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THE LAW OF PARTNERSHIP 
 
THE 
 
 LAW OF PARTNERSHIP 
 
 INCLUDING 
 
 LIMITED PARTNERSHIPS 
 
 FRANCIS M. :^URDICK 
 
 rOKMEBLT DWIGHT PROFESSOR OF LAW, NOW PKOFESSOK OP 
 
 LAW EMERITUS IN COLUMBIA UNIVEBSITT 
 
 SCHOOL OF LAW 
 
 THIRD EDITION 
 Revised and Enlarged 
 
 BOSTON 
 
 LITTLE, BROWN, AND COMPANY 
 
 1917 
 
3<5^;o C \ 
 
 Copyright, 1899, 1906, 1917, 
 By Francis M. BnEDicK. 
 
 All rights reserved 
 
 Set up and electrotyped by J. S. Gushing Co., Norwood, Mass., U.SJL. 
 Presswork by S. J. Parkhill Sk Co., Boston, Mass., U.S.A. 
 
PREFACE TO THIRD EDITION 
 
 The enactment of the Uniform Partnership Act in a number 
 of States has made desirable a new edition of this book. While 
 the statute is in the main a codification of existing law, as ex- 
 pounde4 in the best considered cases, it does clear up many 
 obscurities left by judicial decisions, and works reformation in 
 matters of procedure. 
 
 For example, the courts have had great diflBculty in dealing 
 with the ownership and transfer of real property by partnerships. 
 The Uniform Partnership Act declares that partners hold partner- 
 ship property, as tenants in partnership, and not by a joint ten- 
 ancy or a tenancy in common, as those tenures are defined by the 
 common law. The incidents of this peculiar tenancy are defined, 
 and the methods of taking and of transferring title to firm realty 
 are prescribed ; with the result that legal rules on this topic are 
 both clarified and simplified. Again, the cumbrous and unsatis- 
 factory common law procedure for enforcing against firm property 
 individual judgments against partners, has been superseded by the 
 provision for an order of court charging the debtor partner's 
 interest with the payment of the judgment. Under this procedure, 
 firm business is not interfered with, and there is no clash between 
 the sheriff, who has an execution against a partner, and the partner- 
 ship. 
 
 While this revision was undertaken, primarily, with a view to 
 noting the modification in partnership law, vvTought by the 
 Uniform Act, the attempt has been made to bring the discussion 
 and citation of important cases down to date. 
 
VI PREFACE TO THIRD EDITION 
 
 To the Appendix has been added not only the full text of the 
 Uniform Partnership Act, as amended in 1916, but also the text 
 of the Uniform Limited Partnership Act. The points in which 
 this Act will modify existing statutes are noted in the Chapter on 
 Limited Partnerships. 
 
 Columbia Univbbsitt School of Law, 
 April, 1917. 
 
PREFACE TO FIRST EDITION 
 
 This book is the result of an attempt to state clearly and con- 
 cisely the principles of Enghsh Partnership Law, with an especial 
 view to the needs of the student, as these have revealed them- 
 selves to the writer during his repeated discussions of the subject 
 in the lecture-room. It is a branch of the law which has never 
 proved to be particularly simple or easy for students, and the 
 writer is fully conscious that he has not wrought any radical 
 change in its nature. He has tried to point out the chief sources 
 of difficulty, however, and to save the student from needless per- 
 plexity. While he has not hesitated to criticise respectfully ju- 
 dicial decisions, which appear to him unsound and confusing, 
 nor to avow his own opinions upon controverted points, he has 
 striven not to theorize unduly, but has sought to state the law as 
 it is. 
 
 In dealing with the topic of Bankruptcy, it became necessary to 
 examine with care those provisions of the United States Bankruptcy 
 Law of 1898 which relate to partnership, and to consider the ex- 
 tent to which they have modified former rules. It is believed 
 that some of the changes which they have produced are not only 
 important, but are even radical. 
 
 Legislation has added a chapter to Partnership Law in this 
 country, by its institution of Limited Partnership. In treating 
 this subject, however, no attempt has been made to enumerate the 
 various statutes nor to point out their differences in detail. Dis- 
 
VUl PREFACE TO FIRST EDITION 
 
 cussion has been confined to the principles which are applied in 
 organizing and administering this form of partnership. In order 
 that the reader may have easy access to a typical statute on this 
 topic, the New York Partnership Law of 1897 has been reprinted 
 as an Appendix. 
 
 Columbia University School of Law, 
 February, 1899. 
 
PREFACE TO SECOND EDITION 
 
 In preparing this edition of the Law of Partnership, each page 
 of the original text has been- carefully revised, and typographical 
 errors, so far as discovered, have been corrected. Several topics 
 have beea added, and the discussion of many points has been con- 
 siderably extended. Most of the important cases, decided since 
 the publication of the first edition, have been dealt with, either in 
 the text or in the notes. While the citations of authorities have 
 been largely increased, no attempt has been made to turn the 
 notes into a digest of partnership law. 
 
 Columbia Univeksitt School op Law, 
 April, 1906. 
 
TABLE OF CONTENTS 
 
 FAOB 
 
 Table of Cases xxv 
 
 INTRODUCTION 
 
 § 1. A Modern Branch of English Law 1 
 
 (a) Paucity of Decisions in Early Reports .... 1 
 
 § 2. Incongruous Elements in English Partnership Law . 2 
 
 (a) Attempts at Assimilation 3 
 
 CHAPTER I 
 
 THE FORMATION OF A PARTNERSHIP 
 
 § 1. Partnership results from Contract 5 
 
 (a) An Early Decision of the House of Lords ... 5 
 
 (6) Other Examples . 6 
 
 1. Why an Actual Contract is required 7 
 
 (a) Importance of Delectus Personarum 8 
 
 2. Contract must be enforceable 9 
 
 (a) A Consideration is Essential 9 
 
 (b) Contractual Incapacity 10 
 
 (c) Partnership induced by Fraud 11 
 
 Id) For an Illegal Purpose 12 
 
 (e) The Specific Performance of a Partnership Con- 
 tract . 13 
 
 - (/) Law Governing the Partnership Contract ... 14 
 
 3. Statute of Frauds 15 
 
 4. Express Contract Unnecessary 17 
 
 (o) Words are not Conclusive 18 
 
 § 2. Specific Intent to form a Partnership is not Essential 19 
 
 § 3. A Common Business with a View of Profit 21 
 
 1. Statutory Rules in Britain 21 
 
 2. American Statutes 22 
 
 3. Pairtnership is more than a Common Enterprise ... 23 
 
 4. Partnership is more than Common Ownership of Prop- 
 
 erty and its Returns 25 
 
 (a) Examples of Common Ownership 26 
 
 , 5. Part Owners of Ships 27 
 
 6. Common Ownership of other Chattels [28 
 
 xi 
 
XU TABLE OF CONTENTS 
 
 PAOS 
 
 7. Common Interests in Land 28 
 
 (o) Modern Judicial Attitude 29 
 
 (6) Farming on Shares 31 
 
 (c) Managing and Improving Land 32 
 
 8. With a View of Profit ■ 33 
 
 9. Pooling Earnings ; and Similar Arrangements .... 35 
 
 10. Promoters are not Partners 36 
 
 11. Agreements to form Partnerships 36 
 
 § 4. Joint Stock Companies 38 
 
 (a) Abnormal Partnerships 38 
 
 (6) Their Legality fully established 38 
 
 (c) No Delectus Personarum 39 
 
 (d) Liability of Shareholders 40 
 
 (e) Liability of the Estate and of the Representative 
 
 of a Deceased Shareholder 41 
 
 (/) Shareholder's Liability after a Transfer of Shares 41 
 
 (9) Statutory Joint Stock Companies 43 
 
 (h) Trust Estates as Partnerships 43 
 
 § 5. Defectively Incorporated Associations 44 
 
 (a) Conflicting Doctrines 44 
 
 (b) Simidated Corporations are Partnerships ... 45 
 
 (c) Business pending the Formation of a Corporation 45 
 (d!) Stockholders in De Facto Corporations .... 46 
 
 (e) Liable as Partners 46 
 
 (/) Not Liable as Partners 47 
 
 (,g) Liability of Managers 48 
 
 CHAPTER II 
 
 PARTNERSHIP AS TO THIRD PERSONS 
 
 § 1. Test op Sharing Profits 50 
 
 1. Earliest Statement of Doctrine 51 
 
 2. Doctrine reaffirmed without Limitation 52 
 
 (o) Doctrine originated with Lord Mansfleld ... 52 
 
 3. Partnership Stipulations for Extra-Statutory Interest . 53 
 § 2. Various Exceptions to the Old Rule 64 
 
 (a) A Sharer of Gross Returns is not a Partner . . 54 
 
 (b) Receiving a Sum proportioned to Profits ... 55 
 
 (c) Sharing the Profits as Such 57 
 
 (d) Doctrine of Leggett v. Hyde 58 
 
 § 3. The Test of Intention 59 
 
 1. Cox V. Hickman 59 
 
 (a) Reasons for the Decision 60 
 
 (6) The Present English Rule 61 
 
 (c) Dissolution of the Old Rule 62 
 
 2. American Courts had anticipated the House of Lords . 63 
 
 3. Executor of a Deceased Partner 64 
 
 4. Desire to escape Partnership Liabilities 65 
 
 5. Sharing both Profits and Losses 66 
 
 6. Sub-Partners 67 
 
TABLE OF CONTENTS xiii 
 
 FAQE 
 
 § 4. Partner by Estoppel 68 
 
 (a) Not a Partner- "to the World" 69 
 
 (b) A few Discordant Decisions 69 
 
 1. Nominal Partner as a Party Litigant 70 
 
 2. Holding Out, a Question of Fact 71 
 
 (a) What amounts to Holding Out ? 72 
 
 3. Notice by Retiring Partner 73 
 
 4. Who are Former Dealers ? 75 
 
 5. Using Old Firm Name after Notice of Dissolution . . 75 
 
 (a) Use of Old Name by a New Firm 76 
 
 6. Quasi Partner's Liability for Torts 76 
 
 7. Rights of Creditors against the Property of a Partner 
 
 by Estoppel 77 
 
 (o) Contests between Business and Individual Credi- 
 tors 78 
 
 8. No Quasi Partnerships 79 
 
 9. Individual Creditor may be estopped 81 
 
 CHAPTER III 
 
 THE NATUEE OF A PAETNEESHIP 
 
 § 1. The Firm : Its Members : Its Name 82 
 
 1. The Firm as an Association of Persons 82 
 
 2. The Firm as an Entity 83 
 
 (a) One Firm as Two Entities 84 
 
 (b) Not treated as Two Entities in Bankruptcy . . 85 
 
 3. Partnership as a Status 86 
 
 4. The Merits of these Views 86 
 
 5. Firm Name is a Non-essential 87 
 
 (a) Limitation on Liberty of Choice 89 
 
 (b) Firm Name is the Name of each Member ... 89 
 
 (c) Individual Signatures equivalent to Firm Name . 90 
 
 (d) Assent necessary to a Valid Change of Firm 
 
 Name 91 
 
 (e) Name of one Partner as a Firm Name .... 91 
 (/) Cases rarely decided on the Presumption alone . 92 
 
 6. Suits by and against a Partnership 93 
 
 7. Firms which include Infant Partners 95 
 
 (a) The Rights of Firm Creditors after Repudiation 
 
 by an Infant Partner 95 
 
 (b) Bankruptcy of a Firm with an Infant Member . 97 
 
 (c) The Firm acquires Title to the Infant's Contri- 
 
 bution 98 
 
 (d) Rights of the Adult against the Infant Partner . 99 
 § 2. Firm Title : How Taken and Held 99 
 
 I. Name of Grantee must be that of a Natural Person . . 99 
 
 (a) Firm may be the Grantee 100 
 
 (b) The Uniform Partnership Act 101 
 
XIV TABLE OF CONTENTS 
 
 PAGE 
 
 2. Equity recognizes OwnersMp in the Firm 101 
 
 (a) Purchaser from Holder of Legal Title .... 101 
 (&) Firm Creditors may follow Proceeds 102 
 
 3. Partners are not Tenants in Common 102 
 
 (o) When Partition allowed in the United States . . 103 
 
 (b) Principle underlying the English View .... 104 
 
 (c) Principle criticised 104 
 
 (d) A Mischievous Heresy 105 
 
 4. Firm Real Estate converted into Personalty .... 106 
 
 (o) The American Rule 107 
 
 (&) Conversion of Personalty into Realty .... 108 
 
 5. Rights of Firm. Creditors to Firm Realty 109 
 
 6. Creditor Partner's Rights against Firm Realty . . . 109 
 
 7. Dower in Firm Realty 109 
 
 (a) Reasons for Limiting Right of Dower . . . . Ill 
 
 8. Out and Out Conversion by Agreement of Partners . . Ill 
 
 9. Exempt Property 112 
 
 (o) Anomalous Decisions 112 
 
 (6) The Uniform Partnership Act 113 
 
 § 3. FiBM Title devested by Act op the Firm 114 
 
 1. Firm Property may become the Separate Property of a 
 
 Continuing Partner 114 
 
 (o) Executory Agreement for Conversion .... 115 
 
 (6) The Uniform Partnership Act 116 
 
 2. Conversion must be in Good Faith 116 
 
 (a) What is meant by "Good Faith" 117 
 
 (5) Reasons for Limiting Good Faith to a State of 
 
 Mind 117 
 
 (c) Collusive Waiver of a Partner's Lien 118 
 
 3. Bona Fide Transfer requires a Consideration to the 
 
 Firm 119 
 
 (o) Firm Property cannot be diverted from Firm 
 
 Creditors 120 
 
 4. Assumption by the Firm of Separate Debts . . . . 121 
 
 5. Promise of Purchasing Partner to pay Firm Debts . . 121 
 
 (a) When Firm Creditors arS not defrauded . . . 122 
 
 (6) Sale by one Partner to Others, with Reservation 
 
 of his Lien 123 
 
 6. Liability of Corporation succeeding to the Business of an 
 
 Insolvent Partnership 124 
 
 § 3. (A.) FiEM Title devested by Act or one Partner . 125 
 
 1. Each Partner may sell Firm Goods 125 
 
 2. Either Partner may mortgage Firm Goods 126 
 
 3. Application of Firm Property to a Partner's Debts . . 127 
 
 (a) Separate Creditor's Ignorance of Title .... 128 
 
 (6) Doctrine of Look v. Lewis 129 
 
 4. General Assignment by one Partner 130 
 
 (a) Actual Authority must exist 131 
 
 (6) A Reasonable Requirement 132 
 
 § 3. (B.) Firm Title not devested by Sale of a Partner's In- 
 terest 132 
 
TABLE OP CONTENTS XV 
 
 PAGE 
 
 1. Successive Sales of all the Shares 133 
 
 2. Sale of a Partner's Interest to One of Several Co- 
 
 partners 133 
 
 (a) The Opposite View 134 
 
 (6) Reasons for this Holding 135 
 
 (c) Doner v. Staufler criticised 135 
 
 (d) Absurd Consequences of Doctrine in Doner v. 
 
 Stauffer 136 
 
 3. Sale of a Partner's Interest in Firm Realty 137 
 
 4. The Conveyance of a Partner's Interest is not a Void 
 
 Instrument 137 
 
 (a) Mortgage by a Tenant in Common 138 
 
 § 4. Firm Title after the Death of a Partner 139 
 
 1. Legal Remedies survive 139 
 
 2. Legal Title to Firm Assets survives 140 
 
 (a) Surviving Partner is not Assignee of Deceased 
 
 Partner's Interest 141 
 
 (6) Surviving Partner can make a General Assign- 
 ment ..... 141 
 
 (c) Is the Surviving Partner a Trustee? .... 142 
 
 (d) Surviving Partner's Quasi Trusteeship .... 143 
 
 (e) CompelHng Survivor to apply Firm Property to 
 
 Firm Debts 143 
 
 (/) Firm Assets may be reclaimed from a Fraudulent 
 
 Purchaser 144 
 
 ig) Survivor is subject to a Trustee's Disability to 
 
 buy Firm Assets 144 
 
 3. It is the Firm Title which Survives 146 
 
 (a) Judgments against the Surviving Partner . . . 146 
 
 (b) Bankruptcy of Surviving Partner 147 
 
 4. By Partnership Agreement a Deceased Partner's In- 
 
 terest may vest in his Representative .... 148 
 
 5. By Partnership Agreement, a Deceased Partner's In- 
 
 terest may vest in the Survivors 148 
 
 (o) Such an Agreement must be explicit 149 
 
 § 5. Liability of Surviving Partners 150 
 
 1. Surviving Partner as a Surety for the Firm 151 
 
 § 6. Firm Debts and Partner's Joint Debts 152 
 
 1. No Distinction between Firm Debts and Partners' Joint 
 
 Debts in some Jurisdictions 152 
 
 (o) Reasons assigned by American Courts .... 152 
 
 (6) Claims of Joint Creditors in Bankruptcy . . . 153 
 
 § 6. (A.) Firm Debt is a Debt op Each Partner .... 155 
 
 1. A Partner may pay Firm Debts with his Separate 
 
 Property 155 
 
 2. The Mercantile View of Firm Debts 155 
 
 (o) Mercantile View discredited in Massachusetts . 157 
 
 § 6. (B.) Sole Debt of a Partner for Firm Benefit . . . 158 
 
 (a) A Difficult Question of Fact 159 
 
 1. Negotiable Paper in the Name of a Partner may be a 
 
 Firm Contract 159 
 
XVI TABLE OF CONTENTS 
 
 PAGE 
 
 2. The Deed of a Partner 159 
 
 (a) Unauthorized Deed in Firm Name 160 
 
 (6) When Seal is Surplusage 161 
 
 (c) Partnership Contract not merged in an Unauthor- 
 
 ized Specialty 161 
 
 (d) Rights of Surety upon an Unauthorized Firm 
 
 Deed 162 
 
 § 6. (C.) FiEM Debt converted into Separate Debt . . . 162 
 
 1. Retiring Partner as a Surety 163 
 
 (a) Creditors must assent to the Change of Relation 163 
 
 (6) Notice to Creditors is Sufficient 164 
 
 (c) Illustrations of the Prevailing Doctrine .... 165 
 
 2. Fluctuating Views in England 165 
 
 § 7. The Nature of Firm Contracts 166 
 
 1. Effect of a Partner's Death on a Contract with an 
 
 Employee 166- 
 
 2. Option to Treat the Contract as dissolved 167 
 
 (a) Contract may be for Suretyship to a Fluctuating 
 
 Firm 168 
 
 (6) Other Instances of Dissoluble Contracts . . . 169 
 
 3. Contracts not to engage in Business 169 
 
 4. Pubhe Licenses to partnerships 170 
 
 5. Can a Partnership Contract with its Members ? . . . 170 
 
 6. A Firm as a Partner 171 
 
 7. Effect of a Partner's Disabilities 173 
 
 § 8. Injuries to a Firm 173 
 
 1. CoUusion between Partner and Outside Wrongdoer . . 174 
 
 (o) Remedies available to Defrauded Partner . . . 174 
 
 CHAPTER IV 
 
 POWERS OF PARTNERS 
 
 1. Peculiarities of a Partner's Agency 176 
 
 (a) The Entity Notion not grasped by Parliament . 177 
 
 2. Classification of a Partner's Powers 177 
 
 (a) American Statutes 178 
 
 § 1. Power to sell Firm Property 179 
 
 1. The Fundamental Limitation 179 
 
 (a) Incidental to the Power of Sale 179 
 
 (6) Power of Sale may be relinquished 180 
 
 (c) No Implied Power to sell for Individual Purposes 181 
 
 § 2. Power to Incur a Firm Obligation 182 
 
 1. Determining the Scope of a Firm's Business 182 
 
 (o) A Question of Fact 182 
 
 (b) Urgent but Unusual Acts 184 
 
 2. Power to buy on Credit 184 
 
 3. Power to hire Servants 185 
 
 4. Power to collect Debts 185 
 
 (a) Extraordinary or Improper Proceedings . . .* . 186 
 
 lb) Compromising Firm Claims 187 
 
TABLE OF CONTENTS XVII 
 
 FAOB 
 
 5. Power to borrow Money 188 
 
 (a) Use and Abuse of this Power 189 
 
 6. Power to issue Bills and Notes 189 
 
 (a) Burden of Proving Authority 190 
 
 (b) Distinction between Trading and Non-Trading 
 
 Firms 192 
 
 (c) The Distinction is Generally recognized .... 192 
 
 id) Definition of a Trading Firm 193 
 
 (e) Kinds of Business Judicially declared to be 
 
 Trades 195 
 
 (/) Kinds of Business which are not Trades .... 196 
 
 (g) How Doubtful Cases are dealt with 198 
 
 7. Abnormal Partnerships in Trade 199 
 
 8. Implied Authority may be negatived by the Form of the 
 
 Obligation 200 
 
 (a) When Implied Authority is not Negatived by the 
 
 Form of the Instrument 200 
 
 9. Firm estopped to Deny Authority 201 
 
 10. Admissions and Representations 202 
 
 (o) Effect of a Partner's Admissions and Represen- 
 tations 203 
 
 (A.) The Power of a Partner to execute a Firm Deed 204 
 
 (a) Various Exceptions 205 
 
 (6) Seal treated as Surplusage 205 
 
 (c) Parol Authority or Ratification 206 
 
 (d) Sealed Instruments in the Course of Trade . . 206 
 
 (e) Release under Seal 207 
 
 (/) A Fraudulent Release is not Binding on the Firm 208 
 
 (B.) A Partner's Power to render the Firm Liable in 
 
 Tort 209 
 
 1. Actual Innocence no Defence 209 
 
 2. A Partner is more than an Agent 210 
 
 3. Reasons assigned for this Doctrine 211 
 
 4. Firm may be Liable for a Partner's Illegal Act . . . 211 
 
 (o) Graham v. Meyer criticised 212 
 
 (b) Breaches of Revenue Laws 213 
 
 (c) Malicious Legal Proceedings 213 
 
 5. Ordinary Legal Proceedings 215 
 
 Co) Orders of Arrest are Ordinary Legal Proceedings 215 
 (b) Who should Suffer for a Partner's Bad Temper 
 
 or Poor Judgment? 216 
 
 6. The Prosecution of Criminals . . . 216 
 
 7. Liability for a Partner's Frauds 217 
 
 (a) Actions for Deceit 218 
 
 8. Defamation by a Partner 219 
 
 (a) Malicious Intention of a Partner 219 
 
 (6) Defamation not in the Course of Business . . . 220 
 
 9. Punishment of the Innocent Partner 221 
 
 10. Liability for a Partner's Misapplication of Property . . 222 
 
 (o) Temporary Possession of the Property by the 
 
 Firm 222 
 
XVIU TABLE or CONTENTS 
 
 PAGE 
 
 (6) Liability for Property Fraudulently acquired by 
 
 a Partner 223 
 
 (c) Not in the Course of the Partnership Business . 224 
 
 (d) Whether a Transaction is in the Course of the 
 
 Business 225 
 
 11. Wrongful Use of Trust Funds by a Partner 226 
 
 (o) Notice of the Fraud 227 
 
 (6) Why Defrauding Partner's Knowledge is not Im- 
 putable to his Partners 227 
 
 § 2. (C.) Powers of the Majority 228 
 
 1. Ordinary Matters of Partnership Business 228 
 
 2. Limits to the Power of the Majority 230 
 
 3. The Majority must act in Good Faith 230 
 
 § 2. (D.) Effects op Dissent 231 
 
 1. Dissent by One of Two Partners 232 
 
 2. New Obligations 233 
 
 (a) Waiver by Dissenting Partner 233 
 
 § 2. (E.) Notice of Limitations on a Partner's Power . . 234 
 
 § 3. Powers op a Partner after Dissolution 235 
 
 1. Performing Existing Contracts 236 
 
 (a) Other Examples 236 
 
 (b) New Obligations Incidental to the Performance 
 
 of Existing Contracts 237 
 
 2. Contracts terminated by Dissolution 238 
 
 3. Implied Authority to wind up the Business 239 
 
 (a) The Statutory Rule in Britain 240 
 
 4. Authority to dispose of Firm Assets 241 
 
 (a) The Power to sell 241 
 
 (6) The Power to pledge Firm Property 242 
 
 6. Power to give and to indorse Firm Paper . . . . 243 
 
 6. Power to pay and settle Firm Debts 244 
 
 7. Expenses of Winding up 244 
 
 8. Admissions of Liability .... .... 245 
 
 9. Taking Firm Debts out of the Statute of Limitations . 246 
 
 (a) The Minority View 247 
 
 (6) Payment or New Promise after Statutory Period 248 
 
 (c) If Statute Pleaded, Lex Fori Prevails .... 248 
 
 10. Power to dishonor Negotiable Paper .... . . 248 
 
 (a) Power to waive Presentment, Demand, and No- 
 
 < tice 249 
 
 11. Powers 6f a liquidating Partner 250 
 
 CHAPTER V 
 
 EIGHTS AND HEMEDIES OF CREDITORS 
 
 § 1. Firm Creditors at Law 251 
 
 1. The Property which may be reached 251 
 
 (a) Statutory Modifications 252 
 
 (b) The Louisiana Doctrine 253 
 
TABLE OF CONTENTS XIX 
 
 PAGE 
 
 2. Attachment Proceedings 253 
 
 (o) Partner's Misconduct outside Firm Affairs . . . 254 
 (6) Partner's Misconduct in Connection with Firm 
 
 Affairs 254 
 
 (c) Attachment against Innocent Partner's Property 255 
 
 § 1. (A.) Effect of Novation 256 
 
 (a) Novation by Implied Agreement 266 
 
 (6) New Security for Old Debt 257 
 
 (c) Novation by Express Agreement 258 
 
 (d) Assumption of Firm Debts by one Partner . . . 259 
 
 (e) Novation by Estoppel .... 259 
 
 § 1. (B.) Effect of Judgment against one Paetnek . . . 260 
 
 (a) Non-joinder must be pleaded 261 
 
 (6) Absconding or Non-Resident Partners .... 261 
 
 (c) Merger of Firm Debt in a Judgment against one 
 
 Partner 262 
 
 (d) Statutory Changes 263 
 
 1. Liability of Partners for Partnership Torts 263 
 
 § 1. (C.) Remedies against Dormant Partners ..... 264 
 
 1. Dormant Partner's Liability on Partnership Paper . . 264 
 
 (a) The Doctrine of Swan v. Steele 265 
 
 (b) Dormant Partner estopped to set up Firm Title . 266 
 
 2. Termination of Dormant Partner's Liability .... 266 
 
 3. Who is a Dormant Partner ? 267 
 
 (fl) Dormancy Involves Inactivity as well as Secrecy 267 
 
 (b) Other Authorities for this View 268 
 
 (c) Notice to the Public Unnecessary 269 
 
 (d) Dormant Partner as Plaintiff 269 
 
 § 2. Remedies of Separate Creditors at Law 269 
 
 1. The Value of his Judgment Lien Uncertain 270 
 
 2. Partnership Property is seizable under Separate Exe- 
 
 cution 270 
 
 (a) Exectxtion may be levied on Specific Chattels . .271 
 
 ,(b) Under the Uniform Act 271 
 
 3. Execution Creditor's Rights after a Levy 272 
 
 4. The Sheriff's Rights after a Levy 272 
 
 (a) Sheriff may be Liable in Tort 273 
 
 5. The Rights of the Purchaser 273 
 
 6. Resort to Equity 274 
 
 7. Garnishment of Debts due the Firm 275 
 
 8. Statutory Modifications of Common Law Procedure . . 275 
 
 (a) Separate Creditor prohibited from Levying on 
 
 Firm Property 276 
 
 (b) Statutory Change in Britain 276 
 
 (c) The Uniform Partnership Act 277 
 
 9. Right of Judgment Creditor or Purchaser to an Account 277 
 
 (a) The Present Enghsh J)oetrine 278 
 
 (b) The Uniform Partnership Act 279 
 
 10. Specific Legal Liens 279 
 
 § 3. The Rights of Creditors in Equity 280 
 
 1. The Vigilant Creditor cannot gain a Preference . . . 280 
 
XX TABLE OF CONTENTS 
 
 PAGE 
 
 2. Firm Creditors restricted to Firm Estate 281 
 
 (a) The Doctrine Not Universally Accepted . . . 282 
 
 (6) Lord Thurlow's Rule in this Country .... 282 
 
 (c) Modifications of Lord Thurlow's Rule .... 283 
 
 (d) The Prevailing Rule Empirical 283 
 
 (e) Exceptions to the above Rule 284 
 
 3. The Rights of Secured Creditors 285 
 
 (a) The Bankruptcy Rule 285 
 
 (b) Creditors secured by Third Persons 286 
 
 § 4. The Bankruptcy of the Fiem 287 
 
 1. Holding Our Partners 287 
 
 (a) Various Views in this Country 289 
 
 2. The Capital of a Retired Partner 290 
 
 3. Conversion of Partnership Property into Separate Estate 290 
 
 (o) Agreement by Purchaser of Firm Title to pay 
 
 Firm Debts 291 
 
 (6) Prevailing View in this Country 292 
 
 4. No Joint Estate and No Living Solvent Partner . . . 293 
 
 (a) Amount of Firm Estate 294 
 
 (6) Odd Consequences of this Exception 295 
 
 (c) No Living Solvent Partner 295 
 
 5. Exempt Property 296 
 
 § 4. (A.) The Bankruptcy op a Partner 296 
 
 1. The Trustee and Solvent Partners as Tenants in 
 
 Common 297 
 
 (a) The Modern Doctrine 298 
 
 2. Transfers of Firm Property before Bankruptcy . . . 299 
 
 3. Liens on Firm Property before Bankruptcy 299 
 
 4. Suits on Firm Claims or Liabilities 300 
 
 5. Discharge of a Bankrupt Partner 302 
 
 6. An Insolvent Firm of Solvent Partners 303 
 
 § 4. (B.) Order of Proofs and Marshalling 304 
 
 1. Creditors holding Joint and Several ObHgations . . . 305 
 
 (o) The Present Rule 305 
 
 (6) A Peculiar Doctrine in Kentucky . . ... 306 
 
 (c) Joint and Several LiabiHty in Tort 307 
 
 2. A Partner as Creditor of the Firm ... .... 307 
 
 (a) Rule of United States Bankruptcy Law of 1898 . 308 
 
 (6) Exceptions to the Old Rule 308 
 
 (c) Second Exception : Trade Debts 309 
 
 (d) Exception Limited in this Country 310 
 
 (e) Third Exception : Proof by a Discharged Partner 310 
 
 (J) Proof by a Retired Partner 311 
 
 (g) Proof by Purchaser of Creditor Partner's Claim . 311 
 
 (h) A Partner as a Surety for the Firm 311 
 
 3. The Firm as a Creditor of a Partner 312 
 
 (a) First Exception: Fraudulent Conversion by a 
 
 Partner . . * 313 
 
 (6) Second Exception : Trade Debts 313 
 
 4. A Partner as a Creditor of a Copartner 314 
 
 (a) Assignee of a Creditor Partner 315 
 
TABLE OF CONTENTS XXI 
 
 FAGB 
 
 5. Separate Estate of a Partner in an Illegal Partnership . 315 
 
 § 5. Death of a Paetnee 316 
 
 1. The Rule in Great Britain 316 
 
 2. Conflicting Rtiles in this Country 317 
 
 (o) No Joint Estate or Living Solvent Partner . . . 318 
 
 (6) Statutory Provisions 318 
 
 CHAPTER VI 
 
 DUTIES AND LIABILITIES OF PARTNERS inter Se 
 
 ■'§ 1. The Utmost Good Faith . . > 320 
 
 (a) Preliminary Negotiations 321 
 
 (b) Purchase of a Copartner's Interest 321 
 
 (c) Clandestine Profits 322 
 
 (d) Prohibited Competition 322 
 
 (e) Non-oompetitive Transactions .' 323 
 
 (/) Information gained as a Partner 323 
 
 ■§ 2. To DEVOTE Themselves to the Business 324 
 
 (a) Liability upon Violating this Duty 325 
 
 (6) The Copartners' Right to Compensation . . . 325 
 
 :§ 3. To Contribution 326 
 
 (o) Duty of Contribution imposed by the Partnership 
 
 Contract 326 
 
 (6) May be modified by Contract 327 
 
 (c) Incidental to a Partnership Settlement .... 328 
 
 (d) Contribution may be denied 328 
 
 (e) Purchaser of a Partner's Share 330 
 
 § 4. Actions at Law between Paetnees 330 
 
 (a) Common Law Action of Account 331 
 
 (6) Modified Forms of Action of Account .... 331 
 
 1. Action for Wrongful Ouster of Copartner 332 
 
 (a) Action for Refusal to launch a Partnership . . 333 
 
 2. Actions which do not involve Partnership Accounts . . 333 
 
 (a) Voluntary Settlement between the Partners . . 333 
 
 (6) Agreements antecedent to the Partnership . . . 334 
 
 (c) Insulated Agreements 334 
 
 (d) Wrongful Use of Firm Property 335 
 
 (e) Tortious Conduct toward a Copartner .... 336 
 
 3. Actions between Firms having a Common Member . . 337 
 
 (o) Actions between a Partnership and a Partner . . 338 
 
 CHAPTER VII 
 
 DISSOLUTION OF PARTNERSHIPS 
 
 § 1. By Operation of Law 340 
 
 (a) By the Death or Bankruptcy of a Partner ... 341 
 
 (b) By the Marriage of a Female Partner .... 342 
 
XXU TABLE OP CONTENTS 
 
 PAGE 
 
 § 2. Dissolution by Act of the Parties 342 
 
 (a) A Particular Adventure 343 
 
 (6) Partnerships at Will 343 
 
 1. Partnerships for a Fixed Term 344 
 
 (o) The English Doctrine 344 
 
 (b) Different Views in this Country 344 
 
 (c) Dissolution in Breach of Contract, causing Dam- 
 
 age . . 345 
 
 § 3. Dissolution by the Court . 346 
 
 (a) Lunacy of a Partner 347 
 
 (b) Permanent Incapacity - 347 
 
 (c) Misconduct of a Partner 348 
 
 (d) A Losing Business 348 
 
 (e) For Just Cause 349 
 
 if) On Behalf of Purchaser of a Partner's Interest . . 349 
 
 CHAPTER VIII 
 
 ACCOUNTING AND DISTRIBUTION 
 
 § 1. The Right to an Accounting 350 
 
 (o) During the Continuance of the Partnership . . 350 
 
 (b) Bight to Accounting not a Test of Partnership . 351 
 
 (c) Right to an Accounting not easily lost by a 
 
 Partner 352 
 
 § 1. (A.) Rules op Distribution 353 
 
 1. Modified by Agreement 355 
 
 2. The Burden of Losses 356 
 
 3. Illegal Partnerships 356 
 
 § 2. Repaying Advances 358 
 
 (a) Interest on Advances 360 
 
 (b) Firm Assets Insufflcient to repay Advances . . 361 
 § 3. Repaying Capital 362 
 
 (a) Insolvency of one or more Partners 363 
 
 (b) Interest on Capital 363 
 
 (c) Sharing Profits 364 
 
 § 4. Adjusting the Equities op Partners 364 
 
 1. The Lien of a Creditor Partner 365 
 
 (o) No Lien for Non-partnership Indebtedness . . . 365 
 
 (b) If the Debtor Partner is Insolvent 366 
 
 2. Interest Payable by a Partner 367 
 
 3. Losses chargeable to a Partner 367 
 
 4. Costs of an Accounting 368 
 
 5. When Partnership is Dissolved for Fraud 369 
 
 § 5. The Good Will of the Firm Business 369 
 
 1. What is "Good Will"? 370 
 
 (a) Judicial Definitions 370 
 
TABLE OP CONTENTS xxiii 
 
 PAOB 
 
 2. Partnership Good Will is Property 372 
 
 (a) May not be Valuable 373 
 
 (6) The Good Will may be dissipated 374 
 
 3. Good Will is to be converted into Cash 375 
 
 (o) Duty of a Surviving Partner 375 
 
 4. The Rights of a Purchaser 376 
 
 5. The Rights of the Seller 379 
 
 6. Partnership Stipulations Concerning the Good Will . . 381 
 
 CHAPTER IX 
 
 LIMITED PARTNERSHIPS 
 
 § 1. Their Origin and Nature 383 
 
 1. The Creatures of Legislation 383 
 
 (o) Distinctive Characteristic of Limited Partner- 
 ship 384 
 
 (6) Limited Partnership Associations 384 
 
 2. Limited Partnership is a True Partnership 385 
 
 (o) Purpose of Limited Partnership Legislation . . 386 
 
 § 2. Who may compose Them 387 
 
 (a) The Number of Partners 388 
 
 (6) Fictitious Special Partner- 388 
 
 § 3. Requisites to their Formation 389 
 
 1. Contents of the Certificate 389 
 
 (a) Rules of Statutory Construction 389 
 
 (b) The Partnership Name 390 
 
 (c) The Use of " and Company " 391 
 
 (d) The Nature of the Business 391 
 
 (e) The Amount of Capital contributed 392 
 
 (/) Contributed Cash may be invested in Goods at 
 
 Once 393 
 
 (g) Cash may be borrowed 394 
 
 (h) Contribution of Property other than Cash . . . 395 
 
 (i) When must the Contribution be made ? . . . . 396 
 
 (j) A Check as Cash 397 
 
 2. Registration of Certificate and Afftdavit 397 
 
 3. Pubhcation of the Certificate 398 
 
 (a) Failure to file Proof of Publication 399 
 
 § 4. Notice to Creditors 400 
 
 § 5. Creditors may be Estopped 400 
 
 (ffl) An Advising Creditor 401 
 
 (b) Estoppel by Judgment 401 
 
 (c) Defective Organization does not invaHdate Firm 
 
 Contracts 402 
 
 § 6. Removal to Another County 402 
 
 § 7. Renewal Certificates 403 
 
 § 8. Ante-Pabtnership Negotiations 405 
 
 § 9. Partnership Capital 405 
 
XXIV TABLE OF CONTENTS 
 
 PAOB 
 
 1. Withdrawal of Capital by Special Partner 406 
 
 (o) Bona fide Receipt of Interest or Dividends . . . 406 
 
 (6) Indirect Withdrawals 407 
 
 (c) Actions to compel Restoration 408 
 
 § 10. Phepbbences Forbidden 409 
 
 (a) The Meaning of Insolvency 409 
 
 (6) The Object of this Provision 409 
 
 § 11. Teansformed into General Partnerships 411 
 
 1. Prohibited Interference by a Special Partaer .... 411 
 
 2. Prohibited Alteration by a Special Partner 412 
 
 § 12. Creditors of the General Partners 413 
 
 1. The Rights of a Mortgagee of a General Partner's In- 
 
 terest 413 
 
 2. Assignment for Creditors by the General Partners . . 413 
 
 3. The Special Partner as a Creditor 414 
 
 § 13. Creditors and Assignees of Limited Partners . . . 415 
 
 § 14. Dissolution of Limited Partnerships 416 
 
 1. Dissolution by Expiration of Term 416 
 
 2. Dissolution by Alteration 416 
 
 3. Dissolution by Judicial Decree 417 
 
 4. Dissolution by Act of the Partners 417 
 
 Appendix A. The Partnership Law op New Tork .... 419 
 
 Appendix B. The Uniform Partnership Act 427 
 
 Appendix C. Uniform Limited Partnership Law 446 
 
 Index 457 
 
TABLE OF CASES 
 
 [Refeeencbs are to Pages] 
 A 
 
 PAGES 
 
 Aas V. Benham, [1891] 2 Ch. 244 224 
 
 Abbott V. Anderson, 265 111. 285 83 
 
 V. Jolinson, 32 N. H. 9 230, 348 
 
 Ach V. Barnes, 107 Ky. 219 74 
 
 Adams & Co. v. Albert, 155 N. Y. 356 77, 78, 290 
 
 Adams v. Bankart, 1 Cr. M. & R. 681 187 
 
 V. BeaU, 67 Md. 53 99 
 
 V. Chureh, 42 Or. 270 83 
 
 V. Leeds Co., 195 Pa. 70 187 
 
 V. May, 27 Fed. 907 84 
 
 V. Morrison, 113 N. Y. 152 69 
 
 V. Sturges, 55 111. 468 222 
 
 Adams Exp. Co. v. Met. Street Ry., 126. Mo. App. 471 40 
 
 V. State, 55 Oh. St. 69 43 
 
 Adee v. CorneU, 93 N. Y. 572 131 
 
 V. Demorest, 54 Barb. (N. Y.) 433 189 
 
 Agriculturist Cattle Ins. Co., In re, Baird's Case, 5 Ch. App. 725 38, 39, 40 
 
 Alabama & V. Ry. v. Lamkin, 78 Miss. 502 35 
 
 Alderson v. Pope, 1 Camp. 404, n 75 
 
 Aldrich v. Chemical Nat. Bank, 176 U. S. 618 285 
 
 Alexander v. Lewis, 47 Tex. 481 148 
 
 Alexander Brothers v. King & Co., 87 Ala. 642 33Y, 339 
 
 Allegany Nat. Bank w. Bailey, 147 Pa. St. Ill 401 
 
 AUen, In re, 41 Minn. 430 414 
 
 V. Davis, 13 Ark. 28 31 
 
 AUen & Co. v. Davids, 70 8. C. 260 84, 87 
 
 Alley V. Bowen-MerriU Co., 76 Ark. 4 185 
 
 Allison V. Abendroth, 108 N. Y. 470 259 
 
 Alsop V. Central Trust Co., 100 Ky. 375 183, 198 
 
 V. Mather, 8 Conn. 584 317 
 
 Altgelt V. SuUivan, 79 S. W. (Tex.) 333 148 
 
 Am. Ag. Chem. Co. v. Berry, 110 Me. 528 303 
 
 American Salt Company v. Heidenhamer, 80 Tex. 344 47 
 
 Am. Steel & W. Co. v. Coover, 27 Okla. 131 300 
 
 Ames V. Downing, 1 Brad. (N. Y. Surrogate's Court) 321 . . 386, 416 
 Amory v. Francis, 16 Mass. 308 284 
 
 XXV 
 
XXVI TABLE OF CASES 
 
 PAQES 
 
 Anable v. McDonald L. & M. Co., 144 Mo. App. 303 350 
 
 Anderson v. Branstrom, 173 Mich. 157 13 
 
 V. Maltby, 2 Ves. Jr. 244 54 
 
 Andres v. Morgan, 62 Oh. St. 236 124 
 
 Andrews v. Mundy, 36 W. Va. 22 254 
 
 V. Sehott, 10 Pa. St. 47 391 
 
 V. Stinson, 254 lU. Ill 9, 65, 148 
 
 Anonymous, 12 Mod. 446 297 
 
 3 Salk. 61 297 
 
 Anten v. Ellingwood, 61 How. Pr. (N. Y.) 359 2S 
 
 Appleby v. Brown, 24 N.Y. 143 331 
 
 Apsey, Ex parte, 3 Brown's Ch. Ca. 265 22& 
 
 Arbuokle v. Taylor, 3 Dow, 160 214 
 
 Arden v. Sharpe, 2 Esp. 523 190 
 
 Armand v. Burrun Company, 69 Ga. 758 276 
 
 Armour & Co. v. J. J. Ward & Co., 78 Vt. 60 261 
 
 Armstrong v. Am. Exch. Bank, 150 U. S. 433 358 
 
 V. Hussey, 12 S. & R. (Pa.) 315 266 
 
 Arnold v. AngeD, 62 N. Y. 508 54 
 
 V. Arnold, 90 N. Y. 580 333 
 
 V. Danziger, 30 Fed. 898 404 
 
 V. Nichols, 64 N. Y. 117 293 
 
 Aronhime v. Levinson, 119 Va. 411 321 
 
 Arton V. Booth, 4 Moore, 192 208 
 
 ArundeU v. Bell, 52 L. J. Ch. 537 373 
 
 Ash V. Guie, 97 Pa. St. 493 35 
 
 Ashley v. Downing, 203 Mass. 311 40 
 
 Ashworth v. Stanwix, 3 E. & E. 701 210 
 
 Askew V. Silman, 95 Ga. 678 74, 75 
 
 V. Springer, 111 lU. 662 325 
 
 Atkins, Ex parte, 1 Buck, 479 311 
 
 Attorney General v. Stranyforth, Bunb. 97 209, 213 
 
 Atwood V. Meredith, 37 Miss. 635 274 
 
 Aultman v. Fuller, 53 Iowa, 60 274 
 
 V. Wilson, 55 Ohio St. 138 296 
 
 Austen v. Boys, 2 DeG. & J. 626 373 
 
 Austiil V. Appling, 88 Ga. 54 267 
 
 V. HoUand, 69 N. Y. 571 73 
 
 V. Jackson, 11 Ch. D. 942 368 
 
 V. Neil, 62 N. J. L. 462 53, 63 
 
 V. Thomson, 45 N. H. 113 35 
 
 Axe V. Tolbert, 179 Mich. 556 88 
 
 Avery v. Everett, 110 N. Y. 317 10 
 
 Aylesworth v. Aylesworth, — Ind. — ,109 N. E. 750 20 
 
 Aylett V. Walker, 92 Va. 540 338 
 
 B 
 
 Bach !). The State Ins. Co., 64 Iowa, 595 242 
 
 Bacon v. Christian, — Ind. — , 111 N. E. 628 20 
 
 Bagby & Rivers Co. v. Rivers, 87 Md. 400 379 
 
TitBLE OF CASES XXVU 
 
 PAGES 
 
 Bagel V. Miller, 2 K. B. 212 239 
 
 BaUy V. Hornthal, 154 N. Y. 648 407, 408 
 
 Baker v. Charlton, Peake, 80 8 
 
 V. Mayo, 129 Mass, 617 361 
 
 V. Safe Dep. &c. Co., 90 Md. 744 362 
 
 Baldridge v. Eason, 99 Ala. 516 87 
 
 Baldwin v. Burrows, 47 N. Y. 199 18, 37 
 
 BaU, Matter of, 161 App. D. 79 382 
 
 BaU V. Dunsterville, 4 D. & E. 313 205 
 
 Banco de Portugal v. Waddel, 6 App. Cas. 161 86 
 
 Bank v. CarroUton Railroad, 11 WaU. 624 120, 132, 365 
 
 V. Green, 40 OMo St. 431 254, 255, 258 
 
 V. Hollingsworth, 135 N. C. 556 141 
 
 Bank Commissioners v. Security Trust Co., 70 N. H. 536 .... 285 
 
 Bank of Australasia v. Breillat, 6 Moo. P. C. 152 176 
 
 Bank of Buffalo v. Thompson, 121 N. Y. 280 . . . . 83, 156, 307 
 
 Bank of La Grange v. Cotter, 101 Ga. 134 156 
 
 Bank of Monongahela VaUey v. Weston, 159 N. Y. 201 . . 74, 201 
 
 Bank of Monroe v. Drew, 126 La. 1028 192, 243 
 
 Bankof Montreal u. Page, 98 lU. 109 343 
 
 Bank of Overton w. Thompson, 118 Fed. 798 31 
 
 Bank of Rochester v. Monteath, 1 Den. 402 88 
 
 Bank of South CaroUna v. Case, 8 B. & C. 427 92 
 
 Bapnister v. Miller, 54 N. J. Eq. 121 121 
 
 Barclay v. Barrie, 209 N. Y. 40 348 
 
 BardweU v. Perry, 19 Vt. 292 283, 
 
 Barfleld v. Loughborough, L. R. 8 Ch. 1 364 
 
 Barns v. Barrow, 61 N. Y. 39 168 
 
 Barnes v. Northern T. Co., 169 lU. 112 245 
 
 V. Stanley, 95 Mo. App. 688 142 
 
 V. Youngs, [1898] 1 Ch. 414 344 
 
 Barrett, In re, 2 Hughes, 444 186, 205 
 
 Barrett v. Furnish, 21 Ore. 17 251 
 
 Barrow, Ex parte, 2 Rose, 252 68 
 
 Bartlett v. Meyer-Schmidt Grocer Co., 65 Ark. 290 ' 123 
 
 V. Raymond, 139 Mass. 275 70 
 
 V. Smith, 98 N. W. (Neb.) 687 141 
 
 Barton v. Hanson, 2 Taunt. 49 157 
 
 Barwick v. Alderman, 46 Fla. 433 235 
 
 Bass V. Taylor, 34 Miss. 342 244 
 
 Bass Dry-Goods Co. v. Granite City Mfg. Co., 113 Ga. 1142 180, 242 
 
 Bassett v. Shepardson, 62 Mich. 3 342 
 
 Batard v. Hawes, 2 E. & B. 287 36 
 
 Bauerman, Ex parte, 3 Dea. 476 295 
 
 Baxter v. RoUins, 90 Iowa, 217 234 
 
 Bays V. Connor, 105 Ind. 415 197 
 
 Beacannon v. Liebe, 11 Ore. 443 337 
 
 Beach v. CoUes, 85 N. Y. 516 361 
 
 V. HotehMss, 2 Conn. 425 331 
 
 Bean, In re, 230 Fed. 405 66 
 
 Beatson v. Harris, 60 N. H. 83 186, 208 
 
XXVUl TABLE OP CASES 
 
 PAGES 
 
 Beauchamp Bros., In re (1894), 1 Q. B. 1 82 
 
 Beck V. Kantorowicz, 3 K. & J. 230 350 
 
 Beckwith, In re, 130 Fed. 475 291 
 
 Beckwith v. Mace, 140 Mich. 157 159 
 
 V. Talbot, 2 Col. 639 23 
 
 Beckwith & Co., In re, 130 Fed. 475 78, 288 
 
 Bedford v. McDonald, 102 Tenn. 358 119 
 
 Beecher v. Bush, 45 Mich. 188 20, 57 
 
 Beers v. Reynolds, 11 N. Y. 97 407 
 
 Belcher v. Conner, 1 S. Car 9 
 
 V. Whittemore, 134 Mass. 330 325 
 
 Bell V. Ellis, 33 Cal. 620 372 
 
 V. HaU, 5 N. J. Bq. 477 165 
 
 V. Merrifleld, 109 N. Y. 202 402, 408 
 
 V. Morrison, 1 Pet. 351 246 
 
 Benard v. Packard, 64 Fed. 309 387 
 
 Bender v. Hemstrict, 34 N. Y. Supp. 423 126 
 
 Benedict v. Thompson, 33 La. Ann. 196 197 
 
 V. Van Allen, 17 Up. Can. Q. B. 234 391 
 
 Benjamin v. Covert, 47 Wis. 375 269 
 
 V. Porteus, 2 H. Bl. 590 54 
 
 Bennett «. Bennett, 137 Ky. 17 110 
 
 V. Buohan, 61 N. Y. 222 242 
 
 V. Hough, 141 Mich. 162 101 
 
 Benson v. Hadfield, 4 Hare, 32 257 
 
 Benton v. Hunter, 119 Ga. 381 333 
 
 Beresford v. Browning, 1 Ch. D. 30 316 
 
 Bergeron v. Hobbs, 96 Wis. 641 45, 46 
 
 Berkshire Woolen Co. v. Juillard, 75 N. Y. 535 91 
 
 Bernheimer v. Becker, 102 Md. 250 214 
 
 V. Rindskopf, 116 N. Y. 428 121 
 
 Berns v. Shaw, 65 W. Va. 667 13 
 
 Berry v. Pelneault, 188 Mass. 413 61 
 
 Betts V. Letcher, 1 S. D. 182 112 
 
 Beulah Park Estate, In re, L. R. 15 Eq. 43 361 
 
 Bevan, Ex parte, 10 Ves. 107 305 
 
 V. Lewis, 1 Sim. 376 274 
 
 Bienenstoek v. Ammidown, 155 N. Y. 47 .... 223, 224, 225, 227 
 
 Bigelow V. EUiot, 1 Cliff. 28 66 
 
 V. Gregory, 73 lU. 197 47 
 
 V. Powers, 25 Ont. L. R. 28 339 
 
 Bignold V. Waterhouse, 1 M. & S. 255 227 
 
 Binney v. Mutrie, 12 App. Cas. 160 355, 362 
 
 Birchett v. BoUing, 5 Munf . (19 Va.) 442 13, 14 
 
 Birckhead v. De Forest, 120 Fed. 645 226 
 
 Bird V. Morrison, 12 Wis. 138 16 
 
 Bishop V. Georgeson, 60 111. 484 73 
 
 V. Hall, 9 Gray, 430 70 
 
 Bissell V. Warde, 129 Mo. 439 69 
 
 Bixler v. Kresge, 169 Pa. St. 405 78 
 
 Blackburn Building Soc. v. CunUffe, 22 Ch. D. 61 189 
 
TABLE OF CASES XXIX 
 
 PAGES 
 
 Blackford, Matter of, 35 App. Div. 330 263, 307 
 
 Blackmarr v. Williamson, 57 W. Va. 249 199 
 
 Blain, Ex parte, 12 Ch. D. 533 97 
 
 Blair, In re, 99 Fed. 76 300, 304 
 
 V. Bromley, 1 PhiUips, 354 204 
 
 V. Shaeffer, 33 Fed. 218 61 
 
 Blake v. Atlantic Nat. Bank, 33 R. I. 464 292 
 
 V. Barnes, 26 Abb. N. C. 208 381 
 
 Blaker v. Sands, 29 Kan. 651 179 
 
 Blanehard v. Blackstone, 102 Mass. 343 161 
 
 V. Coolidge, 22 Pick. (39 Mass.) 151 30 
 
 Blisset V. Daniel, 10 Ha. 493 332 
 
 Blodgett V. Sleeper, 67 Me. 499 175 
 
 Bloom V. Lofgren, 64 Minn. 1 321 
 
 Bloxam v. Pell, 2 W. Bl. 999 52 
 
 Blueflelds S. S. Co. v. Lala Ferreras Cangelori S. S. Co., 133 La. 424 56 
 
 Bluff City Lumber Co. v. Bank of Clarksville, 95 Ark. 1 . . . . 10 
 
 Blum V. Mayer, 189 N. Y. 153 361 
 
 Bogart V. Dart, 25 Hun, 395 254 
 
 Boggs V. Friend, (W. Va.), 87 S. E. 873 376, £!80 
 
 Boher v. Drake, 33 Minn. 408 343 
 
 Bohler v. Tappan, 1 Fed. 469 242 
 
 Boisgerard v. Wall, Sm. & M. Ch. (Miss.) 404 230 
 
 Bolen V. Ligett, — Okla. — , 154 Pac. 547 88 
 
 Bolton V. Puller, 1 Bos. & P. 539 114 
 
 Bond V. Gibson, 1 Camp. 185 184 
 
 Bond and Hill, Ex parte, 1 Atk. 98 305 
 
 BonneU v. Chamberlin, 26 Conn. 487 159 
 
 Bonwit V. Heyman, 43 Neb. 537 117 
 
 Boor V. Lowrey, 103 Ind. 468 202 
 
 Booth V. Bunoe, 33 N. Y. 139 124 
 
 V. Wonderly, 36 N. J. L. 250 47 
 
 Borden's Estate, In re, 159 N. Y. S. 346 382 
 
 Bosanquet v. Wray, 6 Taunt. 597 337 
 
 Boston Foundry Co. v. Whiteman, 31 R. I. 88 218, 263 
 
 Bostwick V. Champion, 11 Wend. (N. Y.) 571 36 
 
 Boswell Bros. v. Lynchburg Shoe Co., — Miss. — , 70 So. 689 . . 236 
 
 Bowen v. Argall, 24 Wend. 496 399 
 
 Bower v. Johnson, 28 La. Ann. 9 6 
 
 Bowman v. Bailey, 20 S. C. 553 110 
 
 Bowyer v. Anderson, 2 Leigh (29 Va.) 550 27 
 
 Brace v. Calder, 2 Q. B. 253 167 
 
 Bradbury w. Smith, 21 Me. 117 406 
 
 Bradley v. Brigham, 137 Mass. 545 364 
 
 V. Ely, 24 Ind. App. 2 31 
 
 V. Linn, 19 111. App. 322 197 
 
 Brady v. Calhoun, 1 P. & W. (Pa.) 140 20 
 
 Braithwaite v. Power, 1 N. D. 455 69 
 
 Branch v. Wiseman, 61 Ind. 1 271 
 
 Brandestein v. Hoke, 101 Cal. 131 46, 47 
 
 Brandon v. Conner, 117 Ga. 759 26, 51, 63 
 
XXX TABLE OF CASES 
 
 PAGES 
 
 Brandt v. Edwards, 91 Minn. 505 365, 368 
 
 Breaux v. Le Blanc, 50 La. Ann. 244 349 
 
 Breckinridge v. Shrieve, 4 Dan. 375 197 
 
 Breen v. Richardson, 6 Col. 605 242 
 
 Brennan v. Pardridge, 67 Mich. 449 88 
 
 Breslin v. Brown, 24 Ohio St. 565 9 
 
 Brew V. Hastings, 196 Pa. 222 346 
 
 Brewer v. Browne, 68 Ala. 210 110 
 
 Briar Hill Co. v. Atlas Works Co., 146 Pa. St. 290 402 
 
 Brice, In re, 93 Fed. 942 98 
 
 Brickett v. Downs, 163 Mass. 70 129 
 
 Briere v. Searles, 126 Wis. 347 36 
 
 Briggs, Ex parte, 3 Dea. & Ch. 367 7 
 
 V. Briggs, 15 N. f . 471 256 
 
 Brigham v. Dana, 29 Vt. 1 54 
 
 Brinsmead v. Harrison, L. R. 7 C. P. 547 263 
 
 Broadway Nat. Bank v. Wood, 165 Mass. 312 78, 289 
 
 Brooks V. Martin, 2 Wall. 70 358 
 
 Brotherton v. Gilchrist, 144 Mich. 274 67 
 
 Brower v. His Creditors, 11 La. Ann. 117 290 
 
 Brown v. Bostian, 6 Jones L. 1 161 
 
 V. ChanceUor, 61 Tex. 437 342 
 
 V. Clark, 14 Pa. 469 250 
 
 V. Hicks, 24 Fed. 811 55 
 
 V. Hutchinson, [1895] 2 Q. B. 126 344 
 
 V. Leonard, 2 Chitty, 120 75 
 
 V. Stoerkel, 74 Mich. 269 34 
 
 Brown, Janson, & Co. v. Hutchinson & Co., [1895] 2 Q. B. 126 277, 278 
 
 Browning v. Marvin, 22 Hun, 547 300 
 
 Bruett & Co. v. Austin, 174 Fed. 668 253 
 
 Brundage v. Mellon, 5 N. D. 72 218 
 
 Bruns v. Heise, 60 At. (Md.) 604 328 
 
 Brunson w. Morgan, 76 Ala. 593 . . . . 100 
 
 Buchanan v. Edwards (Tex. Civ. App.), 51 S. W. 33 55 
 
 V. Mech. L. & S. Inst., 84 Md. 430 171 
 
 Buck V. AUey, 145 N. Y. 488 391 
 
 V. Smith, 29 Mich. 166 14 
 
 Buekhause, 7ra re, 10 N. B. R. 206 311 
 
 Buckingham v. Fu-st Nat. Bank, 131 Fed. 192 406 
 
 Buckle V. Her, 81 N. Y. Supp. 631 399 
 
 Buckley v. Barber, 6 Exoh. 164 140 
 
 V. Bramhall, 24 How. Pr. 455 417 
 
 V. Doig, 188 N. Y. 238 112 
 
 V. Kelly, 70 Conn. 411 367 
 
 Bucklin v. Bucklin, 97 Mass. 256 292 
 
 Budgett, In re; Cooper v. Adams, [1894] 2 Ch. 557 293 
 
 Buettner v. Steinbrecher, 91 Iowa, 588 189, 190 
 
 Buffalo City Bank v. Howard, 35 N. Y. 500 169 
 
 Bulger V. Rosa, 119 N. Y. 459 123, 152, 153 
 
 Bullen V. Sharp, L. R. 1 C. P. 86 50, 56, 60, 62 
 
 Bullock V. Hubbard, 23 Cal. 495 153 
 
TABLE OF CASES XXXI 
 
 PAGES 
 
 Bumpus V. Thurston, 98 Me. 550 175 
 
 BurclieU v. WUde (^900), 1 Ch. 551 374, 377 
 
 Burgan v. Lyell, 2 Mich. 102 185, 202 
 
 Burgwyn v. Jones, 113 Va. 511 ■ . . . . 15 
 
 Biirnaby, Ex parte, Cooke's Bankruptcy Law, 244 115 
 
 Burnett v. Hunt, 5 Jur. 650 272 
 
 V. Snyder, 81 N. Y. 650 ' 68 
 
 Burney w. Savannah Grocery Co., 98 Ga. 711 11,342 
 
 Burr V. De La Vergne, 102 N. Y. 415 324 
 
 Burrows v. Leech, 116 Mich. 32 338 
 
 Burt V. Lathrop, 52 Mich. 106 34 
 
 Burwell v. Mandeville's Executor, 2 How. (U. S.) 560 65 
 
 Busby, In re, 124 Fed. 469 286 
 
 V. Rooks, 72 Ark. 657 175, 208 
 
 Bush V. Linthicum, 59 Md. 344 99 
 
 Bush & Hattaway v. W. A. McCarthy Co., 127 Ga. 308 ... . 74 
 
 Butchart v. Dresser, 4 DeG. M. & G. 542 232, 237, 242 
 
 Butler v. Prentiss, 158 N. Y. 49 321 
 
 Butts w. Cooper, 152. Ala. 375 16 
 
 Buxton V. Lister, 3 Atk. 383, 385 13 
 
 Bybee v. Hawkett, 12 Fed. 649 68 
 
 Byers v. Hickman Grain Co., 112 la. 451 169 
 
 Byrne, 7n re, 1 N. B. R. 464 291 
 
 V. Reid, [1902] 2 Ch. 735 14, 346 
 
 Byrne Hammer Dry Goods Co. v. WiUis Dunn Co., 23 S. D. 221 . 124 
 
 C 
 
 Cady V. Shepherd, 11 Pick. 400 249 
 
 Cain Lumber Co. v. Standard Dry Kihi Co., 108 Ala. 346 ... . 37 
 
 Caldicott V. Griffiths, 8 Exch. 898 34 
 
 CaldweR v. Davis, 10 Col. 481 321 
 
 V. Stileman, 1 Rawle 212 239 
 
 Calkins v. Smith, 48 N. Y. 614 335 
 
 Cameron v. Orleans & J. Ry., 108 La. 83 14 
 
 Cammack v. Johnson, 2 N. J. Eq. 163 266 
 
 Camp, In re, 91 Fed. 745 296 
 
 V. Grant, 21 Conn. 41 282 
 
 Campbell v. Bane, 119 Mich. 40 335 
 
 V. J. I. Campbell Co., 117 La. 402 48, 49 
 
 V. Colorado Coal & Iron Co., 9 Col. 60 86 
 
 V. Floyd, 153 Pa. St. 84 257 
 
 Canfleld v. Johnson, 144 Pa. 61 334 
 
 Cannon v. Brush Elec. Light Co., 96 Md. 446 80 
 
 Canton Bridge Co. v. City of Eaton Rapids, 107 Mich. 613 .. . 66 
 
 Capen v. Barrows, 1 Gray 376 330 
 
 Cape's Executor's Case, DeG. M. & G. 562 42 
 
 Carey v. CaldweU, 86 Mich. 570 61 
 
 Carland v. Hecker, 233 Fed. 504 88 
 
 Carlton u> Coffin, 27 Vt. 496 21 
 
 Carpenter, Ex parte, Mont. & McAr. 1 163 
 
XXXU TABLE OF CASES 
 
 PAGES 
 
 Carr v. Hertz, 54 N. J. Eq. 127 232, 234 
 
 Carter-Battle Grocer Co. v. Jackson, 45 S. W. 615 399 
 
 Carter v. McClure, 38 S. W. (Tenn.) 585 40, 341 
 
 V. Producers Oil Co., 200 Pa. St. 579 . . . ^ 40 
 
 V. WhaUey, 1 Barn. & Ad. 11 267 
 
 Case V. Beauregard, 99 U. S. 119 118 
 
 Cassidy v. Saline County Bank, 14 Okla. 532 182 
 
 CasteU, Ex parte, 2 Gl. & J. 124 314 
 
 Castle V. Bullard, 23 How. 173 217 
 
 Castle Bros. v. Graham, 180 N. Y. 553 88 
 
 Catskill Bank v. Gray, 14 Barb. 471 57 
 
 Causten v. Burke, 2 Har. & G. 295 330 
 
 Cavendar v. Bulteel, L. R. 9 Ch. 79 138 
 
 Cayton v. Hardy, 27 Mo. 536 179 
 
 Cfedarberg v. Guernsey, 12 S. D. 77 31 
 
 Central Trust Co. v. Respass, 112 Ky. 606 12, 358 
 
 Chalfant v. Grant, 3 Lea, 118 102 
 
 Chamberlain v. Madden, 7 Rich. L. 395 264 
 
 Chambers v. Clearwater, 1 Keyes, 310 187 
 
 Chandler v. Sherman, 16 Fla. 99 189 
 
 Chapin v. Brown, 101 Cal. 500 257 
 
 Charles v. Bshleman, 5 Colo. 107 199 
 
 Cherry v. Strong, 96 Ga. 183 31 
 
 Chester v. Dickerson, 54 N. Y. 1 218 
 
 V. Jumel, 125 N. Y. 237 361 
 
 Chicago & A. Ry. v. Mulford, 162 lU. 522 35 
 
 Chicago B. & Q. Ry. v. Hoyt, 1 111. App. 374 231 
 
 Chicago T. and S. Bank v. Kinnare, 174 111. 358 190 
 
 Chick V. Robinson, 95 Fed. 619 386, 397 
 
 Childers v. Neely, 47 W. Va. 70 329 
 
 Chippendale, Ex parte, German Mining Co., In re, 4 DeG. M. & G. 19 326 
 
 Chittenden «. Whitbeck, 50 Mich. 401 .' 371 
 
 Church V. Pickett, 19 N. Y. 482 46 
 
 Churton v. Douglas, H. R. V. Johns. 174 370, 371, 376, 380 
 
 Cincinnati Cooperage Co. v. Bate, 96 Ky. 356 46 
 
 Citizens' Bank v. Hine, 49 Conn. 236 45 
 
 Citizens' Nat. Bank v. Weston, 162 N. Y. 113 74 
 
 City Bank v. McChesney, 20 N. Y. 240 75 
 
 City Nat. Bank v. Stone, 131 Mich. 588 64 
 
 City of New Orleans v. Gauthereaux, 32 La. Ann. 1126 .... 81 
 
 Claflin (H. B.) & Co. v. Evans, 55 Ohio St. 31 132 
 
 Claggett V. Kilbourne, 1 Black 346 274 
 
 Clapp V. Lacey, 35 Conn. 463 383, 386, 415 
 
 V. Rogers, 12 N. Y. 283 75, 266 
 
 Clark V. Emery, 58 W. Va. 637 29 
 
 V. Johnson, 90 Pa. 442 184 
 
 w. Sidway, 142 U. S. 682 29 
 
 V. Truitt, 183 111. 239 13, 14 
 
 V. Warden, 10 Neb. 87 360, 364 
 
 Clarke v. Mills, 36 Kan. 393 332 
 
 V. Slate Valley Ry., 136 Pa. 408 229 
 
TABLE OF CASES XXXIU 
 
 PAGES 
 
 Clarkson, Ex parte, In re Fear, 4 D. & Ch. 56 116 
 
 Clausen v. Head, 110 Wis. 405 47 
 
 Clay, Robinson & Co. v. Douglas County, 88 Neb. 363 84 
 
 Clayton v. Davett, 38 At. 308 181, 329, 330, 368 
 
 Cleather v. Twisden, 28 Cb. Div. 340 225 
 
 Clement v. Britisb Am. Assurance Co., 141 Mass. 298 402 
 
 V. Clement, 69 Wis. 599 246 
 
 Clement Nat. Bank v. Connelly, 88 Vt. 55 200 
 
 Clements v. Norris, 8 Ch. D. 129 230, 232 
 
 Cleveland v. Anderson, 2 WiEson (Tex. Ct. of App.), 139, §§ 147, 148 58 
 
 V. Woodward, 15 Vt. 302 71 
 
 Cleveland Paper Co. v. Courier Company, 67 Mich. 152 .... 21 
 
 CUft V. Barrow, 108 N. Y. 187 54, 66, 383 
 
 Clifton V. Clark, 83 Miss. 446 169 
 
 V. Howard, 89 Mo. 192 66 
 
 Clinchfleld Fuel Co. v. Lundy & Son, 130 Tenn. 135 ... 164, 236 
 
 Clough, Be, 31 Ch. D. 324 109, 242 
 
 Cocke V. Bank, 3 Ala. 175 191, 197 
 
 Coe, In re, 183 Fed. 745 263 
 
 Coffin's Appeal, 106 Pa. St. 280 408 
 
 Cohen v. N. Y. Mutual Life Ins. Co., 50 N. Y. 611 34 
 
 Cohoon V. Fisher, 146 Ind. 583 12 
 
 Cole V. Mettee, 65 Ark. 503 100 
 
 V. Moxley, 12 W. Va. 730 344 
 
 V. Reynolds, 18 N. Y. 74 171, 337 
 
 Coleman v. Eyre, 45 N.-Y. 38 9 
 
 V. Pearee, 21 Minn. 123 204 
 
 Colgrove v. Tallman, 67 N. Y. 95 165 
 
 CoUender v. Phelan, 79 N. Y. 366 361 
 
 ColUns V. Barker, [1893] 1 Ch. 578 298 
 
 V. CoUins (Ky.), 83 S. W. 99 185 
 
 V. Warren, 29 Mo. 236 110 
 
 Collom V. Bruning, 49 La. Ann. 1257 54 
 
 CoUumb V. Read, 24 N. Y. 505 112 
 
 CoUyer v. Moulton, 9 R. I. 90 162 
 
 Columbia Digger Co. v. Rector, 215 Fed. 618 253 
 
 Columbia Nat. Bank of Lincoln v. Rice, 48 Neb. 428 181 
 
 Commonwealth v. Adams Exp. Co., 123 Ky. 720 43 
 
 V. James, 98 Ky. 30 170 
 
 Conary v. Sawyer, 92 Me. 463 96 
 
 Condit V. Galveston City Co., — Tex. Civ. App. — 186 S. W. 395 . 40 
 
 Condon v. CaUahan, 115 Tenn. 285 325 
 
 Congdon v. Olds, 18 Mont. 487 199 
 
 Conrad v. Buck, 21 W. Va. 396 244 
 
 Conrader, In re, 118 Fed. 676 294 
 
 V. Cohen, 121 Fed. 801 294 
 
 Consaul v. Cummings, 222 U. S. 262 325 
 
 Const. V. Harris, Turn. & R. 496 231 
 
 Continental Nat. Bank v. Strauss, 137 N. Y. 148 . . 387, 412, 413, 417 
 
 Conway's Adm'rs v. Stealy, 44 W. Va. 163 123 
 
 Cook, Ex parte, 2 P. W. 500 283 
 
XXxiv TABLE OF CASE^ 
 
 PAGES 
 
 Cook, Ex parte, Mon. 228 310 
 
 V. Canny, 96 Mich. 398 334 
 
 V. Gray, 133 Mass. 106 161 
 
 V. Penrhyn Stone Co., 36 OMo St. 135 69 
 
 Coolidge V. Burke, 69 Ark. 237 108 
 
 Coons V. Reniok, 11 Tex. 134 185 
 
 Coope V. Eyre, 1 H. Bl. 37 7 
 
 Copland, Ex parte, 1 Cox Eq. 420 282 
 
 Corbett, In re, 5 Sawyer, 206 296 
 
 Corbett, Ex parte, Shand, In re, 14 Ch. D. 122 82 
 
 Corey v. Perry, 67 Me. 140 302, 303 
 
 Cornells v. Stanhope, 14 R. I. 97 175 
 
 Costa V. Costa, 222 Mass. 280 376 
 
 Costello V. CosteUo, 209 N. Y. 252 133 
 
 Cothran v. Marmaduke, 60 Tex. 370 20, 51, 55, 63 
 
 CottreU V. Mfg. Co., 54 Conn. 122 379, 380 
 
 Couohman v. Maupin, 78 Ky. 33 153 
 
 Council V. Teal, 122 Ga. 61 70, 269 
 
 Cowan & Co. v. Roberts & Co., 134 N. C. 415 74 
 
 Cox V. Delano, 3 Dev. L. 89 55, 57 
 
 V. Hickman, 8 H. L. Cas. 268 44, 67, 59, 60 
 
 Cragg V. Ford, 1 Y. & C. C. C. 280 329 
 
 Craig V. Alverson, 6 J. J. Marsh (29 Ky.) 609 160 
 
 V. Hulschiger, 37 N. J. L. 363 175 
 
 Crane v. French, 1 Wend. (N. Y.) 311 ... 187 
 
 Crane Company v. Tierney, 175 lU. 79 182 
 
 Crawfordw. Burke, 195 U. S. 176 303 
 
 Crawshay v. CoUins, 15 Ves. 227 370 
 
 V. Maule, 1 Swanston, 495 239 
 
 Crescent Ins. Co. v. Bear, 23 Fla. 50 358 
 
 Cresse v. Loper, 72 N. J. Eq. 784 145 
 
 Cribb V. Morse, 77 Wis. 322 123 
 
 Crockett v. Burleson, 60 W. Va. 252 337 
 
 Crosby v. Timolat, 50 Minn. 171 337 
 
 Crosthwait v. Ross, 1 Humph. 23 188, 196 
 
 Crouch V. First Nat. Bank, 156 lU. 342 387, 409 
 
 Crowder, Ex parte, 2 Vern. 706 281 
 
 Crowninshield f. Stroebel, 2 Brev.(S. C.) 80 252 
 
 CrutweU v. Lye, 17 Ves. 335 370 
 
 Cudahy Packing Co. v. Hibon, 92 Miss. 234 64 
 
 CuUey V. Edwards, 44 Ark. 423 64 
 
 Cundey v. Hall, 208 Pa. 335 16, 102 
 
 Cunningham Co. Limited, In re, Simpson's Claim, 36 Ch. D. 532 . 184 
 
 Cunningham v. Littlefield, 1 Ed. Ch. 104 188 
 
 V. Woodbridge, 76 Ga. 302 227 
 
 Curtis V. HoUingshead, 2 Green, 402 155 
 
 Cushman v. Bailey, 1 Hill (N. Y.), 526 66 
 
 D 
 
 Dailey v. Fitzgerald, 17 N. Max. 137 199 
 
 Dale V. Hamilton, 5 Ha. 369 15 
 
TABLE OF CASES XXXV 
 
 PAGES 
 
 Danbury Cornet Band v. Bean, 54 N. H. 524 34 
 
 Daniel, In re, Powell, Ex parte, 3 Manson's Bankruptcy R. 312 149,' 292 
 
 V. CroweU, 125 N. C. 519 138 
 
 V. Owens, 70 Ala. 297 273 
 
 Darby v. Darby, 3 Drewry, 495 29, 104 
 
 V. GiUigan, 33 W. Va. 246 123 
 
 Darnell v. State Bank, — Okla. — , 158 Pae. 921 272 
 
 Darrow v. Calkins, 154 N. Y. 503 107, 110, 112 
 
 Darwent v. Walton, 2 Atk. 510 261 
 
 Daugherty v. Heokard, 189 111. 239 202 
 
 Davies v. Hodgson, 25 Beav. 177 376 
 
 Davis, Estate of, 5 Wliart. 530 252 
 
 Davis V. Bessemer City Cotton MiUs, 178 Fed. 784 319 
 
 V. Davis, [1894] 1 Ch. 393 17, 29 
 
 ■c. Davis, 60 Miss. 615 101 
 
 V. Dodson, 95 Ga. 718 183 
 
 V. HoweU, 33 N. J. Bq. 72 284 
 
 V. Key, 123 U. S. 79 37 
 
 V. MerriU, 51 Mich. 480 339 
 
 V. Poland, 92 Va. 225 247 
 
 V. Smith, 82 Ala. 198 Ill 
 
 V. Stevens, 104 Fed. 235 304 
 
 Davison, Zn re, 13 Q. B. D. 50 263 
 
 Dawson, Blackmore & Co. v. Blrod, 105 Ky. 624 233 
 
 Dawson v. Gurley, 22 Ark. 381 24 
 
 V. Parsons, 31 N. Y. Supp. 78 110 
 
 Day V. Stevens, 88 N. C. 83 31 
 
 Dayly v. Sumpter Drug Co., 127 Tenn. 412 13 
 
 Dayton v. Bartlett, 38 Ohio St. 357 143 
 
 V. Wilkes, 17 How. Pr. 510 375 
 
 Dean v. MacDowell, 8 Ch. D. 345 324, 325 
 
 Dean & Co. v. Collins, 15 N. D. 535 164 
 
 Dear, Ex parte, 1 Ch. D. 514 149, 293 
 
 Deardorf v. Thacher, 78 Mo. 128 197 
 
 Deckard y. Case, 5 Watts, 22 130 
 
 Decker v. HoweU, 42 Cal. 686 199 
 
 Deckert v. Chesapeake Western Co., 101 Va. 804 385, 393 
 
 Deering v. Flanders, 49 N. H. 225 74 
 
 De Haven's Estate, in Re, 248 Pa. 271 56 
 
 Deitz V. Regnier, 27 Kan. 94 189 
 
 Delany v. Root, 99 Mass. 546 31 
 
 DeU, In re, 5 Sawyer, 344 314 
 
 Delmonico v. GuiUaume, 2 Sand. Ch. 366 101, 109 
 
 Denholm v. McKay, 148 Mass. 434 145 
 
 Denning, In re, 114 Fed. 219 299, 308, 311 
 
 Dennis «. Kass & Co., 13 Wash. 137 113 
 
 Denton v. Rodie, 3 Camp. 493 159 
 
 Derry v. Peak, 14 App. Cas. 337 218 
 
 Deutschman v. Dwyer, 223 Mass. 261 322 
 
 DevaU v. Burbridge, 6 W. & S. (Pa.) 529 368 
 
 Devin v. Harris, 3 G. Greene (Iowa) 186 181 
 
XXXVl TABLE OF CASES 
 
 PAGES 
 
 Dewey v. Chapin, 156 Mass. 35 144 
 
 Dickinson v. Valpy, 10 B. & C. 128 69 
 
 Dickson v. Alexander, 7 Ire. Law (29 N. C.) 4 184 
 
 Didlake v. Roden Grocery Co., 160 Ala. 484 371, 374 
 
 DiUey v. Albright, 19 Tex. Civ. App. 487 51 
 
 DiUman v. Schultz, 5 S. & R. 35 262 
 
 Dillon, /n re, 100 Fed. 627 311 
 
 V. McRae, 40 Ga. 107 189 
 
 Dinwiddie v. Glass, 111 Miss. 749, 71 So. 745 260 
 
 Ditsche v. Becker, 6 Phil. 176 56 
 
 Dixon Livery Co. v. Bond, 117 Va. 656 266 
 
 Doddington v. HaUett, 1 Ves. Sr. 497 27, 366 
 
 Doe V. Horn, 5 M. & W. 564 335 
 
 Doggett V. Dill, 108 lU. 560 317 
 
 Donaldson v. Williams, 1 Cr. & M. 345 232 
 
 Doner v. Stauffer, 1 P. & W. 198 134, 136 
 
 DonneU v. Harshe, 69 Mo. 170 31 
 
 Doremus v. McCormiok, 7 Gill, 49 188, 203 
 
 Dorwartv.BaU, 98N.W. (Neb.)652 332 
 
 Dounce v. Parsons, 45 N. Y. 180 223 
 
 Dow V. Moore, 47 N. H. 419 195 
 
 V. State Bank, 85 Minn. 355 37 
 
 Dowling V. Exchange Bank, 145 U. S. 512 196, 198 
 
 Dreyfus i;. Union Nat. Bank, 164111.83 91 
 
 Drilling v. Armstrong, 94 Ark. 505 26 
 
 Drucher v. WeUhouse, 82 Ga. 129 84 
 
 Dry V. BosweU, 1 Camp. 329 55 
 
 Duffy V. Gray, 52 Mo. 528 174 
 
 Duguid, In re, 100 Fed. 274 98, 299 
 
 Duncan v. Lyon, 3 Johns. Cb. 351 331 
 
 Dunham v. Jarvis, 2 Edm. (N. Y.) 145 27 
 
 V. Loverock, 158 Pa. 197 27 
 
 V. Rogers, 1 Barr. (Pa.) 255 57 
 
 V. Schindler, 17 Ore. 256 251 
 
 Dunnica v. Qinkseales, 73 Mo. 600 152 
 
 Dunnigan, In re, 95 Fed. 428 98 
 
 Duiming's Appeal, 44 Pa. St. 150 415 
 
 Dunton v. Brown, 31 Mich. 182 95 
 
 Dupuy V. Leavenworth, 17 Cal. 262 101 
 
 Duquesne Distributing Co. v. Greenbaum, 135 Ky. 182 .... 219 
 
 Durant v. Abendroth, 69 N. Y. 148 390, 396, 397 
 
 V. Abendroth, 97 N. Y. 132 402, 414 
 
 V. Pierson, 124 N. Y. 444 151 
 
 V. Rogers, 87 111. 508 162 
 
 Durgin v. Colburn, 176 Mass. 110 404 
 
 Duryea v. Burt, 28 Cal. 569 17 
 
 V. Whitcomb, 31 Vt. 393 19 
 
 Dutcher v. Buck, 96 Mich. 160 33, 57 
 
 Button V. Morrison, 17 Ves. 193 272, 282, 300 
 
 Dwight V. Hamilton, 113 Mass. 175 374 
 
 Dwinel v. Stone, 30 Me. 384 19, 24 
 
TABLE OP CASES XX3CV11 
 
 PAGE8 
 
 Dwyer Pine Land Co. v. Whiteman, 92 Minn. 55 100 
 
 Dyer v. Clark, 5 Met. 662 110 
 
 E 
 
 Bady v. Newton C. & L. Co., 123 Ga. 557 • . . 175 
 
 Earle v. Art Library Pub. Co., 96 Fed. 544 119 
 
 Early v. Burt, 68 Iowa, 716 269 
 
 Easton v. George Worstenholm & Son, 137 Fed. 624 .... 14, 74 
 
 Eaton V. Walker, 76 Mich. 679 46, 47 
 
 Eckhardt v. Wilson, 8 D. & E. 140 300 
 
 Edwards v. Buchanan (Tex. Civ. App.), 36 S. W. 1022 .... 55 
 
 V. DiEon, 147 lU. 14 180 
 
 V. Warren, 168 Mass. 564 42, 386 
 
 Egan V. Wirth, 26 R. I. 363 143 
 
 Effinger, In re, 184 Fed. 728 308 
 
 Eighth Nat. Bank w. Fitch, 49 N. Y. 639 . . . 270,273,277,278 
 
 Elgin Nat. Watch Co. v. Loveland, 132 Fed. 41 47 
 
 Eliot V. Nimrod, 108 Pa. St. 569 42, 385 
 
 ElMnton v. Booth, 143 Mass. 479 268 
 
 Ellis V. AUen, 80 Ala. 615 126 
 
 Elmira Iron Co. v. Harris, 124 N. Y. 280 268 
 
 Elton, Ex parte, 3 Ves. Jr. 238 282 
 
 Elverson v. Leeds, 97 Ind. 336 76 
 
 Ely Walker Dry Goods Co. u. Blake, — Okla. — , 168 Pae. 381 . 317 
 
 Emanuel v. Draughn, 14 Ala. 303 63 
 
 Emerson v. Senter, 118 U. S. 2 141, 144 
 
 Emery v. Kalamazoo & H. C. Co., 132 Mich. 560 417 
 
 V. The Canal Nat. Bank, 3 Cliff. 507 306 
 
 Emly V. Lye, 15 East, 7 169 
 
 Empire Mills v. Alston Grocery Co., 4 WiUson Tex. App. 346 . . 47 
 
 Enck V. Gerding, 67 Ohio St. 245 138 
 
 England v. Curling, 8 Beav. 129 14 
 
 Englar v. Offutt, 70 Md. 78 226 
 
 Enghs V. Furniss, 2 Abb. Pr. 333 338 
 
 Enix V. Hayes, 48 Iowa, 86 70 
 
 Erskine v. Russell, 43 Colo. 453 319 
 
 Estabrook v. Woods, 192 Mass. 499 56 
 
 Estate of Davis & Dusque, 6 Whart. 530 250 
 
 Estes V. Whipple, 12 Vt. 373 330 
 
 Evans & Howard Co. v. Hadfield, 93 Wis. 666 76 
 
 Evans v. Virgin, 69 Wis. 163 254, 256 
 
 w.Watts, 192Pa. 112 187 
 
 Everett v. Williams, 1 European Mag. 360 366 
 
 Everitt w. Chapman, 6 Conn. 347 20 
 
 Exchange Bank of Leon v. Gardner, 104 Iowa, 176 368 
 
 Eyre, Ex parte, 1 PhiUips, 227 222 
 
 F 
 
 Tairfield v. Lowry, 207 Mass. 352 381 
 
 Faith V. Richmond, 11 A. & E. 339 91 
 
XXXVUl TABLE OF CASES 
 
 PAGES 
 
 Faneuil Hall Nat. Bank v. Meloon, 183 Mass. 66 87 
 
 Fanshawe v. Lane, 16 Abb. Pr. 71 417 
 
 Faris v. Cook, 110 Ky. 867 160 
 
 Farley, In re, 115 Fed. 359 297 
 
 V. Lovell, 103 Mass. 387 .... ' 175 
 
 V. Moog, 79 Ala. 148 274 
 
 Farmers' Bank v. Ridge Ave. Bank, 240 U. S. 498 294 
 
 Farnsworth v. Boardman, 131 Mass. 115 411 
 
 Famum, In Re, 6 Bos. L. R. 21 306 
 
 V. Patch, 60 N. H. 294 21 
 
 Farr v. Pearce, 3 Madd. 74 369 
 
 Farrand v. Gleason, 56 Vt. 633 30, 87 
 
 Farrar v. Deflinne, 1 Car. & K. 580 267 
 
 FarreU v. Friedlander, 63 Hun, 254 214 
 
 Farris v. Morrison, 66 Ark. 318 128 
 
 Fay V. Davidson, 13 Minn. 523 35 
 
 V. Noble, 7 Cust. 188 48 
 
 Fayette Nat. Bank v. Kenney, 79 Ky. 133 283 
 
 Featherstonaugh v. Fenwiok, 17 Ves. 298 322 
 
 Fechteler v. Palm Bros. Co., 133 Fed. 462 10, 64 
 
 Federal Biscuit Co. In Re, 203 Fed. 37 301 
 
 Feiglev v. Whitaker, 22 Ohio St. 606 244 
 
 FeUows V. Wyman, 33 N. H. 351 244 
 
 Fenn v. BoUes, 7 Abb. Pr. 202 375 
 
 Fereday v. Hordern, 1 Jac. 144 54 
 
 Ferero v. Buhlmeyer, 34 How. Pr. 33 344 
 
 Fern v. Cushing, 4 Gush. 357 300 
 
 Fernald v. Clark, 84 Me. 234 165 
 
 Ferris v. Van Ingen, 110 Ga. 347 65 
 
 FeweU v. Am. Surety Co., 80 Miss. 782 275 
 
 Fidelity Banking & T. Co. v. Kangora Valley Tea Co., 95 Ga. 172 . 127 
 
 Fifth Ave. Nat. Bank v. Colgate, 120 N. Y. 381 404 
 
 Finckle t). Stacy, Maonaghten's Sel. Cas. in Chan. 9 24 
 
 First Nat. Bank of Canandaigua v. Whitney, 4 Lans. (N. Y.) 34 . 411 
 
 First Nat. Bank of Champlain v. Wood, 128 N. Y. 35 315 
 
 First Nat. Bank v. Cheney, 112 Ala. 536 163 
 
 First Nat. Bank v. Cody, 93 Ga. 127 38 
 
 First Nat. Bank of DanviUe v. Crevelling, 177 Pa. St. 267 ... 396 
 
 Fu-st Nat. Bank v. State Nat. Bank, 131 Fed. 422 . " 202 
 
 First Nat. Bank v. Wood, 128 N. Y. 32 338 
 
 Fish V. First Nat. Bank, 150 Fed. 524 259 
 
 V. Thompson, 68 Vt. 273 7 
 
 Fish Bros. Co. v. La BeUe Co., 82 Wis. 546 375, 379 
 
 Fisher v. Pender, 7 Jones L. 483 160 
 
 V. Sweet, 67 Cal. 228 31 
 
 V. Taylor, 2 Hare, 218 189 
 
 Fitch V. Harrington, 13 Gray (79 Mass.) 468 68 
 
 Fite V. Dorman, 57 S. W. (Tenn.) 129 376, 379 
 
 Fitzgerald v. Christl, 20 N. J. Eq. 90 115 
 
 Fleming v. Ross, 225 111. 149 3l5 
 
 Flemyng v. Hector, 2 M. & W. 172 34 
 
TABLE OF CASES XXxix 
 
 PAGES 
 
 Fletcher v. Pullen, 70 Md. 205 69, 73 
 
 V. Reed, 131 Mass. 312 . . . 344 
 
 Flour City Nat. Bank v. Widener, 163 N. Y. 276 . . . '. '. '. '. 201 
 Flower v. Commercial Trust, 223 Fed. 318 286 
 
 V. MiUandon, 6 La. 691 ', 54 
 
 Fogg V. Johnston, 27 Ala. 432 . . . 11 
 
 V. Lawry, 68 Me. 78 271 
 
 V. Tyler, 111 Me. 546 '. 355 
 
 Foley V. Foley, 15 App. Div. 276 361 
 
 Folk V. Schaeffer, 180 Pa. St. 613 94 
 
 Folks V. Burletson, 177 Mich. 6 73 
 
 Folsom V. Marlette (Nev.), 49 Pac. 39 360, 368 
 
 Foot, /n re, 12 N. B. R. 337 312 
 
 Forbes v. Garfield, 32 Hun (N. Y.) 389 246 
 
 Forbes, In re, 128 Fed. 137 156, 296, 355 
 
 V. Whittemore, 62 Ark. 229 47 
 
 Ford V. McBryde, 45 Tex. 498 189 
 
 Forsaith v. Merritt, 1 Lowell, 336 299 
 
 Forster v. Lawson, 3 Bing. 462 173 
 
 Forsyth v. Woods, 11 Wall. 484 85 
 
 Fosdiok V. Van Horn, 40 Ohio St. 459 93 
 
 Foss V. Roby, 195 Mass. 292 380 
 
 Fougner v. First Nat. Bank, 141 lU. 124 23 
 
 Fouke V. Brengle (Tex. Civ. App.), 51 S. W. 619 51 
 
 Fourth Street Nat. Bank v. Whitaker, 170 Pa. St. 297 404 
 
 Fox V. Hanbury, Cowp. 445 125 
 
 Francis, In re, 2 Sawy. 286 ' 23 
 
 Francis v. McNeal, 228 U. S. 696 83, 157, 304 
 
 Frank v. Anderson, 13 Lea, 696 339 
 
 Franldin v. Hoadley, 126 App. D. 687 202 
 
 Franklin Sugar Refining Co. t,. Henderson, 86 Md. 452 123 
 
 Frankfort Construction Co. v. Meneely, (Ind. App.), 112 N. E. 
 
 244 321 
 
 Fraser, In re (1892), 2 Q. B. 633 76, 377 
 
 Freeman v. Bloomfield, 43 Mo. 391 7 
 
 V. Huttig Sash & Door Co., 106 Tex. 560 21 
 
 Freeman's Bank v. Savery, 127 Mass. 75 201 
 
 French v. Chase, 6 Me. 166 267 
 
 V. Styring, 2 C. B. n. s. 356 28, 32 
 
 French v. Vanatta, 83 Ark. 306 / 107, 109 
 
 Freund v. Murray, 39 Mont. 539 333, 343 
 
 Friend v. Young, [1897] 2 Ch. 421 167 
 
 Frost V. Wolf, 77 Tex. 455 101 
 
 Frye & Bruhn v. Philhps, 46 Wash. 190 258 
 
 Frye v. Sanders, 21 Kan. 26 338 
 
 Fryer v. Harken, 142 la. 708 358 
 
 Fuller V. Percival, 126 Mass. 381 174, 335 
 
 V. Rowe, 57 N. Y. 23 45 
 
 Fulton V. Thompson, 18 Tex. 278 169, 238 
 
 Funk V. Young, 241 Pa. 72 204 
 
 Furnival v. Weston, 7 Moore, 366 208 
 
xl TABLE OP CASES 
 
 G 
 
 PAGES 
 
 Gabriel v. EviU, 9 M. & W. 297 , 36 
 
 Gaddie v. Mann, 147 Fed. 960 348 
 
 Gaines v. Fourth Nat. Bank (Tenn.), 52 S. W. 467 274 
 
 Galbraith v. Tracy, 153 lU. 64 143, 145 
 
 . Galbreath v. Moore, 2 Watts (Pa.) 86 334 
 
 Gamble v. Rural Ind. School Dist., 132 Fed. 514 139, 141 
 
 Garbett v. Veale, 5 Q. B. 408 272 
 
 Garland, Ex parte, 10 Ves. 109 9 
 
 Garnett v. Richardson, 35 Ark. 144 47 
 
 Garrett v. Belmont Land Co., 94 Tenn. 459 206 
 
 Garrett WiUiams Co. v. Watkins, 84 Vt. 299 170 
 
 Garth v. Davis, 120 Ky. 106 15 
 
 Gaston v. Drake, 14 Nev. 175 13 
 
 Gates V. Beeoher, 60 N. Y. 518 236, 249 
 
 V. Watson, 54 Mo. 585 319 
 
 Gathright v. Burke, 101 Ind. 590 73 
 
 Gavin v. Walker, 14 Lea (82 Tenn.), 643 203 
 
 Gay V. Johnson, 32 N. H. 167 96 
 
 V. Ray, 195 Mass. 8 154 
 
 ,«. Siebold, 97 N. Y. 472 88 
 
 'v. Waltman, 89 Pa. St. 453 186 
 
 Gerard v. Basse, 1 Dallas, 119 204 
 
 V. Bates, 124 111. 150 277 
 
 German Bank v. Schloth, 59 Iowa, 316 186 
 
 German Min. Co., In re, 4 DeG. M. & G. 19 361 
 
 GetcheU v. Foster, 106 Mass. 42 87 
 
 Gibblett v. Read, 9 Mod. 459 370 
 
 Gibbs' Estate, Hallstead's Appeal, 157 Pa. 59 47 
 
 Gibbs V. Humphrey, 91 Wis. Ill 308, 310 
 
 Gibson v. Ohio Co., 2 Disney (Ohio) 499 337 
 
 Gilbert, In re, 94 Wis. 108 171 
 
 GiU V. Kuhn, 6 S. & R. (Pa.) 333 80 
 
 Gillet V. Van Rensselaer, 15 N. Y. 397 361 
 
 Gillilan v. The Sun M. I. Co., 41 N. Y. 376 232 
 
 Gilmore v. Ham, 142 N. Y. 1 245, 250 
 
 Gilpin V. Enderbey, 5 B. & Aid. 954 54 
 
 Gih-uth V. DeceU, 72 Miss. 232 226, 227 
 
 Givens v. Berry (Ky.), 52 S. W. 942 325 
 
 Glade v. White, 42 Neb. 336 337 
 
 Glassington v. Thwaites, 1 Sim. & St. 124 323 
 
 Goddard v. Hodges, 1 Cr. & M. 33 64 
 
 Goell V. Morse, 126 Mass. 480 28 
 
 Goldstein v. Nathan, 158 111. 641 16 
 
 Goldthwaite v. Janney, 102 Ala. 431 • . . . 102, 109 
 
 Good V. Red River VaUey Co., 12 N. M. 245 87 
 
 Goodin v. Pitt, 36 Nev. 156 56 
 
 Goodspeed v. Wiard Plow Co., 45 Mich. 322 239 
 
 Goodwin v. Parton, 41 L. T. Rep. 91 246 
 
 Gordon v. Albert, 168 Mass. 150 186 
 
 V. Brit. & For. Co. Session Cases, 4th Series, 75 214 
 
TABLE OP CASES xli 
 
 PAGES 
 
 Gordon v. Funkhauser, 100 Va. 675 204 
 
 Gosling V. GaskeU, (1897) A. C. 575 50 
 
 Gottschalk v. Smitli, 156 lU. 377 28 
 
 Gould V. Kendall, 15 Neb. 549 356 
 
 Grace v. Smitli, 2 W. Bl. 998 51, 52 
 
 Grady v. Robinson, 28 Ala. 289 40 
 
 Graham v. Meyer, 4 Blatcb. 129 212, 213 
 
 Gram v. CadweU, 5 Cow. 489 209 
 
 Grant v. Bannister, 160 Cal. 774 101 
 
 Gray, Matter of. Ill N. Y. 404 319 
 
 V. Blasingame, 110 Ga. 343 57 
 
 V. ChisweU, 9 Ves. 118 282, 316 
 
 V. Gibson, 6 Micb. 300 37 
 
 V. Green, 142 N. Y. 316 241 
 
 V. Hamil, 82 Ga. 375 325 
 
 Grazebrook, Ex parte, 2 Dea. & Cb. 186 314 
 
 Great Soutbern Hotel Co. v. Jones, 177 U. S. 449 . . 43, 84, 385 
 
 Green, hi re, 116 Fed. 118 294 
 
 V. Beals, 2 Caines (N. Y.) 254 187 
 
 V. Beesley, 2 Bing. N. C. 108 19 
 
 V. Howell, (1910) 1 Ch. 495 332 
 
 V. Morris, (1914) 1 Cb. 562 381 
 
 V. People's Warehouse, 85 S. C. 40 184 
 
 V. Waco State Bank, 78 Tex. 2 344 
 
 Green, Huffaker, & Co. v. Taylor & Son, 98 Ky. 330 ... 78, 113 
 
 Greene v. Butterworth, 45 N. J. Bq. 738 317 
 
 Greenwood's Case, 3 DeG. M. & G. 459 38 
 
 Gresham v. Harcourt, 93 Tex. 149 141, 143 
 
 Grier v. Hood, 25 Pa. 430 187 
 
 Griffith V. Buffum, 22 Vt. 181 25, 264 
 
 V. Kirley, 189 Mass. 522 380 
 
 Griffiths V. Griffiths, 2 Hare, 587 169 
 
 Griswold v. Haven, 25 N. Y. 595 204 
 
 V. Waddington, 15 Johns. 57 10, 340 
 
 V. Waddington, 16 Johns. 438 239, 340 
 
 Groth V. Kersting, 23 Col. 213 355, 368 
 
 Grotte V. Weil, 62 Neb. 478 164 
 
 Groves w. Wilson, 168 Mass. 370 391 
 
 Grubbe v. Pierce, 156 Wis. 29 162 
 
 Guarantee Trust & Safe Dep. Co. v. Investment Co., 107 La. 251 210 
 
 Guckert v. Hacke, 159 Pa. 303 48 
 
 Guerinck v. Alcott, 66 Ohio St. 104 10 
 
 Gueringer v. His creditors, 33 La. Ann. 1279 283 
 
 Guidon v. Robson, 2 Camp. 302 70 
 
 GuiUou V. Peterson, 89 Pa. St. 163 224 
 
 Gulf City Shinghng Co. v. Boyles, 129 Ala. 192 64, 67 
 
 Gunn V. Raib-oad, 74 Ga. 509 10 
 
 Gunnison v. Langley, 3 Allen (85 Mass.) 337 20 
 
 Gusdorf V. Scbleisner, 85 Md. 360 346 
 
 Guthiel V. Gilmer, 27 Utah, 496 201 
 
 Gutman, In re, 114 Fed. 1009 301 
 
Xlii TABLE OF CASES 
 
 PAGES' 
 
 Guy V. Donald, 203 U. S. 399 34 
 
 Gwynn v. DufBeld, 66 Iowa, 708 209 
 
 Gyger's Appeal, 62 Pa. 73 368 
 
 H 
 
 Haberslion v. Blurton, 1 DeG. & S. 121 278 
 
 Hacker v. Johnson, 66 Me. 21 270 
 
 Haokett v. Stanley, 115 N. Y. 625 59 
 
 Hackley v. Patrick, 3 Johns. 536 245 
 
 Haeberley's Appeal, Welles' Account, 191 Pa. 239 108 
 
 Hagan v. Fowler, 6 La. 311 28 
 
 Haggerty v. Foster, 103 Mass. 17 397 
 
 V. Taylor, 10 Paige, 261 416 
 
 Haggett V. Hurley, 91 Me. 542 11 
 
 Hahn v. St. Clau- Savings Co., 50 lU. 456 202 
 
 Haig V. Gray, 3 DeG. & S. 741 140 
 
 Haines & Co.'s Estate ; Grove's Appeal, 176 Pa. St. 354 ... . 309 
 
 Hale V. Henrie, 2 Watts, 143 16 
 
 V. Wilson, 112 Mass. 444 337 
 
 HaU V. Glessner, 100 Mo. 155 410 
 
 V. Jones, 56 Ala. 493 163 
 
 V. Lanning, 91 U. S. 160 187, 262 
 
 Hall Mnfg. Co. v. Western S. & I. Works, 227 Fed. 588 .... 380 
 
 HaUeok v. Streeter, 73 N. W. (Neb.) 219 334 
 
 HaUiday v. McDougall, 20 Wend. (N. Y.) 81 69 
 
 Hallowell v. Blaekstone Nat. Bank, 154 Mass. 359 83, 157 
 
 Halsey v. Norton, 45 Miss. 703 300 
 
 Hamer v. Giles, 11 Ch. D. 942 368 
 
 Hamilton, In re, 1 Fed. 800 171 
 
 Hamilton v. Buxton, 6 Ark. 24 319 
 
 Hamlyn v. John Houston & Co., (1903) 1 K. B. 81 216 
 
 Hammond, Ex parte, L. R. 19 Eq. 614 302 
 
 V. Douglas, 5 Ves. 539 370 
 
 V. Jethro, 2 Brownlow, 99 n 25, 139 
 
 Hamper, Ex parte, 17 Ves. 403 55, 351 
 
 Hamsmith v. Espy, 13 Iowa, 439 251, 252 
 
 Haney Mfg. Co. v. Perkins, 78 Mich. 1 219 
 
 Hanna v. McLaughlin, 158 Ind. 292 352 
 
 Hannaman «. Karrick, 9 Utah, 236 344 
 
 Hansley & Adams, In re, 228 Fed. 564 156, 299 
 
 Hanson v. Paige, 3 Gray, 239 288 
 
 Hanthorn v. Quinn, 42 Ore. 1 37 
 
 Harbeck v. Pupin, 123 N. Y. 115 264 
 
 A. Hardie & Co., In re, 143 Fed. 553 200 
 
 Harding, Ex parte, 12 Ch. D. 557 171 
 
 Hare v. Celey, Cro. Eliz. 143 31 
 
 Hargreayes, E,x parte, 1 Cox, 440 309 
 
 Harlan & Co. v. Bennett, ,127 Ky. 572 366 
 
 Harlow v. La Brum, 151 N. Y. 278 12, 321 
 
 Harrah J). Dyer, 180. Ind. 229 141,325,368 
 
TABLE OF CASES xliii 
 
 PAGES 
 
 Harrill v. Davis, 168 Fed. 187 47, 48 
 
 Harris, Ex parte, 1 Rose, 437 309 
 
 Harris, In re, 108 Fed. 517 299 
 
 V. Bryson, 34 Tex. Civ. App. 532 101 
 
 V. De Raismes, 38 At. 637 29 
 
 V. FarweU,-13 Beav. 403 154, 257, 259 
 
 V. Sessler (Tex.), 3 S. W. 316 72 
 
 Haxrison v. Jackson, 7 D. & E. 207 204, 205 
 
 V. Walker, — Ark. — , 188 S. W. 17 '28 
 
 Harshbarger v. Eby, 28 Idaho, 753 379 
 
 Hart V. Withers, 1 P. & W. 285 160 
 
 V. Woodi-uff, 24 Hun, 510 245 
 
 Hartley v. White, 94 Pa. St. 31 128 
 
 Hartnett v. StiUweU, 121 Ga. 386 102 
 
 Harvey v. McAd'ams, 32 Mioh. 472 215 
 
 V. Childs, 28 Ohio St. 319 60 
 
 HasMns v. Curran, 43 Pae. (Idaho) 559 334 
 
 V. D'Este, 133 Mass. 356 90 
 
 V. Everett, 4 Sneed, 531 273 
 
 V. Throne, 101 Ga. 126 190 
 
 Hastings v. HopMnson, 28 Vt. 108 235 
 
 Hastings Nat. Bank v. Hibbard, 48 Mich. 452 93 
 
 Haswell v. Standring, 152 Iowa, 291 67 
 
 Hatch V. Wood, 43 N. H. 633 70 
 
 Hathaway v. Johnson, 55 N. Y. 93 221 
 
 Haug V. Haug, 193 lU. 645 17 
 
 Hauptman v. Hauptman, 91 App. Div. 197 110 
 
 Haven v. Wakefield, 39 111. 509 338 
 
 Havitey v. White, 94 Pa. 31 128 
 
 Hawes v. Tillinghast, 1 Gray (67 Mass.) 289 28 
 
 Hawkins v. Melnt3n:e, 45 Vt. 496 24 
 
 Hawkshaw v. Parkins, 2 Swanston, 539, 544 207 
 
 Hawtayne v. Bourne, 7 M. & W. 595 184, 188 
 
 Hayes v. Heyer, 35 N.Y. 326 415 
 
 Hayman, Ex parte, 8 Ch. Div. 11 79, 288 
 
 Hazard v. Hazard, 1 Story, 371 56 
 
 Head, In re, 114 Fed. 489 119, 291 
 
 Head, In re, [1893] 3 Ch. 426 257 
 
 Head, In re, [1894] 2 Ch. 236 258 
 
 Heard v. Wilder, 81 Iowa, 421 30 
 
 Heartt v. Walsh, 75 111. 200 185 
 
 Heath v. Waters, 40 Mich. 457 325 
 
 Hedley v. Brainbridge, 3 Q. B. 316 193 
 
 Hefferlin v. Kariman, 29 Mon. 139 226 
 
 Heffron v. Hanaford, 40 Mich. 305 203 
 
 Helme v. Smith, 7 Bing. 709 27 
 
 Helmore v. Smith, 35 Ch. D. 436 279, 320 
 
 Henderson v. Farley Nat. Bank, 123 Ala. 547 277 
 
 Hendley v. Bittinger, 249 Pa. 193 76 
 
 Hendren v. Wing, 60 Ark. 561 99 
 
 Hendricks v. Middlebrooks Co., 118 Ga. 131 219 
 
xliv TABLE OF CASES 
 
 PAGES 
 
 Hendy v. March, 75 Cal. 566 27 
 
 Henkel v. Heyman, 91 lU. 96 398 
 
 Hennessy v. Griggs, 1 N. Dak. 52 343 
 
 Henry v. Anderson, 77 Ind. 36 106 
 
 V. Caruthers, 196 lU. 136 258 
 
 V. Evans, 95 Iowa, 244 68, 352 
 
 V. Jackson, 37 Vt. 431 363 
 
 V. Simanton, 64 N. J. Eq. 572 45, 47, 49 
 
 Hepburn, In re, Smith, Ex parte, 14 Q. B. D. 394 311 
 
 Heran v. HaU, 1 B. Mon. 159 362 
 
 Hermanos v. Duvigneaud, 10 La. Ann. 114 161 
 
 Herrick, /?i re, 13 N. B. R. 312 307 
 
 Herring-HaU-Marvin Safe Co. v. HaU's Safe Co., 208 U. S. 554 . . 376 
 
 Hesketh v. Blanehard, 4 East, 144 6 
 
 Hess V. Werts, 4 S. & R. (Pa.) 356 41, 46, 400 
 
 Hewitt V. Hayes, 204 Mass. 586 142, 144, 147 
 
 V. Sturdevant, 4 B. Mon. (43 Ky.) 459 27 
 
 Heydon v. Heydon, 1 Salk. 392 271, 273 
 
 Heyhoe !). Burge, 9 C. c& B. 431 55 
 
 Heyman v. Heyman, 210 111. 524 17 
 
 Hiatt V. Gilmer, 6 Ired. L. 450 169 
 
 Hibbs V. Brown, 190 N. Y. 167 41 
 
 Hichens v. Congreve, 1 R. & M. 150 321 
 
 Hicks V. Lusk, 19 Ark. 692 248 
 
 Higgins V. Armstrong, 9 Colo. 38 199 
 
 V. Beauohamp, (1914) 3 K. B. 1192 194 
 
 Hiles V. Dunn, 61 N. J. Eq. 391 156 
 
 Hill, Ex parte, 2 Bos. & P. 191, note a 282, 294 
 
 V. Beach, 12 N. J. Eq. 31 47 
 
 V. Bell, 111 Mo. 35 99 
 
 V. Cornwall, 95 Ky. 512 307 
 
 V. Palmer, 56 Wis. 123 333 
 
 HiUman v. Moore, 3 Tenn. Ch. 454 289 
 
 Hinds V. Battin, 163 Pa. St. 487 405 
 
 V. Heath (N. H.), 38 At. 382 155 
 
 Hinman v. LitteU, 23 Mich. 484 71 
 
 Hoag V. Alderman, 184 Mass. 217 326 
 
 Hoaglin v. Henderson, 119 Iowa, 720 275 
 
 Hoare v. Dawes, 1 Doug. 371 6, 53 
 
 V. Oriental Bank Corp., 2 App. Cas. 589 152 
 
 Hobbs V. Chicago Packing Co., 98 Ga. 576 217 
 
 Hodge V. Twitchell, 33 Minn. 389 322 
 
 Hodges V. Parker, 17 Vt. 242 361 
 
 Hodgkinson, Ex parte, 19 Ves. 291 : 205 
 
 Hodgson, Beckett, & Rammsdale, In re, 31 Ch. D. 177 .... 317 
 
 V. Fowler, 24 Colo. 278 16 
 
 Hoffman v. Porter, 2 Brook. 158 100 
 
 Hogan V. Hadzets, 71 N. W. (Mich.) 1092 404 
 
 Hogendobler v. Lyon, 12 Kan. 276 241 
 
 Holbrook, In re, 2 Low. (U. S.) 259 152 
 
 V. Ins. Co., 25 Minn. 229 88 
 
TABLE OF CASES xlv 
 
 CAOES 
 
 Holbrook v. Lackey, 13 Met. 132 143 
 
 V. Nesbitt, 163 Mass. 120 376 
 
 Holden v. Peace, 4 Ired. Eq. (N. C.) 223 360 
 
 Holgate V. Downer, 8 Wy. 334 37 
 
 Holifield V. White, 62 Ga. 567 31 
 
 HoUaday v. Elliott, 8 Or. 84 348 
 
 Hollembaek v. More, 44 N. Y. Super. Ct. 107 226 
 
 HoUiday v. Union Bag Co., 3 Colo. 342 395 
 
 Hollis V. Burton, [1892] 3 Ch. 226 203 
 
 Holme V. Hammond, L. R. 7 Ex. 218 64, ISO 
 
 Holmes v. Alexander, 46 Okla. — , 152 Pac. 819 84 
 
 V. Higgins, 1 B. & C. 74 36 
 
 V. McDowell, 15 Hun, 585 132, 280 
 
 V. Mentze, 4 A. & E. 127 274 
 
 V. MiUer, 41 S. W. (Ky.) 432 276 
 
 V. Old Colony Ry., 5 Gray, 58 26, 63 
 
 V. Stands, 27 Miss. 40 236 
 
 V. United Ins. Co., 2 John. Cas. 324 7 
 
 Holt V. Howard, 77 Vt. 49 333 
 
 Homer v. Wood, 11 Cush. (65 Mass.) 62 175 
 
 Honey, Ex parte, L. R. 7 Ch. 178 306 
 
 Hopki- s V. Forsyth, 14 Pa. St. 34 7, 27 
 
 Horback v. Elder, 18 Pa. 33 329 
 
 Horn V. Newton City Bank, 32 Kan. 518 197 
 
 Horst V. Roehm, 84 Fed. 565 238 
 
 Hoskinson v. Eliot, 62 Pa. St. 393 161, 192, 195 
 
 Hossaek v. Ottawa Dev. Co., 244 111. 274 39, 40 
 
 Hotchkiss V. Brainerd Quarry Co., 68 Conn. 120 199 
 
 Hotopp V. Huber, 160 N. Y. 524 386 
 
 Houser v. Irvine, 3 W. & S. 345 250 
 
 Howe V. Howe, 99 Mass. 71 30 
 
 V. Lawrence, 9 Cush. 563 119, 292, 293 
 
 HoweU V. Harvey, 5 Ark. 270 11 
 
 Howze V. Patterson, 63 Ala. 205 195 
 
 Hoxie V. Chaney, 143 Mass. 592 376 
 
 Hoyt V. Holby, 39 Conn. 326 373 
 
 Hubbard v. Galusha, 23 Wis. 398 180 
 
 V. Matthews, 54 N. Y. 43 249, 340 
 
 Huey V. Fish, 40 8. W. 29 (Tex. Civ. App.) 197 
 
 Huggins u. Huggins, 117 Ga. 151 19 
 
 Hugh Stevenson & Sons v. Aktiengesellschaft &c., (1916) 1 K. B. 763 340 
 
 Hughes M. Ewing, 162 Mo. 261 28,64 
 
 V. Gross, 166 Mass. 61 167 
 
 V. Love, 138 Mich. 169 353 
 
 Huiskamp v. Moline Wagon Co., 121 U. S. 310 118 
 
 Humphreys v. Mooney, 6 Col. 282 45 
 
 HunneweU v. Willow Springs Canning Co., 63 Mo. App. 246 . . 37 
 
 Hunter, Ex parte, 1 Atkyns, 357 158, 308 
 
 Hunter v. Conrad, 18 Mont. 177 61 
 
 w. Land, 81* Pa. 296 332 
 
 Hurley v. Walton, 63 lU. 260 24 
 
xlvi TABLE OF CASES 
 
 PAGES 
 
 Hurst V. Brennan, 239 Pa. 216 322 
 
 Hurter v. Larabee, 224 Mass. 218 368 
 
 Hutehins v. Hudson, 8 Humph. (27 Tenn.) 426 189 
 
 Hutchinson v. Bowes, 15 Upper Can. Q. B. 156 411 
 
 V. Nay, 187 Mass. 262 374, 381 
 
 V. Nay, 183 Mass. 355 376, 379 
 
 Hutzler Bros. v. Philhps, 26 S. C. 136 283 
 
 Hyde v. Moxie Nerve Food Co., 160 Mass. 559 94 
 
 Hynes v. Stewart, 10 B. Mon. (49 Ky.) 429 12 
 
 Hyrne v. Erwin, 23 S. C. 226 211, 213 
 
 I 
 
 Ice V. Kilworth, 84 Kan. 458 360 
 
 Ihmsen v. Huston, 247 Pa. 402 108 
 
 V. Lathrop, 104 Pa. 365 73 
 
 lUingworth v. Parker, 62 111. App. 650 61 
 
 111. Cent. Ry. v. Jones, 87 Miss. 489 35 
 
 111. Mall. Iron Co. v. Reed, 103 Iowa, ,538 25 
 
 Imperial Shale Brick Co. v. Jewett, 169 N. Y. 143 41 
 
 Inge V. StilweU, 88 Kan. 33 303 
 
 Innes v. Lansing, 7 Paige, 583 387, 409 
 
 Insurance Co. v. Railroad, 104 U. S. 146 35 
 
 International Trust Co. v. Wilson, 161 Mass. 80 234 
 
 Irvine v. Forbes, 11 Barb. 587 ... 229 
 
 Irving, In re, 17 Nat. B. Reg. 22 200 
 
 Irwin V. BidweU, 72 Pa. 244 36 
 
 V. Williar, 110 U. S. 499 182 
 
 Island Savings Bank v. Galvin, 19 R. I. 569 318 
 
 Isler V. Baker, 6 Humph. 85 347 
 
 Ives V. MiUer, m Barb. 196 330 
 
 J 
 
 Jackson v. Akron Brick Ass'n, 53 Ohio St. 303 12 
 
 V. Johnson, 11 Hun, 509 364 
 
 V. Lahee, 114 111. 287 280 
 
 V. Robinson, 3 Mason (U. S. Cir. Ct.) 138 6 
 
 V. Stopherd, 2 Cr. & M. 361 334 
 
 Jackson Bank v. Durfey, 72 Miss. 971 120, 291 
 
 Jacobs V. Fountain, 19 Wend. 121 331 
 
 Jacobsen v. Hennekenius, 6 Bro. P. C. 482 6, 37 
 
 Jacquin v. Buisson, 11 How. Pr. 385 383, 389 
 
 Jaffe V. Krum, 88 Mo. 669 386, 415 
 
 Jaffray v. Jennings, 101 Mich. 515 256 
 
 James v. James, 22 Q. B. D. 669 374 
 
 Janes, In re, 128 Fed. 527 294 
 
 Janney v. Springer, 78 Iowa, 617 130 
 
 Janson, Ex parte, 3 Madd. 229 295 
 
 Jaques v. Marquand, 6 Cow. 497 226 
 
 Jarvis v. Brooks, 23 N. H. 136 252 
 
TABLE OF CASES xlvii 
 
 PAGES 
 
 Jeffreys v. Small, 1 Vern. 217 139 
 
 Jenner v. Shope, 205 N. Y. 66 88 
 
 Jennings' Appeal, 16 At. (Pa.) 19 230 
 
 Jennings v. Dark, 175 Ind. 332 48, 49 
 
 V. Jennings (1898), 1 Ch. 378 376, 380 
 
 u. Pratt, 19 Utah, 129 339 
 
 V. Rickard, 10 Col. 395 322, 324 
 
 V. Stannus, 191 Fed. 347 98 
 
 Jepson V. Beck, 78 Cal. 540 328 
 
 Jestons V. Brooke, Cowp. 793 53 
 
 Jesup V. Cook (1 Hals. 434), 6 N. J. L. 529 368 
 
 Jewison v. Disudonne, 127 Minn. 163 77 
 
 Johnson's Appeal, 115 Pa. 129 322 
 
 Johnson v. Evans, 7 Man. & Gr. 240 270 
 
 V. Friedhoff, 27 N. Y. S. 982 379 
 
 V. Gordon, 102 Ga. 350 307 
 
 V. Hartshorne, 52 N. Y. 173 364 
 
 V. Haws, 47 App. Div. 597 235 
 
 V. Hogan, 158 Mich. 635 101 
 
 u. Jones, 39 Okla. 323 164 
 
 V. Marx Levy & Brc, 109 La. Ann. 1036 75 
 
 V. Okenstrom, 75 Minn. 196 45 
 
 V. Shirley, 152 Ind. 453 105, 135 
 
 V. Williams, 111 Va. 95 78, 80 
 
 V. Wingfield (Tenn.), 42 S. W.'203 273, 274 
 
 Johnson Bros. v. Carter & Co., 120 Iowa, 355 66 
 
 Johnston v. Bernheim, 86 N. C. 339 234 
 
 V. Button, 27 Ala: 245 229, 233 
 
 V. Roebuck, 104 Iowa, 523 118 
 
 Jones, In re, 100 Fed. 781 119 
 
 Jones, Matter of, 172 N. Y. 575 43 
 
 V. Beekman (N. J. Eq.), 47 At. 71 109 
 
 V. Blun, 145 N. Y. 333 173 
 
 V. Call, 93 N. C. 170 20 
 
 V. Davis, 60 Kan. 309 24 
 
 V. Dulaney, 86 S. W. (Ky.) 547 145 
 
 0. Jones, 1 Ired. Eq. (N. C.) 332 360 
 
 V. Lloyd, L. R. 18 Eq. 265 344 
 
 V. Neale, 2 Pat. & H. 339 100 
 
 V. Newsom, 7 Biss. 321 .. 298 
 
 V. Way, 78 Kan. 535 18, 25, 37, 106 
 
 Jordan v. Soule, 79 Me. 590 29 
 
 Joselove v. Bohrman, 119 Ga. 204 352 
 
 Joseph V. Herzig, 198 N. Y. 456 352 
 
 Jurgens v. Ittmann, 47 La. Ann. 367 347 
 
 Justice V. Lairy, 49 N. E. 459 341 
 
 K 
 
 Kahn v. Becnel, 108 La. 296 127 
 
 V. Smelting Co., 102 U. S. 641 199 
 
xlviii TABLE OF CASES 
 
 PAGES 
 
 Kaiser v. Lawrence Savings Bank, 56 Iowa, 104 47 
 
 Karrick a. Hannaman, 168 U. S. 641 13,333,345,362 
 
 Kaufman, In re, 136 Fed. 262 303 
 
 Kaufmann v. Kaufmann, 239 Pa. 42 376, 381 
 
 Kavanaugh v. Molntyre, 210 N. Y. 175 302 
 
 Kayser v. Maugham, 8 Colo. 232 16, 17, 24 
 
 Kebart v. Arkin, 232 Fed. 454 346 
 
 Keiley v. Turner, 81 Md. 269 363 
 
 Keith V. Armstrong, 65 Wis. 225 255 
 
 KeU V. Nainby, 10 B. & C. 20 70 
 
 Keiley v. Hurlburt, 5 Cow. 534 266 
 
 V. McNamee, 164 Fed. 369 200 
 
 Kellock's Case, L. R. 3 Ch. 769 285 
 
 KeUogg V. Fancher, 23 Wis. 21 266 
 
 Kelly V. Bourne, 15 Ore. 476 100 
 
 V. Scott, 49 N. Y. 595 289 
 
 Kemp V. Andrews, Carth. 170 139 
 
 Kemptner, /re re, L. R. 8 Eq. 286 115 
 
 Kendall, Ex -parte, 1 Rose, 71 308 
 
 V. Hamilton, 4 App. Cas. 504 264, 316 
 
 Kennedy, Ex parte, 2 DeG. M. & G. 228 294 
 
 Kennedy v. Lonabaugh, 19 Wyo. 352 357 
 
 V. Porter, 109 N. Y. 526 343 
 
 Kenney, In re, 97 Fed. 554 288 
 
 Kenney v. Altvater, 77 Pa. 34 184 
 
 V. Howard, 68 Vt. 194 151 
 
 Kensington and Taylor, Ex parte, 14 Ves. 447 282 
 
 Kent t). Majonier, 36 La. Ann. 259 88 
 
 Kent County Gas L. & C. Co. Limited, In re, (1913) Ch. 92 . . 306 
 
 Kerper v. Wood, 48 Ohio St. 613 248 
 
 Kerr v. Blodgett, 48 N. Y. 62 410 
 
 V. Potter, 6 GiU (Md.) 404 63, 80 
 
 Kimbro v. BulUtt, 22 How. 256 193, 195, 197 
 
 Kincaid v. National Wall-Paper Co., 63 Kan. 288 123 
 
 King, Ex parte, 17 Ves. 115 315 
 
 V. Moore, 72 Ark. 469 330 
 
 King Bros. v. Possmore, 18 Ga. App. — , 89 S. E. 1103 .... 84 
 Kirk V. Garrett, 84 Md. 383 214 
 
 V. Hodgson, 3 Johns, Ch. 400 231 
 
 Kirwan v. Kirwan, 2 C. & M. 617 257 
 
 Kleinhans, In re, 113 Fed. 108 ... 301 
 
 Klosterman v. Hayes, 17 Ore. 325 20 
 
 Knapp V. Read, 88 Neb. 754 322 
 
 Knight, /re re, 8 N. B. R. 346 293 
 
 Knipe v. Livingston, 209 Pa. 49 329 
 
 Knowlton & Co., In re, 196 Fed. 837 153, 172 
 
 Knox V. Gye, L. R. 5 H. of L. 656 140, 142, 145 
 
 Kobre, In re, 224 Fed. 106 299 
 
 Kootz V. Tuvian, 118 N. C. 393 61 
 
 Krall V. Forney, 182 Pa. 6 7 
 
 Krueger, Re, 2 Lowell, 66 75, 288 
 
TABLE OP CASES xlix 
 
 PAGES 
 
 Krueger v. Speith, 8 Mont. 482 143, 151 
 
 Kruschke v. Stefan, 83 Wis. 373 105 
 
 Kuhn V. Weil, 73 Mo. 213 215 
 
 Kutz V. Dreibelbis, 126 Pa. 335 332 
 
 L 
 
 Laeey v. Hill, L. R. 8 Ch. 441 283 
 
 Lachaise v. Marks, 4 E. D. Smitli, 610 407 
 
 La Cotts V. Pike, 91 Ark. 28 28 
 
 LaFayette Land Co. v. Caswell, 59 Pla. 554 100 
 
 Laffan v. Naglee, 9 Cal. 662 33 
 
 Lafond v. Deems, 81 N. Y. 507 34 
 
 Lake v. Duke of ArgyU, 6 Q. B. 477 72 
 
 Lamb v. Rowan, 84 Miss. 45 353 
 
 Lambert's Case, Godbolt, 244 125 
 
 La Montagne v. Bank of New York, 94 App. Div. 219 396 
 
 Lance v. Butler, 135 N. C. 419 64 
 
 Lane, 7n re, 10 N. B. R. 135 310 
 
 V. Lenfest, 40 Minn. 375 273 
 
 Lanier v. MoCabe, 2 Pla. 32 195 
 
 Lapenta ;;. Lettieri, 72 Conn. 377 345*- 
 
 Larson v. Newman, 19 N. D. 153 238 
 
 Latrobe v. Dietrich, 114 Md. 8 99 
 
 Latta V. Kilbourn, 150 U. S. 524 323, 324, 325 
 
 Lauffer v. Cavett, 87 Pa. St. 479 101 
 
 Lawrence v. Merrifleld, 42 N. Y. Sup. Ct. (10 J. & S.) 36 . . . . 395 
 
 Lawson v. Dunn, 66 N. J. Eq. 90 287 
 
 Lay V. Emery, 8 N. D. 515 368 
 
 Leaf, Ex -parte, Simpson & Windross, In re, 4 Deac. 287 .... 147 
 
 Leavitt v. Peck, 3 Conn. 124 233 
 
 Lee V. Dolan, 39 N. J. Eq. 193 327 
 
 V. Haley, 5 Ch. App. 155 89 
 
 V. Hamilton, 12 Tex. 413 185 
 
 V. Kashbrooke, 8 Dana (38 Ky.) 214 360 
 
 V. Nat. Bank, 45 Kan. 8 193 
 
 Leibert u. Reiss, 174 App. Div. 308 83 
 
 Leggatt V. Leggatt, 79 App. Div. 141 319 
 
 Leggett V. Hyde, 58 N. Y. 272 57, 58, 63 
 
 Lehman v. Knapp, 48 La. Ann. 1148 47 
 
 Leiden v. Lawrence, 2 New R. (Exch.) 283 28 
 
 Lempriere v. Lange, 12 Ch. D. 675 99 
 
 Lenow v. Fones, 48 Ark. 557 108, 110 
 
 Le Roy v. Johnson, 2 Pet. 186 87 
 
 Leserman v. Bernheimer, 113 N. Y. 39 359 
 
 Leverson v. Lane, 13 C. B. n. s. 278 191 
 
 Levi V. Latham, 15 Neb. 509 197 
 
 Levine v. Goldsmith, 83 App. Div. 399 103, 110 
 
 V. Michel, 35 La. Ann. 1121 34, 325 
 
 Levy V. Lock, 47 How. Pr. 394 405 
 
 V. Pyne, 1 Car. & M. 453 191 
 
 V. Walker, 10 Ch. Div. 436 377 
 
1 TABLE OP CASES 
 
 PAGES . 
 
 Lewis V. Cline, 5 So. 112 251 
 
 V. Harrison, 81 Ind. 278 366 
 
 V. Langdon, 7 Sim. 421 370 
 
 Lieb V. Craddook, 87 Ky. 525 267 
 
 Ligare v. Peacock, 109 III. 94 361, 364 
 
 Lighthiser v. Allison, 100 Md. 103 69, 72 
 
 Limpus V. London General Omnibus Company, 1 H. & C. 526 209, 212 
 
 Lindner v. Adams Co. Bank, 49 Neb. 735 140 
 
 Lineweaver v. Slagle, 64 Md. 465 394, 406 
 
 Lintner v. MiUiken, 47 111. 178 20 
 
 Liotard v. Graves, 3 Caines, 243 361 
 
 Little V. CaldweU, 101 Cal. 553 145 
 
 V. Hazlett, 197 Pa. 591 342 
 
 Livingston v. Lynch, 4 John. Ch. 573 18 
 
 V. Roosevelt, 4 Johns. 278 191 
 
 Lloyd V. Carrier, 2 Lans. 364 361 
 
 Lochrane v. Stewart, 2 S. W. (Ky.) 903 238 
 
 Lock V. Lewis, 124 Mass. 1 129 
 
 Locke V. Stearns, 1 Met. 560 211 
 
 Lockwood V. Bartlett, 130 N. Y. 340 213 
 
 Lodge aiid Fendal, Ex parte, 1 Ves. Jr. 166 308, 309 
 
 V. Pritchard, 1 DeG. J. & S. 610 318 
 
 Loeb V. Fireman's Ins. Co., 78 App. Div. 113 88 
 
 Loebeok v. Lee-Clark-Andreesen Co., 37 Neb. 158 376 
 
 Loetscher v. Dillon, 119 Iowa, 202 54 
 
 Logan V. Bond, 13 Ga. 192 159 
 
 London Assurance Co. v. Drennen, 116 U. S. 461 7, 36 
 
 London & L. Ins. Co. v. Holt, 10 S. D. 171 168 
 
 Lonegan v. Lonegan, 60 Kan. 855 335 
 
 Long V. Slade, 121 Ala. 267 180 
 
 Long and Corey, In re, 7 Ben. 141 292 
 
 Longman v. Pole, Moody & Mai. 223 174 
 
 Lord V. Baldwin, 6 Pick. (23 Mass.) 348 266 
 
 V. Hull, 178 N. Y. 9 351 
 
 V. Parker, 3 Allen, 127 11 
 
 V. Proctor, 7 Phil. (Pa.) 630 56 
 
 Lothrop V. Adams, 133 Mass. 471 219 
 
 Lott V. Young, 109 Fed. 798 288 
 
 Louden v. Ball, 93 Ind. 232 251 
 
 Love V. Blair, 72 Ind. 284 113 
 
 Lovejoy v. Bailey, 214 Mass. 134 68 
 
 V. Murray, 3 Wall. 1 263 
 
 Lovell V. Beauchamp (1894), Appeal Cas. 607 97 
 
 Lovett's Adm'r v. Perry, 98 Va. 604 184 
 
 Lowerin v. McLaughlin, 161 111. 417 36, 47, 49 
 
 Lucas V. Beach, 1 Man. & G. 417 36 
 
 Luddington v. Bell, 77 N. Y. 138 259 
 
 Lusk V. Riggs, 7Q Neb. 718 47 
 
 Lynch v. Pennyman, 29 Okla. 615 45 
 
 Lyon V. Plum, 75 N. J. L. 883 168 
 
 Lyth V. Ault, 7 Exch. 669 259 
 
TABLE OF CASES li 
 
 M 
 
 PAGES 
 
 Mabbett v. White, 12 N. Y. 442 125, 126, 232 
 
 McArdle v. Thames Iron Works, 96 App. Div. 139 88 
 
 McAreavy v. Magril, 123 Iowa, 605 163 
 
 McArthur v. Chase, 13 Grat. 683 409, 415 
 
 MoCabe v. GoodfeUow, 133 N. Y. 89 34 
 
 V. Sinclair, 66 N. J. Eq. 24 350 
 
 McCandless v. Grouse, 220 lU. 344 369 
 
 McCauley v. Cooley, 45 Neb. 582 335 
 
 MoCoUum V. Carlucci, 206 Pa. 312 332 
 
 McCord Co. v. Callaway, 109 Ga. 796 127 
 
 MoCormick's Appeal, 57 Pa. St. 54 16 
 
 McCoy V. Jack, 47 W. Va. 201 163 
 
 McCrary v. Slaughter, 58 Ala. 230 197 
 
 McCruden v. Jonas, Yetta Greenboum's Appeal, 173 Pa. St. 507 311, 314 
 
 McCulloh V. DasMell, 1 H. & GiU (Md.) 96 293 
 
 McDonald v. Campbell, 96 Minn. 234 64 
 
 McBwen & Sons, /n re, 12 N. B. R. 11 295 
 
 McFadden v. Leeka, 48 Ohio St. 513 328 
 
 McFarlane v. MoFarlane, 82 Hun, 238 17, 29 
 
 MoGhee v. Powell, 8 Al. 827 392 
 
 McGibbon v. Tarbox, 205 N. Y. 271 363 
 
 McGowan v. American Tan Bark Co., 121 U. S. 575 76 
 
 McGrath v. Cowen, 57 Ohio St. 385 126, 232 
 
 McGregor v. Cleveland, 5 Wend. 475 87 
 
 McKee v. Bank of Mt. Pleasant, 7 Ohio, 522 187 
 
 V. HamUton, 33 Ohio St. 7 203 
 
 McKinnon v. MoKinnon, 56 Fed. 409 15 
 
 MeKnight v. Ratcliff, 44 Pa. St. 156 411 
 
 McLaughlin v. HaUoweU, 228 U. S. 278 253 
 
 V. MuUoy, 47 Pac. (Utah) 1031 172 
 
 McLennan v. Hopkins, 2 Kan. App. 260 45, 46 
 
 McLewee w. HaU, 103 N. Y. 639 72 
 
 McMillan v. Hadley, 78 Ind. 590 102 
 
 McMullen v. Hoffman, 174 U. S. 639 358 
 
 McMurray v. Rawson, 3 HiU, 59 331 
 
 MoMurtrie v. Guiler, 183 Mass. 451 10 
 
 McNair v. Wilcox, 121 Pa. 437 175 
 
 MoNeely v. Haynes, 76 N. C. 122 221 
 
 McNeil V. Congregational Society, 66 Cal. 105 102 
 
 McPherson v. Swift, 22 S. D. 165 110, 353 
 
 MeStea v. Matthews, 50 N. Y. 166 340 
 
 McTighe v. Macon Construction Co., 94 Ga. 300 46 
 
 Madden v. Jacobs, 52 La. Ann. 2107 168, 238 
 
 Maddock's Admx. u. Skinner, 93 Va. 479 147 
 
 Madison Co. Bank v. Gould, 6 Hill, 309 399 
 
 Maffett V. Lenckell, 93 Pa. 468 159 
 
 Maflyn v. Hathaway, 106 Mass. 414 116 
 
 Magilton v. Stevenson, 173 Pa. St. 560 361 
 
 Mair y. Glennie, 4 M. & S. 240 55 
 
 Major V. Hawks, 12 lU. 298 185 
 
lii TABLE OP CASES 
 
 PAGES 
 
 Maliey v. Atlantic Ins. Co., 51 Conn. 222 99 
 
 Manchester Bank, Ex parte, Mellor, In re, 12 Ch. D. 917 . . 147, 150- 
 
 Mandeville v. Courtwright, 142 Fed. 97 48, 4& 
 
 Mangels v. Shaen, 21 App. Div. 507 337 
 
 Manhattan Co. v. Laimbeer, 108 N. Y. 578 390, 398 
 
 V. Phillips, 109 N. Y. 383 392, 394, 399, 406 
 
 Manhattan Brass Co. v. Allin, 35 111. App. 336 401 
 
 Manson v. Williams, 213 U. S. 453 363 
 
 Mansur-Tebbets Impl. Co. v. Ritchie, 159 Mo. 213 119 
 
 Markham v. Merrett, 7 How. (8 Miss.) 437 110 
 
 Markle v. Wilbirr, 200 Pa. 457 229 
 
 Marks v. Hastings, 101 Ala. 165 187, 214 
 
 Marlett v. Jackman, 3 Allen, 257 73, 341, 342 
 
 Marsh's Appeal, 69 Pa. 30 368 
 
 Marsh v. Keating, 2 CI. & F. 250 224 
 
 V. Wheeler, 77 Conn. 449 194 
 
 Marshall v. Lambeth, 7 Rob. 471 416 
 
 Marten v. Van Schaiek, 4 Paige's Ch. 479 375 
 
 Martin v. Baird, 175 Pa. St. 540 37 
 
 V. Crompe, 1 Ld. Ray. 340 13» 
 
 V. Meyer, 45 Fed. 435 253 
 
 V. Simkins, 116 Ga. 254 214 
 
 V. Thrasher, 40 Vt. 460 187 
 
 Manvick, In re, 2 Ware, 233 295 
 
 Marx V. Goodnough, 23 Ore. 545 277 
 
 Mason v. Bogg, 2 Myline & K. 447 285 
 
 V. Eldred, 6 Wall. (U. S.) 231 262, 263 
 
 V. Partridge, 66 N. Y. 633 234 
 
 !/. Sieglitz, 22 Col. 320 334 
 
 V. Warthens, 7 W. Va. 532 300 
 
 Mathews v. Colburn, 1 Strob. L. 258 165 
 
 Matlaek v. James, 13 N. J. Eq. 126 102 
 
 Matthews v. Adams, 84 Md. 143 361 
 
 Mattingly v. Stone's Adm'r, 35 S. W. (Ky.) 921 326, 369 
 
 Mattix V. Leach, 16 Ind. App. 112 302 
 
 Mattocks V. Rogers, 1 Hask. 547 77 
 
 Maugham v. Sharpe, 17 C. B. n. s. 443 100 
 
 Maxwell v. Gibbs, 32 Iowa, 32 77 
 
 Mayberry v. Willoughby, 5 Neb. 368 248 
 
 Mayou, Ex parte, 4 DeG. J. & S. 664 121, 122 
 
 Meador v. Hughes, 14 Bush (77 Ky.) 652 172 
 
 Meadows v. Moequot, 110 Ky. 220 363 
 
 Meagher v. Reed, 14 Cal. 335 199 
 
 Meaher v. Cox, 37 Ala. 201 35, 349 
 
 Meoutchen v. Kennedy, 27 N. J. L. 230 201 
 
 Meech v. Allen, 17 N. Y. 300 279 
 
 Meehan v. Valentine, 145 U. S. 611 60, 64 
 
 Mellersh v. Keen, 27 Beav. 236 344 
 
 V. Keen, 28 Beav. 453 375, 382 
 
 Menagh v. Whitwell, 52 N. Y. 146 116, 133, 136, 163 
 
 Meneely v. Meneely, 62 N. Y. 427 89 
 
TABLE OF CASES lili 
 
 PAGES 
 
 Menendez v. Holt, 128 U. S. 514 371, 374, 376 
 
 Merchants & Farmers' Bank v. Johnston, 130 Ga. 661 207 
 
 Merchants' Nat. Bank v. Wehrmann, 202 U. S. 295 10 
 
 Mercur, In re, 122 Fed. 384 297 
 
 Merrall v. Dobbins, 169 Pa. St. 480 26 
 
 MerriU, In re, 12 Blatch. 221 390 
 
 V. Nat. Bank of Jacksonville, 173 U. S. 131 285 
 
 Merritt v. Day, 38 N. J. L. 32 , . . . . 247 
 
 V. Walsh, 32 N. Y. 685 27 
 
 Merry v. Hoopes, 111 N. Y. 415 376 
 
 Meserve v. Andrews, 106 Mass. 419 327 
 
 Messner v. Lewis, 20 Tex. 221 90 
 
 Metcalf V. Arnold, 110 Ala. 180 124 
 
 V. Burin, 12 East, 400 169 
 
 V. Redmon, 43 111. 264 37 
 
 Metropohtan Nat. Bank v. Sirrett, 97 N. Y. 320 . . 391, 394, 399, 407 
 
 Meyer, In re, 98 Fed. 976 300, 304 
 
 w. Hegler, 121 Cal. 682 159 
 
 V. Krohn, 114 lU. 574 68, 73, 172 
 
 Meyers v. MeriUion, 118 Cal. 352 322 
 
 Meysenburg v. Littlefield, 135 Fed. 184 238 
 
 Michalover v. Moses, 19 App. Div. (N. Y.) 343 273 
 
 Mick V. Howard, 1 Ind. 250 91 
 
 Miles V. Pennoek, 50 N. H. 564 252 
 
 Miller v. Berry, 19 S. Dak. 625 141 
 
 V. Brigham, 60 Cal. 615 277 
 
 V. Ferguson, 110 Va. 217 335 
 
 V. Florer, 15 Ohio St. 148 242 
 
 V. Royal Flint Glass Works, 172 Pa. St. 70 90 
 
 V. Simpson, ;07 Va. 476 57 
 
 Miller's River Nat. Bank v. Jefferson, 138 Mass. Ill . . . 287, 311 
 
 MiUerd v. Thorn, 56 N. Y. 402 165 
 
 Milliken v. Loring, 37 Me. 408 244 
 
 Mills, In re, 95 Fed. 269 294 
 
 V. Miller, 111 Iowa, 654 131 
 
 V. Riggle, 83 Kan. 703 92, 159 
 
 Milwaukee Harvester Co. v. Finnegan, 43 Minn. 183 81 
 
 Mining Co. (G. V. B.) v. First Nat. Bank of Hailey, 95 Fed. 35 . . 199 
 
 Mitchell, Ex -parte, 14 Ves. 597 205 
 
 «. Dall, 2 H. & G. (Md.) 159 70 
 
 V. Fish, 97 Ark. 444 13 
 
 V. O'Neale, 4 Nev. 504 9 
 
 Mix V. Shattuck, 50 Vt. 421 247 
 
 Moffat V. Thomson, 5 Rich. Eq. 155 366 
 
 Mohawk Nat. Bank v. Van Slyok, 29 Hun, 188 265 
 
 Moist's Administrator's Appeal, 74 Pa. St. 166 247 
 
 Mohneaux w. Raynolds, 54 N. J. Eq. 559 103,241,355 
 
 MoUow, March, & Co. v. Court of Wards, L. R. 4 P. C. 419 . . 59, 63 
 
 Monahan, The Catharine M., 197 Fed. 855 17.3 
 
 Monroe v. Conner, 15 Me. 178 233 
 
 V. Hamilton, 60 Ala. 226 181 
 
liv TABLE OF CASES 
 
 PAGES 
 
 Moody V. King, 2 B. & C. 558 163 
 
 J). Paine, 2 Jolins. Ch. 548 275 
 
 Moore, Ex parte, 2 Gl. & J. 166 314 
 
 V. May, 117 Wis. 192 40 
 
 V. Price, 116 Ala. 247 349 
 
 V. Rawson, 185 Mass. 264 367, 375, 377 
 
 V. Stevens, 60 Miss. 809 161 
 
 V. Thorpe, — Minn. — , 158 N. W. 235 10 
 
 V. Westbrook, 156 N. C. 482 353 
 
 V. Wood, 171 Pa. St. 365 109 
 
 Moran v. Molnerney, 129 Cal. 29 103 
 
 V. Schuyler, 79 N. J. 490 377 
 
 Morgan v. Child, — Utah — , 155 Pao. 451 20 
 
 V. Parrel, 58 Conn. 413 20, 73 
 
 Morgart v. Somouse, 103 Md. 463 15 
 
 Morley, Ex parte, 8 Ch. App. 1026 149 
 
 V. Strombone, 3 Bos. & P. 254 261 
 
 Morrill v. Weeks, 70 N. H. 178 353 
 
 Morris V. Allen, 14 N. J. Eq. 44 361 
 
 V. Peokham, 51 Conn. 128 14 
 
 V. Wood, 35 S. W. 1013 (Tenn.) 335 
 
 Morriset v. King, 2 Burr. 891 63 
 
 Morrison v. Austin State Bank, 213 111. 472 106 
 
 V. Bennett, 20 Mont. 560 356 
 
 V. StockweU, 9 Dana (39 Ky.) 172 339 
 
 Morse v. Pac. Ry., 191 lU. 365 24 
 
 V. Wilson, 4 D. & E. 353 53, 54 
 
 Moses V. Bagley, 55 Ga. 283 236 
 
 Mosier, In re, 112 Fed. 138 148, 296 
 
 Motley V. Wickoff, 113 Mich. 231 162 
 
 Mt. Carmel Tel. Co. v. Mt. Carmel & P. Tel. Co., 27 Ky. L. Reporter, 
 
 30 46 
 
 Mulherin v. Rice, 106 Ga. 810 145 
 
 Mulligan v. N. Y. & Rockaway Ry., 129 N. Y. 506 217 
 
 Mumford v. NiooU, 20 John. 611 27, 366 
 
 Munson v. Sears, 12 Iowa, 172 30 
 
 Munton v. Rutherford, 121 Mich. 418 72 
 
 Murphy v. Coppieters, 136 Cal. 317 211, 263 
 
 V. Murphy, 217 Mass. 233 144 
 
 Murray v. Murray, 5 Johns. Ch. 60 298 
 
 MurreU n. Mandlebaum, 87 Tex. 27 105 
 
 Myers v. Edison General Electric Co., 59 N. J. L. 163 397 
 
 V. Kalamazoo Buggy Co., 54 Mich. 215 379 
 
 V. Smith, 29 Ohio St. 120 252, 275 
 
 V. Standart, 11 Ohio St. 29 249 
 
 V. Tyson (Kan.), 43 Pac. 91 117 
 
 N 
 
 Nash V. MitcheU, 71 N. Y. 199 32 
 
 Nason, Ex parte, 70 Me. 363 306 
 
TABLE OF CASES Iv 
 
 PAGES 
 
 Nathanson v. Spitz, 19 R. I. 70 262 
 
 Nat. Bank of Comm. v. Temple, 39 How. Pr. 432 221 
 
 Nat. Bank of Newburg v. Bigler, 83 N. Y. 51 169 
 
 Nat. Bank of Salem v. Thomas, 47 N. Y. 15 268 
 
 National State Cap. Bank v. Noyes, 62 N. H. 35 197 
 
 Neal V. M. E. Smith & Co., 116 Fed. 20 74 
 
 Needham v. Wright, 140 Ind. 190 241 
 
 Nehbross v. BHss, 88 N. Y. 600 141, 143 
 
 Nerot V. Burnand, 4 Russ. 247 342 
 
 Nester v. SuUivan, 147 Mich. 493 . 15 
 
 Neudecker v. Kohlberg, 3 Daly, 407 356 
 
 Newberry v. Gibson, 125 Iowa, 575 336 
 
 Newby v. Harrell, 99 N. C. 149 336 
 
 Newell V. Cochran, 41 Minn. 374 30, 322 
 
 Newman v. Bagley, 16 Pick. 570 165 
 
 V. Eldridge, 107 La. 315 83 
 
 V. Gates, 72 N. W. (Ind.) 638 139, 317 
 
 V. Ruby, 54 W. Va. 381 333 
 
 New York Fire Ins. Co. v. Bennett, 5 Conn. 674 200 
 
 New York Nat. Ex. Bank v. CroweU, 177 Pa. 313 48 
 
 News Register Co. v. Rockingham Co., 118 Va. 140 10 
 
 Nichol w. Stewart, 36 Ark. 612 366 
 
 Nichols & Co. V. Thomas, 46 Okla. — , 161 Pac. 847 . . . . 128, 181 
 
 Niehoff V. Dudley, 40 111. 406 61 
 
 Niemann v. Niemann, 43 Ch. D. 198 188 
 
 Nightingale v. Milwaukee Furn. Co., 71 Fed. 234 18 
 
 Nims, In re, 16 Blatch. 439 85, 154 
 
 Nirdlinger v. Bernheimer, 133 N. Y. 45 68, 352 
 
 Noakes v. Barlow, 26 L. T. R. n. s. 136 33 
 
 NordUnger v. Anderson, 123 N. Y. 544 121 
 
 North V. Bloss, 30 N. Y. 374 71 
 
 Northern Pae. Lum. Co. v. Spore, 44 Ore. 462, 470 7 
 
 Northey v. Johnson, 19 L. T. 104 42 
 
 Northrup v. PhiUips, 99 lU. 449 323 
 
 Norton «. Brink, 75 Neb. 566 15 
 
 Norwich Yarn Co., In re, 22 Beav. 143 361 
 
 NoweU V. NoweU, L. R. 7 Eq. 538 361, 382 
 
 Noyes v. CrandaU, 6 S. D. 460 202 
 
 V. Cushman, 25 Vt. 390 26 
 
 Nugent V. Armour Packing Co., 208 Mo. 480 61 
 
 
 
 Oakelley y. PasheUer, 4 CI. & F. 207 165,166 
 
 Oakford v. Eur. & Am. Co., 1 Hen. & Mil. 182 166 
 
 Oberlander v. Spiess, 45 N. Y. 175 218 
 
 O'Brien v. Foglesong, 3 Wyo. 58 252 
 
 O'Donohue v. Bruce, 92 Fed. 858 20 
 
 Ogden V. Arnot, 29 Hun, 146 • 298 
 
 Oglesby v. Thompson, 69 Ohio St. 60 363 
 
 Oglesby Co. R. S. v. Lindsey, 112 Va. 767 389, 401 
 
Ivi TABLE OF CASES 
 
 PAGES 
 
 Oliver v. Gray, 4 Ark. 425 18 
 
 Olmstead v. HiU, 2 Ark. 346 52 
 
 Olson V. Morrison, 29 Mich. 395 123 
 
 Ontario Bank v. Hennessey, 48 N. Y. 545 159 
 
 Osborne v. Barge, 29 Fed. 725 131 
 
 V. High Shoals Co., 5 Jones L. 177 161 
 
 O'Shea v. Kavanaugh, 65 Neb. 639 168 
 
 Oteri V. Soalzo, 145 U. S. 578 346 
 
 Owen V. Meroney, 136 N. C. 475 333 
 
 P 
 
 Page V. Brant, 18 111. 37 70 
 
 V. Citizens' Banking Co., Ill Ga. 73 214, 219 
 
 V. Edmunds, 187 U. S. 596 296 
 
 V. Morse, 128 Mass. 99 99 
 
 V. Thomas, 43 Ohio St. 38 102 
 
 I/. Wolcott, 15 Gray, 536 169 
 
 Paine v. Thaoher, 25 Wend. 450 334 
 
 Palmer v. Purdy, 83 N. Yi 144 165 
 
 V. Scott, 68 Ala. 380 226 
 
 V. Stevens, 1 Den. 471 91 
 
 Palmeri v. Man. Ry., 133 N. Y. 261 217 
 
 Pape V. Capital Bank, 20 Kan. 440 46 
 
 Parker v. Brown, 85 Fed. 595 131 
 
 V. Butterworth, 46 N. J. L. 244 248 
 
 V. Canfleld, 37 Conn. 250 62, 63 
 
 V. Macomber, 18 Pick. 605 244 
 
 V. Muggridge, 2 Story, 334 297 
 
 V. Oakley (Tenn.), 57 S. W. 426 95 
 
 Parsons v. Tillman, 95 Ind. 452 315 
 
 Patrick v. Patrick, 71 N. J. Eq. 347 112, 369 
 
 V. Weston, 22 Col. 45 199, 336 
 
 Patterson v. Atkinson, 37 At. 532 138 
 
 V. Brewster, 4 Edw. Ch. 352 160 
 
 V. Holland, 7 Grant's Ch. 1 417 
 
 V. Ware, 10 Ala. 444 351 
 
 Pattison v. Blanchard, 5 N. Y. 186 35 
 
 Patton V. Carr, 117 N. C. 176 146 
 
 V. Leftwich, 86 Va. 421 141 
 
 Patty-Joiner Co. v. City Bank, 41 S. W. 173 315, 358 
 
 Paul V. Cullum, 132 U. S. 539 131 
 
 Payne v. Freer, 91 N. Y. 43 54 
 
 Peacocks v. Chambers, 46 Pa. 434 229 
 
 Peake, Ex parte, 2 Rose, 54 294 
 
 Pearce v. Chamberlain, 2 Ves. Sr. 33 8 
 
 V. Wilkins. 2 N. Y. 469 '. 234 
 
 Pearson v. Pearson, 27 Ch. Div. 145 380 
 
 V. Post, 2 Dak. 220« 206 
 
 Pease v. Cole, 53 Conn. 53 190, 191, 193, 197 
 
 V. Dawson, 197 111. 340 241 
 
TABLE OP CASES Ivii 
 
 PAGES 
 
 Peck, Matter of, 206 N. Y. 55 83, 263, 307 
 
 Peckham Iron Co. v. Harper, 41 Ohio St. 100 217, 218 
 
 Pelican Ins. Co., Matter of, 47 La. Ann. 935 88 
 
 Pelletier v. Couture, 148 Mass. 269 96 
 
 Pendleton v. Beyer, 94 Wis. 31 364 
 
 Penniman v. Munson, 26 Vt. 164 25 
 
 Pennington v. Todd, 47 N. J. Eq. 569 358 
 
 Pennypacker v. Leary, 65 Iowa, 220 103 
 
 People V. E. Remington & Sons, 121 N. Y. 328 284 
 
 V. Rose, 219 lU. 46 88, 89 
 
 People ex rel. A. J. Johnson Co. v. Roberts, 159 N. Y. 70 . . 371, 373 
 
 PeopleesreZ. Piatt v.Wemple, 117 N.Y. 136 43 
 
 People ex rel. Winchester v. Coleman, 133 N. Y. 279 43 
 
 People's Nat. Bank v. Wilcox, 136 Mich. 567 151 
 
 People's Sav. Bank v. Smith, 114 Ga. 185 202 
 
 Perens v. Johnson, 3 Sm. & G. 419 278 
 
 Perkins v. Butler County, 44 Neb. 110 236 
 
 Perth Amboy Mfg. Co. v. Condit, 21 N. J. L. 659 ". 412 
 
 Pettyjohn v. Woodruff, 86 Va. 478 283 
 
 Pevser v. Myers, 135 N. Y. 599 42, 257, 291 
 
 PhiUip V. StanzeU, 28 S. W. 900 194 
 
 V. Von Raven, 57 N. Y. Supp. 701 " 348 
 
 Phillips V. Abraham Palace Co., 1 K. B. 59 167 
 
 V. Blatehford, 137 Mass. 510 39, 41 
 
 V. Cook, 24 Wend. 389 272 
 
 V. Phillips, 49 111. 437 7 
 
 V. Reynolds, 236 lU. 119 24 
 
 V. StanzeU (Tex. Civ. App.), 28 S. W. 900 201 
 
 V. Thorp, 12 Okla. 617 175, 179 
 
 Piekerell v. Fisk, 11 La. Ann. 277 141 
 
 Pierce v. Bryant, 5 Allen, 91 390, 393, 397 
 
 V. Tiernan, 10 Gill & J. 253 366 
 
 Piersons v. Hooker, 3 Johns. 68 207 
 
 Pilcher, Succession of, 39 La. Ann. 362 156 
 
 Pinkney v. HaU, 1 Salk. 126 189 
 
 Pitcher v. Barrows, 17 Pick. 361 339 
 
 Pitts V. Waugh, 4 Mass. 424 28 
 
 Pittsburg Valve, &c., Co. v. Klingelhofer, 210 Pa. 513 170 
 
 Place V. Sweetzer, 16 Ohio, 142 274 
 
 Plumer v. Lord, 5 Allen, 460 11 
 
 Plummer, In re, 1 Phillips, 56 285 
 
 Plunkert v. DiUon, 4 Houst. (Del.) 338 54 
 
 Poillon V. Secor, 61 N. Y. 456 70 
 
 Polidori, 7w re, 2 N. B. N. & R. 945 300 
 
 Polk V. Buchanan, 5 Sneed, 721 63 
 
 Pollock V. Williams, 42 Miss. 88 185 
 
 Pond V. Kimball, 101 Mass. 105 113 
 
 Pontius V. WaUs, 197 Pa. 223 103 
 
 Pooley V. Driver, 5 Ch. D. 458 19, 66, 82, 177 
 
 V. Whitmore, 10 Heisk. 629 197 
 
 Pope V. Cole, 55 N. Y. 124 317 
 
Iviii TABLE OF CASES 
 
 PAGES 
 
 Pope Mfg. Co. V. Cycle Co., 55 S. C. 528 263 
 
 Porter v. Baxter, 71 Minn. 195 164, 260 
 
 V. Curry, 50 111. 319 184 
 
 V. Long, 98 N. W. (Mich.) 990 141, 143 
 
 V. McClure, 15 Wend. 187 26 
 
 V. White, 39 Md. 613 197 
 
 Post V. Southern Ry., 103 Tenn. 184 35 
 
 Potter V. Commissioner, 10 Bxch. 147 373 
 
 V. Jackson, 13 Ch. D. 845 369 
 
 V. Tolbert (Mich.), 71 N. W. 649 73, 243 
 
 Poundstone v. Hamburger, 139 Pa. 319 62 
 
 PoweU V. Cash, 54 N. J. Eq. 218 321 
 
 Powell M. W. Company v. Finn, 198 111. 56 42 
 
 Powers V. Large, 75 Wis. 494 81 
 
 Pratt V. McGuinness, 173 Mass. 170 277 
 
 Prentice v. Elliott, 72 Ga. 154 360 
 
 Preston v. Fitch, 137 N. Y. 41 105, 144, 146 
 
 Priesing v. Crampton, 181 Mass. 492 292 
 
 Priest V. Choteau, 85 Mo. 398 102 
 
 Pugh V. Currie, 5 Ala. 446 110 
 
 PuUen V. Whitfield, 55 Ga. 174 317 
 
 Pulliam V. Schimpf, 100 Al. 362 67 
 
 Purple V. Farrington, 119 Ind. 164 117 
 
 Purviance v. Sutherland, 2 Ohio St. 478 206 
 
 Purvis V. Butler, 87 Mich. 248 59 
 
 Pyron v. Ruohs, 120 Ga. 1060 84 
 
 Q 
 
 Quackenbosh v. Sawyer, 54 Cal. 439 28 
 
 Queen v. Robson, 16 Q. B. D. 137 34 
 
 R 
 
 Radcliff V. Wood, 25 Barb. 52 113 
 
 Rahl V. Parlin, &o. Co., 27 Tex. Civ. App. 72 63 
 
 Rammelsberg v. Mitchell, 29 Ohio St. 22 376 
 
 Rand v. Wright, 141 Ind. 226 148 
 
 Randall v. Knevals, 27 App. Div. (N. Y.) 146 .... 203, 226, 227 
 
 Randolph v. Daly, 13 N. J. Eq. 313 254 
 
 V. Inman, 172 lU. 575 367 
 
 Ranlett v. CoUier White Lead Co., 30 La. Ann. 56 240 
 
 Ransom v. Wardlaw & Co., 99 Ga. 540 303 
 
 Rapp V. Latham, 2 B. & Aid. 795 204 
 
 Rapple w. Button, 226 Fed. 430 114 
 
 Raymond v. Putnam, 44 N. H. 160 362 
 
 V. Vaughan, 128 lU. 256 347 
 
 Read v. Bailey, 3 App. Cas. 94, 101 308, 309, 313 
 
 Receivers of Mechanics' Bank v. Godwin, 5 N. J. Eq. 334 .... 138 
 
 Reed v. Bacon, 175 Mass. 407 201 
 
 Reeves Lumber Co., W. D., v. Davis, — Ark. — , 187 S. W. 171 . 167 
 
 Reffron Realty Co. v. Adams L. & B. Co., 128 Md. 656 ... . 39 
 
TABLE OP CASES lix 
 
 PAGES 
 
 Regester v. Dodge, 19 Blateh. 79 259 
 
 Regina v. Mallison, 16 Ad. & E. n. s. 367 . . '. '. '. '. .' . '. 336 
 Reid V. Factory, 3 Cow. 399 .............. S61 
 
 Reilly v. Woolbert, — Ala. — , 72 So. 10 .' ." . . . . '. . 16, 350 
 
 Reirden v. Stephenson, 87 Vt. 430 229* 239 
 
 Remington v. Cummings, 7 Wis. 138 ...........' 187 
 
 ReyneU v. Lewis, 15 M. & W. 517 ............ 36 
 
 Reynolds v. Bowley, L. R. 2 Q. B. 474 . 79 
 
 V. Bowley, L. R. 1 Ch. 421 ! ' ' ' ' 288 
 
 V. Hicks, 19 Ind. 113 68 
 
 V. N. Y. Trust Co., 188 Fed. 611 ! ' ' ' 263 
 
 V. Pool, 84 N. C. 37 ' 31 
 
 V. Radke, 112 lU. App. 575 202 
 
 Rhode Island Hosp. Trust Co. v. Copeland, — R. I. — , 98 At. 273 44 
 
 Rhodes v. Monies, [1895] 1 Ch. 236 225 
 
 Rice, 7w re, 9 N. B. R. 373 ' 292 
 
 V. Angell, 73 Tex. 350 374 
 
 V. Culver, 32 N. J. Eq. 601 12 
 
 V. Jackson, 171 Pa. 89 185 
 
 V. McMartin, 39 Conn. 573 '242 
 
 V. Rockefeller, 134 N. Y. 174 43 
 
 V. Shute, 5 Burr. 2611 261, 263 
 
 Rich V. Davis, 6 Cal. 163 .. ' 172 
 
 Richard v. Allen, 117 Pa. 199 . . 273 
 
 V. Davies, 2 R. & M. 347 ! ! ! 350 
 
 Richards v. Fraser, 122 Cal. 456 320 
 
 V. Grinnell, 63 Iowa, 44 15 
 
 V. HaUen, 153 la. 66 98 
 
 V. Le VeiUe, 44 Neb. 38 84, 152 
 
 V. Minn. Savings Bank, 75 Minn. 196 47 
 
 Richardson v. HugMtt, 76 N. Y. 55 58 
 
 V. Moies, 31 Mo. 430 238 
 
 V. Pitts, 71 Mo. 128 47 
 
 V. Redd, 118 N. C. 677 147 
 
 V. Woodward, 104 Fed. 873 296 
 
 Richmond v. Judy, 6 Mo. App. 465 34 
 
 Riddell v. Ramsey, 31 Mon. 386 • 336 
 
 Riddle v. Whitehill, 135 U. S. 621 100 
 
 Ridenour v. Mayo, 40 Ohio St. 9 49 
 
 Rider v. Hammell, 63 Kan. 733 20 
 
 Riedeburg v. Schmitt, 71 Wis. 644 68 
 
 Rieser, In re, 19 Hun, 202 310 
 
 Ring Furniture Co. v. Bussell, 171 N. C. 474 74 
 
 Riper v. Poppenhausen, 43 N. Y. 68 387, 403 
 
 Rittenhouse v. Leigh, 57 Miss. 697 72 
 
 Roach V. Brannon, 57 Miss. 490 151 
 
 Robb V. Mudge, 14 Gray, 534 238 
 
 Robbins v. Weber, 172 Pa. St. 635 396 
 
 Roberts v. Johnson, 58 N. Y. 613 263 
 
 Robertson v. De Lizardi, 4 Rob (La.) 300 87 
 
 V. Smith, 18 John. 459 264 
 
k TABLE OF CASES 
 
 Robertson Lumber Co. v. Anderson, 96 Minn. 527 .... 74, 246 
 
 Robinson t). Daughtry, 171 N. C.—, 88 S. E. 252 101 
 
 V. Goings, 63 Miss. 500 217 
 
 V. Magority, 28 lU. 423 88 
 
 V. Mcintosh, 3 E. D. Smith, 221 414 
 
 V. Security Co., 87 Conn. 268 282 
 
 V. Wilkinson, 3 Price, 538 264 
 
 Robinson Bank v. MiUer, 153 111. 244 16, 102 
 
 RockefeUar v! Bellinger, 22 Mont. 418 102 
 
 Rocky Mountain Mills v. Wilmington & W. R. Ry., 119 N. C. 693 36 
 
 Rodgers v. Clement, 162 N. Y. 422 360, 363 
 
 V. Maw, 15 M. & W. 444 163 
 
 V. Meranda, 7 Ohio St. 179 284, 309 
 
 Roehm v. Horst, 91 Fed. 345 167, 238 
 
 Rogers v. Batchelor, 12 Pet. 221 128 
 
 w.'Lawton, 162 Fed. 203 31 
 
 V. Rogers, 53 Conn. 121 89 
 
 V. Taintor, 97 Mass. 291 379 
 
 Roger Williams Nat. Bank v. Hall, 160 Mass. 171 306 
 
 Rolfe V. Dudley, 58 Mich. 208 215 
 
 Rollins V. Stevens, 31 Me. 454 200 
 
 Rolston V. Click, 1 Stew. 526 200 
 
 Roney «. Buckland, 4 Nev. 45 189 
 
 Roots V. Salt Co., 27 West. Va. 483 242 
 
 Ropes V. Colgate, 17 Abb. N. C. 136 396 
 
 Rose V. Buscher, 80 Md. 225 19 
 
 Rosenkrans v. Barker, 115 111. 331 187, 214 
 
 Rosenstein v. Burns, 41 Fed. 841 348 
 
 Ross V. CorneU, 45 Cal. 133 333 
 
 V. Titsworth, 37 N. J. Eq. 333 281 
 
 V. White, [1894] 3 Ch. 326 369 
 
 RothweU V. Humphreys, 1 Esp. 406 188 
 
 Rouse V. Bradford Banking Co., [1894] 2 Ch. 32 166 
 
 V. Wallace (Col.), 50 Pae. 366 119 
 
 Rowell V. RoweU, 122 Wis. 1 . . . . 141, 143, 372, 375, 376, 378 
 
 Rowland v. Estes, 190 Pa. Ill 268 
 
 V. Long, 45 Md. 439 20 
 
 Rowland & Cranshaw, In re, L. R. 1 Ch. App. 421 79 
 
 Rowlandson, Ex parte, 3 P. W. 405 305 
 
 Ruddock's Case, 6 Coke, 25 207 
 
 Ruffin, Ex parte, 6 Ves. 119 114, 291 
 
 Runnels ;;. Moffat, 73 Mich. 188 27 
 
 Rush V. First Nat. Bank, — Tex. Civ. App. — , 160 S. W. 319 . . 20 
 
 Rusling V. Brodhead, 55 N. J. Eq. 200 151 
 
 Russell V. Annable, 109 Mass. 72 161 
 
 V. Bruce, 159 Ind. 553 113 
 
 V. Cole, 167 Mass. 6 271, 300, 304 
 
 V. McCaU, 141 N. Y. 437 144 
 
 Rust V. Chisholm, 57 Md. 376 237 
 
 Rutger V. Rutger, 28 N. J. Eq. 137 17 
 
 Rutherford v. HiU, 22 Ore. 218 45, 48 
 
TABLE OF CASES Ixi 
 
 PAGES 
 
 Rutherford v. McDonnell, 66 Ark. 448 179 
 
 Rutland Ry. L. & P. Co. v. WiUiams, 90 Vt. 275 202 
 
 Ryan v. Franklin, 199 N. Y. 347 373, 415 
 
 Ryckman v. Manerud, 68 Ore. 350 260 
 
 Ryder v. Wilcox, 103 Mass. 24 330 
 
 Ryerson v. Hendrie, 22 Iowa, 480 319 
 
 S 
 
 Sadler v. Nixon, 5 B. & Ad. 936 330 
 
 Safe Dep. & T. Co. v. Cahn, 102 Md. 530 411 
 
 Sage V. Ensign, 2 AHen, 245 246 
 
 V. Sherman, 2 N. Y. 417 91 
 
 Sailors v. Nixon-Jones Co., 20 lU. App. 508 18 
 
 St. Barbe, Ex parte, 11 Ves. 413 314 
 
 St. John V. Hendrickson, 81 Ind. 350 12 
 
 Salsbury v. EUison, 7 Colo. 167 142 
 
 Salter v. Ham, 31 N. Y. 321 20 
 
 Salt Lake City Brewing Co. v. Hawke, 24 Utah, 199 .^ ... 188 
 
 Sampson v. Shaw, 101 Mass. 145 ^m ... 12 
 
 Samstag & Hilder Bros. v. Ottenheimer & Weil, 90 Conn. 475 . 61, 176 
 
 Samuels, In re, 215 Fed. 845, 207 Fed. 195 299 
 
 Sanborn v. Royee, 132 Mass. 594 271 
 
 Sandilands v. Marsh, 2 B. & Aid. 673 180 
 
 Sands v. Durham, 99 Va. 263 365 
 
 Sandusky, Zn re, 17 N. V. R. 452 279 
 
 V. SidweU, 173 III. 493 261, 263 
 
 Sanford v. Miokles, 4 Johns. 224 244 
 
 San Gabriel Sanatorium Co., In re, 111 Fed. 892 301 
 
 Sanger v. French, 157 N. Y. 213 15, 350 
 
 Sangston v. Hack, 52 Md. 173 356, 362 
 
 Sargent v. Blake, 160 Fed. 57 123 
 
 Sarmiento v. The Catherine C, 110 Mich. 120 412 
 
 Saunders v. ReiUy, 105 N. Y. 12 153 
 
 Savage, /n re, 16 N. B. R. 368 310 
 
 Scarf V. Jardine, 7 App. Cas. 345 71 
 
 Sehellenbeck v. Studebacker, 13 Ind. App. 437 197 
 
 Soheuer v. Cochem, 126 Wis. 209 . ' 15 
 
 Sohlater v. Winpenny, 76 Pa. 321 238 
 
 Schlau V. Enzenbacher, 265 lU. 626 167, 238 
 
 Schleicher v. Walker, 28 Fla. 680 123 
 
 Schlicher v. Vogel, 61 N. J. Eq. 158 353 
 
 Schmerz v. Shreeve, 62 Pa. 457 161 
 
 Schmidt v. EUis, 69 N. H. 98 155 
 
 Schnaier v. Schmidt, 13 N. Y. Supp. 725 337 
 
 Schneider v. Schmidt, 82 N. J. Eq. 81 126 
 
 Scholtz V. Freud, 128 Mich. 72 23 
 
 Schoneman v. Fegley, 7 Pa. St. 433 249 
 
 Schumacher v. Sumner Tel. Co., 161 la. 326 20, 45, 194 
 
 Schwartz v. Soutter, 103 N. Y. 683 414 
 
Ixii TABLE OF CASES 
 
 PAGES 
 
 Seott V. Bryan, 96 N. C. 289 363 
 
 V. CampbeU, 30 Ala. 728 19 
 
 V. Dixie Fire Ins. Co., 70 W. Va. 533 137 
 
 Scruggs V. Burruss, 25 W. Va. 670 130 
 
 Soudder v. Ames, 89 Mo. 491 328 
 
 V. Ames, 142 Mo. 187 331, 376 
 
 Seabury v. BoUes, 51 N. J. L. 103 ., 72 
 
 Seaioh, Matter of, 170 App. Div. 686 382 
 
 Sears v. Starbird, 78 Cal. 225 328 
 
 Sebastian v. Booneville Academy Co., 56 S. W. (Ky.) 810 ... . 40 
 
 Second Nat. Bank v. Burt, 93 N. Y. 233 85 
 
 V. Weston, 161 N. Y. 520 201 
 
 Seeley v. MitcheU, 85 Ky. 508 102 
 
 Seldner v. Mt. Jackson Bank, 66 Md. 488 249 
 
 Seligman v. Friedlander, 199 N. Y. 373 261, 319 
 
 Sells V. HubbeU, 2 Johns. Ch. 394 327 
 
 Selwyn & Co. v. WaUer, 212 N. Y. 507 321 
 
 Senfert v. GiUe, 230 Mo. 453 343 
 
 Setzer v. Beale, 19 W. Va. 274 . . . ■ 8, 68 
 
 Sexton V. Anderson, 95 Mo. 373 123 
 
 V. Sexton, 9 Gratt. 204 321 
 
 Shaffer v. Martin, 25 App. Div. (N. Y.) 501 226 
 
 Shain v. Du Jardin, 38 Pac. (Cal.) 529 90 
 
 Shamburg v. Ruggles, 83 Pa. St. 148 268 
 
 Shanks v. Klein, 104 U. S. 18 109 
 
 Shapiro, In re, 106 Fed. 495 312 
 
 Shapleigh Hardware Co. v. Wells, 90 Tex. 110 163 
 
 Sharp V. Hibbins, 42 N. J. Eq. 543 352 
 
 Shaw et al, Appellants, 81 Me. 207 341 
 
 V. Gilbert, 111 Wis. 165 95 
 
 V. The State, 56 Ind. 188 173 
 
 Shearer v. Shearer, 98 Mass. 107 104 
 
 Sheble v. Strong, 128 Pa. St. 315 491, 492 
 
 Sheedy v. Sec. Nat. Bank, 62 Mo. 17 275 
 
 Sheen, Ex parte, 6 Ch. D. 235 289 
 
 Sheppard, Ex parte, Bulwer, In re, Mon. & Bl. 415 287 
 
 i>. Boggs, 9 Neb. 257 373 
 
 Sheridan v. Medara, 2 Stockt. (10 N. J. Eq.) 469 53 
 
 Sheriff v. Wilkes, 1 East, 48 190 
 
 Sherman v. Kreul, 42 Wis. 33 317 
 
 Sherrod v. Langdon, 21 Iowa, 518 77 
 
 V. Mayo, 156 N. C. 144 Ill 
 
 Sherwood v. His Creditors, 42 La. Ann. 103 .... 83, 413, 414 
 
 Shield e;. S. E. AdMns & Co., 117 Va. 616' 37 
 
 Shinn v. Shinn, 76 W. Va. — , 88 S. E. 610 13 
 
 Shirk V. Shultz, 113 Ind. 571 96 
 
 Shrader v. Downing, 79 Wash. 476 323 
 
 Shrum v. Simpson, 155 Ind. 160 31 
 
 Sikes V. Work, 6 Gray, 433 33 
 
 SiUitoe, Ex parte, 1 Gl. & J. 374 308, 309, 310 
 
 Simmins v. Parker, 4 Martin (n. s.) 207 141 
 
TABLE OF CASES kiii 
 
 PAGES 
 
 Simpson, In re, 9 Cli. App. 672 149 
 
 V. Feltz, 1 McCord, Eq. (S. C.) 213 362 
 
 Sindelare v. Walker, 137 111. 43 174 
 
 Singer v. Kelly, 44 Pa. 145 . . 387, 400, 412 
 
 Sinnott v. Germ. Am. Bank, 164 N. Y. 386 88 
 
 Skavdale v. Moyer, 21 Wash. 10 273 
 
 Skillman v. Lacliman, 23 Cal. 198 199 
 
 Skinner v. Shannon, 44 Mich. 86 113 
 
 Skylark, The, 4 Biss. 388 287 
 
 Slade V. Paschal, 67 Ga. 541 73 
 
 Slater v. Slater, 175 N. Y. 143 375, 378, 379 
 
 Sloan V. Moore, 37 Pa. St. 217 126 
 
 V. Wilson, 117 Ala. 583 138 
 
 Sloeum, In re, 22 Fed. Cases, 338 295 
 
 V. Head, 105 Wis. 431 48 
 
 Slvan V. Grollman, 113 Md. 192 303 
 
 Smilev v. Smiley, 112 Va. 490 364 
 
 Smith V. ArgaU, 6 Hill, 479 399 
 
 V. Ayrault, 71 Mich. 475 329 
 
 V. Bailey (1891), 2 Q. B. 403 77 
 
 V. Brown, 44 W. Va. 342 325 
 
 V. Burnham, 2 Sumn. 435 16 
 
 V. CoUins, 115 Mass. 388 195 
 
 V. Heineman, 118 Ala. 195 133 
 
 V. HiU, 45 Vt. 90 73 
 
 V. Kerr, 3 N. Y. 144 206 
 
 V. Orser, 42 N. Y. 132 273 
 
 V. Putnam, 107 Wis. 155 333 
 
 V. Richmond, 114 Ky. 303 358 
 
 V. Rogers, 17 Johns, 340 258 
 
 V. Sloan, 37 Wis. 285 191 
 
 V. Smith, 51 La. Ann. 72 373 
 
 w. U. S. Casualty Co., 197 N. Y. 420 90 
 
 V. Weston, 159 N. Y. 194 201 
 
 V. Zumbro, 41 W. Va. 623 353 
 
 Smith & Cheney Co. v. Schmidt, 142 Mich. 1 236 
 
 Smyth V. Harvie, 32 lU. 62 237 
 
 Snook, Petition of, 2 Hilt, 566 90 
 
 Snyder v. Studebacker, 19 Ind. 462 46, 47 
 
 Snyder Mfg. Co. v. Snyder, 54 Ohio St. 86 371, 374, 377 
 
 Solomon v. Kirtwood, 55 Mich. 256 374 
 
 Somerby v. Buntin, 118 Mass. 279 14 
 
 Somerset Potters Works v. Minot, 64 Mass. (10 Cush.) 592 .. . 310 
 
 Southern Commission Co. v. Porter, 122 N. C. 692 391 
 
 Southern JeUico Coal Co. v. Smith, 105 Ky. 769 113 
 
 Southworth v. Davison, 106 Minn. 119 379 
 
 Sparman v. Keim, 83 N. Y. 245 99 
 
 Spaulding v. Stuhbings, 86 Wis. 255 20 
 
 Speer Brothers, In re, 114 Fed. 910 201 
 
 Spencer v. Jones, 92 Tex. 616 24 
 
 Spencer Optical Co. v. Johnson, 63 S. C. 533 392 
 
Ixiv TABLE OF CASES 
 
 PAGES 
 
 Springer v. CabeU, 10 Mo. 640 330 
 
 Sprout V. Crowley, 30 Wiss. 187 334 
 
 Staats V. Bristow, 73 N. Y. 274 254, 272 
 
 Stables v. Eley, 1 C. & P. 614 77 
 
 Stafford v. Gold, 9 Pick. 533 143 
 
 V. Sibley, 106 Al. 189 67 
 
 Stafford Bank v. Palmer, 47 Conn. 443 45 
 
 Stahl V. Osmers, 31 Or. 199 135 
 
 Stair V. Richardson, 108 Ind. 429 241, 244 
 
 Standard Wagon Co. v. Few & Co., 119 Ga. 293 192 
 
 Stanton v. Westover, 101 N. Y. 265 122 
 
 Staples V. Schmid, 26 At. 193 217 
 
 V. Sprague, 75 Me. 458 230 
 
 State V. Am. Cotton Oil Trust, 1 Ry. & Corp. L. J. 509 .... 39 
 
 V. Cloudt, 84 S. W. (Tex.) 415 87 
 
 V. Withrow, 141 Mo. 69 142 
 
 State Bank of Lushton v. O. S. Kelley Co., 47 Neb. 678 ... . 139 
 State ex rel. Bogey v. Neal, 29 Wasb. 391 103 
 
 Railroad Commission v. U. S. Express Co., 66 Minn. 271 . . 43 
 
 State Nat. Bank v. Butler, 149 111. 675 9, 30 
 
 Staver Mfg. Co. v. Blake, 111 Micb. 282 401 
 
 Stearns v. BrookUne, 219 Mass. 238 65, 148 
 
 Stebbins v. Willard, 53 Vt. 665 245 
 
 Steffen v. Smith, 159 Pa. St. 207 387 
 
 Stein & Co., L., In re, 127 Fed. 547 87, 304 
 
 Stein V. La Dow, 13 Minn. 412 131 
 
 Steiner v. Peters Stone Co., 119 Ala. 371 153 
 
 Steiner, Lobman & Frank v. T. S. Faulk & Co., 222 Fed. 61 . 132, 187 
 
 Steinfeld v. Nat. Shirt Waist Co., 99 App. Div. 286 376 
 
 Stettheimer !;. Tone, 114 N. Y. 501 339 
 
 Steuart v. Gladstone, 10 Cb. Div. 626 372, 373 
 
 Stevens, In re, 104 Fed. 323 310 
 
 V. McLachlan, 120 Mich. 285 191 
 
 V. Perry, 113 Mass. 380 252 
 
 Stewart's Case, 4 Abb. Pr. (N. Y.) 408 318 
 
 Stewart v. Brown, 37 N. Y. 350 113 
 
 V. Levy, 36 Cal. 159 218 
 
 Stickney v. Smith, 5 Minn. 486 87 
 
 Stoallings v. Baker, 15 Mo. 481 32 
 
 Stockwell V. U. S., 13 Wall. 531 213, 216 
 
 Stone, Ex parte, L. R. 8 Ch. 914 306 
 
 V. Marsh, 6 B. & C. 551 224 
 
 Stout V. Baker, 32 Kan. 113 251 
 
 Stradley v. Cargill El. Co., 135 Mich. 367 398 
 
 Straffln v. Newell, T. U. P. Charlton (Ga.) 163 207 
 
 Strang v. Thomas, 114 Wis. 99 404, 411 
 
 Strange v. Lee, 3 East, 484 168 
 
 Stratton v. O'Connor, 34 S. W. 158 55 
 
 Streichen v. Fehleisen, 112 Iowa, 612 170 
 
 Striker, Matter of, 24 Misc. (N. Y.) 422 318 
 
 Stringfellow v. Wise, 27 S. E. 432 352 
 
TABLE OP CASES Ixv 
 
 FAQES 
 
 Stuart V. Corning, 32 Conn. 105 252 
 
 Stubbs V. Sargon, 2 Keen, 255 90 
 
 Sturgeon v. Apollo Oil Co., 203 Pa. 369 385 
 
 Sturges V. Swift, 32 Miss. 239 334 
 
 Suau V. CafEee, 122 N. Y. 308 11 
 
 Sullivan v. Louisville & N. R., 128 Ala. 77 266 
 
 V. SuUivan, 122 Wis. 326 328 
 
 V. SuUivan Mfg. Co., 20 S. C. 79 48 
 
 Sun Ins. Co. v. 1 Kountz. Line, 122 U. S. 583 36 
 
 SunHn v. Skatt, 133 Miot. 208 218 
 
 Sutro V. Wagner, 23 N. J. Eq. 388 348 
 
 Sutton V. English &c. Co., [1902], 2 Ch. 502 277 
 
 Swan V. Steele, 7 East, 210 129, 190, 265 
 
 Swann v. Sanborn, 4 Woods, 625 290 
 
 Sweet u. Bradley, 24 Barb. (N. Y.) 549 . '. 180 
 
 y. Morrison, 103 N. Y. 235 174,336 
 
 V. Wood, 18 R. I. 386 184 
 
 Swift V. Jewsbury, L. R. 9 Q. B. 301 90 
 
 Swire v. Redman, 1 Q. B. D. 536 166 
 
 Sylvester v. Atkinson, 45 Miss. 81 200 
 
 T 
 
 Taber-Prang Art Co. v. Durant, 189 Mass. 173 29 
 
 Taft V. Schwamb, 80 lU. 289 362, 363, 368 
 
 Tapley v. Butterfleld, 1 Met. 515 ^ 127, 179, 206 
 
 Tarbell v. West, 86 N. Y. 280 102 
 
 Tasker v. Shepherd, 6 H. & N. 575 167 
 
 Tate V. Clements, 16 Fla. 339 246 
 
 Taylor v. Jones, 42 N. H. 25 215 
 
 V. Rasch, 11 N. B. R. 91 400 
 
 V. Taylor, 28 L. T. R. 189 140 
 
 V. Terme, 3 H. & J. 505 63 
 
 V. Thompson, 176 N. Y. 168 336, 338 
 
 V. WUson, 58 N. H. 465 77, 78 
 
 Teague v. Lindsey, 106 Ala. 266 84, 121 
 
 Tebbetts v. RolUns, 192 Mass. 169 285 
 
 Telfer, In re, 184 Fed. 728 308 
 
 Tennant v. Dunlop, 97 Va. 234 145, 321, 375 
 
 TerreU v. Hurst, 76 Ala. 588 173 
 
 Tevis V. Carter, 111 Ky. 938 333 
 
 Thayer v. Augustine, 55 Mich. 187 26 
 
 V. Badger, 171 Mass. 279 326 
 
 V. Goss, 91 Wis. 90 71 
 
 V. Humphrey, 91 Wis. 276 78, 79, 123, 289, 290 
 
 ThiUman v. Benton, 82 Md. 64 64 
 
 Third Nat. Bank v. Lanahan, 66 Md. 461 284 
 
 V. Snyder, 10 Mo. App. 211 197 
 
 Thomas v. Atherton, 10 Ch. D. 185 329 
 
 V. Clark, 18 C. B. 662 42 
 
Ixvi TABLE OP CASES 
 
 PAGES 
 
 Thomas v. Harding, 8 Me. 417 184 
 
 V. Winchester Bank, 105 Ky. 694 359, 360 
 
 Thomas & Sivyer, In re, 8 Biss. 139 286 
 
 Thompson, In re, 208 Fed. 207 286 
 
 V. Brown, M. & M. 40 128 
 
 V. First Nat. Bank, 111 U. S. 530 69 
 
 V. Lewis, 34 Me. 167 275 
 
 Thompson, Matter of, 10 App. Div. (N. Y.) 40 280 
 
 V. McKee, 43 Okla. 243 15 
 
 V. White, 25 Colo. 226 319 
 
 Thornton a. Barber, 48 App. Div. (N. Y.) 298 31 
 
 ■0. Dixon, 3 Brown's C. C. 199 29 
 
 Thynne v. Shove, 45 Ch. Div. 577 377 
 
 Tide Water Kpe Co. v. State Board of Assessors, 57 N. J. L. 516 . 43 
 
 Tierney v. Klein, 67 Miss. 173 374 
 
 Tilford V. Ramsay, 47 Mo. 563 91 
 
 Titoomb v. James, 57 lU. App. 296 187 
 
 Tobias v. Blin, 21 Vt. 644 26 
 
 Tobin V. McKinney, 14 S. Dak. 52 75 
 
 Todd, Ex parte, DeG. 87 315 
 
 Toof V. Duncan, 45 Miss. 48 222 
 
 Topping, Ex parte. Levy, In re, 4 DeG. J. & S. 551 314 
 
 Torbert v. Jeffrey, 161 Mo. 645 64 
 
 Tournade v. Methfessel, 3 Hun, 144 417 
 
 Townsend v. Devaynes, Mont, on Part. (1st ed.) Notes, p. 97 . . 29 
 
 Tracy v. Tuffly, 134 U. S. 206 401 
 
 Trafford v. Hubbard, 15 R. I. 326 275 
 
 Trego ». Hunt, [1896] App. Cas. 7 371, 372, 380, 381 
 
 Tripp V. Deupree, — Okla. — , 158 Pac. 923 g8 
 
 Trotman, Ex parte, Kriegel, In re, 5 Rep. 68 L. T. 588 .... 287 
 
 Troup's Case, 29 Beav. 353 361 
 
 Trowbridge w. Scudder, 11 Cush. 83 48 
 
 Tucker v. Murphy, 114 Ga. 662 335 
 
 Tunley v. Evans, 2 Dow. & L. 747 203 
 
 Turbeville v. Ryan, 1 Humph. 113 206 
 
 Turnipseed v. Goodwin, 9 Ala. 372 348 
 
 Tyrrell v. Washburn, 6 AUen (88 Mass.) 466 40, 42 
 
 Tyson v. Pollock, 1 P. & W. (Pa.) 375 172 
 
 U 
 
 Union Nat. Bank v. Neill, 149 Fed. 711 200 
 
 Unterberg v. Elder, 211 N. Y. 499 167 
 
 U. S. V. Cohn, 128 Fed. 615 221 
 
 U. S. Bank v. Binney, 5 Mason, 176 92 
 
 V 
 
 Vacearo, The Joseph, 180 Fed. 272 34 
 
 Vaooaro v. Security Bank, 103 Fed. 436 304 
 
 Valentine v. Healey, 178 N. Y. 391 94 
 
 V. Wysor, 123 Ind. 47 I45 
 
TABLE OF CASES Ixvii 
 
 Van Alstyne v. Cook, 25 N. Y. 489 410, 413 
 
 Vandergrift w. Vandergrift, 226 Pa. 25^ ......... / 358 
 
 Vandike v. Rosskam, 67 Pa. St. 330 . . 406 
 
 Van Dyke v. Seelye, 49 Minn. 657 . . . 190, 191 
 
 Van Housen v. Copeland, 180 111. 74 ' ' 16 
 
 Van Ingen v. Whitman, 62 N. Y. 513 . '. '. '. '. '. '. '. '. '. '. 393 
 Van Keuren 2). Parmelee, 2 N. Y. 523 ........ 241,246 
 
 Van Sandan v. Moore, 1 Russ. 441 '38 
 
 Van Tine v. Crane, 1 Wend. 524 . . '. 171 
 
 V. Hilands, 142 Fed. 613 ! ! 360 
 
 Veith V. Ress, 60 Neb. 52 280 
 
 Venning v. Leckie, 13 East, 7 ! . . 334 
 
 Vernon v. Manhattan Co., 22 Wend. 183 75 
 
 Vetsoh V. Neiss, 66 Minn. 459 198 
 
 Vetterlein, In re, 5 Ben. 311 154 
 
 Von Aernam v. Bleistein, 102 N. Y. 355 43 
 
 Von Au V. Magenheimer, 126 App. Div. 257 382 
 
 Von Bremen!). MacMonnies, 200 N. Y. 41 380,381 
 
 Voorhis v. Child's Executor, 17 N. Y. 354 317, 319 
 
 W 
 
 Wade V. Jenkins, 2 Giff. 509 381 
 
 Wadhams v. Page, 1 Wash. 420 257 
 
 Wadsworth v. Duncan, 164 111. 360 40, 42 
 
 V. Manning, 4 Md. 59, 69 13 
 
 Wagner v. Simmons, 61 Ala. 143 195 
 
 Wahl V. Barnum, 116 N. Y. 87 . . 15 
 
 Wait, In re, 1 Jac. & W. 605 300 
 
 V. Thayer, 118 Mass. 473 201 
 
 Waite V. Dodge, 34 Vt. 181 70 
 
 V. Foster, 33 Me. 424 244 
 
 Walburn v. Ingilby, 1 My. & K. 61 41 
 
 Walcott V. Canfleld, 3 Conn. 194 183 
 
 Walkenshaw v. Perzel, 32 How. Pr. 233 409 
 
 Walker v. Hirsch, 27 Ch. D. 460 66 
 
 V. MiUer, 139 N. C. 448 100 
 
 V. Mottram, 19 Ch. Div. 355 381 
 
 V. Wait, 50 Vt. 668 339 
 
 V. Wood, 170 lU. 463 389 
 
 V. Yellow Poplar Lumber Co., 35 S. W. 272 188 
 
 WaU V. Fife, 37 Pa. 394 152 
 
 V. London & N. Assets Corp., 2 Ch. 469 231 
 
 Wallace v. Fairman, 4 Watts, 378 160 
 
 V. Milligan, 110 Ind. 498 156 
 
 Walmesley v. Cooper, 11 A. & E. 216 207 
 
 Walsh V. Lennon, 98 lU. 27 161, 195 
 
 Walstrom v. Hopkins, 103 Pa. 118 259 
 
 Ward V. Brigham, 127 Mass. 24 45 
 
 Warder v. Newdigate, 11 B. Mon. 174 191 
 
 Warfield v. Booth, 33 Md. 63 373 
 
Ixviii TABLE OF CASES 
 
 PAGHS 
 
 Warner v. Cunmngham, 3 Dow. 76 8 
 
 V. Griswold, 8 Wend. (N. Y.) 665 211, 212 
 
 V. Smith, 1 DeG. J. & S. 337 172 
 
 Warren v. Parmer, 100 Ind. 593 317, 318 
 
 V. Martin, 24 Neb. 273 129 
 
 V. Taylor, 60 Ala. 218 365 
 
 Warren Dep. Bank v. Younglove, 112 Ky. 767 200 
 
 Warring v. Arthur, 98 Ky. 34 328 
 
 Waterer v. Waterer, L. R. 15 Eq. 402 31 
 
 Watson V. Hinchman, 42 Mich. 27 220 
 
 V. Woodman, L. R. 20 Eq. 721 247 
 
 Watts V. Adler, 130 N. Y. 646 353 
 
 Waugh V. Carver, 2 H. Bl. 235 52, 54, 59, 60, 69 
 
 Webb V. Hicks, 123 N. C. 244 59 
 
 Webster v. Clark, 34 Fla. 637 20, 66, 69 
 
 V. Lanum, 137 Fed. 376 388, 390, 395 
 
 V. Webster, 180 Mass. 310 381 
 
 Weil V. Jones, 70 Mo. 560 143 
 
 Weirioh v. Dodge, 101 Wis. 621 337 
 
 Weisenberg & Co., In re, 131 Fed. 517 154 
 
 Weld V. Johnson Mfg. Co., 86 Wis. 549 108 
 
 Welker v. WaUaoe, 31 Ga. 362 225 
 
 Welles V. March, 30 N. Y. 344 131 
 
 Wells V. Masterman, 2 Esp. 731 8 
 
 V. Turner, 16 Md. 133 183 
 
 Werner v. Calhoun, 55 W. Va. 246 76 
 
 V. Her, 54 Neb. 576 118, 121 
 
 Wessels v. Weiss, 166 Pa. 490 56, 59, 62, 63 
 
 West!). The VaUey Bank, 6 Ohio St. 168 84 
 
 West Nat. Bank v. Perez, [1891] 1 Q. B. 304 253 
 
 West Point Foundry Ass'n v. Brown, 3 Ed. Ch. 284 . . . . 36, 405 
 
 Western Assur. Co. w. Towle, 65 Wis. 247 203 
 
 Western Securities Co. v. Atlee, 168 la. 650 145 
 
 Western Stage Co. v. Walker, 2 Iowa, 504 231 
 
 Westinghouse Elec. Mn'f. Co. v. Hubert, 175 Mich. 568 ... . 74 
 
 Weston, Ex parte, 12 Met. 1 152 
 
 Wetter v. Sohlieper, 4 E. D. Smith, 707 131 
 
 Wharton v. Woodburn, 4 Dev. & B. L. 507 162, 184 
 
 Wheatley v. Calhoun, 12 Leigh, 264 30 
 
 V. Tutt, 4 Kan. 240 186 
 
 Wheaton v. Cadillac Automobile Co., 143 Mich. 21 167 
 
 Wheeler v. Arnold, 30 Mich. 304 332 
 
 V. Nevins, 34 Me. 54 161 
 
 Wheelock v. Doolittle, 18 Vt. 440 248 
 
 Whelann. Shain, 115Cal. 326 152 
 
 Whigam's Appeal, 63 Pa. 194 271 
 
 Whitaker v. Brown, 16 Wend. 504 225 
 
 Whitoomb v. Converse, 119 Mass. 38 362, 363 
 
 V. Whiting, 2 Doug. 652 247 
 
 White V. Biseman, 134 N. Y. 101 396, 397 
 
 V. Farnham, 99 Me. 100 266 
 
TABLE OF CASES Ixix 
 
 .^ PAGES 
 
 White V. Hackett, 20 N. Y. 179 415 
 
 V. Harlow, 6 Gray, 463 . . 330 
 
 V. Kearney, 2 La. Ann. 639 . . 236 
 
 V. Smith, 12 Rich. L. 595 . . 263 
 
 V. Trowbridge, 216 Pa. 11 371 377 
 
 WhitehiU v. Shiekle, 43 Mo. 537 '. . . ' 67 
 
 White Star Line v. Star Line, 141 Mich. 604 . . 35 
 
 Whiteworth v. Patterson, 6 Lea, 119 ] .' 289 
 
 Whiting V. Farrand, 1 Conn. 60 236 
 
 Whitney v. Wenman, 198 U. S. 539 ! ! ! ! 302 
 
 V. Whitney, 115 Ky. 552 ! ! 374 
 
 Whittaker v. Colhns, 34 Minn. 299 . . 263 
 
 Whittemore v. Elliott, 7 Hun, 518 . . 96 
 
 V. Macdonell, 6 Up. Can. C. P. 547 ! 397 
 
 Whitwell V. Arthur, 35 Beav. 140 347 
 
 Whitworth v. Harris, 40 Miss. 483 13, 14 
 
 Wioks V. Perkins, 1 Woods, 383 286 
 
 Wiggins V. Bisso, 92 Tex. 219 356 
 
 V. Blaekshear, 86 Tex. 670 83, 119, 122, 291 
 
 WigginsFerry Co. y. Chioago&A. Ry., 128Mo. 224 35 
 
 Wightman v. Townroe, 1 M. & S. 412 64 
 
 Wilby V. Phinney, 15 Mass. 116 171 
 
 Wilcox, In re, 94 Fed. 84 293 
 
 V. Kellogg, 11 Ohio, 394 123 
 
 Wild V. Davenport, 48 N. J. L. 129 9, 65 
 
 V. Dean, 3 AUen (85 Mass.) 579 292 
 
 w. Milne, 26 Beav. 504 - 103,241 
 
 Wiley, In re, 4 Biss. 214 291 
 
 Wilhelm v. Caylor, 32 Md. 157 331 
 
 Wilkins v. Davis, 15 N. B. R. 60, 2 Low. 501 . . 298, 386, 408, 416 
 
 V. Pearce, 5 Den. 541 233, 234 
 
 Wilkinson v. Frasier, 4 Bsp. 182 55 
 
 V. Henderson, 1 M. & K. 582 316, 317 
 
 WiUey v. Crocker-Woolworth Nat. Bank, 141 Cal. 508 . . . 129, 269 
 
 Williams, Sx parte, 11 Ves. 3; 8 R. R. 62 230 
 
 V. Farrand, 88 Mich. 473 377, 379, 380 
 
 V. Gillies, 75 N. Y. 197 166 
 
 V. Hendriek, 105 Va. 791 . 351 
 
 V. Hendricks, 115 Ala. 277 218, 226 
 
 V. Hurley, 135 Ala. 319 87 
 
 V. Inhabitants of Mffton, 215 Mass. 1 44 
 
 V. Muthersbaugh, 29 Kan. 730 254 
 
 V. Pederson, 47 Wash. 472 325 
 
 V. Rogers, 110 Mich. 418 31 
 
 V. Rogers, 14 Bush (77 Ky.) 776 319 
 
 V. Walbridge, 3 Wend. 415 201 
 
 V. Whedon, 109 N. Y. 333 142 
 
 V. Whitmore, 9 Lea, 262 237 
 
 V. Wilson, 4 Sand. Ch. 380 375 
 
 Williamson v. Johnson, 1 B. & C. 146 91 
 
 V. Monroe, 101 Fed. 322 322 
 
Ixx TABLE OF CASES 
 
 ''~~ ' PAGES 
 
 Willis V. Barron, 143 Mo. 450 339 
 
 V. Crawford, 38 Ore. 522 24 
 
 V. Freeman, 36 Vt. 44 270 
 
 V. Henderson, 43 Ga. 325 276 
 
 V. Rector, 50 Fed. 684 75 
 
 V. Sharp, 113 N. Y. 586 65 
 
 Wills V. Murray, 4 Exoh. 843 41 
 
 Wilson V. Greenwood, 1 Swanston, 471 239' 
 
 V. Robertson, 21 N. Y. 587 119 
 
 V. WilHams, L. R. 29 Ir. Ch. 176 373 
 
 V. Wilson, 26 Or. 251 334 
 
 Wilson Bros. Garage v. Tudor, 89 Vt. 522 89 
 
 Wilson's Ex'rs v. Cobb's Ex'rs, 28 N. J. Eq. 177 7 
 
 Win V. Devine, 62 N. J. L. 374 168 
 
 Winner v. Kuebn, 97 Wis. 394 255 
 
 Winship v. Bank of U. S., 5 Pet. 529 176, 193 
 
 Winslow V. Young, 94 Me. 145 24, 27 
 
 Winston v. Ewing, 1 Ala. 129 275 
 
 Winter v. Pipher, 96 Iowa, 17 66 
 
 Wish V. SmaU, 1 Camp. 333 n 55 
 
 Wishek v. Hammond, 10 N. D. 72 13 
 
 Woelfel V. Thompson, 173 Mass. 301 362 
 
 Woerz V. Schumacher, 161 N. Y. 530 361 
 
 Wolf V. New Orleans &c. Co., 52 La. Ann. 1357 253 
 
 Wood V. Am. Fire Ins. Co., 149 N. Y. 382 137 
 
 V. Beath, 23 Wis. 254 348 
 
 V. Braddick, 1 Taunt. 104 239, 245 
 
 V. Dodgson, 2 M. & S. 195 163. 
 
 V. Duke of ArgyU, 6 M. & G. 928 72 
 
 V. Pennell, 51 Me. 52 69 
 
 V. Railway Co., 72 N. Y. 196 88 
 
 V. Woad, L. R. 9 Ex. 190 332 
 
 Woodling V. Knickerbocker, 31 Minn. 268 220 
 
 Woodman v. Boothby, 66 Me. 389 171 
 
 Woodmansie v. Holoomb, 34 Kan. 35 117 
 
 Woodson D. Wood, 84 Va. 478 250 
 
 Woodward v. McAdam, 101 Cal. 438 100 
 
 Woodward-Holmes Co. v. Nudd, 58 Minn. 236 110 
 
 Woolsey v. Henke, 125 Wis. 134 161, 198, 206 
 
 Worrall v. Munn, 5 N. Y. 229 161 
 
 Worster v. Forbush, 171 Mass. 423 197 
 
 Worth, In re, 130 Fed. 927 119 
 
 Worthington v. Griesser, 77 App. Div. 203 49 
 
 Wray v. Milestone, 5 M. & W. 21 335 
 
 Wright V. Cudahy, 168 111. 86 356 
 
 V. Hooker, 10 N. Y. 51 84, 87 
 
 V. Hunter, 5 Ves. 792 327 
 
 V. Powell, 8 Ala. 560 69 
 
 Wright Bros. v. Merchants & Planters Packet Co., 104 Miss. 507 . 182 
 
 Wrightman v. Wrightman, 223 Mass. 398 373 
 
 Wurtz V. Hart, 13 Iowa, 515 284 
 
TABLE OP CASES Ixxi 
 
 Y 
 
 FAOEB 
 
 Yale V. Eames, 1 Met. 486 244 
 
 Yancey v. Lamar-RanMn Drug Co., 140 Ga. 359 13 
 
 Yarbrough v. Bush, 69 Ala. 170 252 
 
 Yates V. Lyon, 61 N. Y. 344 96 
 
 Yerkes v. McFaddon, 141 N. Y. 136 254 
 
 Yoho V. McGovern, 42 Ohio St. 11 263 
 
 Yonge, Ex -parte, 3 Ves. & B. 31 309, 336 
 
 YorkslureBanMngCcw. Beatson, 5C. P. D. 109 92 
 
 Young V. Axtell, 2 H. Bl. 242 69 
 
 V. Stevenson, 73 Ark. 480 159 
 
 Z 
 
 ZeU's Appeal, 126 Pa. 329 325 
 
 Ziemer v. C. G. Bretting Mn'f. Co., 147 Wis. 252 124 
 
 Zimmerman v. Erhard, 83 N. Y. 74 88 
 
THE LAW OF PARTNERSHIP 
 
 INTRODUCTION 
 
 § 1. A Modem Branch of Bnglish Law. 
 
 Most of the rules relating to partnership in English law have 
 been developed within a little more than a century. No dis- 
 cussion of them is found in Blackstone's Commentaries, and even 
 his allusions to the subject are few and casual.^ In the early 
 abridgments and digests, the few reported cases on this topic are 
 widely scattered under various heads, such as Accounts, Mer- 
 chant, Survivorship. Even Viner, who appears to have been 
 the first to collect them under the title of Partnership, found no 
 diflBculty in compressing them into less than six pages of the ten 
 thousand and more which make up his twenty volumes.^ 
 
 Undoubtedly the Italian bankers, who carried on their trade 
 by means of large "societies" or companies, began to teach Eng- 
 lishmen " a little about partnership",' during the reign of Ed- 
 ward I. ; but Englishmen do not seem to have put that knowledge 
 to much practical use until the closing years of Elizabeth's reign, 
 when the rapid expansion of commerce opened their minds to 
 the advantages to be gained by uniting the capital and skill of 
 several individuals in a common enterprise. 
 
 (a) Paudty of Decisions in Early Reports. — For a century 
 or more after partnership became an established and successful 
 institution of English commerce, it rarely occupied the attention 
 
 ifil. Coirin. 399 (no survivorship among partners). 3 Ihid., 437 
 {courts of equity have jurisdiction of partnership accountii^). 
 
 2 Vol. 15 (1742). 
 
 12 Pollock and Maitland's Hist, of Eng. Law, 219. C/. Mitchell, 
 Early Forms of Partnership. 3 Select Essays in Anglo-American Legal 
 History, 183 (1904). 
 
 1 
 
2, THE LAW OF PAKTNEKSHIP 
 
 of English courts of justice. Probably this is due to the fact that, 
 during a part of this period, disputes between merchants were 
 disposed of, not by the ordinary tribunals of the realm, but by 
 the various kinds of Merchants' Courts.^ Even when these died 
 out, and the disputes came before the law courts for determina- 
 tion, the judges, prior to Lord Mansfield's time, had the habit of 
 leaving to the jury not only the facts of each case, but the custom, 
 of merchants applicable thereto, "with a result that cases were 
 rarely reported as laying down any particular rule, because it was 
 almost impossible to separate the custom from the facts." ^ 
 
 It is not surprising, therefore, that the first attempt to bring 
 the law of partnership into a systematic form was not made until 
 the closing years of the eighteenth century ; nor that the treatise * 
 then published possesses but little value for the student or prac- 
 titioner of to-day. 
 
 § 2. Incongruous Elements in English Partnership Law. 
 
 A learned writer has said : "The law of partnership rests on a 
 foundation composed of three materials; the Common Law, the 
 Law of Merchants, and the Roman law." * It must be added 
 that these different materials, like the iron and the clay in the 
 image of Nebuchadnezzar's vision, do "not cleave one to another." 
 Nor has English jurisprudence yet shown its ability to assimilate 
 them. 
 
 This diversity of materials in the very foundation of English 
 partnership law will constantly force itself upon our attention 
 as we proceed with our subject. We shall discover, from time 
 to time, not only a lack of aflSinity, but positive repulsion between 
 common law principles and the usages of merchants. A single 
 example will suflice by way of illustration. 
 
 ^The law of merchants recognized a partnership as an entity 
 separate and distinct from the members composing it; such is 
 still the mercantile conception of a firm. This quasi person holds 
 the title to the firm property. It acquires rights and incurs 
 obligations of its own. It may deal even with its own members, 
 
 1 Zoucli's Administration of Admiralty, 89-129 (London, 1686). 
 ^ Scrutton's Mercantile Law, 13 (London, 1891). 
 ' Watson on Part. (London, 1794). -^ 
 
 * Collyer on Part. 1. (London, 1840). 
 
INTRODTJCTION ' 3 
 
 thus becoming their creditor or debtor. But the common law 
 flouts all such notions. It refuses to personify the firm. A 
 partnership is but an association of individuals. It cannot con- 
 tract with its members, because a man cannot contract with 
 himself. To this conflict of views is due much of the confusion 
 and perplexity which characterize some of the branches of our 
 partnership law.^ 
 
 (a) Attempts at Assimilation were abandoned in England and 
 the law of partnership with its existing incongruities has been 
 codified.^ In this country, the experiment has been tried of bring- 
 ing the legal rules into conformity with the mercantile conception 
 of a partnership ; ^ but the doctrine of stare decisis has deterred 
 the courts from joining effectually in this movement, and legis- 
 lation has given it but a fitful and uncertain support. One of 
 the severest critics of this experiment has attempted to system- 
 atize the law of partnership upon the basis of firm property. 
 "The instant the notion of firm property is brought forward," he 
 declares, "the material is furnished for an explanation of the 
 relation in all its bearings." * 
 
 The most successful attempt to reduce the legal rules relating 
 to partnership to a coherent system is found in The Uniform 
 Partnership Act, which was approved by the Conference of Com- 
 missioners on Uniform State Laws and has been adopted by 
 State legislatures.* It is described by its draftsman as prepared 
 " on the so-called aggregate or common-law theory, treating the 
 partners not as joint tenants, but as co-owners of the partnership 
 property holding by a distinct tenancy which he called tenancy 
 
 1 British Partnership Act, 1890. See Pollock's Digest of Part. (3d 
 ed.), xxi, and PoUock's Essays on Jurisprudence, 95, for an optiinistie 
 view of the present state of partnership law. In the preface to his second 
 edition of "Principles of Partnership", James Parsons refers to the British 
 Statute as follows : "Incredible as it may seem, this Act ignores the theo- 
 ries by which the cases must be classified. This is codification run mad." 
 
 2 See Parsons on Part. (4th ed.), §§ 1, 3, 4, 46; Ames's Draft of Uni- 
 form Partnership* Law, and 28 Am. Bar Assoc. Rep. 732 (1905). 
 
 3 Parsons (Jas.), Principles of Part. (1st ed.), Ixv. Mr. Parsons' 
 theory of the partnership relation has been ably championed by George 
 Wharton Pepper, in "What Constitutes a Partnership", 37 Am. L. Reg. 
 jsr. s. 141, 295 (1898). 
 
 ^Enacted in Penn., Wis., Md. • 
 
4 THE LAW OF PARTNERSHIP 
 
 in partnership. To this tenancy he gave those legal incidents 
 which seemed to correspond to the understanding of partners 
 and promote partnership as a practical form of business organiza- 
 tion." 1 
 
 The extent to which this Act modifies existing law will be 
 pointed out in the following pages. 
 
 ' The Uniform Partnership Act. By William Draper Lewis. 29 Harv. 
 L. Rev. 158, 171 (1915). The history of the Act is sketched in the 
 foregoing article, and by the draftsman again, in 24 Yale Law J., 617 
 (1915) and in 52 Legal Intelligencerv 110 (1915). See also "The Uniform 
 Partnership Act, with Some Remarks on Other Uniform State Laws." 
 63 Univ. of Pa. L. Rev. 196 (1915), and Criticisms of the Act by Judson 
 A. Crane in 28 Harv. L. Rev. 762 (1915) and 29 Ibid., 838 (1916). 
 
CHAPTER I 
 
 THE FORMATION OF A PARTNERSHIP 
 
 § 1. Partnership results from Contract. 
 
 The relationship of partners is not imposed by the law upon 
 individuals, but is created by their voluntary assent. In the 
 language of an early writer : " Societie is a contract by consent 
 about a thing to be had or used in common on both sides. . . . 
 But that only is properly called Societie, which by mutuall con- 
 sent is applied to that end, that there may be partnership or fel- 
 lowship among the persons contracting ; wherein so soon as they 
 are fully agreed, the one is properly called the other's fellow." ^ 
 This doctrine, originating in the Roman law, became a part of 
 the law merchant, and has been uniformly adhered to by com- 
 mon law courts in litigations between partners themselves; al- 
 though, as we shall see hereafter, it was discarded for a time in 
 England, and is still questioned in some of our jurisdictions, 
 when the rights of third persons are involved. 
 
 (a) An Early Decision of the House of Lords. — It is true that 
 the Court of Chancery once decided that a partnership existed 
 which "did not arise by contract", but the decree was reversed 
 by the House of Lords. In that case, a London trader invited 
 his nephew to remove from Hamburg, with a view to becoming a 
 partner. Upon the nephew's removal, a new set of books was 
 opened, in which he appeared as a partner, and his name was 
 used as that of a member of the firm for about two years. No 
 articles of partnership were entered into, however, and the uncle, 
 when giving the invitation, had expressly notified the nephew 
 that he was "to expect no benefit from the trade", unless he suc- 
 
 > West's Symboleograpliy (1590), § 26. 
 5 
 
6 THE LAW OF PARTNERSHIP 
 
 ceeded in marrying a woman with a fortune of twenty thousand 
 rix-doUars. In the course of about two years, the uncle found 
 that the nephew " had not that turn to business which was likely 
 to prove advantageous to either of them", and as the nephew had 
 not succeeded "in such a match" as had been stipulated for, the 
 uncle sent the nephew home, and formed a partnership with an- 
 other person. No accounting was had between them, nor was 
 any claim made by the nephew against the uncle during their 
 lives. After their deaths, the representatives of the nephew 
 filed a bill for a moiety of the stock and of the profits of the trade 
 for the two years during which the nephew's name had been asso- 
 ciated with his uncle's in the business. The Court of Chancery 
 having "declared that the testator and his nephew ought to be 
 looked upon as partners, and that such partnership did not arise 
 by contract", the decree in favor of the complainants was reversed 
 by the House of Lords, and upon a trial at law in the King's 
 Bench "a verdict was found that the partnership was nominal 
 only, and not real." ^ 
 
 (b) Other Examples. — A broker buying goods for several un- 
 disclosed principals, who are to have separate shares therein, is 
 not brought thereby into partnership relations with them. The 
 transaction is not one in which the parties "meet and contract 
 together as partners." ^ Nor does the master of a ship become a 
 partner with a friend who furnishes money, with which the master 
 buys goods to be taken by him on a voyage, although it is agreed 
 if any profit shall arise from them the friend shall have one half 
 for his trouble. It is only " an agreement for so much, as a com- 
 pensation for the friend's trouble, and for lending the master his 
 credit." ^ Even the joint owners of a cargo, bought with the 
 
 1 Jacobsen v. Hennekenius, 5 Bro. P. C. 482 (1714). 
 
 2 Hoare v. Dawes, 1 Doug. 371 (1780); Burdick's Cases on Part. 1. 
 Accord. Bower v. Jolinson, 28 La. Ann. 9 (1876) ; Jackson v. Robinson, 3 
 Mason (U. S. Cir. Ct.), 138 (1822). At p. 141, Story, J., says: "In my 
 judgment there was no community of interest in the cargo, as partners. 
 It appears from the admission of the parties, as well as the proofs, that 
 they never were, nor designed to be, partners ; and that they held their 
 titles to undivided portions of the cargo, not as a common, but as a sep- 
 arate interest. If either had died, his share would not have survived to 
 the others.'' 
 
 ' Hesketh v. Blanchard, 4 East, 144 (1803). 
 
THE FORMATION OF A PAETNEESHIP 7 
 
 proceeds of an outward cargo, are not partners unless they have 
 contracted with each other for that relationship.-^ 
 
 Again, a trader cannot convert his creditor into a partner by- 
 agreeing to pay the latter a share of the net profits of the business, 
 in addition to interest ; ^ and the creditor of a partner, by taking 
 an assignment of his debtor's share in the firm, and arranging 
 with the other partner for closing out the business, does not become 
 a partner in such business. A contract for "a community of 
 interest by way of security for the payment of money" is 
 radically different from "one of partnership." ^ The idea of 
 "surprising parties into a partnership"* is not favored by 
 the courts. 
 
 1. Why an Actual Contract is required. — The reason 
 for this requirement is found in the nature and the consequences 
 of a partnership.^ Property, contributed to a firm by its members, 
 is no longer owned by them in severalty, but the ownership is 
 vested in the firm. One tenant in common of a chattel can dis- 
 pose of his share, but cannot alienate the share of his cotenant. 
 A partner, on the other hand, can transfer a perfect title to firm 
 chattels. Again, one tenant in common cannot bind his cotenant 
 by a contract relating to the common property, without special 
 authority. The contract of any partner, within the scope of 
 partnership business, binds not only the firm property, but each 
 member of the firm.® "When a man enters into a partnership," 
 
 1 Holmes v. United Ins. Co., 2 John. Cas. 329 (1801). "It is a strong 
 and decisive fact in this case, that there -was no agreement bet-ween the 
 parties, to share in the future sale of the return cargo ; and the presump- 
 tion is directly other-vsdse, since the parties were unconnected in trade. 
 This l)rings the case within Coope v. Eyre," 1 H. Bl. 37 (1788) . 
 
 ' Ex parte Briggs, 3 Dea. & Ch. 367 (1833) ; Burdick's Cases on Part. 3. 
 
 3 Fish V. Thompson, 68 Vt. 273, 35 At. 174 (1896) ; Burdick's Cases 
 on Part. 3 ; KraU v. Forney, 182 Pa. 6, 37 At. 846 (1897). 
 
 « Phillips V. PhiUips, 49 III. 437 (1863); Freeman v. Bloomfield, 43 
 Mo. 391 (1869). In Wilspn's Exrs. v. Cobb's Exrs., 28 N. J. Eq. 177, 
 179 (1877), it is said: "There is no such thing as a partnership by im- 
 phcation of law. The relation inter sese is founded in voluntary contract, 
 and cannot exist independent of it." And see London Assurance Co. 
 V. Drennen, 116 U. S. 461, 29 L. Ed. 688, 6 Sup. Ct. 442 (1886). 
 
 5 Northern Pac. Lum. Co. v. Spore, 44 Or. 462, 470, 75 Pae. 890, 893 
 (1904). 
 
 » Hopkins v. Forsyth, 14 Pa. St. 34, 53 Am. Deo. 513 (1850). 
 
8 THE LAW OF PARTNEKSHIP 
 
 said Lord Kenyon,^ "he certainly commits his dearest rights to 
 the discretion of every one who forms a part of that partnership 
 in which he engages." "It is an imprudent thing for a man to 
 enter into partnership with any person, unless he has the most 
 implicit confidence in his integrity. . . . One partner may pledge 
 the credit of the other to any amount." 
 
 (a) Importance of Delectus Personarum. — Freedom of choice 
 as to his associates, therefore, is a matter of the highest conse- 
 quence to one entering into a partnership. His right to exercise 
 such a choice is a fundamental principle of partnership law.^ 
 Hence the rule that "No person may be introduced as a partner 
 without the consent of all existing partners." ^ Even the personal 
 representative of a deceased partner is not allowed to take the 
 place of his testator in a firm without the consent of the surviving 
 partners. " It would be of ill consequence in general to say, that 
 in articles of partnership in trade, when no provision for the death 
 of either partner is made, they might subsist for the benefit of an 
 executor who may not have skill therein." * 
 
 Undoubtedly partners may bind themselves to receive in his 
 stead the personal representative of a deceased member,^ although 
 
 1 Wells V. Masterman, 2 Esp. 731 (1799) ; Baker v. Charlton, Peake, 
 80 (1791). 
 
 2 Lindley on Part. 363 (5tli Eng. ed.). 
 
 3 Partnership Act, 53 & 54 Vict. c. 39, § 24 (7) ; Setzer v. Beale, 19 
 W. Va. 274, 288 (1882). 
 
 * Pearce v. Chamberlain, 2 Ves. Sr. 33 (1750). 
 
 ' Warner v. Cunningham, 3 Dow. 76 (House of Lords, 1815). , Neigh- 
 bors in Ayrshire formed a partnership for 124 years in working their ad- 
 joining coal fields, binding their heirs and assigns to the performance of 
 the contract. After the death of Warner, his heir sought to renounce the 
 partnership, but the Court of Session held that, while the heir might throw 
 up the succession, if he thought the partnership too hazardous, yet if he 
 accepted the succession he must abide by the partnership. On appeal to 
 the House of Lords, the appellant's counsel argued that, as the Roman 
 law was followed in Scotland, its rules declaring void a stipulation for 
 admitting the heir of the deceased into the firm, and securing to each 
 partner the right to renounce the partnership at any time, should be 
 applied in this case. Respondent's counsel repUed that "the Romans were 
 not a commercial people, and therefore a question of partnership was 
 not to be judged of by the civil law, but by the laws and customs of 
 modern Europe." The decision of the Court of Session was af&rmed 
 in every respect. Cf. with the foregoing quotation, this remark of 
 
THE FOBMATION OF A PARTNERSHIP 9 
 
 they cannot force such representative to become their partner.^ 
 He also possesses the right to select his copartners. If, however, 
 he decides to avail himself of such a stipulation in the partnership 
 articles, and to enter the firm in his testator's stead, "he places 
 himself in that situation by his own choice, judging for himself 
 whether it is fit and safe to enter into that situation and contract 
 that sort of liability." ^ 
 
 2. Contract must be enforceable. — (a) A Consideration 
 is Essential. — It is necessary, not only that the parties volun- 
 tarily assent ^ to become partners, but that their agreement 
 be such as to impose legal obligations upon them. If the arrange- 
 ment is that one shall furnish all of the capital and services, 
 while they shall share equally in the property acquired and the 
 profits gained, no partnership ensues. "It is a naked promise 
 founded upon no consideration." * But if the parties " mutually 
 agree to form a partnership for the purpose of making a proposed 
 road improvement, in case the contract for making the same 
 should be awarded to either of them, and that the contract so 
 awarded should inure to the benefit of the copartnership, . . . 
 the undertaking of each party is based on the undertaking of the 
 other, which, in law, is a sufiicient consideration to support the 
 contract." ^ 
 
 Chancellor Kent: "In the Roman law, and in the commentaries of 
 the civilians, every subject connected with the doctrine of partnership 
 is considered with admirable sagacity and precision." 3 Comm. 56. 
 
 1 Wild V. Davenport, 48 N. J. L. 129, 7 At. 295, 57 Am. R. 552 (1886) ; 
 Burdiek's Case on Part. 77 ; Andrews v. Stinson, 254 111. Ill, 98 N. E. 
 222, 27 Ann. Cas. 927 with note (1912). 
 
 2 Ex parte Garland, 10 Ves. 109, 119 (1804). 
 
 3 If they have reduced their agreement to writing, neither party can be 
 heard to say, as against third persons, who gave credit to the firm with 
 notice of the agreement, that he did not intend to assent to the written 
 terms. State Nat. Bank v. Butler, 149 lU. 575, 36 N. E. 1000 (1894). 
 
 * MiteheU v. O'Neale, 4 Nev. 504 (1869). 
 
 6 Breslin v. Brown, 24 Oh. St. 565 (1874) ; Coleman v. Eyre, 45 N. Y. 
 38 (1871) ; Belcher v. Conner, 1 S. Car. (1868), accord. In the last case 
 it was said: "The contract sought to be enforced is one of partnership. 
 The business contemplated by it was the purchase and sale of slaves ; but 
 the proper consideration of the contract was the mutual covenants and 
 promises of the copartners, and the acts they respectively engaged to per- 
 form, bearing on the objects contemplated. It cannot, in any just sense. 
 
10 THE LAW OF PABTNERSHIP 
 
 While it is essential that the partnership agreement should 
 amount to an enforceable contract, it is not necessary that there 
 be an express provision as to the share of profits which each party 
 is to receive. "When the contract is silent, equity will adjust 
 the rights of the partners to profits on the basis of what their 
 intention was, as shown from all the facts of the case." ^ 
 
 (b) Contractual Incapacity. — An agreement to establish a 
 partnership may fail of its purpose, because of the incapacity 
 of the parties to enter into a contract. Lord Justice Lindley has 
 said : ^ " Now that the disabilities under which spiritual persons 
 formerly lay have been removed, the writer is not aware that 
 there is any class of persons (except convicts), who, being of 
 sound mind, and over twenty-one, are rendered incapable of be- 
 coming members of a partnership. Married women may be 
 partners, as will appear later on." This statement is open to 
 criticism. Not only are convicts incapable of entering into a 
 partnership,* but alien enemies * and corporations ^ (in the ab- 
 sence of charter authority or estoppel ^) are subject to a like in- 
 capacity. But individuals who associate themselves with a 
 corporation in partnership cannot set up the corporation's in- 
 capacity as a defense.'' 
 
 In England, the common law disabilities of married women 
 have been so far removed that their partnership agreements are 
 
 be said that a contract of this nature was one of which the consideration 
 was the purchase of slaves." 
 
 1 McMurtrie v. Guiler, 183 Mass. 451, 454, 67 N. E. 358 (1903). 
 
 " Lindley on Part. (5th Bng. ed.) 71. 
 
 'A matter of statutory regulation. See N. Y. Pen. Law, §§ 510, 511, 
 and N. Y. Code of Crim. Proc, § 819; Avery v. Everett, 110 N. Y. 
 317, 18 N. E. 148, 6 Am. St. R. 368, 1 L. R. A. 264 (1888). 
 
 * Griswold v. Waddington, 15 Johns. 57 (1818) ; Burdick's Cases on 
 Part. 544 ; Stevenson & Sons Lim. v. Aktiengesellschaft fiir Cartonnagen- 
 Industrie, (1916) 1 K. B. 763, 85 L. J. R. B. 847. 
 
 ' Gunn V. Railroad, 74 Ga. 509 (1886) ; Guerinck v. Alcott, 66 Oh. St. 
 94, 63 N. E. 714 (1902); Feehteler v. Palm Bros. Co., 133 Fed. 462, 66 
 C. C. A. 336 (1904) ; Merchants' Nat. Bank v. Wehrmann, 202 U. S. 
 295, 26 Sup. Ct. 613 (1906). 
 
 ' Bluff City Lumber Co. v. Bank of Clarksville, 95 Ark. 1, 128 S. W. 
 58 (1910), corporation estopped; News Register Co. v. Rockingham Co., 
 118 Va. 140, 86 S. E. 874 (1915). Charters gave authority. 
 
 ' Moore v. Thorpe, — Minn. — , 158 N. W. 235 (1916). 
 
THE FORMATION OF A PARTNERSHIP 11 
 
 entirely valid and binding. The same result has been reached 
 in some of our States ; ^ while in others, legislation, as interpreted 
 by the courts, has not accomplished the wife's business emanci- 
 pation. For example, in Massachusetts, a married woman may 
 be a member of a trading partnership, if her husband is not a 
 member thereof ; ^ but if he is a member, her agreement to enter 
 the firm is null and void.^ "If she could contract with her hus- 
 band," said the court in the case last cited, "it would seem to 
 follow that she could sue him and be sued by him. How such 
 suits could be conducted, with the incidents in respect to dis- 
 covery, the right of parties to testify, and to call the opposite 
 party as a witness, without interfering with the rule as to private 
 communications between husband and wife, it is not easy to per- 
 ceive; and the consequences which would follow in respect to 
 process for the enforcement of rights fixed by judgment, arrest, 
 imprisonment, charges of fraud, proceedings in invitum under the 
 insolvent laws, and the like, are not of a character to be readily 
 reconciled with the marital relation. We cannot suppose that 
 an alteration in the law involving such momentous results, and a 
 change so radical, could have been contemplated by the legisla- 
 ture, without a much more direct and clear manifestation of its 
 will." * 
 
 (c) Partnership induced by Fraud. — "Where there is fraud, 
 imposition, misrepresentation or oppression, in the original 
 agreement for the partnership, a court of equity has jurisdiction 
 to decree a dissolution and declare it void ab initio." ^ If the 
 defrauded party secures such a decree, he is to be treated, as 
 against the defrauder, as never having been a partner, and to be 
 freed from all liability for firm losses. Moreover, he is entitled 
 to redress against the perpetrator of the fraud for any injury 
 
 1 Suau V. Gaffe, 122 N. Y. 308, 25 N. B. 488 (1890) ; New York Do- 
 mestic Rel. Law, Ch. 272, L. 1896, § 21, Consolidated Laws 1909, 
 Ch. 14, § 51; Burney v. Savannali Grocery Co., 98 Ga. 711, 25 S. E. 
 915 (1896) ; Burdick's Cases on Part. 11. 
 
 2 Plumer v. Lord, 5 Allen (87 Mass.), 460 (1862). 
 ' Lord V. Parker, 3 AUen (85 Mass.), 127 (1861). 
 
 * Accord. Haggett v. Hurley, 91 Me. 542, 40 At. 561, 41 L. R. A. 362 
 (1898). 
 
 " Fogg V. Johnston, 27 Ala. 432, 436 (1855) ; Howell v. Harvey, 5 Ark. 
 270, 278 (1843). 
 
12 THE LAW OF PAKTNEESHIP 
 
 caused thereby.' He is not obliged to rescind the contract, how- 
 ever. He may waive his right of rescission and sue for damages.^ 
 Indeed, his conduct after discovering the fraud may amount to a 
 waiver of both these rights.* 
 
 The British Partnership Act and the Uniform Partnership 
 Act deal with this topic quite comprehensively. They recognize 
 not only the defrauded partner's right of rescission, but his right 
 to a lien on the defrauding partner's share of the firm property ; 
 to subrogation to firm creditors' claims against the partnership 
 which he has paid, and to full indemnification by the defrauding^ 
 partner against all firm debts and liabilities.'* This topic will 
 receive further consideration in the chapter dealing with the 
 duties of partners. 
 
 (d) For an Illegal Purpose. — An association, organized to 
 carry out a fraudulent or illegal purpose, is not entitled to recog- 
 nition as a partnership. Accordingly, an association formed to 
 corner stock, by buying it up so as to control the market and then 
 purchasing for future deliveries, has no legal standing as a part- 
 nership, and its members do not become partners by force of the 
 agreement, or of any acts done pursuant to it.^ The same is 
 true of an association, made up of several companies, firms, and 
 individuals engaged in the production of brick, for the purpose 
 of controlling the price of brick in the interest of the members, 
 and to the injury of the public.^ 
 
 Although a partnership in the business of gambling is illegal, 
 the partners are liable as joint tort feasors to their victims. The 
 law does not treat the members of such an association as lawful 
 
 1 Hynes v. Stewart, 10 B. Mon. (49 Ky.) 429, 433 (1850) ; Harlow 
 V. Le Brun, 151 N. Y. 278, 45 N. E. 859 (1897); Burdick's Cases on 
 Part. 502. 
 
 ' Cohoon V. Fisher, 146 Ind. 583, 44 N. E. 664, 45 N. E. 787 (1897) ; 
 Rice V. Culver, 32 N. J. Eq. 601 (1880). 
 
 3 St. Jolin V. Hendrickson, 81 Ind. 350 (1882). 
 
 * Partnership Act, 1890, § 41 ; Uniform Partnership Act, L. of Md. 
 1916, Ch. 175, § 39, Art. 73A of Code of Public Laws; L. of Wis. 1915, 
 Ch. 358, § 1724M-34. 
 
 6 Sampson v. Shaw, 101 Mass. 145 (1869). 
 
 « Jackson v. Akron Brick Ass'n, 63 Oh. St. 303, 41 N. E. 257, 35 
 L. R. A. 287, 53 Am. St. R. 638 (1895). See Central Trust Co. v. Res- 
 pass, 112 Ky. 606, 66 S. W. 421, 99 Am. St. R. 317, with valuable note 
 (1902). 
 
THE FORMATION OF A PAETNERSHIP 13 
 
 partners, but it does treat them as conspirators and makes each 
 liable for the acts of the others in the gambling business.^ 
 
 Whether it is illegal for a public officer to contract that his 
 official earnings shall be the property of a firm in which he is a 
 member is a question upon which courts have differed.^ If the 
 contract includes an agreement of the non-official partners to aid 
 the other in securing public office, it would seem to be illegal.^ 
 Courts have also differed as to the legality of a sale of a part 
 interest in a business for the purpose of forming a partnership 
 between the seller and the buyer in the business. On the one 
 hand, such a transaction has been held to fall within the Bulk 
 Sales Law, and has been condemned unless the statutory notice of 
 sale was given.* The opposite has been held and, it is submitted, 
 with better reason.^ 
 
 A valid partnership may exist between persons whose sexual 
 relations are illicit.® 
 
 (e) The Specific PerforTuance of a Partnership Contract is prob- 
 ably within the competence of a court of equity ; ' and decrees 
 for such performance, even of. agreements to enter into a partner- 
 ship, have been made.^ As a rule, however, the courts will not 
 enforce specffic performance of a contract to institute and carry 
 •on a partnership.^ If no term is fixed and the partnership, 
 
 1 Berns v. Shaw, 65 W. Va. 667, 64 S. E. 930, 23 L. R. A. n. s. 523 
 (1909). 
 
 2 Anderson v. Branstrom, 173 Mich. 157, 139 N. W. 40, 43 L. R. A. 
 N. s. 422, with note, 34 Ann. Cas. 817, with note (1912), holding partner- 
 ship iUegal; Shinn v. Shinn, 76 W. Va. — , 88 S. E. 610 (1916), holding it 
 
 3 Gaston v. Drake, 14 Nev. 175, 33 Am. R. 548 (1879) ; Wishek v. 
 Hammond, 10 N. D. 72, 84 N. W. 687 (1900). 
 
 « Dayly v. Sumpter Drug Co., 127 Tenn. 412, 155 S. W. 167, 32 Ann. 
 •Cas. 1101 (1913). 
 
 5 Yancey v. Lamar-Rankin Drug Co., 140 Ga. 359, 78 S. E. 1078 
 
 (1913). 
 
 « MitcheU v. Fish, 97 Ark. 444, 134 S. W. 940, 36 L. R. A. n. s. 838 
 
 (1911). 
 
 ' Story, Equity Jurisprudence, § 666 ; Buxton v. Lister, 3 Atk. 383, 
 385 (1746) ; Wadsworth v. Manning, 4 Md. 59, 69 (1853). 
 
 sWhitworth v. Harris, 40 Miss. 483 (1866); Birchett v. Boiling, 
 5 Munf. (19 Va.) 442 (1817). 
 
 9 Karrick v. Harriman, 168 U. S. 328, 336, 18 Sup. Ct. 135, 42 L. Ed. 
 484 (1897) ; Clark v. Truitt, 183 111. 239, 55 N. E. 683 (1899). 
 
14 THE LAW OF PAETNEBSHIP 
 
 therefore, is one at will, a sufficient reason for refusing a decree 
 for specific performance is, that either party could dissolve the 
 firm the next moment after the decree was enforced; and thus 
 the decree would be of no practical value. Even when a term is 
 fixed in the contract, a due enforcement of the decree would re- 
 quire the court to take upon itself "the management of the part- 
 nership business, which, of itself, is regarded a sufficient reason 
 for a refusal to grant the relief." ^ 
 
 While, however, courts will not entertain suits for the specific 
 performance of contracts for partnership, they will decree the 
 specific performance of particular agreements connected with 
 the business, where this is necessary to secure to a partner the 
 interests in property to which by the partnership articles he is 
 entitled;^ or "to suppress frauds, or manifestly mischievous 
 consequences." ^ 
 
 (/) Law Governing the Partnership Contract. — Whether a 
 valid partnership contract exists must be determined by the law 
 of the place where it is made." The liability of the members of a 
 firm established and duly domiciled jn a particular State, although 
 transacting business in foreign jurisdictions as well, is governed 
 by the law of the State of its origin and domicile, in the absence 
 of any express provision to the contrary known to the person con- 
 tracting with the firm.^ In the absence of proof of any special 
 law in such State, the courts of any other jurisdiction will presume 
 that the liability and rights of the firm and of its members are 
 governed by the law merchant.^ 
 
 ' Clark V. Truitt, 183 lU. 239, 65 N. E. 683 (1899). Accord. Morris 
 v. Peckham, 51 Conn. 128, 133 (1883) ; Buck v. Smith, 29 Mich. 166, 171, 
 18 Am. R. 84 (1874) ; "It is plain that the court cannot assume to en- 
 force the performance of daily prospective duties" of partners. The 
 Uniform Partnership Act [§ 31 (2)] recognizes this doctrine, by according 
 the power to any partner to dissolve the firm, at any time, even in contra- 
 vention of the partnership agreement. 
 
 ' England v. CurUng, 8 Beav. 129, 50 Eng. Rep. 51 (1844) ; Somerby 
 V. Buntin, 118 Mass. 279, 287, 19 Am. R. 459 (1875) ; Whitworth v. Harris, 
 40 Miss. 483, 491 (1866) ; Birchett v. Boiling, 5 Munf. (19 Va.) 442 (1817). 
 
 ' Story on Part. § 189. And see Byrne v. Reid, [1902] 2 Ch. 735, 71 
 L. J. Ch. 830; Lindley on Part. (7th ed.) 521. 
 
 * Easton v. George Wostenholm & Son, 137 Fed. 524, 69 C. C. A. (1905). 
 
 6 Cameron v. Orleans & J. Ry. 108 La. 83, 32 So. 208 (1902). "By 
 that law the partners are liable in solido," said the court. See Uniform 
 
THE FORMATION OP A PAETNERSHIP 15 
 
 3. Statute of Feattds. — Two provisions of this statute 
 bear upon our present topic. One of them requires that any 
 agreement that is not to be performed within the space of one 
 year from the making thereof shall be in writing.^ Accordingly, 
 if the partnership contracted for is not to commence within a year 
 from the making of the contract, or is to continue for more than 
 a year thereafter, the agreement must be in writing or it will not 
 be enforceable. Nor will such a contract be taken out of the 
 statute by part performance. Undoubtedly a partnership busi- 
 ness may be lawfully carried on under such a contract, but the 
 partnership can take effect only as a partnership at will.^ 
 
 The other provision requires that any contract for the sale of 
 lands, or any interest therein, shall be in writing. Does this 
 render an oral contract for a partnership in lands unenforce- 
 able ? ' It must be confessed that the authorities are far from 
 harmonious on this point. Some declare that the partnership is 
 validly organized under such a contract, and that the rights of 
 the partners in the lands of such a firm may be established by 
 oral evidence.'* Others insist that, while a valid partnership 
 may be created by oral agreement for the purpose of dealing in 
 lands,* and the rights of the partners in lands bought with part- 
 Partnership Act, § 5. "In any case not provided for in this act, the 
 rules of law and equity, including the law merchant, shall govern." 
 
 1 See N. Y. Personal Property Law, § 31 (1). 
 
 "Wahl V. Barnum, 116 N. Y. 87, 22 N. E. 280 (1889); Sanger v. 
 French, 157 N. Y. 213, 51 N. B. 979 (1898). 
 
 ' If the partnership business has been finished the assets will be dis- 
 tributed in accordance with partnership law. Norton v. Brink, 75 Neb. 
 566, 575, 106 N. W. 668 (1906). 
 
 ^Dale V. Hamilton, 5 Ha. 369, 67 Eng. Rep. 955 (1846). "This is 
 certainly going a long way towards repealing the statute of frauds." 
 Lindley on Part. (5th ed.) 82; Richards v. Grinnell, 63 Iowa, 44, 53, 
 18 N. W. 668, 50 Am. R. 727 (1884) ; Garth v. Davis, 120 Ky. 106, 85 
 S. W. 692 (1905) ; see McKinnon v. McKinnon, 56 Fed. 409, 5 C. C. A. 
 530, 12 U. S. App. 433 (1893). 
 
 5 Burgwyn v. Jones, 113 Va. 511, 75 S. E. 188, 30 Am. Cas. 564, with 
 note (1912) ; Thompson v. McKee, 43 Okla. 243, 142 Pae. 755, 53 L. R. A. 
 N. s. 521, with note (1914) ; Morgart o. Smouse, 103 Md. 463, 63 At. 
 1070 (1906) ; Nester v. Sullivan, 147 Mich. 493, 111 N. W. 85 (1907). 
 Contra, Scheuer v. Cochem, 126 Wis. 209, 105 N. W. 373, 4 L. R. A. n. s. 
 427 (1905). 
 
16 THE LAW OF PARTNERSHIP 
 
 nership funds may be shown by parol, wherever the transactions 
 give rise to a resulting trust in favor of the partners,^ yet if the 
 agreement provides for a partnership in lands which are at the 
 time owned by one ^ or both ' of the parties, or thereafter to be 
 acquired by one of them,^ it is within the ban of statute. The 
 latter view is supported by the great weight of authority in Eng- 
 land as well as in this country,^ and is preferable upon principle. 
 The property which each partner agrees to contribute to the firm 
 is not vested in the firm by the legal force of the partnership 
 contract. His individual ownership is devested only by some 
 act over and above the act of contracting; and that act, when- 
 ever it is done or in whatever it consists, if the contribution to be 
 made is of real property, amounts to a transfer from him to the 
 firm or to his copartners of an interest in lands.^ 
 
 In Pennsylvania it is held that in order to affect the title or 
 possession of land, it is not competent to show by parol evidence 
 when the deed runs to two persons, as tenants in common, that 
 the land was purchased and paid for by them as partners, and is 
 partnership property.^ In Illinois, on the other hand, it is held 
 that the extent of each partner's interest in partnership lands 
 held, not as land, but as partnership stock in trade and for profit, 
 may be shown by parol, whether the legal title thereto is in one 
 or all the partners, and oral agreements between the partners as 
 to their respective interests, as such partners, in real estate consti- 
 tuting the assets of the firm, are not void under the statute of 
 frauds.^ 
 
 1 Hodgson V. Fowler, 24 Colo. 278, 50 Pae. 1034 (1897). 
 
 ' McCormick's Appeal, 67 Pa. St. 54 (1868). 
 
 ' Goldstein v. Nathan, 158 111. 641, 42 N. E. 72 (1895) ; Burdick's 
 Cases on Part. 9. 
 
 * Smith V. Burnham, 3 Sumn. 435 (1838) ; Kayser v. Maugham, 8 
 Colo. 232, 239, 6 Pac. 803 (1885) ; Bird v. Morrison, 12 Wis. 138, 155-157 
 (1860), containing an excellent discussion of the question. 
 
 « Butts V. Cooper, 152 Ala. 375, 44 So. 646 (1907) and cases cited; 
 ReUly V. Woolbert, — Ala. — , 72 So. 10 (1916). 
 
 « Robinson Bank v. Miller, 153 111. 244, 38 N. E. 1078, 27 L. R. A. 
 449, with extended note, 46 Am. St. R. 883 (1894). 
 
 ' Hale t). Henrie, 2 Watts (Pa.), 143, 27 Am. Dec. 289 (1834) ; Cundey 
 V. HaU, 208 Pa. 335, 57 At. 761 (1904). 
 
 8 Van Housen v. Copeland, 180 111. 74, 54 N. E. 169 (1899). 
 
THE FORMATION OF A PARTNERSHIP 17 
 
 4. Express Contract Unnecessary. — While the relation 
 of partnership arises only from contract between the parties 
 to that relation, and while the terms of their agreement are 
 ordinarily set forth in written articles, neither a writing nor 
 any particular form of convention is essential. A valid part- 
 nership may subsist, although no express engagements of its 
 members can be discovered. Its existence may be established 
 by the conduct of the parties.^ 
 
 In a recent case,^ the question whether a partnership had ex- 
 isted between the plaintiff and a deceased brother was submitted 
 to the court upon an agreed statement of facts, which included 
 the following: "No articles of partnership were ever executed, 
 nor any agreement for a partnership come to, nor was a partner- 
 ship ever mentioned between them. No accounts as between 
 them were ever kept, nor was any balance-sheet or annual ac- 
 count as to the business prepared." And yet, as these brothers 
 had acted together in carrying on a business bequeathed to them 
 by their father, had drawn out and retained each week precisely 
 the same sum, had carried on the business in such a way as to 
 make them liable as partners to outsiders, and had borrowed 
 money for the business on their joint mortgage, the court reached 
 the conclusion that the two brothers were partners by agreement. 
 
 There must be an agreement, however; it is not enough to 
 show an intention to agree. 
 
 Accordingly, it is error for a court to charge the jury that the 
 undeclared intentions of several parties, who make a joint pur- 
 chase of cotton, to unite with each other in its sale, and in a divi- 
 sion of the profits, are sufficient to constitute them partners. 
 It is in effect to charge that such intention makes them partners, 
 although no agreement or arrangement for sale and division had 
 been entered into. The correct doctrine is that, "though goods 
 be bought by several, under an agreement to hold in aliquot 
 shares, but with the intention of subsequently forming a partner- 
 
 ' Duryea v. Burt, 28 Cal. 569, 577 (1865) ; Kayser v. Maugham, 8 
 Colo. 232, 235, 6 Pac. 803 (1885) ; Haug v. Haug, 193 lU. 645, 61 N. B. 
 1053 (1901) ; Heyman v. Heyman, 210 lU. 524, 71 N. E. 591 (1904). 
 
 2 Davis V. Davis, [1894] 1 Ch. 393; Burdick's Cases on Part. 12. 
 Accord. Rutger v. Rutger, 28 N. J. Eq. 137 (1877) ; MoFarlane v. MeFar- 
 lane, 82 Hun, 238, 31 N. Y. Supp. 272 (1894). 
 
18 THE LAW OF PAKTNEESHIP 
 
 ship in respect of them, yet, until the partnership agreement is 
 actually made, the purchasers are not copartners, but only ten- 
 ants in common. There is still a hciis penitentioB. The partner- 
 ship may never be formed. Either party may withdraw before 
 the agreement is consummated. Neither of them, before that 
 time, has power to bind the other by his contracts." ^ 
 
 (a) Words are not Conclusive. — On the other hand, the rela- 
 tionship between persons having a common interest in certain 
 property, or in a particular enterprise, is not that of partnership, 
 although they may call it by that name. When the entire agree- 
 ment as well as the conduct of the parties is considered, it may 
 be evident that the term was used in a popular and not in a legal 
 sense,^ or it may appear that they have failed to accomplish their 
 purpose. "Where the question of a partnership is to be deter- 
 mined from a contract between the parties to it, the relation must 
 be found from the terms and provisions of the contract, and even 
 though parties intend to become partners, yet if they so frame the 
 terms and provisions of their contract as to leave them without 
 any community of interest in the business or profits, they are not 
 partners either in fact or law." ^ 
 
 When there is no conflict of evidence in a case, whether a part- 
 nership "existed or not is an inference of law from the facts", 
 
 ' Baldwin v. Burrows, 47 N. Y. 199, 208 (1872) ; Jones v. Way, 78- 
 Kan. 535, 97 Pao. 437, 18 L. R. A. n. s. 1180 (1908). 
 
 2 Nightingale v. Milwaukee Furn. Co., 71 Fed. 234 (1895) ; Oliver w. 
 Gray, 4 Ark. 425 (1842) ; Burdiek's Cases on Part. 16 ; Livingston v. 
 Lynch, 4 John. Ch. 573, 592, 593 (1820). The owners of a steamboat 
 company styled themselves "sole proprietors and acting partners", and 
 yet were declared by the court to be only tenants in common. This popu- 
 lar use of the term partners is often misleading. In 11 PoUt. Sc. Quar- 
 terly, 265, note 2, it is said: "The Turkey or Levant merchants were 
 first chartered as a partnership (1581), and in 1592 were incorporated. 
 Hakluyt, Collections, vol. ii, pp. 263, 434." The charter of 1581 does, 
 style the grantees in the letters patent "parteners, adventurers, or doers", 
 but it bestows corporate powers upon them, provides for the introduction 
 of new members without the consent of all; for the election of a "Gov- 
 ernor of the said company", and for his removal; for the granting of 
 licenses to trade by the governor and company, and for the adoption of 
 reasonable laws and ordinances for the good government of the company. 
 The association had none of the legal characteristics of a partnership. It 
 was in fact and in law a corporation. 
 
 3 Sailors v. Nixon-Jones Co., 20 111. App. 508 (1886). 
 
THE FOBMATION OF A PAKTNERSHIP 19 
 
 and though the testimony of a party that he and certain others 
 were partners is uncontradicted, it may "have no effect." ^ So, 
 the parties may declare their relationship not to be that of part- 
 ners, while the law adjudges that it is.^ 
 
 As against the parties, however, the fact that they character- 
 ize their relation as that of partners is entitled to much weight. 
 In the language of a recent decision, "While merely calling an 
 association a partnership cannot make it such, when none of the 
 essential elements of a partnership are present, yet where there 
 is a joint undertaking, a union of labor, or a union of labor and 
 capital, or where some of the essential elements of partnership 
 are present, and both parties agree to become partners, there is 
 no reason why the law should not take them at their word, even 
 though the agreement falls short of the facts from which the 
 law would otherwise have inferred a partnership." ' 
 
 § 2. Specific Intent to form a Partnership is not Essential. 
 
 Although the partnership relation cannot be instituted with- 
 out the assent of the parties thereto, it does not follow that the 
 specific intent to incur the liabilities of partners is necessary to 
 the existence of a partnership.* "It is possible for parties to 
 intend no partnership and yet to form one. If they agree upon 
 an arrangement which is a partnership in fact, it is of no impor- 
 tance that they call it something else, or that they even expressly 
 declare that they are not to be partners.^ The law must declare 
 what is the legal import of their agreements, and names go for 
 
 ' Dwinel v. Stone, 30 Me. 384 (1849) ; Burdick's Cases on Part. 17 ; 
 Rose V. Busoher, 80 Md. 226, 232, 30 At. 637 (1894) : "It is true that 
 after several times saying that he and plaintiff agreed to farm on shares, 
 the defendant in his testimony once called the relation thus formed a part- 
 nership ; but that did not make it so." 
 
 2 Pooley V. Driver, 6 Ch. D. 458; 46 h. J. Ch. 466 (1876), and cases 
 cited under the next section. 
 
 ' Huggins V. Huggins, 117 Ga. 151, 156, 43 S. E. 759 (1902). 
 
 " Green v. Beesley, 2 Bing. N. C. 108 (1835) ; Burdick's Cases on 
 Part. 20. 
 
 5 See Scott v. Campbell, 30 Ala. 728 (1857), where an arrangement 
 made between partners upon the dissolution of their partnership, and 
 which was plainly intended by them to prevent the continuance of their 
 partnership relations, was held to constitute a partnership inter se. Cf. 
 Duryea v. Whiteomb, 31 Vt. 393, 395 (1858). 
 
20 THE LAW OF PARTNERSHIP 
 
 nothing when the substance of the arrangement shows them to 
 be inapplicable." ^ 
 
 Generally speaking, where the agreement, under which a busi- 
 ness arrangement is carried on, is in writing, it is for the court to 
 say whether a partnership exists.^ If the agreement is oral and 
 the evidence contradictory, it is the function of the jury to find 
 the facts. But, when the facts are uncontroverted, or have been 
 found by the jury, it becomes the undoubted duty of the court 
 to declare whether or not a partnership exists.' There are inti- 
 mations in some decisions, it is true, that the existence of a part- 
 nership as deducible from the whole evidence is a question for the 
 jury and not for the court ; * but if those decisions mean that 
 the jury are to find the law as well as the fact, in partnership cases, 
 instead of taking the law from the court, they are opposed to the 
 great weight of authority.^ 
 
 1 Beecter v. Bush, 45 Mich. 188 (1881) ; Rowland v. Long, 45 Md. 
 439 (1876) ; Cothran v. Marmaduke, 60 Tex. 370, 372 (1883) ; Spaulding 
 V. Stubbings, 86 Wis. 255, 262, 66 N. W. 469, 39 Am. St. B. 888 (1893) ; 
 Bacon v. Christian, — Ind. — , 111 N. E. (1916) ; Schumacher v. Sumner 
 Tel. Co., 161 la. 326, 142 N. W. 1034, 39 Ann. Cas. 201 (1912). 
 
 2 Aylesworth v. Aylesworth, — Ind. — , 109 N. E. 750 (1915) ; Rider 
 V. HammeU, 63 Kan. 733, 66 Pac. 1026 (1901) ; Morgan v. Child, — Utah 
 — , 165 Pac. 451 (1916) ; but see Rush v. First Nat. Bank, — Tex. Civ. 
 App. — , 160 S. W. 319 (1913). 
 
 sBveritt V. Chapman, 6 Conn. 347 (1827); Morgan v. Farrel, 58 
 Conn. 413, 20 At. 614, 18 Am. St. R. 282 (1890) ; Salter v. Ham, 31 N. Y. 321, 
 327-328 (1866) ; Klosterman v. Hayes, 17 Or. 325, 329, 20 Pac. 426 (1889). 
 
 ^ Brady v. Calhoun, 1 P. & W. (Pa.) 140, 147 (1829) ; Gunnison v. 
 Langley, 3 Allen (86 Mass.), 337, 339 (1862). 
 
 s Webster v. Clark, 34 Pla. 637, 649, 16 So. 601, 27 L. R. A. 126, 43 
 Am. St. R. 217 (1894). In Lintner v. Milliken, 47 lU. 178, 181 (1868), the 
 court ruled that it is improper to ask a party to a contract whether he 
 understood it to constitute a partnership, sa3ring: "The construction of 
 contracts is for the court, and their legal effect cannot rest in the opinions 
 of witnesses. Parties may become partners without knowing it, the rela- 
 tion resulting from the terms they have used in the contract, or from the 
 nature of the undertaking. They may make a bargain together, without 
 knowing it creates or involves a partnership, and subjects them to the law 
 of partnership." In Jones v. Call, 93 N. C. 170, 182 (1886), the court 
 declared : "What is required to constitute a partnership, and what facts 
 make persons members of it, are matters of law ; while the jury find the 
 facts by which the relation is constituted." See O'Donohue v. Bruce, 
 92 Fed. 868, 860, 36 C. C. A. 52 (1899). 
 
THE FORMATION OF A PARTNERSHIP 21 
 
 Persons associating themselves as stockholders in a grocery 
 store business, and thus voluntarily becoming the owners of such 
 business, are partners, even though they do not intend to form 
 a partnership. "Their belief, or understanding, that during that 
 time they were not partners, in the legal sense of the word, was a 
 mistaken and immaterial view of the law. . . . The supposed 
 limitation of their liability was mere legal error." ^ 
 
 § 3. A Commoii Business with a View of Profit. 
 
 We have seen that the existence or non-existence of a partner- 
 ship does not depend altogether upon the language of the con- 
 tracting parties, nor upon the specific intent which actuates them 
 when entering into an association. They may give to their rela- 
 tionship one name, but the law may give to it quite another name. 
 Whether their misnomer proceeded from a misapprehension of 
 the law,^ or from a desire to evade partnership liabilities while 
 sharing its benefits, it is equally ineffective with the courts. 
 How, then, does the law determine whether or not a partnership 
 exists between particular associates ? 
 
 1. Statutory Rules in Britain. — ^This question has re- 
 ceived an authoritative answer in Great Britain by an Act of 
 Parliament. "Partnership", in the words of that statute, "is 
 the relation which subsists between persons carrying on a busi- 
 ness in common with a view of profit." * After announcing 
 this general principle, the statute lays down several rules to be 
 
 1 Farnum v. Patch, 60 N. H. 294 (1880) ; see Cleveland Paper Co. v. 
 Courier Company, 67 Mich. 152, 158, 34 N. W. 556 (1887); Carlton' a. 
 Coffin, 27 Vt. 496, 499 (1854). " The witness cannot tell whether a written 
 paper contains facts to create a partnership. This is a question of law.'' 
 
 2 In Freeman v. Huttig Sash & Door Co., 105 Tex. 560, 153 S. W. 122 
 (1913), Freeman did not intend to become a partner and did not suppose 
 he was a. partner. His purpose was to become a stockholder in a corpora- 
 tion. But the corporation was not organized and the business was car- 
 ried on, with his assent ; his money was invested in it, and had profits 
 been made he would have shared them. He had thus assumed a rela- 
 tionship to the owners of the business which the law declared to be a 
 partnership, and he was held to a partner's Uability for the debts of the 
 business. 
 
 3 Partnership Act (53 & 64 Vict. c. 39), § 1 (1). The second subsec- 
 tion excepts from this definition registered joint stock companies, corpo- 
 rations, and mining companies under the jurisdiction of the Stannaries. 
 
22 THE LAW OF PARTNERSHIP 
 
 followed in applying it.^ The first two of these rules, as Sir Fred- 
 erick Pollock has pointed out, exclude "various relations of two 
 or more persons to property held jointly or in common, and the 
 returns derived from such property, which at first sight may 
 appear to resemble partnership, but do not really satisfy the fun- 
 damental condition of 'carrying on a business in common with 
 a view of profit.' As a matter of history, the conception of 
 partnership has been worked out in our courts through the neces- 
 sity of attending to distinctions of this kind." ^ 
 
 2. American Statutes. — Some of our States * have attempted 
 to give similar legislative answers, although none of these, with 
 the exception of the Uniform Partnership Law, are quite as explicit 
 or as carefully framed as those of the British statute. All are 
 agreed to this extent, it is believed, that an association of persons 
 is not a partnership, as between the members thereof, unless it is 
 engaged in carrying on a business in common with a view of profit. 
 And this statutory definition is but declaratory of the doctrine 
 evolved by the courts, as will appear from an examination of 
 typical cases in various jurisdictions. 
 
 ' These rules are reproduced in substance, in § 7 of tlie Uniform Part- 
 nership Act, which is reprinted in the fourth succeeding note. 
 
 2 Pollock's Digest of Part. (5th ed.) 15, 16. 
 
 2 In California, the Dakotas, and Montana, "Partnership", as defined 
 by statute, "is the association of two or more persons for the purpose of 
 carrying on business together, and dividing its profits between them." 
 Cal. Code, § 2395. The Civil Code of Louisiana declares : "Partnership 
 is a synallagmatic and commutative contract made between two or more 
 persons for the mutual participation in the profits which may accrue 
 from property, credit, skill, or industry, furnished in determined propor- 
 tions by the parties." "Partnerships must be created by the consent 
 of the parties." "A community of property does not of itself create 
 a partnership, however that property may be acquired, whether, by pur- 
 chase, donation, accession, inheritance, or prescription." Arts. 2801, 
 2805, 2806. In New York, "a partnership, as between the members 
 thereof, is the association, not incorporated, of two or more persons who 
 have agreed to combine their labor, property, and skill, or some of them, 
 for the purpose of engaging in any lawful trade or business, and sharing 
 the profits and losses as such between them." Partnership Law, § 2. 
 The Georgia Code (1911, §3158) declares: "A joint interest in the 
 partnership property, or a joint interest in the profits and losses of the 
 business, constitutes a partnership as to third persons. A common 
 interest in profits alone does not." 
 
THE FORMATION OF A PARTNERSHIP 23 
 
 The cases in this country also accord with the provision of 
 British statute and Uniform Partnership Act, that "the receipt 
 ty a person of a share of the profits of a business is prima facie 
 evidence that he is a partner in the business." ^ 
 
 The definition of a partnership in the Uniform Act, and the 
 rules to be observed in applying it, follow closely the British 
 Act.2. 
 
 3. Partnership is more than a Common Enterprise. — 
 Two carpenters, who join in a contract to do a piece of work for 
 a third person, are not necessarily partners in the transaction. 
 If their intention has not been expressed, it is to be inferred from 
 their conduct. The fact that they immediately divide payments, 
 
 1 In re Francis, 2 Sawy. 286 ; Fed. Cases, No. 5,031 (1872) ; Fougner 
 V. First Nat. Bank, 141 111. 124, 30 N. E. 442 (1892) ; Soholtz v. Freud, 
 128 Mich. 72, 87 N. W. 130 (1901). 
 
 2 Sec. 6. [Partnership Defined.] (1) A partnership is an association 
 of two or more persons to carry on as co-owners a business for profit. 
 
 (2) But any association formed under any other statute of this state, 
 or any statute adopted by authority, other than the authority of this 
 state, is not a partnership under this act, unless such association would 
 have been a partnership in this state prior to the adoption of this act; 
 but this act shall apply to limited partnerships except in so far as the 
 statutes relating to such partnerships are inconsistent herewith. 
 
 Sec. 7. [Rules for Determining the Existence of a Partnfe'rship.] In 
 determining whether a partnership exists, these rules shall apply : 
 
 (1) Except as provided by section 16 persons who are not partners 
 as to each other are not partners as to third persons. 
 
 (2) Joint tenancy, tenancy in common, tenancy by the entireties, 
 joint property, common property, or part ownership does not of itself 
 establish a partnership, whether such co-owners do or do not share any 
 profits made by the use of the property. 
 
 (3) The sharing of gross returns does not of itself estabhsh a partner- 
 ship, whether or not the persons sharing them have a joint or common 
 right or interest in any property from which the returns are derived. 
 
 (4) The receipt by a person of a share of the profits of a business is 
 prima facie evidence that he is a partner in the business, but no such 
 inference shall be drawn if such profits were received in payment : 
 
 (a) As a debt by installments or otherwise, 
 
 (6) As wages of an employee or rent to a landlord, 
 
 (c) As an annuity to a widow or representative of a deceased partner, 
 
 Id) As interest on a loan, though the amount of payment vary with 
 
 the profits of the business, 
 
 (e) As the consideration for the sale of the good-will of a business or 
 
 other property by installments or otherwise. 
 
24 THE LAW OF PARTNERSHIP 
 
 instead of bringing them into a common fund with which new 
 suppHes are bought on joint account, indicates that they did not 
 intend to form a partnership.^ The same conclusion is to be 
 drawn where the owner of cattle delivers them to others to be 
 kept for two years, when they are to be sold by the owner, who 
 is to retain from the proceeds an agreed valuation of the cattle, 
 and one-half of the surplus over such valuation, the other half 
 to be paid to the others, who had kept the cattle. Said the court, 
 "the contract lacked these essentials of a partnership, viz. : 
 Community of loss, community of title, community of expenses, 
 and a common right to dispose of partnership property for the 
 purposes of the partnership."? 
 
 This view is not inconsistent with the well established doc- 
 trine that a partnership may exist in the conduct of a single busi- 
 ness transaction.' 
 
 When persons contract to manufacture machines, one supply- 
 ing the patents and the other the money, "as long as the business 
 shall prove practicable and profitable ", although their written 
 contract does not provide for a firm name and is silent as to the 
 intention of the parties in forming this association, "the law 
 
 ' Finckle v. Stacy, Maenaghten's Sel. Cas. in Chan. 9 (1725) ; Bur- 
 dick's Cases on Part. 1 ; Dwinel v. Stone, 30 Me. 384 (1849) ; Burdiek's 
 Cases on Part. 17 ; WiUis v. Crawford, 38 Ore. 522, 63 Pac. 985, 64 Pae. 
 866, 53 L. R. A. 904 (1901). 
 
 ' Beckwith v. Talbot, 2 Colo. 639, 649 (1875). In Dawson v. Gurley, 
 22 Ark. 381 (1860), an agreement between four persons to arrest a crimi- 
 nal, take Mm to Missouri, collect and divide equally a reward offered for 
 the capture, each to bear his own expenses and loss of time, was held not to 
 constitute a partnership. The same conclusion was reached in Hawkins 
 V. Mclntyre, 45 Vt. 496 (1873), where defendant took a contract to fiaiish 
 a church for a definite sum, and then agreed with plaintiff that the latter 
 should work with him, the work of each to offset that of the other, and 
 the cost of materials and other labor to be deducted from the price of the 
 job, and the balance to be equally divided among them; also in Hiwley 
 V. Walton, 63 lU. 260 (1872), a joint enterprise to make a single haul of 
 fish, the catch to be divided equally; and in Morse v. Pac. Ry., 191 111. 
 356, 61 N. E. 104 (1901), a joint purchase of a block of stock to be held 
 as an investment. 
 
 3 Kayser v. Maugham, 8 Colo. 232, 6 Pac. 803 (1885) ; Phillips v. 
 Reynolds, 236 111. 119, 86 N. E. 194 (1908) ; Jones v. Davis, 60 Kan. 309, 
 56 Pac. 484 (1899) ; Spencer v. Jones, 92 Tex. 516, 50 S. W. 118, 71 Am. 
 St. R. 870 (1899). 
 
THE FORMATION OF A PABTNEESHIP 25 
 
 makes it a partnership." ^ So when B and A agree to work to- 
 gether in the business of manufacturing marble, B to furnish the 
 marble and A to pay him one-half of the cost ; B also to board A ; 
 both to contribute their labor and skill in the business ; and the 
 products and avails of the business to be equally divided between 
 them, they are partners. It was a common business, the capital 
 and the profits of which were owned by them in common.^ 
 
 4. Partnekship is more than Common Ownership op 
 Property and its Returns. — The relation existing between 
 co-owners of lands and of chattels was a familiar one, and the 
 body of rules regulating it was well defined, long before English 
 courts of justice were called upon to deal with the institution of 
 partnership. Moreover, such co-owners were accustomed not 
 only to hold the title to their property in common, but to share 
 its income, — even to use it for the purpose of gaining a profit 
 which they were to divide. An association of persons so using 
 and enjoying their property bears a strong resemblance to a 
 partnership. Two centuries ago, it is true, no one would have 
 mistaken them for partners, because they were not merchants;' 
 but now that partnership extends beyond merchandizing and 
 includes "every trade, occupation, or profession ",* the distinc- 
 tion between co-owners and partners is not so broad and clear. 
 However, if the evidence in a particular case establishes only 
 such a relation between the common owners as was familiar to 
 arid regulated by the common law, it will not justify the inference 
 that a partnership exists.^ 
 
 1 lU. Mall. Iron Co. v. Reed, 103 Iowa, 538, 71 N. W. 432 (1897) ; 
 Penniman v. Mimson, 26 Vt. 164, 169 (1853). "It is probable that the 
 mere act of conveying to them undivided interests in the patent did not 
 create among them the relation of partners ; but when later they agreed 
 to convert their separate rights into a common interest, for the purpose 
 of selling the same, and dividing the net proceeds equally between them, 
 there can be no doubt that a partnership was thereby created." 
 
 2 Griffith V. Buffum, 22 Vt. 181 (1850). 
 
 3 Cf. Hammond v. Jethro, 2 Brownlow, 99 n. (1611) ; Burdick's Cases 
 on Part. 245 ; which contains a judicial declaration that " two joynt shop- 
 keepers are merchants." 
 
 ^ British Partnership Act of 1890, § 45 ; Uniform Partnership Law, § 2. 
 
 6 Jones V. Way, 78 Kan. 535, 97 Pae. 437, 18 L. R. A. n. s. 1180 (1908), 
 
 contract for a partnership which was never launched ; Winslow v. Young, 
 
26 THE LAW OF PARTNERSHIP 
 
 Accordingly, if the owner of property leases it to another for 
 a share of the profits made by the hirer in a business in which he 
 uses it, the owner and hirer are not partners. In such a case, 
 the profits are divided not as proceeds of a joint business, but as 
 a means of determining the rental value of the leased property.^ 
 If, however, the use of the property is, in reality, the owner's 
 contribution of capital to a business jointly owned by him and 
 the so-called hirer, a partnership exists, although the parties 
 characterize the transaction as a leasing of property.^ 
 
 (a) Examples of Common Ownership. — Two persons buy a 
 mill-site and jointly contract with a builder for the erection of 
 a sawmill thereon. The only fair inference to be deduced from 
 these facts is that the two are tenants in common.' To turn 
 them into partners further proof must be adduced. If, in addi- 
 tion to the foregoing facts, it had appeared that these persons had 
 sold an interest in the property to a third, who paid a part of the 
 price in cash, and agreed that the balance should be paid out of 
 his share of the profits to be made from running the mill, the in- 
 ference that a partnership had been formed would have been 
 warranted.* In the first case we have only a community of in- 
 terest in real estate ; in the latter we have the owners engaged in 
 carrying on a milling business. "Tenants in common may be- 
 come partners, like other persons, where they agree to assume 
 that relationship towards each other ; but the law will not create 
 
 94 Me. 145, 47 At. 149 (1900) : "In the present case, while there was 
 community of interest, there was no element of agency in the individual 
 parties. This objection might be met and overcome if, by agreement 
 of all the proprietors, the title had been taken by the trustees under an 
 active and defined trust to manage and dispose of the property. But this 
 was not the case." 
 
 ' Holmes v. Old Col. Ry., 5 Gray (71 Mass.), 68 (1855) ; Thayer v. 
 Augustine, 55 Mich. lS7, 20 N. W. 898, 54 Am. R. 361 (1884) ; Tobias 
 V. Bhn, 21 Vt. 544 (1849) ; Drilling v. Armstrong, 94 Ark. 505, 127 S. W. 
 725 (1910). 
 
 2 Brandon v. Conner, 117 Ga. 759, 45 S. E. 371 (1903), applying § 2629 
 of the civil code: "A joint interest in partnership property, or a joint 
 interest in the profits and losses of the business, constitutes a partnership 
 as to third persons. A common interest in the profits alone does not;" 
 Merrall v. Dobbins, 169 Pa. 480, 32 At. 578 (1895). 
 
 3 Porter v. McClure, 15 Wend. 187 (1836). 
 * Noyes v. Cushman, 25 Vt. 380 (1853). 
 
THE FOEMATION OF A PARTNERSHIP 27 
 
 "the relation for them, in consequence of a course of dealing and 
 conduct naturally referable to a relation already existing between 
 them, which made such a course of conduct to their common 
 advantage." ^ 
 
 5. Part Owners of Ships. — Again, persons owning a ship 
 in common are not, by reason of that fact alone, partners.^ In- 
 deed, it has been said by an eminent judge that the principle 
 that persons do not become partners merely by becoming joint 
 owners of a chattel and using it for a common purpose " is pecul- 
 iarly applicable to ships or other craft, the exceptions to it in 
 respect to them being always found in special circumstances." ' 
 But where several persons contracted for the construction and 
 -equipment of a ship for the purpose of "letting her to freight to 
 the East India Company", they were considered partners, "it 
 having been shown that this was their method of trading." * 
 
 It should be borne in mind that there may be a partnership in 
 the use or earnings of a vessel, although as to the vessel itself, 
 "the parties are tenants in common.^ In the California case last 
 •cited, plaintiff and defendant were part owners of a schooner, 
 and "agreed that plaintiff should advance money to keep her in 
 repair and equipped for use, and to advance all necessary running 
 expenses; to collect all her earnings and apply them to his ad- 
 vances ; and the surplus, if any, to be divided — three-fourths 
 to the plaintiff and one-fourth to the defendant ; and if the earn- 
 ings were not sufficient to pay the advances, then defendant was 
 to pay plaintiff one-fourth of the deficiency." This was held to 
 he a distinct agreement to share in the profits and loss arising 
 
 1 Dunham v. Loveroek, 158 Pa. 197, 27 At. 990, 38 Am. St. R. 838 
 <1893); Winslow v. Young, 94 Me. 146, 47 At. 149 (1900). 
 
 2 Helme v. Smith, 7 Bing. 709 (1831) ; Burdick's Cases on Part. 21. 
 
 ' Hopkins v. Forsyth, 14 Pa. St. 34, 38 (1850). See Runnels v. Mof- 
 fat, 73 Mich. 188, 202, 44 N. W. 224 (1889), where the owners of ferry- 
 boats were held not to be partners although they paid the expenses out 
 of the earnings, and divided the profits according to the ownership; 
 Bowyer v. Anderson, 2 Leigh (29 Va.), 550, 554 (1831). 
 
 * Doddington v. Hallett, 1 Ves. Sr. 497 (1751) ; Hewitt v. Sturdevant, 
 4 B. Mon. (43 Ky.) 459 (1844) ; Dunham v. Jarvis, 2 Edm. (N. Y.) 145, 
 150, 8 Barb. 88 (1850) ; Mumford v. NicoU, 20 Johns. (N. Y.) 611, 635 
 (1822). 
 
 6 Hendy v. March, 75 Cal. 566, 17 Pac. 702 (1888) ; Merritt v. Walsh, 
 32 N. Y. 685, 689 (1865). 
 
28 THE LAW OF PARTNERSHIP 
 
 from the use of the schooner ; and therefore to constitute a part- 
 nership in such use.^ 
 
 6. Common Ownership of Other Chattels. — We have 
 seen that persons do not become partners by uniting in the pur- 
 chase of a quantity of goods; nor do such buyers change their 
 relationship by agreeing to hold the property with a view of 
 selling it at an advance,^ or with a view of using it in such a way 
 as to produce a profit which they are to share.* Having acquired 
 title to it as common law tenants in common, their subsequent 
 dealings with it must go beyond the use which such owners could 
 make of it within the pale of common law rules, and must disclose 
 a mutual intention to carry on a business in common therewith.* 
 Such intention is shown very clearly when they buy a chattel for 
 the purpose of employing it in a business which they have agreed 
 to carry on as partners,^ unless they negative such intention in 
 their contract.^ 
 
 7. Common Interests in Land. — Here, again, we have a 
 relationship existing between co-proprietors which was not 
 only familiar to the common law, but which it defined and regu- 
 lated with abundant minuteness and technicality. Moreover, 
 such real estate interests were not the ordinary subjects of mer- 
 chandizing. Indeed, as late as the year 1808, the Supreme Court 
 of Massachusetts declared that "the law merchant does not ex- 
 tend to speculations in land", and that a person cannot be held 
 to the liability of a dormant partner in such speculations.' 
 
 ' Applying §§ 2395 and 2396 of the Civil Code, viz. : "Partnership is the 
 association of two or more persons for the purpose of carrying on business 
 together, and dividing its profits between them." ' ' Part owners of a ship do 
 not, by simply using it in a joint enterprise, become partners as to the ship." 
 
 2 Goell V. Morse, 126 Mass. 480 (1879) ; Burdick's Cases on Part. 23 ; 
 Gottschalk v. Smith, 166 111. 377, 40 N. E. 937 (1895). 
 
 3 French v. Styring, 2 C. B. n. s. 355 (1857) ; Burdick's Cases on Part. 
 22 ; Quackenbosh v. Sawyer, 54 Cal. 439 (1880) ; Burdick's Cases on 
 Part. 25; Hawes v. Tillinghast, 1 Gray (67 Mass.), 289 (1854). 
 
 * Harrison v. Walker, — Ark.—, 188 S. W. 17 (1916) ; La Cotts v. Pike, 
 91 Ark. 28, 120 S. W. 145, 134 Am. St. R. 48 (1909) ; Hughes v. Ewing, 
 162 Mo. 261, 62 S. W. 465 (1901). 
 
 5 Leiden v. Lawrence, 2 New R. (Exch.) 283 (1863) ; Hagan v. Fowler, 
 6 La. 311 (1834). 
 
 6 Anten v. EUingwood, 51 How. Pr. (N. Y.) 359, 361 (1875). 
 
 ' Pitts V. Waugh, 4 Mass. 424 (1808). In Caines's Lex. Am. Merc. 
 
THE FORMATION OF A PARTNERSHIP 29 
 
 Although this doctrine has long been exploded, there appears 
 to be no doubt that the courts are disposed to require stronger 
 evidence of an intention on the part of common owners of real 
 property to become partners than is required where chattels are 
 the subject matter of co-proprietorship. Lord Thurlow went 
 so far as to hold that an express contract between the owners was 
 necessary in order to convert their title from that of joint tenants 
 with the right of survivorship into that of partners.^ This view 
 was repudiated by Lord Eldon,^ and no longer possesses any 
 authority in England ; ' still, both in that country and in this, 
 unless it is shown that real property has been acquired for and 
 used in an established partnership business, it will be deemed to 
 be owned by its associated proprietors, either jointly or in com- 
 mon ; or, in the language of Lord Justice Lindley, it will be deemed 
 to be so owned, " unless there is some evidence to show that it has 
 been treated by them as ancillary to the partnership business, 
 and as part of the common stock of the firm." * 
 
 (a) Modern Judicial Attitude. — The following extract from 
 a modern decision fairly represents the attitude of the courts 
 upon this subject : " From its nature, and the legal requirements 
 in regard to conveying title to it, real estate alone has rarely been 
 the sole subject matter of a partnership . . . From the nature 
 of the property, the limitations of the agency of each partner 
 in making a perfected sale, courts are not inclined to imply a part- 
 nership where the subject matter is real estate alone. Looking 
 into these contracts, nothing is found indicative of a clear inten- 
 tion to form a partnership. No partnership, nor partnership 
 
 (1802), 424, it is said: "These fratermties nmst be restricted to chattel 
 interests, for they cannot embrace real estate, as that would be to intro- 
 duce a new species of tenure, unknown to the law of the land." 
 
 1 Thornton v. Dixon, 3 Brown's C. C. 199 (1791). 
 
 2 Townsend v. Devaynes, Mont, on Part. (1st ed.) Notes, p. 97 (1810). 
 ' Darby v. Darby, 3 Drewry, 495 (1856). 
 
 « Lindley on Part. (5th Eng. ed.) 334; Clark v. Sidway, 142 U. S. 
 682, 12 Sup. Ct. 327, 35 L. ed. 1157 (1891) ; Jordan v. Soule, 79 Me. 590, 
 12 At. 786 (1887) ; Harris v. De Raismes (N. J. Ch.), 38 At. 637 (1897) ; 
 McFarlane v. McFarlane, 82 Hun, 238, 31 N. Y. Supp. 272 (1894) ; Davis 
 V. Davis (1894), 1 Ch. 393; Burdick's Cases on Part. 12; Taber-Prang 
 Art Co. V. Durant, 189 Mass. 173, 75 N. E. 221 (1905) ; Clark v. Emery, 
 58 W. Va. 637, 52 S. E. 770, 5 L. R. A. n. s. 503 (1906). 
 
30 THE LAW OF PARTNEKSHIP 
 
 name, nor partnership business, nor capital, is agreed upon. The 
 parties agree to purchase certain property and fit it up for certain 
 purposes, and to be at equal expense in doing it, and to share 
 equally the profits that may arise from selling or leasing the 
 property. They do not contemplate the carrying on of any busi- 
 ness upon or in connection with the property so purchased. Each 
 was in his own way to furnish his share of the funds necessary to 
 accomplish the purposes of the contracts." ^ 
 
 Another court has said : " A partnership between sons in the 
 family homestead, furniture and other property connected with 
 it, conveyed to them by their father, in considqfation of a promise 
 by them to pay his debts and support him and his wife, is too 
 novel and extraordinary to be inferred, without clear proof." ^ 
 
 On the other hand, if the contract shows that the parties have 
 bought the land in common for the purpose of making it the very 
 basis of a common business,' or if the business of the co-owners 
 is such as necessarily to involve the land in its dealings, for ex- 
 ample, that of nursery gardening, where it is "practically impos- 
 sible to separate the use of the soil for the trees and shrubs from 
 the trees and shrubs themselves, which are a part of the freehold,. 
 
 1 Farrand v. Gleason, 56 Vt. 633 (1884) ; Burdick's Cases on Part. 27. 
 In Wheatley v. Calhoun, 12 Leigli (39 Va.), 264, 273 (1841), it is said: 
 "Unless the intent of the joint owners to throw their real estate into the 
 fund as partnership stock is distinctly manifested, or unless the real prop- 
 erty is bought out of the social fund for partnership purposes, it must still 
 retain its character of realty. Considering the partnership as a third per- 
 son, the titles of the individual partners cannot be passed to it, perhaps, 
 without violating the statute of frauds, unless it be by express agreement 
 in writing, or unless by purchasing with partnership funds an impUed 
 trust is raised in its favor." Munson v. Sears, 12 Iowa, 172 (1861), accord. 
 Cf. British Partnership Act, § 20 (3) : "Where co-owners of an estate or 
 interest in land, . . . not being itself partnership property, are partners 
 as to the profits made by the use of the land or estate, and purchase other 
 land or estate out of the profits to be used in like manner, the land or 
 estate so purchased belongs to them, in the absence of any agreement to 
 the contrary, not as partners, but as co-owners." 
 
 2 Howe V. Howe, 99 Mass. 71, 73 (1868). Accord. Blanehard v. 
 Coolidge, 22 Pick. (39 Mass.) 151 (1839). 
 
 ' State Nat. Bank v. Butler, 149 111. 575, 36 N. E. 1000 (1894) ; Newell 
 V. Cochran, 41 Minn. 374, 43 N. W. 84 (1889) ; Heard v. Wilder, 81 
 Iowa, 421, 46 N. W. 1075 (1890) — land bought for joint benefit on 
 resale. 
 
THE FOBMATION OF A PARTNERSHIP 31 
 
 and at the same time constitute the substantial stock in trade "/ 
 the co-owners will be considered as holding the land in partnership. * 
 
 The Uniform Partnership Act declares : " Unless the contrary 
 intention appears, property acquired with partnership funds is 
 partnership property." ^ 
 
 (6) Farming on Shares. — The relation subsisting between 
 the owner of land and a person farming it on shares was fixed 
 at an early day as that of tenants in commoa of the crops.^ Such 
 is still not only the legal conception of their relationship, but the 
 popular understanding as well.^ "Contracts of this nature," 
 it has been judicially declared, "may either be regarded as a 
 lease of the land, with a rent payable in a portion of the crop ; or 
 as ah agreement by one man to work upon the land of another, 
 and to receive a part of the crop as compensation for his labor; 
 or as giving the laborer a qualified interest in the land";* but 
 "the proprietor and the occupant might be equally surprised to 
 be informed that they were partners." ® 
 
 Undoubtedly it is quite possible for the parties so to frame their 
 contract as to make them partners,' especially when they are 
 joint owners of the land.^ If the arrangement contemplates a 
 joint title in the crops, their conversion into cash ' as a joint fund 
 
 1 Waterer v. Waterer, L. R. 15 Eq. 402 (1873). 
 
 2 L. of Md. 1916, Ch. 175, § 8 (2). , 
 5 Hare v. Celey, Cro. Eliz. 143 (1688) .J 
 
 * Williams v. Rogers, 110 Mich. 418, 68 N. W. 240 (1896). 
 
 5 Delaney v. Root, 99 Mass. 546, 549 (1868). 
 
 ^Donnell v. Harshe, 69 Mo. 170, 172 (1877); Burdick's Cases on 
 Part. 30, n. Accord. T^ rg,dlfiy ». Ely . 24 Ind. App. 2, 56 N. E. 44 (1900) ; 
 Shrum v. Simpson, 155 Ind. 160, 57 N. E. 708 (1900) ; Cedarberg v. 
 Guernsey, 12 S. D. 77, 80 N. W. 159 (1899) ; Rogers v. Lawton, 162 Fed. 
 203 (1908). 
 
 ' Reynolds v. Pool, 84 N. C. 37, 37 Am. R. 609 and note (1881) ; Bur- 
 dick's Cases on Part. 30, n. Cf. Day v. Stevens, 88 N. C. 83, 43 Am. 
 R. 732 (1883) ; Bank of Overton v. Thompson, 118 Fed. 798 (1902) ; 
 Thornton v. Barber, 48 App. Div. (N. Y.) 298 (1900). 
 
 8 Fisher v. Sweet, 67 Cal. 228 (1885). Cf. Cherry v. Strong, 96 Ga. 
 183, 22 8. E. 707 (1895) ; Burdick's Cases on Part. 28. 
 
 9 In Allen v. Davis, 13 Ark. 28 (1852), and Holifleld v. White, 62 Ga. 
 567 (1874), it was held that a partnership in the business of cropping 
 existed, although the parties were "to divide the crop", in the first case, 
 and "to share and share alike the crop", in the second. The holding in 
 
32 THE LAW OF PARTNERSHIP 
 
 out of which advances are to be repaid, and that the balance is 
 to be shared as net profits, it may fairly be inferred that a part- 
 nership was intended. A transaction of that character amounts 
 to carrying on a business in common. 
 
 (c) Managing and Improving Land. — This is not treated by 
 the courts as a business, ordinarily. A recent decision of the 
 New York Court of Appeals has declared that a married woman 
 was not carrying on a trade or business when managing her real 
 estate, although she hired help to cultivate a part of it and rented 
 other parcels. The statute enabling married women to carry 
 on trade or business was interpreted as having "respect to business 
 pursuits, — mechanical, manufacturing, or commercial." ^ 
 
 Perhaps this is a narrower definition of "business" than is 
 to be found in any partnership adjudication or statute,^ but it 
 appears to accord fairly with the spirit of judicial and legislative 
 deliverances on this topic. The dictum of Willes, J.,' that "if 
 two tenants in common of a house agreed that one of them should 
 have the general management, and provide funds for necessary 
 repairs, so as to render the house fit for the habitation of a tenant, 
 and that the net rent should be divided between them equally", 
 they would not thereby become partners, has been accepted as a 
 correct statement of the law, and is sustained by express decisions 
 
 the Arkansas case was not necessary to the decision. The Georgia 
 court says: "In this case, both parties were equally interested in the 
 whole expenses of the enterprise, after it was started — every item thereof 
 — and also in the crop, the result or profits of the adventure." But see 
 Stoallings v. Baker, 15 Mo. 481 (1842), where the court held that a con- 
 tract, by which one party was to furnish miU and hands to saw, while the 
 other was to furnish the logs and the feed for the horses and hands, and 
 they were to divide the lumber into which the logs were to be sawed, was 
 not one of partnership. "Nothing was said about profits nor losses, nor 
 about the right of either to sell the lumber." This, it is submitted, is 
 the better holding. 
 
 1 Nash V. Mitchell, 71 N. Y. 199 (1877). 
 
 2 British Partnership Act, § 45 : Business includes "every trade, occu- 
 pation, or profession." Uniform Partnership Act, § 2, accord. 
 
 ' French v. Styring, 2 C. B. n. s. 355 (1857). C}. Sir Frederick Pol- 
 lock's comment: "But if they furnished the house at their joint ex- 
 pense, and then let portions of the house as lodgings, they might well 
 be partners. Letting a house is not a business, but letting furnished 
 rooms is." Digest of Part. (5th ed.) 3. 
 
THE FORMATION OF A PARTNERSHIP 33 
 
 in this country .1 In Sikes v. Work, cited in the last note, tenants 
 in common bought a lot, on which a house was erected under the 
 direction of the plaintiff. Later the plaintiff "carried on the 
 business of keeping it as a boarding house, under an understand- 
 ing between himself and the defendant that there should be a 
 partnership between them" in the boarding house business; yet 
 the coui't held that there was no partnership in the real estate. 
 "There was no agreement between them to share the profit and 
 loss of the joint undertaking, which is the essential and distin- 
 guishing feature of the contract of copartnership." 
 
 Where the use of land consists in clearing it of timber, cutting 
 the trees into logs and bolts and marketing these, a partnership 
 may exist between the landowner and the user of the land.^ In 
 the case last cited, the court held that the business of clearing the 
 land and marketing the timber products, under the particular 
 agreement between the landowner and land-clearer, was the 
 common business of both, in which there was a community of 
 property, a community of interest, and a community of profits. 
 Accordingly, a partnership was declared to exist, though it ap- 
 peared not to have been the intention of the parties to create 
 one.' 
 
 8. With a View of Profit. — Even though an association 
 may possess business features, it is not necessarily a partner- 
 
 1 Sikes V. Work, 6 Gray (72 Mass.), 433 (1856). Cf. Noakes v. Bar- 
 low, 26 L. T. R. N. s. 136 (1872), where parties engaged in improving 
 real estate were held partners because "every clause in the agreemenl^ 
 showed that every act that was to be done, and every purchase that was 
 to be made, was to be done or made in their joint names, for their joint 
 benefit, and for both jointly", and the money used in paying for the 
 Improvements "was to be paid to a bank to their joint account." 
 
 2 Dutcher v. Buck, 96 Mich. 160, 55 N. W. 677, 20 L. R. A. 776 (1893). 
 See Laffan v. Naglee, 9 Cal. 662, 678, 70 Am. Dec. 678 (1858), where 
 the court said: "The property was purchased and improved for the 
 purpose of carrying on the regular joint business of leasing the same for 
 profit. The relation the parties sustained to each other was not that of 
 mere tenants in common ; it was something more ; it was that of part- 
 ners." 
 
 ' Montgomery, J., and Hooker, Ch. J., dissented, on the ground that 
 the trial judge had found that the parties to the agreement had not 
 intended to form a partnership ; and that the share of the profits to be 
 paid to the landowner was as a measure of compensation for the stump- 
 age value of the timber. 
 
34 THE LAW OF PARTNERSfflP 
 
 ship. We have seen that the earliest form of partnership recog- 
 nized by Enghsh law was that of joint merchants. It existed 
 for the pm-pose of pecuniary gain. It was not a charitable, nor 
 a benevolent, nor a moral reform institution. Naturally, there- 
 fore, there has been no hesitation on the part of courts in declar- 
 ing that societies and clubs organized and maintained for the 
 promotion of temperance,^ for the enforcement of the laws,^- for 
 musical culture among their members,' for the propagation of 
 political, social, or religious doctrines,* or even for mutual pro- 
 tection ^ or insiu-ance,® are not partnerships, even though they 
 may have for one of their objects the accumulation of property 
 to be owned and enjoyed in common. Whether an association of 
 pilots is a partnership or not has been held to depend upon whether 
 its government is in the hands of commissioners imposed upon it 
 by law, or is controlled by its members.^ It is not essential to 
 the attainment of the objects which non-business associations 
 have in view, that their members should severally possess the 
 powers which the law merchant found it necessary to bestow upon 
 each partner, such as the power of alienating firm property or of 
 incurring firm obligations. Hence there is no foundation for a 
 legal inference that the members of such associations possess 
 those powers. On the other hand, it is uniformly held that the 
 property rights and the legal liabilities of the members of these 
 
 1 Lafond v. Deems, 81 N. Y. 507 (1880). 
 
 2 MoCabe v. GoodfeUow, 133 N. Y. 89, 30 N. E. 728 (1892). 
 
 3 Danbury Cornet Band v. Bean, 54 N. H. 524 (1874). Although this 
 association is spoken of by Smith, J., as a partnership he admits that it 
 might be considered an association of joint owners, and the property 
 rights of its members are determined by the terms of their agreement, 
 that is, by the association's by-laws, and not by the rules of partnership 
 law. 
 
 * Plemyng v. Hector, 2 M. & W. 172 (1836) ; Richmond v. Judy, 6 
 Mo. App. 465 (1879) ; QueeitfaRobson, 16 Q. B. D. 137 (1885). 
 
 'Caldicott V. Grifflths, 8 Exch. 898 (1853); Burt v. Lathrop, 52 
 Mich. 106 (1883) ; Brown v. Stoerkel, 74 Mich. 269, 41 n!%. 921 (1889) 
 (Knights of Labor Assembly). 
 
 « Cohen v. N. Y. Mutual Life Ins. Co., 50 N. Y. 611 (1872). 
 
 ' The Joseph Vaccaro, 180 Fed. 272 (1910), following Levine v. Michel, 
 
 35 La. Ann. 1121 (1883) and distinguishing Guy v. Donald, 203 U. S. 
 399, 27 Sup. Ct. 63, 51 L. Ed. 245 (1906), which reversed 135 Fed. 429 
 and 127 Fed. 228. 
 
THE FORMATION OF A PARTNERSHIP 35 
 
 associations depend in the main upon their constitutions and 
 rules.^ V 
 
 9. Pooling Earnings ; and Similar Arrangements. — An 
 agreement for pooling the earnings of several rival proprietors, 
 and dividing such earnings between them in fixed proportions, 
 does not constitute a partnership, where, by the agreement, each 
 proprietor transacts his own business in his own way, and is 
 liable for his own contracts and torts, but not liable for those of 
 any other member of the pool.^ Nor is a partnership created by 
 a traflBc arrangement, under which connecting passenger or freight 
 carriers divide the fares or charges in agreed proportions.' But 
 if the several owners of different vessels or transportation lines 
 agree "to divide between them, in certain proportions, the net 
 proceeds of their freight, passage-money, and other earnings, as 
 they may accrue, after satisfying their running expenses " ; ^ or if 
 the agreement between them provides that their earnings shall 
 constitute a common fund, out of which certain common expenses 
 
 lAsh V. Guie, 97 Pa. St. 493 (1881); Burdick's Cases on Part. 30; 
 see Austin v. Thomson, 45 N. H. 113 (1863), holding that an arrange- 
 ment for "mutually keeping house", did not constitute a partner- 
 ship. 
 
 2 Wiggins Ferry Co. v. Chicago & A. Ry., 128 Mo. 224, 27 S. W. 568 
 (1895). In this case the contract provided that the business of transfer- 
 ring freight in cars and railway equipments over the Mississippi River 
 should be conducted as a joint interest, and the joint gross earnings derived 
 therefrom should be pooled and divided between the parties ; the Madison 
 company to have 9| per cent of such earnings, and the other companies 
 the remainder : of which remainder the bridge company should have 75 
 per cent and the Wiggins company 25 per cent. This contract provided 
 for a pool auditor, to receive reports and make settlements; that rates 
 should be charged by each company according to a schedule to be agreed 
 upon from time to time ; and that there should be no interference by one 
 party with the business of the others. Cf. Fay v. Davidson, 13 Minn. 
 623 (1868) ; White Star Line v. Star Line, 141 Mich. 604, 105 N. W. 135 
 (1905). 
 
 ' Pattison v. Blanchard, 5 N. Y. 186 (1851) ; Chicg,go & A. Ry. v. 
 MuUord, 162 111. 522, 44 N. E. 861, 35 L. R. A. 599 (1896) ; Post v. 
 Southern Ry., 103 Tena. 184, 52 S. W. 301, 55 L. R. A. 481 (1899) ; 
 Insurance Co. v. Raiboad, 104 U. S. 146 (1881). 
 
 * Meaher v. Cox, 37 41a. 201 (1861) ; Alabama & V. Ry. v. Lamkin, 
 78 Miss. 502, 30 So. 47 (1901) ; lU. Cent. Ry. v. Jones, 87 Miss. 489, 
 39 So. 493 (1905). 
 
36 THE LAW OF PARTNERSHIP 
 
 shall be paid, and the net profits be divided in agreed proportions ; ' 
 or if the parties to the agreement hold themselves out as carrying 
 on a joint enterprise under a single name/ they become partners. 
 
 10. Promoters are not Partners. — The few cases in which 
 the promoters of corporations, or the provisional committees for 
 organizing business associations, have been declared to be part- 
 ners,^ are no longer entitled to consideration. These persons are 
 not engaged in carrying on a business, but in preliminary nego- 
 tiations for the launching of a business. They have no intention 
 of acquiring the property rights or of exercising the contractual 
 powers of partners.^ 
 
 If, however, they do carry on a business in common, before 
 a valid incorporation is secured, they are partners therein.^ 
 
 11. Agreements to form Partnerships. — While a true 
 partnership cannot exist without a contract between its members, 
 an association of persons does not become a partnership by the 
 simple force of an agreement for that relationship.^ Partnership 
 
 » Bostwick V. Champion, 11 Wend. (N. Y.) 571, 18 Wend. 175 (1837) ; 
 Briere v. Searles, 126 Wis. 347, 105 N. W. 817 (1905) : "The union agree- 
 ment included a partnership feature and an agency feature of the sort 
 between a factor and his consignee as well. The former included the 
 business of finding customers for berries produced by members, so far 
 as they desired that to be done, and the handling of outside berries, so 
 far as that seemed necessary for the protection of the common interest, 
 which it is held covers the instances where business of that nature was 
 transacted." 
 
 2 Sun Ins. Co. v. 1 Kountz. Line, 122 U. S. 583, 7 Sup. Ct. 1278 (1887) ; 
 Rooky Mountain Mills v. Wilmington & W. R. Ry., 119 N. C. 693, 25 
 S. E. 854 (1896). 
 
 3 Holmes D.Higgins, 1 B. & C. 74 (1822); Lucas v. Beach, 1 Man. & 
 G. 417 (1840). 
 
 « Reynell v. Lewis, l6 M. & W. 517 (1846) ; Batard v. Hawes, 2 E. & B. 
 287 (1852) ; Burdick's Cases on Part. 33 ; West Point Foundry Ass'n i;. 
 Brown, 3 Ed. Ch. 284 (1837). 
 
 ^Lowerin v. McLaughlin, 161 111. 417, 44 N. E. 99 (1896). The 
 court said in London Assurance Co. v. Drennen, 116 U. S. 461, 470, 29 
 L. Ed. 688, 6 Sup. Ct. 442 (1886) : "Looking at the whole agreement, 
 the parties did not contemplate a partnership, and none was ever estab- 
 lished between them. The agreement looked only to a corporation ; the 
 payment and other things specified being in preparation for its ultimate 
 formation, which was an adequate, as it was the actual, consideration." 
 
 » Gabriel v. EviU, 9 M. & W. 297 (1842) ; Irwin v. Bidwell, 72 Pa. 244 
 (1872). 
 
THE FORMATION OP A PARTNERSHIP 37 
 
 is more than a contract.' Persons suing as partners do not make 
 out a case by evidence that they have executed a written contract 
 to carry on a business as partners. They must show that they 
 carried on this business, and that their alleged cause of action 
 accrued to them therein.^ Nor will it matter that the parties 
 have opened books of account, in which the existence of a partner- 
 ship is recited and the interests of the various members are stated, 
 nor that various steps have been taken preliminary to the opening 
 of a firm business, nor that the refusal of any party to the contract 
 to carry it into execution may subject him to a suit for damages 
 by his repudiated associates. So long as the affair has not gone 
 beyond a contract to carry on a business in the future, there is 
 no partnership.' 
 
 Accordingly, if one of the parties to the agreement dies, before 
 the time stipulated for the partnership to commence arrives ; ^ 
 or if he fails to perform an undertaking, the performance of which 
 is made a condition precedent to the organization of the firm,* 
 the relation of the contracting parties is not that of partner- 
 ship. 
 
 While a partnership may not have been launched, and the 
 agreement between the parties may be executory only, their 
 conduct may estop them from showing this, as against third 
 persons, who have been led by such conduct to believe that a 
 partnership actually existed.^ Moreover, although the parties 
 may have agreed that the partnership business shall not begin 
 until the happening of a stipulated event, this condition precedent 
 
 1 Jones V. Way, 78 Kan. 535, 97 Pac. 437, 18 L. R. A. n. s. 1180 (1908). 
 
 2 Gray v. Gibson, 6 Mich. 300 (1859) ; Davis v. Key, 123 U. S. 79, 
 8 Sup. Ct. 65, 31 L. Ed. 112 (1887). 
 
 3 Martin v. Baird, 175 Pa. St. 540, 34 At. 809 (1896); Burdiek's 
 Cases on Part. 34 ; cf. Jacobsen v. Hennekenius, 5 Bro. P. C. 481 (1714) ; 
 Hunnewell v. Willow Springs Canning Co., 53 Mo. App. 245 (1893), 
 Opinion of Biggs, J. ; Hanthorn v. Quinn, 42 Ore. 1, 69 Pae. 817 (1902) ; 
 Shield V. S. E. Adkins & Co., 117 Va. 616, 85 S. E. 492 (1915). 
 
 « Dow V. State Bank, 85 Minn. 355, 93 N. W. 121 (1903). 
 
 ^Metcalf V. Redmon, 43 lU. 264 (1867); Baldwin v. Burrows, 47 
 N. Y. 199 (1872) ; Holgate v. Downer, 8 Wy. 334, 57 Pac. 918 (1899), 
 and cases cited therein. 
 
 6 Cain Lumber Co. v. Standard Dry Kiln Co., 108 Ala. 346, 16 So. 882; 
 (1895). 
 
38 THE LAW OF PARTNERSHIP 
 
 may be waived. If it is waived, the partnership may come into 
 existence at once.^ 
 
 § 4. Joint Stock Companies. 
 
 (a) Abnormal Partnerships. — These associations were de- 
 vised for the purpose of escaping certain consequences of an 
 ordinary partnership, — especially the unlimited agency of each 
 partner and his inability to devolve his partnership rights upon 
 an outsider. In the language of an eminent English judge : " At 
 first they existed under the favor of the Crown, which gave them 
 charters of incorporation, and nobody ever supposed that the 
 holders of stock in the Bank of England or the East India Com- 
 pany had anything to do with the law of partnership, or were 
 partners. But there were large societies on which the sun of 
 royal or legislative favor did not shine, and as to whom the whole 
 desire of the associates and the whole aim of the ablest legal 
 assistance they could obtain, were to make them as nearly a cor- 
 poration as possible, with continuous existence, with transmissible 
 and transferable stock, but without any individual right in any 
 associate to bind the other associates, or to deal with the assets of 
 the association." ^ 
 
 (6) Their Legality fully established. — After the passage of the 
 famous South Sea Bubble Act,^ the legality of these non-incor- 
 porated companies was doubted, notatly by Lord Eldon.* Since 
 the repeal of this statute, however, their legality at common law 
 has been affirmed. Lord Cranworth declaring that "these com- 
 panies, being consonant with the wants of a growing and wealthy 
 community, have forced their way into existence, whether fos- 
 tered by the law or opposed to it." ^ 
 
 1 First Nat. Bank v. Cody, 93 Ga. 127, 145, 19 S. E. 831 (1893). In 
 this case, it was agreed that the partnership business should not begin 
 until two certain stocks of goods had been consolidated and an inventory 
 taken. There was evidence that this provision was waived, and that 
 business was transacted in advance of the time stipulated. 
 
 2 In re Agriculturist Cattle Ins. Co., Baird's Case, 5 Ch. App. 725, 734 
 (1870). 
 
 2 6 Geo. I. e. 18 (1719). 
 
 * Van Sandan v. Moore, 1 Russ. 441, 472 (1826). 
 
 ' Greenwood's Case, 3 DeG. M. & G. 459, 477 (1854). Joint stock 
 companies which simulate corporations, without legal authority have 
 
THE FORMATION OF A PARTNERSHIP 39 
 
 Although the chartering of corporations is not, ordinarily, 
 a matter of executive or legislative favoritism in this country, 
 and joint stock companies are, therefore, less numerous than in 
 Britain, their legality here has not been successfully challenged.^ 
 In the cited case from Massachusetts it was charged that the 
 company was formed to avoid having a paid up capital, which 
 would have been necessary had a corporation been organized, 
 and to escape taxation. But the court answered that the company 
 was a partnership, and that if a partnership incurs debts the 
 members are personally liable, and there is no need of paid up 
 capital. Hence there was no wrong to the public; and, if per- 
 sons choose to buy stock in such a concern, it is their own lookout. 
 
 (c) No Delectus Personarum. — One of the principal objects of 
 the early partnership was the union of mercantile service and 
 skill. In the quaint language of an old writer : " It may be 
 that the one (partner) only conferreth the goods, and the other 
 no goods, but bestoweth only his labor and diligence, which then 
 is instead of goods. For labor is oftentimes of as good regard 
 as money, yea, and sometimes much better, which causeth that 
 even the poor, being industrious, may have fellowship with the 
 rich." ^ The importance to the partner of the right to select as 
 associates only such persons as, in his judgment, were possessed 
 of the requisite business ability and skill, was enhanced by the 
 mercantile custom that each partner was the unlimited agent of 
 the firm. It was natural, therefore, for the law to assume that 
 the ordinary partnership was "based on mutual trust and confi- 
 dence of each partner in the skill, knowledge, and integrity of 
 every other partner." ^ 
 
 The joint stock company, however, has in view the aggregation 
 of capital rather than the union of personal talents. Not only 
 are the owners of this capital so numerous that it is impracticable 
 
 been declared illegal in Louisiana. State v. Am. Cotton Oil Trust, 
 1 Ry. & Corp. L. J. 509 (1887). But see this case on appeal, 40 La. Ann. 
 8 (1888). 
 
 iPMUips V. Blatehford, 137 Mass. 510 (1884); Hossack v. Ottawa 
 Development Co., 244 111. 274, 291, 91 N. E. 439 (1910) ; Reffron Realty 
 Co. V. Adams Land & B. Co., 128 Md. 656, 98 At. 199 (1916). 
 
 2 West's Symboleography, § 27 (1590). 
 
 3 In re Agriculturist Cattle Ins. Co., Baird's Case, 5 Ch. App. 725, 
 733 (1870). 
 
40 THE LAW OF PARTNERSHIP . 
 
 for all of them to take an active part in the conduct of the com- 
 pany's affairs, but by mutual agreement the business management 
 is confined to a few persons, who may or may not be shareholders.^ 
 In such circumstances, the ownership of shares may change, with 
 the consequent withdrawal of old members and the introduction 
 of new ones, without hazard to the owners of other shares. The 
 personality of the ordinary member ceases to be important. It 
 follows that these companies may provide that the withdrawal or 
 death of a member shall not dissolve the association. Indeed, 
 although the articles of association may be silent on this point, 
 the presumption arising from the history, the nature, and the 
 objects of these companies is that neither the death of a member 
 nor the transfer of his shares works "a dissolution of the busi- 
 ness." ^ The assignee or personal representative of a member 
 may take the place of his predecessor, " on exactly the same terms 
 and conditions as every other owner of a share, — equal benefit, 
 equal liability." * Whether the assignee or personal represent- 
 ative of a shareholder is entitled to take the place of his pred- 
 ecessor, without the assent of the other shareholders, depends 
 upon the association articles.* 
 
 (d) Liability of Shareholders. — For the obligations of the 
 company the shareholder's liability is that of the normal part- 
 ner.^ It cannot be limited or modified by provisions in the articles 
 of association. In the absence of legislative authority, stipulations 
 for limited liability are "wholly nugatory as between the com- 
 
 1 Adams Exp. Co. v. Met. Street Ry., 126 Mo. App. 471, 103 S. W. 
 583 (1907), quoting and applying the text. 
 
 ' TyrreU v. Washburn, 6 AUen (88 Mass.), 466 (1863) ; Carter v. Mc- 
 Clure, 98 Tenn. 109, 38 S. W. 585, 36 L. R. A. 282, 60 Am. St. R. 842; 
 Burdiok's Cases on Part. 37 (1897); Moore v. May, 117 Wis. 192, 
 94 N. W. 45 "(1903) ; Hossack v. Ottawa Development Co., 244 111. 274* 
 91 N. E. 439 (1910). 
 
 ' In re Agriculturist Cattle Ins. Co., Baird's Case, 5 Ch. App. 725 735 
 (1870). 
 
 * Carter v. Producers Oil Co., 200 Pa. St. 579, 50 At. 167 (1901) ; 
 Condit V. Galveston City Co., — Tex. Civ. App. — , 186 S. W. 396 (1915). 
 
 6 Grady v. Robinson, 28 Ala. 289 (1856); Sebastian v. Booneville 
 Academy Co., 56 S. W. (Ky.) 810 (1900), and cases already cited in 
 this section; Wadsworth v. Duncan, 164 111. 360, 45 N. E. 132 (1897), 
 9.ff'g 61 lU. App. 156; Ashley v. Downing, 203 Mass. 311, 89 N. E. 434 
 (1909). 
 
THE FOKMATION OF A PARTNERSHIP 41 
 
 pany and strangers", unless assented to by the latter.^ Even the 
 express declaration in the notes of a banking association, that they 
 were to be paid by the members " out of their joint funds accord- 
 ing to their articles of association", has been judicially declared 
 not' to be binding on the holders of the notes. "I see no reason 
 to. doubt," said Gibson, J., "but that they may limit their re- 
 sponsibility by an explicit stipulation made with the party with 
 whom they contract, and clearly understood by him at the time. 
 But this is a stipulation so unreasonable on the part of the part- 
 nership, and affording such facility for fraud, that unless it ap- 
 pears unequivocally plain, from the terms of the contract, I will 
 never suppose it to have been in the view of the parties." ^ 
 
 (e) Liability of the Estate and of the Representative of a Deceased 
 Shareholder. — Although the personal representative of a share- 
 holder may succeed to his membership in the company, and 
 although the estate of the deceased may remain liable for the 
 debts of the company contracted after his death, the personal 
 representative is not bound to enter the association as a member ; 
 and until he does become "an actual partner in the concern ",^ 
 he will not be personally liable for its debts. Upon the death of 
 a shareholder, the shares are vested in his personal representative, 
 and the estate in such representative's hands is liable as a share- 
 holder, to the extent, at least, of indemnifying the other share- 
 holders for its proportionate share of the company's liabilities, 
 whether contracted before or after the shareholder's death.* 
 
 (/) Shareholder's Ldability after a Transfer of Shares. — It is 
 well settled that a shareholder cannot escape liability for existing 
 
 1 Walburn v. Ingilby, 1 My. & K. 61, 76 (1833) ; Brougham ; L. C. It 
 is to be borne in mind that, even in the case of normal partnerships, 
 "there is nothing in the law to prevent a firm from stipulating with any 
 creditor from the beginning that he shall look only to the members of the 
 firm for the time being." Pollock's Digest of Part. (5th ed.) 68. 
 
 2 Hess V. Werts, 4 S. & R. (Pa.) 356, 361 (1818) ; Imperial Shale Brick 
 Co. V. Jewett, 169 N. Y. 143, 150, 62 N. E. 167 (1901). In Hibbs v. 
 Brown, 190 N. Y. 167, 82 N. B. 1108 (1907) it was held that bonds of the 
 Adams Ex. Co., a joint stock company, were negotiable, though ex- 
 pressly exempting the shareholders from personal liability thereon. 
 
 swills V. Murray, 4 Exch. 843 (1850). In this case, becoming an 
 actual partner involved the execution of the company's deed by the per- 
 sonal representative; Parke, B., at p. 868. 
 
 i Phillips V. Blatehford, 137 Mass. 510, 514 (1884). 
 
42 THE LAW OF PAHTNERSHIP 
 
 debts of the company by transferring his share ; and that he may 
 be liable for subsequent debts, unless he gives notice of his with- 
 drawal, or unless he has sustained the position of a dormant 
 partner.^ The general rules of partnership law apply here. It 
 is also held, in England, that the purchaser of a share does not 
 become liable for existing debts ; ^ and a similar holding has been 
 made in this country.* It is admitted, however, that "when a 
 person takes shares in a joint stock company, he, as between him- 
 self and other shareholders, takes those shares with all the rights 
 and liabilities attaching to them ; so that his co-shareholders have 
 a perfect right to insist upon his contributing with them towards 
 the liquidation of debts contracted before he joined the com- 
 pany." * The sale of shares, in accordance with the company's 
 constitution, does not dissolve the partnership and result in the 
 organization of a new one. The incoming partner pays for his 
 shares upon the basis of their net value ; that is, their value after 
 debts are paid. In other words, the partnership into which his 
 purchase introduces him is liable for all existing debts, for it has 
 contracted them. Certainly, in those jurisdictions where third 
 persons are allowed to sue upon a contract made for their benefit,^ 
 creditors ought to be accorded the option of suing those who were 
 members of the company when the debts were inciu-red, or those 
 who are shareholders when the suit is brought.^ 
 
 This doctrine is modified by the Uniform Partnership Act, so 
 far as common law joint stock companies are concerned. It 
 provides that an incoming partner incurs no personal liability for 
 past debts, but that his interest in the partnership property is 
 subject to such debts.^ Joint stock companies, organized under 
 statutes referred to in the next paragraph, may not be subject 
 to the Uniform Act.^ 
 
 1 Tyrrell v. Washburn, 6 Allen (88 Mass.), 466, 475 (1863) ; Northey 
 V. Johnson, 19 L. T. 104 (1852) ; Shamburg v. Ruggles, 83 Pa. 148 (1876). 
 
 ' Thomas v. Clark, 18 C. B. 663, 25 L. J. C. P. 309 (1856). 
 
 3 M. W. Powell Company v. Finn, 198 111. 567, 64 N. E. 1036 (1902). 
 
 ^Lindley on Companies (6th ed.), 365; Cape's Executor's Case, 2 
 DeG. M. & G. 662 (1852). 
 
 6 Peyser v. Myers, 135 N. Y. 599, 32 N. E. 699 (1892). 
 
 8 See Wadsworth v. Duncan, 164 111. 360, 45 N. E. 132 (1897). 
 
 ' L. of Md. 1916, Ch. 175, § 17. 
 
 8 Ibid., § 6 (2). ' 
 
THE FORMATION OF A PARTNERSHIP 43 
 
 (g) Statutory Joint Stock Companies. — The rules thus far 
 stated as applicable to these abnormal partnerships have been 
 modified to a considerable but varying extent by statutes in 
 England and in our States. In each jurisdiction those statutes 
 must be consulted and the decisions applying and construing them 
 must be examined, if the learned reader would know the present 
 legal status of joint stock companies.^ While they may generally 
 sue and be sued in the name of some officer instead of in the names 
 of the various shareholders,^ and while they " provide for a perma- 
 nent investment of capital, the right of succession and the transfer 
 of property by the assignment of the certificate of ownership ",^ 
 thus possessing some of the features of a corporation,* they are 
 rarely treated as corporations,^ but are still classed as partnerships, 
 because they are organized by an agreement between their mem- 
 bers, and exist independently of any public grant or franchise.^ 
 
 (h) Trust Estates as Partnerships. — The ordinary commercial 
 trust is not a partnership.' Nor is a partnership created between 
 
 ' See The Evolution of the English Joint Stock Limited Trading Com- 
 pany, by Frank Evans, 8 Col. L. R. 839, 341 ; N. Y. Joint Stock Asso- 
 ciation Law, Ch. 29, Consolidated Laws. 
 
 2 Von Aernam v. Bleistein, 102 N. Y. 355, 7 N. E. 637 (1896) ; "Prior 
 to 1849, all members of an unincorporated joint stock company were neces- 
 sary parties to an action," in New York. 
 
 3 People ex rel. Piatt v. Wemple, 117 N. Y. 136, 144, 22 N. E. 1046, 
 6 L. R. A. 303 (1889). 
 
 « Commonwealth v. Adams Exp. Co., 123 Ky. 720, 97 S. W. 386 (1906) ; 
 State ex rel. Raihoad Comm's v. U. S. Exp. Co., 66 Minn. 271, 38 L. R. A. 
 225, 68 N. W. 1085 (1896) ; Adams Ex. Co. v. State, 55 Oh. St. 69, 44 N. E. 
 506 (1896). 
 
 5 Tide Water Pipe Co. v. State Board of Assessors, 57 N. J. L. 516, 
 31 At. 220, 27 L. R. A. 684 (1895); holding a Pennsylvania Limited 
 Partnership Association (also styled a joint stock company, by the Penn- 
 sylvania statutes) to be a corporation within the meaning of the New 
 Jersey Tax Law. 
 
 8 Edwards v. Warren Linoline Works, 168 Mass. 564, 47 N. E. 502 
 (1897) ; State ex rel. Railroad Commission v. U. S. Exp. Co., 81 Minn. 87, 
 83 N. W. 465, 50 L. R. A. 667, 83 Am. St. R. 366 (1900) ; People ex rel. 
 Winchester v. Coleman, 133 N. Y. 279, 31 N. E. 96, 16 L. R. A. 183 (1892) ; 
 Matter of Jones, 172 N. Y. 575, 65 N. E. 570 (1902); Eliot v. Nimrod, 
 108 Pa. St. 569 (1885) ; Great Southern Hotel Co. v. Jones, 177 U. S. 
 449, 20 Sup. Ct. 690, 44 L. Ed. 482 (1900). 
 
 ' Rice w. Rockefeller, 134 N. Y. 174, 31 N. E. 407, 30 Am. St. R. 658, 
 17 L. R. A. 237 (1892), Standard Oil Trust. 
 
44 THE LAW OF PARTNEESfflP 
 
 an insolvent debtor and his creditors, when he transfers his prop- 
 erty to trustees for the benefit of creditors and reserves no con- 
 trol over the business carried on by the trustees.^ Whether an 
 agreement and declaration of trust, which provides for trustees 
 and transferable shares of stock, creates a partnership or not 
 depends upon the relation which is instituted by the agreement 
 between the shareholders and the trustees. If the shareholders are 
 the principals, whose instructions are to be obeyed by the trustees, 
 the association is a partnership.^ If, on the other hand, the share- 
 holders are mere beneficiaries, and the trustees have not only the 
 legal title to the association property, but are the principals and 
 masters in the conduct of the business, there is no partnership.^ 
 
 § 6. Defectively Incorporated Associations. 
 
 (o) Conflicting Doctrines. — It is impossible to reconcile the 
 different views concerning the liability of shareholders, in a de- 
 fectively incorporated association, for its obligations. On the 
 one hand it is maintained that as these associates intended that 
 a business should be carried on with the capital which they con- 
 tributed, in the manner and by the agencies which they prescribed 
 or assented to, and for their gain, they are partners, even though 
 they did not intend to assume that relationship.* On the other 
 hand, it is declared that a partnership is never created between 
 parties by operation of law, apart from an intention and agree- 
 ment to constitute the relation ; that where parties in good faith 
 go through the form of organizing a corporation and the business 
 is carried on in the name and by the agency of such apparent 
 corporation, any intent to constitute the relationship is nega- 
 tived.^ Let us consider the opposing arguments and authorities 
 upon this topic. 
 
 1 Cox V. Hickman, 8 H. L. C. 268 (1860). 
 
 2 Williams v. Inhabitants of Milton, 215 Mass. 1, 102 N. E. 356 (1913). 
 ' Rhode Island Hosp. Trust Co. v. Copeland, — R. I. — , 98 At. 273 
 
 (1916). 
 
 * The author's views on this topic are set forth in 6 Columbia Law 
 Review 1 (1906). These views find considerable support in the authorities 
 cited in two articles by Edward H. Warren, in 20 Harv. L. R. 456 (1907) 
 and 21 Harv. L. R. 305 (1908). 
 
 5 The arguments in support of this view are well marshaled by Joseph 
 L. Lewinson, "Liability to Third Persons of Associates in Defective Cor- 
 porations", 13 Mich. L. R. 274 (1915). 
 
THE FORMATION OP A PAETNEESHIP 45 
 
 (6) Simulated Corporations are Partnerships. — When the per- 
 sons who own a business which is carried on for their gain pretend 
 to be a corporation, without color of legality for their assumption, 
 there is no difficulty in point of principle, and but little hesitation 
 on the part of the courts, in treating them as partners.^ Accord- 
 ingly, if several persons subscribe and pay for shares in a banking 
 institution, elect directors and officers, with the understanding 
 that articles of incorporation are to be executed, and that all 
 other steps are to be taken to legally organize the bank as a cor- 
 poration, but no such steps are taken, the banking business car- 
 ried on with such capital, and by such directors and officers, is 
 that of a partnership.^ 
 
 (c) Biisiness pending the Formation of a Corporation. — Whether 
 a business carried on while proceedings for the organization of 
 & corporation are pending is that of a partnership, or not, will 
 depend upon the facts of each case. If promoters of a contem- 
 plated corporation, after a part of the stock has been subscribed 
 for, believing that the scheme is to be successful, begin the busi- 
 ness on their own credit, but agreeing to turn it over to the cor- 
 poration as soon as it is organized, and no corporation is ever 
 perfected, there is no partnership between these promoters and 
 the stock subscribers.' Clearly the business thus carried on was 
 the business of the promoters only. In case, however, the sub- 
 scribers agree that a going business, in which they are all interested 
 -as proprietors, shall be carried on for their mutual profit until it 
 
 1 Fuller V. Rowe, 57 N. Y. 23 (1874) : "That parties assuming to act 
 in a corporate capacity witliout a legal organization as a corporate body 
 are liable as partners to those with whom they contract, is not denied." 
 Accord. Humphreys v. Mooney, 5 Colo. 282, 288 (1880) ; Stafford Bank 
 V. Palmer, 47 Conn. 443, 448 (1880); Schumaker v. Sumner Tel. Co., 
 161 la. 326, 142 N. W. 1024, Ann. Cas. 1916 A. 201 (1913) ; Henry v. 
 Simanton, 64 N. J. Eq. 572, 578, 54 At. 153 (1903) ; Bergeron v. Hobbs, 
 •96 Wis. 641, 71 N. W. 1056 (1897) ; Lynch v. Pennyman, 29 Okla. 615, 
 119 Pae. 229, 26 Ann. Cas. 1065 (1911), "Parties acting as stockholders 
 attempting to organize a corporation, but failing for the reason that a 
 •corporation cannot be organized for the declared purpose, or because all 
 the business is to be conducted in a foreign state, are liable as partners." 
 
 ' McLennan v. Hopkins, 2 Kan. App. 260, 41 Pac. 1061 (1895) ; Bur- 
 dick's Cases on Part. 41. 
 
 = Ward V. Brigham, 127 Mass. 24 (1879) ; Rutherford v. Hill, 22 Ore. 
 218, 29 Pac. 546, 17 L. R. A. 549, 29 Am. St. R. 596 (1892). 
 
46 THE LAW OF PARTNERSHIP 
 
 is transferred to the corporation for whose stock they have sub- 
 scribed, it will be a partnership business during the interim.^ 
 
 (d) Stockholders in De Facto Corporations. — To constitute a 
 de facto corporation, as distinguished from a corporation de jure, 
 "there must be a law under which the incorporation can be had.^ 
 There must also be an attempt in good faith on the part of the 
 incorporators to incorporate under such law", and there must be 
 "an actual, open, and notorious exercise, unchallenged by the 
 State, of the powers of a corporation." ' When such an attempt 
 has been made, but through some honest blunder the provisions 
 of law have not been complied with, and consequently a de jure 
 corporation has not come into existence, what is the liability of 
 the stockholders for the obligations of the enterprise which is 
 held out as a corporation by those responsible for it ? 
 
 (e) Liable as Partners. — Undoubtedly they did not intend 
 to form a partnership. Their principal object, in undertaking 
 to organize themselves into a corporation, was to limit their per- 
 sonal liability for the obligations of the business.* And yet they 
 intended to control, and do control, the business through persons 
 whom they have selected, and the profits are and were intended 
 to be theirs. It is true that they intended to create a legal entity, 
 to vest the title to the property of the business in this entity, and 
 to make it the debtor for all the obligations of the enterprise. 
 Their exemption from personal liability for such obligations could 
 be lawfully attained, however, in but one of two ways : by the 
 assent of the creditors, or by legislative authority. If their enter- 
 prise is not a corporation de jure, clearly the proprietors of it have 
 
 1 Citizens' Bank v. Hine, 49 Conn. 236 (1881). See Cincinnati 
 Cooperage Co. v. Bate, 96 Ky. 356, 26 S. W. 538, 49 Am. St. R. 300 (1894) ; 
 Mt. Carmel Tel. Co. v. Mt. Carmel & F. Tel. Co., 27 Ky. L. Reporter, 
 30, 84 S. W. 515 (1905). 
 
 ' Pape V. Capital Bank, 20 Kan. 440 (1878) ; Church v. Pickett, 19 
 N. Y. 482 (1859). This is generally held to mean a constitutional 
 statute. Brandenstein v. Hoke, 101 Cal. 131, 35 Pac. 562 (1894) ; Snyder 
 V. Studebaker, 19 Ind. 462 (1862) ; Eaton v. Walker, 76 Mich. 679, 43 
 N. W. 638 (1889). 
 
 3 McLennan v. Hopkins, 2 Kan. App. 260, 41 Pac. 1061 (1895) ; Bur- 
 diok's Cases on Part. 41 ; MoTighe v. Macon Construction Co., 94 Ga. 
 306, 21 S. E. 701 (1894); Bergeron «„ Hobbs, 96 Wis. 641, 71 N. W. 
 1056 (1897). 
 
 * Hess V. Werts, 4 S. & R. (Pa.) 356, 363 (1818). 
 
THE FORMATION OF A PARTNERSHIP 47 
 
 not secured legislative sanction for their coveted exemption. 
 This was offered to them by the legislature upon their performance 
 of specified conditions, which have not been performed. It would 
 seem to follow, logically, that their common law liability has 
 not been modified by legislative authority. It would seem, 
 also, that the creditors have not assented to any modification 
 of the common law liability of the stockholders, in cases where 
 the latter have mistakenly represented that a corporation exists. 
 These conclusions are sustained by a considerable body of judicial 
 opinion.^ ^ 
 
 (/) Not Liable as Partners. — It must be admitted, however, 
 that they are not accepted by all courts. Perhaps, the majority 
 of American decisions hold that, in cases where the stockholders 
 have made a bona fide attempt to form a corporation, and the 
 business has been carried on, honestly but mistakenly, as that of 
 a corporation, the associates are not to be treated as partners, 
 because "they never intended to form an association which the 
 law calls a partnership." ^ 
 
 In most jurisdictions holding this view, however, the exemp- 
 tion from partnership liability is limited to associates in a de facto 
 corporation, using that term in the sense already explained ; ^ 
 and some of these courts limit it still further to cases where cred- 
 
 1 Garnett v. Richardson, 35 Ark. 144 (1879) ; Forbes v. Whittemore, 
 62 Ark. 229, 35 S. W. 223 (1896) ; Bigelow v. Gregory, 73 111. 197 (1874) ; 
 Lowerin v. McLaugHin, 161 111. 417, 44 N. E. 99 (1896) ; Kaiser v. Law- 
 rence Savings Bank, 56 Iowa, 104, 41 Am. R. 85 (1881) ; Lehman v. 
 Knapp, 48 La. Ann. 1148, 20 So. 674 (1896) ; Richardson v. Pitts, 71 
 Mo. 128 (1879) ; Elgin Nat. Watch Co. v. Loveland, 132 Fed. 41 (1904) ; 
 HarriU v. Davis, 168 Fed. 187, 94 C. C. A. 47, 22 L. R. A. n. s. 1153 (1909). 
 
 2 Parsons on Part. (4th ed.) § 57 and eases cited : Richards v. Minn. 
 Savings Bank, 75 Minn. 196, 77 N. W. 822 (1899) ; Lusk v. Riggs, 70 
 Neb. 718, 102 N. W. 88 (1905); Gibbs' Estate, Hallstead's Appeal, 
 157 Pa. 59, 27 At. 383 (1893) ; American Salt Company v. Heidenhamer, 
 80 Tex. 344, 15 S. W. 1038 (1891); Clausen v. Head, 110 Wis. 405, 85 
 N. W. 1028 (1901). 
 
 3 Brandenstein v. Hoke, 101 Cal. 131, 35 Pac. 562 (1894); Snyder v. 
 Studebaker, 19 Ind. 462 (1862); Eaton v. Walker, 76 Mich. 579, 43 
 N. W. 638 (1889) ; Hill v. Beach, 12 N. J. Eq. 31 (1858) ; Booth v. Won- 
 derly, 36 N. J. L. 250-(1873) ; Henry v. Simanton, 64 N. J. Eq. 572, 54 
 At. 153 (1903); Empire Mills v. Alston Grocery Co., 4 Willson Tex. 
 App. 346, 15 S. W. 505, 12 L. R. A. 366 (1891). 
 
48 THE LAW OF PARTNERSHIP 
 
 itors have known that the associates claimed to be incorporated.^ 
 If the corporation engages in a business or conducts it in a manner 
 not authorized by its charter, its members are not exempt from 
 partnership liability.^ 
 
 In a few jurisdictions, notably in Massachusetts, it is held that 
 business associates, who believe themselves to be incorporated, 
 cannot be held liable as partners, though there is no corporate 
 liability, owing to the fact that not even a de facto corporation 
 has been organized. In these cases, where there is no corporate 
 liability, the responsibility for the assopiate obligations rests upon 
 the persons who take part in creating them,' and the title to the 
 associate property has been held to vest in the persons who are 
 acting as apparent agents of the association.* 
 
 (gf) Liability of Managers. — Whether the responsibility of 
 these persons, as distinguished from that of stockholders, in 
 cases where there is no de facto corporation, rests upon "an im- 
 plied warranty of the corporate liability, analogous to the lia- 
 bility of one who assumes without authority to act as agent ",^ 
 or is "a liability imposed by statute ",® is a question upon which 
 the courts are at variance. The Supreme Court of Ohio has 
 
 ' Guckert v. Hacke, 159 Pa. 303, 28 At. 249 (1893) ; New York Nat. 
 Ex. Bank v. CroweU, 177 Pa. 313, 35 At. 613 (1896) ; Slocum v. Head, 
 105 Wis. 431, 81 N. W. 673, 60 L. R. A. 324 (1900). 
 
 ' Jennings v. Dark, 175 Ind. 332, 92 N. E. 778 (1910) ; Campbell v. 
 J. I. CampbeU Co., 117 La. 402, 41 So. 696 (1906) ; MandeviUe v. Court- 
 wright, 142 Fed. 97, 73 C. C. A. 321, 6 L. R. A. n. s. 1003 (1905), reversing 
 126 Fed. 1007 (1903). 
 
 ' Rutherford v. HiU, 22 Ore. 218, 222, 29 Pac. 546, 17 L. R. A. 649, 
 29 Am. St. R. 696 (1892). 
 
 * Fay w.. Noble, 7 Cush. (61 Mass.) 188 (1861) : "FuUer was not agent 
 of a copartnership, for none existed ; he was not the agent of individuals 
 as such, because he was not authorized to act; he was not the agent of 
 the Western Boston Iron Company, because, if the court were right in 
 deciding that it had never been organized and that its proceedings were 
 void, it never had the power to appoint him agent. Cleai-ly then he acted 
 without authority for any one. If he purchased, he purchased for him- 
 self. In him only did the property vest, and as against all but the ven- 
 dors, he had the sole right to dispose of it to others." 
 
 5 Parsons on Part. (4th ed.) § 57, approving Trowbridge v. Seudder, 
 11 Cush. (65 Mass.) 83 (1853); Harrill v. Davis, 168 Fed. 187, 192, 94 
 C. C. A. 47, 22 L. R. A. n. s. 1153 (1909). 
 
 « SuUivan v. Sullivan Mfg. Co., 20 S. C. 79 (1883). 
 
THE FORMATION OF A PABTNEKSHIP 49 
 
 declared that such persons are liable as partners/ and this view 
 prevails in Illinois.^ 
 
 In Ridenour v. Mayo, the plaintiff sued the stockholders on a 
 certificate of deposit, issued in the name of the Farmers' Savings 
 Bank of Lima. Such a corporation had been organized by cer- 
 tain of the defendants, with a board of managers, president, 
 treasurer, and cashier. These managers, however, did not carry 
 on a savings bank business, such as the incorporating statute per- 
 mitted, but conducted a general banking business. They did 
 business in the corporate name, but it was wholly ultra vires. 
 The court said, "We are very clear that a partnership as to all 
 was prima facie established, and that therefore the testimony as 
 to the conduct and acts of each was properly received against all 
 to strengthen the presumption." * 
 
 1 Ridenour v. Mayo, 40 Oh. St. 9 (1883). 
 
 ^Lowerin v. McLaughlin, 161 111. 417, 44 N. E. 99 (1896): "The 
 members or stockholders of a corporation, illegally formed, are liable as 
 partners for its acts or contracts." 
 
 3 Accord. Jennings v. Dark, 175 Ind. 332, 92 N. E. 778, 781 (1910) ; Henry 
 V. Simanton, 64 N. J. Eq. 572, 54 At. 163 (1903) ; Worthington u. Griesser, 
 77 App. Div. 203, 79 N. Y. Supp. 52 (1902) ; CampbeU v. J. I. Campbell 
 Co., 117 La. 402, 41 So. 696 (1906) ; Mandeville v. Courtwright, 142 Fed. 
 97, 73 C. C. A. 321, 6 L. R. A. n. s. 1003 (1905), reversing 126 Fed. 1007 
 (1903) : "The case, then, as we read the record, is this : The defendants, 
 who were stockholders and officers of a company incorporated in the state 
 of New Jersey, caused to be conducted in the state of Pennsylvania, in 
 the name of the corporation, the business of dentistry, which the corpo- 
 ration had no charter right to carry on there and which it was expressly 
 forbidden to carry on in Pennsylvania by the law of the latter state. 
 The plaintiff, in ignorance of the existence of such a corporation, and sup- 
 posing that she was in the hands of licensed dentists, submitted herself 
 to an authorized employee of the estabUshment, who operated upon her 
 mouth so negligently and carelessly as to fracture her jawbone and cause 
 her serious injury. Such being the case, can the defendants escape per- 
 sonal liability to the plaintiff by setting up the charter of the company? 
 We think not. To all intents and purposes, the defendants acted without 
 any charter at aU, for the New Jersey charter gave no warrant to the 
 corporation to practice dentistry in Pennsylvania and the Pennsylvania 
 statute prohibited the corporation to practice dentistry in that state." 
 
CHAPTER II 
 
 PARTNERSHIP AS TO THIRD PERSONS 
 
 § 1. Test of Sharing Profits. 
 
 While the relationship of partners has never been imposed by 
 the common law upon individuals, without their voluntary assent,^ 
 English courts held for a time, that persons who participate in 
 the profits of a business, are partners in such business as to third 
 persons, although not partners as between themselves.^ ' Such is 
 not the present English doctrine. It is now well established in 
 England, that "no person, who does not hold himself out as a 
 partner, is liable to third persons for the acts of persons whose 
 profits he shares, unless he and they are really partners inter se, 
 or unless they are his agents." ' 
 
 In some of our States, however, the earlier English doctrine 
 still prevails. Very recently, the Supreme Court of Georgia re- 
 ferred to the subject as follows : "We are aware that the trend 
 of modern outside authorities is against the old rule, and that 
 now many courts hold that persons are not liable to third persons 
 as partners, although they share in the profits of a business, un- 
 less they are really partners inter sese, or have held themselves 
 out as partners under such circumstances as to estop them from 
 denying that they were. For my part, I wish the law in this 
 State upon the subject of partnership had undergone the change 
 which is pointed out, so that even as to third persons, a partner- 
 
 1 Supra, Ch. I. § 1. 
 
 2 Gow on Part. (ed. of 1823) 11. 
 
 ' Lindley on Part. (7th ed.) 59, 60, citing among other cases Gosling 
 V. Gaskell (1897), A. C. 575, 66 L. J. Q. B. 848. See the opinion of Bram- 
 weU, B., in Bullen v. Sharp, L. R. 1 C. P. 86, 125, 18 C. B. n. s. 614, 
 35 L. J. C. P. 105 (1865). 
 
 50 
 
PARTNERSHIP AS TO THIRD PERSONS 51 
 
 ship could not be held to exist, unless there was really a partner- 
 ship inter Sese, or else the person claimed to be a partner had, by 
 holding himself out as such, estopped himself to deny that he 
 was. This would greatly simplify matters in cases in which the 
 question of partnership or no partnership may arise, and would, 
 it seems to me, place the law in such cases upon a more rational 
 and reasonable basis. But we are bound by the previous deci- 
 sions of this court which we have cited, which are directly in point, 
 and must follow them so long as they stand unreviewed and un- 
 reversed." ^ 
 
 1. Earliest Statement of Doctrine. — This doctrine was 
 formally announced, for the first time, in the case of Grace v. 
 Smith,'' in these words: "Every man who has a share of the 
 profits of a trade ought also to bear his share of the loss. And 
 if any one takes part of the profit, he takes a part of that fund 
 on which the creditor of the trader relies for his payment." The 
 latter part of his opinion makes it clear that the Chief Justice 
 was referring to one who shared the profits of a trade as a pro- 
 prietor.; who was a co-owner of the trade with the ostensible 
 owner; to one, on whose behalf the trade was conducted. He 
 said : " I think the true criterion is to inquire whether Smith 
 agreed to share the profits of the trade with Robinson, or whether 
 he only relied on those profits as a fund of payment ; a distinction 
 not more nice than usually occurs in questions of trade and usury. 
 The jury have said that this is not payable out of the profits, and 
 I think there is no foundation for granting a new trial." ' 
 
 If this limitation upon the doctrine had been observed and 
 
 1 Brandon v. Conner, 117 Ga. 759, 765-76, 45 S. E. 371, 63 L. R. A. 
 260 (1903). The old doctrine prevails in Texas. Cothran v. Marma- 
 duke, 60 Tex. 370 (1883) ; DiUey v. Albright, 19 Tex. Civ. App. 487, 
 48 S. W. 548 (1899) ; Fouke v. Brengle (Tex. Civ. App.), 51 S. W. 619 
 (1899). 
 
 2 2 W. Bl. 998; Burdick's Cases on Part. 45 (1775), opinion of De 
 
 Grey, Ch. J. 
 
 ' Blaekstone, J., rested his decision mainly on the fact that Smith was 
 to receive from Robinson for the money furnished by the former five per 
 cent and £300 per annum. "The hazard of the loss and profit," he rea- 
 soned, "is not equal and reciprocal, if the lender can receive only a lim- 
 ited sum for the profits of his loan, and yet is made liable to all the losses, 
 all the debts contracted in trade, to any amount." 
 
52 ' THE LAW OF PARTNERSHIP 
 
 enforced, much " injustice and mischief " would have been 
 avoided. 
 
 2. Doctrine reaffirmed without Limitation. — Unfortu- 
 nately, however, the reason assigned for the doctrine, rather 
 than the limitation just referred to, impressed itself upon the 
 judges in the leading case of Waugh v. Carver} In that case 
 Erasmus and William Carver, ship-agents at Gosport, entered 
 into an agreement with Archibald Giesler, a ship-agent at Cowes, 
 to allow each other certain portions of each other's commissions 
 and profits, in consideration of mutual services to be rendered 
 by each to the other. Plaintiff, having sold goods to Giesler at 
 his agency in Cowes, brought suit for the price against the three 
 as partners. Lord Chief Justice Eyre, delivering the unanimous 
 opinion of the court, said : " It is plain upon the construction of 
 the agreement, if it be construed only between the Carvers and 
 Giesler, that they were not nor ever meant to be partners. They 
 meant each house to carry on trade without risk of each other, and 
 to be at their own loss. . . . But the question is whether they 
 have not, by parts of their agreement, constituted themselves 
 partners in respect to other persons. The case, therefore, is 
 reduced to a single point, whether the Carvers did not entitle 
 themselves and did not mean to take a moiety of the profits of 
 Giesler's house, generally and indefinitely as they should arise at 
 certain times agreed upon for the settlement of their accounts. 
 That they have so done is clear upon the face of the agreement ; 
 and upon the authority of Grace v. Smith, he who takes a moiety 
 of all the profits indefinitely shall, by operation of law, be made 
 liable to losses, if losses arise, upon the principle that, by taking 
 a part of the profits, he takes from the creditors a part of that 
 fund which is the proper securitv to them for the payment of their 
 debts.'' 
 
 (a) Doctrine originated with Lord Mansfield. — The proposi- 
 tion that one who shares in the profits of a business " is, by impli- 
 cation and operation of law, clothed with the character of a partner " 
 as to third persons, appears to have originated with Lord Mans- 
 field. In Bloxham v. Pell,^ cited by plaintiff's counsel in Orace v. 
 
 12 H. Bl. 235; Burdick's Cases on Part. (1793). Followed in 01m- 
 stead V. Hill, 2 Ark. 346, 354 (1840). 
 
 2 2 W. Bl. 999 (1775) ; Burdick's Cases on Part. 45, approved in 
 
PAETNERSHIP AS TO THIRD PERSONS 53 
 
 Smith, and upon which "the judgment" in the latter case "ap- 
 pears to have been based"/ Lord Mansfield held that an agree- 
 ment by which a retiring partner was to receive from the purchas- 
 ing partner, who continued the trade as his sole business, a bond 
 for £2,485, with five per cent interest on this amount and £200 
 per annum for six years, if the purchasing partner so long lived, 
 as in lieu of the profits of the trade, " was a device ^ to make more 
 than legal interest of money, and if it was not a partnership, it 
 was a crime. And it shall not lie in the defendant Pell's (retiring 
 partner's) mouth to say, 'It is usury and not a partnership.'" 
 This view was referred to by the same great judge in a later case' 
 as undisputed law. It was not only followed in like cases,^ so 
 long as the usury statutes remained in force in England, but, by 
 suggesting the doctrine which was laid down in Grace v. Smith 
 and Waugh v. Carver, it introduced into partnership law "an 
 amount of confusion which even the repeal of the usury laws 
 failed to remove." ^ 
 
 3. Partnership Stipulations foe Extra-Statutory In- 
 terest. — If a partnership actually exists, an agreement be- 
 tween its members that one shall receive more than the statutory 
 rate of interest for capital contributed or money advanced by 
 him to the firm, or that one shall pay to the firm more than stat- 
 
 Sheridan v. Medara, 2 Stoekt. (10 N. J. Eq.) 469, 478, 64 Am. Dec. 464 
 (1855), but declared to be discredited in Austin v. Neil, 62 N. J. L. 462, 
 466, 41 At. 834 (1898). 
 
 1 Lindley on Part. (7th ed.) 53. 
 
 " This was clearly erroneous. The purchase price of Pell's interest was 
 £2,486, the sum which Pell had contributed to the firm's capital, plus the 
 annuity. The annuity was the agreed value of the accumulated profits 
 and good-will, and would fall under § 7, (4), (E) of the Uniform Partner- 
 ship Act. 
 
 3 Hoare v. Dawes, 1 Doug. 371 (1780) ; Burdick's Cases on Part. 1. 
 
 ^ It is true Lord Mansfield did not apply this doctrine consistently ; 
 cf. Morriset v. King, 2 Burr. 891 (1759) ; Jestons v. Brooke, Cowp. 793 
 (1778). In Morse v. Wilson, 4 D. & E. 353 (1791), Buller, J. seems to 
 echo Lord Mansfield's heresy, that one who lends money to traders, and is 
 to receive the statutory rate of interest and a share of the profits, is liable 
 to the creditors of the business, although not a partner of the borrowers. 
 Neither Kenyon, Ch. J., nor Ashurst, J., intimates any approval of this 
 doctrine .- 
 
 " Lindley on Part. (7th ed.) 48. 
 
54 THE LAW OF PAKTNEKSHIP 
 
 utory interest for money withdrawn by him, is not usurious. In 
 the first case, the stipulation is for " an advantage to be taken out 
 of the trade", which " may be measured in any way agreed on ; 
 for the money is not lying at interest, but employed in making 
 profits subject to losses." ^ In the latter case, the agreement is 
 not for a loan of money, but "in substance is to make a contri- 
 bution to profits equal to the estimated earning power of the cap- 
 ital withdrawn and belonging in part to himself as one of the 
 firm." 2 
 
 If the parties did not contemplate a partnership, and the 
 agreement does not result in the business being conducted on 
 behalf of the person advancing money, and the stipulation is 
 for a share of the profits, in addition to the statutory rate of in- 
 terest, as a compensation for its use, the transaction should be 
 treated, and is generally treated, as that of a usiurious loan.* 
 
 § 2. Various Exceptions to the Old Rule. 
 
 An unsound legal rule breeds exceptions. Within three years 
 after the decision of Waugh v. Carver, the same court decided * 
 that a broker employed to sell goods, and to have for his own 
 profit whatever sum he could get for them above a stipulated 
 price, was not a partner of the owner. In the language of Justice 
 Heath, "He must be considered as a broker, and not as a prin- 
 cipal ; he is only paid for his trouble in a particular manner." 
 
 (a) A Sharer of Gross Returns is not a Partner. — This was 
 followed by cases holding that seamen, who receive a certain 
 
 1 Anderson v. Maltby, 2 Ves. Jr. 244 (1793) ; Fereday v. Hordern, 
 1 Jae. 144 (1821) ; Gilpin v. Enderbey, 5 B. & Aid. 954 (1822) ; Plunkett 
 V. Dillon, 4 Houst. (Del.) 338 (1872) ; Brigham v. Dana, 29 Vt. 1, 7 
 (1856) ; Clift v. Barrow, 108 N. Y. 187, 15 N. E. 327 (1888) ; Burdick's 
 Cases on Part. 98. 
 
 2 Payne v. Freer, 91 N. Y. 43, 43 Am. R. 640 (1883). 
 
 ' Morse v. Wilson, 4 D. & E. 353 (1791) ; Arnold v. AngeU, 62 N. Y. 
 508 (1875). In the latter ease the agreement was for seven per cent 
 interest on the money loaned and one quarter of the profits of the busi- 
 ness. This, the Court of Appeals held, constituted usury. Flower v. 
 Millandon, 6 La. 697, 707 (1834), accorcL 
 
 < Benjamin v. Porteus, 2 H. Bl. 590 (1796); cf. CoUom v. Bruning, 
 49 La. Ann. 1257, 22 So. 744 (1897) ; Loetsoher v. DiUon, 119 Iowa, 202, 
 93 N. W. 98 (1903). 
 
PARTNERSHIP AS TO THIRD PERSONS 55 
 
 share of the produce of the cargo in lieu of wages, are not part- 
 ners of the captain ; ^ that the owner of a Hghter is not a partner 
 of the person who, in consideration of working the vessel, is to 
 receive half the gross earnings ; ^ that one pasturing bullocks is 
 not a partner of their owner, although it is agreed that they shall 
 «qually share the excess above £20 received upon their sale ; ' 
 that the captain of a ship who, in lieu of wages, primage, etc., is 
 to receive one-fifth of the profit and loss of the voyage, is not a 
 partner of the owners.^ And thus the first ex:ception to the rule 
 was established that "a person who shares gross profits is not a 
 partner." ^ 
 
 (b) Receiving a Sum proportioned to Profits. — Another excep- 
 tion to the rule, that one sharing in the profits of a trade became 
 a partner by operation of law, is stated by Lord Eldon ^ in these 
 "words : " It is clearly settled, though I regret it, that if a man 
 stipulates that as the reward of his labor he shall have, not a 
 specific interest in the business, but a given sum of money, even 
 in proportion to a given quantum of the profits, that will not 
 make him a partner ; but if he agrees for a part of the profits, as 
 such, giving him a right to an account, though having no prop- 
 erty in the capital, he is as to third persons a partner." ^ 
 
 1 Wilkinson v. Frasier, 4 Esp. 182 (1803). 
 
 ' Dry V. Boswell, 1 Camp. 329 (1808). In Cox v. Delano, 14 N. C. 89 
 (1831), the court held the owner and master of a vessel partners, because 
 they were to carry on a business in common, in using the vessel, and were 
 to own the profits in common. But in The Mettaoomet, 230 Fed. 308 
 <1915), the master and crew of a fishing vessel were held not to be partners. 
 
 5 Wish V. Small, 1 Camp. 333 n. (1808); cf. Stratton v. O'Connor, 
 (Tex. Civ. App.) 34 S. W. 158 (1896) ; Burdiok's Cases on Part. 61 ; 
 Edwards v. Buchanan, (Tex. Civ. App.) 36 S. W. 1022 (1896) ; Buchanan 
 V. Edwards, (Tex. Civ. App.) 51 S. W, 33. (1899). These cases appear 
 to be decided on the ground that a sharing of profits makes the owner 
 and the pasturer of the cattle partners as to third parties ; though they 
 may not be as between themselves ; following the doctrine of Cothran 
 V. Marmaduke, 60 Tex. 370 (1883). 
 
 * Mair v. Glennie, 4 M. & S. 240 (1815) ; cf. Brown v. Hicks, 24 Fed. 
 811 (1885). 
 
 5 Heyhoe v. Burge, 9 C. & B. 431 (1850), Parke, B. 
 
 8 Ex parte Hamper, 17 Ves. 403 (1811). 
 
 ' Lord Eldon has been called "the great enforcer of this distinction." 
 Lindley on Part. (7th ed.) 55. He appears to have given to it its author- 
 
56 THE LAW OP PARTNERSHIP 
 
 This distinction, although not originally satisfactory to Lord 
 Eldon/ was accepted by the profession as simple and practical, 
 and soon won approval from courts and jurists.^ The reason 
 given for the distinction is thus stated by a learned judge : " In 
 a case where the stipulation is for a compensation proportioned 
 to the profits, without having a specific lien upon such profits 
 to the exclusion of other creditors, it is for the interest of the 
 creditors that the party should be compensated in that way, 
 instead of receiving fixed compensation, whether the business 
 produces profits or otherwise. On the other hand, if the stip- 
 ulation is for an interest in the profits of the business, which 
 would entitle the party to an account, and give him a specific lien 
 
 itative, if not its earliest judicial sanction. In Ditsche v. Becker, 6 PMl. 
 176 (1866), Hare, J., said : "If judges of great authority, including Lord 
 Eldon and Chief Justice Gibson, have commented on the distinction be- 
 tween a commission or a percentage on the profits, and a share in the 
 profits themselves, as thin or verbal, their criticism was directed against 
 the relaxation of the ancient rule, that he who benefited by the profits in 
 any form, was a partner, and not intended to intimate that sharing profits 
 could be less than a partnership." 
 
 > The same distinction was judicially declared by Judge Sharswood 
 (with regret even more voluble than Lord Eldon's) to apply to an agree- 
 ment for the loan of money with interest "equal to one-fourth of the 
 profits of the borrower's business." Lord v. Proctor, 7 Phil. (Pa.) 630, 
 632 (1870). In Wessels v. Weiss, 166 Pa. 490, 31 At. 247 (1895), the lender 
 was held Uable as a partner, because his contract gave him 15 per cent of 
 the net profits, instead of a sum equal to that per cent ! The same doc- 
 trine is repeated in Re De Haven's Estate, 248 Pa. 271, 93 At. 1013 
 (1915). But it has been repudiated in Pennsylvania by the Uniform 
 Partnership Act, L. of Pa. 1915, No. 15, p. 18, § 7, (4). 
 
 ' Story on Part. (5th ed.) §§ 33 to 36. Lord BramweU, referring to 
 Story's approval of this distinction as satisfactory, asks : "Satisfactory in 
 what sense ? In a practical business sense ? No ; but in the sense of an 
 acute and subtle lawyer, who is pleased with refined distinctions, interest- 
 ing as intellectual exercises, though unintelligible to ordinary men, and 
 mischievous when applied to the ordinary affairs of life." Bullen v. 
 Sharp L. R. 1 C. P. 86 (1866) ; Burdick's Cases on Part. 71. In Hazard 
 V. Hazard, 1 Story, 371, 375-376; Fed. Cases, No. 6279 (1840), Judge 
 Story spoke of the distinction as "a very thin, if it is a clearly discernible 
 distinction." Estabrook v. Woods, 192 Mass. 499, 78 N. E. 538 (1906), 
 ignores the distinction, as do Blueflelds S. S. Co. v. Lala Ferreras Cangelori 
 ■ S. S. Co., 133 La. 424, 63 So. 96 (1913) and Goodin v. Pitt, 36 Nev. 156, 
 134 Pac. 459 (1913). 
 
PARTNEESfflP AS TO TfflED PERSONS 57 
 
 or a preference in payment over other creditors, and the full 
 benefit of the increased profits of the business, without any cor- 
 responding risk in case of loss, it would operate unjustly as to 
 other creditors. Hence, it is right in principle, that the party 
 should be holden to be liable to third persons as a partner in the 
 latter case, but not in the first." ^ 
 
 The distinction became useless in England when the old rule 
 was overthrown by the House of Lords in Cox v. Hickman,^ but 
 its influence survives there in the notion that persons may be 
 partners in the profits of a business, although not partners in the 
 business itself.^ In this country it is still a live and mischievous 
 doctrine in not a few jurisdictions. It is admittedly difficult of 
 application,* and has been rejected by many of our courts as " un- 
 important and merely verbal", ^ as well as "an arbitrary one, 
 resting on authority and not principle." ® 
 
 (c) Sharing the Profits as SiLch. — The courts which continue 
 to enforce this distinction are careful to say that the share of the 
 profits which is to be taken must be a "proprietary interest," 
 "an interest in the profits, as such", "a right to insist upon an 
 accounting and a division thereof" at definite periods.^ If they 
 meant by this language that a person who stipulates for and 
 receives a sh are of the profits of a business, in which he is a com- 
 mon proprietor with those who carry it on, should be liable as 
 a partner, although he pretends to be a creditor only of the busi- 
 ness, no fault could be found with the statement. In such a 
 case, the business would be carried on in common by him and its 
 
 1 WrigM, J., in CatskiU Bank v. Gray, 14 Barb. 471, 476 (1851). 
 
 2 8H. L. Cases, 268 (1860). 
 
 5 Lindley on Part. (7th ed.) 46, and cases cited. In Georgia, the 
 statute declares : "A joint interest in the partnership property, or a joint 
 interest in the profits and losses of the business, constitutes a partnership 
 as to third persons. A common interest in profits alone does not." Civil 
 Code, § 2629 ; Gray v. Blasingame, 110 Ga. 343, 36 S. B. 653 (1900). 
 
 * Cox V. Delano, 3 Dev. L. (14 N. C.) 89 (1831). 
 " Beeeher v. Bush, 45 Mich. 188 (1881), Cooley, J. 
 
 6 Dunham v. Rogers, 1 Barr. (1 Pa.) 255 (1845), Gibson, C. J. 
 
 ■> Leggett V. Hyde, 58 N. Y. 272, 17 Am. R. 244 (1874) ; Burdick's 
 Cases on Part. 50. See majority opinion in Dutcher v. Buck, 96 Mich. 
 160, 55 N. W. 677, 20 L. R. A. 776 (1893), as explained in Brotherton v. 
 Gilchrist, 144 Mich. 274, 277, 107 N. W. 890 (1906) ; MiUer v. Simpson, 
 107 Va. 476, 59 S. E. 378, 18 L. R. A. n. s. 963 with voluminous note (1907). 
 
58 THE LAW OF PARTNERSHIP 
 
 ostensible owners. To call the share of the profits for which he 
 has stipulated a compensation for his services, or for the use of 
 his property, would be a subterfuge. Such, however, is not the 
 meaning of these tribunals. 
 
 (d) Doctrine of Leggett v. Hyde. — This is apparent from the 
 able opinion in the case last cited. The defendant Hyde loaned 
 to the firm of A. Putnam & Co. $2,000 for one year, in considera- 
 tion of which Putnam & Co. agreed to hire Hyde's son as clerk, 
 at $10 per week for the year, to pay Hyde one-third of the profits, 
 which were to be settled half yearly, and at the end of the year. 
 to take him in as a partner if the firm and he should feel satisfied 
 upon his supplying more money. Hyde never interfered in the 
 affairs of the concern, nor exercised any control of the business ; 
 nor had he any right to interfere, to transact business, or to sign 
 for the firm or to bind the same. The court did not intimate that 
 Hyde had any proprietary interest in the business. "It matters 
 not," said the court, "that the defendants meant not to be part- 
 ners at all and were not partners inter sese." Inasmuch as Hyde 
 obtained "an interest in the profits, as such, and a right to itisist 
 upon an accounting and a division thereof half yearly", he was 
 declared to be a partner as to third persons, since he had a right 
 to take "a part of the fund which in great measure is the creditor's 
 security for the payment of debts to them", although in fact he 
 "never received anything for his $2,000, nor anything by way 
 of interest money." 
 
 The same doctrine is announced in Texas, as follows : " To 
 constitute a partnership as to third persons, all that is required 
 is, that the parties to the contract shall have a community of 
 interest in the profits; and it is not essential that there should 
 be a community of interest in the property or capital used in the 
 business ; nor that there should be an agreement to share losses." ^ 
 
 In other cases decided by the New York court, parties who 
 had the right to take, and did take, a part of this same sacred 
 fund were held not to be partners, even as to third persons, be- 
 cause their "interest in the profits" was "as a compensation for 
 the money loaned." ^ 
 
 'Cleveland v. Anderson, 2 Willson (Tex. Ct. of App.), 139, §§ 147, 
 148 (1884), citing among other cases Leggett v. Hyde. 
 
 2 Richardson v. Hughitt, 76 N. Y. 55, 32 Am. R. 267 (1879), and other 
 
PARTNERSHIP AS TO THIRD PERSONS 59 
 
 1 3. The Test of Intention. 
 
 With the growth of exceptions to the rule, doubts sprang up 
 as to the soundness of the rule itself. The test of partnership 
 "which it furnished was recognized as artificial, and its enforce- 
 ment was found to be productive of great hardship and injus- 
 tice.^ In the cases which first declared exceptions to the rule, 
 the judges laid stress upon the facts that the parties never in- 
 tended to form a partnership, and that such a relation between 
 them was inconsistent with the business usages in those branches 
 •of trade. To hold that a broker was a partner of his employer, 
 or that seamen were partners of their captain, was to do violence 
 to the intention of the parties, as well as to the understanding of 
 the business community.^ English courts, true to their judicial 
 habit, distinguished tfiese cases from Waugh v. Carver, instead 
 of overruling it; content to be practical rather than logical. 
 However, the reasoning in these very cases led inevitably to the 
 adoption of a new test of partnership. 
 
 1. Cox V. Hickman. — The first authoritative statement, in 
 England, of the new test appeared in the judgments delivered 
 in the House of Lords in Cox v. Hickman.^ Creditors of an em- 
 barrassed partnership (B. Smith and Son) entered into a deed 
 of arrangement with the firm, by which the firm property was 
 assigned to certain trustees, who were to carry on the business 
 
 <jases as digested by Ruger, Cli. J., in Hackett v. Stanley, 115 N. Y. 625, 
 22 N. E. 745 (1889) ; Burdick's Cases on Part. 57, 60. 
 
 1 Wessels v. Weiss, 166 Pa. St. 490, 31 At. 247 (1895) ; Burdick's Cases 
 on Part. 55, 56; Mollwo, March, & Co. v. Court of Wards, L. R. 4 P. C. 
 419 (1872). " Supra, § 2, (a). 
 
 3 8 H. L. Cas. 268 (1860) ; Burdick's Cases on Part. 65. Cf. Purvis 
 V. Butler, 87 Mich. 248, 49 N. W. 564 (1891), where a partnership was 
 held to exist, because the agreement between the creditors and the debtor 
 "gave to the parties the entire proprietorship of the business, and ren- 
 dered them liable as partners to third persons upon contracts made in 
 carrying it on" ; and Webb v. Hicks, 123 N. C. 244, 31 S. E. 479 (1898), 
 •where a partnership was held to exist between an assignee for creditors 
 of an insolvent debtor and those creditors, because they entered into an 
 agreement "that the business should be carried on, as it heretofore has 
 been, for the benefit of the creditors, in order that the full value of the 
 assigned property shall be realized for the payment of the creditors in 
 full." In each of these cases, the business carried on in the name of the 
 .assignee was that of the creditors. 
 
60 THE LAW OF PAETNERSHIP 
 
 under the name of the Stanton Iron Company ; to divide the net 
 income among the creditors in ratable proportions, and, after 
 the debts were discharged, to retransfer the property to the 
 Smiths. The creditors had the right to make rules for the con- 
 duct of the business, or to put an end to it, but the property and 
 its income were to be deemed the property of the Smiths. Hick- 
 man, who had supplied goods to the business and received there- 
 for bills accepted by the trustees in the name of the Stanton Iron 
 Company, sought to hold all of the creditors who had executed 
 the deed as partners. 
 
 Clearly, under the doctrine of Waugh v. Carver, they were 
 liable to Hickman as partners. They were to receive a share 
 of the profits as such. Just as clearly, the creditors did not 
 intend to enter into the relation of partnership. The claim of 
 one creditor, the Midland Railway Company, amounted to only 
 £39, "and to suppose that the directors could imagine that they 
 were making themselves partners" was considered "absurd." 
 Moreover, such deeds of arrangement were of frequent occur- 
 rence, and yet neither lawyers nor business men supposed they 
 created a partnership. By a case of this character, the arbitrari- 
 ness and hardship of the old rule were fully disclosed. Although 
 the judges in the Exchequer Chamber, as well as those who were 
 summoned to the House of Lords during the argvunent, were 
 equally divided as to the proper decision of the case, — some of 
 them believing that the doctrine of Waugh v. Carver " had become 
 so inveterately part of the law of England that it would require 
 legislation to reverse it", ^ — their Lordships were unanimous in 
 holding that the creditors were not partners. 
 
 (a) Reasons for the Decision. — While their Lordships were 
 not entirely agreed, nor entirely clear,^ in the reasoning which 
 led up to their unanimous conclusion, and while the emphasis 
 whicl;i they laid upon agency as a test of partnership was 
 unfortunate,^ the ratio decidendi of the case is found in the fol- 
 
 1 Lord Blackburn in Bullen v. Sharp, L. R. 1. C. P. 86 (1865). 
 
 2 "For some time", the consequences of Cox v. Hickman "were still 
 imperfectly understood, even by some of the noble and learned persons 
 who had taken part in the decision." Pollock on Part. (5th ed.) 17. 
 See Lindley on Part. (7th ed.) 56-60. 
 
 ' Gray, J., in Meehan v. Valentine, 145 U. S. 611, 12 Sup. Ct. 972, 36 
 L. Ed. 835 (1892) ; Burdick's Cases on Part. 80, 82. In Harvey v. Childs, 
 
PAETNEKSHIP AS TO THIRD PERSONS 61 
 
 lowing extract from Lord Cranworth's judgment: "It is often 
 said that the test, or one of the tests, whether a person not osten- 
 sibly a partner is, nevertheless, in contemplation of law, a partner, 
 is whether he is entitled to participate in the profits. This, no 
 doubt, is in general a sufficiently accurate test; for a right to 
 participate in profits affords cogent, often conclusive, evidence 
 that the trade in which the profits have been made was carried 
 on in part for, or on behalf of, the person setting up such a claim. ^ 
 But the real ground of the liability is, that the trade has been 
 carried on by persons acting on his behalf. When that is the 
 case, he is liable to the trade obligations, and entitled to its profits, 
 or to a share of them. It is not strictly correct to say that his 
 right to share in the profits makes him liable to the debts of the 
 trade.^ The correct mode of stating the proposition is to say that 
 the same thing which entitles him to the one makes him liable 
 to the other ; viz. the fact that the trade has been carried on on 
 his behalf, i.e. that he stood in the relation of principal towards 
 the persons acting ostensibly as the traders, by whom the lia- 
 bilities have been incurred, and under whose management the 
 profits have been made." 
 
 (b) The Present English Rule. — Substantially in accordance 
 with the foregoing extract is the present English rule, as it ap- 
 pears in sections one and two of the Partnership Act. 
 
 It should be noted, however, that the third section of that 
 Act postpones the rights of one who is to receive a rate of interest 
 varying with the profits, or a share of the profits as compensation 
 
 28 Oh. St. 319, 322, 22 Am. R. 387 (1876), the court said : "On principle, 
 the true test of a partnership is that of the relation of the parties as 
 principal and agent, to be proved by any competent evidence." A sim- 
 ilar statement is found in Samstag & Hilder Bros. v. Ottenheimer & Weil, 
 90 Conn. 475, 97 At. 865 (1916). 
 
 1 lUingworth v. Parker, 62 111. App. 650 (1896), cites 1 Lindley on 
 Part. 7, 12, 13, and Niehoff v. Dudley, 40 111. 406 (1866) for the proposi- 
 tion "that where no statute interferes, an agreement to share profits 
 is prima facie an agreement for a partnership." The same doctrine is 
 laid down in Carey v. CadweU, 86 Mich. 570, 573, 49 N. W. 611 (1891) ; 
 Kootz V. Tuvian, 118 N. C. 393, 394, 24 S. E. 776 (1896) ; Blair v. Shaeffer, 
 33 Fed. 218, 221 (1887); Berry v. Pelneault, 188 Mass. 413, 74 N. E. 
 917 (1905), and The Uniform Partnership Act, § 7, (4). 
 
 2 Nugent V. Armour Packing Co., 208 Mo. 480, 106 S. W. 648 (1907) ; 
 Hunter v. Conrad, 18 Mont. 177, 44 Pac. 523 (1890). 
 
62 THE LAW OF PARTNERSHIP 
 
 for a loan of money,^ as well as the rights of one who is to receive 
 a portion of the profits in consideration of the sale by him of the 
 good-will of the business, in case of insolvency of the debtor, 
 until the claims of other creditors have been satisfied.^ 
 
 Attention may well be called, here, to the corresponding provi- 
 sions of The Uniform Partnership Act,^ which do not require 
 loan contracts to be in writing and do not postpone the lenders, 
 or beneficiaries to the claims of other creditors. 
 
 (c) Dissolution of the Old Rule. — In deciding Cox v. Hickman, 
 the House of Lords did not formally overrule Waugh v. Carver. 
 Indeed, one of the noble lords undertook the difficult task of 
 justifying the conclusion reached in that case, while repudiating 
 the reasons upon which it was based. The judgment in Cox v. 
 Hickman, however, did overrule the notion that "he who takes 
 a moiety of all the profits indefinitely shall by operation of law 
 be liable to losses", — one which Lord Bramwell declared had 
 "caused more injustice and mischief than any bad law in our 
 books";* or in the more conventional phrase of Sir Montague 
 
 1 Section two reqtiires a contract of this kind to be in writing. Cf. 
 Pennsylvania statute, referred to in Poundstone v. Hamburger, 139 Pa. 
 319, 20 At. 1054 (1891) ; and Wessels v. Weiss, 166 Pa. St. 490, 31 At. 
 247 (1895); Burdick's Cases on Part. 55. Cf. Parker v. Canfield, 37 
 Conn. 250, 9 Am. R. 317 (1870). 
 
 ' Sir Frederick Pollock, referring to the statute for which this section 
 is in part a substitute, has said : "The Act was meant to do away with 
 the hardship of the unquahfled rule that whoever shared the profits of a 
 business was Kable as a partner. But that supposed rule (as now ap- 
 pears) was in fact abrogated by the decision in Cox v. Hiokman, and the 
 Act expressed only a part of the new footing on which the law was thus 
 placed. ParUament intended to produce a substantial amendment of the 
 law, and produced unawares a stray bit of codification. As an acute and 
 plain spoken judge has since said, the effect of Cox v. Hickman was not 
 understood at the time. The singular part of the story is that the mis- 
 understanding was shared by the law officers of the Crown, all the law 
 lords (two of whom had been parties to the decision in Cox v. Hickman) , 
 and, it would seem, the legal profession generally. Whence the moral 
 may be drawn that the evolution of law by the unaided natural process 
 of Utigation is an even more subtle and excellent thing than one would 
 imagine, seeing that, as in this case, it may take not less than five years 
 for a leading judgment of the ultimate Court of Appeal to be felt in its 
 full extent." Essays in Jurisprudence, 83. 
 
 ' L. of Md. 1916, Ch. 175, § 7, (4). 
 
 * BuUen v. Sharp, L. R. 1 C. P. 86 (1865) ; Burdick's Cases on Part. 71, 76. 
 
PAETNEESHIP AS TO THIED PEESONS 63 
 
 Smith, "the judgment had certainly the effect of dissolving the 
 rule of law which had been supposed to exist, and laid down prin- 
 ciples of decision by which the determination of cases of this kind 
 is made to depend, not on arbitrary presumptions of law, but on 
 the real contracts and relation of the parties." ^ 
 
 2. Ameeican Couets had anticipated the House of Loeds. 
 — These principles of decision had been laid down by courts in 
 this country some time before the judgment in Cox v. Hickman. 
 As early as 1848, the Supreme Court of Alabama had declared : 
 "The best test is to consider the intention of the parties, in con- 
 nection with the rights and obligations each party takes under the 
 contract; and as between the parties themselves, to give effect 
 to this intention. By this rule, courts will enforce the contract 
 of the parties, and not violate it, or make one." ^ 
 
 In many of the States,^ unfortunately, the courts of last resort 
 had adopted the doctrine of Waugh v. Carver, before its unsound- 
 ness and injustice were fully appreciated ; but in others it had been 
 greatly modified * or squarely rejected.^ 
 
 The Supreme Court of Tennessee, in the case last cited, declared 
 that, as there was no decision in that State upon the point, it 
 would "not admit the doctrine that the mere participation in 
 the profits of a business, whether gross or net profits, is to be taken 
 as conclusive of a partnership, even in favor of creditors, irre- 
 spective of the truth of the case", but would "proceed upon the 
 more just and sensible view that participation in the profits 
 affords merely a presumption, which is to prevail only in the ab- 
 
 ' MoUwo, March, & Co. v. Court of Wards, L. R. 4 P. C. 419 (1872). 
 
 2 Emanuel v. Draughn, 14 Ala. 303, 306 (1848). Defendants were held 
 to be partners between themselves in this case. 
 
 3 Parker v. Canfield, 37 Conn. 250, 9 Am. R. 317 (1870) ; Leggett v. 
 Hyde, 58 N. Y. 272 (1874) ; Wessels v. Weiss, 166 Pa. 490, 31 At. 247 
 (1895) ; Brandon v. Conner, 117 Ga. 759, 45 S. B. 371, 63 L. R. A. 260 
 (1903) ; .citing earher cases in those States; Cothran v. Marmaduke, 60 
 Tex. 670 (1883) ; Rahl v. Parlin, &c. Co., 27 Tex. Civ. App. 72, 64 S. W. 
 1007 (1901). 
 
 « Kerr v. Potter, 6 Gill (Md.), 404 (1848), overruHng Taylor v. Terme, 
 3 H. & J. 505 (1815) ; Holmes v. Old Colony Ry., 5 Gray (71 Mass.), 58 
 (1855) ; Austin v. Neil, 62 N. J. L. 462, 41 At. 834 (1898). 
 
 5 Polk V. Buchanan, 5 Sneed (Tenn.), 721 (1857) ; Burdick's Cases on 
 Part. 61. 
 
64 THE LAW OF PARTNERSHIP 
 
 sence of proof to the contrary ; and that it is a question of fact, 
 upon inquiry and proof, whether the circumstances under which 
 the participation in the profits exists clearly demonstrate that the 
 profits are taken, not in the character of partner, but in a totally 
 different character, and merely as compensation for services or 
 benefits rendered by the person by whom they are received." 
 
 This has become the prevailing view in oiu- State and Federal 
 courts,^ and is adopted in The Uniform Partnership Act.^ 
 
 3. Executor of a Deceased Partner. — In WaUgh v. 
 Carver, the Chief Justice expressed the opinion that that case 
 would not lead to the " consequence that, if there was an annuity 
 granted out of a banking house to the widow, for instance, of a 
 deceased partner, it would make her liable for the debts of the 
 house." Later, however, it was decided that the executor of a 
 deceased partner, who continued his share in the business for the 
 benefit of his infant child, was liable as a partner ; * and still later, 
 that the cestui que trust was also liable.* But this view no longer 
 obtains either in England or here. 
 
 The executor may become a partner, by voluntarily taking 
 the place of the deceased in the firm with the assent of the sur- 
 vivors,* but he does not incur the liabilities of a partner by per- 
 mitting the deceased's share to remain in the business, and by 
 receivuig for the use thereof a share of the profits.® He is not 
 obliged to take the risks of a partner, simply because his testator 
 has directed that the share shall be continued in the business. In 
 
 • Cases already cited, and Meehan v. Valentine, 145 U. S. 611, 12 
 S. C. 972, 36 L. Ed. 835 (1892) ; Burdiek's Cases on Part. 80 ; Feohteler v. 
 Palm Bros. & Co., 133 Fed. 462, 66 C. C. A. 336 (1904) ; Gulf City Shin- 
 gling Co. V. Boyles, 129 Ala. 192, 29 So. 800 (1900) ; CuUey v. Edwards, 
 44 Ark. 423, 428, 51 Am. R. 614 (1884); TMllman v. Benton, 82 Md. 
 64, 33 At. 485 (1895) ; Burdiek's Cases on Part. 85 n. ; McDonald v. 
 Campbell, 96 Minn. 87, 104 N. W. 760 (1905) ; Cudahy Packing Co. v. 
 Hibon, 92 Miss. 234, 46 So. 73, 18 L. R. A. n. s. 975, with voluminous 
 note (1908) ; Torbert v. Jeffrey, 161 Mo. 645, 61 S. W. 823 (1901) ; Hughes 
 V. Ewing, 162 Mo. 261, 62 S. W. 465 (1901) ; Lance v. Butler, 135 N. C. 
 419, 47 S. E. 488 (1904). 
 
 ' L. of Md. 1916, Ch. 175, §§ 6 and 7. 
 
 ' Wightman v. Townroe, 1 M. & S. 412, 4 Taunt. 412 (1813). 
 
 < Goddard v. Hodges, 1 Cr. & M. 33 (1832). 
 
 B City Nat. Bank v. Stone, 131 Mich. 588, 92 N. W. 99 (1902). 
 
 • Holme V. Hammond, L. R. 7 Ex. 218 (1872). 
 
PARTNEKSHIP AS TO THIRD PERSONS 65 
 
 case the partnership articles provide that the testator's capital 
 shall remain in the business, the executor cannot withdraw it 
 without subjecting the estate to liability to suit ; and the capital 
 so remaining is liable for the debts of the business. 
 
 The executor, however, incurs no personal liability, unless 
 he voluntarily assumes the relationship of partner. If he does 
 so enter the partnership, in compliance with his testator's direc- 
 tions, and thus take upon himself personal responsibility for the 
 firm's debts, he will be entitled to indemnity out of the testator's 
 estate to the extent of the fund embarked in the business by the 
 will. Beyond this any loss must be his own.^ Such a partner 
 occupies an unenviable position. He can never bag the profits, 
 and may be compelled to pocket the losses. 
 
 It is quite possible, however, for a partner by his will to bind 
 his general assets for all the debts of the partnership contracted 
 after his death.^ In such a case, the executor upon becoming a 
 partner of the survivors in his testator's place, is entitled to in- 
 demnity, to the extent of the entire estate / 
 
 4. Desire to Escape Partnership Liabilities. — While 
 the true test of partnership is the intention of the parties, the 
 inquiry concerning that intention is not to be limited to the lan- 
 guage of their agreements ; nor is this intention to be confounded 
 with the desire to escape the liabilities of a partner while stipu- 
 lating for the rights and benefits of that relationship. Every 
 provision of the agreement and all the circumstances of the case 
 are to be considered in determining whether a partnership has 
 been entered into. If the business carried on under their agree- 
 
 » Wild V. Davenport, 48 N. J. L. 129, 7 At. 295 (1886) ; Burdick's 
 Cases on Part. 77. See Andrews v. Stinson, 254 lU. Ill, 98 N. E. 222; 
 Ann. Cas. 1913, 927 with note (1912) ; Stearns v. Brookline, 219 Mass. 
 238, 107 N. E. 57 (1914). 
 
 2 Ferris v. Van Ingen, 110 Ga. 102, 35 S. E. 347 (1900): "I direct 
 that all of my estate, of every Mnd and description — not only the capi- 
 tal employed in this business, but all other property — shall from the 
 ■date hereof be chargeable for the liabilities of said firm and the survivor 
 thereof, made in conducting and carrying on the business, in the same 
 manner and to the same extent as if I was in life." Burwell v. Mande- 
 viUe's Executor, 2 How. (U. S.) 560, 576, 11 L. Ed. 378 (1844) ; Willis 
 V. Sharp, 113 N. Y. 586, 590, 21 N. E. 705, 4 L. R. A. 493 (1889). In 
 the last case it is said, that the testator's intention to bind his entire 
 «state must be clearly expressed. 
 
66 THE LAW OF PARTNERSHIP 
 
 ment is owned jointly by them, and is carried on for their benefit 
 as proprietors, however explicitly they may declare that one is 
 a lender and the other a borrower, or however elaborate their 
 devices or ingenious their contrivances for concealing their true 
 relationship, the courts will declare them partners.^ 
 
 5. Sharing both Profits and Losses. — The opinion has 
 been expressed by a learned author that "persons engaged in 
 any trade, business or adventure, upon the terms of sharing 
 the profits and losses arising therefrom, are necessarily to some 
 extent partners in that trade, business, or adventure." ^ It is 
 not borne out by the authorities, however, either in England or 
 in this country. Whether parties who stipulate to bear the 
 losses as well as to share the profits of a business venture are 
 partners or not, depends upon the further question whether 
 they are jointly interested in the venture as co-proprietors. If 
 the parties enter into an agreement of this character "in order 
 to avoid conflict and rivalry between them" in a particular trade,* 
 or if its design is "to induce care on the part of" one who is really 
 agent for the other contracting party,^ no partnership is created. 
 
 On the other hand, a partnership may exist between persons 
 who have contracted for that relationship, although they have 
 agreed that one shall keep the other "harmless from all losses, 
 debts, dues, or demands that may come against the firm." * 
 This doctrine, it is true, has been disputed in a few jurisdic- 
 tions.* In the cases last cited it is declared that in this coun- 
 
 1 Pooley V. Driver, 6 Ch. D. 458, 46 L. J. Ch. 466 (1876) ; Webster v. 
 Clark, 34 Fla. 637, 653, 16 So. 601, 27 L. R. A. 126, 43 Am. St. R. 217 
 (1894); Cushman v. Bailey, 1 Hill (N. Y.), 526 (1841); Bigelow v. 
 EUiot, 1 Cliff. 28, Fed. Cases, No. 1399 (1858) ; In re Bean,. 230 Fed. 405 
 (1916). 
 
 2 Lindley on Part. (7tli ed.) 46. See opinion of Lindley, L. J., in 
 Walker v. Hirseh, 27 Ch. D. 460 (1884); Burdiok's Cases on Part. 
 90 n. 
 
 ' Clifton V. Howard, 89 Mo. 192, 1 S. W. 26, 58 Am. R. 97 (1886) ; 
 Burdiek's Cases on Part. 88. 
 
 " Canton Bridge Co. v. City of Eaton Rapids, 107 Mich. 613, 65 N. 
 W. 761 (1895) ; Burdiek's Cases on Part. 90. 
 
 <• Clift V. Barrow, 108 N. Y. 187, 15 N. E. 327 (1888) ; Burdiek's Cases 
 on Part. 93. 
 
 "Winter v. Pipher, 96 Iowa, 17, 64 N. W. 663 (1895) ; Burdiek's' 
 Cases on Part. 90 n. ; Johnson Bros. v. Carter & Co., 120 Iowa, 355, 94 
 
PARTNERSHIP AS TO THIRD PERSONS 67 
 
 try "the general doctrine is that, in order to constitute general 
 partnership as between the partners, there must be some kind 
 of liability for the losses of the concern. Indeed, it is difficult 
 to see how one can be a partner in, — can participate in, and 
 be partner of a busmess, — without being subject to those for- 
 tunes." The court, however, did not question that the party 
 guaranteed against loss might be liable to third persons as a 
 partner by estoppel. 
 
 The Supreme Court of Alabama has said: "We cannot con- 
 ceive of a partnership in a legal sense between two parties, to a 
 transaction, when if one of them is compelled to pay an obligation 
 he has no recourse on the other. An agreement by which one is 
 to share in the profits alone does not create a partnership. The 
 agreement should bind the parties to bear the burden of losses." ^ 
 But the agreement then before the court unequivocally stated 
 that the business to be carried on was "my (the defendant's) 
 business of timber and log broker", and that the plaintiff was a 
 mere employee therein, who was to receive, as "a stipulated 
 salary, one dollar per month and a sum of money equal to forty 
 per cent of the net amount" from certain sources of revenue in 
 the business. And in other Alabama cases, containing dicta 
 to the effect that there can be no true partnership, without an 
 agreement to share losses as well as profits, it has plainly ap- 
 peared that the share of profits, stipulated for, was payable as 
 rent ^ or as compensation for the surrender of a legal claim.' 
 
 6. Sub-partners. — This term is frequently applied to per- 
 sons who are jointly interested in the profits and losses of one 
 member of a fixm. For example, Ryley, a partner in the firm of 
 Strang, Piatt & Co., arranged with Snyder that they should be 
 jointly interested in Ryley's share, "that is to say, that Snyder 
 should be entitled to receive one-half of Ryley's profits and should 
 be liable for one-half of his losses." The court spoke of them 
 as sub-partners, and of their contract as one of sub-partnership ; 
 
 N. W. 850 (1903) ; Haswell v. Standring, 152 Iowa, 291, 132 N. W. 417, 
 27 Ann. Cas. 1326, with note (1911); WMtehill v. SMckle, 43 Mo. 537 
 (1869). 
 
 1 Stafford v. Sibley, 106 Ala. 189, 17 So. 324 (1894). 
 
 2 PuUiam v. Sehimpf, 100 Ala. 362, 14 So. 488 (1893). 
 
 3 Gulf City Co. V. Boyles, 129 Ala. 192, 295, 800 (1900). 
 
bo THE LAW OF PARTNERSHIP 
 
 but held that Snyder was not a member of the firm of Strang, Piatt 
 & Co., nor Hable for its debts.^ 
 
 Such is the holding in England ^ and generally in this country ; ' 
 although the Supreme Court of Massachusetts has declared that 
 "an agreement between one co-partner and a third person, that 
 he shall participate in the profits of the firm as profits, renders 
 him liable as a partner, to the creditors of the firm, although, as 
 between himself and the members of the firm, he is not their 
 co-partner." ^ In Massachusetts, accordingly, the terms " sub- 
 partner" and "sub-partnership" have an intelligible significance. 
 In other jurisdictions, their use should be discarded. Clearly, 
 the contract of so-called "sub-partnership" does not provide for 
 a business to be carried on by the contracting parties in common, 
 with a view to profit. The so-called "sub-partner" shares not in 
 the profits of the firm's business as a proprietor in that business, 
 but only in a portion of such profits, after they have become the 
 individual property of his co-contractor.^ 
 
 § 4. Partner by Estoppel. 
 
 While a true partnership exists only where the parties have 
 agreed to create that relationship, a person may subject himself to 
 the liabilities of a partner without possessing a partner's rights. 
 If he holds himself out, or permits others to hold him out, as a 
 partner in a business, he will not be allowed to deny this repre- 
 
 1 Burnett v. Snyder, 81 N. Y. 550, 555, ^7 Am. R. 527 (1880). Cf. 
 Nirdlinger y. Bernheimer, 133 N. Y. 45, 30 N. E. 561 (1892); Henry v. 
 Evans, 95 Iowa, 244, 63 N. W. 687 (1895). 
 
 ' Ex parte Barrow, 2 Rose, 252 (1815) ; Lindley on Part. (7tli ed.) 66. 
 
 5 Bybee v. Hawkett, 12 Fed. 649 (1882) ; Meyer v. Krohn, 114 111. 574, 
 2 N. E. 495 (1885) ; Reynolds v. Hicks, 19 Ind. 113 (1862) ; Setzer v. 
 Beale, 19 W. Va. 274 (1883) ; Riedeburg v. Schmitt, 71 Wis. 644, 38 
 N. W. 336 (1888). 
 
 ^ Fitch V. Harrington, 13 Gray (79 Mass.) 468, 474, 74 Am. Dec. 641 
 (1859). 
 
 ' This view has been criticized by a learned author (Rowley's Modern 
 Law of Partnership, § 160), who declares that " the great weight of author- 
 ity is in favor of the proposition that sub-partners are partners as between 
 themselves." Of the cases cited in support of the proposition, not one 
 sustains it, except Fitch v. Harrington, supra, and that seems opposed 
 on this point to the later case of Lovejoy v. Bailey, 214 Mass. 134, 150, 
 101 N. E. 63 (1913). 
 
PARTNERSHIP AS TO THIRD PERSONS 69 
 
 sentation as against those who have acted in reliance upon its 
 truth. But this does not mean that a true partnership can be 
 proved by evidence of reputation only.^ 
 
 (a) Not a Partner "to the World." — Lord Mansfield is re- 
 ported to have said that, as the defendant "suffered her name 
 to be used in the business, and held herself out as a partner, she 
 was certainly liable, though the plaintiff did not, at the time of 
 dealing, know that she was a partner, or that her name was 
 used";^ and Chief Justice Eyre declared that if one "will lend 
 his name as a partner, he becomes, as against all the rest of the 
 world, a partner." ^ 
 
 This doctrine has been modified by subsequent decisions in 
 England. As early as 1829, Mr. Justice Parke laid down the 
 rule that when a plaintiff seeks to subject one who is not in reality 
 a partner to a partner's liability, he must show that the defend- 
 ant "had held himself out to be a partner, not 'to the world', 
 for that is a loose expression, but to the plaintiff himself, or under 
 such circumstances of publicity as to satisfy a jury that the plain- 
 tiff knew of it and believed him to be a partner." * Under this 
 rule, the liability of one holding himself out to be a partner "is 
 nothing more than an illustration of the general principle of 
 estoppel by conduct." ^ 
 
 (b) A Few Discordant Decisions. — While the great body of 
 judicial authority ^ in this country accords with the rule stated 
 
 1 Lighthiser v. Allison, 100 Md. 103, 69 At. 182 (1904) ; Fletcher v. 
 Pullen, 70 Md. 205, 16 At. 887, 14 Am. S. R. 355 (1889) ; Adams v. 
 Morrison, 113 N. Y. 152, 20 N. E. 829 (1889) ; Halliday v. McDougall, 
 20 Wend. (N. Y.) 81 (1838). 
 
 2 Young V. Axtell (1784), cited in Waugh v. Carver, 2 H. Bl. at p. 
 242. 
 
 2 Waugh V. Carver, supra; Burdiek's Cases on Part. 47, 48. 
 
 * Dickinson v. Valpy, 10 B. & C. 128 (1829). 
 
 = Lindley on Part. (7th ed.) 68-79. 
 
 « Thompson v. First Nat. Bank, 111 U. S. 530 (1884); Burdiek's 
 Cases on Part. 96 ; Wright v. Powell, 8 Ala. 560 (1845) ; Webster v. Clark, 
 Son & Co., 34 Pla. 637, 644, 16 So. 601, 27 L. R. A. 126, 43 Am. S. R. 
 217 (1894); Wood v. Pennell, 51 Me. 52 (1863). In Bissell v. Warde, 
 129 Mo. 439, 31 S. W. 928 (1895), the court, while applying the doctrine 
 of estoppel, points out "that a partnership as to third persons may be 
 shown by facts which would not prove a partnership inter se." Cook v. 
 Penrhyn Stone Co., 36 Oh. St. 135 (1880). In Braithwaite v. Power, 1 
 
70 THE LAW OF PARTNERSHIP 
 
 above, a few learned judges ^ have announced their preference 
 for Lord Mansfield's view. In Poillon v. Secor the court de- 
 clared: "The sound rule would seem to be, that a person who 
 deliberately agrees that his name shall be used in a partnership 
 must be conclusively presumed to intend the consequences which 
 naturally flow from such an act. It would be contrary to public 
 convenience to require affirmative proof that dealers with the firm 
 knew who was represented by the fictitious name." This view, 
 that the liability of one holding himself out as a partner rests 
 upon considerations of public policy rather than upon principles 
 of equitable estoppel, was thought to be strengthened- by a New 
 York statute making the use of fictitious partnership names a 
 crime. 
 
 1. Nominal Partner as a Party Litigant. — As a nominal 
 or holding-out partner is liable only on the ground of estoppel, 
 and not because he is one of the contracting parties in trans- 
 actions relating to the business of the ostensible firm, he need 
 not be a party to litigations growing out of such transactions, 
 although it is not a fatal misjoinder to make him a party .^ He 
 need not join as a plaintiff, unless suit is brought on a specialty, 
 or on a negotiable instrument, in which he is named as a party .^ 
 "A party with whom the contract is actually made may sue with- 
 out joining others with whom it is apparently made." * Nor is 
 it necessary to make him a defendant. The plaintiff may waive 
 his right against him, and sue only the actual owner of the busi- 
 
 N. D. 455, 48 N. W. 354 (1890), it was held that reliance on defendant's 
 representation will be presumed, where it is shown that he has held him- 
 self out as a partner for a long time. 
 
 1 Dwight, C, in Poillon v. Secor, 61 N. Y. 456 (1875) ; (the state- 
 ment quoted by the learned judge, in support'of his view, from the second 
 edition of Parsons on Partnership, has been omitted from the fourth 
 edition). Holmes, J., in Bartlett v. Raymond, 139 Mass. 275 (1885). 
 
 i'Waite V. Dodge, 34 Vt. 181 (1861). 
 
 2 Guidon v. Robson, 2 Camp. 302, 11 R. R. 713 (1809). " 
 
 4 Kell V. Nainby, 10 B. & C. 20, 5 M. & R. 76 (1829) ; Bishop v. Hall, 
 9 Gray (75 Mass.), 430, 432 (1857); Enix v. Hays, 48 Iowa, 86 (1878). 
 
 " Hatch V. Wood, 43 N. H. 633 (1862). So it is generally held that the 
 plaintiff need not join as defendant a dormant partner, who was unknown 
 to him when the contract was made. Council v. Teal, 122 Ga. 61, 49 
 S. E. 806 (1904) ; Page v. Brant, 18 111. 37, 38 (1856) ; Mitchell v. Dall, 2 
 
PABTNEESHIP AS TO THIRD PERSONS 71 
 
 If he is made a defendant, however, it must be in his assumed 
 capacity as partner. The liability which he is estopped to deny 
 is that of a joint promisor with those persons whom he has held 
 out as partners. Accordingly, where A retires from the firm of 
 B & Co., and B, the continuing partner, enters into partnership 
 with C, the new firm carrying on business in the old name, A 
 •will be liable jointly with B on contracts of the new firm made 
 with persons who have not been duly notified of the change. By 
 permitting the business to be carried on in the old name, without 
 notice of his retirement, he virtually represents that the old part- 
 nership continues. He is not liable jointly with B and C, however, 
 for he never has held himself out as their partner ; nor is he sev- 
 erally liable to a customer who, after notice of the change in the 
 partnership, has elected to take the new firm as his debtors.^ 
 Undoubtedly, a partner who has retired from a firm may be 
 jointly liable with the members of the new firm on its contracts ; 
 but only in cases where his conduct has led the creditors to be- 
 lieve that he was a member of the new firm when the contracts 
 were made.^ 
 
 2. Holding Out, a Question op Fact. — Whether a per- 
 son has held himself out to be a partner is a question of fact. 
 It is not strange, therefore, that different juries, upon the same 
 evidence, have given different answers to the question whether 
 
 H. & G. (Md.), 159, 172 (1828) ; North v. Bloss, 30 N. T. 374 (1864) ; 
 Cleveland v. Woodward, 15 Vt. 302, 40 Am. Dee. 682 (1843). 
 
 1 Scarf V. Jardine, 7 App. Cas. 345, 51 L. J. Q. B. 612 (1882) ; Burdick's 
 Cases on Part. 101. Mr. James Parsons' criticism of this case is based 
 upon a misapprehension of its doctrine. Parsons' Principles of Part. 
 § 70. In Lindley on Part. (7th ed.) 78, it is said: "The case would be 
 otherwise if A and B carried on business in their own names, and A re- 
 tired and gave no notice of his retirement, and C came in ; and if B and 
 C carried on business with A's consent under the name A B and C. In 
 such a case A would hold himself out as in partnership with both B and 
 C and would be estopped from denying it as against any one dealing with 
 the new firm on the faith of A being a member of it. Further, if the 
 old customer did not know of A's retirement, but did know that C had 
 become a member of X & Co., such customer would, it is apprehended, 
 be entitled to sue A B and C jointly for a debt contracted by X & Co. 
 after A's retirement and C's admission." 
 
 2 Thayer v. Goss, 91 Wis. 90, 64 N. W. 312 (1895) ; Burdick's Cases 
 on Part. 102, and cases cited therein. 
 
72 THE LAW OF PARTNERSHIP 
 
 the defendant had held himself out as a partner in a particulai* 
 business.^ If there is no conflict of evidence, and but one infer- 
 ence can reasonably be drawn therefrom, the question will be 
 answered by the court.^ 
 
 (a) What Amounts to Holding Out ? — Perhaps no better an- 
 swer, in general terms, can be given to this question, than that 
 which is furnished by the Uniform Partnership Act: "When a 
 person, by words spoken or written or by conduct, represents 
 himself, or consents to another representing him to any one, as a 
 partner in an existing partnership or with one or more persons 
 not actual partners, he is liable to any such person to whom such 
 representation has been made, who has, on the faith of such repre- 
 sentation, given credit to the actual or apparent partnership, 
 and if he has made such representation or consented to its being 
 made in a public manner he is liable to such person, whether the 
 representation has or has not been made or communicated to 
 such person so giving credit by or with the knowledge of the 
 apparent partner making the representation or consenting to its 
 being made." * 
 
 If this be compared with the corresponding provision of the 
 British Act,* it will be noticed that it requires proof of actual 
 
 1 Wood V. Duke of ArgyU, 6 M. & Gr. 928 (1844) ; Lake v. Duke of 
 Argyll, 6 Q. B. 477 (1844). 
 
 2 McLewee v. HaU, 103 N. Y. 639 (1886) ; Harris v. Sassier, 67 Tex. 383, 
 3 S. W. 316 (1887) ; Lighthiser v. Allison, 100 Md. 103, 59 At. 182 (1904) ; 
 Rittenhouse v. Leigh, 57 Miss. 697, 701 (1880). In the last case the 
 court said: "The evidence does not show that she (the defendant) ever 
 held herself out as a partner, or knowingly permitted others to do so." 
 Seabury v. BoUes, 61 N. J. L. 103, 16 At. 54, 11 L. R. A. 136 (1888)-: "If 
 partnership is a matter of doubt to be decided by inferences to be drawn 
 from all the evidence, it is one of fact for the jury." In Munton v. Ruther- 
 ford, 121 Mich. 418, 80 N. W. 112 (1899), the court declared that the 
 evidence did not warrant the inference of "holding out" by Mrs. Ruther- 
 ford. » L. of Md. 1916, Ch. 175, § 16 (1). 
 
 '' § 14 (1) : "Every one who by words spoken or written, or by con- 
 duct, represents himself, or who knowingly suffers himself to be repre- 
 sented, as a partner in a particular firm, is liable as a partner to any one 
 who has, on the faith of any such representation, given credit to the 
 firm, whether the representation has or has not been made or communi- 
 cated to the person so giving credit by or with the knowledge of the 
 apparent partner making the representation, or suffering it to be made." 
 
 The second subsection provides that this rule shall not apply to the 
 
PARTNERSHIP AS TO THIRD PERSONS 73 
 
 consent by the defendant to the holding out, while the British 
 Act requires proof only of the fact that he has suffered himself 
 to be held out. Under the latter rule afBrmative action repudiat- 
 ing the representation is necessary at times .^ Under the former, 
 it is not.^ 
 
 The authorities cited in the foregoing notes show how the 
 question is dealt with in a specific case. 
 
 3. Notice by Retiring Partner. — Although a member of 
 a firm retires from the business, he may remain liable as a holding- 
 out partner, unless proper notice of his retirement is given. The 
 rule is formulated in the British statute as follows: "Where a 
 person deals with a firm after a change in its constitution, he is 
 entitled to treat all apparent members of the old firm as still being 
 members of the firm, until he has notice of the change." ' 
 
 This notice, in the case of former dealers, must be an actual 
 one,^ although it is not necessary that it be communicated directly 
 by the retiring partner to such dealers.^ As to all other persons, 
 a public notification, generally by advertisement in a newspaper 
 "circulated in the locality in which the business of the partner- 
 estates of a deceased partner. Sueii is the settled law. See Marlett v. 
 Jackman, 3 Allen (Mass.), 257 (1861) ; Burdick's Cases on Part. 647. 
 
 1 Slade V. Paschal, 67 Ga. 541 (1881) ; Fletcher v. PuUen, 70 Md. 
 205, 16 At. 887, 14 Am. St. R. 355 (1889); Polks v. Burletson, 177 
 Mich. 6, 142 N. W. 1120 (1913) ; Smith v. HiU, 45 Vt. 90, 12 Am. R. 189 
 (1872). 
 
 ' Morgan v. Farrel, 58 Conn. 413, 426, 20 At. 614, 18 Am. St. R. 282 
 (1890) ; Bishop v. Georgeson, 60 111. 484, 487 (1871) ; Ihmsen v. Lathrop, 
 104 Pa. 365, 368 (1883) : "His acts must have been such as to justify a 
 reasonable belief that he was a partner." 
 
 ' Partnership Act, 1890, § 36 (1). The second subsection provides for 
 advertisements in the London Gazette, the Edinburgh Gazette, and the 
 Dublin Gazette. The third subsection recognizes the established excep- 
 tion in favor of the estate of a deceased, a bankrupt, or of a dormant 
 partner. 
 
 The corresponding provision of The Uniform Partnership Act is found 
 in § 35 of L. of Md. 1916, Ch. 175 ; and see § 41 (10). 
 
 « Austin t). HoUand, 69 N. Y. 571, 25 Am. R. 246 (1877). A notice 
 mailed to a former dealer, but not received, does not protect the retiring 
 partner. Meyer v. Krohn, 114 111. 574, 2 N. E. 495 (1885), accord. See 
 L. of Md. 1916, Ch. 175, § 3. 
 
 5 Gathright v. Burke, 101 Ind. 590 (1884) ; Potter v. Tolbert, 113 Mich. 
 486, 71 N. W. 549 (1897) ; Burdick's Cases on Part. 367. 
 
74 THE LAW OF PARTNERSHIP 
 
 ship has been conducted "/ is sufficient. It is to be borne in 
 mind that no particular form of notice is required. Inasmuch 
 as the defendant's liability, in cases now under consideration, 
 rests upon an equitable estoppel, any evidence which shows that 
 the plaintiff had no reasonable ground for reliance upon the 
 defendant's membership in the firm is admissible.^ 
 
 Accordingly it has been held that notice "to the agent in ref- 
 erence to or in connection with any business in which the agent 
 is engaged by authority of the principal, and where the informa- 
 tion is so important a fact in the transaction as to make it the 
 duty of the agent to communicate it to the principal, is, in con- 
 templation of law, notice to the principal, upon the theory that 
 it is the agent's duty to communicate to his principal knowledge 
 which he has respecting any business in which he is engaged for 
 the principal; and the presumption is that he will perform his 
 duty." ^ It is not enough to show, however, that the dissolution 
 "was made quite generally known, and as is ordinarily done and 
 required" ; nor even that "the notice was given to the two prom- 
 inent commercial agencies"; nor that "one or two newspapers in 
 the vicinity published a local item of dissolution." * 
 
 1 Askew V. Silman, 95 Ga. 678, 22 8. E. 573 (1895) ; Burdiok's Cases on 
 Part. 106 ; Bush & Hattaway v. W. A. McCarty Co., 127 Ga. 308, 56 
 S. E. 430 (1907). 
 
 ' Cases cited in last two notes, and Deering v. Flanders, 49 N. H. 225 
 (1870). Also L. of Md. 1916, Ch. 175, § 3. 
 
 ' Ach V. Barnes, 107 Ky. 219, 53 S. W. 293 (1899) ; Robertson Lumber 
 Co. V. Anderson, 96 Minn. 527, 105 N. W. 972 (1905), holding it a question 
 of fact for the jury whether plaintiff had notice by reason of agent's knowl- 
 edge of facts ; Westinghouse Elec. Mn'f . Co. v. Hubert, 175 Mich. 568, 
 141 N. W. 600, 35 Ann. Cas. 1099, with note (1913). But if the agent has 
 no authority to give credit or determine to what extent customers are 
 trustworthy, notice to him is not notice to the principal. Neal v. M. E. 
 Smith & Co., 116 Fed. 20, 54 C. C. A. 226 and valuable note, 229-238 
 (1902) ; Cowan & Co. v. Roberts & Co., 134 N. C. 415, 45 S. E. 954 (1903) ; 
 Ring Furniture Co. v. BusseU, 171 N. C. 474, 88 S. E. 484 (1916) ; Easton 
 V. Geo. Wostenholm & Son, 137 Fed. 524, 69 C. C. A. (1905). 
 
 < Citizens' Nat. Bankw. Weston, 162 N. Y. 113, 56N. E. 494 (1900); Bank 
 of Monongahela Valley v. Weston, 159 N. Y. 201, 211, 54 N. E. 30 (1899). 
 
 The Code of California, § 2453, requires notice by publication to be 
 made "in a newspaper published in every county where the partnership, 
 at the time of its dissolution, had a place of business, if a newspaper is 
 there pubUshed." See L. of Md. 1916, Ch. 175, § 35, (1), (6), (II). 
 
PARTNEBSHIP AS TO THIRD PERSONS 75 
 
 4. Who are Former Dealers? — Not every business trans- 
 action with a firm will bring a party within this class. If it is 
 one which would not reasonably be attended by any trust re- 
 posed in or credit given to the members of the firm, the other 
 party to the transaction is not considered a dealer/ who is en- 
 titled to actual notice of a change in its membership. Hence 
 one who has sold goods to a firm on credit, even though no definite 
 time of forbearance is agreed upon, is a former dealer, but one 
 who has sold only for cash is not,^ nor is one who has been a 
 purchaser only from the firm.' 
 
 Again, it would be unreasonable to require actual notice to 
 be given to persons whose identity and address are not brought 
 home to the partnership. Accordingly, one who has bought 
 the firm's paper from third persons, without request from the 
 firm or negotiations with it, is not entitled to actual notice.^ 
 
 5. Using Old Firm Name after Notice of Dissolution. — 
 This, if done with the assent of the retiring partner, will render 
 him liable for the debts of the new business.^ It is clear that 
 such should be its effect, where the retiring partner informed the 
 plaintiff that, although he had ceased to be a partner, his name 
 was to continue for a certain time.^ Here, certainly, was a repre- 
 
 1 Vernon v. Manhattan Co., 22 Wend. (N. Y.) 183 (1839). 
 
 2 Clapp V. Rogers, 12 N. Y. 283 (1855). In this case Hand, J., said: 
 "The credit on the faith of the partnership, mentioned by some writers, 
 I suppose to mean confidence in the solvency and probity of the firm, and 
 not necessarily an agreement for the forbearance of some debt." Followed 
 in Tobin v. McKinney, 14 S. Dak. 52, 84 N. W. 228 (1900), construing 
 § 4059 of the Compiled Laws. 
 
 3 Askew V. Silman, 95 Ga. 678, 22 S. E. 573 (1895), applying § 1895 
 (now § 3163) of the Civil Code, requiring notice to be given to "Creditors 
 and to the world." The Code of Cahfornia (re-enacted in the Dakotas 
 and Montana) requires personal notice to be given to "persons who have 
 had deaUngs with and given credit to the partnership, during its exist- 
 ence;" §2453. 
 
 «City Bank v. McChesney, 20. N. Y. 240 (1859). Queer e under 
 Uniform Partnership Act, § 35. 
 
 5 Re Krueger, 2 Lowell, 66 (1871) ; Johnson v. Marx Levy & Bro., 109 
 La. Ann. lCi36, 34 So. 68 (1902). 
 
 « Brown v. Leonard, 2 Chitty, 120 (1816) ; cf. Alderson v. Pope, 1 Camp. 
 404 n. (1809), and comments thereon in CoUyer on Part., Wood's ed. 38; 
 also in Lindley on Part. (7th ed.) 70 ; Willis v. Rector, 50 Fed. 684 (1892). 
 
76 THE LAW OF PARTNERSHIP 
 
 sentation of his willingness, that the plaintiff should deal with 
 the firm on the credit of all of its old members. 
 
 However, it has recently been held in England that, if due 
 notice of the dissolution of a firm has been given, the retiring 
 partner will not be liable to creditors of the continuing partner, 
 although the former permits the latter to carry on business in 
 the old name.^ Permission "to carry on the business under the 
 old firm name," it was said, did not "amount to a representation" 
 by the retired partner "that he was a partner in the firm." 
 
 (a) Use of Old Name by a New Firm. — This also may subject 
 those who have sold out their business to strangers to the lia- 
 bility of partners in the new firm.^ In the Indiana case, cited 
 in the last note, the court said : " If the plaintiffs were authorized 
 to regard the name of 'Leeds & Co.', as the name under which 
 Hannah A. Leeds did business, then the use of such name by the 
 son (to whom she had sold) with her knowledge, consent, and 
 approval, will bind her, as though she was in fact doing business 
 under such name." 
 
 6. Quasi Partner's Liability for Torts. — The liability 
 of a true partner for the torts of his co-partners will be discussed 
 in a subsequent chapter. It may be stated in general terms, 
 however, that he is liable for all torts committed by his authority, 
 or by his co-partners, or by the firm's agents, acting in the ordi- 
 nary course of the firm's business.^ 
 
 A quasi partner's liability for firm torts is less extensive. He 
 is answerable in a tort action for deceit, undoubtedly, where the 
 
 1 In re Fraser (1892), 2 Q. B. 633; Burdick's Cases on Part. 108; see 
 comments on, in Lindley on Part. (7th ed.) 76, 77. In Snail's Principles 
 of Equity (llth ed.) 625, this case is cited for the proposition, that using 
 the old firm name is not a holding out. 
 
 2 Evans & Howard Co. v. Hadfield, 93 Wis. 665, 68 N. W. 468 (1896) ; 
 Burdick's Cases on Part. 110. "The defendant should have foreseen 
 that this use of his name was well suited to give the impression that he 
 was the leading partner in the new lirm." Elverson v. Leeds, 97 Ind. 336, 
 49 Am. R. 458 (1884) ; Hendley v. Bittinger, 249 Pa. 193, 94 At. 831, 
 L. R. A. 1915 F., 711 (1915) ; Werner v. Calhoun, 55 W. Va. 246, 46 S. E. 
 1024 (1904) ; MoGowan v. American Tan Bark Co., 121 U. S. 575, 7 Sup. 
 Ct. 1315 (1886). 
 
 3 British Part. Act of 1890, § 10 ; The Uniform Partnership Act, § 14. 
 By the California Civil Code, § 2443, "The liability of general partners 
 for each other's acts is defined by the title on agency." 
 
PARTNERSHIP AS TO THIRD PERSONS 77 
 
 person whom he held out as his partner has induced third parties 
 by false representations concerning quality to buy firm property 
 to their damage.^ But, as his responsibility for firm transactions 
 rests solely on estoppel, he is not answerable in tort to third per- 
 sons who have been injured by the negligence of an agent of the 
 firm. His holding himself out as a partner does not induce the 
 third person, in such a case, to change his position to his detri- 
 ment. A rulmg to the contrary by a distinguished Enghsh judge 
 is reported ; ^ but it was made while Lord Mansfield's heresy of 
 Young v. Axtell was in vogue, and has been thoroughly discredited.^ 
 7. Rights of Creditors against the Property of a Part- 
 ner BY Estoppel. — Not only may a person estop himself from 
 denying that he is a partner in a business, but "by permitting 
 his property to be used and held out as the property of a partner- 
 ship, he may make that property liable for the debts of the part- 
 nership." * Accordingly, one who holds himself out as in part- 
 nership with another cannot have any of the business assets set 
 
 ' Sherrod v. Langdon, 21 Iowa, 518 (1866) ; Burdick's Cases on Part. 
 112; cf. Maxwell v. Gibbs, 32 Iowa, 32 (1871), where plaintiff let a horse 
 to an ostensible firm, arid the holding-oUt partner was considered Uable 
 for the firm's injury of the animal. In Jewison v. Disudonne, 127 Minn. 
 163, 149 N. W. 20 (1914), it is said, "Where as in this case there is a hold- 
 ing out of a partnership relation concerning the control of a place where 
 business is transacted, and an in\dtation to patronize is extended under 
 such circumstances of publicity as to warrant the inference that a per- 
 son subsequently injured * * * must have had the right to beheve that 
 those extending the invitation were in control of the premises, liabUity 
 results without regard to the existence of the partnership relation." 
 
 2 Stables v. Eley, 1 C. & P. 614 (1825), Abbott, C. J. 
 
 ' Sir Frederick Pollock first pointed out this blunder. Lindley on 
 Part. (7th ed.) 79, note a. See also Smith v. Bailey (1891), 2 Q. B. 403, 
 60 L. J. Q. B. 779. 
 
 ^ Taylor v. Wilson, 58 N. H. 465 (1878) ; Burdick's Cases on Part. 112 ; 
 Mattocks V. Rogers, 1 Hask. 547; Fed. Cases, No. 9300 (1874). See 
 Adams & Co. v. Albert, 155 N. Y. 356, 49 N. E. 929, 63 Am. S. R. 675 
 (1898), holding that "a retired partner, who has allowed his unliquidated 
 interest in the old firm to be continued in the business of a new firm as 
 capital, and, hence, at the risk of the business, cannot, on the insolvency 
 of the new fij-m, assume the position of a firm creditor in virtue of that 
 interest, to the prejudice of actual creditors of the new firm ; and as be- 
 tween him and an actual creditor, the latter has, in equity, the superior 
 light to the fund arising from the firm assets.' 
 
78 THE LAW OF PARTNERSHIP 
 
 off to him under an exemption statute, although all the assets 
 are his separate property, and the pretended copartner is his 
 minor son.^ 
 
 (a) Contests between Biisiness and Individual Creditors. — 
 While the holding-out partner may be estopped from setting up 
 his individual ownership as against creditors who have acted 
 upon the faith of his representations that the title was in the 
 firm, the estoppel is personal to him and should not affect his 
 separate creditors,^ in the absence of statutory provisions. 
 
 The weight of authority is in favor of this view,* although a 
 different doctrine obtains in some jurisdictions. An elaborate 
 discussion of the question will be found in the prevailing and the 
 dissenting opinions in a recent Wisconsin case.* According to 
 the majority of the court, it is "too clear for argument" that, 
 "when there is an ostensible firm, by holding out to creditors 
 generally the property of such firm ought to be considered, in 
 equity, joint property for the administration thereof, in insol- 
 vency, the same as if such property belonged to a firm in fact"; 
 and "such," it is asserted by the majority, "is the law as sub- 
 stantially declared by the Court of Appeals in Chancery of Eng- 
 land." 
 
 The English decisions referred to, however, do not establish 
 any such broad doctrine. They are based on a statutory provi- 
 sion that the property of a bankrupt divisible amongst his cred- 
 itors shall include "all goods being, at the commencement of the 
 bankruptcy, in the possession, order, or disposition of the bank- 
 
 1 Green, Huffaker, & Co. v. Taylor & Son, 98 Ky. 330, 32 S. W. 945 
 (1895) ; Burdick's Cases on Part. 113. 
 
 2 Taylor v. Wilson, 58 N. H. 465 (1878). 
 
 ' Bixler v. Kresge, 169 Pa. St. 405, 32 At. 414, 47 Am. S. R. 920 (1895) ; 
 Broadway Nat. Bank v. Wood, 165 Mass. 312, 43 N. E. 100 (1896) ; Bur- 
 dick's Cases on Part. 115, 129. In re Beekwith & Co., 130 Fed. 475, 12 
 Am. B. R. 453 (1904), holds that : "A partnership in fact must be shown 
 to maintain involuntary proceedings against one as a partner and not a 
 mere holding out, by which he may become liable to creditors as a part- 
 ner." To same effect, Johnson v. Williams, 111 Va. 95, 68 S. E. 410, 
 22 Ann. Cas. 47, with note, 31 L. R. A. n. s. 406, with note (1910). 
 
 * Thayer v. Humphrey, 91 Wis. 276, 64 N. W. 1007, 51 Am. S. R. 
 887 (1895) ; Burdick's Cases on Part. 117 ; S. P. in Adams & Co. v. Albert, 
 155 N. Y. 356, 49 N. E. 929, 63 Am. S. R. 675 (1898). 
 
PARTNEESHIP AS TO THIRD PERSONS 79 
 
 rupt, in his trade or business, by the consent and permission of 
 the true owner, under such circumstances that he is the reputed 
 owner thereof." ^ 
 
 It is true that the Lord Chancellor, in In re Rowland & Cran- 
 shaw,^ observed that "the question of reputed ownership has 
 nothing to do with the case", but in Ex parte Hayman,' the learned 
 judges expressly declared that the right of the creditors of an 
 ostensible firm to have the property, which is in the reputed 
 ownership of such firm, treated as the joint estate of the firm, 
 and not as the separate estate of its true owner, rests upon the 
 statutory provision above referred to, and not upon the princi- 
 ples of equitable estoppel. 
 
 The Uniform Partnership Act undertakes to render such a 
 decision as that in Thayer v. Humphrey impossible. The obliga- 
 tion incurred in such a case is declared to be the joint obligation 
 of the parties, not a firm obligation ; and hence the creditor who 
 believes there is a partnership, when none exists in fact, gets no 
 priority over other creditors of the owner of the assets.* 
 
 The Act further provides that when a person is held out as a 
 partner in an existing partnership, with the consent of all the 
 partners, he is able to bind the firm as though he were a member, 
 and that with respect to persons who rely upon the representa- 
 tion that he is a partner, a partnership act or obligation results. 
 Here, again, the creditor of the estopped partnership gets no 
 priority over creditors of the actual partnership in the partnership 
 assets.® 
 
 8. No Quasi Partnerships. — According to the view of the 
 Wisconsin court, not only are persons who hold themselves out 
 
 1 46 & 47 Viet. e. 52, § 44 (Bankruptcy Act of 1883). 
 
 2 L. R. 1 Ch. App. 421 (1866), Lord Cranworth, L. C. 
 
 '8 Ch.. Div. 11 (1878). See extracts from opinions of James and 
 Tliesiger, L. JJ., in Burdick's Cases on Part. 121. Cf. Lindley on Part. 
 (7th ed.) 760: "The possession in this case was not in accordance with 
 the title, whilst in Reynolds v. Bowley, L. R. 2 Q. B. 474 (case of a dor- 
 mant partner) it was ; and this seems to be the test in cases of this de- 
 scription." 
 
 ^ L. of Md. 1916, Ch. 175, § 16, as explained by its draftsman in 24 
 Yale Law J. 625 and 29 Harv. L. Rev. 301. But see the doubts by 
 Judson A. Crane in 28 Harv. L. Rev. 780. 
 
 » L. of Md. 1916, Ch. 175, § 16, (1), (o), and (2). 
 
80 THE LAW OF PARTNERSfflP 
 
 as members of a firm properly called quasi partners, but the 
 ostensible firm is to be viewed as a quasi partnership. It is true 
 that an eminent English writer has given currency to the term 
 quasi partnership; but in his treatise it represents a different 
 conception from that which is entertained by the Wisconsin and 
 New York courts. It is employed by him for the purpose of 
 showing an "ambiguity in the word partnershi-p as used by Eng- 
 lish lawyers. Partnerships," he points out, "are by them di- 
 vided into partnerships (properly so called), and partnerships 
 as regards third persons, which are not in fact partnerships at all, 
 and should never be so styled. What is called a partnership as 
 regards third persons (quasi partnership) is nothing more than a 
 number of persons who, in consequence of certain acts done by 
 them, are held liable for each other's conduct, as if they had 
 entered into a contract of partnership amongst themselves." 
 
 Quasi partnership, as thus used by Lindley,^ refers only to the 
 persons who hold themselves out as partners, and does not indi- 
 cate that the property which is owned by these persons in severalty 
 is to be treated by the courts as though it were the joint estate of 
 a true partnership. Such is the view of The Uniform Partnership 
 Act. 
 
 If a quasi partnership results from holding out, it should fol- 
 low that the estopped partner is entitled to all the rights and 
 equities of an actual partner. But such rights and equities have 
 been denied him, in a carefully considered and well-reasoned case.^ 
 
 There are dicta, it must be admitted, in various American deci- 
 sions, which furnish more or less support to the views of the New 
 York and Wisconsin courts. For example. Judge Gibson, in a 
 case ' which he describes as possessing " no single feature of a 
 
 ' Lindley on Part. (5tli ed.) Bk. 1, Chap. 1, § 2. In the seventh edi- 
 tion, the term is no longer retained as a separate heading because "though 
 in some respects convenient, it does not occur in the Partnership- Act, 
 1890." 
 
 " Kerr v. Potter, 6 GiU (Md.), 404 (1848). See Cannon v. Brush Elec. 
 Light Co., 96 Md. 446, 54 At. 121 (1903) ; Johnson v. WiUiams, 111 Va. 
 95, 68 8. E. 410, 22 Ann. Cas. 47, with note, 31 L. R. A. n. s. with note 
 (1910). 
 
 » Gill V. Kuhn, 6 S. & R. (Pa.) 333 (1821). Plaintiffs and defendant 
 entered into an agreement to follow their several occupations in concert in 
 the same establishment, but without any copartnership, which it was 
 
PARTNERSHIP AS TO THIRD PERSONS 81 
 
 partnership", says: "To third persons, they would undoubtedly 
 be held responsible as partners from the circumstances of their 
 carrying on a joint business, and all participating in its profits; 
 but their relation towards each other depends on other and very 
 different considerations. That there is a distinction between 
 partnership as respects the public, and partnership as respects 
 the parties, is an elementary principle of this branch of the law, 
 so plain that its only difiiculty is in its application to particular 
 cases. Here, however, there was not even a joint interest in the 
 stock." 
 
 It is submitted, that the distinguished judge ought not to have 
 intimated that there can be " a partnership as respects the public", 
 when there is no "partnership as respects the parties"; although 
 his first statement is quite correct, that parties may "be held 
 responsible as partners", although no partnership exists between 
 them. 
 
 9. Individual Creditor may be estopped. — It is not nec- 
 essary to invoke the doctrine of a quasi partnership, in order to 
 estop an individual creditor from denying the existence of a 
 partnership. For example, if P takes a judgment note from his 
 son for a large sum knowing that the son and another are holding 
 themselves out as partners, and contracting debts in the business 
 thus carried on; and does not disclose his secret claim against 
 the son, but stands by, while the ostensible partners replenish 
 the business stock by contracting such debts, he is properly held 
 estopped from asserting that the ownership of the stock is in the 
 son, and that his lien under the judgment note is superior to that 
 under a judgment in behalf of a business creditor.^ 
 
 expressly agreed should not exist. Plaintiffs were commission merchants 
 and defendant was an auctioneer. See City of New Orleans v. Gauth- 
 ereaux, 32 La. Ann. 1126 (1880), holding that a partnership may be 
 created by construction of law, as to third persons, although not intended, 
 nor actually existing as between the parties. In Milwaukee Harvester 
 Co. V. Finnegan, 43 Minn. 183, 45 N. W. 9 (1890), the use of the term 
 "quasi partnership" was whoUy unnecessary and not at all descriptive 
 of the relation between the parties, who were two joint agents. 
 
 1 Powers V. Large, 75 Wis. 494, 43 N. W. 1120, 17 Am. St. R. 195 
 (1890). 
 
CHAPTER III 
 
 THE NATURE OF A PARTNERSHIP 
 
 § 1. The Firm: Its Members: Its Name. 
 
 One of the most perplexing topics in partnership law is the 
 nature of a firm. Undoubtedly the subject is inherently diffi- 
 cult; but its discussion has been rendered unusually trouble- 
 some by .the multifarious and inconsistent doctrines which 
 abound in judicial decisions. Perhaps the various conceptions 
 of a partnership may be brought within one of the three 
 classes now to be considered. 
 
 . 1. The Firm as an Association of Persons. — Although 
 occasionally an English judge has suggested "the notion of the 
 existence of the firm as a separate entity from the existence 
 of the partners " ^ the English bench and bar have maintained 
 the view that "there is no such thing as a firm known to the 
 law " ; ^ that a firm has no separate existence as distinguished 
 from the individual members, and does not partake of the nature 
 of a corporation.^ This view has received the approval of Par- 
 liament/ and is now an established doctrine of English jurispru- 
 
 1 Jessel, M. R., in Pooley v. Driver, 5 Ch. Div. 458 (1876). 
 
 ' Ex parte Corbett, In re Shand, 14 Ch. D. 122 (1880) ; Burdick'a 
 Cases on Part. 134. 
 
 3 Kay, L. J., In re Beauohamp Bros. (1894), 1 Q. B. 1, 7; Burdick's 
 Cases on Part. 156 n. 
 
 * Partnership Act, 1890, § 4. (1) "Persons who have entered into 
 partnership with one another are, for the purposes of this Act, eaUed col- 
 lectively a firm, and the name under which their business is carried on is 
 called the firm name. (2) In Scotland a firm is a legal person distinct from 
 the partners of whom it is composed, but an individual partner may b© 
 charged on a decree of diligence directed against the firm, and on payment 
 of the debts is entitled to relief pro rata from the &m and its members." 
 
 82 
 
THE NATURE OF A PARTNERSHIP 83 
 
 dence. It prevails also in most of the jurisdictions of this country 
 and has received legislative approval in The Uniform Partnership 
 Act.^ In the language of a learned judge, "A partnership cannot 
 be considered as a person, in contradistinction to the persons com- 
 posing it, simply because such is not its nature." ^ American 
 judges often use similar expressions. In a recent Oregon decision, 
 we read : " A partnership is not a person, either natural or artificial." ' 
 
 2. The Firm as an Entity. — While English law "knows 
 nothing of the firm as a body or artificial person distinct from 
 the members composing it ",* the British Partnership Act ^ recog- 
 nizes it in Scotland as "a legal person distinct from the partners 
 of whom it is composed." In that country, "not only can it 
 sue and be sued in 'the social name', but it may sue and be sued 
 by its own members." ^ 
 
 Similar doctrines obtain in some of our States. In Louisiana, 
 whose jurisprudence is founded on the civil law, we should ex- 
 pect to find the firm spoken of as "the ideal being known as the 
 partnership " ; ^ but in not a few of our common law States the 
 courts have declared that "A partnership is a distinct entity, 
 having its own property, debts, and credits. For the purposes 
 
 ' Supra, p. 3. 
 
 2 Stayton, C. J., in Wiggins v. Blackshear, 86 Tex. 665, 668, 26 S. W. 929 
 (1894) ; Burdiok's Cases on Part. 198. In Bank of Buffalo v. Thompson, 
 121 N. Y. 280 (1890), Earl, J., said : "The Arm is not recognized by law- 
 yers as distinct from the members composing it;" and in Hallowell v. 
 Blackstone Nat. Bank, 154 Mass. 359 (1891), Holmes, J., said: "Corey 
 on Accounts and Lindley on Partnership have made it popular to refer to 
 a mercantile distinction between the firm and its members. But we have 
 no doubt that our merchants are perfectly aware that claims against their 
 firms are claims against them." Burdick's Cases on Part. 286, 288; 
 Francis v. McNeal, 228 U. S. 695, 33 Sup. Ct. 701, L. R. A. 1915 E, 706 
 (1913) ; Abbott v. Anderson, 265 111. 285, 106 N. E. 782, Ann. Cas. 1916 
 A, 741 (1914). 
 
 ' Adams v. Church, 42 Ore. 270, 272, 70 Pac. 1037, 1038, 95 Am. S. 
 R. 740 (1902) ; Leibert v. Reiss, 174 App. Div. 308, 160 N. Y. Supp. 535 
 (1916) ; Matter of Peek, 206 N. Y. 55, 99 N. E. 258, 31 Ann. Cas. 798, 
 41 L. R. A. N. s. 1223 (1912). 
 
 « PoUock on Part. (5th ed.) 20. 
 
 5 Quoted in a former note. 
 
 « Pollock on Part. (5th ed.) 21. 
 
 ' Sherwood v. His Creditors, 42 La. Ann. 103 (1890) ; Burdick's Cases 
 on Part. 678, 680; Newmann v. Eldridge, 107 La. 315,31 So. 688 (1902). 
 
84 THK LAW OF PARTNERSHIP 
 
 for which it was created, it is a person, and as such is recognized 
 by the law." ^ These judicial declarations are supported, to some 
 extent, by statutory provisions authorizing actions to be brought 
 by or against a partnership in its firm name, imposing taxes upon 
 it, referring to it as an absconding or non-resident debtor, and 
 the like.2 
 
 (a) One Firm as Two Entities. — In a few instances judges 
 have treated a single firm, not as composed of natural persons, 
 but as constituting two separate artificial persons. Taylor and 
 Cassily were a firm having business houses in Cincinnati and 
 New Orleans, Taylor living in New Orleans and Cassily in Cin- 
 cinnati. A draft drawn in Cincinnati, by a creditor of the firm, 
 on "Taylor and Cassily, New Orleans", and accepted in Cin- 
 cinnati by Cassily, was held to be drawn on a mercantile "per- 
 son without the jurisdiction of " Ohio. The branch house in 
 New Orleans was treated as an ideal person, domiciled there, and 
 the bill, it was said, was drawn, not on the natural persons Tajlor 
 and Cassily, but on the New Orleans house.^ And yet there 
 can be no doubt that the holder of the bill might have maintained 
 an action thereupon against Taylor and Cassily as individuals in 
 Ohio, and might have enforced his judgment against the property 
 of the Cincinnati house.* Moreover, had the members of the 
 firm been sued in a State court of Ohio, they could not have se- 
 cured a removal of the cause to a Federal court on the ground 
 that the firm was a resident of Louisiana.^ 
 
 • Richards v. Le VeUle, 44 Neb. 38, 62 N. W. 304 (1895) ; Burdiok's 
 Cases on Part. 281, 282; cf. Teague v, Lindsey, 106 Ala. 266, 17 So. 538 
 (1895) ; Burdiok's Cases on Part. 207 n. ; AUen & Co. v. Davids, 70 S. C. 
 260, 49 S. E. 846, 848 (1904) ; Clay, Robinson & Co. v. Douglas County, 
 
 88 Neb. 363, 129 N. W. 548, 23 Ann-. Cas. 756 (1911). 
 
 2 Druoker v. WeUhouse, 82 Ga. 129 (1888) ; Burdiok's Cases on Part. 
 131; Holmes v. Alexander, 47 Okla. — , 152 Pac. 819 (1915). 
 
 Even in Georgia, the partnership cannot be sued in a county where, 
 none of the partners resides. King Bros. v. Passmore, 18 Ga. App. 614, 
 
 89 S. E. 1103 (1916); Pyron v. Ruohs, 120 Ga. 1060, 48 S. E. 434 
 (1904). 
 
 ' West V. The Valley Bank, 6 Oh. St. 168 (1856) ; Burdiok's Cases on 
 Part. 132. 
 
 4 Wright V. Hooker, 10 N. Y. 51 (1854). 
 
 5 Adams v. May, 27 Fed. 907 (1886) ; Great So. Hotel Co. v. Jones, 
 177 U. S. 449, 20 Sup. Ct. 690, 44 L. Ed. 482 (1900). 
 
THE NATUKE OF A PARTNERSHIP 85 
 
 Equally untenable with this Ohio decision is the dictum of a 
 distinguished New York judge, that a bill drawn by Page & 
 Co. on White & Co., and accepted by the drawees, had upon 
 it the names of two firms; it appearing that Page, Barnard, 
 and White as partners carried on business at Oswego, N. Y., 
 in the name of Page & Co., and at Albany in the name of White 
 & Co.^ Here was but a single business entity. 
 
 (b) Not treated as Two Entities in Bankruptcy. — The inti- 
 mation of the learned judge that, had the partners gone into 
 bankruptcy, the house of Page & Co. would have been treated as 
 entirely distinct from that of White & Co., and that the assets 
 of each would have been first distributable to its creditors is not 
 borne out by the authorities cited in its support.^ In the first of 
 the two cases which were referred to, Nims and Long had been 
 partners under the name of O. L. Nims & Co. They dissolved, 
 and Long formed a partnership with Evans. After the dissolution 
 of this firm Nims and Long entered into a new partnership under 
 the name of O. L. Nims, Agt. Upon the bankruptcy of Nims 
 and Long, it was properly held that the debts of O. L. Nims & 
 Co. were not provable against the assets of the firm of O. L. Nims, 
 Agt. • The second citation is not of a case where the same partner- 
 ship carried on business in two names. The question in Forsyth 
 v. Woods was whether a joint contract of the partners made in 
 their individual names respecting a matter that had no connection 
 with the firm business created a liability of the firm as such. Jus- 
 tice Strong declared that it did not. The opinion does not contain 
 an intimation in favor of Judge Ruger's dictum. 
 
 But where the same partnership carries on business in different 
 places, the assets of the various houses constitute but- a single 
 joint fund, and there is but one set of firm creditors, although 
 the business in one place may not be of the same character as that 
 
 1 Second Nat. Bank v. Burt, 93 N. Y. 233 (1883). This case has been 
 explained as one where the same men had formed two distinct partner- 
 ships, to carry on two distinct businesses. 29 Harv. L. Rev. 184. But 
 the plaintiff's complaint, the evidence, the findings of fact and the opin- 
 ion of the referee show that but one partnership was formed, and but 
 one business was carried on. The one firm had two names. See pp. 12, 
 50, 143, and 145 of Case Book in Court of Appeals record. 
 
 2 In re Nims, 16 Blatch. 439 (1879), and Forsyth v. Woods, 11 WaU. 
 (U. S.) 484 (1870). 
 
86 THE LAW OF PARTNERSHIP 
 
 in the other places, and although the different branches may have 
 dM[erent names as well as keep distinct accounts.^ 
 / 3. Partnership as a Status. — Still a third view of the 
 nature of a firm has been propounded by a learned and ingenious 
 writer. According to his .conception, partnership is a status. 
 In his own language : ^ "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 contract, like marriage or sale. The 
 contract is the occasion or door, and the consummation or con- 
 veyance establishes rights in rem." "Though partnership may 
 be dissolved at will, and the relation brought to a close through 
 the act of the individual, yet the status, with all its attendant 
 duties and prerogatives, subsists until it is terminated in a manner 
 consistent with its original purpose." "The elevation of part- 
 nership into a status is due to the presence of a firm estate." 
 "The partners, being merged as individuals in the firm estate, are 
 enabled to trade in a distinct capacity." "The only qualification 
 is, that in acting as partners they bind their separate estates, and 
 the firm creditor is not confined to the firm fund." "It is the 
 recognition by the law of the estate that severs the partner from 
 himself as a man." i 
 
 This learned author has no tolerance for the fiction that the 
 firm is a person, which "contracts debts, and charges its assets 
 for payment. If the fiction had a legal basis for its existence," he 
 declares, " and was consistently carried out, a partnership would be- 
 come a corporation." Referring to a distinguished advocate of this 
 fiction, he asks, "What is the polarity of mind of a lawyer who 
 advocates making a partnership by turns a corporation and a num- 
 ber of individuals? (The Law of Partnership, Chap. X. § 1, by 
 Theophilus Parsons, LL.D.) ; " and adds, " If he comprehended the 
 elemental distinction of kind, he would not expose his confusion by 
 making the suggestion, but he would disguise the proposition in 
 the jargon of lawyers, who speak of a man quo modo a horse." ^ 
 
 4. The Merits op these Views. — No attempt will be made 
 at present to estimate the comparative merits of these various 
 
 1 Campbell v. Colorado Coal & Iron Co., 9 Colo. 60, 10 Pac. 248 (1885) ; 
 Banco de Portugal v. Waddel, 5 App. Cas. 161 (1881). 
 
 2 Parsons (James), Principles of Part. (1st ed.) 290, 291, 696. 
 ' Parsons (James), Principles of Part. (1st ed.) 286, 287. 
 
THE NATURE OP A PARTNERSHIP 87 
 
 conceptions of a partnership.^ Each view will be discussed in 
 connection with the authorities which support or antagonize it. 
 It may be noticed in passing, however, that prior to the Uniform 
 Partnership Act it was becoming more and more customary for 
 legislation and judicial decisions to treat a partnership as an 
 entity .2 Meanwhile we pass to the consideration of topics upon 
 which there is substantial unanimity of opinion. 
 
 5. Firm Name is a Non-essential. — A partnership may 
 exist without a firm name,^ although one is usually agreed upon 
 by the parties ; and the absence of a stipulation on this point may 
 be indicative of their intention not to form the partnership re- 
 lation.* If a firm name has not been agreed upon, either partner 
 may adopt one, and the fact that he has employed a particular 
 name in one transaction does not preclude him from using a 
 different style on another occasion.^ 
 
 In the absence of any statutory provision ® or settled doctrine 
 
 ' See the articles referred to in previous notes : 24 Yale Law J. 617 ; 
 52 Leg. Intelligencer, 110; 29 Harv. L. R. 158, 171; 63 Univ. of Pa. 
 L. Rev. 196; 29 Harv. L. R. 838, 843. 
 
 2 In WiUiams v. Hurley, 135 Ala. 319, 33 So. 169 (1902), it is said that 
 ■"the statement of the names of the members of the firm is mere descrip- 
 tion of the personnel of the entity, which alone is sued," under § 2605 of 
 the Alabama Code; citing Baldridge v. Eason, 99 Ala. 516, 13 So. 74 
 (1892), which construes and applies that section of the code. In Faneuil 
 HaU Nat. Bank v. Meloon, 183 Mass. 66, 66 N. E. 410 (1903), where a 
 note was made by the firm, and indorsed by the individual members, the 
 «ourt held that a covenant by the holder not to sue the firm on the note, 
 "released the firm as maker, but not the individual members as indors- 
 €rs." In Good v. Red River Valley Co., 12 N. M. 245, 78 Pac. 46 (1904) ; 
 Allen & Co. v. Davids, 70 S. C. 260, 49 S. E. 846 (1904) ; State v. Cloudt 
 (Tex. Civ. App.), 84 S. W. 415 (1904) ; and In re L. Stein & Co., 127 
 Eed. 547, 62 C. C. A. 272 (1904), statutes are considered, which treat the 
 firm "as an entity existing and having rights and liabilities apart from 
 its members." 
 
 ' Le Roy v. Johnson, 2 Pet. 186 (1829) ; Robertson v. De Lizardi, 
 4 Rob. (La.) 300, 314 (1843) ; Stickney v. Smith, 5 Minn. 486 (1861) ; 
 Getchell v. Foster, 106 Mass. 42 (1870) ; Wright v. Hooker, 10 N. Y. 51 
 (1854). 
 
 4 Farrand v. Gleason, 56 Vt. 633 (1884) ; Burdick's Cases on Part. 27. 
 
 6 McGregor v. Cleveland, 5 Wend. (N. Y.) 475 (1830). 
 
 ^ "In a State where there is no statute prohibiting the use of a name, 
 or an abbre^dation, to do business under other than that of the individual, 
 as in this state, there is no necessary presumption that when '& Co.' is 
 
88 THE LAW OF PARTNERSHIP 
 
 of public policy to the contrary, the firm style need not contain 
 the name of any of the partners ; ^ it may be fanciful or may pur- 
 port to be that of a corporation.^ In some States, the assumption 
 of a corporate name in any sign or advertisement, for the purpose 
 of soliciting business, by an unincorporated association, subjects 
 the party to a fine, but to no other penalty.' In other States, 
 legislation makes it illegal to do business under an assumed or 
 fictitious name, unless a certificate is filed giving the names of 
 those engaged in the business.* The cases cited indicate that 
 this legislation has not been wholly beneficent. 
 
 made use of after the dealer's name, he has a partner or partners, or that 
 such title includes more than one person.'' Brennan v. Pardridge, 67 
 Mich. 449, 453, 35 N. W. 85 (1887), ciling Robinson v. Magarity, 28 111. 
 423 (1862). The New York Court of Appeals has characterized a statute 
 which prohibits the use of "and Company", or "& Co.", unless it shall 
 represent an actual partner, as well as the use of the name of a person 
 not interested in the firm, as "not a very useful statute." Gay v. Sie- 
 bold, 97 N. Y. 472 (1884). Other decisions bearing on this statute (L. 
 1833, Ch. 281, now Pen. Law, § 440) are Zimmerman v. Erhard, 83 
 N. Y. 74 (1880) ; Wood v. Railway Co., 72 N. Y. 196 (1878) ; Sinnott v. 
 Germ. Am. Bank, 164 N. Y. 386, 58 N. E. 286 (1900) ; Loeb v. Fire- 
 man's Ins. Co., 78 App. Div. 113, 79 N. Y. Supp. 510 (1903); McArdle 
 V. Thames Iron Works, 96 App. Div. 139, 89 N. Y. Supp. 485 (1904) ; 
 Castle Bros. v. Graham, 180 N. Y. 553, 73 N. E. 1120 (1905) ; Jenner v. 
 Shope, 205 N. Y. 66, 98 N. E. 325 (1912). See Kent v. Mojonier, 36 La. 
 Ann. 259 (1884); Pelican Ins. Co., Matter of, 47 La. Ann. 935, 17 So. 
 427 (1895). 
 
 1 Bank of Rochester v. Monteath, 1 Den. (N. Y.) 402, 43 Am. Dec. 
 681 (1845). Keeler, Allen, and Geo. Monteath did business in the name 
 of Wm. Monteath, who acted as their agent. 
 
 ^Holbrook v. Ins. Co., 25 Minn. 229 (1878). "It is said to be an 
 offence against the prerogative of the Crown for private persons to 'as- 
 sume to act as a corporation.' But it is by no means clear how it can be 
 punished, though possibly the Queen's Bench Division may have the 
 jurisdiction to punish it by fine." PoUoek's Digest of Part. (5th ed.) 22. 
 
 'Illinois Crim. Code, § 220; People v. Rose, 219 111. 46, 76 N. E. 
 42 (1905). 
 
 " Carland v. Hecker, 233 Fed. 504 (1916), holding the Mich. Statute 
 complied with; Axe v. Tolbert, 179 Mich. 556*146 N. W. 418 (1914) and 
 oases cited from Cal., Mont., Okla., S. D.andN.Y.,undersimilar statutes; 
 Tripp V. Deupree, — Okla. — , 158 Pao. 923 (1916), holding that the re- 
 ceiver of an offending firm may recover claims due it, as the statutory 
 disability is personal to the offending partners; Bolen v. Ligett, — Okla. 
 — , 154 Pac. 547, L. R. A. 1916 D, 352 (1916) with full note on statutes 
 
THE NATURE OF A PARTNERSHIP 89 
 
 (a) Limitation on Liberty of Choice. — The right to select any 
 appellation as a firm name has this important limitation : it must 
 not be exercised in such a way as to work a fraud upon others 
 trading under substantially the same name, or upon the public. 
 No person or body of persons can obtain an exclusive right to a 
 name at common law. Accordingly, persons trading as "Rogers 
 & Bro.", cannot lawfully complain because others trade in the 
 name of "C. Rogers & Bros.", if this is done in an honest and 
 ordinary business manner .^ "Where the only confusion created 
 is that which results from the similarity of the names, the courts 
 will not interfere. A person cannot make a trade mark of his own 
 name, and thus obtain a monopoly of it which will debar all other 
 persons of the same name from using their own names in their own 
 business." ^ 
 
 But if a trader or firm has carried on a business under a par- 
 ticular name, such as the "Guinea Coal Company", it is a fraud 
 upon such trader or firm, as well as upon the public, for another 
 trader or firm to set up a rival business "in such a way as to in- 
 duce persons to deal with him or them in the belief that they are 
 dealing with the trader or firm who gave a reputation to the name." ' 
 
 (6) Firm Name is the Name of each Member. — Upon this point 
 common law authorities are in accord, wholly ignoring the idea 
 of the firm as an entity distinct from its members. The au- 
 
 requiring the filing of certificates of firms doing business under as- 
 sumed or fictitious names; Wilson Bros. Garage v. Tudor, 89 Vt. 522, 
 96 At. 794 (1915), holding the Vt. statute not complied with. 
 
 ' Rogers v. Rogers, 53 Conn. 121, 65 Am. R. 78 (1885). 
 
 ^Meneely v. Meneely, 62 N. Y. 427 (1875). The name of plaintiffs' 
 firm was E. A. & G. R. Meneely; that of defendants' was Meneely & 
 Kimberly. Plaintiffs had stamped their goods "Meneely's, West Troy, 
 N. Y." Defendants stamped theirs "Meneely & Kimberly, Troy, N. Y." 
 The court did not interfere. 
 
 3 Lee V. Haley, 5 Ch. App. 155 (1869). The rival business was eon- 
 ducted in the name of "Pall Mall Guinea Coal Company", and defend- 
 ant's envelopes and businegs,cards were printed in such a way as to re- 
 semble the plaintiffs; PeopK w. Rose, 219 lU. 46, 76 N. E. 42 (1905). 
 
 "The rules governing the use of firm or trade names obviously belong, 
 properly speaking, not to the law of partnership, but to that subdivision 
 of the general law of ownership which has to do with copyright and other 
 analogous rights." Pollock's Digest of Part. (5th ed.) 21. See Bur- 
 dick's Law of Torts, 386, 389-391, and cases cited. 
 
90 THE LAW OF PARTNERSHIP 
 
 thorized signature of the partnership name operates as the sig- 
 nature of each partner.^ If the firm name is "D'Este & Co.", 
 a note having that signature is properly described as a note made 
 by the partners composing the firm.^ If Lewis, Gorthwaite, and 
 Grant are trading in New York under the name of Lewis, Gorth- 
 waite, & Co., and in New Orleans under the name of Grant, Lewis, 
 & Co., notes payable to Lewis, Gorthwaite, & Co., may be joined 
 in an action with those payable to Grant, Lewis, & Co., and all 
 may be described as payable to Lewis, Gorthwaite, and Grant.' 
 
 At common law a man may change his name at pleasure,* 
 and may make contracts under any name he may choose to as- 
 sume, even though it may be a fictitious name.* Accordingly, 
 where a firm did business in the name of the "Royal Flint Glass 
 Works", a warrant of attorney to confess judgment, which was 
 executed in that name by the president and treasurer of the firm, 
 with the assent of the various partners, was held to be the warrant 
 of each partner.^ 
 
 On the other hand, the firm name represents only those who are 
 partners when it is employed. Hence, " if a legacy is left to a firm, 
 it is payable to those who compose the firm at the time the legacy 
 vests." ' 
 
 (c) Individual Signatures equivalent to Firm Name. — Whether 
 the partners have agreed upon a name for their firm or not, its 
 employment is not necessary to the validity of a firm contract. 
 
 1 This is sometimes changed by statute. See Swift v. Jewsbury, 
 L. R. 9 Q. B. 301 (1874), under 8 & 9 Geo. IV. e. 14, § 6, providing that 
 one shall not be hable for a false representation as to the solvency of 
 another, unless it is in writing, and signed by him; no provision being 
 made for signing by an agent. 
 
 2 HasMns v. D'Este, 133 Mass. 356 (1882) ; Burdick's Cases on Part. 
 13-5. 
 
 'Messner v. Lewis, 20 Tex. 221 (1857); Burdick's Cases on Part. 
 133. 
 
 * Petition of Snook, 2 Hilt. 566 (1859) ; Smith v. U. S. Casualty Co., 
 197 N. Y. 420, 90 N. E. 947 (1910). 
 
 » Shain v. Du Jardin, 38 Pac. (Cal.) 529 (1894) ; Burdick's Cases on 
 Part. 138, n. 
 
 e Miller v. Royal Flint Glass Works, 172 Pa. St. 70, 33 At. 350 (1895) ; 
 Burdick's Cases on Part. 137. 
 
 ' Stubbs V. Sargon, 2 Keen 255 (1837). See other applications of 
 this principle in Lindley on Part. (7th ed.) 129-131. 
 
THE NATURE OF A PAHTNEKSHIP 91 
 
 Notes signed with the individual names of the partners/ or with 
 the name of but one of them, ^ will bind the firm if they were issued 
 as firm contracts. Treating such "notes as firm obligations would 
 not be inconsistent with their face. To determine the fact whether 
 they are such, it is necessary to inquire into the nature of the 
 transaction out of which they grew, and how it was intended they 
 should operate." ^ 
 
 As the firm name is but a conventional appellation for its va- 
 rious members, firm and individual names may be interchanged 
 at pleasure. If J. S. Allen and H. H. Hayes are partners under 
 the style of Allen and Hayes, a note payable to them in their 
 individual names is validly indorsed in the name of Allen and 
 Hayes.^ 
 
 (d) Assent necessary to a Valid Change of Firm Name. — It is 
 lo be borne in mind, in this connection, that when the partners 
 have agreed upon a firm name, it cannot be changed without 
 their consent. Consequently, if negotiable paper is issued by a 
 partner in other than the stipulated firm name, it will not be bind- 
 ing on the partners who did not authorize the signature, or have 
 not ratified it, unless the variation is immaterial.^ The principles 
 underlying the cases in the preceding note will be discussed in the 
 next chapter. 
 
 (e) Name of one Partner as a Firm Name. — If the partners 
 assent to the adoption of the individual name of one of their 
 
 • Dreyfus v. Union Nat. Bank, 164 111. 83, 45 N. E. 408 (1896) ; Bur- 
 diek's Cases on Part. 139; In re Kendriok & Co., 226 Fed. 978 (1915). 
 
 2 Sage V. Sherman, 2 N. Y. 417 (1849). 
 
 " Dreyfus v. Union Nat. Bank, supra. In this case the notes were 
 given in partial payment of the purchase price of lands, which the evi- 
 dence showed was bought for the firm, paid for in part with firm moneys, 
 and entered on the firm's books as partnership assets; hence the notes 
 were held to be a proper charge against the assets of the firm in the hands 
 of an assignee for the benefit of creditors. Cf. Berkshire Woolen Co. 
 V. Juillard, 75 N. Y. 535, 31 Am. R. 489 (1879) ; where a joint obligation 
 under seal, executed by aU the members of a firm in its business and for 
 its benefit, was held to be a partnership obUgation. 
 
 " Mick V. Howard, 1 Ind. 250 (1848) ; Burdiek's Cases on Part. 131. 
 
 5 Palmer v. Stevens, 1 Den. (N. Y.) 471 (1845) ; Williamson v. John- 
 son, 1 B. & C. 146 (1823) ; Faith v. Richmond, 11 A. & E. 339 (1840) ; 
 Tilford V. Ramsay, 37 Mo. 563, 567 (1866). Cf. Lindley on Part. (7th 
 •ed.) 213-215. 
 
92 THE LAW OF PARTNERSHIP 
 
 number as their firm name, contracts executed in that style for 
 the partnership will be enforceable against all.^ In case the in- 
 dividual member "carries on no business separate from that of 
 the firm, there is a presumption that a bill of exchange, drawn, 
 accepted, or indorsed in the common name, is a bill drawn, ac- 
 cepted, or indorsed for the partnership, and for which the partner- 
 ship is liable." ^ This presumption is based upon considerations 
 of business convenience and expediency. "The vast majority of 
 the bills," said the court in the last cited case, "given under the 
 circumstances supposed, would be really partnership bills, and 
 yet it would be often difficult, if not impossible, for the holders 
 of such bills to do more than prove that the only trade carried 
 on under the individual name was the trade of the partnership; 
 and if they were compelled to go further, and prove that the par- 
 ticular bill was a partnership bill, the effect might be that in many 
 cases dormant partners, and in some cases ostensible ones too, 
 might escape from just liability." 
 
 If the partner in whose name the firm trades carries on a separate 
 business, there is no basis for the presumption stated above. The 
 signature of this name, common to the firm and to the individual 
 trader, "may be on his own individual account, as his personal 
 contract, or it may be on account of the partnership. Upon the 
 face of the paper it stands indifferent. The burden of proof is 
 upon the plaintiffs to establish that it is a contract of the firm, and 
 ought to bind them." ' 
 
 (/) Cases rarely decided on the Presumption alone. — While it 
 is important to bear in mind this presumption, the observation 
 of the learned judge in Yorkshire Banking Co. v. Beatson * should 
 be remembered, that "there are likely to be few, if any, cases where 
 the decision of the jury or of a court will be rested upon the pre- 
 sumption alone." In that case, Beatson carried on no separate 
 business, and the jury found that the plaintiff took the bills in 
 suit as the bills of the chemical works (the partnership business 
 
 1 Bank of South Car. v. Case, 8 B. & C. 427, 2 M. & Ry. 459 (1828). 
 
 2 Yorkshire Banking Co. v. Beatson, 5 C. P. D. 109, 42 L. T. n. s. 
 455, 49 L. J. C. P. 380 (1880) ; Burdick's Cases on Part. 141 ; Mills v. 
 Riggle, 83 Kan. 703, 112 Pac. 617, 22 Ann. Cas. 616 (1911). 
 
 3 U. S. Bank v. Binney, 5 Mason (U. S.) 176 (1828). 
 
 ^ 5 C. P. D. 109 (1880) ; Burdick's Cases on Part. 141. 
 
THE NATURE OF A PARTNERSHIP 93 
 
 of Beatson and Mycock), whoever the proprietors might be, yet 
 the court held that the presumption in favor of plaintiff was over- 
 borne by the additional facts that the bills were in truth private 
 transactions of Beatson, not intended to bind the firm nor enuring 
 to its benefit. "Beatson," it was said, "by giving the use of his 
 name to a partnership of which he was a member, and the only 
 ostensible member, did not preclude himself from making con- 
 tracts binding on himself alone, and in any contracts de facto 
 made by him, whether by parol or in writing, the question, the 
 answer to which would determine Mycock's liability or freedom 
 from liability, would not be whether the other contracting party 
 trusted Beatson because he supposed him to be the sole owner of 
 the chemical works, but whether Beatson, whom alone he knew 
 and actually trusted, was acting as agent for the partnership, or 
 in his individual capacity for himself." ^ 
 
 6. Suits by and against a Partnership. — We have seen 
 that a partnership cannot sue or be sued as an artificial person, 
 at common law, but that suits must be brought by or against 
 its members.^ And yet the peculiar relation of the partners 
 does affect the rights of third persons in such suits. 
 
 For example, if the members of a firm are sued as partners 
 for damages sustained by the plaintiff, while in their employ- 
 ment, it is error to receive an admission made by one of the de- 
 fendants after the accident from which negligence could be in- 
 ferred, even though the court instructs the jury that its effect is 
 to be limited to the partner who made the statement. 
 
 In dealing with this question, the Supreme Court of Penn- 
 
 ' Hastings Nat. Bank v. Hibbard, 48 Mich.. 452, 12 N. W. 651 (1882) ; 
 Fosdick V. Van Horn, 40 Oh. St. 459 (1884), accord. In the latter case 
 it is said : "If suit is brought on a promissory note for borrowed money, 
 bearing the signature of the common firm name, the presumption is that 
 it is the note of the firm not containing the dormant partner. The plain- 
 tiff, to recover against the dormant partner, tnust prove either that the 
 consideration of the note was obtained on the credit of the firm in which 
 the dormant partner was interested, or that it enured to the benefit of that 
 firm. That it was upon the credit of that firm that the money was bor- 
 rowed may be proved by the declarations to that effect of the ostensible 
 partners at the time of the loan, or it may be proved by circumstances." 
 
 ' This, as we have seen, has been changed in some of our States by 
 legislation. Ante, Chap. III. § 1, 2. The Uniform Partnership Act is 
 silent on this topic. 
 
94 THE LAW OF PARTNERSfflP 
 
 sylvania declared: "As the action was against the firm, there 
 could practically be no such limitation;" ^ for the action as well 
 as the judgment was joint, and process to enforce the judgment, 
 could be levied on the firm assets. Of course, admissions made 
 by one partner in such circumstances as to be binding upon the 
 firm are receivable in actions against the partnership ; but in such 
 cases they are the admissions of the firm, and not those of the 
 individual partner only. 
 
 Although the case just cited suggests the conception of a part- 
 nership as an entity, that conception is modified by other cases, 
 two of which are now to be considered. The surviving mem- 
 bers, having sued for legal services rendered by the firm, were 
 met by the objections that the firm was a legal person which 
 had died upon the death of one of its members, and that a dead 
 person cannot sue. "But," said the court, "a firm is not a per- 
 son in the sense supposed. For technical purposes of suing and 
 being sued, the law does not know the firm, but only the men 
 composing it. If we leave technicalities on one side, and consider 
 practical convenience, it would not do at all to let dissolution — 
 for instance, by the death of a member — prevent the collection 
 of debts due to the firm." ^ 
 
 In the other case,' above referred to, a firm was lessee of certain 
 premises and occupied them for some weeks after the expiration 
 of the lease. The lessor, who was a tenant in common of Healey, 
 one member of the firm, brought suit for a quarter's rent, on the 
 theory that where a tenant remains in possession after the ter- 
 mination of his lease, the landlord may at his option hold him as 
 a tenant for another year upon the terms of the prior lease. The 
 Appellate Division of the Supreme Court decided that "Healey 
 did not undertake as a tenant in common to reinvest himself with 
 possession, but that a different entity or firm, known as ' Healey 
 & Co.', tenants under the old lease, held over and retained posses- 
 sion of the premises," and that the action was maintainable.* 
 
 1 Folk V. Schaeffer, 180 Pa. St. 613, 37 At. 104 (1897) ; Burdiek's Cases. 
 on Part. 158. 
 
 2 Hyde v. Moxie Nerve Food Co., 160 Mass. 559, 36 N. E. 585 (1894) ; 
 Burdiek's Cases on Part. lS9. 
 
 'Valentine v. Healey, 178 N. Y. 391, 70 N. E. 913 (1904). 
 
 * Valentine v. Healey, 77 App. Div. 635, 79 N. Y. Supp. 1149 (1902). 
 
THE NATURE OF A PARTNERSHIP 95 
 
 This decision was reversed by the "Court of Appeals, which held 
 that Healey, "by his title as tenant in common, had power to 
 suffer the firm to remain in possession without subjecting it to 
 the liabilities that ordinarily obtain where a tenant holds over;" 
 that the tenant was not an entity separate and distinct from 
 the members of the firm, but that " the tenants were the cotenant 
 of the lessor and the copartner of such cotenant." ^ 
 
 7. Firms which include Infant Partners. — Perhaps the 
 cases, which afford the greatest support to the conception of 
 a firm as an entity, in the absence of a statute, are those in which 
 the rights and liabilities attaching to partnerships containing 
 infant members have been adjudicated. It is true the doctrine 
 has not been formally declared in these decisions, but it is difficult 
 to uphold them upon any other theory. 
 
 Undoubtedly an infant who without fraud enters into part- 
 nership with an adult can hold the latter to this contract, as to 
 any other business agreement. He can exercise the powers of 
 a partner, buy and sell its goods, and subject it to contract and 
 tort liabilities.^ On the other hand, he has the legal right, 
 during infancy ' or at maturity, to repudiate his contract of part- 
 nership, as well as his responsibility for firm obligations. In 
 case he exercises this right, two important questions arise : First, 
 How does it affect the rights of firm creditors ? Second, How does 
 it affect the adult partner ? * 
 
 (a) The Rights of Firm Creditors after Repudiation by an Infant 
 Partner. — In case the repudiation is confined to the infant's 
 liability for firm obligations, it is well settled that his plea of in- 
 
 > In Shaw v. Gilbert, 111 Wis. 165, 86 N. W. 188 (1901), it was held 
 that a partner, who had bought his copartner's interest in the firm could 
 recover as damages for deceit practised by defendant on the firm, only his 
 proportionate share of the loss ; and as plaintiff owned a five-sixths inter- 
 est in the firm, when the deceit was practised, he could recover but five- 
 Sixths of the firm's loss. 
 
 2 In Parker v. Oakley (Tenn.), 57 S. W. 426 (1900), the infant partner 
 was but fourteen or fifteen years old, and yet he was allowed to sell the 
 firm assets as surviving partner. 
 
 ' In Dunton v. Brown, 31 Mich. 182 (1875), it was declared that an 
 infant could not disaffirm his contract of partnership during minority; 
 but this is not the general view. Lindley on Part. (7th ed.) 86-89. 
 
 * The Uniform Partnership Act contains no provisions on this topic, 
 although the original draft covered it. 
 
96 THE LAW OF PARTNEESHIP 
 
 fancy will not affect the rights of firm creditors against the firm 
 assets. Accordingly, if actions against the firm are instituted 
 by various creditors, and the minor partner sets up the defence of 
 infancy against some of the plaintiffs while he does not against 
 others, all of the judgments are enforceable against the firm assets, 
 although some of them are entered against the adult partner only. 
 Such a defence leaves the partnership contract still in force, and 
 gives to the adult partner the right to have the firm property ap- 
 plied to the firm debts, and to have "each partner contribute his 
 pro rata share to the payment of any partnership indebtedness 
 remaining after applying the partnership property." ^ 
 
 There seems to be no doubt that the courts will accord the 
 same rights to firm creditors, even though the infant repudiate 
 the partnership contract, and thus relieve himself from per- 
 sonal liability to firm creditors, as well as from liability to the 
 adult partner for contribution. The Supreme Court of New 
 Hampshire ^ has declared : " If an infant partner can repudiate 
 his contract of partnership and call for- a return of his share in 
 the capital, without regard to the account of profit and loss, it 
 must be upon some proceeding instituted for the purpose and 
 in which the rights of the other partners and of the creditors may 
 be considered and protected." 
 
 A similar view is presented in an opinion of the New York Court 
 of Appeals : " It cannot be doubted but that the law would de- 
 vote the assets of the firm to the discharge of the partnership obli- 
 gations, whenever any court should be appealed to for that pur- 
 pose. ... It is not too much to say that, if an infant goes into 
 a mercantile adventure which proves unsuccessful, he ought at 
 least to be held so far as that the assets acquired by the firm should 
 be applied to the payment of the debts of the concern." ' 
 
 Such, too, is the doctrine of the House of Lords. "The adult 
 partner is, however, entitled to insist that the partnership assets 
 shall be applied, in payment of the liabilities of the partnership, 
 
 • Whittemore v. EUiott, 7 Hun (N. Y.) 518 (1876). 
 
 ' Gay V. Johnson, 32 N. H. 167 (1855). 
 
 ' Yates V. Lyon, 61 N. Y. 344 (1875). Accord. PeUetier v. Couture, 
 148 Mass. 269, 19 N. E. 400, 1 L. R. A. 863 (1889) ; Conary v. Sawyer, 92 
 Me. 463, 43 At. 27, 69 Am. St. R. 525 (1889) ; Shirk v. Shultz, 113 Ind. 
 571, 15 N. B. 12 (1887). 
 
THE NATURE OP A PARTNERSHIP 97 
 
 and that until these are provided for no part of them shall be re- 
 ceived by the infant partner. And if the proper steps are taken, 
 this right of the adult partner can be made available for the 
 benefit of the creditors." ^ 
 
 (b) Bankruptcy of a Firm vnih an Infant Member. — In Britain 
 an infant " cannot be made subject to the bankrupt laws in respect 
 of any debt contracted by a firm of which he is a partner" ; but 
 his infancy will not prevent an adjudication of bankruptcy against 
 the firm. This question, which proved to be a perplexing one to 
 the English courts, was settled by the House of Lords in the case 
 last referred to. Firm creditors brought an action against the 
 firm in the firm name of Beauchamp Brothers, pursuant to a 
 provision of the rules of court. Gilbert W. Beauchamp, the in- 
 fant partner, appeared by his guardian ad litem and objected that 
 he was not liable. A variety of views was presented by the 
 judges of the lower courts as to the proper form of judgment in 
 such a case, and the proper form of proceedings in bankruptcy, 
 upon the failure of the firm to pay the judgment. In the House 
 of Lords it was ruled that the judgment should have been either 
 against Ralph Beauchamp, the adult partner, or against the firm 
 other than Gilbert W. Beauchamp ; and that the bankruptcy pro- 
 ceeding should have been against the firm of Beauchamp Brothers 
 other than Gilbert W. Beauchamp. It was also ruled that in the 
 bankruptcy proceedings the partnership assets were available for 
 firm creditors. These rulings, it is submitted, are a virtual recog- 
 nition of the firm as an entity distinct from its members.^ 
 ■ Under the present Federal Bankruptcy Law, it has been held, 
 that if a member of the firm is a minor, the petition should be 
 dismissed as to him without costs, and with the specific statement 
 that the dismissal is made because of his minority ; that an ad- 
 judication should be made against the partner who is of age, and 
 against the firm, and that the partnership property shall be ad- 
 
 ' Lovell & Christmas v. Beauchamp (1894), Appeal Cas. 607, 63 L. J. 
 ■Q. B. 802; Burdiek's Cases on Part. 155. 
 
 ' "These rules, it wiU be observed, do not introduce anything that 
 amounts to the recognition of the firm as an artificial person distinct from 
 its members." Pollock on Part. (5th ed., 1890) 131, citing from James, 
 L. J., in Ex parte Blain, 12 Ch. D., at p. 533 (1879), the following sen- 
 tence : "We have not yet introduced into our law the notion that a firm 
 is a persona." 
 
98 THE LAW OF PABTNERSHIP 
 
 ministered in bankruptcy.^ It has also been held, that when a 
 state statute "provides that a minor may not disaffirm his con- 
 tracts on reaching full age when, from his having engaged in business 
 as an adult, the other party had good reason to believe him ca- 
 pable of contracting, if a minor engages in business as a merchant, 
 and parties consequently assume that he is of full age, and deal 
 with him in that belief, no inquiry or representation being made as 
 to his minority, he becomes absolutely liable for the debts con- 
 tracted in such business, and may be adjudged bankrupt on his 
 own petition, though still an infant." ^ 
 
 (c) The Firm acquires Title to the Infant's Contribution. — While 
 this doctrine has not been formally declared by the courts, it 
 appears to be sustained by the cases already cited. If the firm 
 does not obtain a title of its own to the contributions of its mem- 
 bers, it is difficult to understand why an infant partner cannot " re- 
 claim his share of the firm property at any time on his title as 
 cotenant, irrespective of the state of account between himself 
 and his copartners", to the exclusion of the claims of firm creditors 
 against the firm fund.' And yet, as we have seen, the courts have 
 uniformly denied this right to the infant.* 
 
 1 In re Dunnigan, 95 Fed. 428, 2 Am. B. R. 628 (1899) ; In re Duguid, 
 100 Fed. 274, 3 Am. B. R. 794 (1900) ; Jennings v. Stannus, 191 Fed. 347, 
 27 Am. B. Reg. 384 (1911). 
 
 2 In re Brioe, 93 Fed. 942, 2 Am. B. R. 197 (1899). 
 
 ' "Suppose the infant partner upon majority repudiated the partner- 
 ship, 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 copartner, 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 contract with the seller, but 
 under his contract with his copartner, 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 
 representing his contribution. " " The firm does not acquire by virtue of the 
 contract of partnership a joint title, so as to subject 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." Parsons (James) Principles of Part. (1st ed.), §§ 136, 137. 
 
 '' In addition to cases cited above, see Richards v. HaUen, 153 la. 66, 
 
THE NATTTRE OF A PARTNERSHIP 99 
 
 Undoubtedly, if the infant has been induced to enter the part- 
 nership by false representations of the adult member, he can 
 maintain an action against the adult for the rescission of the con- 
 tract and the recovery of his contribution, less any sum received 
 by him from the business, where the rights of firm creditors are 
 not involved.^ But in the absence of fraud, an action to recover 
 his contribution cannot be maintained by the infant ; ^ nor can he 
 recover the premium paid for admission to a firm.' 
 
 (d) Rights of the Adult against the Infant Partner. — While a 
 contract of partnership between an adult and a minor is ordinarily 
 binding upon the former, yet if it has been induced by the minor's 
 fraud, a court of equity will rescind it at the suit of the adult ; * 
 and in case of the minor's misconduct the partnership may be 
 dissolved.^ Infancy will shield the minor from liability for firm 
 debts, from his obligation to perform the duties of a partner or 
 to observe the terms of the partnership agreement, and even from 
 the costs of a suit for dissolution, but he will not be permitted to 
 use it as a weapon for his partner's undoing. 
 
 § 2. Firm Title : How Taken and Held. 
 
 The title to chattels which are acquired by a partnership in 
 ordinary business transactions vests in the firm, whatever may 
 be its name or style.® Nor will it matter that the transfer of 
 such property is evidenced by a contract under seal.' In the 
 case of real property, however, a different doctrine prevails, 
 generally to the effect that a deed of conveyance to a firm "by 
 its firm name does not vest the legal title in the firm. 
 
 1. Name of Grantee must be that of a Natural Person. 
 — This rests upon a perversion of the common law rule, that it 
 
 133 N. W. 393 (1911) ; Latrobe v. Dietrich, 114 Md. 8, 78 At. 983, 11 Col. 
 L. Rev. 468-470 (1910) ; Hill v. Bell, 111 Mo. 35, 19 S. W. 959 (1892). 
 
 1 Sparman v. Keim, 83 N. Y. 246 (1880). 
 
 2 Page V. Morse, 128 Mass. 99 (1880). 
 
 3 Adams v. Beall, 67 Md. 53, 8 At. 664, 1 Am. St. R. 379 (1887). 
 
 * Lempriere v. Lange, 12 Ch. D. 675 (1879). This was a case of lease, 
 but the principle announced warrants the statement in the text. 
 
 6 Bush V. Linthicum, 59 Md. 344 (1882) ; Burdick's Cases on Part. 154. 
 
 8 MaUey v. Atlantic Ins. Co., 51 Conn. 222 (1883). 
 
 ' Hendren v. Wing, 60 Ark. 561, 31 S. W. 149 (1895) ; Burdick's Cases 
 on Part. 161. 
 
100 THE LAW OF PARTNERSHIP 
 
 is necessary in a grant that the grantees should be named, other- 
 wise the grant can in law have no operation. ' If the name adopted 
 as a firm style does not include the name of a natural person, a 
 deed to the firm in such name, it is said, passes nothing at law; 
 it has no more legal effect than a deed in which the name of the 
 grantee is that of a dead person. If the name includes the name 
 of a natural person, for example, J. M. Whitehill & Co., a deed to 
 the firm name conveys the legal title to the natural person, J. M. 
 Whitehill ; ^ and such person can convey a perfect legal title to a 
 grantee of the firm.^ 
 
 (a) Firm may be the Grantee. — In England, and in some of 
 our States, the common law rule has not been thus perverted; 
 and a deed of land to a firm in its business name conveys the 
 legal title to the property to those who use that " style and firm." ' 
 This is quite in accord with the early common law conception of 
 a deed, as stated in Sheppard's Touchstone, at p. 236 : " If the 
 grant do not intend to describe the grantee by his own name, but 
 by some other matter, then it may be good by a certain descrip- 
 tion of the person, without either surname or name of baptism. 
 Id certum est quod cerium reddi potest." 
 
 In other States, a deed to a firm, as such, vests the full equitable 
 ownership to the land in the members as tenants in common. 
 Hence a deed from the firm must be executed by all of the partners. 
 
 1 Riddle v. Whitehill, 135 U. S. 621, 10 Sup. Ct. 924 (1889) ; Dwyer 
 Pine Land Co. v. WMteman, 92 Minn. 55, 99 N. W. 362 (1904). 
 
 2 Woodward v. McAdam, 101 Cal. 438, 35 Pae. 1016 (1894) ; Burdick's 
 Cases on Part. 163. 
 
 ' Maugham v. Sharpe, 17 C. B. n. s. 443 (1864) ; Burdick's Cases on 
 Part. 160; Hoffman v. Porter, 2 Brock. (U. 8. C. C.) 158 (1824); Jones 
 V. Neale, 2 Pat. & H. (Va.) 339 (1856); Brunson v. Morgan, 76 Ala. 
 593 (1884) ; Walker v. MiUer, 139 N. C. 448, 52 S. E. 125, 1 L. R. A. 
 N. a. 157, 111 Am. S. R. 805, 4 Ann. Cas. 601, with note (1905). In 
 Cole V. Mettee, 65 Ark. 503, 47 S. W. 407 (1898), a deed of land to 
 Mettee & Kanne, the firm name was held to vest legal title in Lewis 
 Mettee and George Kanne, because the "partnership name contained 
 the surnames of both partners"; LaFayette Land Co. v. Caswell, 59 
 Pla. 554, 52 So. 140, 138 Am. St. R. 166 (1910). In KeUy v. Bourne, 
 15 Ore. 476, 16 Pao. 40 (1887), the court held that a deed of land to 
 "The Grant's Pass Real Estate Association", passed an equitable title 
 to the partners, and left undecided the question, whether it passed the 
 legal title. 
 
THE NATURE OF A PARTNERSHI^ V '*'" JO/ 
 
 If executed by less than all, it will operate only as atoBt-TETct to 
 convey legal title.^ 
 
 In order to avoid any diflSculty, however, a deed to a firm 
 should contain the names of the various partners as well as the 
 name in which they are carrying on business,^ as a deed executed 
 to partners individually prima facie vests in them undivided 
 interests as tenants in common.^ 
 
 (6) The Uniform Partnership Act. — This statute simplifies the 
 law as to partnership conveyancing. It permits title to real 
 property to be taken and conveyed in the firm name, and regu- 
 lates the effect of conveyances, where title is taken in the names 
 of one or more or all of the partners for the partnership.* 
 
 2. Equity recognizes Ownership in the Firm. — Although 
 the legal title may be vested by a conveyance in one partner, or 
 may be vested in several members as tenants in common, equity 
 will compel the possessor of such title to hold and to transfer it 
 for the firm's benefit. It treats such possessor as a trustee for the 
 firm.^ In the language of an eminent judge : ^ "In the view of 
 equity it is immaterial in whose name the legal title of the prop- 
 erty stands, — whether in the individual name of a copartner 
 or in the joint names of all ; it is first subject to the payment of 
 the partnership debts, and is then to be distributed among the co- 
 partners according to their respective rights. The possessor of 
 the legal title in such case holds the property in trust for the pur- 
 poses of the copartnership." 
 
 (a) Purchaser from Holder of Legal Title. — In such cases, 
 
 1 Robinson v. DaugMry, 171 N. C. 200, 88 S. E. 252 (1916). 
 
 2 Lauffer v. Cavett, 87 Pa. St. 479 (1878). In Davis v. Davis, 60 Miss. 
 615 (1882), Burdiok's Cases on Part. 164 n., however, it was said that the 
 deed should run to H. L. Davis & Co., so as to show that the purchase 
 was made by partners for firm purposes and not by cotenants. 
 
 3 Grant v. Bannister, 160 Cal. 774, 118 Pae. 253, 10 Mich. L. Rev. 246 
 (1911). 
 
 * L. of Mad. 1916, Ch. 175, §§ 8, 9, 10 and 25. 
 
 5 Delmonico v. Guillaume, 2 Sand. Ch. 366 (1845) ; Burdick's Cases on 
 Part. 161 ; Frost v. Wolf, 77 Tex. 455, 14 S. W. 440, 19 Am. St. R. 761 
 (1890) ; Harris v. Bryson, 34 Tex. Civ. App. 532, 80 S. W. 105 (1904) ; 
 Bennett v. Hough, 141 Mich. 162, 104 N. W. 414 (1905), deed to one 
 partner to expedite sale ; Johnson v. Hogan, 158 Mich. 635, 123 N. W. 
 891, 37 L. R. A. n. s. 889, with extensive note (1909). 
 
 6 Field, C. J., in Dupuy v. Leavenworth, 17 Cal. 262 (1861). 
 
102 THE LAW OF PARTNERSHIP 
 
 however, the interest of the firm in the property is only an equitable 
 one. Having permitted the legal title to stand in the name of 
 one of its members, neither the firm nor its creditors can enforce 
 the equitable interest against a bona fide purchaser or mortgagee 
 for value from the legal owner.^ But a purchaser with notice, 
 although for value, will take the property subject to the firm's 
 equitable claim. ^ The separate creditors of the individual member 
 holding the legal title are not purchasers for value,' and judgments 
 obtained by them do not affect the equitable interest of the firm, 
 nor give them a preference over firm creditors.'* 
 
 (6) Firm Creditors may follow Proceeds. — In case the part- 
 ner who holds the legal title disposes of the property to a bona 
 fide purchaser, and invests the proceeds in other property, equity 
 will enable the firm or its creditors to take the property so ac- 
 quired in lieu of the partnership property.^ 
 
 3. Partners are not Tenants in Common. — The real 
 property of a firm is not held by its members as tenants in com- 
 mon.^ If it were, any partner might maintain an action for its 
 
 1 Robinson Bank v. MiUer, 153 lU. 244, 38 N. E. 1078, 46 Am. S. R. 
 883, 27 L. R. A. 449, with valuable note (1894) ; Burdick's Cases on Part. 
 165. In this case, land was bought by three men as tenants in common, 
 who formed a partnership later and used the land in the firm business. 
 Although it was milling property, and was used by them as partners in 
 the milling and grain business, the court held that these facts were not 
 necessarily notice of a partnership in the land. Accord. McNeil v. Con- 
 gregational Society, 66 Cal. 105, 110 (1884); McMillan w. Hadley, 78 Ind. 
 590, 594 (1881) ; Seeley v. Mitchell, 85 Ky. 508, 512, 4 S. W. 190 (1887) ; 
 Priest V. Chouteau, 85 Mo. 398, 55 Am. R. 373 (1884) ; TarbeU v. West, 
 86 N. Y. 280, 287 (1881) ; L. of Md. 1916, Ch. 175, § 10, (3). 
 
 2 Matlaok v. James, 13 N. J. Eq. 126 (1860) ; Hartnett v. Stillwell, 
 121 Ga. 386, 49 S. E. 276, 104 Am. St. R. 151 (1904). 
 
 ' Goldthwaite v. Janney, 102 Ala. 431, 15 So. 560 (1894) ; Burdick's 
 Cases on Part. 176. 
 
 * Page V. Thomas, 43 Oh. St. 38, 1 N. E. 79, 54 Am. B. 788 (1885) ; 
 Rockefellar v. Bellinger, 22 Mont. 418, 56 Pac. 822, 74 Am. St. R. 613 (1899). 
 A different doctrine obtained in Pennsylvania, before the Uniform Partner- 
 ship Act, where it was held that "no partner has the right to contradict 
 the legal title, after a lien has attached." Parsons (James), Principles of 
 Partnership (1st ed.), § 111 and cases cited; also Cundey v. Hall, 208 
 Pa. 335, 57 At. 761, 101 Am. S. R. 938 (1904). 
 
 5 Chalfant v. Grant, 3 Lea (Tenn.) 118 (1879). 
 
 « In Hartnett v. Stillwell, 121 Ga. 386, 49 S. E. 276, 104 Am. S. R. 
 
THE NATURE OF A PARTNERSHIP 103 
 
 partition upon the dissolution of the firm. But it is well settled 
 that he has no such right, so long at least as the partnership af- 
 fairs remain unadjusted. In England the right is absolutely de- 
 nied. Upon dissolution, the partnership assets must be sold,* 
 in the absence of an agreement of the partners to the contrary, 
 although no firm debts are owing to outsiders; it is necessary 
 "for the purpose of settling the rights between the partners." ^ ^ 
 
 In this country, an action for partition cannot be maintained 
 so long as the property may be neieded for the payment of firm 
 debts.^ While these debts remain unsatisfied each partner has 
 a right to insist that firm assets shall be applied to their liquida- 
 tion. Out of this equity, it has been said, "has emerged the 
 rule that the partition of the real property of a firm will not be 
 decreed, so long as debts of the partnership remain unliquidated. 
 . . . The only method by which a partner, under such conditions, 
 can compel a division of the firm property is by a bill to administer 
 and settle the partnership affairs." * 
 
 (a) When Partition allowed in the United States. — In the case 
 last cited, the evidence disclosed that the only outstanding claim 
 against the firm was in litigation in the courts of New York; 
 
 151 (1904), partners are declared to hold firm realty as tenants in com- 
 mon, but, as we shall see a little later, this is an unsound doctrine. Of 
 course, persons who are partners may take and hold real estate as tenants 
 in common, and not by a partnership title. Levine v. Goldsmith, 83 App. 
 Div. 399, 82 N. Y. Supp. 299, 13 N. Y. Annotated Cases, 123, with ex- 
 tended note (1903) ; Pontius v. Walls, 197 Pa. 223, 47 At. 203 (1900). 
 
 'Partnership Act, 1890, § 39; Lindley on Part. (7th ed.) 586. In 
 Moran v. Mclnemey, 129 Cal. 29, 61 Pa«. 575 (1900), and State ex rel. 
 Bogey V. Neal, 29 Wash. 391, 69 Pac. 1103 (1902), the same rule was ob- 
 served. 
 
 2 Wild V. Milne, 26 Beav. 504 (1859) ; Burdick's Cases on Part. 166. 
 This is the rule of the Uniform Partnership Act, L. of Md. 1916, Ch. 175, 
 § 39. In Wild v. Milne, the Master of Rolls referred to the singular 
 inconveniences which would follow a decree for partition: "Would the 
 steam engine be included in the division, and, if so, how could it be pos- 
 sible to make a partition of the remainder? Are all the parties to have 
 the use of the shaft, or a right of descending by means of the machinery? 
 The court is compelled, by the exigency and circumstances of these cases, 
 
 3 Pennybaeker v. Leary, 65 Iowa 220, 223, 21 N. W. 575 (1884). 
 
 ' Mohneaux v. Raynolds, 54 N. J. Eq. 559, 35 At. 536 (1896) ; Bur- 
 dick's Cases on Part. 169. 
 
104 THE LAW OF PARTNEKSHIP 
 
 that the firm owned real property in that State which was more 
 than sufficient for the satisfaction of the claim; while the real 
 estate sought to be partitioned was located in New Jersey, which 
 was the State of the firm's domicile. The court decided that in- 
 asmuch as the ground for refusing partition is that partners may 
 be protected from future calls to pay firm debts, it having been 
 shown in this case that the property involved in the application 
 for partition would not be needed to meet such obligations, all 
 objection to such distribution disappeared. 
 
 (6) Principle underlying the English View. — This diEFers radically 
 from that announced in the case last referred to, and has been 
 stated as follows : ^ "On the dissolution of the partnership, all the 
 property belonging to the partnership shall be sold, and the pro- 
 ceeds of the sale, after discharging all the partnership debts and 
 liabilities, shall be divided among the partners, according to their 
 respective shares in the capital. That is the general rule ; it re- 
 quires no special stipulation; it is inherent in the very contract 
 of partnership. . . . The mere contract of partnership, without 
 any express stipulation, involves in it an implied contract, quite 
 as stringent as if it were expressed, that at the dissolution of the 
 partnership, all the property then belonging to the partnership, 
 whether it be ordinary stock in trade, or a leasehold interest, or 
 a fee simple estate in land, shall be sold, and the net proceeds, 
 after satisfying all the partnership debts and liabilities, be divided 
 among the partners; and that each partner and the representa- 
 tives of any deceased partner, have a right to insist on this being 
 done." 
 
 (c) Principle criticised. — The existence of this implied agree- 
 ment has been denied in this country. "If the inference of such 
 an agreement," a learned judge has said, "is to be made as part 
 of the transaction of purchasing real estate with partnership funds 
 for partnership use, it is equally inconsistent with the failure to 
 express such a term in the deed of conveyance. The inconsistency 
 is even greater than that; for by the express terms of the deed 
 and by the well known operation of law, the estate is limited to 
 the heirs of the several copartners, whose estate is at law the 
 ordinary one of tenants in common." ^ 
 
 1 Darby v. Darby, 3 Drewry 495, 25 L. J. Ch. 371 (1856). 
 
 2 Shearer v. Shearer, 98 Mass. 107 (1867). 
 
THE NATURE OF A PARTNERSHIP 105 
 
 (d) A Mischievous Heresy. — This statement, that at law 
 copartners are tenants in common, although constantly recur- 
 ring in judicial opinions and in text-books, is unsound and mis- 
 chievous. That it is the source of needless confusion in partner- 
 ship law will be clearly seen, when we examine the rights and 
 remedies of creditors. Its inaccuracy will be fully disclosed in 
 the next section. The New York Court of Appeals has denied 
 the accuracy of the statement in explicit terms.^ In the case 
 referred to, William B. and Simeon Fitch, upon the dissolution 
 of their partnership, agreed that they should continue to hold as 
 tenants in common a certain debt due the firm. The debt was 
 secured by mortgages and other liens. The former partners be- 
 gan a foreclosure of these mortgages. Upon the death of Simeon, 
 William, as survivor, continued the foreclosure suit, and during 
 its progress paid out considerable sums of money. Simeon's 
 representatives denied their liability to contribute towards these 
 disbursements, on the ground that their testator was tenant 
 in common with William, and that the latter's expenditures had 
 not been requested by their testator nor by them. But the court 
 declared that the intention of the parties was not to change the 
 nature of their title, — " they described such holding as a tenancy 
 in common, when in law it was a holding as partners." As their 
 title was that of partners, and not of tenants in common, the 
 court decided that William, as surviving partner, had the legal 
 right to incur all proper and reasonable expenses in the foreclosure 
 action, and that the estate of Simeon must contribute towards 
 their reimbursement. 
 
 The unsoundness of the doctrine that the legal estate of part- 
 ners is that of tenants in common is also afiirmed by the Supreme 
 Court of Wisconsin.^ The title to firm property had been taken 
 
 1 Preston v. Fitch, 137 N. Y. 41, 33 N. E. 77 (1893). In Murrell v. 
 Mandlebaum, 85 Tex. 22, 19 S. W. 880, 34 Am. S. R. 777 (1892), the 
 court expressly held that partnership title is radically different from that 
 of tenancy in common. The same- view is enforced in Johnson v. Shirley, 
 152 Ind. 453, 53 N. E. 459 (1899), and is legislatively declared in the 
 Uniform Partnership Act. See 24 Yale L. J. 617, 624 ; 29 Harv. L. Rev. 
 171 ; L. of Md. 1916, Ch. 175, § 25 (1), "A partner is co-owner with his part- 
 ners of specific partnership property holding as a tenant in partnership." 
 
 2 Kruschke v. Stefan, 83 Wis. 373, 53 N. W. 679 (1892) ; Burdick's 
 Cases on Part. 167. 
 
106 THE LAW OF PAKTNEKSHIP 
 
 in the name of one partner, with the assent of his copartner. 
 The latter having brought an action to have the legal title vested 
 in both partners as tenants in common, his complaint was dis- 
 missed, the court declaring that he "had no right to call for a 
 conveyance of his interest as a tenant in common of the lots until 
 the trust fastened upon them for partnership purposes had been 
 fully satisfied. . . . The remedy of the plaintiff, if any, was only 
 by action to dissolve the copartnership, and for an accounting 
 and proper application of the assets." 
 
 In an Indiana case ^ it appeared that H deeded land, which he 
 owned, to a firm composed of himself and three others, and he 
 kept possession of the deed. Some years afterwards, he made 
 an assignment of all of his individual property for the benefit of 
 his creditors. His assignee sought to subject the land to the 
 claims of H's individual creditors, on the ground that the deed 
 was invalid, first, because H was both grantor and grantee, and 
 second, because there was no delivery of the deed, as H had al- 
 ways retained possession of it. The court held that as the land 
 was purchased by the firm, the delivery of the deed to H, as a part- 
 ner, was a delivery to the firm. It also declared : " It is not true 
 that H was granting land to himself. He was granting it to a 
 firm of which he was a member. Although individuals compose 
 partnerships, yet the partnership is a legal entity, distinct and 
 different from the persons who constitute its component parts." 
 
 4. Firm Real Estate converted into Personalty. — The 
 modern English rule on this topic, as authoritatively stated in 
 the Partnership Act of 1890, is as follows: "Where land or any 
 heritable interest therein has become partnership property, it 
 shall, unless the contrary intention appears, be treated as between 
 the partners (including the representatives of a deceased partner), 
 and also as between the heirs of a deceased partner and his ex- 
 ecutors or administrators, as personal or movable and not real or 
 heritable estate." "Provided that the legal estate or interest in 
 
 ' Henry v. Anderson, 77 Ind. 361, 363 (1881). In Morrison v. Austin 
 State Bank, 213 111. 472, 72 N. E. 1109, 104 Am. S. R. 225 (1905), it is 
 said : "While partnership property has many characteristics of estates in 
 common and in joint tenancy, yet the interest of partners in the firm 
 property is neither that of joint tenants, nor that of tenants in common 
 but is sui generis." The same view is expressed in Jones v. Way, 78 Kan. 
 535, 537, 97 Pac. 437, 18 L. R. A. n. s. 1180 (1908). 
 
THE NATURE OF A PARTNERSHIP 107 
 
 any land, or in Scotland the title to or interest in any heritable 
 estate, which belongs to the partnership, shall devolve according 
 to the nature and tenure thereof, and the general rules of law thereto 
 applicable, but in trust, so far as necessary, for the persons bene- 
 ficially interested in the land." ^ 
 
 This rule followed logically from the principle that a part- 
 ner's share "is nothing more than his proportion of the partner- 
 ship assets after they had been turned into money and applied in 
 liquidation of the partnership debts, including the claims of part- 
 ners." ^ The suggestion* is purely fanciful that it grew "out of 
 the peculiar law of inheritance there", in the attempt "to remedy 
 the hardship of the rule which excludes all but the eldest child 
 from the inheritance, and from the other rule which exempts 
 real estate in the hands of the heir from all but the specialty debts 
 of the ancestor." * 
 
 (a) The American Rule. — A learned English author has ex- 
 pressed the opinion that the rule of out and out conversion, now 
 embodied in the statute, was well settled by judicial decisions, 
 "and may safely be accepted in other common law jurisdictions." ' 
 Such is not the view, however, of the American courts. 
 
 In the case last cited it was said : " The clear current of the 
 American decisions supports the rule that, in the absence of 
 any agreement, express or implied, between the partners to the 
 contrary, partnership real estate retains its character as realty 
 with all the incidents of that species of property between the 
 partners themselves, and also between a surviving partner and 
 the real and personal representatives of a deceased partner, ex- 
 cept that J each share is impressed with a trust implied by law 
 in favor of the other partner, that, so far as is necessary, it shall 
 
 ' Partnership Act, §§22 and 20 (2). The Uniform Partnership Act, 
 § 26, declares: "A partner's interest in the partnership is his share of 
 the profits and surplus, and the same is personal property." French v. 
 Vanatta, 83 Ark. 306, 104 S. W. 141 (1907), heirs and widow not necessary- 
 parties to proceedings by surviving partner to sell firm real estate. 
 
 2 Lindley on Part. (7th ed.) 381. 
 
 ' Repeated in Darrow v. CalMns, 154 N. Y. 503, 49 N. E. 61, 48 L. R. A. - 
 299, 61 Am. St. R. 637 (1897). 
 
 * The history of this suggestion is traced in " Some Judicial Myths ", by 
 Francis M. Burdiek, 22 Harv. L. R. 393. 
 
 6 Pollock's Digest of Part. (5th ed.) 65, n. 1. 
 
108 THE LAW OF PARTNERSHIP 
 
 be first applied to the adjustment of partnership obligations and 
 the payment of any balance found to be due from the one partner 
 to the other on winding up the partnership affairs. To the ex-, 
 tent necessary for these purposes, the character of the property' 
 is, in equity, deemed to be changed into personalty. On the death 
 of either partner, where the title is vested in both, the share of 
 the land standing in the name of the deceased partner descends 
 as real estate to his heirs, subject to the equity of the surviving 
 partner to have it appropriated to accomplish the trust to which 
 it was primarily subjected. The working out of the mutual rights 
 which grew out of the partnership relation does not seem to re- 
 quire that the character of the property should be changed until 
 the occasion arises for a conversion, and then only to the extent / 
 required. The American rule commends itself for its simplicity. 
 It makes the legal title subservient in equity to the original trust. 
 It disturbs it no further than is necessary for this purpose. The 
 portion of the land not required for partnership equities retains 
 its character as realty and it leaves the laws of inheritance and 
 descent to their ordinary operation." ^ 
 
 Even under this rule it is held that a deceased partner's interest 
 in firm realty is not taxable under inheritance tax laws, as tangible, 
 corporeal property. It is only an equitable interest.^ 
 
 (b) Conversion of Personalty into Realty. — Applying the Ameri- 
 can doctrine as above set forth, the Supreme Court of Arkansas 
 has held that when the surviving partner converts firm personalty 
 into realty, in the ordinary course of settling firm affairs and in 
 good faith ; and such realty is not needed to pay firm debts or to 
 adjust the equities between the partners, the deceased partner's 
 interest in this realty "must go to the devisees under his will as 
 realty." ^ 
 
 • Lenow v. Fones, 48 Ark. 557, 563, 4 S. W. 56 (1886) ; Haeberley's 
 Appeal, Welles' Account, 191 Pa. 239, 43 At. 207 (1899) ; Weld v. Johnsoa 
 Mfg. Co., 86 Wis. 549, 57 N. W. 374 (1893). But see Ihmsen v. Huston, 
 247 Pa. 402, 93 At. 601 (1915). 
 
 ' Chrystie on Inheritance Taxation, and authorities digested, 119, 752, 
 910. 
 
 ' Coolidge V. Burke, 69 Ark. 237, 62 S. W. 583 (1901). If, however, 
 partnership realty is converted into personalty by the surviving partner 
 in winding up partnership affairs, the deceased partner's share in any 
 surplus remains personalty, and goes to the personal representative and 
 
THE NATURE OF A PARTNERSHIP 109 
 
 5. Rights of Firm Creditors to Firm Realty. — Both in 
 England and in this country the creditors of the firm can compel 
 the application of partnership real estate to the payment of their 
 claims. In England, upon the death of one partner, the legal 
 estate in real property jointly owned by the partners devolves on 
 "the surviving partners, who can sell or mortgage it in winding up 
 the affairs of the firm,^ and convey a perfect title thereto. Such is 
 the rule under the Uniform Partnership Act.^ 
 
 In this country, the surviving partners, in such cases, can 
 -dispose of the property; but under the doctrine stated in Bar- 
 row V. Calkins, they cannot convey the legal title. They can, 
 however, transfer full equitable ownership, and confer upon the 
 purchaser the right to the aid of a court of chancery to compel 
 the heir or devisee of the deceased partner to convey his legal 
 title.3 
 
 These rights of the firm creditors are not affected by the fact 
 that the firm realty stands in the name of a partner to whom the 
 firm is indebted.* 
 
 6. Creditor Partner's Rights against Firm Realty. — 
 Not only is the real estate of a firm treated as personalty, for 
 the purpose of paying outside creditors of the firm, but it is also 
 deemed converted into personalty for the purpose of adjusting the 
 equities of the partners. If one partner, upon the settlement of 
 the firm's affairs, is a creditor to the extent of the value of all the 
 real property of the firm, he will be entitled to a decree for its 
 sale and the application of the proceeds to the payment of his 
 ■claim, to the exclusion of the heirs and separate creditors of his 
 ■copartners.^ 
 
 7. Dower in Firm Realty. — Under the rule of out and out 
 conversion, the right of dower in partnership real estate does 
 
 not to the heirs. French v. Vanatta, 83 Ark. 306, 104 S. W. 141, 8 Col. 
 L. Rev. 208-211 (1907). 
 
 1 Re Clough, 31 Ch. D. 324, 55 L. J. Ch. 77 (1885). 
 
 2 The Uniform Partnership Act, § 25, (2), (d). 
 
 3 Delmonico v. Guillaume, 2 Sand. Ch. 366 (1845) ; Burdiek's Cases on 
 Part. 161 ; Shanks v. Klein, 104 U. S. 18 (1881). 
 
 « Goldthwaite v. Janney, 102 Ala. 431, 15 So. 560, 28 L. R. A. 161, 48 
 Am. S. R. 56, and extended note (1894) ; Burdiek's Cases on Part. 176. 
 
 B Moore v. Wood, 171 Pa. St. 365, 33 At. 63 (1895). See extended note 
 in 27 L. R. A. 449; also Jones v. Beekman (N. J. Eq.), 47 At. 71 (1900). 
 
110 THE LAW OF PARTNERSHIP 
 
 not exist.^ Under the American rule, however, this right can- 
 not be disposed of quite so summarily. It undoubtedly attaches 
 with all its common law incidents to any real estate of the firm, 
 which remains after the payment of partnership debts and the 
 adjustment of the partners' equities.^ Whether it attaches as 
 soon as land is acquired by the firm, subject to the claims of firm 
 creditors, or whether it does not come into existence until "the 
 partnership is terminated and wound up by judgment or agree- 
 ment, and it is determined that the land no longer forms part of 
 the partnership stock, and is not required for its purposes ",' is 
 a question upon which our courts are not agreed. 
 
 According to the decisions in some States, it probably attaches 
 at once.^ Hence the wives of partners ought to join their hus- 
 bands in conveyances of firm realty, and should be made parties 
 to a bill for an account or for the sale of such realty to pay debts,* 
 in order to give the purchaser a perfect title. According to other 
 American decisions the wife has no inchoate right of dower during 
 the existence of the partnership.^ Only so much of firm realty 
 "becomes the individual real estate of the partner as remains 
 in specie, unconverted, after all the purposes of the partnership 
 have been entirely fulfilled ; and it is only to such of it that any 
 inchoate interest of the wife attaches." ^ 
 
 ' The Uniform Partnership Act, § 25, (2), (e) : "A partner's right in 
 specific partnership property is not subject to dower, curtesy, or allow- 
 ances to widows, heirs, or next of kin." 
 
 2 Bennett v. Bennett, 137 Ky. 17, 121 S. W. 495, 22 Ann. Cas. 407 (1909), 
 with full note on " Dower Rights in Partnership Lands." 
 
 3 Woodward-Holmes Co. v. Nudd, 58 Minn. 236, 59 N. W. 1010, 49 
 Am. S. R. 503, 27 L. R. A. 340, and extended note (1894) ; Burdick's Cases 
 on Part. 179. 
 
 " Markham v. Merrett, 7 How. (8 Miss.) 437 (1859) ; Bowman v. Bailey, 
 20 S. C. 553 (1883). Cf. Darrow v. Calkins, 154 N. Y. 503, 515, 49 N. B. 
 61, 48 L. R. A. 299, 61 Am. St. R. 637 (1897) ; Dyer v. Clark, 5 Met. 562, 
 39 Am. Dec. 697 (1843) ; Lenow v. Fones, 48 Ark. 557, 4 S. W. 56 (1886). 
 
 5 Pugh V. Currie, 5 Ala. 446 (1843) ; Brewer v. Browne, 68 Ala. 210 
 (1880) ; Collins v. Warren, 29 Mo. 236 (1859). 
 
 » Dawson v. Parsons, 31 N. Y. Supp. 78, 10 Misc. 428 (1894) ; Haupt- 
 mann v. Hauptmann, 91 App. Div. 197, 86 N. Y. Supp. 427 (1904). See 
 note to Levine v. Goldsmith, 13 N. Y. Annotated Cases, 123, 143 (1903). 
 
 ' Woodward-Holmes Co. v. Nudd, 58 Minn. 236, 59 N. W. 1010, 27 
 I;. R. A. 340, 49 Am. S. R. 503 (1894) ; McPherson v. Swift, 22 S. D. 165, 
 116 N. W. 76, 133 Am. St. R. 907 (1908). 
 
THE NATUBE OF A PARTNEESHIP 111 
 
 (a) Reasons for Limiting Right of Dower. — This view is based 
 on the nature and necessities of a partnership. In the last cited 
 case it was said that, if the inchoate right of dower attached to 
 firm real estate upon its acquisition, "the partners could never, 
 even during the active life of the copartnership, convey perfect 
 title to partnership land without their wives joining, except to the 
 extent actually necessary to pay existing debts of the firm. This 
 would practically involve, in every case where one of the wives 
 refused to join in a conveyance, the necessity of a suit, to which 
 she is made a party, in order to determine whether the sale was 
 necessary to pay debts. Any such rule would hamper the business 
 of the firm to an extent that might practically defeat the purposes 
 of the partnership." 
 
 The court, therefore, decided that the purchaser of real estate 
 from a firm obtained a perfect title thereto, although the wife 
 of a partner had not joined in the conveyance, nor had been made 
 a party to the suit for the dissolution of the firm and the sale of 
 its property, and although the proceeds of the real estate were in 
 excess of the firm's debts. 
 
 8. Out and out Conversion by Agreement of Partners. 
 — Even in this country, firm realty may be converted into per- 
 sonalty, for all purposes, by the agreement of the partners.^ This 
 agreement is embodied at times in the partnership articles. A 
 stipulation, "that all the real estate whatever belonging to the 
 said firm shall be, and is hereby,, considered as part of the joint 
 stock and funds of said firm, and as possessing all the incidents 
 and liabilities of partnership funds and personal property, and 
 is hereby by the parties fully impressed with such incidents and 
 liabilities", works a total conversion of the realty into personalty, 
 and enables the surviving partner to convey a perfect legal title 
 thereto.^ 
 
 A deed from one partner of all his right, title, and interest in 
 firm real estate to his copartner, to be held by the grantee as 
 partnership property, with power to manage, sell, and distribute 
 the proceeds as firm stock, works an out and out conversion into 
 personal property, at least as between the partners and their 
 
 J Sherrod v. Mayo, 156 N. C. 144, 72 S. E. 216, 25 Ann. Cas. 1205, 
 with exhaustive note (1911). 
 
 2 Davis V. Smith, 82 Ala. 198 (1887) ; Burdick's Cases on Part. 182. 
 
112 THE LAW OF PARTNEESHIP 
 
 representatives.^ Such a deed does not create a trust in lands. 
 "It recognizes a pre-existing trust imposed upon the lands, im- 
 plied by law, and arising out of the partnership relation, and 
 that the trust is to continue notwithstanding the conveyance of 
 the legal title." 
 
 In such cases, the intention of the parties to work an out and 
 out conversion is clearly expressed. But effect ought to be given 
 to the intention of the partners, in whatever manner it may be 
 disclosed. When real estate is purchased with firm funds and 
 is treated by the partners as a part of the firm assets, an agree- 
 ment for conversion may well be inferred.^ 
 
 The Uniform Partnership Act, as noted above, treats firm 
 realty as personalty for all purposes. 
 
 9. Exempt Property. — Under statutes which exempt cer- 
 tain property of debtors from legal process, the firm, as such, 
 has no rights. They are intended for the benefit of natural per- 
 sons only.^ Although these statutes are humane in their object, 
 and are entitled to a liberal construction, most courts have felt 
 constrained to hold that they do not secure to the individual 
 partner any exemption out of firm property. They provide that 
 certain articles owned by him, such as "tools and implements", 
 " materials and stock in trade ", " a team ", " household and kitchen 
 furniture", and the like, necessary for the prosecution of his 
 business or the support of his family, or property owned by him 
 not exceeding a certain sum, or a homestead, shall not be taken 
 from him by his creditors under attachment, execution, or in 
 bankruptcy proceedings. 
 
 In all cases, however, it is a portion of his property that is 
 exempted. "But property belonging to the firm cannot be said 
 to belong to either partner as his separate property. He has no 
 
 ' Darrow v. Calkins, 154 N. Y. 503, 49 N. E. 61, 48 L. R. A. 299, 61 
 Am. S. R. 637 (1897). 
 
 ' Denio, J., in Collumb v. Read, 24 N. Y. 505 (1862), approved in Dar- 
 row V. Calkins, supra. The text is cited and applied in Buckley v. Doig, 
 188 N. Y. 238, 248, 80 N. B. 913, 917, 11 Ann. Cas. 263, 266, with note 
 (1907) ; Patrick v. Patrick, 71 N. J. Eq. 347, 63 At. 848 (1906). 
 
 3 Cf. Betts V. Letcher, 1 S. D. 182, 201, 46 N. W. 193 (1890), where it 
 is said: "It is true, the exemption belongs to the firm . . .; yet each 
 partner is entitled to his several interest in that exemption, according to 
 the number and interest of the partners." 
 
THE NATURE OF A PARTNERSHIP 113 
 
 exclusive interest in it." ^ "In case of a partnership, neither 
 member has title to firm property, but the title is in the firm." ^ 
 It is clear, therefore, upon principle, that one who transfers to a 
 firm property which would be exempt from process if he retained 
 the ownership of it, loses the benefit of the statutory exemption, 
 as he would lose it if he transferred it to a third person. Such is 
 the generally accepted view.' 
 
 (a) Anomalous Decisions. — A few courts maintain a different 
 doctrine. They have treated the partners as tenants in common 
 of the firm property, and have accorded to them the statutory 
 privilege which would undoubtedly be theirs, if their titles to the 
 partnership property were several.* Occasionally a court has ac- 
 corded the statutory exemption to a partner against his separate 
 creditor, while denying it to him against firm creditors, on the 
 ground that "partnership debts have a superior claim to partner- 
 ship assets." ^ It is said, that, if a partner has an interest in 
 firm property which could be levied upon under an execution 
 against him alone, he has such an interest as should entitle him to 
 his exemptions out of it ; " that it is no concern of the oflBcer that 
 the entire title to the property is not vested in the judgment debtor, 
 and that the title of the copartner and the superior claims of firm 
 creditors will not be affected by according the exemption and 
 setting aside the statutory allowance." ^ 
 
 (6) The Uniform Partnership Act leaves this topic to the statu- 
 tory regulations and judicial decisions of each jurisdiction, by pro- 
 
 1 Pond V. Kimball, 101 Mass. 105 (1869) ; Burdiek's Cases on Part. 186. 
 
 2 Green, Huffaker, & Co. v. Taylor & Son, 98 Ky. 330, 32 S. W. 945, 
 56 Am. S. R. 375 (1895) ; Burdiek's Cases on Part. 113. 
 
 3 Love V. Blair, 72 Ind. 281, and eases cited at p. 284 (1880) ; Russell 
 V. Bruce, 159 Ind. 553, 64 N. E. 602, 65 N. E. 585 (1902). 
 
 * Skinner v. Shannon, 44 Mich. 86, 6 N. W. 108 (1880). In some of 
 the cases, which are generally cited as in accord with the last-mentioned 
 decision, the true relation of the so-caUed partners appears to have been 
 that of common owners of chattels, and not of partners. Radeliff v. 
 Wood, 25 Barb. (N. Y.) 52 (1857), and Stewart v. Brown, 37 N. Y. 350 
 (1867), are of this class. 
 
 6 Dennis v. Kass & Co., 13 Wash. 137, 39 Pac. 656 (1895) ; Southern 
 Jellieo Coal Co. v. Smith, 105 Ky. 769, 49 S. W. 807 (1899). 
 
 * The power of partners to secure the right to exemptions by con- 
 verting partnership assets into their separate property depends upon 
 the principles which are discussed in the next section. 
 
114 THE LAW OF PAETNEKSHIP 
 
 viding that " nothing in this act shall be held to deprive a partner 
 of his right, if any, under the exemption laws, as regards his in- 
 terest in the partnership." ^ 
 
 § 3. Firm Title devested by Act of the Firm. 
 
 That a firm may dispose of its property in the ordinary course 
 of trade is unquestioned. To make such transfers is one of the 
 purposes for which it is organized. Can it dispose of its property 
 to one or more of its members, thereby converting joint ownership 
 into separate ownership? The question received an affirmative 
 answer in the leading case of Bolton v. Puller.^ 
 
 A firm of four persons carried on a banking business in Liver- 
 pool. Two of them carried on a separate banking house in Lon- 
 don. Upon the bankruptcy of both partnerships, it was held 
 that bills of exchange deposited with the Liverpool bank, and 
 by it discounted with the London bank, were the property of the 
 latter; and that the acceptor could not recover them, although 
 the arrangement under which he had deposited the bills with the 
 Liverpool bank was such as would have entitled him to their 
 surrender had they remained its property. Partners, it was de- 
 clared, "may by their acts convert the joint property of the general 
 partnership into the separate property of an individual partner, 
 or into the joint property of two or more partners, or e conmrso. 
 And their transactions in this respect will, generally speaking, 
 bind third persons, and third persons may take advantage of the 
 same, in the same manner as if the partnership were transacting 
 business with strangers." 
 
 1. Firm Property may become the Separate Property of 
 A Continuing Partner. — The dissolution of a firm is often ac- 
 companied by an agreement for the purchase of the business by 
 one or more of the partners. Upon the execution of such a con- 
 tract in good faith, the firm property becomes the separate property 
 of the purchasing member or members.^ "If," said Lord Eldon, 
 
 1 L. of Md. 1916, Ch. 175, § 28, (3). 
 
 2 1 Bos. & P. 539 (1796) ; Burdick's Cases on Part. 187. 
 
 ^Ex parte Ruffln, 6 Ves. 119 (1801); Burdick's Cases on Part. 192; 
 Rapple V. Button, 226 Fed. 430 (1915). In the later case, the continuing 
 partner assumed the firm debts, and it was held that the retiring partner 
 had no right to have the former partnership property applied to partner- 
 ship debts. 
 
THE NATURE OF A PARTNERSHIP 115 
 
 in the case last cited, "the court should say that what has ever 
 been joint or separate property shall always remain so, the con- 
 sequence would be that no partnership could ever arrange their 
 affairs." 
 
 Without regard to this " argument of inconvenience ", which 
 Lord Eldon thought entitled to great consideration, it seems 
 perfectly clear that all of the partners can, by their joint act, 
 transfer the firm title to any partner, subject to the right of firm 
 creditors to impeach the conveyance for fraud. "They have 
 power to dispose of the corpus of the joint property; and the 
 exercise of that power, when free from fraud, devests the title of 
 the firm as effectually as if they had united in a sale to a stranger." ^ 
 The sale of one partner's interest to his copartner, in a firm of two, 
 transforms firm ownership into separate ownership ; but the sale 
 of one partner's interest to another partner, in a firm of three or 
 more, does not affect the firm title.^ 
 
 (a) Executory Agreement for Conversion. — Although the part- 
 ners may have bound themselves by contract to convey the firm 
 assets to one or more of their number, such contract will not work 
 the conversion of firm property into separate property, as against 
 firm creditors, so long as it remains executory. Accordingly, if 
 it is agreed that one partner shall receive a certain sum for his 
 interest in the firm, and bills of exchange for that sum payable 
 to the order of the firm are handed to him unindorsed, they will 
 be treated as firm property, and available to firm creditors, 
 in case the firm becomes insolvent before indorsement.* Even 
 though the partners have agreed upon a division of firm property, 
 and have taken possession of their allotted portions, if the de- 
 livery was upon condition that security should be given by one of 
 the purchasers, the conversion will be deemed not consummated 
 until such condition is performed.^ 
 
 It often happens, however, that the purchaser promises to do 
 
 1 Menagh v. WMtwell, 52 N. Y. 146, 160 (1873) ; Burdick's Cases on 
 Part. 222. 
 
 ^ Ex parte Bumaby (1746), Cooke's Bankruptcy Law, 244; Menagh 
 V. Whitwell, supra. 
 
 3 In re Kemptner, L. R. 8 Eq. 286 (1869) ; Burdick's Cases on Part. 
 196. 
 
 * Fitzgerald v. Christl, 20 N. J. Eq. 90 (1869). 
 
116 THE LAW OF PARTNERSHIP 
 
 acts which are not conditions of the passing of the firm title to 
 him. In such cases, the mere fact that he has not performed his 
 promise will not arrest the conversion of firm property into sepa- 
 rate property.^ "The test," in such cases, in the language of an 
 eminent authority,^ "is to see whether there was at the time of 
 the bankruptcy any act still to be done before the ownership could 
 be considered by the partners as changed; if in any case there 
 was such an act to be done, the trustee will not be bound by the 
 agreement, whilst if there was not, he will." 
 
 It is well to bear in mind also the following comments of a 
 learned English judge on this class of cases : " But the struggle 
 of the courts has always been to find some loophole for the benefit 
 of creditors ; and if the transfer were not itself absolute, or if it 
 wanted any of the formalities required by law or equity to render 
 it valid, the courts have readily laid hold of any of the circumstances 
 to bring back the property into a just course of distribution among 
 the general creditors, who would have been entitled to a lien on 
 it but for the attempted transfer." ^ 
 
 (6) The Uniform Partnership Act secures a loophole for firm 
 creditors by the following provision: "When all but one part- 
 ner retire and assign (or the representative of a deceased partner 
 assigns) their rights in partnership property to the remaining 
 partner, who continues the business without liquidation of part- 
 nership affairs, either alone or with others, creditors of the dis- 
 solved partnership are also creditors of the person or partnership 
 so continuing the business." * 
 
 2. Conversion must be in Good Faith. — While the title 
 to firm property may be transferred from the firm to its members, 
 the creditors of the firm have the right to impeach the transfer 
 for bad faith. In case the firm of A, B, & C, conveys its property 
 to a partnership composed of A & B, in satisfaction of a debt 
 claimed to be due from the former firm to the latter, the trans- 
 action "should be carefully scrutinized by the courts, . . . and 
 set aside, . . . unless afiirmatively it is clearly shown that the 
 
 1 Mafflyn v. Hathaway, 106 Mass. 414 (1871). 
 
 2 Lindley on Part. (7th ed.) 769. 
 
 = Sir G. Rose in Ex parte Clarkson, In re Fear, 4 D. & Ch. 56 
 (1834). 
 
 ' L. of Md. 1916, Ch. 175, § 41, (2). 
 
THE NATURE OF A PARTNERSHIP 117 
 
 transaction was free from fraud." ^ A & B, it was said, in the 
 last-mentioned case, stood in the relation of trustees towards the 
 firm of A, B, & C, in appropriating the property of the latter firm 
 to the payment of their claim, and had the burden of showing 
 afiirmatively the bma fides of their claim against their cestui que 
 trv^t} 
 
 (a) What is meant by "Good FaitJi.'^ — WbUe the authorities 
 are agreed that "good faith" is essential to the conversion of 
 firm property into separate property, they use the term in various 
 significations. 
 
 Some courts limit it to the state of mind of the purchaser. They 
 appear to confine the inquiry to the domain of morals and to 
 apply the proverb, "For as he thinketh in his heart so is he." 
 Accordingly, they sustain a transfer of firm property to an honest 
 creditor of one partner, if made with the assent of all of the firm, 
 even though the transfer left the firm and its members insolvent, 
 and was made by them with fraudulent intent against the part- 
 nership creditors.^ 
 
 Others extend the term to the state of mind of the transferor 
 and the transferee. If the partners, in case of a sale of the interest 
 of one to his copartners, or if the partners and the creditor of one 
 partner, in case of a transfer of firm property in satisfaction of 
 the individual creditor's claim, have honest intentions, their trans- 
 fer of firm property is held to be unassailable. Actual fraud, moral 
 obliquity, must characterize the transaction, or it cannot be im- 
 peached and set aside by the firm creditors. The transfer is not 
 necessarily fraudulent towards such creditors, it is said, because 
 the firm is insolvent and receives no consideration for the property 
 transferred.^ 
 
 1 Bonwit V. Heyman, 43 Neb. 537, 61 N. W. 716 (1895) ; Burdiek's 
 Cases on Part. 192, note. In this case the transfer was made without 
 C's assent, and to a creditor of the firm of A & B to whom they had 
 assigned their claim against A, B, & C; but the ground of decision is 
 fairly stated in the text. 
 
 2 Myers v. Tyson, 2 Kan. App. 464, 43 Pae. 91 (1896). "There must 
 be participation in the fraud on the part of the grantee, or, at least, knowl- 
 edge of the intended fraud of the grantor must be shown, or the sale will 
 be upheld ", following Woodmansie v. Holcomb, 34 Kan. 35, 7 Pac. 603 
 (1883). 
 
 ' Purple V. Farrington, 119 Ind. 164, 25 N. E. 904, 4. L. R. A. 535 
 (1889). 
 
118 THE LAW OP PARTNERSHIP 
 
 (6) Reasons for Limiting Good Faith to a State of Mind. — These 
 have been stated in a leading case ' as follows : " The right of each 
 partner extends only to the share of what may remain after pay- 
 ment of the debts of the firm and a settlement of its accounts. 
 Growing out of the right, or rather included in it, is the right 
 to have the partnership property applied to the payment of the 
 partnership debts in preference to those of any individual partner. ^ 
 This is an equity that partners have between themselves, and 
 in certain circumstances it enures to the benefit of the creditors 
 of the firm. The latter are said to have the privilege or prefer- 
 ence, sometimes loosely denominated a 'lien', to have the debts 
 due to them paid out of the assets of a firm in course of liquidation, 
 to the exclusion of the creditors of its several members. This 
 equity is a derivative one. It is not held or enforceable in their 
 own right. It is practically a subrogation to the equity of the in- 
 dividual partner, to be made effective only through him. Hence, 
 if he is not in a condition to enforce it, the creditors of the firm 
 cannot be." ^ 
 
 It is true the foregoing doctrine was not necessarily involved 
 in the case then before the court, for the transfer of the firm 
 property was in consideration, in part at least, of the payment of 
 certain firm debts by the transferee; but it has been adopted 
 and enforced by the United States Supreme Court in later deci- 
 sions,^ and is undoubtedly the settled rule of law for that tribunal. 
 
 It has been accepted by a number of State courts also.* 
 
 (c) Collusive Waiver of a Partner's Lien. — Even in juris- 
 dictions, where the foregoing doctrine prevails, it is generally 
 admitted that the waiver of his lien by a partner, in order to 
 destroy the derivative equity of firm creditors, must be an honest 
 one. If he unites in a conveyance of joint property to a partner 
 or to an individual creditor, "with a knowledge of the insolvency 
 of the firm, and with an intent to deprive the creditors of its 
 proper application to the payment of the joint debts", it "would 
 
 1 Case V. Beauregard, 99 U. S. 119 (1878). 
 
 2 Werner v. Her, 54 Neb. 576, 74 N. W. 833 (1898) applies this doctrine. 
 ' See Huiskamp v. Moline Wagon Co., 121 U. S. 310, 7 Sup. Ct. 899 
 
 (1886), upholding the transfer of firm property to an individual creditor 
 of one partner. 
 
 ^ Johnston v. Roebuck, 104 Iowa, 523, 73 N. W. 1062 (1898). 
 
THE NATURE OF A PAEJNEESHIP 119 
 
 be in fraud of the law; and equity would at once set it aside." ^ 
 But it has been held that if partners suffer firm property to be 
 sold under a judgment for their joint debt, though not a partner- 
 ship obligation, their conduct is not collusive and fraudulent, 
 " and the purchaser takes an absolute title, free from all claims of 
 partnership creditors." ^ 
 
 3. Bona Fide Transfer requires a Consideration to the 
 PiRM. — A transfer of partnership property in payment of the 
 separate debt of a partner, for which neither the firm nor the 
 other partners are liable, is a voluntary conveyance, and clearly 
 impeachable by the creditors of the firm as well as by the creditors 
 of the other partners, if it leaves the firm and such partners in- 
 solvent.' '^And this doctrine is enforced generally by the courts.'* 
 
 But suppose the partners unite in a conveyance of firm prop- 
 erty to pay or secure the separate debts of each. Will the fact 
 that they are equally benefited by the transfer render it valid 
 against firm creditors? Surely not upon principle; and yet 
 such a conveyance has been upheld in a recent case.^ So confident 
 was the court of the correctness of its view that it declared "no 
 one would doubt the perfect right of partners", in such a case, 
 "under agreement between themselves, to pay or secure their 
 several debts with partnership assets, for this would be simply 
 using by each one what belonged to him for a lawful purpose."--" 
 
 ' Howe V. Lawrence, 9 Cush. (Mass.) 533, 57 Am. Deo. 68 (1852). 
 In this case there was no evidence that the partners knew that the firm 
 •was insolvent ; the continuing partner thought he could carry on the busi- 
 ness successfully, and during the month of his separate ownership he added 
 five or six hundred dollars' worth of goods to the stock. Following the 
 extract in the text is this statement by the court : "It is only when part- 
 ners act fairly for the purpose of dissolution, and winding up the affairs of 
 the firm, that creditors will be bound by a change of the partnership prop- 
 erty to the separate estate of one of the partners." Accord. Mansur- 
 Tebbets Impl. Co. v. Ritchie, 159 Mo. 213, 60 S. W. 87 (1900) ; Bedford 
 V. McDonald, 102 Tenn. 358, 52 S. W. 157 (1899). 
 
 2 Rouse V. Wallace, 10 Col. App. 93, 97, 50 Pac. 366 (1897). 
 
 ' Wiggins V. Blackshear, 86 Tex. 665, 26 S. W. 939 (1894) ; Burdick's 
 Cases on Part. 198. See In re Worth, 130 Fed. 927, 12 Am. B. R. 566 
 (1904). 
 
 « Wilson V. Robertson, 21 N. Y. 587 (1860) ; Barle v. Art Library Pub. 
 Co., 95 Fed. 544 (1899) ; In re Jones, 100 Fed. 781, 4 Am. B. R. 141 
 (1900) ; In re Head, 114 Fed. 489 (1902). 
 
 ' Wiggins V. Blackshear, supra. 
 
120 THE I4A.W OF PARTNERSHIP 
 
 The error of the court is in treating a partner's share in a firm 
 as the interest of a tenant in common in the firm stock ; when in 
 truth it "is his proportion of the partnership assets after they 
 have been all realized and converted into money, and all the debts 
 and liabilities have been paid and discharged." ^ The court said : 
 "The value of the firm assets, exclusive of accounts and claims, 
 which amounted to $800, was shown to be fl,310, and one half 
 of this was more than the individual indebtedness of either part- 
 ner secured by the mortgage. As partnership creditors had no 
 lien on firm property, no reason is perceived why each member 
 might not lawfully permit the other to pay his individual debt 
 out of his own share of the partnership property." The court 
 appears to have forgotten that whether each partner was paying 
 his separate creditors out of his own property could be determined 
 only after the conversion of the mortgaged stock and the ac- 
 counts into cash, the discharge of firm debts, and the adjustment 
 of the accounts between the partners. His share of this remnant 
 was all that each partner could mortgage to a separate creditor.^ 
 
 (a) Firm Property cannot be diverted from Firm Creditors. — 
 In a case very similar to that which we have been considering, 
 the Supreme Court of Mississippi^ adjudged the conveyance 
 invalid as against the creditors of an insolvent firm. It was 
 insisted by the separate creditors that each partner had received 
 a full consideration for his release of his right as a partner, in the 
 assent of the other partner to the conveyance. "The reply is," 
 said the court, "that a full consideration does not make a contract, 
 otherwise unlawful, valid. If A agrees to do an unlawful act if 
 B will do another, of what avail is it that each will reap a benefit 
 from such an act of the other ? Durfey had a right to have the 
 partnership property applied to the partnership debts, and Ascher 
 had a like right. While these reciprocal rights existed, they were 
 of value as property rights of the debtors to a certain class of 
 creditors, i.e., firm creditors. . . . We are unable to perceive 
 any just principle upon which the right of a debtor can be rec- 
 ognized to thus deal with his estate for the very purpose of ob- 
 
 ' Lindley on Part. (7th ed.) 377. 
 
 2 Bank v. Carrollton Railroad, 11 Wall. (U. S.) 624 (1870). 
 
 3 Jackson Bank v. Durfey, 72 Miss. 971, 18 So. 456 (1895) ; Burdick's 
 Cases on Part. 201. 
 
THE NATTJKE OF A PARTNERSHIP 121 
 
 structing his creditors." The same conclusion has been reached 
 in New Jersey/ and is supported by the great weight of authority 
 both in England ^ and in this country. 
 
 In some jurisdictions the invalidity of such a conveyance has 
 been based on the ground that "a partnership in contemplation 
 of law is an entity distinct from the members who compose 
 it." ' 
 
 4. Assumption by the Firm of Separate Debts. — While 
 a firm is solvent, it may lawfully assume the debts of its members. 
 If this is done, a subsequent conveyance of firm property for the 
 payment of such debts is valid, even though the firm is then 
 insolvent.* So, if a firm receives a valuable consideration 
 for its assumption or guaranty of its members' de.bts,^ its trans- 
 fer of firm property in satisfaction thereof cannot be impeached 
 by its other creditors. Such liabilities are as truly partnership 
 debts as those which are incurred for goods bought by the 
 firm. 
 
 5. Promise of Purchasing Partner to pay Firm Debts. 
 — As between the partners, a sale of his interest by one_to the 
 other, in consideration of the promise by the purchaser to pay 
 the firm debts, is binding, and works a conversion of firm prop- 
 erty into separate property. Whether it will have the same 
 result, as respects firm creditors, is to be determined by applying 
 the principles which we have been discussing. 
 
 If the members are insolvent, and directly after the sale the 
 purchaser becomes bankrupt or makes an assignment for the 
 benefit of creditors, the necessary result of the transfer would be 
 to postpone the claims of partnership creditors against the prop- 
 erty to those of the purchaser's separate creditors. Moreover, 
 as the purchaser is insolvent, his promise to pay the firm debts 
 cannot be considered a valuable consideration to the firm for the 
 
 1 Bannister v. MiUer, 54 N. J. Eq. 121, 701, 32 At. 1066 (1895) ; Bur- 
 dick's Cases on Part. 207. 
 
 2 Ex parte Mayou, 4 DeG. J. & S. 664, 34 L. J. Bank. 25 (1865). 
 
 3 Teague v. Lindsey, 106 Ala. 266, 17 So. 638 (1895) ; Burdiek's Cases 
 on Part. 207 n. 
 
 * Nordlinger v. Anderson, 123 N. Y. 544, 25 N. E. 992 (1893) ; Teague 
 V. Lindsey, supra; Werner v. Tier, 54 Neb. 576, 74 N. W. 833 (1898). 
 
 5 Bernheimer v. Rindskopf, 116 N. Y. 428, 22 N. E. 1074, 15 Am. St. 
 R. 414 (1889). 
 
122 THE LAW OF PARTNERSHIP 
 
 transfer of its property to him. Such a transfer, therefore, ought 
 to be held invalid as against firm creditors. 
 
 In the language of Lord Chancellor Westbury:^ "Taking 
 then, in the first place, the principle of law which is embodied 
 in the statute of 13 Eliz. c. 5, and applying that to the trans- 
 action, I think that it was not competent for the one to make 
 or for the other to accept an assignment of that description, 
 both of them being insolvent at the time, . . . because it had 
 for its immediate and necessary object and consequence the 
 alteration of the property in such a manner as would defeat or 
 ■delay the joint creditors. . . . Having regard to the principle 
 that a voluntary assignment is, in this sense, a fraudulent assign- 
 ment, if I regard the transaction as entered into by one partner 
 alone, I cannot look at it as a conveyance for good or valuable 
 consideration, seeing that the covenant by the assignee of the 
 partner was a covenant entered into by a man in a state of insol- 
 vency, and in this sense, being voluntary, it would be fraudulent 
 within the meaning which has been applied to this term." 
 
 (a) When Firm Creditors are not defrauded. — The transfers 
 which we are now considering, cannot defraud fiirm creditors if 
 either partner remains solvent and within the jurisdiction, for 
 their claims can be collected from him. Nor do they necessarily 
 defraud such creditors where the property remains in the pos- 
 session of the purchasing partner for several months. As it is 
 still subject to legal process in favor of such creditors, the transfer 
 does not of itself hinder, delay, or defeat them.* If, however, 
 before they can obtain a levy in the ordinary course of litigation, 
 separate creditors of the purchasing partner seize it, or the pur- 
 chaser becomes bankrupt or makes an assignment for the benefit 
 of creditors, the transfer does operate to hinder, delay, and defeat 
 the creditors of the firm, and should be held fraudulent as against 
 them. 
 
 The right of firm creditors to have the assets of a partnership, 
 
 • Ex parte Mayou, 4 DeG. J. & S. 664, 34 L. J. Bank. 25 (1865). In 
 Lindley on Part. (7th ed.) 376, it is said of the foregoing ease : "Although 
 no fraud was intended, the necessary effect of the arrangement was to 
 •delay and defeat the joint creditors." 
 
 2 Stanton v. Westover, 101 N. Y. 265, 4 N. B. 529 (1886) ; Wiggins v. 
 Blackshear, 86 Tex. 665, 26 S. W. 939 (1894) ; Burdick's Cases on Part-. 
 198, 200. 
 
THE NATURE OF A PARTNERSHIP 123 
 
 ■whose members are insolvent, applied to the payment of their 
 claims before the assets "can be devoted either to the separate 
 use, or appropriated to the payment of the separate debts, of any 
 of the members of the firm", is a property right of these creditors 
 which cannot be destroyed by the partners.^ This view, as we 
 have seen, is sustained by the great weight of authority.^ It is 
 rejected, however, in those jurisdictions which make the test of 
 the legal bona fides of a transfer the state of mind of the parties 
 thereto.' 
 
 (6) Sale by one Partner to Others, with Reservation of his Lien. 
 — In some cases, contracts of sale between partners have been 
 treated by the courts as conditional and not absolute transfers. 
 Thus they have been brought within a principle already discussed,* 
 and firm creditors have been permitted to subject the property 
 in the hands of the purchasing partner to the payment of their 
 ■debts. In such cases it has been "held that the agreement to 
 pay the debts as a consideration for the transfer was a sufiicient 
 recognition of the equitable lien of the partnership creditors, 
 tracing the same, through the equity of the vendor, to enable 
 them, joining with him, to enforce such equity." ^ 
 
 If the transfer is made subject to firm debts, the rights of 
 creditors are thereby expressly preserved.^ In the case last 
 
 1 Franklin Sugar Refining Co. v. Henderson, 86 Md. 452, 38 At. 991, 
 63 Am. S. R. 524 (1897) ; Bartlett v. Meyer-Schmidt Grocer Co., 65 Ark. 
 290, 45 S. W. 1063 (1898) ; Cribb v. Morse, 77 Wis. 322, 46 N. W. 122 
 (1890). 
 
 ' Darby v. Gilligan, 33 W. Va. 246, 10 S. E. 400, 6 L. R. A. 740 (1889), 
 and eases cited therein ; Conway's Adm'rs v. Stealy, 44 W. Va. 163, 28 
 S. E. 743 (1897). 
 
 ' In addition to cases heretofore cited on this point, see Schleicher v. 
 Walker, 28 Fla. 680, 10 So. 33 (1891) ; Kincaid v. National Wall-Paper 
 Co., 63 Kan. 288, 65 Pac. 247, 54 L. R. A. 412, 88 Am. St. R. 243 (1901) ; 
 Wilcox V. Kellogg, 11 Ohio, 394 (1842) ; Sexton v. Anderson, 95 Mo. 373, 
 8 S. W. 562 (1888) ; Sai^ent v. Blake, 160 Fed. 57, 87 C. C. A. 213, 17 
 L. R. A. N. s. 1040, with note (1908). 
 
 « Supra, Chap. Ill, § 3, 1, (a). 
 
 5 Thayer v. Humphrey, 91 Wis. 276, 64 N. W. 1007 (1895) ; Burdick's 
 Cases on Part. 117, 123, citing Olson v. Morrison, 29 Mich. 395 (1874). 
 
 6 Bulger V. Rosa, 119 N. Y. 469, 24 N. E. 853 (1890). In Lindley on 
 Part. (7th ed.) 770, it is said : "Even if it has been agreed between the 
 partners that on a dissolution, the continuing or surviving partner shall 
 
124 THE LAW OF PARTNERSHIP 
 
 cited, the New York Court of Appeals declared : " The part- 
 nership, as such, has its own property and its own creditors, as 
 distinct from the individual property of its members and their 
 individual creditors. The firm creditors are preferentially en- 
 titled to be paid out of firm assets. Whatever may be the true 
 foundation of the equity, it is now an undisputed element in the 
 security of the firm creditors. The insolvent firm cannot apply 
 the firm assets in payment of the individual debts of the partners, 
 nor can the equity of the firm creditors be defeated by an at- 
 tempted conversion of the assets of the firm into the individual 
 assets of one of the partners, through a transfer by one partner 
 of his interest therein to the other. In either of the cases supposed, 
 they would remain, as to the firm creditors, firm assets, which could 
 be followed and taken on execution by firm creditors until they 
 had come to the hands of a bona fide purchaser ; and where an 
 individual creditor of one of the members of an insolvent firm, 
 knowing of such insolvency, takes a transfer of 'firm property in 
 payment of an individual debt, his act is not merely a violation 
 of an equitable right of the firm creditors, but it constitutes a 
 fraud under the statute of Elizabeth. The law regards it as a 
 voluntary transfer, made to hinder, delay, and defraud the firm 
 creditors, and as to them is void." 
 
 6. Liability of Corporation succeeding to the Business 
 OF AN Insolvent Partnership. — This depends upon the facts 
 in each case. If the transfer of the partnership property to the 
 corporation is fraudulent, under the rules heretofore stated, or if 
 the corporation assumes the partnership debts, it is liable for 
 such debts.^ Otherwise it is not liable.^ 
 
 be entitled to the assets of the firm, still, so long as these assets continue 
 subject to the right of the other partners, to have them applied in discharge 
 of the joint debts, the assets will continue joint for the purpose of dis- 
 tribution in bankruptcy. To convert them into separate estate the 
 agreement between the partners must be inconsistent with the continu- 
 ance of this lien." 
 
 1 Uniform Partnership Act, L. of Md. 1916, Ch. 175, § 41 ; Metcalf 
 V. Arnold, 110 Ala. 180, 20 So. 301, 55 Am. St. R. 24 (1895); Booth v. 
 Bunoe, 33 N. Y. 139, 88 Am. Dec. 372 (1865) ; Andres v. Morgan, 62 Oh. 
 St. 236, 56 N. E. 875, 78 Am. S. R. 712 (1900) ; Ziemer v. C. G. Bretting 
 Mn'f. Co., 147 Wis. 252, 133 N. W. 139, 25 Ann. Cas. 1275 (1911). 
 
 ^ Byrne Hammer Dry Goods Co. v. Willis Dunn Co., 23 S. D. 221, 
 121 N. W. 620, 29 L. R. A. n. s. 589 (1909). 
 
THE NATURE OF A PARTNERSHIP ^ 125 
 
 § 3. (A.) Firm Title devested by Act of one Partner. 
 
 "Every partner is an agent of the firm and his other partners 
 for the purpose of the business of the partnership." "• This rela- 
 tion of each partner to the firm and to his associates results from 
 the very nature of partnership. It was recognized by the custom 
 of merchants, and has never been questioned by the courts. In 
 the language of an early writer, "Partners may be imagined 
 virtually present at and sanctioning the proceedings they singly 
 enter into in the course of trade ; or as each vested with a power 
 enabling them to act at once as principals and as the authorized 
 agents of their copartners. It is for the advantage of partners 
 themselves that they are thus held liable, as the credit of their 
 firm in the mercantile world is hereby greatly enhanced, and a 
 vast facility is given to all their dealings; insomuch that they 
 may reside in distant parts of the country or in different quarters 
 of the globe." ^ 
 
 1. Each Partner may sell Firm Goods. — In one of the 
 earliest reported cases bearing upon partnership law, "it was 
 agreed by the court that the sale of one partner is the sale of 
 them both " ; ^ and more than a century ago Lord Mansfield laid 
 it down as unquestioned law that "each has a power singly to 
 dispose of the whole of the partnership effects." * 
 
 The only limitation upon the power of a partner to transfer 
 the firm title to a stranger is, that it shall be exercised "for the 
 purpose of the business of the partnership." If the business 
 
 1 Britisli PartnersMp Act, 1890, § 5. The Uniform Partnership Act, 
 § 9 (1) declares: "(1) Every partner is an agent of the partnership for 
 the purpose of its business, and the act of every partner, including the 
 execution in the partnership name of any instrument, for apparently 
 carrying on in the usual way the business of the partnership of which he 
 is a member binds the partnership, unless the partner so acting has in 
 fact no authority to act for the partnership in the particular matter, and 
 the person with whom he is dealing has knowledge of the fact that he 
 has no such authority." 
 
 2 Watson on Part. (2d ed.) 167. In Mabbett v. White, 12 N. Y. 
 442 (1855), Burdick's Cases on Part. 212, 214, it is said: "This jus 
 disponendi of each partner is for the advantage of trade and commerce, 
 and no doubt strengthens the credit and benefits the partners them- 
 selves." 
 
 ' Lambert's Case, Godbolt, 244 (1614). 
 * Fox V. Hanbury, Cowp. 445 (1776). 
 
126 THE LAW OF PAETNEESHIP 
 
 of the firm consists in buying and selling goods, any partner 
 has the power to dispose of the entire stock to a bona fide pur- 
 chaser.^ He has the power, also, of paying the debts of the firm ; 
 and payment may be made with firm money, or with firm goods 
 which have not been converted into cash. Moreover, as the 
 firm has the legal right to pay one creditor in full, to the exclusion 
 of others, it would seem to follow that each partner has the power 
 to exercise this right. 
 
 A bill of sale, therefore, of all the partnership stock, at a fair 
 valuation, in satisfaction of an honest claim against the firm, al- 
 though executed on behalf of the firm by one partner without his 
 copartner's consent, should be held, and has been held, a valid 
 alienation of firm title to the creditor.^ In some jurisdictions,, 
 however, it has been ruled that in case one partner undertakes to 
 dispose of the entire stock, either for cash or in satisfaction of 
 the claim of a favored creditor, the other partner "may protect 
 himself by forbidding or dissenting before the sale is completed." * 
 This is based on the doctrine that fair dealing between the partners 
 requires that the co-partner, if conveniently accessible and no 
 sudden imperative exigency arises, should be consulted in such 
 cases. 
 
 The partnership may be of a character that negatives an im- 
 plied power of a partner to sell the entire property without the 
 consent of his copartners. Such a sale would not appear to be 
 "for the purpose of the business" of a newspaper partnership* 
 or of a firm of attorneys. 
 
 2. ElTHEE PaETNEE MAY MOETGAGE FlEM GoODS. — The 
 
 reasons for upholding a sale of firm property by a partner have 
 induced the courts to sustain chattel mortgages given by him, 
 either to raise money for the firm or to secure firm debts. Here, 
 again, the only limitation upon his implied power is the nature 
 
 ' The powers of partners will be more fully discussed in the next 
 chapter. See Schneider v. Schmidt, 82 N. J. Eq. 81, 88 At. 179 (1913). 
 
 '■ Mabbett v. White, 12 N. Y. 442 (1855) ; Burdick's Cases on Part. 
 212. Cf. Bender v. Hemstreet, 34 N. Y. Supp. 423, 12 Misc. 620 (1895), 
 denying the power of one partner to sell the entire stock to a stranger, 
 for the avowed purpose of ending the partnership. 
 
 » Ellis V. Allen, 80 Ala. 515, 2 So. 676 (1887) ; Burdick's Cases on 
 Part. 214, n; McGrath v. Cowen, 57 Oh. St. 385, 49 N. E. 338 (1898). 
 
 * Sloan V. Moore, 37 Pa. St. 217 (1860). 
 
THE NATURE OF A PARTNERSHIP 127. 
 
 of the partnership business. In case of an ordinary trading 
 partnership, his impliea uthority to pledge or mortgage firm 
 goods in order to raise m^ „' for the firm business, or to secure 
 existing partnership debts, is i^questioned, even though the pledge 
 or mortgage extends to the whole of the firm stock. ' Nor does it 
 matter that the chattel mortgage executed by one partner is in 
 the form of a deed. If without a seal it would constitute a valid 
 lien on the property, it will be none the less effectual that it has 
 an unnecessary seal.-^ 
 
 In the case last cited. Chief Justice Shaw expressed the fol- 
 lowing opinion concerning a mortgage of firm realty by a part- 
 ner : " Lands held by partners are considered as lands held by 
 tenants in common; and as one tenant in common cannot pass 
 any estate of his cotenant, and as land cannot pass without deed, 
 it follows that one partner cannot convey away the real estate 
 of the firm without special authority." The principles upon 
 which the effect of such a mortgage depends have been considered 
 at some length in a preceding section,^ and will be discussed fur- 
 ther in the following chapter. 
 
 The Supreme Court of Georgia' has held that "one partner 
 cannot, over the protest of another, mortgage the firm's assets, 
 even to secure the payment of a valid existing debt of the firm." 
 To give to a partner such power, the court thought would " lead to 
 great perplexities and inextricable confusion in the management 
 of a partnership business." 
 
 3. Application of Firm Property to a Partner's Debts. 
 — The limitation upon a partner's power to dispose of firm 
 property, which has been referred to repeatedly, precludes him 
 from using it for the purpose of paying his own debts. Accord- 
 ingly, if a third person is a creditor of the firm as well as of one 
 partner, and receives from such partner a check belonging to the 
 firm, he has no right to apply it to the satisfaction of his claim 
 
 iTapley v. Butterfield, 1 Met. (42 Mass.) 515 (1840); Burdick's 
 Cases on Part. 211. In Kahn v. Becnel, 108 La. 296, 32 So. 444 (1902), 
 it is held that "a partner, who is not the special agent of the partnership, 
 has no authority to execute a mortgage against his copartners." 
 
 2 Supra, Chap. Ill, § 2. 
 
 " Fidelity Banking & T. Co. v. Kangara Valley Tea Co., 95 Ga. 172, 
 22 8. E. 50 (1894) ; McCord Co. v. Callaway, 109 Ga. 796, 35 S. E. 171 
 (1900). 
 
128 THE LAW OF PAKTNERSHIP 
 
 against the partner, although that may be the older indebtedness. 
 To accord him that option "would be allowing him to pay the 
 debt of one person with the money of others." ^ 
 
 Nor would the right of the creditor be enlarged by the express 
 assent of the debtor partner to the application of firm property 
 to the satisfaction of his individual liability. Where the consid- 
 eration for the transfer of partnership assets is the individual 
 indebtedness of the partner assuming to make the transfer, actual 
 authority from his copartners for his act must be shown, or a 
 case of estoppel against them must be established.^ "To receive 
 property of a partnership from one of the partners in payment 
 of his personal debt, without the consent of his copartner, is no 
 less a fraud upon the partnership than to pay a debt due the firm 
 by doing or furnishing something for the personal use of one of its 
 members. Such an arrangement accompanying the receipt of 
 partnership property would be void against the other partner, 
 and would leave the party receiving the property liable upon an 
 implied contract to pay the firm its value." ^ If the property 
 were still in possession of the transferee, it could be reclaimed by 
 the firm or its creditors.'* 
 
 (a) Separate Creditor's Ignorance of Title. — Even though 
 the separate creditor is ignorant of the fact that the property 
 which he receives belongs to the partnership, he cannot hold 
 it against the firm or its creditors,^ unless he can make out a 
 case of estoppel. The debtor partner cannot, in his own right, 
 convey title, for he is not the owner of the property. He can- 
 not convey it as agent, for his authority as agent is limited to 
 
 ' Thompson v. Brown, M. & M. 40 (1827) ; Burdick's Cases on Part. 
 211 ; Farris v. Morrison, 66 Ark. 318, 50 S. W. 693 (1899). 
 
 2 The Uniform Partnership Aet, §25, (2), (o), declares that a partner 
 has no right to possess partnership property except for partnership pur- 
 poses, without the consent of his partners; and § 9, (2) reads: "An act 
 of a partner which is not apparently for the carrying on of the business 
 of the partnership in the usual way does not bind the partnership unless 
 authorized by the other partners." 
 
 ^Brickett v. Downs, 163 Mass. 70, 39 N. E. 776 (1895); Burdick's 
 Cases on Part. 215 ; Nichols & Co. v. Thomas, 47 Okla. — , 151 Pac. 847, 
 L. R. A. 1916 B, 908 (1915). 
 
 * Hartley v. White, 94 Pa. St. 31 (1880). 
 
 « Rogers v. Batchelor, 12 Pet. (37 U. S.) 221 (1838). 
 
THE NATURE OP A PARTNERSHIP 129 
 
 its transfer for firm purposes. Undoubtedly the firm may estop 
 itself from claiming title as against a separate creditor of the 
 disposing partner. If A is a secret partner with B in business 
 carried on in B's name, A holds B out to the world as the sole 
 owner of the business assets, and as possessing the power of a 
 sole owner to transfer these assets. In such circumstances, a 
 separate creditor of B who receives a part of the assets in satis- 
 faction of B's debt, although it was not contracted in the firm 
 business, is entitled to retain the property.^ 
 
 (6) Doctrine of Loch v. Lewis. — It was upon this doctrine of 
 €stoppel that Lock v. Lewis ^ was decided, — a case which is 
 sometimes mistakenly cited for the proposition "that a transfer 
 of firm property in payment of a private debt will not be avoided 
 against a transferee who took the property without knowledge 
 "that it was firm property." ^ The plaintiff in that case, upon 
 the dissolution of a partnership between himself and I. L. Robin- 
 son and Son, received a note for a part of his interest in the firm 
 from the Robinsons, who continued the business of manufacturing 
 carriages in the name of I. L. Robinson and Son. Later they 
 formed a limited partnership, under the laws of New Hampshire, 
 in the name of I. L. Robinson & Co., in which they were the gen- 
 eral partners, and Chase, Parkinson, and Greeley were the special 
 partners. While this partnership was in existence, the Robinsons 
 paid the note to plaintiff by transferring to him three carriages 
 which were the property of the limited partnership, giving him 
 a bill of the goods in the name of I. L. Robinson & Co. There- 
 after the carriages were attached by the defendant, a deputy 
 sheriff, under process against the limited partnership, and plaintiff 
 brought replevin. A verdict was ordered for defendant, on the 
 ground that the sale by the two general partners, in payment of 
 their own debt, of goods which were in fact the goods of the part- 
 nership, but were not known to the creditor to be such, was void 
 as against the partnership and its creditors. 
 
 In setting aside this verdict the Supreme Court was careful 
 
 ' Swan V. Steele, 7 East, 210 (1806) ; Willey v. Croeker-Woolworth 
 Nat. Bank, 141 Cal. 508, 76 Pac. 106 (1904). 
 
 2 124 Mass. 1 (1878). 
 
 ' George on Part. 221, n. 50, and see Bates on Part. § 1046. Approved 
 in Warren v. Martin, 24 Neb. 273, 280, 38 N. W. 849, 852 (1888). 
 
130 THE LAW OF PARTNERSHIP 
 
 to say : " We would not be understood to aflBrm that the mere 
 behef of the separate creditor that the property which he receives 
 does not belong to the partnership- will of itself be sufficient to 
 entitle him to hold it, if there has been nothing in the acts or 
 conduct of the other partners to induce the belief that the part- 
 ners with whom he dealt were the sole owners. But the evidence 
 before us would warrant a jury in finding, not only that the plain- 
 tiff acted in good faith, but that the active and ostensible partners 
 had been held out as the sole owners of the property." ^ And the 
 conclusion of the court is stated as follows : " For these reasons, 
 we are of opinion that the jury should have been instructed that 
 if the plaintiff, by the manner in which the general partners dealt, 
 and had been allowed by the special partners to deal, with the 
 property sold to him, was induced to believe that it was the 
 property of the general partners only, and, acting on such belief, 
 bought it in good faith, and with no notice or knowledge that the 
 special partners, or any other person than the general partners, 
 had any interest therein, he was entitled to maintain this 
 action." 
 
 4. General Assignment by one Partner. — Whether one 
 partner can devest the firm title by a general assignment for the 
 benefit of creditors, is a question upon which the decisions are 
 somewhat conflicting. From the power possessed by each part- 
 ner to sell all the property of a trading firm to its creditors in pay- 
 ment of debts, it has been argued by some courts that his agency 
 to assign the property to a trustee for sale and distribution among 
 creditors also results from the partnership relation.^ 
 
 The view generally entertained, however, is that a transfer 
 of all the firm property to a trustee for creditors is not an act 
 done "for the purpose of the business of the partnership", but 
 is necessarily and intentionally destructive of that business, and 
 
 ' It is submitted that no evidence of this character appears in the 
 statement of the facts by the court. On the other hand, it appears that 
 the firm name, in which the bill of the goods was given, differed from 
 that in which the note was given ; and that, upon the formation of the 
 limited partnership, a certificate giving the names of its members as well 
 as the name of the new firm was recorded and pubhshed, as required by 
 the statute. C/. Janney v. Springer, 78 Iowa, 617, 43 N. W. 461 (1889). 
 
 2 Deckard v. Case, 5 Watts (Pa.) 22 (1836) ; Scruggs v. Burruss, 25 
 W. Va. 670 (1885). 
 
THE NATURE OF A PARTNERSHIP 131 
 
 that an agency to do such an act does not result from the partner- 
 ship relation.^ 
 
 (a) Actual Authority must exist. — If all of the partners are 
 within the jurisdiction and accessible, the partner who would 
 make a valid assignment for creditors must secure their assent 
 or ratification. This assent may be evidenced by a letter of 
 attorney, giving to the partner in question power to sell, mort- 
 gage and hypothecate all partnership property, and manage the 
 business.^ In case the unauthorized assignment is ratified by 
 the other partners, it will not affect a lien of firm creditors acquired 
 during the interim.' 
 
 The assent need not be directed to the special act of assign- 
 ment. If a partner, upon leaving the jurisdiction, writes to his 
 copartner, "Take charge of everything in our business, close it 
 it up speedily ", he authorizes the latter " to make such disposition 
 of the partnership property as should be deemed most expedient 
 to close up the partnership enterprise", including an assignment 
 for creditors.* 
 
 The temporary absence of a partner, however, cannot be con- 
 strued as an implied assent to an assignment executed by his 
 copartner during that period ; ^ but his permanent absence and 
 total inattention to the business may warrant the inference that 
 "he intended to intrust the affairs of the firm wholly to the resi- 
 dent partner. . . . He might reasonably expect and be held 
 to intend that the member placed in control should not only 
 
 ' Osborne v. Barge, 29 Fed. 725 (1887) ; Parker v. Brown, 85 Fed. 
 595, 29 C. C. A. 357, 56 U. S. App. 341 (1898). 
 
 2 Paul V. CuUum, 132 U. S. 539, 10 Sup. Ct. 151, 33 L. Ed. 430 (1889). 
 
 3 Stein V. La Dow, 13 Minn. 412 (1868). In Adee v. Cornell, 93 N. Y. 
 572 (1883), Bellows and Hunt made an assignment of tlie firm property 
 of Charles Bellows & Co. A firm creditor obtained judgment against 
 them, and procured the appointment of a receiver of their property in 
 supplementary proceedings. The receiver then brought a siut to set 
 aside the assignment on the ground that Leach and Hinds were secret 
 partners with the judgment debtors, and had not joined in the assign- 
 ment. The court said: "Even if they were partners, they could ratify 
 an assignment by the other members of the firm, and no one else would 
 have the right to complain." Accwd. Mills v. Miller, 109 Iowa, 688, 
 81 N. W. 169 (1899). 
 
 * Welles V. March, 30 N. Y. 344 (1864). 
 
 6 Wetter v. Schlieper, 4 E. D. Smith (N. Y.) 707 (1858). 
 
132 THE LAW OP PARTNERSHIP 
 
 exercise the implied powers of agency ordinarily possessed by a 
 partner, but, in addition, should have the discretionary power in 
 case of emergency to do what, under the circumstances, should 
 appear to be just and proper in the disposition of the firm prop- 
 erty.^ 
 
 The Uniform Partnership Act ^ declares that unless authorized 
 by the other partners, or unless they have abandoned the business, 
 one or more but less than all the partners have no authority to 
 make an assignment in trust for creditors, or dispose of the good- 
 will of the business, or do any other act which makes it impossible 
 to carry on the business.^ 
 
 (b) A Reasonable Requirement. — The rule which requires 
 either the express or implied assent of all the partners to a general 
 assignment by a single partner is a perfectly reasonable one. 
 The refusal of such assent by any partner need not result in the 
 sacrifice of firm property. In case of hostile attacks by creditors, 
 a partner who wishes to prevent them from forcing a sale under 
 execution may institute a suit in equity for the dissolution of the 
 partnership and the ratable distribution of its assets among its 
 creditors.* Hence, a power in each partner to make an assign- 
 ment in trust for creditors is not necessary for the protection of 
 the interests of the firm or the rights of its creditors. 
 
 § 3. (B.) Firm Title not devested by Sale of a Partner's Interest. 
 
 The interest of a partner in the firm property is not that of 
 a common law tenant in common. As already pointed out, 
 it is only "a share of what may remain after payment of the 
 partnership debts and after a settlement of the accounts between 
 partners." ^ 
 
 Upon the sale of a partner's interest, therefore, all that passes 
 
 1 H. B. Claflin & Co. v. Evans, 55 Oh. St. 183, 45 N. E. 3, 60 Am. S. R. 
 686 (1896) ; Burdick's Cases on Part. 216. 
 
 2 L. of Md. 1916, Ch. 175, § 9 (3), (a), (6), (c). 
 
 ' Steiner, Lobman & Frank v. T. S. Faulk & Co., 222 Fed. 61 (1915) ; 
 a partner has no implied authority to consent to an adjudication in bank- 
 ruptcy against the firm. 
 
 Holmes v. McDowell, 15 Hun (N. Y.), 585 (1878); Burdick's Cases 
 on Part. 434. 
 
 'Bank v. CarroUton Ry., 11 Wallace (78 U. S.), 624 (1870); L. of 
 Md. 1916, Ch. 175, § 26. / 
 
THE NATURE OF A PABTNERSHIP 133 
 
 to the purchaser is such share; the firm title is not devested. 
 Up to this point there is entire concurrence of authorities. 
 
 1. Successive Sales op all the Shares. — It would seem 
 to follow that the firm title is not devested, although the interest 
 of each partner is sold ; and such is the holding of the best con- 
 sidered cases on this subject.^ In the case cited in the last note, 
 each of the five partners who composed the firm of J. C. Smith 
 & Co. had transferred his interest in the firm assets ; but there 
 had been no joint act of all the partners relating to these trans- 
 actions. After these several transfers, and when the firm assets 
 were in the possession of the transferees who claimed title thereto, 
 the sheriff, under an execution in favor of a firm creditor, levied 
 upon the property and sold it. The plaintiff, who had acquired 
 all of the rights which passed under the transfers from four of the 
 five partners, sued the sheriff for conversion. The referee before 
 whom the action was tried decided that, at the time of the levy, 
 neither of the partners, defendants in the executions, had any 
 leviable interest, and that the judgment creditor had no lien on 
 the firm assets, but that the property belonged four-fifths to the 
 plaintiff and one-fifth to Mary B. Goodwin, the transferee of the 
 fifth partner. This decision was reversed by the Court of Ap- 
 peals on the ground that " the title of the firm, as between it and 
 its creditors to the corpus of the property, or at least to so much 
 of it as is necessary for the debts, was not devested by the separate 
 transfers to strangers." 
 
 The court did not recognize any lien of partnership creditors, 
 upon the firm property. On the other hand, it asserted that the^ 
 firm had power to dispose of its assets; but it denied that the 
 individual members had exercised any such power. The transfers 
 of their interests for their individual purposes, the court declared, 
 were inoperative upon the corpus of the prbgerty^o long as there 
 were firm debts unpaid, and the property continued in the firm 
 until its title had been devested by some act of the firm. 
 
 2. Sale of a Partner's Interest to One of Several Co- 
 partners. — Another question which was discussed in Menagh 
 
 1 Menagh v. WWtwell, 52 N. Y. 146 (1873) ; Burdiek's Cases on Part. 
 222; Smith v. Heineman, 118 Ala. 159, 24 So. 364, 72 Am. S. R. 150 
 (1897). This doctrine has received legislative sanction in the Uniform 
 Partnership Act, L. of Md. 1916, Ch. 175, § 27. Accord. Costello v. 
 CosteUo, 209 N. Y. 252, 103 N. E. 148 (1913). 
 
134 THE LAW OF PARTNERSHIP 
 
 V. WMtwell was whether the sale by two of the five partners of 
 their interests to a third devested the firm title. The court 
 decided that it did not; that the. purchasing partner acquired 
 by the sale " the same interest in the firm property that any other 
 transferee would have acquired; that is, a right as to the two 
 fifths thus purchased to an account/ and to share to that extent 
 in the surplus of the property of the firm." The joint act of the 
 three was not the act of the partnership. Undoubtedly, had the 
 remaining three partners carried on the business thereafter as a 
 new firm, their joint act (unless fraudulent against creditors) 
 would have operated to devest the old firm title, and to transfer 
 it to the new firm of three. But no evidence of such a joint act 
 appeared in that case. All that was done by the three, after the 
 sale by the two of their interests, pertained to winding up the 
 affairs of the dissolved firm, and did not amount to the formation 
 of a new one.^ 
 
 (a) The Opposite View. — Although the foregoing doctrine 
 appears to be unassailable, it has been repudiated in some juris- 
 dictions. The leading case upon this side is Doner v. Stauffer? 
 
 Doner and others obtained judgments against Howry, of the 
 firm of Howry and Eshelman. Stauffer and others obtained 
 judgments against Eshelman. The executions were levied upon 
 the firm stock, which was sold and the proceeds brought into 
 court. Stauffer and the other separate creditors of Eshelman 
 claimed one half of the proceeds, while the creditors of Doner and 
 the firm creditors disputed this claim, on the ground that the 
 firm of Howry and Eshelman was insolvent when the executions 
 were levied, that Eshelman's interest in the firm was worth noth- 
 ing, and that after the levy Howry and Eshelman made an assign- 
 ment to trustees for the benefit of firm creditors. Evidence 
 tending to support this defence was excluded by the trial court, 
 and one half of the proceeds was awarded to Stauffer and the 
 other separate creditors of Eshelman, to the exclusion of the firm 
 creditors. 
 
 ' Under The Uniform Partnership Act, § 27, (1), such purchaser of a 
 partner's share is not entitled to an account but " merely to receive in 
 accordance with his contract the profits to which the assigning partner 
 would otherwise be entitled." ^ See opinion of Allen, J. 
 
 ' 1 P. & W. (Pa.) 198 (1829) ; Burdick's Cases on Part. 218. 
 
THE NATURE OF A PARTNERSHIP 135 
 
 (6) Reasons for this Holding. — In delivering the opinion 
 of the Supreme Court, Chief Justice Gibson assigned the fol- 
 lowing reasons for afHrming the judgment of the court below : 
 "Now, had the sheriff sold the interest of but one of the part- 
 ners, the execution creditor would have clearly been entitled 
 to the proceeds. But although he sold the whole stock at one 
 operation on separate executions against both, there was in con- 
 templation of law a separate sale of each. What, then, would 
 have been the effect had these sales been made consecutively? 
 The first in the order of time would have passed the interest of the 
 partner, subject to the equity of his copartner, and the execution, 
 creditor would have been entitled to the price. But this equity, 
 together with the remaining interest of the other partner, would 
 have passed by the succeeding sale to the same purchaser, the 
 execution creditor in that instance also taking the proceeds. Can 
 it make a difference, then, that instead of being consecutive these 
 sales were simultaneous? . . . Here, where the shares of the 
 partners are united in the same purchaser every semblance of^ 
 partnership equities is at an end. As regards the goods in the 
 hands of the purchasers, this is conceded ; but the joint creditors 
 insist that the proceeds are to be substituted for the goods, and 
 subjected to the same equities. That might be done if the pro- 
 ceeds belonged to the partners; but it is not easy to imagine 
 how they are to be treated as the owners of money raised by a 
 sale on executions against them. . . . Here the partners can- 
 not be prejudiced in respect of their claims on each other, the 
 advantage to be gained from an application of the joint effects to 
 the separate debts being mutual and equal. The consequences 
 are precisely the same as if the effects had been sold on an execution 
 against both. We are therefore of opinion that the joint credi- 
 tors cannot interpose; and, consequently, that the rejection of 
 the evidence, as well as the direction to the jury, was substantially 
 right." 
 
 (c) Doner v. Stauffer criticised. — Although this reasoning 
 has been foUbwed in other States,^ it has not escaped deserved 
 criticism even in the jurisdiction of its distinguished author. 
 
 1 Stahl V. Osmers, 31 Ore. 199, 49 Pao. 958 (1897) ; Burdick's Cases 
 on Part. 237. Contra, Johnson v. Shirley, 152 Ind. 453, 53 N. E. 459 
 (1899). 
 
136 THE LAW OF PARTNERSHIP 
 
 Judge Sharswood, after pointing out that "altogether too much 
 was conceded when it was conceded that the goods could not be 
 followed into the hands of the purchaser", and that the equity 
 of a partner is not a salable interest at all, adds, "The practical 
 operation of the doctrines set forth in the opinion in Doner v. 
 Stauffer would be that the purchaser, though buying an encum- 
 bered title under the first execution, by the legerdemain of a 
 second sale under an execution against the other partner, is thereby 
 vested with an absolute unencumbered 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." ^ 
 
 (d) Absurd Consequences of Doctrine in Doner v. Stauffer. — 
 "The injustice and absurdities" of such doctrines are set forth 
 by Judge Rapallo in the following language : ^ " Suppose a firm 
 to consist of three members, each having an equal interest, and 
 to be possessed of assets to the amount of $300,000, and to owe 
 debts to half of that amount.- The interest of each partner, 
 supposing their accounts between themselves to be even, is 
 $50,000. The members of the firm are individually indebted. 
 One of them sells his share, and receives for it $50,000, which is 
 its actual value ; the share of another of the partners is sold out 
 under execution, and brings its full value, $50,000.^Thus far 
 one partner remains, and he has an equity to have the firm debts 
 paid; and those who have sold out are protected against those 
 debts. The purchasers of the separate interests are entitled to 
 the surplus only; the joint creditors still have their recouFse 
 against the partnership property and the right of levy on such 
 of it as is subject to sale on execution ; but before any levy, thfe 
 remaining partner sells out his individual interest, or it is sold out 
 on execution. According to the doctrine" of Doner v. Stauffer, 
 " the firm property is by this last sale relieved from the partner- 
 ship debts, the two shares first sold are at once changed from 
 interests in the surplus to shares in the corpus of the property free 
 from the debts, their value is doubled, and the fund which should 
 
 • MS. Lectures, as quoted in Parsons (James), Principles of Part. 
 (1st ed.) 303, 304. 
 
 2 Menagh v. Whitwell, 52 N. Y. 146 (1873) ; Burdick's Cases on Part. 
 222, 226. 
 
THE NATURE OF A PARTNERSHIP 137 
 
 have gone to pay the joint debts is, without any consideration, 
 appropriated by the transferees of the individual interests of the 
 partners." 
 
 The Uniform Partnership Act repudiates Doner v. Stauffer and 
 follows Menagh v. Whitwell} 
 
 3. Sale of a Partner's Interest in Firm Realty. — If 
 partners hold the legal title to the real estate of the firm as ten- 
 ants in common, the transfer of a partner's interest therein would 
 work a change in the title, and the firm would be no longer the 
 sole and unconditional owners of the property. That such is 
 not the effect of the transfer of a partner's interest has been 
 declared by the New York Court of Appeals.^ 
 
 The firm of Wood Brothers took out a policy of insurance 
 on a building which was a part of the firm property. The policy 
 contained the condition that it should be void if the interest of 
 the insured was other than unconditional and sole ownership. 
 Prior to the issue of the policy one of the six brothers composing 
 the firm had made a general assignment of his individual property 
 for the benefit of his separate creditors ; and, the building having 
 been destroyed by fire, the insurance company defended an action 
 brought by the firm upon the policy, on the ground that the sole 
 and unconditional ownership was not in the firm when the policy 
 was placed. But the court held : " Since the title to the real 
 estate held by a partnership is in the firm, and not in the indi- 
 vidual members of it, . . . the title was not affected by the 
 assignment of one of the members. It still remained firm prop- 
 erty, since the assignee had no interest in it as such, and whether 
 the sale or transfer by the individual member was anything more 
 than a mere form, or conveyed anything to the assignee, must 
 depend upon the existence of a surplus after the partnership 
 affairs are adjusted." 
 
 4. The Conveyance of a Partner's Interest is not a 
 Void Instrument. — While it is true that the purchaser of a 
 partner's interest in a particular parcel of the firm property. 
 
 1 L. of Md. 1916, Ch. 175, §§ 25, (1), (6), and 27. 
 
 2 Wood V. Am. Fire Ins. Co., 149 N. Y. 382, 44 N. E. 80, 52 Am. S. R. 
 733 (1896) ; Burdick's Cases on Part. 240. Same doctrine is applied in 
 Scott V. Dixie Fire Ins. Co., 70 W. Va. 533, 74 S. E. 659, 40 L. R. A. n. s. 
 152, with note (1912). 
 
138 THE LAW OF PARTNERSHIP 
 
 cannot, as a rule, form a definite estimate of the worth of his 
 purchase, and his right may turn out to be a barren one, the 
 instrument conveying the interest is not void,^ unless it con- 
 travenes some statutory provision, or established rule of law.^ 
 It is effective to transfer to the grantee whatever right the grantor 
 would have possessed with respect to this property, upon set- 
 tling the affairs of the partnership. If the firm is not at once 
 dissolved, but continues in business, the grantee's interest will 
 be subject to the subsequent debts of the firm and equities of the 
 partners.' 
 
 (a) Mortgage by a Tenant in Common. — If two persons buy 
 and hold property as equal tenants in common, and not as part- 
 ners, either of them, by mortgaging his share to secure an individual 
 
 ' Patterson v. Atkinson, 19 R. I. 25, 37 At. 532 (1897) ; Burdiek's 
 Cases on Part. 241. Accord. Sloan v. Wilson, 117 Ala. 583, 23 So. 145 
 (1898). The Uniform Partnership Act, § 25, (2), (6), reads: "(b) A 
 partner's right in specific partnership property is not assignable except 
 in connection with the assignment of the rights of all the partners in. the 
 same property." 
 
 2 Bnck V. Gerding, 67 Oh. St. 245, 65 N. E. 880 (1902). In this case 
 the mortgage was declared void as to firm creditors, because the property 
 was left in the possession of the mortgagors, with power to sell. But the 
 court assumed that the mortgage was valid, as to "the share of each 
 mortgagor, in any surplus remaining after the debts were paid." 
 
 ^ Receivers of Mechanics' Bank v. Godwin, 5 N. J. Eq. 334 (1846) ; 
 Daniel v. CroweU, 125 N. C. 519, 34 S. E. 684 (1899); Cavender v. Bul- 
 teel, L. R. 9 Ch. App. 79 (1873). The British Partnership Act of 1890, 
 § 31, declares : " (1) An assignment by any partner of his share in the 
 partnership, either absolute or by way of mortgage or redeemable charge, 
 does not, as against the other partners, entitle the assignee during the 
 continuance of the partnership to interfere in the management or admin- 
 istration of the partnership business or affairs, or to require any accounts 
 of the partnership transactions, or to inspect the partnership books, but 
 entitles the assignee only to receive the share of the profits to which the 
 assigning partner would otherwise be entitled, and the assignee must 
 accept the account of profits agreed to by the partners. (2) In case of a 
 dissolution of the partnership, whether as respects all the partners or as 
 respects the assigning partner, the assignee is entitled to receive the 
 share of the partnership assets to which the assigning partner is entitled 
 as between himself and the other partners, and for the purpose of ascer- 
 taining that share to an account as from the date of the dissolution." 
 
 With a few verbal changes the above section is reproduced in § 27 
 of the Uniform Partnership Act. 
 
THE NATURE OP A PARTNERSHIP 139 
 
 creditor, can give to such creditor a lien on an undivided half 
 interest in the property. This lien will not be subject to the claim 
 of a joint creditor of the owners, even though that claim be for 
 the purchase price of the property.^ 
 
 § 4. Firm Title after the Death of a Partner. 
 
 By the custom of merchants, the common law benefit of sur- 
 vivorship between joint tenants was denied to surviving partners. 
 This custom is recognized, in the earliest reported cases on the 
 subject in England, as a part of the law of the land.^ Accordingly, 
 it was held that the representativie of the deceased partner could 
 avail himself of its benefit, even though the deceased had been 
 advised that the firm stock would survive, and had replied that 
 he was content it should survive.' 
 
 1. Legal Remedies survive. — Notwithstanding the judi- 
 cial adoption of the maxim. Jus accrescendi inter mercatores 
 locum non habet, it was early decided that, upon the death of a 
 partner, the legal remedies on behalf of the firm survive.* In 
 an action of trover, brought by the surviving partner against 
 the converter,^ and in an action of account similarly brought 
 against a factor of the firm,^ it was objected that the represen- 
 tative of the deceased partner should have been a party plain- 
 tiff; but in both cases it was held that the action must neces- 
 sarily survive, "otherwise there would be a failure of justice, 
 because the survivors and the executors of those who were dead 
 cannot join in the action, for that their rights are of several 
 natures and there must be several judgments." Upon recovery, 
 however, it was declared to be the duty of the survivor to account 
 to the representative of the deceased for the latter's share. Even 
 in equity, the surviving partner is the proper plaintiff, and need 
 
 ' State Bank of Lushton v. O. 8. Kelley Co., 47 Neb. 678, 66 N. W. 
 619 (1896) ; Burdiok's Cases on Part. 243. 
 
 2 Hammond v. Jethro, 2 Brownlow, 99 n. (1611) ; Burdick's Cases on 
 Part. 245. 
 
 3 Jeffreys v. Small, 1 Vem. 217 (1683). 
 
 * This is still the rule; Gamble v. Rural Ind. School Dist., 132 
 Fed. 514, 522 (1904) ; Newman v. Gates, 165 Ind. 171, 72 N. W. 638 
 (1904). 
 
 s Kemp V. Andrews, Garth. 170 (1690). 
 
 •Martin v. Crompe, 1 Ld. Ray. 340; Comb. 474, 2 Salk. 444 (1696). 
 
140 THE LAW OF PARTNERSHIP 
 
 not make the representative of the deceased partner a party, in 
 an action to collect debts due the firm.^ 
 
 2. Legal Title to Firm Assets survives. — Although 
 the survivorship of a firm's legal remedies was firmly estab- 
 lished by the early decisions, above referred to, "it is remark- 
 able that the law" as to the survivorship of the firm's legal title 
 was left in uncertainty until the latter half of the last century. 
 As late as 1851, Baron Parke, delivering the unanimous opinion 
 of the Court of Exchequer,^ declared that there was "no satis- 
 factory authority for the position that the title to partnership' 
 chattels survives at law; and the authorities the other way 
 greatly predominate." He even expressed a doubt as to 
 the surviving partner's authority to dispose of firm chattels 
 to pay firm debts, — an authority which is now universally 
 recognized.^ 
 
 But, in the language of Lord Justice Lindley, "all this is of 
 little consequence now, " * for both in England and in this coun- 
 try ^ the survivorship of the firm's legal title is well established. 
 An authoritative statement of the present rule in England, on 
 this point, is the following: ^ "The representative of a deceased 
 partner has no specific interest in or claim upon any particular 
 part of the partnership estate. The whole property therein 
 accrues to the surviving partner; and he is the owner thereof, 
 both at law and in equity. The right of the deceased partner's 
 representative consists in having an account of the property, 
 of its collection and application, and in receiving that portion of 
 the clear balance that accrues to the deceased's share and interest 
 in the partnership." "^ 
 
 1 Haig V. Gray, 3 DeG. & S. 741 (1850) ; Burdiok's Cases on Part. 246. 
 
 = Buckley v. Barber, 6 Exch. 164, 20 L. J. Exch. 114 (1851). 
 
 5 Lindner v. Adams Co. Bank, 49 Neb. 735, 68 N. W. 1028 (189G) ; 
 Burdiok's Cases on Part. 262. 
 
 < Lindley on Part. (7tli ed.) 380, note 2. 
 
 ' It is reaffirmed in The Uniform Partnership Act, § 25, (2), (d). 
 
 » Lord Westbury in Knox w. Gye, L. R. 5 H. of L. 656, 42 L. J. Ch. 
 234 (1872). 
 
 ' In Taylor v. Taylor, 28 L. T. R. 189 (1873), Lord Justice James re- 
 ferred to Baron Parke's statements in Buckley v. Barber, supra, as "the 
 peculiar views on the subject once taken by the Court of Exchequer." 
 The right of the deceased partner's representative to an account is recog- 
 
THE NATURE OF A PARTNERSHIP 141 
 
 Such is not the rule in Louisiana, where it is held that the 
 surviving partner cannot alienate the partnership property; 
 that the heirs of the deceased partner become joint owners with 
 the survivor of the common property, and the survivor can only 
 ■dispose of his right in the thing sold.'^ 
 
 (a) Surmving Partner is not Assignee of Deceased Partner's 
 Interest. — The title of the firm devolves upon the surviving 
 partner by operation of law ; he is not in any sense the assignee 
 of the deceased partner's interest. The surviving partner, there- 
 fore, by virtue of his ownership of a firm judgment, can redeem 
 land from a sheriff's sale, without producing an assignment of 
 the judgment; although the statute governing the case requires 
 that a creditor, claiming a right to redeem under a judgment which 
 has been transferred to him, must file an assignment of such judg- 
 ment.^ So the surviving partner can endorse firm paper in his 
 individual name.' 
 
 (6) Surmving Partner can make a General Assignment. — As 
 the firm title vests in the surviving partner, he can transfer it 
 to a trustee for the benefit of creditors, without obtaining the 
 consent of the representative of the deceased partner. In this 
 assignment, he may give such preferences among firm creditors 
 as he deems proper.* His exclusive power to convert firm assets 
 into cash results from the nature of a partnership. "It was 
 never in the contemplation of the contract of partnership that 
 strangers, as the representatives of a deceased partner are, should 
 
 nized in Harrah v. Dyer, 180 Ind. 229, 102 N. E. 14, 1916 B. Ann. Cas. 
 868 (1913) ; Porter v. Long, 136 Micli. 150, 98 N. W. 990, 4 Ann. Cas. 
 177 (1904) ; Gresham v. Haroourt, 93 Tex. 149, 53 S. W. 1019 (1899) ; 
 RoweU V. Rowell, 122 Wis. 1, 99 N. W. 473 (1904). 
 
 1 Pickerell v. Fisk, 11 La. Ann. 277 (1856) ; Simmins v. Parker, 4 
 Martin (n. s.), 200, 207 (1826). 
 
 2 Nehbross v. Bliss, 88 N. Y. 600 (1822) ; Burdick's Cases on Part. 246 ; 
 ■Gamble v. Rural Ind. School Dist., 132 Fed. 514, 522 (1904). 
 
 ' Bank v. Hollingsworth, 135 N. C. 556, and cases cited at p. 569, 47 
 S. E. 618 (1904) ; Miller v. Berry, 19 S. Dak. 625, 104 N. W. 311 (1905) ; 
 note and mortgage in the name of the deceased partner may be trans- 
 ferred by the surviving partner. 
 
 * Emerson v. Senter, 118 U. S. 2, 6 Sup. Ct. 981, 30 L. Ed. 49 (1885) ; 
 Burdick's Cases on Part. 253 ; Bartlett v. Smith, 5 Neb. Unof . 337, 98 
 N. W. 687 (1904) ; Patton v. Leftwieh, 86 Va. 421, 10 8. E. 686, 6 L. R. A. 
 ^69, 19 Am. S. R. 902 (1889). 
 
142 THE LAW OP PARTNERSHIP 
 
 have a voice in the determination of questions relating to the 
 distribution of the firm assets among its creditors." ^ Each 
 partner, by the exercise of his delectus personarum, has signified 
 his confidence in his copartners to manage the firm's affairs to 
 the exclusion of strangers, and has conferred upon them full 
 authority for such management. If all the firm assets are devoted 
 to the payment of firm debts, it is immaterial to the estate of the 
 deceased partner that some of the creditors are paid in full, while 
 others obtain little or nothing from the firm property. The 
 liability of the separate estate is not increased by preferences 
 among firm creditors.^ 
 
 In some States the power of the surviving partner to make a 
 general assignment for the benefit of creditors has been taken 
 away by statute.' 
 
 The Uniform Partnership Act contains no express provision 
 on this topic, but appears to recognize the prevailing doctrine 
 as above set forth.* 
 
 (c) 75 the Surviving Partner a Trustee f — That he " is not 
 a trustee in the full and proper sense of that word" is admitted 
 everywhere. The House of Lords has declared that "There is 
 nothing fiduciary between the surviving partner and the dead 
 partner's representative, except that they may respectively sue 
 each other in equity ; " ^ and Parliament has enacted that, " Sub- 
 ject to any agreement between the partners, the amount due from 
 surviving or continuing partners to an outgoing partner or the 
 representatives of a deceased partner in respect of the outgoing 
 or deceased partner's share is a debt accruing at the date of the 
 dissolution or death." ® 
 
 > Williams v. Whedon, 109 N. Y. 333, 16 N. E. 365, 4 Am. S. R. 460 
 (1888) ; Burdick's Cases on Part. 254 n. ; Hewitt v. Hayes, 204 Mass. 
 586, 90 N. B. 985, 27 L. R. A. n. s. 154 (1910). 
 
 2 Salsbury v. EUison, 7 Colo. 167, 303, 2 Pao. 906, 3 Pae. 485 (1883), 
 denies the power of a surviving partner to give preferences in a general 
 assignment, on the ground that he is a trustee for all the firm creditors, 
 and must distribute the property ratably among them. 
 
 ' State V. Withrow, 141 Mo. 69, 41 S. W. 980 (1897) ; Barnes v. Stanley, 
 95 Mo. App. 688, 69 S. W. 682 (1902). 
 
 « Uniform Partnership Act, § 9, (3), (a) and § 37. 
 
 5 Knox V. Gye, L. R. 5 H. L. 656, 42 L. J. Ch. 234 (1872). 
 
 « Partnership Act, 1890, § 43 ; Uniform Partnership Act, § 43. 
 
THE NATURE OF A PARTNEKSHIP 143 
 
 (d) Surviving Partner's Quasi Trmteeship. — In this country, 
 his quasi trusteeship has a more extensive character. It is true 
 that the legal title to firm assets is "so completely vested" in 
 him that he may join in the same suit demands due him as an in- 
 dividual and those due him as survivor, and in an action upon 
 a firm claim the defendant can set off a claim against him as an 
 individual.^ If he is the surviving partner of two firms, he may 
 join demands of both in one suit.^ Upon his death, the right to 
 settle firm affairs passes to his personal representative.' Never- 
 theless, the representatives of the deceased partner are not lim- 
 ited to the personal liability of the survivor for firm assets. They 
 possess equitable interests therein which the courts will protect 
 and enforce.* 
 
 (e) Compelling Survivor to Apply Firm Property to Firm Debts. 
 — If the surviving partner neglects his duty of settling the part- 
 nership business, or acts in bad faith, "the representative of the 
 deceased partner may invoke the interference of a court of equity, 
 and compel such a disposition of the partnership effects as will 
 be just and proper; this because, as between the partners, and 
 therefore, as between the surviving partner and the personal 
 representative of the deceased partner, the joint assets constitute a 
 fund to be appropriated primarily to the discharge of partnership 
 
 1 Holbrook v. Lackey, 13 Met. (54 Mass.) 132 (1847), and cases cited 
 therein; Nehbross v. Bliss, 88 N. Y. 600 (1882); Burdick's Cases on 
 Part. 246, and cases cited in tlie opinion. Contra, Weil v. Jones, 70 Mo. 
 560 (1879). 
 
 2 Stafford v. Gold, 9 Pick. (26 Mass.) 533 (1830). 
 
 3 Galbraith .,. Tracy, 153 111. 54, 38 N. E. 937, 28 L. R. A. 129, 46 
 Am. S. R. 867 (1894) ; Burdick's Cases on Part. 257 ; Dayton v. Bartlett, 
 38 Oh. St. 357 (1882). 
 
 * In Porter v. Long, 136 Mich. 150, 98 N. W. 990, 4 Ann. Cas. 177, with 
 note (1904), the surviving partner was charged with interest on interest, 
 because he fraudulently misapplied funds : Egan v. Wirth, 26 R. I. 363, 
 58 At. 987 (1904) ; the administrator of the deceased partner was held 
 entitled to an account of the business transactions and profits from the 
 survivor; Gresham v. Harcourt, 93 Tex. 149, 53 S. W. 1019 (1899) ; the 
 survivor is not responsible for loss due to the depreciation of firm prop- 
 erty, if he proceeds with reasonable diligehce in closing up the partnership 
 business; Rowell v. Rowell, 122 Wis. 1, 99 N. W. 473 (1904); holding 
 the surviving partner liable to account for the partnership good-will 
 valued at $35,000. In Krueger v. Speith, 8 Mont. 482, 20 Pac. 664 
 (1889), the survivor is declared to be a quasi trustee. 
 
144 THE LAW OF PARTNERSHIP 
 
 liabilities." ^ This doctrine is codified in the Uniform Partnership 
 Act.2 
 
 In case the survivor is insolvent and makes an assignment for 
 the benefit of creditors, the assignee takes whatever remains of 
 the firm assets subject to the same burden or obligation that was 
 impressed upon it in the survivor's hands. If hersells it, the 
 proceeds must be accounted for by him to the representative of 
 the deceased partner. Though the legal title to the firm assets 
 passes to the assignee, they " form a trust fund for the realization 
 so far as possible of the" firm liabilities.' The trustee in bank- 
 ruptcy of the surviving partner takes title to the firm property 
 and must distribute it among firm creditors.* 
 
 (/) Firm Assets may be reclaimed from a Fraudulent Purchaser. 
 — In case the surviving partner disposes of the firm assets for 
 less than their value, he may be compelled to account for them 
 at the price which he ought to have obtained. If the purchaser 
 has colluded with him in the sacrifice of the assets, the personal 
 representatives of the deceased may maintain an action against 
 the purchaser "as a wrongdoer and trustee de son tort" ; and such 
 an action is not barred by an unsatisfied judgment against the 
 survivor in a suit for an accounting.^ In case the property 
 remains in the hands of the fraudulent purchaser, the representa- 
 tive of the deceased partner may have a receiver appointed to 
 take the property and apply the proceeds thereof to the satisfac- 
 tion of partnership claims.^ 
 
 (g) Survivor is subject to a Trustee's Disability to buy Firm 
 Assets. — In the cases cited under the last heading, the courts 
 refer to the position of a surviving partner in such terms as these : 
 "While he held the legal title, he held it subject to a kind of trust 
 
 1 Emerson v. Senter, 118 U. S. 2, 6 Sup. Ct. 981, 30 L. Ed. 49 (1885) ; 
 Burdiek's Cases on Part. 253 ; Murphy v. Murphy, 217 Mass. 233, 104 
 TS[. E. 466 (1914). 
 
 = L. of Md. 1916, Ch. 175, § 25, (2), (d), and § 37. 
 
 3 Preston v. Fitch, 137 N. Y. 41, 33 N. E. 77 (1893). 
 
 * Hewitt V. Hayes, 204 Mass. 587, 90 N. E. 985, 27 L. R. A. n. s. 154 
 (1910). 
 
 « RusseU V. McCall, 141 N. Y. 437, 36 N. E. 498, 38 Am. S. R. 807 
 (1894) ; Burdiek's Cases on Part. 256. 
 
 « Dewey v. Chapin, 156 Mass. 35, 30 N. E. 223 (1892) ; Burdiek's Cases 
 on Part. 255. 
 
THE NATURE OF A PARTNERSHIP 145 
 
 which equity will enforce in favor of those interested in it. " " The 
 position is somewhat anomalous, — not exactly and wholly a 
 trustee, and yet not a full owner of the assets which he takes or 
 retains possession of by reason of survivorship." 
 
 This quasi trusteeship of the surviving partner has been rec- 
 ognized also in cases where his right to purchase firm property 
 has been considered. While it is his duty to settle up the firm's 
 affairs with reasonable promptness, it is also his duty to act 
 fairly and honestly in disposing of firm property. He cannot, 
 consistently with this duty, purchase it from himself, either at 
 public or private sale.^ If he assumes to buy it, the representa- 
 tives of the deceased partner can have the sale set aside, or can 
 compel him to account for the property at its fair value.^ He 
 will not be allowed to make a profit out of his fiduciary position 
 at the expense of the deceased partner's estate, either by purchas- 
 ing firm assets,^ or by consenting to the extinguishment of a 
 contract belonging to the partnership and the substitution there- 
 for of one in the profits of which he alone is to participate.* 
 
 The Uniform Partnership Act codifies these judicial views.^ 
 
 1 Valentine v. Wysor, 123 Ind. 47, 23 N. E. 1076, 7 L. R. A. 788, with 
 note (1890). In this case it was said the survivor could buy the de- 
 ceased partner's interest from the representative, as he was not trustee 
 of that interest. In Jones v. Dulaney, 86 S. W. (Ky.) 547 (1905), it is 
 declared that a surviving partner holds the &m assets as the trustee of 
 an express trust, and that if he recovers a judgment for tlie benefit of 
 the firm, and assigns it in payment of his individual debt to one knowing 
 the facts, the assignment is subject to the rights of firm creditors. In 
 Tennant v. Dunlop, 97 Va. 235, 33 S. E. 620 (1899), the doctrine of Knox v. 
 Gye, L. R. 5 H. L. 656, 42 L. J. Ch. 234 (1872) is criticized, and the court 
 holds that the surviving partner is "a trustee in a certain sense, and is 
 subject to the rules and principles of equity which pertain to persons who 
 sustain a fiduciary relation," and must make full disclosure to the repre- 
 sentative of the deceased partner of the value of the firm assets. He 
 must also account for the good-will of the business. 
 
 2 Galbraith v. Tracy, 153 111. 54, 38 N. E. 937 (1894) ; Burdick's Cases 
 on Part. 257. A different view seems to have been taken in Mulherin v. 
 Rice, 106 Ga. 810, 32 S. E. 865 (1899). 
 
 8 Denholm v. McKay, 148 Mass. 434, igN. E. 551 (1889). 
 
 * Little V. Caldwell, 101 Cal. 553, 36 Pac. R. 107 (1894). Accord. 
 Cresse v. Loper, 72 N. J. Eq. 784, 65 At. 1001 (1907) ; Western Securities 
 Co. V. Atlee, 168 la. 650, 151 N. W. 56 (1915). 
 
 s L. of Md. 1916, Ch. 175, §§ 21 and 37. 
 
146 THE LAW OF PARTNERSHIP 
 
 3. It IS THE Firm Title which survives. — Notwithstand- 
 ing the common law decisions/ which treat the title of the surviv- 
 ing partner as indistinguishable from his individual title, in equity 
 the two titles are recognized as distinct and independent. This 
 is disclosed in some of the cases already cited.^ It is brought out 
 still more clearly in the cases now to be considered. 
 
 The surviving partner in a banking firm sued the indorser of 
 a promissory note made by the deceased partner, and discounted 
 for him by the firm. The indorser defended on the ground that 
 his indorsement was for the accommodation of the deceased 
 partner, Conrad. This being admitted by the plaintiff, the court 
 declared that defendant was a mere surety for Conrad, " and these 
 facts all being known to Conrad, the partner of plaintiff, in law 
 were all known to plaintiff. This presents a case in which Con- 
 rad was both payer and payee, and so far as Conrad was con- 
 cerned never constituted what is known as a legal cause of action. 
 It could only be adjusted by the partners themselves, in equity, 
 upon a dissolution and settlement of the concern. Neither would 
 it have been the subject of an action at law against the defendant 
 by the firm if Conrad were still living, as the note — the cause of 
 action — would necessarily disclose the equity of the case. The 
 death of Conrad, leaving the plaintiff survivor, does not change 
 the law of the case, and does not authorize the plaintiff to bring 
 an action which he and his copartner would not have had a right 
 to bring if he were living." ' 
 
 (a) Judgments against the Surviving Partner. — Equity will sub- 
 ordinate the lien upon firm property of judgments, obtained by 
 separate creditors against the survivor, to partnership liabilities. 
 Such creditors will be limited to the share of their debtor; and 
 that share, as we have seen, is only his interest in the balance which 
 remains after the firm debts and the equities of partners are 
 satisfied. If, then, the surviving partner is indebted to the firm, 
 that debt must be paid out of firm property, that is, out of his 
 share in the assets of the partnership remaining after the payment 
 of the firm debts, if the representative of the deceased partner 
 
 ' Supra, pp. 140-142. 
 
 2 Especially Preston v. Pitch, 137 N. Y. 41 (1893). 
 ' Patton V. Can, 117 N. C. 176, 23 S. E. 182 (1895) ; Burdick's Cases 
 on Part. 248. 
 
THE NATURE OF A PARTNERSHIP 147 
 
 demands it, before a court of equity will permit the separate judg- 
 ment creditors to enforce their judgments against the firm assets 
 in the hands of the surviving partner. Nor does it matter that 
 judgments are obtained and executions levied before the repre,- 
 sentative of the deceased partner institutes proceedings in equity.^ 
 Survivorship does not work a merger of the firm title in the indi- 
 vidual title, at least in equity; and the representative of the 
 deceased partner may invoke the aid bi the court of equity to 
 prevent such merger, as he did in the case last cited. 
 
 The same doctrine has been enforced by common law courts. 
 Upon the death of a partner and the levy of an execution by a 
 firm creditor on the firm assets, the two surviving partners claimed 
 their personal property exemptions out of the firm effects. By 
 the law of that jurisdiction a partner is entitled to this exemption, 
 if his copartners consent. Each of the survivors assented to the 
 other's claim of exemption, insisting that the representative of 
 the deceased partner had no voice in the matter. But the court 
 refused to take this view, saying that to sustain their contention 
 "would be 'to stick in the bark' and to abandon the principle 
 upon which the rule has been established; that although the 
 partnership was dissolved by the death of A. J. Boyd, still his 
 estate (his administrator) has the same interest in its effects and 
 is under the same obligation to its creditors that A. J. Boyd was 
 when living." ^ 
 
 (b) Bankruptcy of Sunimng Partner. — That the firm title 
 to firm property is not merged in the individual title of the sur- 
 viving partner has been repeatedly adjudicated in bankruptcy 
 cases. Dawson and Windross had been partners. Dawson died ; 
 Windross deposited firm moneys with third parties for the pay- 
 ment of firm creditors, and became bankrupt. Yet these moneys 
 were held to be firm assets, and not a part of Windross's separate 
 estate.^ 
 
 1 Maddock's Admx. v. Skinner, 93 Va. 479, 25 S. E. 535 (1896) ; Bur- 
 dick's Cases on Part. 250. 
 
 2 Richardson v. Redd, 118 N. C. 677, 24 S. E. 420 (1896) ; Burdick's 
 Cases on Part. 260. 
 
 3 Ex parte Leaf, In re Simpson & Windross, 4 Deac. 287 (1840). See 
 Ex parte Manchester Bank, In re Mellor, 12 Ch. D. 917 (1879) ; Burdick's 
 Cases on Part. 263 ; and U. S. Bankruptcy Law of 1898, § 5 (a) ; Hewitt 
 t). Hayes; 204 Mass. 587, 90 N. E. 985, 27 L. R. A. n. s. 154 (1910). 
 
148 THE LAW OF PARTNERSHIP 
 
 It has been decided, also, that "a bankrupt who is the sur- 
 viving partner in a bankrupt partnership is not entitled to claim 
 exemptions from property belonging to the firm estate." ^ 
 
 4. By Partnership Agreement a Deceased Partner's 
 Interest may vest in his Representative. — While the 
 death of a partner ordinarily dissolves the firm and vests the 
 partnership title in the survivors,^ this result may be prevented 
 by the agreement of the partners. If they stipulate that, in 
 case of the death of a member, "his or her legal heirs or legal 
 representatives shall occupy the same place in the copartner- 
 ship as was occupied by the partner ", such death does not dis- 
 solve the firm, nor in any way change the relations of the sur- 
 vivors to the firm title.^ The partnership continues without a 
 break, the representative of the deceased member taking his 
 place as in a joint stock company. But such a stipulation must 
 be express and unequivocal.^ If it is, and the personal represen- 
 tative of the deceased partner takes the place of the deceased, 
 the Uniform Partnership Act "recognizes the fact that the busi- 
 ness has been one business from the start." * There is but one 
 firm estate and but one set of firm creditors.^ 
 
 5. By Partnership Agreement, a Deceased Partner's 
 Interest may vest in the Survivors. — On the other hand, 
 the partners may agree that upon the death of any of their num- 
 ber, the survivors shall become the absolute owners of the firm 
 assets, with, a personal liability to pay the deceased partner's 
 representatives for his interest. If the firm is solvent, such an 
 agreement operates to convert the title of the original firm in- 
 stantly upon the death of a member into the title of the survivors. 
 If the agreement provides that the death shall not dissolve the 
 firm, but that the survivors shall carry on the business, it relieves 
 
 1 In re Hosier, 112 Fed. 138, 7 Am. B. R. 268 (1901). 
 
 2 Andrews v. Stinson, 254 lU. Ill, 98 N. E. 222, 27 Ann. Cas. 927, 
 with note (1912) ; Stearns v. Inhabitants of Brookline, 219 Mass. 238, 
 107 N. E.57 (1914). 
 
 'Rand v. Wright, 141 Ind. 226, 39 N. E. 447 (1895); Burdiek's 
 Cases on Part. 266. 
 
 « Alexander v. Lewis, 47 Tex. 481 (1877) ; Altgelt v. Sullivan (Tex. 
 Civ. App.), 79 S. W. 333 (1903). 
 
 6 William Draper Lewis, in 24 Yale L. J. 617, 636-7. 
 
 « L. of Md. 1916, Ch. 175, § 41. 
 
THE NATURE OF A PARTNERSHIP 149 
 
 the survivors from the necessity of winding up the affairs of the 
 old firm and constitutes them partners in a new firm ; but it does 
 not secure the continuance of the old firm title, either for the benefit 
 of the deceased partner's representatives or for the benefit of the 
 old firm's creditors. The right of the representatives is to have 
 the value of their testator's interest ascertained in the method 
 prescribed by the agreement, and paid by the survivors in the 
 stipulated manner. They cannot insist upon having the old 
 firm assets applied to the payment of its debts ; nor can its cred- 
 itors, upon the bankruptcy of the survivors, compel the appro- 
 priation of any assets of the old firm, remaining in specie, to the 
 satisfaction of their claims, in preference to the claims of creditors 
 of the new firm.^ 
 
 The Uniform Partnership Act provides that when the business 
 is carried on by the survivors without liquidation, "creditors of 
 the dissolved partnership are also creditors of the partnership so 
 continuing the business",^ thus modifying the doctrine of the 
 cases referred to above. 
 
 (a) Such an Agreement must he explicit. — Provisions which 
 extinguish the right of an outgoing partner to have the firm 
 assets applied to the payment of firm debts, whether operating 
 against ^ or in favor * of the estate of the deceased partner, or 
 when they are contained in dissolution agreements between 
 living partners,^ are strictly construed. Their language must 
 show clearly and explicitly that the parties intended to destroy 
 the right. Such provisions are looked upon as "very special" ^ 
 and exceptional. 
 
 In Ex parte Morley, the partnership agreement provided that, 
 upon the death of W. White, the shares of his copartners, W. T. 
 White, his son, and Collins, should belong to W. White's personal 
 representatives, who should pay to these survivors sums equal 
 to their shares of the profits during the preceding year, and £500 
 
 ' In re Simpson, 9 Ch. App. 672, 43 L. J. Bank, 147 (1872). 
 
 2 L. of Md. 1916, Ch. 175, §§ 41, 42. 
 
 2 In re Simpson, supra. 
 
 " Ex parte Morley, 8 Cli. App. 1026, 29 L. T. 442 (1873). 
 
 » In re Daniel, Ex parte Powell, 3 Manson's Bankruptcy R. 312, 75 
 L. T. 143 (1896). "Generally speaking, the equitable right of the out- 
 going partner mil continue unless there are clear words taking it away." 
 
 « Ex parte Dear, 1 Ch. D. 514, 45 L. J. Bank, 22 (1876). 
 
150 THE LAW OF PARTNERSHIP 
 
 in addition. Yet the court held that it was not intended by the 
 deed to alter the rights of creditors, and vest the entire assets in 
 the father's representatives, but to vest them in such representa- 
 tives subject to the payment of the debts. Lord Justice James 
 said : " There was nothing in that deed, if it could have been valid 
 as against the rights of creditors, which professed to say that the 
 son or the other partners going out were not to have their usual 
 legal inherent right to be indemnified against the debts, in the 
 mode in which the court of bankruptcy or the court of chancery 
 indemnifies a person in respect of debts to which he is liable, 
 but from which he is entitled to be exonerated by some one else. 
 The mode in which that sort of thing is done is this : that, if there 
 be two estates, a joint estate and separate estate, the court takes 
 care that the joint assets are applied in payment of the debts of 
 the joint creditors, before any part of them goes to the separate 
 creditors. The trade assets, beyond all question, were joint 
 assets, so far as they remained in specie. Those, therefore, were 
 to be applied in payment of the joint creditors, so far as there were 
 any joint creditors remaining, and, if there was a surplus, that 
 would be applied among the persons entitled to it." 
 
 The decision has been followed in England without question. 
 In a later case the partnership agreement between a father and 
 son provided that the machinery and stock in trade should be- 
 long to the father, and not form part of the capital of the firm. 
 Yet the court held that this machinery and stock were firm assets ; 
 that upon the father's death, the son had the right to have every 
 shilling of this joint estate applied in payment of the joint debts ; 
 and that joint creditors had the right to have this estate, so far 
 as it remained in specie, upon the son's bankruptcy appropriated 
 to the satisfaction of their claims.^ 
 
 § 6. Liability of Surviving Partners. 
 
 In the preceding section, the liability of the surviving partner 
 to the estate of his deceased associate has been stated in general 
 terms. It will be referred to again in Chapters VI and VIII. 
 
 His liability to the creditors of the firm is not confined to an 
 honest and faithful disposition of its assets and to their appli- 
 
 '■ Ex parte Manchester Bank, In re Mellor, 12 Ch. D. 917 (1879), 
 13 Ch. D. 465 (1880) ; Burdick's Cases on Part. 263. 
 
THE NATUKE OF A PARTNERSfflP 151 
 
 cation to the firm debts. He is personally liable for every obli- 
 gation of the partnership; and actions for the enforcement of 
 such obligations are to be brought against him alone. Even 
 though the action is an equitable one and calls for an accounting, 
 if it has for its object the collection of a partnership indebted- 
 ness, it is properly brought against the survivor alone. The 
 representatives of the deceased partner are strangers to the 
 obligation.^ They are not to be joined as defendants with the 
 surviving partner ; ^ -although the estate of the deceased partner 
 may be compelled, by appropriate proceedings against it, to pay 
 partnership debts. The nature of such proceedings will be dis- 
 cussed in the last section of Chapter V. 
 
 1. Surviving Partner as a Surety for the Firm. — While 
 the surviving partner is liable to be sued alone by firm creditors, 
 because of the joint character of all firm obligations, yet, when- 
 ever he is obliged to satisfy them out of his individual property, 
 he acts as surety for the firm, and not as a principal common 
 law joint obligor. If he borrows money with which to meet them, 
 he may apply the proceeds of firm property to the repayment 
 of the loans.^ In case he makes an assignment for the benefit 
 of creditors, before repayment, he may include the loans in the 
 list of firm debts which are to be paid by the assignee out of 
 firm assets.* If the property of the firm is insufficient for the 
 
 ' Rusling V. Brodhead, 55 N. J. Eq. 200, 35 At. 841 (1896) ; Burdick's 
 Cases on Part. 273. 
 
 2 "A surviving partner is the representative of his house; in him their 
 rights concentre, and from him their dues are to be exacted ; if only one 
 remain, he may be sued alone without joining the executors of his com- 
 panions." Lex Merc. Am. 446, 447. Accord. Roach v. Brannon, 67 
 Miss. 490, 500 (1879) ; Krueger v. Speith, 8 Mon. 482, 20 Pac. 664 (1889). 
 
 ' Kenney v. Howard, 68 Vt. 194, 34 At. 700 (1896) ; Burdick's Cases on 
 Part. 271. The surviving partner in this case gave a bond to apply the 
 proceeds of the sales of firm property "on said indebtedness of the firm." 
 Pending the sale of the property he borrowed money for the payment of 
 firm debts, giving his individual notes therefor. The court held that in 
 applying the proceeds of subsequent sales of firm property to the satisfac- 
 tion of these notes, the survivor was applying them "on said indebted- 
 ness of the firm." 
 
 * Durant v. Pierson, 124 N. Y. 444, 26 N. B. 1095, 12 L. R. A. 146, 
 21 Am. S. R. 686 (1891) ; People's Nat. Bank v. Wilcox, 136 Mich. 567, 
 100 N. W. 24 (1904), applies the same doctrine to a mortgage of firm 
 property by the surviving partner to secure a firm debt. 
 
152 THE LAW OF PARTNERSHIP 
 
 payment of its debts, the surviving partner, upon discharging 
 them, is entitled to contribution from the estate of the dead 
 partner as a co-surety for the firm.^ 
 
 § 6. Firm Debts and Partners' Joint Debts. 
 
 If it is true that a "partnership as such has its own property, 
 and its own creditors, as distinct from the individual property 
 of its members and their individual creditors",^ it should fol- 
 low that a judgment against the members "of a partnership, for 
 an indebtedness not connected with firm affairs, is not enforce- 
 able against thfe firm's property. Under it only the separate 
 property of the partners and their several shares in the firm 
 assets can be sold.^ Nor should it matter that the judgment 
 is obtained upon a joint obligation of the partners'.* This view 
 is supported by no little judicial authority.^ 
 
 1. No Distinction between Firm Debts and Partners' 
 Joint Debts in some Jurisdictions. — In England, all joint 
 obligations of the partners are collectible out of partnership 
 assets, whether contracted in the business of the firm or out- 
 side of it. Accordingly, if the members of a firm together with 
 others enter into a joint and several bond, the obligee may sue 
 the partners as joint promisors, and upon recovering judgment 
 may take out execution against the partnership assets, although 
 the bond has no connection with the partnership business; or 
 if the firm is in bankruptcy, he may prove against the firm estate.^ 
 
 (a) Reasons assigned by American Courts. — The courts in 
 this country which have permitted judgments against partners 
 upon their joint obligations unconnected with the partnership 
 business, to be collected out of firm assets, have based their deci- 
 sions on the following grounds. 
 
 1 See Chap. VI. § 3, infra. 
 
 2 Bulger V. Rosa, 119 N. Y. 459, 467, 24 N. E. 853 (1890). 
 
 3 Richards v. Le Veille, 44 Neb. 38, 62 N. W. 304 (1895) ; Burdick's 
 Cases on Part. 281. 
 
 ^ Whelan v. Shain, 115 Cal. 326, 47 Pac. 57 (1896) ; Burdick's Cases 
 on Part. 283. 
 
 6 In re Holbrook, 2 Low. (U. S.) 259 (1873) ; Ex parte Weston, 12 
 Met. (53 Mass.) 1 (1846) ; Dunnica v. Clinkscales, 73 Mo. 500 (1881) ; 
 Wall V. Fife, 37 Pa. 394 (1860). 
 
 « Hoare v. Oriental Bank Corp., 2 App. Cas. 589, 597 (1877). 
 
THE NATURE OF A PARTNERSHIP 153 
 
 Firm creditors, it is said, can enforce their claims against the 
 firm property only through the equity which the members of 
 the firm possess to have the firm property applied to firm assets. 
 This equity the partners surrender when they enter into a joint 
 obligation, for they thereby clothe the obligee with authority to 
 take joint property in satisfaction of the joint debt. The joint 
 debt, being the debt of each partner, neither has any equitable 
 right to insist that firm assets should be applied to the firm debts 
 rather than to this debt.^ 
 
 This reasoning, it will be seen, ignores the doctrine that "firm 
 creditors are preferentially entitled to be paid out of the firm 
 assets", and that this equity is an "element in the security of 
 the firm creditors";^ or, in other words, that this equity is a 
 property right of the creditors. In Saunders v. Reilly, it is said 
 that the partners, although insolvent, could have taken their 
 firm property and applied it upon a joint judgment, which was 
 not obtained upon a firm debt. But no authority is cited for this 
 important proposition, a proposition which, it is submitted, is 
 unsound in principle, and opposed to the weight of authority. 
 Moreover, it appears to be irreconcilable with the doctrines which 
 have been repeatedly affirmed by the court which announced it.^ 
 
 (6) Claims of Joint Creditors in Bankruptcy. — Whether, 
 upon the bankruptcy of a partnership, creditors, holding the 
 joint obligations of the partners unconnected with the firm busi- 
 ness, can share pari passu with the firm creditors in firm assets, 
 appears to depend upon the provisions of the bankruptcy statutes. 
 
 In England, as we have seen, no distinction is made between 
 these two classes of debts. The language of the statute is as 
 follows : " In the case of partners the joint estate shall be appli- 
 cable in the first instance in payment of their joint debts, and the 
 separate estate of each partner shall be applicable in the first 
 
 1 Steiner v. Peters Stone Co., 119 Ala. 371, 24 So. 576 (1898) ; Coueh- 
 man v. Maupin, 78 Ky. 33 (1879) ; Saunders v. Reilly, 105 N. Y. 12, 12 
 N. E. 170 (1887) ; Burdick's Cases on Part. 277. 
 
 2 Bulger V. Rosa, 119 N. Y. 459, 24 N. E. 853 (1890). 
 
 3 See Menagh v. WhitweU, 52 N. Y. 146 (1873) ; Burdick's Cases on 
 Part. 222 ; Bulger v. Rosa, supra, and other New York cases referred to 
 in the preceding section. Also Bullock v. Hubbard, 23 Cal. 495, 83 Am. 
 Dec. 130 (1863); In re Knowlton & Co., 196 Fed. 837 (1912), aff'd 202 
 Fed. 480, 120 C. C. A. 610 (1913). 
 
154 THE LAW OF PARTNERSHIP 
 
 instance in payment of his separate debts." ^ Hence the courts 
 recognize but three classes of creditors, in administering the 
 estates of bankrupt partners : first, creditors to whom all the 
 partners are jointly liable; second, creditors to whom the part- 
 ners are liable severally and respectively; third, creditors to 
 whom the partners are liable both jointly and separately for the 
 same debt.^ 
 
 Moreover, the English statute permits the consolidation of 
 bankruptcy proceedings against joint debtors. Under this pro- 
 vision, the courts have consolidated the separate adjudications 
 of two firms, having the same members, and have distributed 
 their aggregate properties as one estate.' This course appears 
 to have been followed by a Federal District Court in one in- 
 stance.* The facts are meagrely set forth, but according to the 
 statement in the report, the bankrupt partners had succeeded 
 to the business of one partnership in New York, and to that of 
 an entirely distinct one in Philadelphia. Nor is there any inti- 
 mation that they had merged the two sets of capital, or consoli- 
 dated the two business houses. Yet the court declared that they 
 ought not to be treated as separate and distinct firms in the distri- 
 bution of assets belonging to the bankrupts. 
 
 As a rule, however, our courts, in administering bankrupt 
 estates, have treated the firm creditors as preferentially entitled 
 to the firm assets. In re Nims,^ the subject is discussed at 
 
 ' British Bankruptcy Act of 1883, § 40 (3). 
 
 2 Lindley on Part. (7th ed.) 771. 
 
 3 Harris v. FarweU, 13 Beav. 403, 15 L. J. Ch. 185 (1846). 
 
 ■• In re Vetterlein, 5 Ben. (U. S. Dist. Ct.) 311 (1871) ; Burdick's 
 -Cases on Part. 276. In Gay v. Ray, 195 Mass. 8, 80 N. E. 693 (1907), 
 it was held that "Where the business of a partnership has been placed 
 in the hands of a receiver at the suit of a creditor of a partner, business 
 done in another city should be brought in, so as to affect the value of 
 defendant's share, if such business is an extension of the original busi- 
 ness, but not if carried on by the same partners as a new and independent 
 venture." 
 
 6 16 Blatch. (U. S. Cir. Ct.) 439; Fed. Cas. No. 10,269 (1879), revers- 
 ing the Decision of the District Court, which is reported in 18 N. B. R. 
 91 (1878), to the effect that "joint creditors share equally in joint assets, 
 whether their debts are partnership debts or not." Accord. In re Weisen- 
 berg & Co., 131 Fed. 517 (1904) ; but evidence was admitted to show that 
 joint notes were in fact firm debts. 
 
THE NATURE OF A PARTNERSHIP 155 
 
 ■length by Judge Blatchford, and the conclusion is reached that 
 "debts of the firm are different in character from other joint 
 •debts of the partners." 
 
 § 6. (A.) Firm Debt is a Debt of Each Partner. 
 
 While a partnership has its creditors as distinct from the sep- 
 arate creditors of its members, it does not follow that firm cred- 
 itors are not also creditors of the several partners. Unless a 
 partnership is changed into an artificial person by statute, con- 
 tracts entered into in its name are the contracts of its members.^ 
 They are personally liable to the extent of their several fortunes 
 for all firm obligations. Therefore, in determining whether an 
 insolvent's indebtedness amounts to the sum required by statute 
 to be owing to the petitioning creditors, a promissory note, given 
 to such creditors by a firm of which the debtor was a member, 
 is to be treated as his debt.^ 
 
 1. A Partner may pay Firm Debts with his Separate Prop- 
 erty. — We have seen that the use of firm property by the part- 
 ners for the payment of their separate debts is a fraud upon the 
 firm creditors. But a partner does not hinder, delay, or defraud 
 his separate creditors by applying his separate estate to the satis- 
 faction of firm debts. The owners of such debts, upon obtaining 
 judgment against the firm, could levy upon the property of each 
 partner, and sell it,^ while the judgment creditor of a partner 
 under a levy upon partnership property can sell only his debtor's 
 share. As the firm creditors can thus compel the application of 
 the separate property of a partner to the satisfaction of their 
 •claims, he may lawfully transfer it to them in payment.* But 
 the receiver of an insolvent firm cannot maintain an action to set 
 aside a conveyance of individual property by a partner, as in 
 
 ' Supra, Chap. III. § 1. But see Hornblo-wrer, J., in Curtis v. Hol- 
 lingshead, 2 Green (14 N. J. L.), 402 (1834) ; Burdiek's Cases on Part. 
 285. 
 
 2 Hinds V. Heath, 68 N. H. 551, 38 At. 382 (1896). The statute of 
 Ne-w Hampshire further pro-vides that "the insolvency of a partnership 
 shall render each partner insolvent -within the meaning of this chapter ", &o. 
 See Schmidt v. Ellis, 69 N. H. 98, 38 At. 382 (1897). 
 
 3 This topic will be more fully discussed in Chap. V. § 1, infra. 
 
 * Ne-wman v. Bagley, 16 Pick. (33 Mass.) 570 (1835) ; Burdiek's Cases 
 on Part. 285. 
 
156 THE LAW OF PAKTNEESHIP 
 
 fraud of firm creditors. The individual liability of a partner is 
 not a firm asset.^ 
 
 The Uniform Partnership Act defines the assets of a partner- 
 ship as including " the contributions of the partners necessary 
 for the payment of all the partnership liabilities." ^ 
 
 2. The Mercantile View op Firm Debts. — While the 
 legal doctrine, that the debts of a firm are the debts of each of 
 its members, is well established, merchants look upon the firm 
 as the debtor. "In ordinary commercial language the obliga- 
 tion of a firm would not be spoken of as the obligation of any 
 one of its members, and a firm is regarded as an entity distin- 
 guished from all the individual members of which it is composed." * 
 
 How, then, should a contract of mortgage or pledge be con- 
 strued, in which a member of a firm agrees that certain of his 
 individual property may be applied by the other contracting 
 party to the payment of all sums of money which may be owing 
 upon any account whatever by the first party to the second 
 party? In the case last cited, the New York Court of Appeals 
 declared that such a contract "must be regarded as a commercial 
 instrument, executed in commercial transactions, and must be 
 construed as ordinary commercial men would understand the 
 language used"; that, as among business men, a distinction is 
 made between a firm as an entity, and the members who compose 
 it, the language of the contract would not be understood by them 
 as broad enough to cover the indebtedness of a firm of which the 
 mortgagor was a member, "and for whose debts, jointly with 
 the other members of the firm, he could be made responsible." 
 
 (a) Mercantile View discredited in Massachusetts. — On the 
 
 'WaUace v. Milligan, 110 Ind. 498, 11 N. E. 599 (1886); Hiles v. 
 Dunn, 61 N. J. Eq. 391, 48 At. 315 (1901). 
 
 2 L. of Md. 1916, Ch. 175, § 40, following In re Forbes, 128 Fed. 137 
 (1904) ; In re Hansley & Adams, 228 Fed. 564 (1916). 
 
 3 Bank of Buffalo v. Thompson, 121 N. Y. 280, 24 N. B. 473 (1890); 
 Burdick's Cases on Part. 286 ; cf. Succession of Pilcher, 39 La. Aim. 362, 
 1 So. 929 (1887), holding that the statute, giving to a minor heir $1,000, 
 in preference to her ancestor's creditors, did not apply to his share in a 
 partnership, as the firm debts were not contracted by him as an indi- 
 vidual, but by the firm. See Bank of La Grange v. Cotter, 101 Ga. 134, 
 28 S. E. 644 (1897), a bank having a pledge of collaterals from a firm 
 to pay its debts was held to have no right to apply the collateral to the 
 payment of the individual debts of the partners. 
 
THE NATURE OF A PARTNERSHIP 157 
 
 other hand, the Supreme Court of Massachusetts has given a 
 very different construction to language which was substantially 
 the same.^ Mr. Justice Holmes, speaking for the majority of 
 the court, said : "The clause pledging the property for any other 
 claim against the debtor is not inserted with a view to certain 
 specific debts, but as a dragnet to make sure that whatever comes 
 to the creditor's hands shall be held by the latter until its claims 
 are satisfied. Corey on Accounts and Lindley on Partnership 
 have made it popular to refer to a mercantile distinction between 
 the firm and its members. But we have no doubt that our mer- 
 chants are perfectly aware that claims against their firms are 
 claims against them; and when a merchant gives security for 
 any claim against him, and there is nothing to cut down the 
 literal meaning of the words, he must be taken to include claims 
 against him as a partner." This view has been repeated by Mr. 
 Justice Holmes, speaking for the Federal Supreme Court.^ 
 
 § 6. (B.) Sole Debt of a Partner for Firm Benefit. 
 
 A person who lends money or sells property to a partner, upon 
 his credit, becomes his separate creditor. Nor will he be trans- 
 formed into a creditor of the firm, by the fact that the money or 
 property was acquired by his debtor for the benefit of the firm.* 
 Its transfer to the partnership by his debtor has no more effect 
 on his relations to the debtor than its transfer to a stranger would 
 have had. 
 
 1 HaUowell v. Blaekstoiie Nat. Bank, 154 Mass. 359, 28 N. E. 281, 13 
 L. R. A. 315 (1891) ; Burdiek's Cases on Part. 288. The clause in ques- 
 tion read: "It is hereby agreed that such surplus, or any excess of col- 
 laterals upon this note, shall be applicable to any other note or claim 
 against me held by said bank." The note, which was accompanied by 
 these collaterals and this contract, was the individual note of the pledgor. 
 
 2 Francis v. McNeal, 228 U. S. 695, 699, 33 Sup. Ct. 701, 67 L. Ed. 
 1029 (1913); "But the fact remains as true as ever that partnership 
 debts are debts of the members of the firm, and that the individual lia- 
 bility of the members is not collateral like that of a surety, but primary 
 and direct." 
 
 3 Barton v. Hanson, 2 Taunt. 49, 2 Camp. 97 (1809). In this case, 
 partners in a coach line divided the road into sections, each providing the 
 horses for his district. Plaintiff, with knowledge of this arrangement, 
 sold feed to one of the proprietors for his horses, and stabled them, taking 
 in part payment a bill accepted by him individually. The court held that 
 the debt was that of the individual proprietor and not of the firm. 
 
158 THE LAW OF PARTNERSHIP 
 
 It often happens, however, that a transaction which assumes 
 the form of a personal contract between a third person and a 
 partner, is in fact a contract between the third person and the 
 firm. Such person is a firm creditor, although he may be also 
 a separate creditor of the contracting partner. In an early 
 case, in which one partner borrowed money for the use of the 
 firm, giving therefor his note, and later his bond, Lord Chan- 
 cellor Hardwicke observed : " It is very true there might have 
 been a loan to the partnership, notwithstanding the notes were 
 given by one of them only; and if the contract had been origi- 
 nally between the petitioner and both the partners, though the 
 bond is executed by one only, yet it would be considered as a 
 collateral security, and both of them would have been liable 
 notwithstanding." ^ 
 
 The Uniform Partnership Act provides that " any partner may 
 enter into a separate obligation to perform a partnership con- 
 tract." 2 
 
 (a) A Difficult Question of Fact. — Whether the transaction 
 gives the creditor a claim upon the firm, as well as upon the 
 contracting partner, is sometimes a difficult question of fact. 
 This is well illustrated by two English cases tried before Lord 
 EUenborough. In the earlier case, E. L. Lye, who was in part- 
 nership with Geo. Lye, under the firm name of Geo. Lye & Son, 
 drew bills of exchange in his individual name, which were dis- 
 counted by a banker, and the proceeds were used by the firm. 
 Plaintiffs, as assignees in bankruptcy of the banker, sought to 
 recover against the firm on the ground that the transaction 
 was a loan of money to the firm. But, said Lord EUenborough^ 
 "the bills, considering the transaction as a discount between 
 the parties, are his only. But it is contended that, as the pro- 
 ceeds went to the use of the partnership, the partners are there- 
 fore liable upon the other counts. I am at a loss to discover what 
 difference that circumstance can make, if it were originally a 
 mere matter of discount ; and I do not find any evidence to show 
 that it was 'anything else. It was supposed -indeed by Burrough 
 (the bankrupt) that the money would be applied to the partner- 
 ship use; and to such use it was in fact applied; but nothing 
 
 1 Ex parte Hunter, 1 Atkyns, 223 (1742). 
 
 2 L. of Md. 1916, Ch. 175, § 15, (6). 
 
THE NATURE OF A PARTNERSHIP 159 
 
 passed from the defendants to induce him to believe that it was 
 a partnership concern, and to lend his money on that account. 
 It does not appear that any contract of that sort took place, nor 
 anything more than the mere discount of the bills ; and it would 
 be highly dangerous to follow the proceeds into the hands of every 
 party to whose use they may be applied." ^ 
 
 In the later case, one member of an English firm, who was 
 the manager of its business in New York, drew bills on the firm, 
 payable to plaintiffs' order, and upon them raised money from 
 plaintiffs for the use of the firm. This was done with the knowl- 
 edge and approval of all the partners. Lord Ellenborough con- 
 sidered this case distinguishable from Emly v. Lye, declaring that 
 the transaction was a loan rather than a discount, and that the 
 bills were given as security for the money borrowed from the 
 plaintiffs. The fact that the house in England had regularly 
 accepted and paid bills of this character, until its bankruptcy, 
 indicated that all parties understood the transaction to be that 
 of a loan to the firm, and not of a purchase of the drawing part- 
 ner's bill.^ 
 
 The soundness of the doctrine announced in these two cases, 
 as well as the difficulty in applying it, is recognized by the Ameri- 
 can Courts.^ 
 
 1. Negotiable Paper in the Name of a Partner may be a 
 Firm Contract. — We have seen, in a previous section,* that 
 a note or bill, in the name of one partner, is the contract of the 
 firm whenever the partner's name is adopted or held out as the 
 firm name. In such cases, the paper is not collateral security 
 for the firm debt, but represents the debt itself, and all the part- 
 ners may be sued upon it. 
 
 2. The Deed op a Partner. — A partnership creditor may, 
 as Lord Hardwicke pointed out, take a bond from one partner 
 
 lEmly V. Lye, 15 East, 7 (1812). 
 
 ' Denton v. Rodie, 3 Camp. 49^ (1813). 
 
 3 Logan V. Bond, 13 Ga. 192 (1853) ; Bonnell v. Chamberlin, 26 Conn. 
 487 (1857) ; Maffet v. Lenokel, 93 Pa. 468 (1880) ; Meyer v. Hegler, 121 
 Cal. 682, 54 Pae. 271 (1898) ; Young v. Stevenson, 73 Ark. 480, 84 S. W. 
 623 (1904) ; MiUs v. Riggle, 83 Kan. 703, 112 Pac. 617, 22 Ann. Cas. 616 
 (1911); Beckwith v. Mace, 140 Mich. 157, 103 N. W. 559 (1905); On- 
 tario Bank v. Hennessey, 48 N. Y. 545 (1872). 
 
 • Supra, Chap. Ill, § 1. 
 
160 THE LAW OF PARTNERSHIP 
 
 as collateral security for the debt. He may also take the bond 
 in conditional payment of the firm debt, without losing his claim 
 against the firm in case the bond is not paid.-' When, however, 
 an instrument under seal is executed and delivered by one part- 
 ner, upon his receiving money or property from the obligee, the 
 latter can rarely claim to be a firm creditor. In the absence of 
 fraud or mistake, the courts will treat him as having intended to 
 take the partner for his sole debtor.^ Accordingly, a person who 
 conveys land to one partner, and receives from him in part pay- 
 ment of the purchase price his bond and mortgage, has no claim 
 against the firm for the unpaid purchase money. The only one 
 liable to him therefor is the obligor in the bond.' 
 
 If, however, a bond is given in the name of one partner, but 
 for the benefit of the firm, and its execution for such purpose 
 is authorized by the other partners, it may be binding upon 
 all.* 
 
 (a) Unauthorized Deed in Firm Name. — In what cases one 
 partner may bind the firm by an instrument under seal in the 
 firm name will be considered in the next chapter. Our present 
 inquiry is directed to the rights of a firm creditor, who has re- 
 ceived such an instrument for a firm debt, from a partner 
 who executed and delivered it without authority from his asso- 
 ciates. 
 
 That the instrument is effective,^ against the executing part- 
 ner, as his deed, follows from the principles set forth in the first 
 section of this chapter. The firm name is equivalent to the 
 names of each partner. But has the obligee destroyed his claim 
 against the firm by receiving this deed which is the specialty con- 
 tract of one partner only ? The answers given by the courts are 
 not entirely harmonious. 
 
 1 Wallace v. Fairman, 4 Watts (Pa.) 378 (1835) ; Craig v. Alverson, 
 6 J. J. Marsh (29 Ky.) 609, 612 (1831). 
 
 2 Patterson v. Brewster, 4 Edw. Ch. (N. Y.) 352 (1844). 
 
 » WiUiams v. Gillies, 75 N. Y. 197 (1878) ; Burdick's Cases on Part. 
 290. 
 
 * Paris V. Cook, 110 Ky. 876, 62 S. W. 1043 (1901). 
 
 '^ A few courts have taken the view that the executing partner cannot 
 be sued alone on such a deed, because it was not delivered as his individ- 
 ual deed, but that of the firm. Fisher v. Pender, 7 Jones L. (52 N. C.) 
 483 (1860) ; Hart v. Withers, 1 P. & W. (Pa.) 285 (1830). 
 
THE NATUEE OF A PARTNEBSHIP 161 
 
 (6) When Seal is Surplusage. — In some jurisdictions, an un- 
 authorized seal to a partnership contract is treated as surplusage, 
 ■whenever it is unnecessary to the validity of the transaction.^ 
 Other courts have refused to take this view, and have held that 
 the instrument is not to be treated as the specialty of the firm 
 because the seal was unauthorized by its members, nor as the 
 simple contract of the firm, because it was not intended by the 
 partner delivering and the obligee receiving it as a simple contract. 
 They intended to enter into a specialty contract, some of the char- 
 acteristics of which are radically different from those of a simple 
 contract.^ 
 
 (c) Partnership Contract not merged in an Unauthorized Specialty. 
 — Another view is that when a partner, without authority from 
 the firm, puts the contract, between the firm and the third per- 
 son, into the form of a specialty, the firm obligation is not merged 
 therein. Nor is the seal a surplusage. The deed may be avail- 
 able against the executing partner ; but the third person has the 
 right to hold the firm to a simple contract obligation, whose 
 terms are evidenced by the sealed writing.^ 
 
 In Walsh v. Lennon, plaintiff, upon lending money to a firm, 
 received a promissory note signed in the names of the partners 
 by one of them, who also attached seals. The court said : "It is 
 undoubtedly true, that one partner has no power to bind the 
 &m by deed, but this instrument is not sued upon as a deed. 
 The declaration contains the common counts. The proof shows 
 defendants were partners, and that the writing in question has 
 the firm name attached thereto by one of the partners. This 
 partner had the right to borrow money on the credit of the firm, 
 and give the promise of the firm for its payment. A seal is not 
 necessary to render such a promise effective. The writing, with- 
 
 1 Cook V. Gray, 133 Mass. 106 (1881) ; Moore v. Stevens, 60 Miss. 
 S09, 816 (1883) ; same principle in Blanchard v. Blaekstone, 102 Mass. 
 343 (1869) ; Worrall v. Munn, 5 N. Y. 229 (1851) ; Woolsey v. Henke, 
 125 Wis. 134, 103 N. W. 267 (1905). 
 
 ' RusseU V. Annable, 109 Mass. 72 (1871) ; Schmerz v. Shreeve, 62 Pa. 
 457 (1869) ; same principle, Wheeler v. ^Ne^nns, 34 Me. 54 (1852). 
 
 ' Walsh V. Lennon, 98 III. 27 (1881) ; Brown v. Bostian, 6 Jones L. 
 (51 N. C.) 1 (1858) ; Hoskinson v. Eliot, 62 Pa. St. 393 (1869) ; same prin- 
 ciple, Osborne v. High Shoals Co., 5 Jones L. (50 N. C.) 177 (1857) ; 
 Hermanos v. Duvigneaud, 10 ha,. Ann. 114 (1855). 
 
162 THE LAW OF PARTNERSHIP 
 
 out reference to its effect as an obligation, contains a written ad- 
 mission that the money was borrowed by the firm at the agreed 
 rate of interest mentioned." 
 
 (d) Rights of Surety upon an Unauthorized Firm Deed. — One 
 who signs, as a surety, a specialty of the character we have been 
 considering, has no rights against the firm on the instrument. 
 He is not entitled, therefore, to be subrogated to any claims of 
 the obligee against the firm. His rights of subrogation are 
 limited to the obligee's claims against the executing partner. 
 But in case this partner had the implied power to bind the firm 
 upon a contract of indemnity, the surety can enforce such con- 
 tract against the partnership.^ 
 
 § 6. (C.) Firm Debt converted into Separate Debt. 
 
 The members of a partnership cannot convert a firm debt 
 into the separate debt of one of their members, without a con- 
 tract to that effect with the creditor. Accordingly, if a firm 
 is dissolved, and its members agree that one shall take the assets 
 in consideration of his assuming and paying its debts, this agree- 
 ment does not discharge the retiring partners from liability to 
 firm creditors. Nor will they be discharged by the mere assent 
 of a creditor unless the transaction amounts to a novation.* 
 What constitutes a novation will be discussed hereafter ; ^ but the 
 following statement on the subject may well be recalled in this 
 connection: "If, by a mutual agreement between the plaintiff 
 Collyer (a firm creditor) and the two defendants (partners), 
 Moulton had been released from his liability for the work already 
 done, and a new promise made by Browley, the other defendant, 
 to pay for it, this would have been a release for a valuable 
 consideration; one debt would have been substituted for 
 another." * 
 
 ' Wharton v. Woodburn, 4 Dev. & B. L. (20 N. C.) 507 (1839) ; Durant 
 V. Rogers, 87 111. 508 (1877). 
 
 2 Motley V. Wickoff, 113 Mieh. 231, 71 N. W. 520 (1897); Bur- 
 dick's Cases on Part. 293; Grubbe v. Pierce, 156 Wis. 29, 145 N. W. 
 207, 37 Ann. Cas. 1199, with note, 51 L. R. A. n. s. 358, with note 
 (1914). 
 
 ' Infra, Chap. V. § 1. 
 
 * CoUyer v. Moulton, 9 R. I. 90, 98 Am. Dec. 370 (1868). 
 
THE NATXJRE OF A PARTNERSHIP 163 
 
 1. Retiring Partner as a Surety. — In case of a contract 
 between the partners that one shall pay the firm debts, upon 
 taking the firm assets, the relation of principal and surety is 
 created between the purchasing and selling partners.^ If the latter 
 is compelled to pay firm debts out of his own property, he is en- 
 titled to be reimbursed by the former. As between themselves, 
 the selling partner becomes a separate creditor of the purchasing 
 partner, upon discharging firm debts.^ 
 
 Whether, by a contract of this kind and notice to creditors, 
 the liability of the retiring partner to them is at all changed, is a 
 question upon which the authorities are divided. 
 
 (a) Creditors must assent to the Change of Relation. — On the 
 one hand it is maintained that the rights of creditors against 
 the partners with whom they contracted rest upon the terms of 
 the contract, which cannot be varied without the consent of the 
 creditors. " It requires the same mutuality to vary or modify a 
 contract," the advocates of this view declare, "as it does to create 
 it in the first instance. The modification "is only a species of 
 contract." ^ 
 
 "This doctrine," in the opinion of the Supreme Court of Texas, 
 "that a contract, when once made, cannot be unmade without 
 consent of both parties thereto, is so evidently sound, just, and 
 correct that no argument is required to sustain it." * 
 
 Even where this doctrine prevails, a creditor who has received, 
 from the original firm, ample securities for his claim, will dis- 
 charge the retiring partner by surrendering them to the new firm. 
 Not on the ground, it is said, that the retiring partner is but a 
 surety for the new firm, but for the reason that such a surrender 
 is an appropriation by the creditor of assets of the old firm, suffi- 
 cient to pay the debt.^ 
 
 1 Rodgers v. Maw, 15 M. & W. 444, 4 Dow. & L. 66 (1846) ; Me- 
 Areavy v. Magril, 123 Iowa, 605, 99 N. W. 193 (1904). 
 
 ' Ex parte Carpenter, Mont. & McAr. 1 (1826) ; Wood v. Dodgson, 2 
 M. & S. 195 (1813) ; Moody v. King, 2 B. & C. 558, 4 D. & E. 30 
 (1824). 
 
 3 HaU V. Jones, 56 Ala. 493 (1876). 
 • ^ Shapleigh Hardware Co. v. WeUs, 90 Tex. 110, 37 S. W. 411, 59 
 Am. S. R. 783 (1896) ; McCoy v. Jack, 47 W. Va. 201, 34 S. E. 991 
 (1899). 
 
 5 First Nat. Bank v. Cheney, 114 Ala. 536, 21 So. 1003 (1896). 
 
164 THE LAW OF PARTNERSHIP 
 
 Nebraska holds the foregoing doctrine in a modified form/ as 
 does Oklahoma.^ 
 
 (6) Notice to Creditors is Sufficient. — The weight of authority 
 in this country, however, is opposed to the doctrine stated 
 in the foregoing paragraph. According to the prevailing 
 view, the right of the retiring partner to be treated as a surety, 
 within limits presently to be pointed out, rests upon equitable 
 principles, and not on any contract between him and the 
 creditors.^ 
 
 The retiring partner does not cease to be a principal debtor 
 when he becomes a quasi surety. By notifying the creditor of 
 the agreement between himself and those who have assumed the 
 firm debts, he cannot compel the creditor to sue them. The 
 creditor's right to proceed at law against all the members of the 
 old firm is unaffected by such a notice.* Moreover, if he is not 
 informed of the agreement between the partners, he may take the 
 notes of the continuing partners or of a new firm, for the debt of 
 
 ' Grotte V. Weil, 62 Neb. 478, 87 N. W. 173 (1901). After citing a 
 list of cases on both sides of this question, the court says : "We do not 
 wish to be understood as holding that the creditors of a firm, upon learn- 
 ing that one partner had retired, will not be held to the duty of acting in 
 good faith in the management of security placed in his hands for the pay- 
 ment of his claim, or in the preservation of hens and in the application 
 of payments made. Should the creditors fail, after notice, to perform 
 these duties, and such failure result in damage to the retired partner, it 
 might well be regarded in a court of equity as cause to release him, at 
 least to the extent of his damage. In such case the terms of the contract 
 "have not been changed, but the fact that new relations had arisen between 
 the partners, by which one assumes, as between them, the burdens of aU, 
 might well call upon the creditors to act in such a way as not to injure 
 the retiring partner. We cannot, however, go to the extent of holding 
 that a contract upon which two persons agree with a third to be jointly 
 and primarily liable for a debt can be changed by the agreement of the 
 debtors themselves so as to require the creditor to accept one as a prin- 
 cipal debtor and the other as surety for its payment." 
 
 2 Johnson v. Jones, 39 Okla. 323, 135 Pac. 12, 48 L. R. A. n. s. 547, with 
 full note (1913). 
 
 ' Brandt on Suretyship (2d ed.) § 32. 
 
 « Porter v. Baxter, 71 Minn. 195, 73 N. W. 844 (1898) ; Dean & Co. 
 V. Collins, 15 N. D. 535, 108 N. W. 242, 9 L. R. A. n. s. 49, with long 
 note, 125 Am. St. R. 610, 11 Ann. Cas. 1027 (1906) ; Clinchfleld Fuel Co. 
 V. Lundy & Son, 130 Tenn. 135, 169 8. W. 563, L. R. A. 1915 B. 418 
 (1914). 
 
THE NATURE OF A PARTNERSHIP 165 
 
 the old one, especially if he reserves his rights against the retiring 
 partner, without discharging the latter.^ 
 
 But if the creditor does not enforce his claims against all the 
 members of the old firm, any dealings between him and the con- 
 tinuing partners or the new firm, after notice of the agreement, 
 which would discharge an ordinary surety, will discharge the 
 retiring partners. 
 
 (c) Illustrations of the Prevailing Doctrine. — This is well 
 illustrated by a decision of the New York Court of Appeals.^ 
 Tallman & Barnes, upon dissolution of their partnership, agreed 
 that Tallman should transfer his interest to Barnes, and 
 that the latter should pay all the firm debts. Notice of this 
 agreement was given by Tallman to the plaintiff, who held an 
 overdue note of the firm. He also requested the plaintiff to 
 collect the note from Barnes without delay; but plaintiff did 
 not institute proceedings for its collection until after Barnes's 
 insolvency, and the court held that, by his failure to collect the 
 note from Barnes during the latter's solvency, the plaintiff had 
 discharged Tallman. 
 
 According to the doctrine which we are now considering, the 
 retiring partner is discharged by a valid agreement between the 
 assuming partner and the creditor, extending the time of pay- 
 ment,' or voluntarily compromising the debt,* or releasing secur- 
 ities held by the creditor.^ 
 
 (cZ) Uniform Partnership Act. — This codifies the prevailing 
 view as stated above. ^ 
 
 2. Fluctuating Views in England. — The doctrine which, 
 as we have seen, is the prevailing one in this country, was based 
 on a dictum in a House of Lords decision.^ But the declaration 
 of Lord Lyndhurst in that case, that a retiring partner becomes 
 a surety for a new firm which assumes the old firm's debts, by 
 giving notice to creditors of his contract with the new firm, was 
 
 1 Palmer v. Purdy, 83 N. Y. 144 (1880). 
 
 2 Colgrove v. Tallman, 67 N. Y. 95 (1876). 
 
 3 MiUerd v. Thorn, 56 N. Y. 402 (1874) ; Femald v. Clark, 84 Me. 234, 
 24 At. 823 (1892). 
 
 ' Mathews v. Colburn, 1 Strob. L. (32 S. C.) 258 (1847). 
 
 5 BeU V. Hall, 5 N. J. Eq. 477 (1846). 
 
 " L. of Md. 1916, Ch. 175, § 36 (3). 
 
 ' Oakelley v. PasheUer, 4 CI. & F. 207, 10 Bligh, n. s. 548 (1836). 
 
166 THE LAW OP PAETNEESHIP 
 
 soon criticized,^ and, after having been treated by the courts as 
 a mere dictum,^ was apparently nullified by the Partnership Act. 
 This declares that "a partner who retires from a firm does not 
 thereby cease to be liable for partnership debts or obligations 
 incurred before his retirement. A retiring partner may be dis- 
 charged from any existing liabilities by an agreement to that 
 effect between himself and the members of the firm as newly con- 
 stituted and the creditors, and this agreement may be either 
 express or inferred as a fact from the course of dealing between 
 the creditors and the firm as newly constituted." ^ 
 
 The doctrine has been reinstated, however, by a recent decision 
 of the House of Lords.* 
 
 § 7. The Nature of Firm Contracts. 
 
 Frequent references have been made in the preceding sections 
 of this chapter, to the opposing views which are entertained con- 
 cerning the nature of partnership contracts. According to one 
 view there is, in law, no such thing as a firm contract. In the 
 language of a learned author : " Every joint contract is an aggre- 
 gate of the several contracts of the partners. The fact is, that 
 the jointness of the contract is nothing but a form. The only 
 contracts that have a substantive existence are the individual 
 contracts of the partners." ^ 
 
 1. Effect of a Paetnee's Death on a Conteact with an 
 Employee. — Where this view prevails, it is held that the death 
 of a partner, although dissolving the firm, does not, as a matter 
 
 ' "This quasi suretyship is surely a false analogy, unless the creditor 
 has assented to such a change in his debtor's position." Lindley on Part. 
 (5th ed.) *252, note x; (6th ed.) 258, note z. These notes are omitted 
 from the seventh edition of Lindley on Part. Oakford v. Eur. & Am. Co., 
 1 Hen. & Mil. 182 (1863) ; also opinion of Lindley, L. J., in Rouse v. 
 Bradford Banking Co., [1894] 2 Ch. 32, 58-60. 
 
 2 Swire v. Redman, 1 Q. B. D. 536 (1876) ; Cockburn, C. J., pointed 
 out that in Oakelley v. Pasheller, the creditor had assented to the sub- 
 stitution of debtors. 
 
 2 British Partnership Act of 1890, § 17 (2) & (3) ; Uniform Partnership 
 Act, § 36 (1) & (2). 
 
 * Rouse V. Bradford Banking Co. [1894] A. C. 586. See criticism of 
 this case in De Colyar's Law of Guaranty (3d ed.) 317, 318. 
 
 s Parsons (James), Principles of Part. (1st ed.) §§ 95, 96. 
 
THE NATUKE OF A PARTNEBSHIP 167 
 
 of law, dissolve a contract for personal services to the firm.^ 
 In the last cited case, the court declared that the common law 
 does not know the firm as an entity ; that a contract with a firm 
 is a contract with the members who compose it ; and that where 
 the death of a partner would not naturally put an end to the 
 business, and the business in fact is continued by the survivor, 
 the latter is bound to carry out the contract with the employee, 
 as he would be bound to complete a firm contract for the erection 
 of a building. 
 
 In jurisdictions, however, where the firm is deemed a con- 
 tracting party, as distinct from its individual members, the 
 death of a partner in a firm of employers dissolves a contract 
 for personal services, whenever an individual employer's death 
 would have that result. Such a contract has "reference to a 
 certain existing partnership business only. Any business car- 
 ried on after the death of one partner might be a totally different 
 one." 2 
 
 If the firm is an employee or agent instead of an employer, 
 the death of a partner certainly ought to dissolve the contract,' 
 as it calls for the skill and ability and personal qualities of each 
 partner.'* 
 
 2. Option to Treat the Contract as Dissolved. — Even 
 if the true conception of a firm contract were that it is merely 
 a bundle of its members' several contracts, the other contract- 
 ing party should be accorded the option of treating it as dissolved 
 by a change in the membership of the firm, whenever the person- 
 ality of its members is a material element in the contract rela- 
 tion.^ But when no such element exists, and especially when 
 
 ' Hughes V. Gross, 166 Mass. 61, 43 N. E. 1031 (1896) ; Burdiek's 
 Cases on Part. 296. 
 
 2 Tasker v. Shepherd, 6 H. & N. 575, 581, 30 L. J. Ex. 207 (1861). 
 
 'Friend v. Young, [1897] 2 Ch. 421, 429; Brace v. Calder (1895), 
 2 Q. B. 263; Phillips v. Abraham Palace Co. (1901), 1 K. B. 59, 70 
 L. J. K. B. 26. 
 
 ^ Sehlau v. Enzenbaoher, 265 ILL 626, 107 N. E. 107, L. R. A. 1915 C. 
 676 (1914), with note; Wheaton v. CadUlao Automobile Co., 143 Mich. 
 21, 106 N. W. 399 (1906) ; Unterberg v. Elder, 211 N. Y. 499, 106 N. E. 
 834, 37 Ann. Cas. 616, with note (1914). 
 
 6 W. D. Reeves Lumber Co: v. Davis, 124 Ark. 143, 187 S. W. 171(1916), 
 holding evidence was admissible to show that plaintiff was financially 
 unable to carry out the contract, after the withdrawal of his copartner. 
 
168 THE LAW OF PARTNERSHIP 
 
 the dissolution of the firm is by mutual consent of the partners, 
 and all remain bound by the contract, the other contracting party 
 has no option to treat it as dissolved.^ 
 
 If one becomes a surety to a firm, he has a surety's right to 
 stand upon the very terms of his contract. To hold him liable 
 as surety to a different association of persons would be to make 
 a new contract for him. Hence the death or retirement of a 
 partner ^ or the introduction of a new member * into the firm dis- 
 charges the surety from future liability. 
 
 In Strange v. Lee, the defendant became surety for Blyth to 
 the banking house of Wallwyn, Savage & Co. for the payment 
 of all sums advanced by the partners to Blyth. After Wallwyn's 
 death, the survivors continued to advance money to Blyth, and 
 upon his default sued Lee on the bond ; but the court held that 
 the defendant contracted as surety to the partnership as con- 
 stituted at the time of his engagement, and not to the banking 
 house, "however the individual partners might change." Said 
 Lord Ellenborough, "It may make a very material difference in 
 the view of the obligor, as to the persons constituting the house 
 at the time of entering into the obligation, and by whom the ad- 
 vances are to be made to the party for whom he is surety ; for a 
 man may very well agree to make good such advances, knowing 
 that one of the partners, on whose prudence he relies, will not 
 agree to advance money improvidently. The characters, there- 
 fore, of the several partners may form a material ingredient in 
 the judgment of the obligor upon entering into such an engage- 
 ment." 
 
 (a) Contract may be for Suretyship to a Fluctuating Firm. — • 
 
 ' Roelim V. Horst, 91 Fed. 345, 62 U. S. App. 520, 33 C. C. A. 550 
 (1898), the firm contracted to sell hops to Roehm; Madden, v. Jacobs, 
 52 La. Ann. 2107, 28 So. 225 (1900), holding that the voluntary dissolu- 
 tion of a firm does not absolve it from the performance of its contracts ; 
 O'Shea v. Kavanaugh, 65 Neb. 639, 91 N. W. 578 (1902), holding that 
 the dissolution of a firm does not affect the right of its members to sue 
 upon a claim due to it. In such a case the recital in the complaint that 
 plaintiffs are partners is immaterial and may be disregarded. Win v. 
 Devine, 62 N. J. L. 374, 41 At. 213 (1898). 
 
 2 Strange v. Lee, 3 East, 484 (1803). 
 
 ' Barns v. Barrow, 61 N. Y. 39 (1874), London & L. Ins. Co. ;;. Holt, 
 10 S. D. 171, 72 N. W. 403 (1897) ; Lyon v. Plum, 75 N. J. L. 883, 69 At. 
 209, 14 L. R. A. N. s. 1231 (1907). 
 
THE NATURE OF A PARTNERSHIP 169 
 
 If the terms of the contract ^ or the circumstances of the case ^ 
 justify such a construction, the obligor may be held liable as 
 surety to a partnership, however shifting its membership may be, 
 or to its surviving members. 
 
 Moreover, the secret withdrawal of a partner will not neces- 
 sarily terminate the suretyship. If a person gives a mortgage 
 to a firm, to seciu-e it for indorsements of his paper, the mortgage 
 will remain a valid security for such indorsements in the old firm 
 name, after the secret withdrawal of a partner.^ 
 
 These principles apply, also, to contracts of suretyship for a firm.* 
 
 (6) Other Instances of Dissoluble Contracts. — If the contract 
 stipulates for the personal services of a particular partner, his 
 death will justify the other contracting party in treating the con- 
 tract as dissolved.^ One apprenticed to a firm has a right to 
 insist that he shall be instructed in the trade by the members 
 then composing it.^ A client is discharged from his contract with 
 a firm of lawyers, upon a dissolution of the partnership,^ unless 
 they remain jointly engaged in his service, and jointly respon- 
 sible to him for any mistake or negligence by either in the per- 
 formance of the contract.^ 
 
 3, Contracts not to engage in Business. — In jurisdic- 
 tions where the partnership is treated as an entity, a sale of 
 
 ' Nat. Bank of Newburgh v. Bigler, 83 N. Y. 51 (1880). 
 
 ' Metcalf V. Bruin, 12 East, 400, 2 Camp. 422 (1810). 
 
 ^Bufialo City Bank v. Howard, 35 N. Y. 500 (1866). Contra, Byers 
 V. Hickman Grain Co., 112 la. 451, 84 N. W. 500 (1900). 
 
 ^ The British Partnership Act, § 18, declares : "A continuing guaranty 
 or continuing obligation given either to a firm or to a third person in 
 respect of the transactions of a firm is, in the absence of agreement to 
 the contrary, revoked as to future transactions by any change in the 
 constitution of the firm to which, or of the firm in respect of the trans- 
 actions of which, the guaranty or obligation was given." This section is 
 not reproduced in The Uniform Partnership Act, but accords with the 
 rules of suretyship law in this country. 
 
 6 Fulton V. Thompson, 18 Tex. 278 (1857). 
 
 8 Hiatt V. Gilmer, 6 Ired. L. (28 N. C.) 450 (1846). 
 
 ' Grifflths V. Grifaths, 2 Hare, 587, 12 L. J. Ch. 397 (1843). 
 
 " Page V. Wolcott, 15 Gray (81 Mass.) 536 (1860). In CUfton v. Clark, 
 83 Miss. 446, 36 So. 251 (1904), it was held that a client has the option 
 to require the surviving partner of a firm of attorneys to complete the 
 contract of employment, or to discharge him, upon paying for the services 
 rendered, and employ others. 
 
170 THE LAW OF PARTNERSHIP 
 
 its business plant and good-will, accompanied by an agreement 
 not to start a similar business in the same town within a specified 
 period, does not preclude the members, as individuals, from en- 
 gaging in such business within the stipulated time. Dealing 
 with such a contract, the Supreme Court of Iowa has said : "The 
 defendant had never agreed not to engage in the business as an 
 individual. His contract, as a member of the partnership, was 
 that the firm would not enter said business within the time spec- 
 ified. The contract might have been so drawn as to cover the 
 individual acts of each partner, and it may have been the inten- 
 tion of the plaintiffs to reach such a result, but it does not do so ; 
 and the law, not favoring contracts in restraint of trade, will 
 construe it strictly." ^ 
 
 4. Public Licenses to Partnerships: — As each partner 
 has authority, by virtue of the partnership relation, to do all 
 acts required to be done in the ordinary course of the firm's busi- 
 ness, a public license to a firm recognizes the fitness of each mem- 
 ber to exercise the privileges of the license. Hence dissolution 
 of a firm of retail liquor dealers, by the sale of one partner's inter- 
 est to the other, ought not to work the revocation of aHicense 
 issued to the firm. If the license is required as an incident of 
 taxation, no ground for complaint on the part of the State exists. 
 It has received its revenue from the business. If the license is 
 required, as a police measure, to exclude unfit persons from carry- 
 ing on the particular business, there is equal absence of just 
 cause for complaint. The fitness of each partner should have 
 been passed upon when the license was issued.^ 
 
 Of course, a license to one partner gives no authority to the 
 firm or to the copartner to exercise the licensed privilege.* 
 
 5. Can a Partnership contract with its Members? — 
 If a firm contract is but an aggregate of the several contracts 
 
 1 Streichen v. Fehleisen, 112 Iowa, 612, 84 N. W. 715 (1900). In Pitts- 
 burg Valve, &c., Co. v. Klingelliofer, 210 Pa. 513, 60 At. 161 (1904), the 
 covenant read that "the said parties will not, nor shall any members of 
 said parties concerned, engage in similar business", and was held to bind 
 the chairman of a limited partnership, which was one of the parties. 
 
 2 Commonwealth v. James, 98 Ky. 30, 32 S. W. 219 (1895) ; Burdick's 
 Cases on Part. 298. 
 
 ' Garrett Williams Co. v. Watkins, 84 Vt. 299, 79 At. 387, 26 Ann. Cas. 
 846 (1911). 
 
THE NATURE OF A PARTNERSHIP 171 
 
 of its members, the foregoing question should receive a negative 
 answer. Undoubtedly, a partner who has loaned money to 
 the firm and taken its note therefor, cannot maintain an action 
 at common law against the firm. As all of its members must be 
 made defendants, the record would disclose that the plaintiff 
 was suing himself. But the courts are substantially agreed 
 that this difficulty of the common law "affects the remedy and 
 not the right; and when the note is duly indorsed to a third 
 person, he acquires a legal title, and may sue in his own name." ^ 
 
 The same principle applies to contracts between two firms 
 with a common member. At common law one firm could not 
 sue the other on the contract.^ It could maintain a suit in equity, 
 however, and the reformed procedure in some of our States per- 
 mits an action to be brought by one firm against another having 
 a common member,' as well as an action by a partner against 
 the firm or by the firm against a partner.^ 
 
 6. A Firm as a Partner. — While our law does not recog- 
 nize a firm as a legal entity, it does permit it to enter into con- 
 tracts as a quasi person. If a partnership and an individual 
 execute a joint and several promissory note, the partnership will 
 be treated as one of the two makers, and may be sued as such by 
 the holder ; but the note will not be construed as the joint and 
 several contract of the partners.^ 
 
 A firm may enter a partnership as one member thereof.^ A 
 partnership between two firms does not necessarily consolidate 
 
 1 Woodman v. Boothby, 66 Me. 389 (1876) ; Buchanan v. Mech. L. & 
 S. Inst., 84 Md. 430, 35 At. 1099 (1896) ; Burdick's Cases on Part. 298. 
 
 2 But see Wilby v. PMnney, 15 Mass. 116, 123 (1818). 
 
 3 Cole V. Reynolds, 18 N. Y. 74 (1858). 
 * Infra, Chap. VI. § 4. 
 
 5 Van Tine v. Crane, 1 Wend. (N. Y.) 524 (1828). In Ex parte Hard- 
 ing, 12 Ch. D. 557 (1879), a contract of guaranty ("we hereby guaran- 
 tee", &c.) signed "Smith, Fleming & Co.", the firm name, and "John 
 Fleming, R. Mclnraith, W. Niooll", the individual names, was con- 
 strued as a joint promise of the firm and a several promise of each part- 
 ner. 
 
 6 In re Hamilton, 1 Fed. 800 (1880) ; In re Gilbert, 94 Wis. 108, 68 
 N. W. 863 (1896). Creditors of the larger firm were allowed, in the 
 Wisconsin case, to prove against the smaller firm as though it were an 
 individual member, but were subordinated to the regular firm creditors of 
 the smaller firm. 
 
172 THE LAW OF PAETNEESHIP 
 
 the members thereof into a single business establishment. Each 
 firm may continue to carry on its own business as before the new 
 partnership was formed, having its separate capital, its separate 
 assets, and its separate creditors.^ Ordinarily, however, a cred- 
 itor's rights against such a partnership will be the same as against, 
 a" firm made up of individuals.^ If he brings an action against 
 it, all the persons composing it will be made defendants, and the 
 judgment may be enforced against the property of either. If it 
 becomes insolvent or bankrupt, the estates of the constituent 
 partnerships will be applied first to the payment of the debts of 
 such firms ; " the surplus only, if any, being distributable to the 
 creditors" of the larger firm.' 
 
 In some cases, however, it is a matter of importance to the 
 creditor, that the partnership has a firm as one of its members. 
 The obligation which he holds may be binding on a firm, as one 
 member of a partnership, when it would not be binding on the 
 persons composing that firm, if they were individual members of 
 the partnership. 
 
 For example, the firm of Kidder & Bro., composed of Geo. 
 C. Kidder and R. W. Kidder, became a member of the partner- 
 ship of Mason, Kidder & Co. For money borrowed by the 
 larger firm, a note was given in the firm name, with the members 
 of the firm as sureties. The name of Kidder & Bro. was signed 
 by Geo. C. Kidder without the knowledge or consent of R. W. 
 Kidder. It was insisted that this signature was not binding on 
 the firm of Kidder & Bro.; but the court held that borrowing 
 money for the larger firm, and giving negotiable paper therefor, 
 was within the scope of the partnership business of the smaller 
 firm, and that it was liable on this paper.^ Had the Kidders 
 entered the firm of Mason, Kidder & Co. as individuals, however, 
 neither would have had authority to sign the other's name as a 
 surety for the firm. While a partner is an agent of the firm 
 
 1 Meador v. Hughes, 14 Bush (77 Ky.), 652, 657 (1879) ; Tyson v. Pol- 
 look, 1 P. & W. (Pa.) 375, 379 (1830) ; Warner v. Smith, 1 De G. J. & S. 
 337, 32 L. J. Ch. 573 (1863). 
 
 2 Rich V. Davis, 6 Cal. 163 (1856) ; Meyer v. Krohn, 114 lU. 574, 581, 
 2N. B.495 (1885). 
 
 ' In re Knowlton & Co., 202 Fed. 480, 120 C. C. A. 610 (1913). 
 ^ McLaughlin v. Mulloy, 14 Utah, 490, 47 Pae. 1031 (1897) ; Burdick'a 
 Cases on Part. 301. 
 
THE NATURE OP A PARTNERSHIP 173 
 
 for the purposes of its business, he is not an agent of his 
 associates as individuals.^ 
 
 7. Effect of a Partner's Disabilities. — As a rule, the 
 ■cpntract rights of a firm are not affected by claims or defences 
 against its individual members.^ In some jurisdictions, how- 
 ever, statutes have been construed as subjecting a firm to dis- 
 abilities which, in terms, are imposed upon an individual. A 
 New York statute, for example, prohibits a corporation, which 
 lias refused payment of any of its debts, from transferring any 
 of its property to an officer or stockholder "directly or indirectly 
 for the payment of any debt." This has been construed to pro- 
 hibit the payment of a debt to a firm, of which a stockholder 
 was a member. Said the court: "There is no such potency in 
 the entity known as a copartnership as to shield a stockholder of 
 a corporation from the penalty denounced by this statute because 
 lie happens to be a member of a firm, and thus allow him to se- 
 cure to himself a preference of his claim against a corporation. 
 If his copartner, who is not a stockholder, is injured by the en- 
 forcement of the statute, it may be a matter for adjustment 
 Isetween themselves, but offers no reason for suspending the 
 operation of the statute. If the contrary doctrine were to pre- 
 vail, it would result in the officers and stockholders of corpora- 
 tions securing to themselves indefinite preferences by forming 
 partnership relations in which the interest in the firm profits of 
 the partner not a stockholder would be only nominal." ^ 
 
 ^ 8. Injuries to a Firm. 
 
 The quasi personality of a firm is brought out very clearly 
 in actions instituted for the redress of injuries which have been 
 inflicted upon it. In case a partnership is defamed, a joint action 
 by its members will lie for the damages sustained by the firm.* 
 If the defamation extends to the personal character of the members, 
 
 1 Shaw V. The State, 56 Ind. 188 (1877) ; TerreU v. Hurst, 76 Ala. 588 
 (1884). 
 
 2 But see The Catharine M. Monahan, 197 Fed. 855 (1912), holding that 
 a partnership cannot assert a maritime Hen for advances made against 
 a vessel of which one of the partners is part owner. 
 
 ' Jones V. Blun, 145 N. Y. 333, 39 N. E. 954 (1895). 
 * Forster v. Lawson, 3 Bing. 452, 11 Moore, 360 (1826) ; Burdiok's Cases 
 on Part. 303. 
 
174 THE LAW OF PARTNERSHIP 
 
 as where they are charged with swindhng, or perjury, they may 
 sue as individuals, but the damages recoverable in such actions 
 cannot include those which are sustained by the firm, and, there- 
 fore, a recovery of damages by the firm will not bar a separate 
 action by a partner for the same defamation.^ 
 
 1. Collusion between Partner and Outside Wrongdoer. 
 — The fact that the injury to the firm results from collusion 
 between a partner and an outsider does not enable the other 
 partners to sue at law for the damages which they have suffered. 
 Such damages could not be judicially ascertained without an 
 accounting between the partners and a settlement of the firm's 
 affairs. So long as the plaintiffs and the defrauding partner are 
 associated in partnership they cannot "show any individual title 
 or ownership in them to the partnership property or business" 
 which they allege to have been injured by their wrongdoing asso- 
 ciate and his fellow conspirator.^ 
 
 If, however, a partner is damaged individually by the collu- 
 sive misconduct of a copartner and an outsider he may main- 
 tain an individual action for redress. For example, should 
 partner A fraudulently issue the negotiable paper of the firm 
 for his individual benefit, and should the paper pass into the 
 hands of a bona fide holder and be collected by him from partner 
 B, the latter could maintain an action at law against partner A 
 and the payee for the fraud practised upon him.^ 
 
 (a) Remedies available to Defrauded Partner. — Lord Tenter- 
 den once charged a jury that " if a person colludes with one part- 
 ner in a firm to enable him to injure the other partners, they can 
 maintain a joint action against the person so colluding." ^ In 
 that case, however, the plaintiffs had bought out the dishonest 
 partner, and, ^hen they brought the suit, were the sole owners 
 of the claim against the defendants. 
 
 The Supreme Court of Rhode Island, while recognizing the 
 
 ' Duffy V. Gray, .52 Mo. 528 (1873). 
 
 2 Sindelare v. Walker, 137 111. 43, 27 N. E. 59 (1891) ; Burdiok's Cases 
 on Part. 304. 
 
 3 Puller V. Pereival, 126 Mass. 381 (1879) ; cf. Sweet v. Morrison, 103 
 N. Y. 235, 8 N. E. 396 (1886), and see infra, Chap. VI. § 4, 2 (e). 
 
 ■• Longman v. Pole, Moody & Mai. 223 (1828). This is said to be the 
 rule in England, under the reformed procedure. Lindley on Part. (7th 
 ed.) 303, 316. 
 
THE NATURE Oi: A PARTNERSHIP 175 
 
 rule that where a partner wrongfully uses the partnership funds 
 to pay his individual debts, the firm cannot maintain an action 
 at law for them, because the guilty partner is a necessary party 
 plaintiff, and cannot be heard to allege his own default as a ground 
 of recovery, has characterized the rule as purely technical, and 
 one that ought not to be applied to defences further than is clearly 
 required. Accordingly, in a suit by the colluding party against 
 the firm, it allowed the partners the benefit of firm moneys, which 
 the plaintiff had, by collusion with one partner, applied to that 
 partner's individual debt.^ 
 
 In Pennsylvania it has been held that if one partner turns 
 out firm property in payment of his individual debt, and the 
 transferee denies the title of the firm to the property, and claims 
 exclusive possession and ownership, the other partner can main- 
 tain trover therefor.^ The Supreme Court of Arkansas has 
 recently permitted a partner to maintain an action in the name 
 of himself and colluding partner, for the innocent partner's share 
 of the balances of indebtedness from the defendants.' 
 
 On the other hand, the Supreme Court of Maine holds that 
 an action at law cannot be maintained, in such circumstances, 
 either in the names of all the partners * or in the names of the 
 innocent ones.^ 
 
 1 Cornells v. Stanhope, 14 R. I. 97 (1883). Accord. Eady v. Newton 
 C. & L. Co., 123 Ga. 557, 51 S. B. 661, 1 L. R. A. n. s. 650, with note 
 (1906) ; PhiUips v. Thorp, 12 Okla. 617, 73 Pac. 268 (1903) ; McNair v. 
 Wilcox, 121 Pa. 437, 15 At. 575, 6 Am. St. R. 799 (1888). 
 
 2 McNair v. Wilcox, 121 Pa. 437, 15 At. 575, 6 Am. S. R. 799 (1888). 
 
 3 Bushy V. Rooks, 72 Ark. 657, 81 S. W. 1056 (1904). The debt was 
 S3,656.25, which partner Ainsworth fraudulently settled for $1,000; and 
 Rooks, in a suit by Rooks and Ainsworth, was allowed to recover one 
 half of $2,656.25, and interest. 
 
 * Blodgett V. Sleeper, 67 Me. 499 (1877), following Homer v. Wood, 11 
 Cush. (65 Mass.) 62 (1853), and Farley v. LoveU, 103 Mass. 387 (1869). 
 
 6 Bumpus V. Thurston, 98 Me. 550, 57 At. 883 (1904). The court left 
 undecided the question whether the plaintiff had an adequate remedy in 
 equity, as declared in Craig v. Hulschiger, 34 N. J. L. 363, 365 (1871). 
 
CHAPTER IV 
 
 POWERS OF PARTNERS 
 
 Frequent reference has been made to the implied powers of 
 a partner. The present chapter will be devoted to a discussion 
 of their nature and their limitations. They are implied from 
 the partnership relation. It is not necessary for the partner- 
 ship articles to enumerate them or to refer to their existence.-' 
 By the custom of merchants, which has received judicial sanc- 
 tion, each partner is "the general and accredited agent of the 
 partnership." ^ 
 
 1. Peculiarities of a Partner's Agency. — An eminent 
 English judge has called attention to the peculiar character of 
 a partner's agency, in the following paragraph, which has been 
 quoted with approval by many of our courts : " Everybody 
 knows that partnership is a sort of agency, but a very peculiar 
 one. You cannot grasp the notion of agency, properly speaking, 
 unless you grasp the notion of the existence of the firm as a sep- 
 arate entity from the existence of the partners; a notion which 
 was well grasped by the old Roman lawyers, and which was 
 partly understood in the courts of equity before it was part of 
 the whole law of the land, as it is now. But when you get that 
 idea clearly, you will see at once what sort of agency it is. It is 
 the one person acting on behalf of the firm. He does not act 
 
 ' "The acting partners are identified with the company, and have 
 power to conduct its general business in the usual way. This power is 
 conferred by entering into the partnership, and is perhaps never to be 
 found in the articles." Marshall, C. J., in Winship v. Bank of U. S., 
 
 5 Pet. (30 U. S.) 529, 8 L. Ed. 216 (1831). 
 
 2 Story on Agency (9th ed.), § 124; Bank of Australasia u, Breillat, 
 
 6 Moo. P. C. 152, 12 Jurist, 189 (1847) ; Samstag & Hilder Bros. v. Ot- 
 tenheimer, 90 Conn. 475, 97 At. 865 (1916). 
 
 176 
 
POWERS OF PARTNERS 177 
 
 as agent, in the ordinary sense of the word, for the others so as 
 to bind the others ; he acts on behalf of the firm of which they are 
 members ; and as he binds the firm and acts on the part of the 
 firm, he is properly treated as the agent of the firm. If you can- 
 not grasp the notion of a separate entity for the firm, then you 
 are reduced to this, that inasmuch as he acts partly for himself 
 and partly for the others, to the extent that he acts for the others, 
 he must be an agent ; and in that way you get him to be an agent 
 for the other partners, but only in that way, because you insist 
 upon ignoring the existence of the firm as a separate entity." ^ 
 
 (a) The Entity Notion not grasped by Parliament. — The 
 idea of the firm as a separate entity was not adopted by Parlia- 
 ment in codifying the law of partnership. The statute declares : 
 "Every partner is an agent of the firm and his other partners, 
 for the purpose of the business of the partnership ; and the acts 
 of every partner who does any act for carrying on in the usual 
 way business of the kind carried on by the firm of which he is a 
 member, bind the firm and his partners, unless the partner so 
 acting has in fact no authority to act for the firm in the particular 
 matter, and the person with whom he is dealing either knows 
 that he has no authority, or does not know or believe him to be a 
 partner." ^ 
 
 2. Classification of a Partner's Powers. — In his draft 
 of the British Partnership Act, Sir Frederick Pollock inserted 
 a proposed classification of the implied powers of a partner ; ^ 
 
 1 Jessel, M. R., in Pooley v. Driver, 5 Cli. D. 458, 46 L. J. Ch. 466 
 (1876). 
 
 ' Britisli Partnership Act, 1890, § 5. Substantially reproduced in 
 the Uniform Partnership Act, § 9. 
 
 ' Sec. 17 of his draft was as foUows: "Subject to the limitations ex- 
 pressed in the three next following articles, every partner may bind the 
 firm by any of the following acts : 
 
 " (a) He may sell any goods or personal chattels of the firm. (5) He 
 may purchase on account of the firm any goods of a kind necessary for or 
 usually employed in the business carried on by it. (c) He may receive 
 payment of debts due to the firm, and give receipts or releases for them, 
 (d) He may engage servants for the partnership business. 
 
 "If the partnership is in trade, every partner may also bind the firm by 
 any of the following acts : (e) He may accept, make, and issue biUs and 
 other negotiable instruments in the name of the firm. (/) He may borrow 
 money on the credit of the firm, (g) He may for that purpose pledge any 
 
178 THE LAW OP PARTNERSHIP 
 
 but the classification, with its distinction between trading and 
 non-trading partnerships, was omitted by Parliament, and there 
 is no authoritative enumeration in England of the implied powers 
 of a partner. 
 
 (a) American Statutes. — This is true in most of our juris- 
 dictions as well. A few States, however, have statutory pro- 
 visions on the subject.^ 
 
 In Louisiana, whose jurisprudence is based on the civil law, 
 the implied powers of a partner are somewhat different from 
 those which have been recognized by the common law.^ 
 
 goods or personal chattels belonging to the firm, (h) He may [probablyj 
 for the hke purpose make an equitable mortgage by deposit of deeds, or 
 otherwise of real estate or chattels real belonging to the firm." 
 
 'Civil Code of California, §§ 2429, 2430: "Every general partner is 
 agent for the partnership in the transaction of its business, and has au- 
 thority to do whatever is necessary to carry on such business in the or- 
 dinary manner, and for this purpose may bind his copartners by an agree- 
 ment in writing." 
 
 "A partner, as such, has not authority to do any of the following acts, 
 unless his partners have wholly abandoned the business to him, or are in- 
 capable of acting : (1) To make an assignment of the partnership property 
 or any portion thereof to a creditor, or to a third person in trust for the 
 benefit of a creditor or of all creditors. (2) To dispose of the good-will of 
 the business. (3) To dispose of the whole of the partnership property at 
 once, unless it consist entirely of merchandise. (4) To do any act which 
 would make it impossible to carry on the ordinary business of the partner- 
 ship. (5) To confess a judgment. (6) To submit a partnership claim to 
 arbitration. (7) To do any other act not within the scope of the preceding 
 section." This code has been reenaoted with a few modifications in Mon- 
 tana, North Dakota and South Dakota. 
 
 ' Revised Civil Code of La., Art. 2870 : "When there is no agreement 
 respecting administration in the act of partnership, the following rules 
 are adhered to. (1) The partners are supposed to have given, reciprocally, 
 to each other the power of administering one for the other ; what one does 
 is valid, even for the share of his partners, without receiving their ap- 
 probation, saving the right which they or every one of the partners has 
 to oppose the operation before it be concluded. (2) Every partner may 
 make use of the things belonging to the partnership, provided he employs 
 the same to the uses for which they are intended, and he does not use 
 them in such a manner as to prevent his partners from using them ac- 
 cording to their rights, or against the interest of the partnership. (3) 
 Every partner has a right to bind his partners to contribute with him to 
 the expenses which are necessary for the preservation of the things of the 
 partnership. (4) A partner can neither dispose of nor make any change in. 
 
POWERS OF PARTNERS 179 
 
 § 1. Power to sell Firm Property. 
 
 The nature of this implied power and some of its limitations 
 were discussed at considerable length in the preceding chap- 
 ter.^ According to the authorities there cited, it varies with 
 the character of the partnership business ; it is never an unqual- 
 ified or absolute power. The statutes, quoted above, embody 
 this view. Indeed, the American codes go farther than the 
 common law in limiting a partner's implied authority to dispose 
 of firm property. 
 
 1. The Fundamental Limitation. — An excellent illustra- 
 tion of the doctrine, that a partner's power of sale depends upon 
 the nature of the partnership enterprise, is afforded by a firm 
 of farmers. A member of a mercantile firm, whose business 
 consists in buying and selling goods, has implied authority to 
 dispose of the entire stock ; ^ but the partnership relation does 
 not empower one of a firm of farmers to sell the animals which 
 have been bought and are needed for use in cultivating the farm.' 
 Nor, if the partnership is formed for the increase and improvement 
 of a flock of sheep, has either partner the implied power to sell 
 the entire flock.* 
 
 In such a case as the last, however, the facts imposing a limi- 
 tation upon a partner's authority must be brought home to the 
 purchaser ; a topic which will be discussed in a later part of this 
 chapter. 
 
 (a) Incidental to the Power of Sale. — Whenever a partner 
 possesses authority to sell firm property, he can bind the firm 
 
 any real property belonging to the partnersliip, without the consent of 
 his partners, should even this disposition or change be advantageous to 
 the partnership. (5) In other than commercial partnerships a partner 
 cannot, as partner only, and if he has not the administration, alienate or 
 engage the things which belong to the partnership." Real Property in 
 Louisiana includes many things which are classed as personal property 
 by the common law of England. See Civil Code, §§ 462-469. 
 
 1 Chap. III. § 3. 
 
 2 Tapley v. Butterfleld, 1 Met. (42 Mass.) 515 (1840), Burdick's Cases 
 on Part. 211. 
 
 ' Cayton v. Hardy, 27 Mo. 636 (1858). Same rule applied to a part- 
 nership in a marble yard. Phillips v. Thorp, 12 OHa. 617, 73 Pac. 268 
 (1903). 
 
 - Blaker v. Sands, 29 Kan. 551 (1882) ; Rutherford v. McDonnell, 66 
 Ark. 448, 51 8. W. 1060 (1899). 
 
180 THE LAW OF PARTNERSHIP 
 
 by acts which are incidental to a sale. If, upon the sale of fruit 
 trees, he stipulates that the purchaser is to pay for those only 
 which live, the stipulation is binding upon the firm ; and although 
 the purchaser gives his promissory note to the firm for the price 
 of all the trees, he is entitled to be credited thereon the price of 
 those trees which do not live.^ Engagements by the selling 
 partner as to the title of the property, or its fitness for a partic- 
 ular purpose, or its quality, which are ordinarily made upon such 
 sales, will bind the firm as incidental to the sale transaction.^ 
 So a partner may subject the firm to a suit for damages for breach 
 of contract by a contract to sell property, which has been already 
 sold.' 
 
 (b) Power of Sale may he relinquished. — While the power 
 to sell firm property is inherent in each member of a normal 
 partnership, it may be relinquished by one or more of the part- 
 ners, either by express agreement or by conduct. 
 
 If A, B, and C enter into partnership upon these terms : that 
 A and B are to have the entire management of the business, 
 while C is not to interfere, in any way, in the firm's affairs, 
 clearly, as between themselves, C's implied agency for the firm 
 is abandoned ; and if these terms of the partnership agreement 
 are known to the world, as in the case of joint stock companies, 
 organized under public statutes, or are known to those dealing 
 with the firm, C cannot bind the firm even by acts done "for the 
 purpose of the partnership." The same result would follow, 
 although the terms of the partnership articles were not known, 
 provided C was a dormant partner.* 
 
 The authority of a normal partner to dispose of firm prop- 
 
 1 Hubbard v. Galusha, 23 Wis. 398 (1868). 
 
 2 Sandilands v. Marsh, 2 B. & Aid. 673 (1819), opinion of Abbott, 
 C. J., at 679; Edwards v. DiUon, 147 111. 14, 35 N. E. 135, 37 Am. St. 
 R. 199 (1893) ; Sweet v. Bradley, 24 Barb. (N. Y.) 549 (1857). 
 
 We have seen that a partner has implied power to mortgage firm goods 
 to secure a firm debt. Supra, Chap. III. § 3 (A) 2, also Long v. Slade, 
 121 Ala. 267, 26 So. 31 (1899). 
 
 3 Bass Dry-Goods Co. v. Granite City Mfg. Co., 113 Ga. 1142, 39 S. E. 
 471 (1901). 
 
 " The Uniform Partnership Act, § 9 (1) ; British Partnership Act, 
 1890, § 5, last clause; and opinion of Cleasby, B., Holme v. Hammond, 
 L. R. 7 Ex. 218, 41 L. J. Ex. 157 (1872). 
 
POWERS OF PARTNERS 181 
 
 erty may be lost by his acts. If he sells his interest in the firm, 
 or permits it to be sold on legal process, his agency for the part- 
 nership is thereby terminated.^ But he may mortgage his share 
 without working such a result ; ^ especially if the mortgagee is 
 his copartner, and if he remains thereafter subject to all the duties 
 and liabilities of a partner. So long as the partnership relation 
 continues to exist between the mortgagor and mortgagee, the 
 rights of the latter are confined to his lien on the former's share ; 
 they are not the rights of a sole owner of the stock. Even though 
 the mortgagor agrees not to exercise the power of sale of a part- 
 ner, this is but a secret restraint upon his authority, which will 
 not affect a bona fide purchaser.^ 
 
 (c) No Implied Power to sell for Indimdvnl Purposes. — As a 
 partner's agency for the firm is limited to transactions connected 
 with its business, the validity of his sale of firm property in pay- 
 ment of his individual debt will depend upon the actual authority 
 which his copartners have bestowed upon him, or upon the ap- 
 pearance of actual authority for which they are responsible.* 
 The fact that the selling partner assures his creditor of his partner's 
 actual assent to the sale will not protect the purchaser. An 
 agent's authority cannot be established by his declarations, as 
 against the principal. The purchaser, in such cases, deals with 
 the debtor partner at his peril. An unauthorized sale of this 
 character may be ratified by the other partners, when the rights 
 of creditors are not involved; but acts done by them, in igno- 
 rance of the facts connected with the transaction, will not estab- 
 lish a ratification.^ 
 
 ' See the authorities cited in Chap. VI. § 2, infra. 
 
 2 Clayton v. Davette (N. J. Eq.), 38 At. 308 (1897); Burdick's Cases 
 on Part. 521. 
 
 ' Monroe v. Hamilton, 60 Ala. 226 (1877) ; Burdick's Cases on Part. 
 306; Devin v. Harris, 3 G. Greene (Iowa), 186 (1851). 
 
 * The validity of such a transfer as against firm creditors has been 
 considered, Chap. III. The doctrine of the text was applied to a transfer 
 by a partner of a cheek payable to the firm for his individual debt to plain- 
 tiff, who was held not to be a bona fide holder of the check. Nichols 
 & Co. V. Thomas, — Okla. — , 151 Pac. 847, L. R. A. 1916 B, 908 
 (1915). 
 
 5 Columbia Nat. Bank of Lincoln v. Rice, 48 Neb. 428, 67 N. W. 165 
 (1896) ; Burdick's Cases on Part. 309. 
 
182 THE LAW OF PARTNERSHIP 
 
 § 2. Power to incur a Firm Obligation. 
 
 Not only has a partner the implied power to divest the firm 
 of its title to property, but the partnership relation authorizes 
 him to subject the firm to various other obligations. In the 
 language of the California statute/ "Every general partner 
 . . . has authority to do whatever is necessary to carry on 
 such business in the ordinary manner." The acts of a partner, 
 then, which bind the firm are those which fall within the scope 
 of the partnership business.^ 
 
 1. Determining the Scope of a Firm's Business. — If the 
 partnership articles expressly define the manner in which the 
 business is to be conducted, they are conclusive upon the part- 
 ners; and upon third persons who have notice of the terms. 
 In the absence of such stipulations and notice, the authority 
 of a partner "for each transaction may be implied from the nature 
 of the business, according to the usual and ordinary course in 
 which it is carried on by those engagefl in it, in the locality which 
 is its seat, or as reasonably necessary or fit for its successful prose- 
 cution. If it cannot be found in that, it may still be inferred 
 from the actual, though exceptional course and conduct of the 
 business of the partnership itself, as personally carried on, with 
 the knowledge, actual or presumed, of the partner sought to be 
 charged."^' 
 
 (a) A Question of Fact. — In Irwin v. Williar * it is said : 
 "What the nature of that business in each case is, what is neces- 
 sary and proper to its successful prosecution, what is involved 
 in the usual and ordinary course of its management by those en- 
 gaged in it, at the place and time where it is carried on, are all 
 
 1 Civil Code of Cal. § 2429. 
 
 2 Wright Bros. v. Merchants & Planters Packet Co., 104 Miss. 507, 
 61 So. 550, 37 Ann. Cas. 1111 (1913), not within scope of business to 
 subscribe for stock in a corporation. 
 
 « Irwin V. Williar, 110 U. S. 499, 505, 4 Sup. Ct. 160, 28 L. Ed. 225 (1883). 
 In Crane Company v. Tierney, 175 111. 79, 51 N. E. 715 (1898), the court 
 said: "If a partner professes to act for the firm in the business actually 
 carried on by it, third parties with whom he deals are not bound by limi- 
 tations contained in the articles between the partners of which they have 
 no notice." Cassidy v. Saline County Bank, 14 Okla. 532, 78 Pae. 324 
 (1904), follows Irwin v. Williar, supra. 
 
 <• 110 U. S. 499 at p. 506. 
 
POWERS OF PARTNERS 183 
 
 questions of fact, to be decided by the jury from a consideration 
 of all the circumstances which, singly or in combination, affect 
 its character, or determine its peculiarities; and from them all, 
 giving to each its due weight, it is its province to ascertain and 
 say whether the transaction in question is one which those deal- 
 ing with the firm had reason to believe was authorized by all of 
 its members." 
 
 This is undoubtedly true of a new business or of one carried 
 on in ah exceptional manner. But in old and well defined lines 
 of business, whether a particular act is within the scope of a 
 partner's implied authority is a question of fact to be determined 
 by the court. In such cases, Sir Frederick Pollock has observed : ^ 
 "There are well understood usages extending to all trading part- 
 nerships, and now constantly recognized by the court; these 
 have become in effect rules of law." ^ 
 
 Accordingly, judges have ruled that "a copartnership formed 
 to transport passengers amd their baggage in a stage does not 
 authorize one of the partners to bind the firm by an agreement 
 that he will carry a person a certain distance within a specified 
 time " ; ' that a member of a firm of machinists has no implied 
 authority to bind the firm by a promise of payment to the fund 
 of an association, organized to keep a harbor free from ice ; * 
 that a law partnership does not authorize one member to bind the 
 £rm by a promise to collect a note free of charge.^ 
 
 In the last cited case, the learned judge remarked : "We have 
 yet to see the rare spectacle of an attorney at law, or a firm of 
 them, rendering professional services gratuitously as a recognized 
 and customary incident of the business in which they engage. 
 We have long ago departed from the honorarium from which our 
 ancient ancestors in this noble profession either wholly or par- 
 tially derived their means of subsistence." 
 
 > Pollock's Digest of Part. (Sth ed.) 27. 
 
 2 In Alsop ». Central Trust Co., 100 Ky. 375, 38 S. W. 510 (1897) ; 
 Burdick's Cases on Part. 340, it is said: "In a commercial partnership 
 the extent of a partner's power to bind the firm is a question of law, 
 while in the non-commercial firm the power to bind his copartner is a 
 question of fact." ' Walcott v. Canfield, 3 Conn. 194 (1819). 
 
 4 Wells V. Turner, 16 Md. 133 (1860). 
 
 6 Davis V. Dodson, 95 Ga. 718, 22 S. E. 645, 29 L. R. A. 496 (1895) ; 
 Burdick's Cases on Part. 338. 
 
184 THE LAW OF PARTNERSHIP 
 
 (b) Urgent but Unusual Acts. — A partner's implied authority 
 to incur a firm obligation being limited by the scope of its business, 
 as above defined, it follows that his acts are not binding on the 
 partnership, simply because they are beneficial to it,^ or because 
 they appear necessary in an extraordinary exigency.^ "A power 
 to do what is usual, " it is said in the last cited case, quoting from 
 Lindley on Partnership,' "does not include a power to do what is 
 unusual, however urgent." ^ 
 
 2. Power to buy on Credit. — No attempt will be made 
 to enumerate the various acts which a partner is impliedly author- 
 ized to do on behalf of his firm. Our attention will be confined 
 to his most important and characteristic powers. 
 
 One of these is the power to purchase property on the credit 
 of the firm. The existence of this power, in the case of an ordi- 
 nary commercial partnership, has never been questioned. These 
 associations could not properly serve the purposes for which 
 they are organized, unless their members possessed the authority 
 to pledge the credit of the firm for the price of "goods of a kind 
 necessary for or usually employed in the business carried on by" 
 them. Provided the purchase is of this character, and the seller 
 acts in good faith, the firm will be bound, although the partner 
 purchasing and receiving the goods misappropriates them to his 
 own use.* If the goods are not of the kind usually bought by 
 the firm, their purchase by one partner will not bind the firm, 
 unless it is ratified.^ 
 
 1 Thomas v. Harding, 8 Me. 417 (1832), holding that a member of a 
 paper manufacturing firm has no impHed authority to buy, on firm credit, 
 cloth which he can exchange for paper-rags, at a profit. 
 
 2 Hawtayne v. Bourne, 7 M. & W. 595, 10 L. J. Ex. 244 (1841) ; In re 
 Cunningham Co. Limited, Simpson's Claim, 36 Ch. D. 632, 57 L. J. 
 Ch. 169 (1887). 3 Lindley on Part. (6th ed.) 135, (7th ed.) 147. 
 
 * This principle is applied in Lovett's Admr. v. Perry, 98 Va. 604, 37 
 S. E. 33 (1900), where a partner, who was not to fm-nish any capital, 
 borrowed and used in the firm's business $2,000. 
 
 ' Bond V. Gibson, 1 Camp. 185 (1808) ; Burdick's Cases on Part. 311 ; 
 Wharton v. Woodburn, 4 Dev. & Bat. (20 N. C.) 507 (1839) ; Dickson v. 
 Alexander, 7 Ire. Law (29 N. C.) 4 (1846) ; Kenney v. Altvater, 77 Pa. 
 34 (1874) ; Clark v. Johnson, 90 Pa. 442 (1879) ; Sweet v. Wood, 18 
 R. I. 386, 28 At. 335 (1893), a case of hiring a horse instead of purchas- 
 ing it; Green v. People's Warehouse, 85 S. C. 40, 67 S. E. 14 (1910). 
 
 « Porter v. Curry, 50 111. 319 (1869). 
 
POWERS OF PARTNERS 185 
 
 Even though the firm is not engaged in trade, its members 
 may possess the implied power of buying certain kinds of prop- 
 erty on firm credit.-^ 
 
 3. Power to hire Servants. — This power belongs to the 
 members of non-trading as well as of trading partnerships, pro- 
 vided that contracts for service are incidental to the business 
 of the particular firm. In hiring servants and appointing agents 
 for the firm, a partner does not act in the capacity of an agent 
 merely, and the principle that an agent cannot delegate his 
 authority to a sub-agent has no application to him. All the 
 partners "are regarded as being present and sanctioning the 
 engagements and contracts which they may singly enter into 
 within the scope of their partnership matters." ^ Of course this 
 doctrine does not apply when the servant knows that the 
 one hiring him is not authorized to bind the firm for his 
 services.^ 
 
 4. Power to collect Debts. — Every member of a normal 
 partnership has implied authority to receive payment of its 
 debts and to give receipts or releases for them.* 
 
 Hence, if a debtor of a firm pays the debt to a partner, the 
 indebtedness is discharged, though the partner is the debtor's 
 husband, and misappropriates the money to his own use.^ A 
 partner may take negotiable paper instead of cash,^ but whether 
 he can bind the firm, by the receipt of other forms of property, 
 depends upon the further question, whether such act is within 
 the apparent scope of his authority, having regard to the nature 
 of the firm's business and the usages of those engaged in that 
 trade or occupation.'' 
 
 Receipts given by a partner are not conclusive evidence of 
 payment; and even his releases may be impeached by the firm 
 
 1 AUey V. Bowen-Merrill Co., 76 Ark. 4, 88 S. W. 838, 113 Am. St. R. 
 73 (1905). 
 
 2 Burgan v. Lyell, 2 Mioli. 102 (1851) ; Burdiok's Cases on Part. 312 ; 
 Rice V. Jackson, 171 Pa. 89, 32 At. 1036 (1895) ; Coons v. Renick, 11 
 Tex. 134, 60 Am. Dee. 232 (1853). 
 
 3 Pollock V. WiUiams, 42 Miss. 88 (1868). 
 « Major V. Hawks, 12 111. 298 (1850). 
 
 B CoUins V. CoUins, 83 S. W. 99, 26 Ky. L. R. 1037 (1904). 
 
 6 Heartt v. Walsh, 75 111. 200 (1874). 
 
 ' Lee V. Hamilton, 12 Tex. 413, 418 (1854). 
 
186 THE LAW OF PARTNERSHIP 
 
 for fraud.^ Until so impeached, they "disable him from main- 
 taining an action for the released claim ; and the other partner 
 cannot sue without him", at law.^ 
 
 But a partner's implied authority in the collection of debts 
 extends beyond the mere receipt of payment. He has the power 
 to coerce the debtor by resort to ordinary and regular legal pro- 
 ceedings. He may perfect a mechanic's lien for the firm,' may 
 employ attorneys and bring actions against firm debtors,* and 
 may even execute a power of attorney under seal in the firm 
 name.^ In the last cited case it was said, that this exception 
 to the common law rule, that a partner could not bind his co- 
 partner by an instrument under seal, "grows out of the necessity 
 of the case. It is often inconvenient to bring together all the 
 members of a firm to execute a deed of this character. The 
 general rule is relaxed to facilitate business ; and if such were not 
 the law, great injury might result to a firm in prosecuting their 
 ■claims against a party in failing circumstances, when it is impor- 
 tant to proceed without delay." 
 
 (a) Extraordinary or Improper Proceedings. — While a partner 
 has implied authority to institute regular legal proceedings for 
 the firm, his power to bind his associates by a submission of their 
 claims to arbitration is generally denied. In some jurisdictions 
 this limitation upon a partner's power in collecting debts has 
 been based upon his Inability to bind the firm by an instrument 
 under seal. Accordingly, where a seal was not required for a 
 valid submission, a partner's authority to execute it for his firm 
 was upheld.^ The prevailing view, however, is that expressed 
 by Baron Parke as follows : " The authority to bind a partner 
 to submit to arbitration does not flow from the relation of part- 
 nership ; and when it is relied upon, it must, like every authority, 
 be proved either by express evidence or by such circumstances as 
 lead to the presumption of such an authority having been con- 
 
 1 Beatson v. Harris, 60 N. H. 83 (1880). 
 
 2 Gordon v. Albert, 168 Mass. 150, 154, 46 N. E. 423 (1897). For 
 eases contra see supra, Chap. III. § 8. 
 
 ' German Bank v. Schloth, 59 Iowa, 316, 13 N. W. 314 (1882). 
 < Wheatley v. Tutt, 4 Kan. 240 (1867). 
 5 In re Barrett, 2 Hughes, 444 (1869). 
 « Gay V. Waltman, 89 Pa. 453 (1879). 
 
POWERS OF PAETNEES 187 
 
 ferred." ' It is generally held that the authority to confess 
 judgment does not flow from the relation of partnership.^ Such 
 authority is recognized in some jurisdictions.' It is denied by 
 The Uniform Partnership Act.* One partner has no implied author- 
 ity to consent that the partnership be adjudged a bankrupt, even 
 though he is empowered to carry on the business without consult- 
 ing his copartners. ^ 
 
 In the proper and orderly conduct of regular legal proceed- 
 ings, the act of one partner is the act of the firm. If A and B 
 as partners recover a judgment against C, which is void be- 
 cause of the judge's consanguinity with A, and an oflacer, under 
 A's direction, enforces the judgment against C's property, both 
 A and B will be liable in tort.* But the malicious arrest ' or 
 assault ^ of a firm debtor by one partner, or his groundless and 
 malicious prosecution of a person whom he charges with larceny 
 of firm property,^ has been held by some courts not to be within 
 liis implied powers, and therefore not to bind the firm, unless 
 actually authorized or ratified. The soundness of this view will 
 be discussed at length hereafter. 
 
 (6) Compromising Firm Claims. — That the power to col- 
 lect debts includes an authority to compromise them, in any 
 honest manner, is asserted by eminent writers,^" and has some 
 
 1 Adams v. Bankart, 1 Cr. M. & R. 681, 686 (1835) ; Martin v. Thrasher, 
 40 Vt. 460 (1868). The statutory provisions on this subject in each ju- 
 risdiction should be examined. See §§ 1278 and 1279 of the N. Y. Code ■ 
 of Civ. Proc. 
 
 2 HaU V. Lanning, 91 U. S. 160, 170, 23 L. Ed. 271 (1875) ; McKee v. 
 Bank of Mt. Pleasant, 7 Ohio, 522 (1836) ; Remington v. Cummings, 7 
 Wis. 138 (1856); Crane v. French, 1 Wend. (N. Y.) 311 (1828). The 
 judgment is valid against the partner executing the confession. Adams- 
 V. Leeds Co., 195 Pa. 70, 45 At. 666 (1900) ; Green v. Beals, 2 Caines 
 (N. Y.), 254 (1804). 
 
 3 Grier v. Hood, 25 Pa. 430 (1855) ; Evans v. Watts, 192 Pa. 112, 43 
 At. 464 (1899). * L. of Md. 1916, Ch. 175, § 9, (3). 
 
 6 Steiner, Lobman & Frank v. T. S. Faulk & Co., 222 Fed. 61, 137 C. 
 C. A. 599 (1915). 
 
 6 Chambers v. Clearwater, 1 Keyes (N. Y.), 310, 1 Abb. App. Dec. 341 
 (1864). 
 
 ' Rosenkrans v. Barker, 115 lU. 331, 3 N. E. 93 (1885). 
 
 8 Titcomb V. James, 57 111. App. 296 (1894). 
 
 9 Marks v. Hastings, 101 Ala. 165, 13 South. 297 (1892). 
 
 w Parsons (T.) on Part. (4th ed.) § 117; Bates on Part. § 382. 
 
188 THE LAW OF PAETNERSHIP 
 
 support in judicial decisions.^ In other jurisdictions, the author- 
 ity to compromise a claim is held to depend upon the circumstances 
 of each particular case, including the business usages of that class 
 of partnerships in that locality.^ 
 
 5. Power to borrow Money. — It is customary for com- 
 mercial partnerships to borrow money in carrying on their busi- 
 ness. Hence the implied power of each partner, in a normal 
 partnership, to pledge its credit, for money borrowed by him for 
 the purpose of its business, has long been recognized by the courts.* 
 If, however, the firm conducts its business on a cash basis, this 
 implied authority is negatived ; and persons, lending money to it 
 through one of its members, cannot hold the fiirm therefor, if 
 they have notice of its business methods.* 
 
 Nor is this authority possessed by every member of a joint 
 stock company, whose affairs are necessarily managed by a 
 few of its members,^ "for the ordinary authority of a partner 
 is founded on the mutual confidence involved, in ordinary cases, 
 in the contract of partnership ; and this confidence is excluded 
 when the members of the association are personally unknown to 
 one another." * 
 
 The members of non-trading partnerships have no implied 
 power to borrow money on the firm's credit. Incurring obli- 
 gations of this kind is not incidental to their business. On the 
 other hand it is unusual and as a rule unnecessary. There is, 
 therefore, no ground for the inference that the members of such 
 partnerships contemplated the exercise of this power, when they 
 entered into the partnership relation. Its exercise must be 
 actually authorized or ratified.'' 
 
 1 Cunningliaiii v. Littlefleld, 1 Ed. Ch. (N. Y.) 104 (1831); Doremus 
 V. McCormick, 7 Gill (Md.), 49 (1848) ; Walker v. Yellow Poplar Lum- 
 ber Co., 35 S. W. (Ky.) 272 (1896). 
 
 z Niemann v. Niemann, 43 Ch. D. 198 (1889) ; cf. Lindley on Part. 
 (7tli ed.) 161. 
 
 " Rothwell V. Humphreys, 1 Esp. 406 (1795) ; Burdiek's Cases on 
 Part. 313. (Money borrowed for travelling expenses of a partner, while 
 buying for the firm) ; Salt Lake City Brewing Co. v. Hawke, 24 Utah, 
 199, 66 Pao. 1058 (1901). 
 
 < Hawtayne v. Bourne, 7 M. & W. 695, 10 L. J. Ex. 244 (1841). 
 
 B Greenwood's Case, 3 De G. M. & G. 459, 477, 23 L. J. Ch. 966 (1854). 
 
 « Pollock's Digest of Part. (5th ed.) 30. 
 
 ' Crosthwait v. Ross, 1 Humph. (20 Tenn.) 23, 30, 34 Am. Dee. 613 
 
POWERS OF PARTNERS 189 
 
 (a) Use and Abiise of this Power. — Even when a partner 
 possesses the borrowing power, his vaHd exercise of it is lim- 
 ited by the nature and scope of the firm's business. He can 
 bind the firm to repay money borrowed for carrying on the busi- 
 ness in the ordinary manner, but he cannot pledge its credit for 
 funds, which the lender knows he is raising in order to increase 
 the capital of the firm, without special authority.^ Where usury 
 laws are in force, he has no implied authority to agree to pay more 
 than the legal rate of interest on borrowed money ; ^ nor, it is 
 submitted, does his implied authority extend to contracts for the 
 payment of a share of profits in lieu of interest.' 
 
 On the other hand, his borrowing power is not limited to cash 
 loans.'* The firm will be bound by his engagement in its name, 
 although he borrows for it negotiable paper ^ or securities ^ or 
 goods.'^ 
 
 6. Power to issue Bills and Notes. — Another implied 
 
 , power possessed by the members of trading partnerships, which 
 
 a partner in a non-trading firm does not possess, is that of issuing 
 
 negotiable paper in the firm name.® Such paper is binding upon 
 
 the firm, in favor of a bona fide holder, even though it was not 
 
 (1839). In this case it is said of a firm of physicians that if money must 
 be raised for the needs of the firm, "it must be raised by the individuals 
 composing the firm, and not by one member thereof, unless he be author- 
 ized by the others so to do, independent of any right arising from part- 
 nership." 
 
 ' Fisher v. Taylor, 2 Hare, 218 (1842). 
 
 2 Dillon V. McRae, 40 Ga. 107, 114 (1869). 
 
 3 Chandler v. Sherman, 16 Fla. 99 (1877) ; but see Ford v. McBryde, 
 45 Tex. 498 (1876). 
 
 ' Blackburn Building Soc. v. Cunliffe, 22 Ch. D. 61 (1882) ; 9 App. 
 Cas. 857 (1884). Overdrawing a bank account is obtaining a loan of 
 money. 
 
 " Deitz V. Regnier, 27 Kan. 94 (1882) ; Buettner v. Steinbrecher, 91 
 Iowa, 588, 60 N. W. 177 (1895) ; Burdick's Cases on Part. 326 ; Hutch- 
 ins V. Hudson, 8 Humph. (27 Tenn.) 426 (1847). 
 
 « Roney v. Buckland, 4 Nev. 45 (1868). 
 
 ' Adee v. Demorest, 54 Barb. (N. Y.) 433 (1867). 
 
 8 In Pinkney v. HaU, 1 Salk. 126, Ld. Ray. 126 (1696), it is said : "By 
 the custom of England, when there are two joint traders, and one accepts 
 a bill drawn on both for him and partner, it binds both, if it concerns 
 the trade ; otherwise, if it concerns the acceptor only in a distinct interest 
 and respect." 
 
190 THE LAW OF PARTNERSHIP 
 
 issued for the purposes of the business. Inasmuch as each part- 
 ner is held out by a trading firm as its general agent, with author- 
 ity to issue firm paper, it is estopped to deny as against a bona fide 
 holder, that he acted as its agent in issuing a particular bill or 
 note. "It would be a strange and novel doctrine," said Lord 
 EUenborough, referring to the indorsement of a trading firm, "to 
 hold it necessary for a person receiving a bill of exchange indorsed 
 by one of several partners to apply to each of the other partners 
 to know whether he assented to such indorsement ; or otherwise 
 that it should be void.!' ^ 
 
 If the claimant, however, does not possess the rights accorded 
 by the law of negotiable paper to a bona fide holder, he cannot 
 recover against the firm, unless he can show that the paper was 
 issued for the purposes of the business; or that the act of the 
 partner was authorized or has been ratified by his associates.^ 
 In the case last cited. Lord Kenyon observed : " It is hard enough 
 for one partner in any case to be able to bind another without 
 his knowledge or consent ; but it would be carrying the liability 
 of partners for each other's acts to a most unjust extent, if we 
 suffered a new partner to be bound in this manner (by the accept- 
 ance of a bill payable to the order of plaintiffs) for an old debt 
 incurred by other persons. ... It is no answer to say that one 
 partner has a general power of binding the rest." 
 
 (a) Burden of Proving Authority. — This is always on the 
 person seeking to enforce the payment of negotiable paper by 
 a firm.^ Prima facie evidence of authority in the partner, issu- 
 ing the paper, to do this act, is afforded by the fact that the firm 
 is a trading or commercial partnership ; and if in addition to this, 
 the claimant shows that he is a bona fide holder, the evidence of 
 authority becomes, as we have seen, conclusive.* While, if the 
 
 1 Swan V. Steele, 7 East, 210, 3 Smith, 199 (1806). ' 
 
 2 Arden v. Sharpe, 2 Esp. 524 (1797) ; Sheriff v. Wilkes, 1 East, 48 
 (1800). 
 
 3 Pease v. Cole, 53 Conn. 53, 55 Am. R. 53, 22 At. 681 (1885) ; Bur- 
 dick's Cases on Part. 314 ; Van Dyke v. Seelye, 49 Minn. 557, 52 N. W. 
 215 (1892). 
 
 « Haskins v. Throne, 101 Ga. 126, 28 S. E. 611 (1897) ; Chicago T. and 
 8. Bank v. Kinnare, 174 111. 358, 51 N. E. 607 (1898) ; Buettner v. Stein- 
 brecher, 91 Iowa, 588, 60 N. W. 177 (1895) ; Bm-dick's Cases on Part. 326. 
 In this case one partner gave to the plaintiff a firm note for securities bor- 
 
POWERS OF PARTNERS 191 
 
 bona fides of his holding is negatived, and it is shown that the paper 
 was not issued for the purpose of the firm's business, he must give 
 proof of actual authority,^ or of ratification.^ Mere silence, or 
 omission to repudiate, does not necessarily amount to a ratification.* 
 
 If the partnership is a non-trading one, the claimant does 
 not make out a case against the firm, by showing that the paper 
 in question was executed by one partner in the firm name for 
 money borrowed for the firm.* In such a case he "must give 
 evidence of the authority of the other partners to draw, accept 
 or indorse in the firm name." ^ The fact that the paper is given 
 for a debt which the firm admittedly owes does not amount to 
 the required proof. Evidence of actual authority must be given, 
 or it must be shown that "the giving of such instrixments is 
 necessary to the carrying on of the firm business, or is usual in 
 similar partnerships." ^ 
 
 Moreover the claimant's ignorance of the nature of the part- 
 nership will not relieve him from the necessity of giving such 
 evidence. "When the public have the usual means of knowledge 
 given them, and no means have been suffered by the partnership 
 to mislead them, every man is presumed to know the extent of 
 the partnership with whose members he deals." ^ Or, in the 
 
 rowed, as lie assured plaintiff, for firm needs, but a part of the proceeds 
 of which he misapplied. 
 
 1 Leverson v. Lane, 13 C. B. n. s. 278, 3 F. & F. 221, 32 L. J. C. P. 10 
 (1862). "It is plain here that, at the time the plaintiffs took the bill in 
 question, they were perfectly aware that it was given in satisfaction of 
 an overdue acceptance of Sterne's (the partner issuing the paper), for a 
 matter in which the firm had no interest whatever. The case, therefore, 
 falls within the rule that one who takes a negotiable security under such 
 circumstances is bound to show affirmatively that the person from whom 
 he took it had the authority of his copartners to pledge the credit of the 
 firm." See Stevens v. MeLachlan, 120 Mich. 285, 79 N. W. 627 (1899) 
 as to evidence of mala fides. 
 
 2 Warder v. Newdigate, 11 B. Mon. (50 Ky.) 174, 52 Am. Dee. 567 
 (1850). 
 
 3 Van Dyke v. Seelye, 49 Minn. 557, 52 N. W. 215 (1892). 
 
 * Pease v. Cole, 53 Conn. 53, 55 Am. R. 53 ; Burdick's Cases on Part. 
 314. ^ Levy v. Pyne, 1 Car. & M. 453 (1842). 
 
 « Smith V. Sloan, 37 Wis. 285, 19 Am. R. 757 (1875) ; a partnership 
 of lawyers. 
 
 ' Livingston v. Roosevelt, 4 Johns (N. Y.) 251, 278 (1809) ; see also 
 Cocke V. Bank, 3 Ala. 175, 180 (1841). 
 
192 THE LAW OF PARTNERSHIP 
 
 language of another court: one who deals "with a single part- 
 ner, must ascertain, at his peril, the actual or apparent authority 
 of such partner. In other words, when he deals with a member 
 of a partnership in a matter as to which such member has no 
 express authority, he is chargeable with notice of the apparent 
 character and scope of the partnership business." ^ 
 
 (b) Distinction between Trading and Non-Trading Firms. ^ — 
 In some jurisdictions this distinction is ignored. The Supreme 
 Court of Pennsylvania ' has said : " No such distinction is sug- 
 gested or recognized in any adjudicated cases or text-books, and 
 there is no foundation for it in the necessities or usage of these 
 partnerships. The necessity for borrowing money to carry on the 
 business of a manufacturing partnership may be as great as it 
 is in order to carry on the business of one that is strictly commer- 
 cial." Undoubtedly, a firm engaged in manufacturing ought 
 to be classed as a trading partnership. 
 
 Perhaps the difference of judicial opinion on this point is due 
 to the fact that "there is no authoritative list or definition of 
 the kinds of business which are 'trades' in the sense" * in which 
 that term is used in classifying partnerships. 
 
 (c) The Distinction is generally recognized. — And yet the 
 English courts, as well as the courts in most American juris- 
 dictions, have recognized and enforced a distinction between 
 trading and non-trading partnerships, when dealing with the 
 implied power of a partner to issue negotiable paper. 
 
 Lord Denman stated the English view in the following pas- 
 sage : " Partners in trade have authority, as regards third persons, 
 to bind the firm by bills of exchange, for it is the usual course of 
 
 ' Standard Wagon Co. v. Few & Co., 119 Ga. 293, 46 S. E. 109 (1903). 
 
 ^ The distinction between an ordinary and a commercial partnership in 
 Louisiana is considered in Bank of Monroe v. Drew, 126 La. 1028, 53 
 So. 129, 32 L. R. A. n. s. 256 (1910). 
 
 3 Hoskinson v. Eliot, 62 Pa. 393 (1869). Lindley on Part. (7th ed.) 148 
 says : "The question, Can one partner bind the firm by accepting bills in 
 its name ? admits of no general answer ; the nature of the business and 
 the practice of those who carry it on (usage or custom of the trade) must 
 be known before any answer can be given." But in other connections 
 the author observes the usual distinction between trading and non-trad- 
 ing firms. See p. 155. 
 
 * Pollock's Digest of Part. (5th ed.) 28. 
 
POWERS OP PARTNERS 193 
 
 mercantile transactions so to do; and this authority is by the 
 custom and law of merchants, which is part of the general law of 
 the land. But the same reason does not apply to other partner- 
 ships. There is no custom or usage that attorneys should be 
 parties to negotiable instruments, nor is it necessary for the 
 purposes of their business. . . . Upon the whole, we think that 
 the implied authority is confined to partners in trade." ^ 
 
 The same view has been expressed in a carefully considered 
 decision of the Supreme Court of Connecticut : " In a com- 
 miercial partnership each acting partner is its general agent, 
 with implied authority to act for the firm in all matters within 
 the scope of its business; and the presumption of law is that 
 all commercial paper which bears the signature of the firm, exe- 
 cuted by one of the partners, is the paper of the partnership, for 
 the reason that the giving of such notes would be within the 
 usual course of mercantile transactions. But when we pass to 
 non-trading partnerships the doctrine of general agency does not 
 apply, and there is no presumption of authority to support the 
 act 'of one partner." ^ 
 
 (d) Definition of a Trading Firm. — Various attempts have 
 been made by judges and writers to define a trading firm. Chief 
 Justice Marshall described it as one existing "for commercial 
 purposes; for trading with the world; for buying and selling 
 from and to a great number of individuals." ^ Mr. Justice 
 Clifford said: "Whenever the business, according to the usual 
 mode of conducting it, imports, in its nature, the necessity of 
 buying and selling, the firm is then properly regarded as a trad- 
 ing partnership." * The Supreme Court of Kansas has declared 
 that "the test of the character of a partnership is buying and 
 selling. If it buys and sells, it is commercial or trading ; if it 
 does not buy or sell, it is one of employment or occupation." ^ 
 
 Another definition, suggested by Mr. Bates,^ has met with 
 
 1 Hedley v. Brainbridge, 3 Q. B. 316, 2 G. & D. 483, 11 L. J. Q. B. 293 
 (1842). 
 
 2 Pease v. Cole, 53 Conn. 53, 55 Ain. R. 53 (1885) ; Burdick's Cases 
 on Part. 314. 
 
 3 WinsHp V. Bank, 5 Pet. (30 U. S.) 529, 561, 8 L. Ed. 216 (1831). 
 
 * Kimbro v. Bullitt, 22 How. (63 U. S.) 256, 268, 16 L. Ed. 313 (1859). 
 » Lee V. Nat. Bank, 45 Kan. 8, 25 Pao. 196, 11 L. R. A. 238 (1890). 
 « 1 Bates on Part. § 327. 
 
194 THE LAW OF PAETNEESHIP 
 
 approval in some jurisdictions.^ It is this : " If the partner- 
 ship contemplates the periodical or continuous or frequent pur- 
 chasing not as incidental to an occupation, but for the purpose 
 of selling again the thing purchased, either in its original or manu- 
 factured state, it is a trading partnership ; otherwise it is not." 
 
 Undoubtedly every trade partnership habitually indulges in 
 buying and selling. This habit alone, however, does not appear 
 to furnish the basis for the legal presumption that each member 
 of such a partnership has authority to bind it by negotiable paper. 
 If it were the custom of merchants to buy and sell for cash only, 
 authority to issue negotiable paper could not be presumed from 
 the buying and selling feature of their business. And yet, as 
 we have seen, "this authority is by the custom and law of mer- 
 chants, which is part of the general law of the land." That cus- 
 tom was described by an early writer on partnership law as fol- 
 lows : " According to the present course of mercantile dealings, 
 no sooner is a debt contracted than a negotiable security is given 
 for it. If money is lent, if goods are sold, the lender or vendor 
 receives a bill of exchange or promissory note from the borrower 
 or purchaser for the payment of the sum due on a certain day." ^ 
 
 It would seem, therefore, that every partnership, whether 
 engaged in ordinary merchandising, or in manufacturing or 
 mechanical pursuits, is a trade partnership, in the sense now 
 under consideration, if the regular conduct of its affairs so noto- 
 riously involves buying or selling on credit, as to warrant a court 
 in taking judicial cognizance of its business usage in this respect. 
 Such is the view presented in a recent Connecticut case, which 
 contains a full citation of authorities and a careful consideration 
 of the subject.' Commercial or trading partnerships, it is de- 
 clared, are those "whose conduct so involves buying and selling, 
 whether incidentally or otherwise, that it naturally comprehends 
 the employment of capital, credit, and the usual instrumentalities 
 
 ' PhiUip V. Stanzell, 28 S. W. 900 (Tex. Civ. App.) (1895) ; Burdick's 
 Cases on Part. 323 ; Schumacher v. Sumner Tel. Co., 161 la. 326, 142 N. 
 W. 1034, 39 Ann. Cas. 201 (1913) ; Higgins v. Beauchamp, (1914) 3 K. 
 B. 1192, 84 L. J. K. B. 631, holding that cinematographic theater pro- 
 prietors are not a trading firm. 
 
 2 Watson on Part. (2d ed.) 195. 
 
 ' Marsh v. Wheeler, 77 Conn. 449, 454, 59 At. 410, 412, 107 Am. S. R. 
 40 (1904). 
 
POWERS OP PARTNERS 195 
 
 of trade, and frequent contact with the commercial world in deal- 
 ings which, in their character and incidents, are like those of 
 traders generally." 
 
 (e) Kinds of Biisiness judicially declared to be Trades. — The 
 character of a partnership, engaged in carrying on the dry goods 
 business, in the ordinary manner,^ or in conducting a country 
 store,^ where articles of almost every kind are bought and sold 
 on credit ; or in the cattle trade, if the evidence shows that such 
 a trade includes the buying and selling of cattle and the borrow- 
 ing of money therefor,' admits of no doubt. It is a partnership 
 organized for merchandising, and the law presumes that each 
 partner intended to clothe the others with all the powers incident 
 to and usually exercised by trading partners. 
 
 Even though the partners have neither a place of business, 
 nor a continuous stock of goods, nor a common fund as firm cap- 
 ital, yet if they engage in a business which includes buying and 
 selling on credit they are partners in trade.* The same is true 
 of mechanics and manufacturers. While their pursuits are not 
 commercial in the strict sense of that term, if they enter into 
 partnership to carry on a business, involving in its ordinary con- 
 duct the buying and selling of goods on credit, their association 
 is a trading partnership, and each partner has implied authority 
 to borrow money on the credit of the firm, and to issue negotiable 
 paper in its name.^ In the case of Kimbro v. Bullitt, cited in the 
 last note, it is said : "While it is conceded that this is the law as 
 applicable to commercial partnerships it is insisted that it does 
 not apply to partnerships formed for mechanical or manufacturing 
 purposes. But no such distinction is suggested or recognized in 
 
 1 Walsh V. Lennon, 98 lU. 27, 37 Am. R. 75 (1881). 
 
 2 Dqw v. Moore, 47 N. H. 419 (1867). 
 
 'Smith V. CoUins, 115 Mass. 388 (1874); Wagner v. Simmons, 61 
 Ala. 143 (1878). 
 
 * Howze V. Patterson, 53 Ala. 205, 25 Am. R. 607 (1875). 
 
 " Kimbro v. Bullitt, 22 How. (63 U. S.) 256 (1859). A partnership for 
 running a steam saw-mill for manufacturing purposes. Said Clifford., J. : 
 " Common observation will warrant the remark that those who engage in 
 that business always want capital to carry it on, and frequently find it 
 necessary to ask for credit." Lanier v. McCabe, 2 Fla. 32 (1848), is some- 
 times cited as contra, but that decision appears to be based on the ground 
 that the partnership was a joint stock company. See supra, Chap. I. § 4. 
 Cf. Hoskinson v. Eliot, 62 Pa. St. 393 (1869). 
 
196 THE LAW OF PARTNERSHIP 
 
 any of the adjudicated cases or text-books, and there is no foun- 
 dation for it in the necessities or the usages of partnerships. The 
 necessity for borrowing money to carry on the business of a manu- 
 facturing partnership may be as great as it is in order to carry 
 on the business of one that is strictly commercial : and common ■ 
 observation and experience show that it is equally the custom and 
 usage of manufacturing as of commercial partnerships to borrow 
 money to enable them to conduct their business." 
 
 In a later case/ the same court expressed the opinion that a 
 partnership formed "for the purpose of carrying on the business 
 of sawing lumber-, pickets, and laths at the village of Montague, 
 in the steam saw-mill lately erected there", was a non-trading 
 firm; and that the question of implied authority of a partner to 
 issue negotiable paper in the firm name was for the jury, "under 
 all the facts indicating the nature, necessities, and course of busi- 
 ness of the firm, and under proper instructions from the court as 
 to the legal principles by which they should be guided in deter- 
 mining the case." 
 
 (/) Kinds of Business which are not Trades. — While there 
 is no doubt that valid partnerships may exist between lawj'ers 
 and between physicians, as well as between merchants, and while 
 the members of such firms have implied authority to do all acts 
 which are necessary for the ordinary conduct of their business,^ 
 they have never been treated as partners in trade, with the im- 
 plied powers of borrowing money and issuing negotiable paper. 
 "Money," it has been said, "does not constitute the business 
 capital of an attorney and counsellor as such ; nor is it the instru- 
 ment with which he carries on his profession. It forms no sig- 
 nificant item in the contributions of individuals forming a pro- 
 fessional partnership of this character. . . . There is in the 
 legitimate operations of such a partnership, no joint use of money. 
 ... In short, the borrowing of money is no part of the profes- 
 sional business of an attorney and counsellor, or of a firm asso- 
 ciated for the pursuit of that business. It is not to be considered 
 as coming within the scope of their ordinary transactions, unless 
 
 1 Dowling V. Exchange Bank, 145 U. S. 512, 518, 12 Sup. Ct. 928, 36 
 L. Ed. 795 (1892). 
 
 2 Crosthwait v. Ross, 1 Humph. (20 Tenn.) 23 (1839). Partnership 
 of physicians. 
 
POWERS OF PARTNERS 197 
 
 made so by the terms of the association, or shown to be so by the 
 practice pr usage of the parties." ^ 
 
 In some of the cases a disposition is shown to limit the implied 
 powers of borrowing money and issuing negotiable paper to "part- 
 ners in the trade of merchandise." Accordingly a partnership 
 in the business of tavern keeping has been judicially declared a 
 non-trading firm,^ and the same declaration has been made con- 
 cerning a firm of printers,* a firm engaged in the manufacture 
 and marketing of pottery,* and a firm of plumbers.^ But the 
 prevailing view appears to be that whether a partnership is en- 
 gaged in trade or not, depends upon these questions : Is it engaged 
 in buying and selling on credit? Does it need a joint capital? 
 Is the issuing of negotiable paper ordinarily resorted to by firms 
 engaged in the same line of business? If these questions with 
 respect to a particular firm are answered in the negative, it is a 
 non-trading partnership. 
 
 Accordingly, firms of brokers,^ of ordinary farmers and planters,'' 
 of architects, ship-carpenters, and stevedores,^ of livery stable- 
 keepers,' of theatre managers,^" of the owners and operators of 
 threshing machines,^^ of real estate agents,^^ and of lumber man- 
 ufacturers,^' have been declared by the courts to be non-trading 
 partnerships. 
 
 1 BrecMnridge v. Shrieve, 4 Dana (34 Ky.), 375 (1836), cited and 
 foUowed in Worster v. Forbush, 171 Mass. 423, 50 N. E. 936 (1898). 
 "There is no general custom or usage known to us for lawyers in partner- 
 ship to give or indorse notes in the name of the partnership." 
 
 2 Cocke V. The Branch Bank of Mobile, 3 Ala. 175 (1841). 
 
 3 Pooley V. Whitmore, 10 Heisk. (57 Tenn.) 629 (1873) ; Bays v. Conner, 
 105 Ind. 415 (1885). See contra, Porter v. White, 39 Md. 613 (1873). 
 
 « Bradley v. Linn, 19 lU. App. 322 (1885). 
 
 6 Huey V. Fish, 40 S. W. 29 (Tex. Civ. App.) (1897). 
 
 6 Third Nat. Bank v. Snyder, 10 Mo. App. 211 (1881). 
 
 ' Kimbro v. Bullitt, 22 How. (U. S.) 256 (1859) ; McCrary v. Slaughter, 
 68 Ala. 230 (1877) ; ScheUenbeck v. Studebacker, 13 Ind. App. 437, 41 
 N. E. 845 (1895). 
 
 8 Benedict v. Thompson, 33 La. Ann. 196 (1881). 
 
 9 Levi V. Latham, 15 Neb. 509, 48 Am. R. 361 (1884). 
 
 10 Pease v. Cole, 53 Conn. 53, 22 At. 681, 55 Am. R. 53; Burdiek's 
 Cases on Part. 314. 
 
 " Horn V. Newton City Bank, 32 Kan. 518, 4 Pae. 1022 (1884). 
 
 " Deardorf v. Thacher, 78 Mo. 128, 47 Am. R. 95 (1883). 
 
 " National State Cap. Bank v. Noyes, 62 N. H. 35, 41 (1882). 
 
198 THE LAW OF PARTNERSHIP 
 
 (g) Hem Doubtful Cases are Dealt with. — Cases are constantly 
 brought for adjudication, which involve the powers of partners 
 in lines of business where there are no well-established mercantile 
 customs on this subject, or where they are not so notorious as to 
 warrant a court in taking judicial notice of them. In such cases, 
 the power of a partner to bind the firm for borrowed money, 
 or upon negotiable paper, is a question of fact. If the part- 
 nership is engaged in " the business of boring wells, buying ma- 
 terials for pumps and windmills, putting these materials together, 
 and placing these articles into wells bored by the firm, or already 
 bored or dug by other persons ", and there is no well-established 
 usage in that line of business as to buying or selling on credit, it is 
 error for the trial court to " hold, as a matter of law, that it is a 
 trading partnership, and hence that each partner has implied au- 
 thority to borrow money for its use, and to execute and deliver a 
 firm note for the same." The question of authority should be left 
 to the jury, with the instruction that the test to be applied by 
 them is whether the borrowing of money and the issuing of nego- 
 tiable paper is essential to carry into effect the ordinary purpose 
 for which the partnership was formed, or is an act in the usual 
 way of business; and that, in applying this test the fact that 
 the firm had the benefit of the money for which the paper was 
 given, may be taken into consideration, although this fact alone 
 does not warrant a finding that the paper is binding upon the 
 firm.^ 
 
 When a firm is sued on a written obligation, as, for example, 
 a lease, if the plaintiff does not allege that the partnership is 
 a trading one, the court will assume that it is a non-trading firm ; 
 and unless his complaint contains aflBrmative allegations "that 
 the obligation was executed for something necessary for the 
 transaction of the business of the firm", or that the partner 
 issuing it was actually authorized to make the contract, or that 
 his act has been ratified, his pleading is demurrable.^ 
 
 1 Vetsch V. Neiss, 66 Minn. 459, 69 N. W. 315 (1896) ; Burdiek's Cases 
 on Part. 328; Bowling v. Nat. Ex. Bank, 145 U. S. 512, 12 Sup. Ct. 
 928, 36 L. Ed. 795 (1892). 
 
 2 Alsop V. Central Trust Co., 100 Ky. 375, 38 S. W. 510 (1897) ; Bur- 
 diek's Cases on Part. 340 ; Woolsey v. Henke, 125 Wis. 134, 103 N. W. 
 267 (1905). Lease of premises was necessary in this case. 
 
POWERS OF PARTNERS 199 
 
 7. Abnormal Partnerships in Trade. — The fact that the 
 members of joint stock companies do not possess the implied 
 authority which attach to ordinary trading partners, has been 
 stated on a previous page.^ The reason assigned for this want of 
 authority applies to mining partnerships. Undoubtedly these 
 firms are engaged in trade, and, in the main, they are governed 
 by the rules of ordinary partnership law.^ In some respects, 
 however, they are abnormal partnerships, "with different rights 
 and liabilities attaching to their members from those attaching 
 to members of ordinary trading partnerships." ' 
 
 The delectus personcs has no place in these associations.* The 
 necessities of their business require that their members should 
 be numerous and that they should not be dissolved by the death 
 or bankruptcy of a partner, or by the assignment of his interest in 
 the firm. As new members may thus be introduced into the firm, 
 who are personally unknown or even objectionable to the old 
 members, there is no warrant for the inference that persons form- 
 ing such associations intend that each member shall exercise the 
 power of an ordinary managing partner.* He has no implied 
 authority to issue the negotiable paper of the firm,® nor "to em- 
 ploy counsel to litigate the title of the mine." ' His implied 
 authority is limited to acts which appear to be necessary or usual 
 on the part of a member in the conduct of the business.^ 
 
 ' Supra, Chap. I. § 4. 
 
 ' Patrick v. Weston, 22 Colo. 45, 43 Pae. 446 (1895) ; Burdick's Cases 
 on Part. 529. Of course, if partners in mining agree that their partner- 
 ship shall be carried on as an ordinary commercial firm, it will be subject 
 to aU the legal rules appUeable to such a firm. Decker v. Howell, 42 Cal. 
 636 (1872). 
 
 In G. V. B. Mining Co. v. First Nat. Bank of Hailey, 95 Fed. 35, 35 
 C C. A. 510 (1899), the statute of Idaho, bearing upon mining partner- 
 ships, is considered and applied. Rev. Statutes of 1887, §§ 3300-3305. 
 
 3 Kahn v. Smelting Co., 102 U. S. 641 (1880) ; Meagher v. Reed, 14 
 Colo. 335, 351, 24 Pao. 681, 9 L. R. A. 455 (1890) ; Hotehkiss v. Brainerd 
 Quarry Co., 58 Conn. 120, 140 (1889) ; Blackmarr v. Williamson, 57 W. 
 Va. 249, 50 S. E. 254, 4 Ann. Cas. 265, with note (1905). 
 
 « Dailey v. Fitzgerald, 17 N. Mex. 137, 125 Pac. 625, 34 Ann. Cas. 1183, 
 with note (1912). ^ Skillman v. Lachman, 23 Cal. 198 (1863). 
 
 « Congdon v. Olds, 18 Mont. 487, 46 Pac. 261 (1896) ; Burdick's Cases 
 on Part. 331. 
 
 ' Charles v. Eshleman, 5 Colo. 107 (1879). 
 
 » Higgins V. Armstrong, 9 Colo. 38, 10 Pao. 232 (1855). 
 
200 THE LAW OF PARTNERSHIP 
 
 While the retirement of a partner from such a firm does not 
 dissolve it, the retiring partner can absolve himself from lia- 
 bility for subsequent obligations of the firm by giving notice of 
 his withdrawal, but he remains liable for obligations incurred 
 during his membership.^ 
 
 8. Implied Authority may be negatived by the Form of 
 THE Obligation. — Even in the case of a normal trading part- 
 nership, the firm paper may show on its face that one partner 
 had no implied power to issue it. 
 
 If the firm signature is followed by the word "surety",^ or 
 if it is apparent from the paper itself that it is an accommodation 
 signature, as in the case of an anomalous indorsement,' every 
 person to whom the paper is offered, has constructive notice that 
 the signature was not given in the ordinary course of the firm's 
 business. No one can be a bona fide holder of such paper. A 
 person seeking to enforce it against the firm must prove actual 
 authority or ratification. Whether the signature of a firm as 
 joint maker with a third person raises the presumption that it is 
 an accommodation signature is a mooted question,* but the better 
 opinion seems to be that it does not.^ 
 
 If the paper is indorsed in the firm name, and is offered by 
 the maker who is not a partner, presumptively the indorsement 
 is for the maker's accommodation, and without other evidence 
 than that the plaintiff paid full value to the maker for it in good 
 faith, he cannot recover against the Ssm.^ 
 
 (a) When Implied Authority is not negatived by the Form of 
 the Instrument. — No such presumption exists, however, where 
 the maker of the instrument, indorsed in the firm name, is a 
 
 1 Kelley v. MoNamee, 164 Fed. 369, 90 C. C. A. 357, 22 L. R. A. n. s. 
 851, 16 Ann. Cas. 299, with note (1908), aff'g 3 Alaska, 470 (1907). 
 
 2 Rollins V. Stevens, 31 Me. 454 (1850) ; Clement Nat. Bank v. Con- 
 nelly, 88 Vt. 55, 90 At. 794 (1914). 
 
 ' N. Y. Fire Ins. Co. v. Bennett, 5 Conn. 574 (1825). 
 
 1 Rolston V. Click, 1 Stew. (Ala.) 526 (1828) ; In re A. Hardie & Co., 
 143 Fed. 553 (1906). 
 
 ' Union Nat. Bank v. NeiU, 149 Fed. 711, 79 C. C. A. 417, 10 L. R. A. 
 N. s. 426 (1906), reversing 143 Fed. 553 supra; Warren Dep. Bank v. 
 Younglove, 112 Ky. 767, 66 S. W. 749 (1902); Sylvester v. Atkinson, 45 
 Miss. 81 (1871). 
 
 « In re Irving, 17 Nat. B. Reg. 22 (1877) ; Burdiek's Cases on Part. 334. 
 
POWERS OF PARTNERS 201 
 
 partner. There is nothing on the face of such paper to pre- 
 vent one who pays full value for it to the maker from occupying 
 the position of a bona fide holder. Whether he is entitled to this 
 position or not depends upon the extraneous facts attending the 
 transfer.^ 
 
 The same is true in the case of paper indorsed successively 
 by two firms and transferred by a member of the firm first in- 
 dorsing it. The inference from the paper itself is quite as natural 
 that the partner transferring the paper had become the individual 
 owner of it, as that he was disposing of it for the benefit of the 
 first indorsing firm.^ 
 
 9. Firm Estopped to deny Authority. — Ordinarily a 
 person taking firm paper from a partner in payment of his in- 
 dividual debt cannot maintain an action upon it against the firm, 
 without proving that the other partners actually authorized or 
 ratified the act. The facts of the transaction are ample notice 
 that the debtor partner is exceeding his implied authority.' 
 
 But the conduct of the firm may be such as to warrant the 
 creditor of a partner in believing that he is authorized by his 
 copartners to use firm paper in paying his individual debts.* 
 For example, if a firm is carrying on two banking institutions 
 in different towns, and the partner who is cashier of bank A is 
 accustomed to pay his individual debts to a creditor by drafts 
 drawn as cashier to his own order, on bank B, whose manager is 
 the other partner in the firm, and these drafts are regularly paid 
 
 1 Wait V. Thayer, 118 Mass. 473 (1875) ; Reed v. Bacon, 175 Mass. 
 407, 56 N. E. 716 (1900). 
 
 2 Freeman's Bank v. Savery, 127 Mass. 75, 34 Am. R. 345 (1879); 
 Smith V. Weston, 159 N. Y. 194, 54 N. E. 38 (1899). In Meeutchen v. 
 Kennady, 27 N. J. L. 230 (1858), and WiUiams v. Walbridge, 3 Wend. 
 (N. Y.) 415 (1829), wMch contain expressions to the contrary, there was 
 evidence that the plaintiff did not pretend to deal with the transferring 
 partner as indorsee, but as a partner with authority from his firm to pass 
 the paper for his debt. 
 
 3 Phillips V. Stanzell (Tex. Civ. App.), 28 S. W. 900 (1895); Bur- 
 dick's Cases on Part. 323. 
 
 * Flour City Nat. Bank v. Widener, 163 N. Y. 276, 57 N. E. 471 (1900) ; 
 Bank of Monongahela Valley v. Weston, 159 N. Y. 201, 54 N. E. 40 (1899) ; 
 Second Nat. Bank v. Weston, 161 N. Y. 520, 55 N. E. 1080 (1900) ; Gu- 
 thiel V. Gilmer, 27 Utah, 496, 76 Pac. 628 (1904) ; In re Speer Brothers, 
 144 Fed. 910 (1906). 
 
202 THE LAW OP PARTNERSHIP 
 
 and retained as vouchers by bank B, with the knowledge of its 
 manager that they were issued for his copartner's private debts, 
 the creditor will be justified in believing that this course of dealing 
 has the sanction of both partners. If, acting upon this belief, 
 he sells goods or loans money to the cashier of bank A, and re- 
 ceives therefor the accustomed firm paper, the manager of bank B 
 will be estopped to deny A's authority to bind the firm by this 
 paper.^ 
 
 10. Admissions and Representations. — Each partner has 
 implied authority to bind the firm by admissions or represen- 
 tations made "concerning the partnership affairs and in the 
 ordinary course of the business." ^ Without such authority 
 he could not properly discharge his duties as agent of the Gim. 
 Accordingly, a statement by a partner, of the amount due from 
 the firm to a servant, is to be treated as a statement of the firm.* 
 
 A partner's admissions or representations, however, which 
 are not made in the ordinary course of the business, although they 
 may relate to partnership affairs, are not evidence against his 
 copartners, unless they have actually authorized or ratified them. 
 They are receivable only against the partner making them. 
 Hence the statement of A that he and B are partners is not evi- 
 dence as against B that such a partnership exists ; * nor is A's 
 statement that his partner B had improperly treated a patient, 
 admissible as against B,^ nor is A's statement concerning the 
 
 1 Noyes v. CrandaU, 6 S. D. 460, 61 N. W. 806 (1895) ; Burdick's Cases 
 on Part. 335. But see People's Sav. Bank v. Smith, 114 Ga. 185, 39 S. E. 
 920 (1901) ; First Nat. Bank v. State Nat. Bank, 131 Fed. 422, 429, 65 
 C. C. A. 406 (1904). The Uniform Partnership Act, § 4, (2), "The law 
 of estoppel shall apply under this act." 
 
 2 British Partnership Act, 1890, § 15; Uniform Partnership Act, § 11. 
 'Burgan v. Lyell, 2 Mich. 102 (1851); Burdick's Cases on Part. 312; 
 
 Rutland Ry. L. & P. Co. v. WiUiams, 90 Vt. 275, 98 At. 85 (1916). 
 
 4 Hahn v. St. Clair Savings Co., 50 111. 456 (1869). "If the existence 
 of the alleged copartnership be prima facie estabUshed by other evidence 
 than the declarations of either of the alleged partners ; or by such decla- 
 rations of one made in the presence and hearing of the others, then the 
 acts and declarations of each of the partners may be proven in aid of the 
 prima facie case." Daugherty v. Heckard, 189 lU. 239, 245, 59 N. E. 569 
 (1901); Reynolds v. Radke, 112 111. App. 575, 577 (1903); Frankhn v. 
 Hoadley, 126 App. D. 687, 111 N. Y. Supp. 300 (1908). 
 
 B Boor V. Lowrey, 103 Ind. 468, 53 Am. R. 519, 32 A. L. J. 513 (1885). 
 
POWERS OF PARTNERS 203 
 
 business of a firm before he became a partner in it, admissible 
 against the members of the original firm.^ 
 
 "In order to make a declaration by one party binding on 
 another," observed Wightman, J., in the case last cited, "it is 
 necessary to show that the person was authorized, either gener- 
 ally in carrying on the business, or with reference to the particu- 
 lar transaction.^ In the present instance, however, I do not find 
 any evidence of such authority from Tunley to Simpson, with 
 regard to this particular transaction, or any evidence by which 
 such an implication should necessarily arise from the situation of 
 clerk or partner." 
 
 (a) Effect of a Partner's Admissions and Representations. — 
 Even when the statements of a partner are admissible against 
 the firm, they are not necessarily conclusive. Indeed, the part- 
 ner who makes them may generally show that they were the result 
 of a mistake.^ On the other hand, they may be conclusive not 
 only as against the member making them, but as against the entire 
 firm. They have this effect in favor of persons who have been 
 induced by them to alter their condition ; to act otherwise than 
 but for their reliance upon the truth of these statements they 
 would have acted. In such cases the firm is estopped to deny 
 their truth. 
 
 If a partner, acting within the scope of his authority, receives 
 plaintiff's money, with directions to buy certain property and 
 resell it; renders a statement to plaintiff that the property had 
 
 In this case, A's statement is the expression of an opinion, and inadmis- 
 sible for that reason. 
 
 1 Tunley v. Evans, 2 D. & L. 747, 14 L. J. Q. B. 116 (1845). 
 
 2 Doremus v. MeCormick, 7 GiU (Md.), 49 (1848) ; Randall v. Knevals, 
 27 App. Div. 146, 50 N. Y. Supp. 748 (1898), afi'd on opinion below, 
 161 N. Y. 632, 57 N. E. 1122 (1900) ; McKee v. Hamilton, 33 Oh. St. 7 
 (1877) ; Gavin v. Walker, 14 Lea (82 Tenn.), 643 (1885). In Heffron v. 
 Hanaford, 40 Mich. 305 (1879), the declaration of one partner that his 
 firm was to receive compensation for indorsing a note for the accom- 
 modation of a third party, was held inadmissible, because such an in- 
 dorsement was not in the ordinary course of the firm's business. In 
 Western Assur. Co. v. Towle, 65 Wis. 247, 26 N. W. 104 (1886), the ad- 
 mission by one partner that he had set fire to firm property was allowed 
 against all the partners, in a suit by the insurer to recover the insurance 
 paid to the firm, on proofs by the firm that the fire was accidental. 
 
 8 Hollis V. Burton (1892), 3 Ch. 226, 67 L. T. 146. 
 
204 THE LAW OF PARTNERSHIP 
 
 been bought and resold at a profit ; pays to plaintiff the proceeds 
 of this alleged sale ; represents that the firm has an opportunity 
 to make further purchases for plaintiff and receives more money 
 therefor, the firm is estopped to deny that any resales and profits 
 were actually made ; and plaintiff is entitled to retain the money 
 received on account of these alleged sales, as well as to recover the 
 money last advanced.^ 
 
 Again, in case a partner in a firm which receives plaintiff's 
 money for investment represents that it has been invested on a 
 particular mortgage, and pays sums to the plaintiff from time 
 to time as interest thereon, the firm is concluded by these state- 
 ments. The plaintiff's rights in equity against the firm are the 
 same as they would have been, had the firm made the invest- 
 ment, and then, on the day of plaintiff's discovery of the untruth 
 of the statements made to him, had converted it to their own 
 use. "As one partner may certainly bind another as to any 
 matter within the limits of their joint business, so he may by an 
 act which, though not constituting a contract by itself, is in 
 equity considered as having all the consequences of one." ^ 
 
 § 2. (A.) The Power of a Partner to esecute a Finn Deed. 
 
 Common law courts, both in this country and in England, 
 have held, uniformly, that a partner has no implied authority 
 to bind his firm by a deed. According to these decisions, enter- 
 ing into contracts under seal was not an ordinary mercantile 
 transaction, like issuing negotiable paper,^ but such contracts 
 were "subject to the rules of law independent of trade and com- 
 
 > Rapp. V. Latham, 2 B. & Aid. 795 (1819) ; Burdiok's Cases on Part. 
 341. 
 
 2 Blair v. Bromley, 1 PhiUips, 354, 5 Hare, 542, 16 L. J. Ch. 105, 495 
 (1847) ; cf. Coleman v. Pearce, 26 Minn. 123 (1879), and Griswold v. 
 Haven, 25 N. Y. 595 (1862), where the firm was held liable as for a con- 
 version of property which one partner represented it had received, but 
 which it had not reoeiyed. 
 
 ' Harrison v. Jackson, 7 D. & E. 207 (1797) ; Burdick's Cases on Part. 
 343. 
 
 * Gerard v. Basse, 1 Dallas (Pa.), 119 (1784) ; Funk v. Young, 241 Pa. 
 72, 88 At. 291 (1913); Gordon v. Funkhauser, 100 Va. 676, 42 S. E. 677 
 (1902), and cases cited. 
 
POWEES OF PARTNERS 205 
 
 Although the conclusion in these cases was based on the mis- 
 taken assumption that contracts under seal were not mercantile 
 instruments, the error was not fully disclosed until their doctrine 
 had become too firmly established to be overthrown by direct 
 assault.^ Even the British Parliament, when codifying the law 
 of partnership, did not disturb the doctrine.^ But the Uniform 
 Partnership Act rejects it^ and courts have modified it by the 
 jecognition of various exceptions. 
 
 (a) Various Exceptions. — Even before the decision in Harri- 
 son V. Jackson, the Court of King's Bench had declared that if 
 one partner execute a deed for himself and his partner "in the 
 'presence of that other", it is the deed of both, although but one seal 
 is used, and that seal is impressed upon the wax but once.* The 
 "inconvenience" of the doctrine that one partner cannot bind 
 the firm by a contract under seal, induced courts of bankruptcy, 
 both in England and in this country, to sanction the usage which 
 had grown up in their practice, of executing a sealed power of 
 attorney for voting in the choice of assignees,^ or a bond to the 
 court upon filing a petition in bankruptcy,^ by one partner in 
 the name of the firm ; and to treat such deed as the deed of the 
 firm. 
 
 (b) Seal treated as Surplusage. — The same "inconvenience" 
 has led judges, in numerous cases, to treat as surplusage a seal 
 w^hich is unnecessary to the validity of the transaction in ques- 
 tion. For example, a chattel mortgage under seal of firm prop- 
 erty, executed by one partner in the name of the firm, has been 
 held as effectual against the firm as it would have been had no 
 
 ' See Macleod's Theory and Practice of Banking (4tli ed., London, 
 1886), 236-244. The author produces an overwhelming array of evidence 
 against this and kindred assumptions of Lord Kenyon. His comments 
 on Mansfield and Kenyon, as expounders of commercial law, are very 
 instructive. 
 
 2 Partnership Act of 1890, § 6. 
 
 ' L. of Md. 1916, Ch. 175, § 9. 
 
 *■ Ball V. Dunsterville, 4 D. & E. 313 (1791). This decision appears to 
 show that the explanation of the doctrine of Harrison v. Jackson, offered 
 in Clark on Part. Vol. I. p. 201, as "one of the consequences of the non- 
 recognition of the quasi person of the company firm", is incorrect. 
 
 « Ex parte Mitchell, 14 Ves. 597 (1808) ; In re Barrett, 2 Hughes (U. 
 S. Dist. Ct.), 444, 3 Fed. Cas. No. 1,043 (1869). 
 
 « Ex parte Hodgkinson, 19 Ves. 291 (1815). 
 
206 THE LAW OF PARTNERSHIP 
 
 seal been used ; ^ and a firm note under seal, issued by one partner, 
 has been enforced against the firm, as it would have been enforced 
 without a seal.^ 
 
 In the case last cited, Judge Thurman expressed the opinion 
 " that the rule, that one partner has no power to bind his copartners 
 by deed, if not purely arbitrary, rests upon very unsatisfactory 
 reasons"; and declared "it would be a stigma upon the law, to 
 relieve a partnership from all liability, because the seal is affixed 
 to an agreement, which, without it, would effectually bind the 
 firm ; or to say that although the agreement, if unsealed, would 
 raise a presumption that it was given on partnership account, 
 and for a consideration received or to be received by the com- 
 pany, yet no such presumption arises, if a scrawl is added to the 
 partnership name." 
 
 Several States have freed themselves from the "inconven- 
 ience" of the doctrine, now under discussion, by abolishing all 
 distinctions between sealed and unsealed instruments.^ 
 
 (c) Parol Authority or Ratification. — Moreover, while com- 
 mon law courts have not professed to doubt the validity of the 
 doctrine that a partner has no implied authority to execute a 
 firm contract under seal, in this country, with a few exceptions,* 
 they have repudiated Lord Kenyon's view that the executing 
 partner's authority must be specially conferred by an instrument 
 under seal ; and have held " that an absent partner may be bound 
 by a deed executed on behalf of the firm by his copartner, provided 
 there be either a previous authority or a subsequent parol adop- 
 tion of the act." ^ 
 
 (d) Sealed Instruments in the Course of Trade. — Occasionally 
 a court has taken even a broader -view than this, and has declared 
 that a partner has implied authority to bind his firm by a contract 
 under seal, whenever the contract is a mercantile one and in the 
 
 > Tapley v. Butterfleld, 1 Met. (42 Mass.) 515 (1840) ; Burdick's Cases 
 on Part. 211; Woolsey v. Henke, 125 Wis. 134, 103 N. W. 267 (1905), 
 a lease under seal. 
 
 2 Purviance v. Sutherland, 2 Oh. St. 478 (1853). 
 
 'Pearson v. Post, 2 Dak. 220 (1880), Stimson's Am. Statute Law, 
 § 1564 ; Garrett v. Belmont Land Co., 94 Tenn. 459, 29 S. W. 726 (1894). 
 
 4 Turbeville v. Ryan, 1 Humph. (20 Tenn.) 113, 34 Am. Dee. 622 
 (1839). 
 
 6 Smith V. Kerr, 3 N. Y. 144 (1849). 
 
POWERS OF PARTNERS 207 
 
 course of trade.^ "I bottom my decision," said Charlton, J., in 
 the case last referred to, "upon the broad ground that a charter 
 party is exclusively a mercantile transaction, and always in the 
 course of trade. ... A charter party is as essential in the 
 course of trade, as the negotiation of bills of exchange ; and I can 
 perceive no difference between the exigencies which would impose 
 a liability in the one case, and destroy it in the other. This con- 
 tract could not have been in the contemplation of judges when 
 they decided that one partner could not bind the other by 
 deed." 
 
 (e) Releases under Seal. — Under the doctrine which we have 
 been considering, a covenant by one partner, although in the 
 firm name, not to sue a firm debtor, will not bar a suit thereafter 
 brought by the firm for the debt. The covenant is binding upon 
 the partner only who executed it, and as to him it cannot operate 
 as a release. "A covenant not to sue has been held equivalent 
 to a release on no other principle than that of avoiding a circuity 
 of action. . . . But if the parties opposed in interest are not the 
 same, the principle cannot apply. If one of two plaintiffs covenants 
 not to sue for a joint debt, he may be liable for a breach of that 
 covenant if both afterwards sue. But, if he is then sued by the 
 debtor for breach of covenant, he alone must answer for it." ^ 
 
 A bona fide release under seal of a firm debtor, however, does 
 bar an action for the debt. In such a case the specialty does 
 not operate as a grant from the firm,' nor as an attempt to charge 
 the partnership with a liability. It is not upheld on the ground 
 that one partner has power to bind his copartners by an instru- 
 ment under seal. Its nature and effect are described by Chief 
 Justice Kent, in a leading case,* as follows : " It is a general prin- 
 ciple of law, that when two have a joint personal interest, the 
 release of one bars the other ; ^ and I cannot perceive that the case 
 
 1 Straffin v. Newell, T. U. P. Charlton (Ga.), 163, 4 Am. Dee. 705 
 (1808) ; Burdick's Cases on Part. 344 ; Merchants & Farmers' Bank v. 
 Johnston, 130 Ga. 661, 61 S. E. 543, 17 L. R. A. n. s. 969, with note (1908), 
 applying § 2643 Civil Code of 1895, § 3172 Code of 1911. Such is the 
 rule, under The Uniform Partnership Act, § 9. 
 
 2 Walmesley v. Cooper, 11 A. & E. 216, 10 L. J. Q. B. 49 (1839). 
 
 3 Hawkshaw v. Parkins, 2 Swanston, 539, 544 (1819). 
 * Piersons v. Hooker, 3 Johns. (N. Y.) 68 (1808). 
 
 s Ruddock's Case, 6 Coke, 25 (1592). 
 
208 THE LAW OP PAETNEESfflP 
 
 of copartners in trade forms an exception to the general rule. 
 Each partner is competent to sell the effects, or to compound or 
 discharge the partnership demands. He is to be considered as 
 an authorized agent of the firm for all such purposes.^ Each has 
 an entire control over the personal estate. So, in like manner, one 
 coexecutor or administrator cannot bind his companion to an 
 obligation, but he may commit a separate devastavit and release 
 a debt." 
 
 (/) A Fraudulent Release is not binding on the Firm. — While 
 a bona fide release of a firm debt by one partner cannot be set 
 aside by his copartners,^ they are entitled to relief, when they 
 can show that the release was fraudulent.' Thus, in the earlier 
 of the cases just cited, one of the partners, after an action 
 had been brought by the firm against the defendant, gave to the 
 latter a release from all liability to the firm. The other partner, 
 in ignorance of this fact, brought the action to trial, and was met 
 with the release. Thereupon he moved to set it aside, but the 
 court held that, as one of two plaintiffs may release the action, 
 it could not interfere "unless fraud could be imputed by direct 
 evidence to the defendant, as well as" to the releasing partner. 
 Such an act by the releasing partner, it was said in an earlier Eng- 
 lish case,* "might be improper, still it is not fraudulent", although 
 it relieved the defendant from costs and from reimbursing the 
 other partner for his taxable expenses in the action. 
 
 In the New Hampshire case,^ the release was also given to the 
 defendant by one partner, after the commencement of an action 
 by the firm; but as the evidence disclosed that the executing 
 partner had no interest in the firm assets and was insolvent; 
 that the defendant had notice of these facts; that he "did not 
 try to settle with the solvent partner, because he knew that he could 
 not without paying the claim", and that he obtained the release 
 without any legal consideration, the court held that the release 
 was fraudulent and void. It would have been equally fraudulent 
 
 1 Watson on Part. 137, 141. 
 
 2 Furnival v. Weston, 7 Moore, 356 (1822). 
 
 ' Beatson v. Harris, 60 N. H. 83 (1880) ; Busby v. Rooks, 73 Ark. 657, 
 81 S. W. 1056 (1904). 
 
 " Arton V. Booth, 4 Moore, 192 (1820). 
 6 Beatson v. Harris, 60 N. H. 83 (1880). 
 
POWERS OF PARTNERS 209 
 
 and voidable, had it been given by the executing partner in satis- 
 faction of a debt owing by him individually to the defendant.^ 
 
 § 2. (B.) A Partner's Power to render the Firm liable in Tort. 
 
 Thus far, in this section, we have dealt with the power of a 
 partner to subject the firm to contractual liabilities. We have 
 seen that his implied authority, in this respect, is determined, 
 as a rule, by the apparent scope of the partnership business. 
 Passing now to the consideration of a partner's power to sub- 
 ject the firm and his copartners to liabilities in tort, we shall 
 find the same general rule obtaining. It is stated in the British 
 Partnership Act,^ as follows: "Where, by any wrongful act or 
 omission of any partner acting in the ordinary course of the 
 business of the firm, or with the authority of his copartners, loss 
 or injury is caused to any person not being a partner in the firm, 
 or any penalty is incurred, the firm is liable therefor to the same 
 extent as the partner so acting or omitting to act." This is 
 reproduced with a few verbal changes in the Uniform Partnership 
 Act.3 
 
 1. Actual Innocence no Defence. — Although the tort be 
 committed by one partner only, and the others are ignorant of 
 the wrong,* nay, though they may have used every reasonable 
 effort to prevent the wrong,^ they are nevertheless answerable 
 for the tort, provided it was done in the ordinary course of the 
 firm's business.^ 
 
 This doctrine, it has been observed, is "derived from the wider 
 
 1 Gram v. CadweU, 6 Cow. (N. Y.) 489 (1826). 
 
 ' Partnership Act of 1890, § 10. 
 
 5 L. of Md. 1916, Ch. 175, § 13. 
 
 * The Attorney General v. Stranyforth, Bunb. 97 (1721) ; Burdick's 
 Cases on Part. 346. 
 
 ^ Limpus V. London General Omnibus Company, 1 H. & C. 526, 32 
 L. J. Exch. 34 (1862). In this case the defendants had informed their 
 servants that they must not obstruct other omnibuses, and a servant did 
 obstruct and overturn plaintiff's omnibus, and defendants were held 
 liable for the damages, on the ground that the servant's act was in the 
 course of his service. While the wrongdoer in this case was not a part- 
 ner, but a servant only, the same principle of law is applicable to the 
 wrongdoing of a partner. See next paragraph of text. 
 
 « Gwynn v. DuflBeld, 66 Iowa, 708, 24 N. W. 523 (1885). A member of 
 a firm of apothecaries is not acting in the ordinary course of business in 
 
210 THE LAW OF PARTNERSHIP 
 
 rule to the same effect, which is one of the most familiar and 
 important parts of the law of agency." ^ 
 
 The Supreme Court of Louisiana has recently declared^ that 
 the liability of innocent partners for the tortious conduct of co- 
 partners is not to be deduced entirely from the law of agency ; 
 that it is ascribable in part to " the equity of makiftg the loss fall, 
 as between two innocent parties, on the one who contributed to 
 bring it about", and in part to considerations of public policy. 
 "It would be dangerous," said the court, "to the community to 
 allow men to depredate upon the public under the shelter of an 
 irresponsible associate." 
 
 2. A Partner is more than an Agent. — While a partner 
 is an agent of the firm, and his acts, done within the scope of 
 the business, bind the firm and its members precisely as these 
 would bind them, if they were the acts of any other general agent ; 
 yet he is something more than an agent, even with respect to his 
 copartners. This is brought out very clearly in Ashworth v. 
 Stanwix.^ 
 
 Plaintiff, a workman in the employ of Stanwix and Walker, 
 sued the firm for injuries sustained by the negligence of Walker. 
 Stanwix defended on the ground that Walker's negligent act 
 was, so far as Stanwix was concerned, the act of a fellow-servant 
 of plaintiff, and therefore plaintiff could not recover against him. 
 The court refused to sustain the defence, although it did not ques- 
 tion that Walker's act was of a character which would not have 
 rendered plaintiff's employers liable, had it been done by a fellow- 
 servant. While Walker was engaged in doing work which might 
 have been entrusted to a mere servant, he "did not the less remain 
 the master of the plaintiff and the partner of Stanwix." 
 
 giving away drugs; and for his negligence on such an occasion, his ab- 
 sent copartner is not liable. 
 
 1 Pollock's Digest of Part. (6th ed.) 47. The California Civil Code 
 declares: "The liability of general partners for each other's acts is de- 
 fined by the title of Agency", § 2443. See §§ 2338, 2339 of that title, 
 ■which declare the principal liable for the torts committed by the agent in 
 and as a part of the transaction of the principal's business, and for those 
 which the principal has authorized or ratified. 
 
 " Guarantee Trust & Safe Dep. Co. v. Investment Co., 107 La. 251, 31 
 So. 736 (1902). 
 
 3 3 E. & E. 701, 7 Jur. n. s. 467 (1860) ; Burdiok's Cases on Part. 347. 
 
POWEKS OF PARTNERS 211 
 
 3. Reasons assigned for this Doctrine. — Although there 
 is no dispute as to the existence of the rule that the firm is answer- 
 able for the torts of a member, committed in the ordinary course 
 of the business, the reasons which have been assigned in its sup- 
 port are various. 
 
 Chief Justice Shaw rested it upon the principle that "when 
 one party must suffer by the wrong and misconduct of another, 
 it is more reasonable that he should sustain the loss who reposes 
 the confidence in the agent, than he who has given no such con- 
 fidence." ^ 
 
 The Supreme Court of South Carolina has supported the rule 
 upon the ground that each partner "guarantees that, within 
 the scope of the common business, reasonable care, diligence, 
 and skill shall be displayed by the one in charge. Or at least 
 that a failure on the part of one thus to exercise such reasonable 
 care, diligence, and skill is a failure in law of each and all, and an 
 injury resulting from such failure is the act of all." ^ 
 
 In New York, an eminent judge has given as a short reason 
 for the rule, that the partners " constitute but one person in law." * 
 
 4. Firm may be liable for a Partner's Illegal Act. — 
 Some authority is to be found for the proposition, that "acts 
 or omissions in the course of the partnership trade or business, 
 in violation of law will only implicate those who are guilty of 
 them." * For example, it has been held that, if one member 
 
 ' Locke V. Stearns, 1 Met. (42 Mass.) 560, 35 Am. Dee. 382 (1840). 
 Action for deceit sustained against both partners, although one was 
 ignorant that any false statements were made. 
 
 2 Hyme v. Erwin, 23 S. C. 226, 65 Am. R. 15 (1885). In an action 
 for malpractice both partners were held liable for damages, although but 
 one was negligent in treating the patient. 
 
 3 Sutherland, J., in Warner v. Griswold, 8 Wend. (N. T.) 665 (1832). 
 
 « Collyer on Part. (Wood's ed. 1878) § 473, citing Watson on Part, 
 (ed. 1807) 235. Mr. Watson, the originator of this doctrine, .neither cites 
 any authority nor presents any argument in its support. His statement 
 was copied, almost verbatim, by Gow and by Collyer. Having received 
 the sanction of these writers, some American judges appear to have been 
 content to adopt it without inquiring as to its origin, and without any ex- 
 amination of the judicial decisions on the subject. It is submitted that 
 their judgments are not entitled to much weight. In Murphy v. Cop- 
 pieters, 136 Cal. 317, 68 Pac. 970 (1902), an action was maintained against 
 all the partners for death caused by their servant's negligence. 
 
212 THE LAW OF PARTNERSHIP 
 
 of a firm makes a usurious loan and receives from the debtor a 
 conveyance of property as security therefor, the other partner 
 is not Hable in conversion upon the refusal of the first partner 
 to return the property, and his retention of it for the firm, it 
 appearing that the second partner was ignorant of the loan trans- 
 action, and that no demand had been made upon him for the 
 property.' It was admitted that the New York statute, governing 
 the transaction, declared every conveyance made to secure a 
 usurious loan void, and that the partner negotiating the loan was 
 guilty of conversion upon refusing to return the property in ques- 
 tion to plaintiff upon his demand. But the court thought that, 
 as the act of making a usurious loan was in violation of a statute 
 and attended with a forfeiture, it could not be considered as 
 within the scope of the business of a partnership entered into for 
 lawful purposes. Therefore, to make the partner, who was ignorant 
 of the transaction, liable in an action of tort, it was declared that 
 "it must be made to appear by some other evidence, that he 
 either authorized it or ratified it." 
 
 (a) Graham v. Meyer criticized. — This view, it is submitted, 
 is erroneous. Whether a tortious act of an agent is within the 
 scope of his employment is not determined by its legality or 
 illegality. "In almost every action for negligent driving," 
 remarked a distinguished English judge, when repudiating such 
 a test, "an illegal act is imputed to a servant." ^ The partnership 
 business in Graham v. Meyer ' included the loaning of money and 
 the receipt of securities therefor. Such an act would not be taken 
 out of the course of the partnership business by one partner's 
 demanding and receiving for the firm an exorbitant or even 
 illegal rate of interest. "If one of two attorneys, who are part- 
 ners, receives money collected for a client, and embezzles or ab- 
 sconds with it, that will form no defence to the other partner. 
 If one should be guilty of extortion, the other would be liable 
 to repay what had been illegally received." * So if one member 
 of a firm of warehousemen refuses to surrender plaintiff's goods, 
 
 ' Graham v. Meyer, 4 Blatch. 129, 15 Leg. Int. 25 ; Federal Cases, No. 
 5673 (1858) citing the above quotation from CoUyer. 
 
 ' Byles, J., in Limpus v. London General Omnibus Co., 1 H. & C. 526, 
 541 (1862). 3 4 Blatch, 129, supra. 
 
 * Warner v. Griswold, 8 Wend. (N. Y.) 665 (1832). 
 
POWERS OF PAETNEES 213 
 
 unless illegal fees are paid, the entire firm must respond in dam- 
 ages for this wrongful act.^ Again, a physician is liable in dam- 
 ages, even for a wanton act of his copartner in treating a patient 
 of the firm.^ 
 
 (&) Breaches of Revenue Laws. — These are attended not only 
 by the forfeiture of the goods which illegally elude the payment 
 of government imposts, but subject the owners of the goods to 
 the payment of penalties. And yet to an action for the penalties, 
 it is no defence for one partner that the breach of the revenue 
 statute was the act of his copartner, done without his knowledge 
 or consent.' 
 
 Upon this point the United States Supreme Court has said, 
 "That, as a general rule, partners are liable to make indemnity 
 for the tort of one of their number, committed by him in the 
 course of the partnership business, is familiar doctrine. It rests 
 upon the theory that the contract of partnership constitutes all 
 its members agents for each other, and that when a loss must fall 
 upon one of two innocent persons, he must bear it who has been 
 the occasion of the loss or has enabled a third person to cause it. 
 In other words, the tortious act of the agent is the act of his 
 principals if done in the course of his agency, though not directly 
 authorized." * 
 
 Counsel for the firm had argued that if a partner, in the course 
 of his employment, wilfully does an act in violation of law, the 
 copartner is not liable, except upon evidence that he authorized 
 or adopted it, and Mr.. Justice Field, in a dissenting opinion,^ 
 approved of this proposition. The majority of the court, how- 
 ever, repudiated it. The reasoning as well as the conclusions of 
 the prevailing opinion appear to be irreconcilable with the deci- 
 sion of the District Court in Graham v. Meyer.^ 
 
 (c) Malicious Legal Proceedings. — A belief in the soundness 
 of the doctrine that acts or omissions of partners, "in violation 
 of law, will only implicate those who are guilty of them", has 
 
 1 Loekwood v. Bartlett, 130 N. Y. 340, 29 N. E. 257 (1891). 
 
 2 Hyrne v. Erwin, 23 S. C. 226, 55 Am. R. 15 (1885). 
 
 3 The Attorney General v. Stranyforth, Bunbury 97 (1721) ; Btirdick's 
 Cases on Part. 346. 
 
 ' StockweU V. U. S., 13 WaU. (80 U. S.) 531, 547-548, 20 L. Ed. 491 
 (1871). s Ibid. p. 562. « 4 Blateh. 129 (1858). 
 
214 THE LAW OF PARTNERSHIP 
 
 led to decisions that a firm is not answerable for legal proceedings 
 maliciously instituted by a partner, unless his acts were specially 
 authorized or have been ratified by his copartners.^ In such 
 cases it is said that the malicious prosecution of offenders is not 
 within the power constructively delegated to one partner as the 
 agent of another.^ 
 
 One of the earliest judicial statements favoring this view is 
 that of Lord Eldon in Arbuckle v. Taylor, a case appealed to the 
 House of Lords from the Court of Session of Scotland.' His 
 remarks upon this point, however, are very meagre, and he offers 
 no reasons in support of his conclusion, that the members of the 
 firm, other than the one who appeared in the prosecution of 
 Arbuckle for alleged larceny of partnership property, were not 
 answerable for the prosecution. Moreover, this portion of his 
 opinion is little more than a dictum, for he reached the conclusion 
 that this action for malicious prosecution must fail, even as to the 
 prosecuting partner, because the latter had probable cause for 
 his prosecution. 
 
 Upon principle, the foregoing decisions appear to be unsound. 
 A similar decision in Georgia * is sustainable under the following 
 code provision of that State : " Partners are not responsible for 
 torts committed by a copartner. For the negligence or torts of 
 their agents or servant, they are responsible under the like rules 
 with individuals." 
 
 1 Rosenkrans v. Barker, 115 111. 331, 3 N. E. 93, 56 Am. R. 169 (1885) ; 
 Kirk V. Garrett, 84 Md. 383, 35 At. 1089 (1896) ; Bernheimer v. Becker, 
 102 Md. 250, 62 At. 526 (1905). 
 
 =iParrell v. Friedlander, 63 Hun (N. Y.), 254, 257 (1892); Marks v. 
 Hastings, 101 Ala. 165, 13 So. 297 (1892). The language in this case is 
 that "a prosecution for larceny of goods stolen from the firm is not within 
 the scope of a mercantile partnership." 
 
 ' 3 Dow, 160, 186 (1815). That Lord Eldon mistook the Scotch law 
 upon this subject is apparent from Gordon v. Brit. & For. Co. Session 
 Cases, 4th Series, 76 (1886). 
 
 In Page v. Citizens' Banking Co., Ill Ga. 73, 36 S. B. 418, 51 L. R. A. 
 463, with note, 78 Am. S. R. 144 (1900), the plaintiff alleged and proved 
 that all the partners took part in his criminal prosecution, and hence the 
 action was sustained against the firm as an entity, as well as against the 
 members thereof. 
 
 * Martin v. Simkins, 116 Ga. 254, 42 S. E. 483 (1902), applying § 2658 
 of the civil code of 1895. 
 
POWERS OP PARTNERS 215 
 
 5. Ordinary Legal Proceedings. — There is no dispute 
 that a partner is acting within the scope of the partnership busi- 
 ness in instituting and carrying on ordinary legal proceedings, 
 for the recovery of firm property, or for the protection of its 
 interests, or for the redress of its wrongs.^ It is generally agreed, 
 also, that the partner in charge of the proceedings does not cease 
 to be acting within the scope of the partnership business, simply 
 by conducting them in such a manner as to inflict legal injury 
 npon third persons. For example, if in a suit against a firm debtor, 
 he orders an attachment to be levied on the goods of a third person, 
 supposing them to be the goods of the debtor, his act is the act 
 of the firm.^ Nor will such an act be taken out of the scope of the 
 partnership business by his knowledge that the third person has 
 legal rights in such property with which he is unlawfully inter- 
 fering.^ Again, if one partner under a void judgment against a 
 firm debtor takes property from the latter, and thereafter refuses 
 to surrender it to the debtor upon demand, his acts will bind his 
 copartner.^ "What was done by either" partner, said the court 
 in the last cited case, quoting the language of Judge Cooley, " in 
 the collection of the partnership debt was presumptively with 
 the sanction of the other." 
 
 (a) Orders of Arrest are Ordinary Legal Proceedings. — If a 
 partner is acting within the scope of the partnership business, 
 in ordering the levy of an attachment or an execution, it is difii- 
 cult to understand why he is not also acting within the scope of 
 the partnership business, when he orders the arrest and imprison- 
 ment of a person charged with defrauding the firm, or with steal- 
 ing its property. Partnerships frequently are entitled to procure 
 the arrest and imprisonment of persons who have wronged them. 
 Proceedings of this character, in order to be effective in protect- 
 
 1 Supra, Chap. IV. § 2, 4. 
 
 2 Kuhn V. Weil, 73 Mo. 213 (1880). 
 
 3 Harvey v. McAdams, 32 Mich. 472 (1875). 
 
 4Rolfe V. Dudley, 58 Mich. 208, 211 (1885); Taylor v. Jones, 42 
 N. H. 25, contra. In this case it was said that "there is no legal pre- 
 sumption that one partner concurs in the wrongful act of another ", and 
 that it is a question for a jury whether a partner's refusal to surrender 
 the property of a third person, which has been levied upon as the prop- 
 erty of a firm debtor, is an act within the scope of the partnership busi- 
 ness. 
 
216 THE LAW OF PARTNERSHIP 
 
 ing the rights or redressing the wrongs of a firm, must often be 
 instituted hurriedly and be pushed vigorously. There is no oppor- 
 tunity for consulting all of the partners before commencing pro- 
 ceedings. If, in such cases, the prosecuting partner acts upon 
 probable cause and without malice, and for the purpose of serv- 
 ing the interests of the firm, his acts would certainly bind all of 
 the members. Any recovery from the arrested person would 
 belong to the firm rather than to the acting partner. 
 
 (b) Who should suffer for a Partner's Bad Temper or Poor Judg- 
 ment 9 — Does the fact that this partner, through defects of 
 temper or errors of judgment, so conducts the proceeding as to 
 enable the arrested and imprisoned person to maintain an action 
 for malicious prosecution, change his relationship to the firm? 
 Does it terminate his agency? Does it put his acts outside the 
 scope of the partnership business? If it does, what becomes of 
 the principle "that the contract of partnership constitutes all 
 its members agents for each other, and that when a loss must fall 
 upon one of two innocent persons, he must bear it who has been 
 the occasion of the loss, or has enabled a third person to cause 
 it"?i 
 
 Surely it is more reasonable that the copartners who have 
 held out this one as a fit and proper person to act in protecting 
 the firm's interests should suffer for his defects of temper and 
 errors of judgment, rather than those who have reposed no con- 
 fidence in him and made no representations as to his fitness. 
 
 6. The Prosecution of Criminals. — Undoubtedly the 
 institution of proceedings for the punishment of criminals is 
 no part of the ordinary business of a mercantile partnership. 
 When a partner, therefore, obtains the arrest and imprison- 
 ment of a person, not in performance of the duty which he owes 
 to his firm to protect its interests and to obtain redress for its 
 wrongs, but in performance of his duty as a citizen in bringing 
 criminals to justice, he alone is answerable for his acts. As they 
 are not done on behalf of his firm, nor to further its interests, and 
 do not fall within the ordinary course of its business, his partners 
 cannot be called upon to share responsibility with him. 
 
 These views are sustained by the decisions relating to the 
 
 1 Stockwell V. U. S., 13 Wall (80 U. S.) 531, 647-548 (1871) ; Hamlyn 
 V. John Houston & Co., (1903) 1 K. B. 81, 72 L. J. K. B. 72. 
 
POWERS OP PARTNERS 217 
 
 liability of employers for malicious prosecutions by their agents.^ 
 In a recent case, the Supreme Court of Rhode Island, sustaining 
 a recovery of damage against a firm for plaintiff's wrongful 
 arrest by a servant, said : "The criterion of the master's liability 
 can never be whether the act would have been lawful for the master 
 to have done in the circumstances as they actually existed. . . . 
 If the servant had seen the plaintiff take up and secrete the pack- 
 age of spoons in question, and had allowed her to walk away with 
 them unmolested, could any one say that he had not been derelict 
 in his duty to his master? If, in the performance of this duty, 
 he mistook the occasion for it, or exceeded his powers, or employed 
 an improper degree of compulsion, the mistake and the excess 
 must be answered for by the master. . . . The arrest was for 
 the purpose of searching for and recovering the master's property, 
 not with the object of punishing crime against the public." ^ 
 
 7. Liability for a Partner's Frauds and Trespass. — 
 For the fraudulent acts of a partner in the course of the partner- 
 ship business, the firm and every member of it are liable to re- 
 spond in damages. If goods are sent to a firm of commission 
 merchants for gale, and one partner induces the owner to make a 
 credit sale to a third person, by false representations concerning 
 the buyer's financial condition, it is no defence to the copartners 
 in an action for damages, that they were ignorant of the represen- 
 tations.^ Again, if a firm receives goods, with instructions from 
 their owner, " to be by them delivered to a certain person upon 
 his paying for the same, and not otherwise", all members will 
 be liable for conversion if any partner delivers them to the person 
 named, without receiving payment.'* So, if one partner forcibly 
 and without color of legal authority seizes plaintiff's property, 
 under the mistaken belief that his firm has a lien upon it, his 
 copartner will be liable with him for exemplary damages.^ And 
 
 1 Mulligan v. N. Y. & Roekaway Ry., 129 N. Y. 506, 29 N. E. 952, 26 
 Am. S. R. 539, 14 L. R. A. 791 (1892) ; Palmeri v. Man. Ry., 133 N. Y. 
 261, 30 N. E. 1001, 28 Am. S. R. 632, 16 L. R. A. 136 (1892). 
 
 2 Staples V. Schmid, 18 R. I. 224, 26 At. 193, 19 L. R. A. 824 (1893). 
 
 3 Castle V. BuUard, 23 How. (64 U. S.) 172, 16 L. Ed. 424 (1859). 
 
 ^ Hobbs V. Chicago Packing Co., 98 Ga. 576, 25 S. E. 584, 58 Am. 
 S. R. 320 (1896) ; Burdick's Cases on Part. 349. 
 
 5 Robinson v. Goings, 63 Miss. 500 (1886) ; s. p. Peckham Iron Co. v. 
 Harper, 41 Oh. St. 100 (1884). 
 
218 THE LAW OF PARTNEESfflP 
 
 for a trespass to property, in the ordinary course of the firm's 
 business/ or when the benefit thereof has been received and re- 
 tained by the firm,^ all the partners are liable. 
 
 (a) Actions for Deceit. — Even in a common law action against 
 the firm for deceit, where the plaintiff must show " that the defend- 
 ants believed or had reason to believe that the representations 
 were false at the time, and for that reason that they were fraud- 
 ulently made", ^ he makes out his case against all the partners, 
 by showing that the one who made the representations believed 
 or had reason to believe that they were false.^ 
 
 In Chester v. Dickerson, cited in the last note, four partners 
 were sued for deceit in the sale of lands. The evidence showed 
 that two of them were engaged in perpetrating the fraud, which 
 consisted in having petroleum poured on the lands and repre- 
 senting to plaintiff that this petroleum was the natural product 
 of the lands, "but there was no evidence that Dickerson had 
 anything whatever, personally, to do with the fraud, or that he 
 knew that any fraud was practised." The trial court refused 
 to charge "that they must find a verdict in favor of the defendant 
 Dickerson, unless they believe that he personally knew or con- 
 sented to some fraudulent act or representation to the plaintiffs 
 which procured the sale", and directed the jury "that each defend- 
 ant was liable for the fraud personally committed by him, and 
 that from the time they became partners, all were liable for the 
 fraud committed by either in and about the partnership business." 
 The Court of Appeals, after approving the charge and the refusal 
 to charge, declared : " It is well settled that the firm is bound 
 for the fraud committed by one partner in the course of the 
 
 1 WUliams v. Hendricks, 115 Ala. 277, 22 So. 439, 41 L. R. A. 650, 67 
 Am. 8. R. 32, with valuable note (1896). 
 
 2 Sunlin v. Skutt, 133 Mich. 208, 94 N. W. 733 (1903). 
 
 ' Oberlander v. Spiess, 45 N. Y. 175 (1871) ; Derry v. Peek, 14 App. 
 Cas. 337 (1889). 
 
 " Chester v. Dickerson, 54 N. Y. 1, 13 Am. R. 550 (1873) ; Peekham 
 Iron Co. V. Harper, 41 Oh. St. 100 (1884) ; Brundage v. Mellon, 5 N. D. 
 72 ; 63 N. W. 209 (1895) ; Burdick's Cases on Part. 348. Contra, Stewart 
 V. Levy, 36 Cal. 159 (1868). See a full collection of authorities in note 
 to Williams v. Hendricks, 67 Am. St. R. 46-51, in note to Page v. Citizens' 
 Banking Co., 51 L. R. A. 479-486 and in note to Boston Foundry Co. v. 
 Whiteman, 31 R. I. 88, 76 At. 757, 22 Ann. Cas. 1334, 1337 (1910). 
 
POWERS OF PARTNERS 219 
 
 transactions and business of the partnership, even when the 
 other partners have not the slightest connection with, or knowl- 
 edge of, or participation in the fraud." 
 
 8. Defamation by a Partner. — It is not necessary to show 
 that a firm is organized for the purpose of publishing defamatory 
 matter, in order to hold every member liable for defamation pub- 
 lished by the firm. If the defamatory statement is made to aid 
 the firm business, the partnership will be responsible for it. Ac- 
 cordingly, if a partner in a manufacturing firm falsely publishes 
 that a rival manufacturer is infringing a patent which they own, 
 that they have secured an injunction and closed up his business, 
 each partner is answerable in damages for the defamation.^ " Each 
 of the partners, " to quote from the decision in the last cited case, 
 " is an agent of the partnership as an entirety, and, if in the course 
 of that business he injures the business of another by slander, the 
 partnership is liable therefor, just as it might be for any other 
 tort by any other agent." ^ 
 
 A different view prevails in Georgia, under the statutory pro- 
 vision already quoted, where the court has held that neither the 
 partnership nor the copartners were liable in damages for slan- 
 ■derous reports circulated by one partner without the knowledge 
 or sanction of the others.^ 
 
 (a) Malicious Intention of a Partner. — By statute, in Mas- 
 sachusetts, the truth of the words published is not an absolute 
 defence: "The plaintiff may, notwithstanding the words are 
 true, maintain his action if he can show that they were published 
 with malicious intention." In case the words are published in 
 the course of a firm's business, will the fact that one partner only 
 was responsible for the publication absolve his absent, ignorant, 
 and innocent partners from liability? The Supreme Court of 
 Massachusetts has answered the question in the negative.^ In 
 the case referred to, defendants, as partners in the publication of 
 ■a newspaper, were sued for publishing false and malicious libels 
 
 1 Haney Mfg. Co. v. PerMns, 78 Mich. 1, 43 N. W. 1073 (1889). 
 
 ^ Duquesne Distributing Co. v. Greenbaum, 135 Ky. 182, 121 S. W. 
 1026, 21 Ann. Cas. 481, with note (1909), holds the firm not liable for 
 its salesman's slander which was neither authorized nor ratified. 
 
 3 Hendricks v. Middlebrooks Co., 118 Ga. 131, 44 S. E. 835 (1903). 
 
 * Lothrop V. Adams, 133 Mass. 471, 43 Am. R. 528 (1882). 
 
220 THE LAW OF PAETNERSHIP 
 
 of the plaintiff. At the trial they "asked the judge to rule that 
 express malice of one of the defendants could not affect the other 
 defendants, unless it appeared that they participated in such 
 malice. The judge refused so to rule", and, on appeal, the Su- 
 preme Court held that the refusal was right. "Partners," it 
 was declared, " are the general agents of each other and of the firm ; 
 and the reason for imputing the actual malice or fraud of an agent 
 to his principal is not that it is inferred that the principal actually 
 participated in the malice or fraud, but, the act having been done 
 for his benefit by his agent acting within the scope of his employ- 
 ment in his business, it is just that he should be held responsible 
 for it in damages." 
 
 (6) Defamation not in the Course of Business. — It is not enough 
 to bring the publication of a libel within the course of the partner- 
 ship business, that it was authorized by a partner and referred to 
 a partnership transaction. In a comparatively recent case,^ one 
 member of a firm of furniture dealers placed the following placards 
 on a table : "This was taken back from Dr. Woodling, as he would 
 not pay for it ; for sale at a bargain", and "Moral : Beware of dead 
 beats." As it appeared very clearly from the evidence that the 
 libellous matter was published not as a firm advertisement, but 
 for the purpose of venting the personal spite of the partner who 
 actually published it, the court held that the action was properly 
 dismissed as to the partner who knew nothing about the placards. 
 
 9. Punishment op the Innocent Partner. — While every 
 member of a firm is answerable in damages for the tort of any 
 member, committed in the course of the partnership business, 
 he is not subject to punishment therefor, if he is actually inno- 
 cent of any wrongdoing. For example, a proceeding under a 
 statute for the arrest and punishment of debtors, who have dis- 
 posed of their property to defraud creditors, cannot be maintained 
 against all of the partners, upon evidence that a fraudulent dis- 
 position of firm property has been made by one partner. Such 
 a statute does not include debtors who have been guilty of no 
 personal delinquency.^ 
 
 A similar view has been taken of statutory provisions for the 
 arrest of defendants in actions for fraud. The North Carolina 
 
 ' Woodling V. Knickerbocker, 31 Minn. 268, 17 N. W. 387 (1883). 
 2 Watson V. Hinehman, 42 Mich. 27, 3 N. W. 236 (1879). 
 
POWERS OF PARTNERS 221 
 
 Code of Civil Procedure authorizes the arrest of a defendant 
 " when the defendant has been guilty of a fraud in contracting the 
 debt", etc. This language, it has been held, does not warrant the 
 arrest of an innocent partner, in an action for damages by one who 
 had been induced to sell goods to the firm by false representations 
 of the copartner.^ 
 
 Under a similar statute in New York, the Court of Appeals 
 has held ^ that in an action to enforce a contract for the pur- 
 chase of property made -by his agent, the defendant cannot be 
 arrested on proof that the vendor was induced by the agent's 
 fraud to enter into the contract, when the fraud was not known 
 to the defendant, nor authorized nor ratified by him, on the 
 ground that the statutory "test of the liability to arrest in such 
 an action is the guilt of the defendant in contracting the debt 
 or incurring the obligation sued upon." Whether the defendant 
 would have been liable to arrest, had the plaintiff brought his 
 action for deceit, was not decided. 
 
 In Alabama, under a statute imposing a penalty for cutting 
 trees upon the land of another, knowingly and wilfully, it has 
 been held ^ that the penalty can be enforced against those partners 
 only who knowingly and wilfully violated the statute ; although 
 all members of the firm would be liable for the common law dam- 
 ages inflicted by the trespass, if it was within the scope of the 
 partnership business. 
 
 10. Liability for a Partner's Misapplication of Prop- 
 erty. — We have seen that every member of a partnership is 
 liable for the wrongful conversion of a third person's property 
 by any partner, while acting in the course of the partnership 
 business. But it must be borne in mind that the mere fact that 
 the wrongdoer is a member of a firm will not make his copartners 
 answerable for his misconduct, even though "had he not been 
 connected with the firm he might not have been in a position to 
 commit the " wrong.* 
 
 1 McNeely v. Haynes, 76 N. C. 122 (1877). 
 
 2 Hathaway v. Johnson, 65 N. Y. 93, 14 Am. R. 186 (1873). See Nat. 
 Bank of Comm. v. Temple, 39 How. Pr. 432 (1870). 
 
 5 Williams v. Hendricks, 115 Ala. 277, 22 So. 439, 41 L. R. A. 650, 
 with valuable note, 67 Am. 8. R. 32 (1896). Accord. U. S. v. Cohn, 128 
 Fed. 615 (1904). * Lindley on Part. (7th ed.) 189. 
 
222 THE LAW OF PARTNERSHIP 
 
 The leading case in England on this point is Ex parte Eyre,^ 
 in which a customer of a banking firm attempted to hold all 
 the partners liable for the abstraction by one partner of secur- 
 ities from a box deposited with the firm. It appeared, however, 
 that the customer gave to this partner authority to borrow cer- 
 tain securities from the box, upon his substitution of others; 
 and that the partner, after substituting certain securities, ab- 
 stracted them, without the knowledge of his copartners. It was 
 held that "the act was a tortious act committed by one partner,, 
 not acting for the partnership or for any partnership object,, 
 but in his separate character, and for his own individual and 
 separate purposes." 
 
 The doctrine of this case has been applied frequently in this- 
 country. For example,^ the owner of certain shares of stock 
 sent them to B with a power of attorney to him to sell them. 
 Instead of selling the shares, he had them transferred to his 
 firm, but they always remained in his custody, his copartners 
 knowing nothing of the affair, until their failure, when the stock 
 was discovered in his private drawer, and was handed to them 
 by the firm's assignee. The court held that the owners of the 
 stock had no claim against the firm; that they confided the 
 stock to B as an individual, and that the subsequent transactions 
 with the stock were not those of his firm, but were B's transac- 
 tions alone. 
 
 (a) Temporary Possession of the Property by the Firm. — In 
 cases of the character now under consideration, when a partner 
 obtains property, not in the course of the partnership business, 
 but in his individual capacity, the further fact that the firm 
 receives and holds the property for a time will not of itself 
 render the copartners liable for the property. 
 
 A good illustration of this doctrine is afforded by Toof v. Dun- 
 can; ^ also a case where the wrongdoer's connection with the de- 
 fendant firm gained for him the opportunity of committing the 
 wrong. Frazier, while on a trading expedition for his firm, was 
 asked by Duncan to collect and remit to him a debt due from a 
 
 > 1 Phillips, 227, 3 Mont. D. & D. 12, 12 L. J. Ch. 266 (1842). 
 2 Adams v. Sturges, 55 111. 468 (1870). See oases digested in note, in 
 51 L. R. A. 486-490, and 67 Am. St. R. 44-50. 
 5 Toof V. Duncan, 45 Miss. 48 (1871). 
 
POWEES OF PARTNERS 223 
 
 party in another town to which the firm business was expected 
 to take Frazier. The latter assented, and Duncan drew his 
 draft on the debtor to Frazier's order. Instead of presenting it 
 in person, Frazier indorsed it to his firm for collection, and after 
 it was collected received the proceeds from his firm and used them 
 for his individual purposes. Inasmuch as Duncan's transaction 
 was with Frazier individually, and as the firm derived no benefit 
 from the money, but paid it over to Frazier in good faith and 
 without any knowledge of Duncan's arrangement with him, the 
 court held that Frazier alone was responsible to Duncan, and 
 that the other partners were not " in any way, morally or legally, 
 involved in the transaction." ^ 
 
 (6) Liability for Property Fraudulently acquired by a Partner. 
 — A case quite similar to the last, but differing in some impor- 
 tant respects, has received the careful consideration of the New 
 York courts.^ The Rittenhouse Manufacturing Company made 
 a fraudulent purchase of goods from the plaintiffs ; its president 
 pledged them for a loan; deposited the lender's check, for the 
 sum loaned, with a firm composed of Ammidown, the president 
 and chief stockholder of the company, and A. D. Smith, and soon 
 after, but before plaintiffs had discovered the fraud, drew out the 
 money in payment of the company's debts. The company and 
 Ammidown were insolvent. The trial court gave judgment against 
 both Ammidown and Smith, on the ground, among others, that 
 the receipt of the money by the firm was a partnership transaction 
 with the company. This was affirmed by the general term, but 
 reversed by the Court of Appeals. 
 
 It was admitted by the lower courts that Smith had no per- 
 sonal knowledge of the company's fraud, and that the firm of 
 Ammidown and Smith received no benefit from the transaction. 
 But in the opinion of those courts, the knowledge of Ammidown 
 
 1 Cf. Bounce v. Parsons, 45 N. Y. 180 (1871). Plaintiff was induced 
 by one partner to supply him with money to be used for a specific pur- 
 pose. Instead of using it for that purpose, he deposited it with the firm 
 as his own money, and cheeked it out in payment of debts for which he 
 was liable, but not for debts of his firm. His copartners, who were ig- 
 norant of plaintiff's transaction with him, were held to be under no Ua- 
 bihty to plaintiff. 
 
 2Bienenstock v. Ammidown, 155 N. Y. 47 (1898), 49 N. B. 321, re- 
 versing s. c. in 29 N. Y. Supp. 593, 32 N. Y. Supp. 1138, 11 Misc. 76. 
 
224 THE LAW OF PARTNERSHIP 
 
 was imputable to Smith when the cheek was deposited by the 
 company with the firm. Moreover, they declared that the receipt 
 of the check by the firm was a transaction of the partnership in 
 the ordinary course of its business ; that the check, at the time 
 Ammidown indorsed it to his firm, could have been recovered by 
 the plaintiffs ; and that the firm by taking title to the check, col- 
 lecting it and paying out the proceeds upon orders of the Ritten- 
 house Company, became liable to the plaintiffs therefor. 
 
 (c) Not in the Course of the Partnership Business. — Had the 
 check been received by the firm in the ordinary course of its 
 business, and had its proceeds gone into the general funds of the 
 firm. Smith would have been liable to plaintiffs, even though he 
 had been personally ignorant of the transaction, and even though 
 Ammidown had checked out the proceeds for the benefit of his 
 company. The case would have been governed by the rule laid 
 down in the famous Fauntleroy forgery cases in England,^ and 
 which has been followed in this country.^ 
 
 But in Bienenstock v. Ammidown, it appeared that the Ritten- 
 house Company had an arrangement with Ammidown and Smith, 
 permitting it to deposit moneys with the firm against which it 
 
 1 Marst V. Keating, 2 CI. & F. 250 (1834) ; Stone v. Marsh, 6 B. «&■ C. 
 551 (1827). The rule is now fornlTilated in the British Partnership Act 
 of 1890, § 11, as follows: "In the following cases, namely: (o) Where a 
 partner, acting within the scope of his apparent authority, receives the 
 money or property of a third person and misapplies it ; and (6) Where a 
 firm in the course of its business receives money or property of a third 
 person, and the money or property so received is misappUed by one or 
 more of the partners while it is in the custody of the firm, the firm is 
 liable to make good the loss." Reproduced in Uniform Partnership 
 Act, § 14 ; L. of Md. 1916, Ch. 175. 
 
 2 Guillou V. Peterson, 89 Pa. St. 163 (1879). In this case one partner 
 loaned to his firm certain securities which he held as executor; another 
 partner sold them and applied the proceeds to the payment of firm debts. 
 All the partners were held liable to the estate for the securities, although 
 some of them were ignorant of the transaction. Said Paxson, J. : "It is 
 entirely within the course of the regular business of the firm to pay its 
 debts. I regard the case in hand as stronger than those cited, for the 
 reason that the firm got the benefit of every dollar realized from the 
 securities, while in Marsh v. Keating, 2 CI. & F. 250, and Stone v. Marsh, 
 6 B. & C. 551, Fauntleroy cheated his firm, as well as the owner of the 
 stock, by appropriating to his own use the money received from the sale 
 of the stock." 
 
POWERS OF PARTNERS 225 
 
 could draw at any time ; that the check in question was deposited 
 to the company's credit, and the full amount thereof drawn out 
 by the company within two or three days after the deposit. Al- 
 though in a sense it was a partnership transaction to receive the 
 deposit, yet that circumstance, in the opinion of the Court of 
 Appeals, was so "qualified and materially affected by the fact 
 that it was a mere accommodation extended to the customer, 
 from which the firm could derive no benefit, having no interest in 
 such deposits, and holding the same subject to immediate draft", 
 that the firm was not charged with the "liability which might 
 follow upon a regular and ordinary business transaction, in the 
 conduct of which Ammidown would be acting as its agent as well 
 as that of the company." 
 
 (d) Whether a Transaction is in the Course of the Business — 
 is often a difficult question of fact; a question upon which 
 learned judges have frequently differed, even when the evidence 
 was undisputed. Bienenstock v. Ammidown, which we have been 
 reviewing at some length, is an example. Another illustration 
 is afforded by Cleather v. Twisden,^ in which Justice Denman 
 held, that the receipt and misappropriation of certain bonds by 
 a member of a firm of solicitors were acts in the scope of the 
 partnership business, while all of the judges of the Appellate Court 
 were of the opposite opinion. Said Bowen, L. J., "Although we 
 differ from Mr. Justice Denman in the conclusion at which we 
 have arrived, that difference arises solely from the different view 
 we take of the facts. We agree entirely with him in his view of 
 the law. This is a case which falls very near the line." 
 
 In other cases the question is an easy one. If a partner in a 
 mercantile firm collects money for a third person and uses it in 
 the firin business, instead of remitting it to his principal, the 
 partnership and every member will be liable for the amount.^ 
 Although his acts as collector were not in the ordinary course 
 of the partnership business, he was exercising an implied power as 
 a partner in borrowing and using the money. His acceptance 
 of a draft for the money in the firm name would bind the firm, 
 
 1 28 Ch. D. 340, 54 L. J. Ch. 408 (1884). Still another example is 
 Rhodes v. Moules, [1895] 1 Ch. 236, 64 L. J. Ch. 122, reversing Kekewich, J. 
 
 2 Walker v. Wallace, 31 Ga. 362 (1860) ; Whitaker v. Brown, 16 Wend. 
 (N. Y.) 504 (1836). 
 
226 THE LAW OF PABTNERSHIP 
 
 as an act done in the ordinary course of the partnership busi- 
 
 ness.^ 
 
 In still other cases, the question has been left to the jury.^ 
 
 11. Wrongful Use of Trust Funds by a Partner. — If 
 all the members of a firm assent to the wrongful use of trust 
 funds, in the firm business, by one of their number, all will be 
 liable to the cestui que trust, not because of their partnership 
 relation, but because they are joint wrongdoers. But a partner 
 who improperly uses trust funds in the partnership business as 
 his own property does not render the partnership a debtor to his 
 cestui que tru^t? 
 
 It is true that the cestui que trust may be able to recover his 
 property from the firm "if he can show that the firm still has 
 it, and that the firm did not come by it by purchase for value 
 without notice. The true owner of money traced to the posses- 
 sion of another has a right to have it restored, not because it 
 is a debt, but because it is his money. His right is incidental 
 to his ownership ; and whether the money is traced to the hands 
 of a single individual, or to the hands of a firm, is immaterial." * 
 
 If he cannot show that the firm still has the funds, his claim 
 will be confined to the wrongdoing partner.^ The same result 
 will follow where the trust money is paid by the trustee partner 
 as his contribution to the firm capital.* The rights of the firm 
 and of the other partners are substantially those of purchasers 
 for value, and if they have no notice of the trustee partner's fraud, 
 they will incur no liability to the cestui qu£ tru^t, by receiving and 
 using his contribution to the capital of the partnership.' 
 
 > Palmer v. Soott, 68 Ala. 380 (1880). 
 
 2 Birckhead v. De Forest, 120 Fed. 645, 57 C. C. A. 107 (1903) ; Hef- 
 ferlin v. Karlman, 29 Mon. 139, 74 Pao. 201 (1903). 
 
 ' Ex parte Apsey, 3 Brown's Ch. Ca. 265 (1791). Cestui' que trust not 
 allowed to prove against firm estate. Jaques v. Marquand, 6 Cow. 497 
 (1826) ; Shaffer v. Martin, 25 App. Div. (N. Y.) 501, 49 N. Y. Supp. 
 853 (1898). 
 
 ^Lindley on Part. (7th ed.) 196; Randall v. Knevals, 27 App. Div. 
 (N. Y.) 146, 50 N. Y. Supp. 748 (1898), affirmed 161 N. Y. 632 (1900). 
 
 sEnglar v. Oflfutt, 70 Md. 78, 16 At. 497, 14 Am. St. R. 333 (1889). 
 
 « Gilruth V. DeceU, 72 Miss. 232, 16 So. 250 (1894) ; Burdick's Cases 
 on Part. 351. 
 
 ' HoUembaek v. More, 44 N. Y. Sup. Ct. 107 (1878). 
 
POWERS OF PARTNERS 227 
 
 (a) Notice of the Fravd. — It is not necessary to prove that 
 his copartners had actual knowledge of the trustee partner's 
 fraud upon his cestui qtie trust. Knowledge of facts fairly putting 
 them upon inquiry, which, if followed up, would have disclosed 
 the truth, is enough to fix upon all the partners responsibility for 
 the wrongdoing partner's acts. 
 
 In some cases, the knowledge of the defrauding partner is 
 imputed to his innocent copartners.^ But this ought not to be 
 done when th^ fraudulent act is outside the scope of the part- 
 nership business, or where it amounts to a fraud ^ upon his co- 
 partners as well as upon outsiders. Accordingly, if a partner 
 obtains his wife's money, by forging her name to a check, and 
 uses it as his contribution to the capital of his firm, his knowledge 
 of the fraud is not imputable to his copartners, as his "acts and 
 doings" are "wholly outside the scope of the partnership busi- 
 ness." ^ 
 
 (b) Why Defrauding Partner's Knowledge is not imputable 
 to his Partners. — This topic received very careful consideration 
 in Bienenstock v. Ammidown* a case which was briefiy stated on 
 a preceding page. In the lower courts it was ruled that Ammi- 
 down's knowledge of the Rittenhouse Company's defective title 
 
 1 Randall v. Knevals, 27 App. Div. (N. Y.) 146 (1898) ; Cunningliam 
 V. Woodbridge, 76 Ga. 302 (1886). 
 
 2 Bignold V. Waterhouse, 1 M. & S. 255 (1813). 
 
 ' Gilruth V. DeceU, 72 Miss. 232, 16 So. 250 (1894) ; Burdick's Cases 
 on Part. 351. 
 
 * 155 N. Y. 47, 49 N. E. 321 (1898). The provisions of the British Part- 
 nership Aet of 1890, bearing upon the questions decided in this case, 
 are as follows : " § 13. If a partner, being a trustee, improperly employs 
 trust-property in the business or on the account of the partnership, no 
 other partner is liable for the trust-property to the persons beneficially in- 
 terested therein : Provided as follows : (1) This section shaU not affect 
 any liability incurred by any partner by reason of his having notice of a 
 breach of trust ; and (2) Nothing in this section shall prevent trust money 
 from being followed and recovered from the firm if still in its possession 
 or under its control." " § 16. Notice to any partner who habitually acts 
 in the partnership business of any matter relating to partnership affairs, 
 operates as notice to the firm, except in the case of a fraud on the firm 
 committed by or with the consent of that partner." 
 
 The Uniform Partnership Act has no provision like § 13 of the British 
 Act, but § 16 is reproduced with modifications in § 12 of the Uniform Act ; 
 L. of Md. 1916, Ch. 175. 
 
228 THE LAW OF PARTNERSHIP 
 
 to the check, which he deposited to its credit with his firm, was 
 imputable to his copartner. The Court of Appeals, however, 
 repudiated this view. " Ammidown, " it declared, " in temporarily- 
 depositing the proceeds of property fraudulently acquired by him 
 for his manufacturing company with his firm, without any com- 
 munication of the fact to his copartner, would be conducting a 
 fraud upon him, if in so doing he could make him incur an unsus- 
 pected and unusual liability to a third person. The rule of law 
 which attaches a responsibility to the status of a partnership 
 relation for the acts of a copartner, within the scope of busi- 
 ness transactions, is founded upon a just view of the require- 
 ments of public commercial interests. To extend its operation 
 to the extent of imputing the notice or knowledge of one 
 copartner acquired in transactions outside of the partnership 
 business, and which were had for his individual benefit, to the 
 other, would be to convert the rule into an instrumentality of 
 injustice." 
 
 § 2. (C.) Powers of the Majority. 
 
 The articles of partnership often provide that in case of dif- 
 ferences or disputes between the members relating to the firm 
 business, the determination of the majority, or the decision of a 
 particular member, shall be binding upon all. A provision of 
 this character in the partnership agreement is not only legal, 
 it is most desirable. In the absence of such a stipulation, however, 
 the decision of a majority is binding upon all the partners, pro- 
 vided it relates to the ordinary business of the firm, and is made 
 in good faith.^ 
 
 1. Ordinary Matters of Partnership Business. — In com- 
 menting upon the subsection of the Partnership Act referred to 
 in the last note, Sir Frederick Pollock states that "Sir G. Jessel 
 is believed to have intimated in one or more unreported cases 
 an opinion that a majority of the partners has not any power 
 whatever implied by law. But the rule that in such matters the 
 
 1 Uniform Partnership Act, § 18 (h) declares : " Any difference arising as 
 to ordinary matters connected with the partnership business may be decided 
 by a majority of the partners ; but no act in contravention of any agree- 
 ment between the partners may be done rightfully without the consent of 
 all the partners." Cf. British Partnership Act of 1890, § 24 (8). 
 
POWERS OF PAETNERS 229 
 
 mind of the greater number must prevail is universal in modern 
 business practice." ^ 
 
 This rule has the sanction of judicial ^ and of legislative author- 
 ity ' in this country. It is thought to be more reasonable and 
 just to imply an understanding on the part of all the members 
 of the firm, that the will of the majority shall prevail in all matters 
 within the scope of the partnership business, than "to allow the 
 minority to stop the operations of the concern, against the views 
 of the majority." * 
 
 When persons associate themselves as partners, they invest 
 the firm with the power to do all acts required to be done in the 
 ordinary course of the business which is to be carried on by the 
 firm. In this respect a partnership differs from an association of 
 tenants in common. The latter do not form a business entity, 
 and their titles to the property held in common are several titles. 
 Their relationship to each other and to the common property 
 affords no such ground for inferring an understanding that the 
 minority is to abide by the decision of the majority, as exists in 
 case of a partnership.* 
 
 In the New York case last cited, two of the three members of a 
 firm brought an action in the firm name, upon a contract made by 
 
 1 PoEoek's Digest of Part. (6tli ed.) 79, (8th ed.) 85. 
 
 2 Peacocks w. Chambers, 46 Pa. 434 (1863) ; Burdick's Cases on Part. 
 353. In this case, the owners of a majority of the shares of the partner- 
 ship stock were held entitled to discharge an agent and to employ another, 
 notwithstanding the dissent of a strong minority. Accord. Markle v. 
 Wilbur, 200 Pa. 457, 50 At. 204 (1901) ; Reirden v. Stephenson, 87 Vt. 
 430, 89 At. 465, Ann. Cas. 1916 C. 109, with note (1914). 
 
 'See Civil Code of California, § 2428: "Unless otherwise expressly 
 stipulated, the decision of the majority of the members of a general part- 
 nership binds it in the conduct of its business." But c/. La. Rev. Civ. 
 Code, Art. 2870. 
 
 * Johnston v. Button, 27 Ala. 245, 253 (1855). Plaintiffs recovered on 
 notes given in the firm name by two of three partners, for goods sold to 
 the firm by plaintiffs, after notice that the third partner refused to be 
 responsible for further debts of the firm. 
 
 5 Irvine v. Forbes, 11 Barb. (N. Y.) 587 (1852); Clarke v. Slate Val- 
 ley Ry., 136 Pa. 408, 20 At. 562, 10 L. R. A. 238 (1890). In the latter 
 case, it appearing that the majority, who gave the warrant of attorney to 
 proceed with the case, had divested themselves of all interest in the firm, an 
 order, staying proceedings until a sufficient warrant of attorney should 
 be filed, was sustained. 
 
230 THE LAW OF PAETNERSHIP 
 
 the firm, to collect what was alleged to be due upon it. " Such 
 conduct," the court held, "is within the power of the majority, 
 because it is within the scope of the business of the firm and in 
 furtherance of it. A dissenting minority has no veto power in 
 such a case, but is bound by the action of the majority." 
 
 The sale of partnership goods, being an ordinary matter of 
 the firm's business, may be made by a majority of the partners, 
 and in the absence of fraud or collusion the purchaser will acquire 
 a perfect title, although he is notified by the minority that they 
 do not consent to the sale.^ 
 
 2. Limits to the Power of the Majority. — While the 
 minority cannot veto an act which has been decided upon by 
 the majority in good faith, and is within the ordinary scope of 
 the partnership business, its members have the right to veto any 
 act which is outside the ordinary affairs, of the firm. 
 
 If the articles of a trading partnership provide that the busi- 
 ness shall not include the purchase and sale of spirituous liquors, 
 the business cannot be so changed as to include this traffic with- 
 out the consent of every partner.^ So, if the articles declare that 
 the business shall be carried on at a designated place, or in such 
 other place as the partners may agree upon, nothing short of the 
 consent of every partner to a change of location will authorize 
 such a change.* The assent of all the partners to a lease of certain 
 premises for their business will authorize the location of the busi- 
 ness upon those premises. Upon the expiration of the lease, 
 however, the renewed consent of all will be necessary to authorize 
 a renewal of the lease and the continuance of the business there.* 
 
 3. The Majority must act in Good Faith. — Even when 
 the majority are engaged in a transaction, which is within the 
 ordinary scope of the firm business, they are bound to act in 
 good faith towards the minority. "For a majority to say, 'We 
 do not care what one partner may say, we, being the majority, 
 will do what we please,' is" to act in bad faith. The minority 
 
 1 Staples V. Sprague, 76 Me. 458 (1883). 
 
 2 Abbot V. Johnson, 32 N. H. 9 (1855). 
 
 ' Jennings' Appeal, 16 At. (Pa.) 19, 2 Mon. 184, 2 L. R. A. 43 (1888). 
 Such consent may be evidenced by the conduct of the partners, and 
 need not be established by express statements. Boisgerard v. WaR, Sm. 
 & M. Ch. (Miss.) 404, 428 (1843), aff'd 19 Miss. 574 (1848). 
 
 * Clements v. Norris, 8 Ch. D. 129, 47 L. J. Ch. 546 (1878). 
 
POWERS OF PARTNERS 231 
 
 should have an opportunity to express their views j and the 
 conclusions of the majority should represent their honest opinions 
 of what is best for the firm as a whole. The majority should 
 meet "not for the purpose of negativing what any one may have 
 to offer, but for the purpose of negativing what, when they are 
 met together, they may after due consideration think proper to 
 negative." ^ 
 
 Accordingly, if the majority, after hearing the dissent of a 
 member, and learning that their proposed act will operate as a 
 fraud upon him, arbitrarily decide to do the act, their act will be 
 invalid, so far as his interests are concerned. A bill of sale of 
 firm property, in such circumstances, will not convey the firm 
 title to a purchaser with knowledge of the facts.^ 
 
 But all that is required of the majority is fairness and good 
 faith. If the minority are bent on obstruction, it is not the 
 duty of the majority to listen to objections "till everybody is 
 tired of talking and has sat down" ; but the majority may enforce 
 closure and bring the matter in controversy to a vote, whenever, 
 in their opinion, the minority have had a fair opportunity to ex- 
 press their views.' 
 
 § 2. (D.) Effects of Dissent. 
 
 Not only are the acts of the majority binding upon all of the 
 members, when done in good faith and in the Ordinary course of 
 the partnership business, but their disapproval of a particular 
 course of action must be heeded by the minority, as well as by 
 third persons who have notice of it. 
 
 For example, if two of three partners refuse to give preferences 
 and determine to turn out the firm property for 'pro rata distribu- 
 tion among the firm creditors, the third partner cannot give a 
 valid mortgage on the partnership assets to a firm creditor who 
 is aware of these facts. In such a case the implied power possessed 
 by each partner to mortgage firm property for firm debts is re- 
 
 ' Lord Eldon in Const, v. Harris, Turn. & R. 496 (1824). 
 
 "^ The Western Stage Co. v. Walker, 2 Iowa, 604, 65 Am. Dec. 789 
 (1856). Accord. Chicago, B. & Q. Ry. v. Hoyt, 1 lU. App. 374 (1878). 
 
 ' Lindley, M. R., in Wall v. London & N. Assets Corp. (1898), 2 Ch. 
 469, 481, 67 L. J. Ch. 596. Accord. Kirk v. Hodgson, 3 Johns. Ch. 400 
 (1818). 
 
232 THE LAW OF PARTNERSHIP 
 
 voked, and the majority are entitled to have the mortgages can- 
 celled.^ 
 
 1. Dissent by One of Two Partners. — If the firm is com- 
 posed of but two members, the effect of dissent by one will de- 
 pend upon the nature of the act involved. It is quite clear that one 
 partner cannot annihilate the power of his copartner to receive 
 payment of firm debts, by notifying the creditors that they must 
 not pay to the copartner.^ Nor, according to the weight of author- 
 ity, can he, by dissent, destroy the implied power of his copartner 
 to pay a firm debt, or to mortgage firm property to secure it, 
 even though the consequence of the payment or security is to 
 prefer a favored creditor.' If, however, the purpose and effect 
 of a transfer of the firm assets by one partner are to immediately 
 terminate the partnership, and to place all of the property beyond 
 its control, the dissenting partner may be able to have it set aside 
 in equity.* Under the Uniform Partnership Act, such transfer is 
 invalid at law.^ 
 
 Again, if both partners have assented to a firm contract, which 
 is determinable at the option of the partnership, either partner 
 can keep the contract in force, even against the wish of his co- 
 partner.^ On the other hand, as we have seen, if the contract 
 is limited to a definite period, neither partner can renew the con- 
 tract without the other partner's assent.' In such cases, as the 
 authority of the partners is coextensive, the partner who refuses 
 his assent to a change has the advantage of position.* 
 
 1 Carr v. Hertz, 54 N. J. Eq. 127, 33 At. 194 (1895) ; afarmed 54 N. J. 
 Eq. 700, 37 At. 1117 (1896) ; Burdick's Cases on Part. 356. 
 
 2 GiUilan v. The Sun M. I. Co., 41 N. Y. 376 (1869). In this case there 
 was no evidence of fraud or collusion, although the partner receiving pay- 
 ment was insolvent. 
 
 » Mabbett v. White, 12 N. Y. 442 (1855) ; Burdick's Cases on Part. 
 212. 
 
 « McGrath v. Cowen, 57 Oh. St. 385, 49 N. E. 338 (1898). 
 
 = L. of Md. 1916, Ch. 175, § 9, (3), (c). 
 
 « Donaldson v. WilUams, 1 Cr. & M. 345, 3 Tyrwh. 371 (1833). One 
 partner undertook to dismiss a weekly servant, against his copartner's 
 will ; but the dismissal was held ineffective. . 
 
 ' Clements v. Norris, 8 Ch. D. 129 (1878). 
 
 8 Butchart v. Dresser, 4 De G. M. & G. 542 (1853) ; Burdick's Cases 
 on Part. 363. One partner can make a valid transfer of firm property in 
 carrying out a firm contract, although his copartner objects. 
 
POWERS OF PARTNERS 233 
 
 2. New Obligations. — The principle just stated operates 
 to prevent one partner from imposing new obligations on the 
 firm, against the dissent of his copartner, if this is communi- 
 cated to the obligee, although they may be within the ordinary 
 scope of the firm business. We have seen that either member 
 of a trading firm has implied authority to issue firm paper. If, 
 however, one partner, in a firm of two, refuses to permit the issue 
 of firm paper, a creditor, taking such paper from the copartner, 
 with notice of the refusal, cannot enforce it against the firm. 
 "Nothing can be more reasonable," it has been said, "than that 
 a person may protect himself, in this manner, against the fraud 
 and misconduct of his associate. The principle under consid- 
 eration is not founded at all on any supposed waiver by the 
 creditor, but solely and exclusively on the declaration of the per- 
 son declining to be bound. The implied authority of his partner 
 he has annihilated ; and the contract in the name of the firm is 
 of no validity, beyond the personal obligation it infers on the 
 individual making it." ^ 
 
 So'if one partner, in a firm of two, gives notice to plaintiff that 
 he will not be bound for the price of goods which his copartner 
 may buy from plaintiff for the firm, he cannot be held for 
 their price.^ But this doctrine does not apply to a firm of three 
 or more in which the majority will rule.' 
 
 (a) Waiver by Dissenting Partner. — Although one partner 
 by dissenting may withdraw from his copartner the authority 
 impliedly conferred by the partnership relation, his subsequent 
 
 1 Leavitt v. Peek, 3 Conn. 124, 128 (1819). In Wilkins v. Pearce, 5 
 Den. 541 (1848), it is said : "By the act of entering into a copartnership 
 each of its members becomes clothed with full power to make any and 
 every contract within the scope and limits of the copartnership business. 
 . . . This power is incident to the copartnership relation, and must exist, 
 in defiance of expostulations and objections, while the relation endures." 
 But in that case, there was evidence that the dissenting partner had waived 
 his dissent. See this case, in the Court of Appeals, cited in the third 
 note below. 
 
 2 Dawson, Blackmore & Co. v. Elrod, 105 Ky. 624, 49 S. W. 465 (1899) ; 
 Monroe v. Conner, 15 Me. 178, 32 Am. Dec. 148 (1838). This seems to 
 be in accordance with the rule in the Uniform Partnership Act, § 9, 
 (4) " No act of a partner in contravention of a restriction on his authority 
 shall bind the partnership to persons having knowledge of the restriction." 
 
 'Johnston & Co. v. Dutton's Adm'r, 27 Ala. 245 (1855). 
 
234 THE LAW OF PARTNERSHIP 
 
 conduct may amount to a waiver of this withdrawal. In Wilkins 
 V. Pearce, referred to above, one partner borrowed from Pearce 
 his acceptance of a draft and gave Pearce an agreement in 
 the firm name to take care of the draft at maturity. The co- 
 partner refused to assent to this agreement; yet, later, he re- 
 ceived the draft and applied it to the use of the firm. "His 
 application of the acceptance to the partnership use," it was held,^ 
 "was inconsistent with his previous dissent, and ought to be 
 regarded as a waiver of it, and a ratification of the stipulation in 
 the partnership name to provide for the draft at maturity." 
 
 So, if the partners agree that all purchases by the firm shall 
 be for cash, neither partner has the right to waive the stipxilation. 
 But in case goods are bought on credit by one partner and used 
 by the firm, both partners are liable for the price. "A partner, 
 not bound by the act of his associate in its inception, assumes the 
 obligation when he takes the benefit of the property thus ac- 
 quired, and assents to its going into the common stock, as truly 
 as if the right to bind the firm in the premises existed." ^ 
 
 § 2. (E.) Notice of Limitations on a Partner's Power. 
 
 In the cases last cited, those dealing with the partner had re- 
 ceived express notice of the limitations upon his authority. Such 
 notice is not necessary, however. The form of the notice is im- 
 material. "Circumstances may speak as forcibly as words." ^ 
 Notice of restrictions upon a partner's implied authority is some- 
 times given by the form and contents of a writing (such as a 
 promissory note), which is a part of the transaction.* 
 
 In a recent case,^ it appeared that Wilson and Cassells, part- 
 ners under the name of Wilson, Cassells, & Co., had agreed that 
 no money should be borrowed for the firm, except upon notes 
 payable to Wilson's order and indorsed by him, and that plaintiff 
 
 ' Pearce v. Wilkins, 2 N. Y. 469, 472 (1849). 
 
 2 Johnston v. Bernheim, 86 N. C. 339 (1882) ; Mason v. Partridge, 
 66 N. Y. 633 (1876). 
 
 3 Carr v. Hertz, 54 N. J. Eq. 127, 33 At. 194 (1895) ; Burdick's Cases 
 on Part. 356, 359; Baxter v. Rollins, 90 Iowa, 217, 57 N. W. 838, 48 Am. 
 St. R. 432 (1894). 
 
 « Chap. IV. § 2, 8, supra. 
 
 5 International Trust Co. v. Wilson, 161 Mass. 80. 36 N. E. 589; Bur- 
 dick's Cases on Part. 361. 
 
POWERS OF PARTNERS 235 
 
 had discounted a number of notes in that form. Later, Cassells 
 presented to plaintiff two notes, signed by him in the firm name 
 to the order of Wilson, with Wilson's name indorsed thereon with- 
 out authority, and one note in the firm name to plaintiff's order. 
 Plaintiff discounted them, and Cassells used the money for his 
 own benefit. It was contended for Wilson that the form of the 
 notes was notice to plaintiff that the money to be obtained upon 
 them was for Wilson individually, and that Cassells's authority, 
 as a partner, to borrow money for the firm had been limited by 
 agreement between him and Wilson. The trial court declined 
 to take this view, and its ruling was affirmed on appeal. The form 
 of the notes was a matter for the jury to take into consideration, 
 in determining whether the plaintiff had notice of the agreement, 
 but such notice was not to be inferred as matter of law from the 
 form of the notes. "It is obvious," said the court, "that the 
 same form might have been used if Cassells's authority had been 
 unlimited." 
 
 Other cases in which the plaintiff has failed, because the evi- 
 dence disclosed that he had notice of limitations on a partner's 
 power or liability, are cited in the note.^ 
 
 § 3. Powers of a Partner after Dissolution. 
 
 To say that a partnership has been dissolved is to say, that 
 the relation which has subsisted between persons who were 
 carrying on a business in common, with a view of profit, has 
 been terminated.^ As soon as this relation is broken up, the 
 powers of the associates, which we have found to be conferred 
 by the relation, are withdrawn.^ If new business engagements 
 are entered into, they are binding upon the individuals who have 
 made or have actually authorized them, but upon no others. 
 They are not binding upon the firm, for that has ceased to exist. 
 They are not binding upon the members of the dissolved firm 
 who are not actual parties to them, for the actors are no longer 
 
 1 Barwick v. Alderman, 46 Fla. 433, 35 So. 13 (1903) ; Johnson v. Haws, 
 47 App. Div. 597, 62 N. Y. Supp. 641 (1900) ; affirmed without opinion, 
 168 N. Y. 654, 61 N. E. 1130 (1901) ; Hastings v. HopMnson, 28 Vt. 108 
 (1855). 
 
 2 The Uniform Partnership Act, L. of Md. 1916, § 29. 
 
 3 Ibid., § 33. 
 
236 THE LAW OF PARTNERSHIP 
 
 their agents. All this, upon the supposition that the firm has 
 not only been dissolved, but that due notice of dissolution has 
 been given, in accordance with the rules presented in a former 
 chapter. 
 
 1. Performing Existing Contracts. — While the dissolu- 
 tion of a partnership terminates the authority of each partner 
 to enter into new engagements for the firm or for his former 
 associates,^ it does not destroy his power to act for them in " mat- 
 ters in which they all still have a common interest, and are under 
 a common liability." ^ 
 
 Such a common interest and common liability exist in the 
 case of a contract made by the firm, and unperformed at disso- 
 lution. Neither partner is at liberty to say to the other con- 
 tracting party, our firm is dissolved, the contract is therefore at 
 end, and you must not tender performance. Even after notice 
 of dissolution, the third party may perform the contract and call 
 upon all the partners for satisfaction.^ If the contract is for the 
 sale of goods to the firm, the seller may recover the price from the 
 members, although he delivers them after notice of dissolution.* 
 It follows, therefore, that the implied authority of each partner to 
 receive and pay for the goods continues. 
 
 (a) Other Examples. -^ If the contract is for the services of 
 a firm of attorneys, the client's right to the ability and skill of 
 all the partners is not affected by the dissolution of their partner- 
 ship. Services thereafter rendered by either partner are sub- 
 ject to the terms of the firm contract. If a particular rate or 
 method of compensation has been agreed upon, this must be 
 observed by the partner rendering service ; ^ and for the acts 
 of the partner, who is allowed to transact the business, his for- 
 
 iBoswell Bros. v. Lynchburg Shoe Co., 110 Miss. 553, 70 So. 689 
 (1916). 
 
 2 Gates V. Beecher, 60 N. Y. 518 (1875) ; Burdick's Cases on Part. 
 372, 375 ; L. of Md. 1916, Ch. 175, § 33. 
 
 5 Holmes v. Shands, 27 Miss. 40 (1854) ; Perkins v. Butler County, 
 44 Neb. 110, 62 N. W. 308 (1895). 
 
 < Whiting V. Farrand, 1 Conn. 60 (1814); White v. Kearney, 2 La. 
 Ann. 639 (1847) ; Smith & Cheney Co. v. Schmidt, 142 Mich. 1, 105 N. 
 W. 39 (1905) ; Clinohfleld Fuel Co. v. Lundy, 130 Tenn. 135, 169 S. W. 
 563, L. R. A. 1915 B. 418 (1914). 
 
 5 Moses V. Bagley, 55 Ga. 283 (1875). 
 
POWERS OF PARTNERS 237 
 
 mer copartners are liable. He is engaged in discharging their 
 obligations as well as his own.^ 
 
 Again, if the contract calls for the erection of a building by 
 the firm, the dissolution of the partnership does not discharge 
 the contract. And if the dissolution is caused by the death of 
 a member, the survivor has full power to complete the build- 
 ing, and charge the deceased partner's interest in 'the firm with 
 its proportion of the expenditures incident thereto.^ Moreover, 
 if a firm has executed a mortgage on its property to secure a third 
 person for money which he has agreed to furnish for the erection 
 of buildings thereon, the mortgage lien will include moneys ad- 
 vanced to the surviving partner as well as those advanced before 
 the firm's dissolution.^ 
 
 (b) New Obligations Incidental to the Performance of Exist- 
 ing Contracts. — Although the dissolution of a firm terminates 
 the authority of its members to transact any new business, the 
 performance of existing contracts often necessitates the crea- 
 tion of new obligations. In such a case, the new obligation 
 should be treated as merely incidental to the performance of a 
 common duty, and thus, within the impUed authority of either 
 partner. It is believed that the weight of authority supports 
 this view, which is embodied in the Uniform Partnership Act.* 
 
 In a leading case ^ upon this point, it appeared that a firm of 
 sharebrokers had entered into a contract for the purchase of cer- 
 tain -railway shares. After dissolution, in order to raise money 
 -with which to pay the balance due for the shares, one partner 
 pledged them with the bankers of the former firm. This, it was 
 held, he had power to do. Said Lord Justice Turner, "Each 
 partner has, after and notwithstanding the dissolution, full 
 authority to receive and pay money on account of the partner- 
 ship, and has the same authority to deal with the property of 
 the partnership, for partnership purposes, as he had during the 
 continuance of the partnership. This must necessarily be so. 
 
 1 Smyth V. Harvie, 31 lU. 62, 83 Am. Dee. 202 (1863) ; Williams v. 
 Whitmore, 9 Lea (77 Temi.), 262 (1882). 
 
 2 Rust V. Chilsom, 67 Md. 376 (1881). ' Ibid. 
 * L. of Md. 1916, Ch. 175, §§ 33, 34, 35. 
 
 5 Buteliart v. Dresser, 10 Hare, 453 (1853) ; s. c. on appeal, 4 DeG. TVE. 
 & G. 542 (1853) ; Burdiok's Cases on Part. 363. 
 
238 THE LAW OF PARTNERSHIP 
 
 If it were not, at the instant of the dissolution, it would be neces- 
 sary to apply to this court for a receiver in every case, although 
 the partners did not differ on any one item of the account. Nor 
 is there any inconvenience in this state of the law ; for it is com- 
 petent to any partner to apply, in case of necessity, for a receiver, 
 and to have the affairs of the partnership wound up under the 
 direction of this court, and thus to prevent his partner from exer- 
 cising unduly any power which he has as a partner." 
 
 In another case,^ where the defence interposed was the absence 
 of authority in one partner to issue negotiable paper in the firm 
 name, it appeared that the paper was given pursuant to an agree- 
 ment of the firm to renew certain notes when they matured ; and 
 the court held that the dissolution of the firm did not revoke the 
 authority of either partner to renew the paper. Power to perform 
 the firm contract necessarily included the power to create the new 
 obligation for which the contract provided. 
 
 2. Contracts terminated by Dissolution. — The doctrine, 
 which we have been considering, does not apply to contracts, 
 which, although continuing engagements in form, are to be 
 construed as terminable by the dissolution of the firm.^ For 
 example, if a firm, engaged in conducting a lottery, contracts 
 to pay its counsel a certain sum per month " during the existence 
 or operation of said lottery", the agreement is to be construed as 
 terminating with the existence of the firm.' The same construc- 
 tion has been put upon contracts with firm agents appointed to 
 sell a note,* or "buy and sell goods, sign notes, and perform all 
 acts concerning the business." ^ The dissolution of the firm ter- 
 minates the agency .* 
 
 1 Richardson v. Moies, 31 Mo. 430 (1862) ; Burdiek's Cases on Part. 366. 
 
 2 See supra. Chap. III. § 7, 1, 2 ; Fulton v. Thompson, 18 Tex. 278 
 (1857). For example of a contract not so terminable, see Horst v. Roehm, 
 84 Fed. 565 (1898). Affirmed Roehm v. Horst, 91 Fed. 345, 65 U. S. App. 
 520, 33 C. C. A. 560 (1898), 178 U. S. 1, 20 Sup. Ct. 780 (1900) ; Madden 
 V. Jacobs, 52 La. Ann. 2107, 28 So. 225 (1900). 
 
 3 Loehrane v. Stewart, 2 S. W. 903, 8 Ky. L. Rep. 688 (1887). 
 * Robb V. Mudge, 14 Gray (80 Mass.), 534 (1860). 
 
 6 Schlater v. Winpenny, 75 Pa. 321 (1874). 
 
 eMeysenburg v. Littlefleld, 135 Fed. 184 (1905); Sehlau «. Enzen- 
 bacher, 265 111. 626, 107 N. E. 107 (1914) ; Larson v. Newman, 19 N. D. 
 153, 121 N. W. 202, 23 L. R. A. n. s. 849 (1909). 
 
POWERS OF PARTNERS 239 
 
 Moreover, agreements of a firm may be binding on it only 
 as offers, as when it undertakes to supply another with such goods 
 as he may order, or guarantees payment for such goods as A may 
 purchase of B. In such cases the duly notified dissolution of 
 the firm works a revocation of the offer. If after such notice the 
 third person orders the goods, or B sells to A, neither partner has 
 any implied authority to bind his former associates by accepting 
 the order or by promising to pay B.^ 
 
 3. Implied Authority to wind up the Business. — Not 
 only do the members of a firm retain their implied powers to 
 complete subsisting contracts after dissolution, but these powers 
 extend to all acts necessarily involved in winding up its affairs.^ 
 
 Lord Eldon declared on several occasions^ that while in one 
 sense a partnership was determined by dissolution, in another 
 sense it is "continued till all the affairs are settled." Similar 
 expressions are to be found in the opinions of other distinguished 
 judges, both in England and in this country. Chancellor Kent 
 has said : "A dissolution of a partnership only has respect to the 
 future. The parties remain bound for all antecedent engage- 
 ments. The partnership may be said to continue as to every- 
 thing that is past, and until all pre-existing matters are wound 
 up and settled." * In a leading English case,* Mr. Justice Heath 
 declared : " With regard to things past, the partnership continues 
 
 1 See CaldweU v. Stileman, 1 Rawle (Pa.), 212 (1829) ; Goodspeed v. 
 Wiard Plow Co., 45 Mich. 322 (1881). See Bagel v. MiUer (1903), 2 
 K. B. 212, 72 L. J. K. B. 495, where goods were ordered by the firm, but 
 the order was not accepted by the seUer, nor was dehvery made until after 
 one partner's death ; and it was held that the estate of the deceased 
 partner was not bound. Approved, 19 Law Quar. Rev. 361. 
 
 2 Reirden v. Stephenson, 87 Vt. 430, 89 At. 465, Ann. Cas. 1916 C. 
 109, with note (1914). In this case, the majority bound all by a contract 
 with an accountant for his services, in examining the firm books and 
 making a statement of its financial condition, after it had sold its plant. 
 
 3 Ex parte Williams, 11 Ves. 3, 8 R. R. 62 (1805) ; Crawshay v. Maule, 
 1 Swanston, 495, 1 WU. 181, 18 R. R. 126 (1818) ; Wilson v. Greenwood, 
 1 Swanston, 471, 1 Wil. 223, 18 R. R. 118 (1818). 
 
 * Griswold v. Waddington, 16 Johns. 438, 493 (1819). This, like Lord 
 Eldon's statement on the subject, was a mere dictum. Cf. Story on Part. 
 (7th ed.) § 325. 
 
 6 Wood V. Braddick, 1 Taunt. 104, 9 R. R. 711 (1808). Cf. Uniform 
 Partnership Act, § 30. 
 
240 THE LAW OF PARTNERSHIP 
 
 and always must continue." This form of statement has been 
 criticised by writers and judges. Mr. Justice Lindley has char- 
 acterized it as a loose statement which increased rather than 
 diminished the difficulties of the courts.^ 
 
 (a) The Statutory Rule in Britain. — In accordance with Mr. 
 Justice Lindley's suggestion, a more guarded statement of the 
 rule upon this topic was embodied in the British Partnership 
 Act.^ It is as follows: "After the dissolution of a partnership 
 the authority of each partner to bind the firm, and the other 
 rights and obligations of the partners, continue, notwithstanding 
 the dissolution, so far as may be necessary to wind up the affairs 
 of the partnership, and to complete transactions begun but un- 
 finished at the time of the dissolution, but not otherwise. Pro- 
 vided that a firm is in no case bound by the acts of a partner who 
 has become bankrupt, but this proviso does not affect the liability 
 of any person who has after the bankruptcy represented himself 
 or knowingly suffered himself to be represented as a partner of 
 the bankrupt." 
 
 This statement of the rule, although not as broad in terms 
 as the dicta above referred to, appears to accord with the weight 
 of actual decisions in this country as well as in England. In some 
 of our States, the authority of partners, after dissolution, has been 
 further restricted by statute.^ 
 
 1 Lindley on Part. (5th Eng. ed.) 218. The correctness of this view 
 is shown in Ranlett v. CoUier White Lead Co., 30 La. Ann. 56 (1878), 
 where the court found it necessary to limit the dicta of earlier cases. 
 
 ^ Partnership Act of 1890, § 38. The Uniform Partnership Act con- 
 tains similar but more detailed provisions. L. of Md. 1916, Ch. 175, 
 §§33 and 35. 
 
 * The following provisions in the California Civil Code have been re- 
 enacted in Montana and North Dakota : "Article VI. Liquidation, § 2458. 
 After the dissolution of a partnership, the powers and authority of the 
 partners are such only as are prescribed by this article. § 2459. Any 
 member of a general partnership may act in liquidation of its affairs, ex- 
 cept as provided by the next section. § 2460. If the liquidation of a part- 
 nership is committed, by consent of all the partners, to one or more of 
 them, the others have no right to act therein ; but their acts are valid in 
 favor of persons parting with value, in good faith, upon credit thereof. 
 § 2461. A partner authorized to act in liquidation may collect, compro- 
 mise, or release any debts due to the partnership, pay or compromise any 
 claims against it, and dispose of partnership property. § 2462. A part- 
 
POWERS OF PARTNERS 241 
 
 4. Authority to dispose of Firm Assets. — Upon the dis- 
 solution of a partnership each partner "is entitled to have the 
 whole assets disposed of . . . for the purpose of settling the 
 rights between the partners." ^ In the absence of agreement 
 that one or more of the partners shall act as liquidators, each 
 of them "has an equal right to the possession of its assets, and 
 is under an equal duty to apply those assets to the discharge of 
 the debts." ^ It follows, therefore, that after dissolution, as 
 before that event, "each partner still has authority to dispose of 
 the partnership property, to collect, adjust, and pay debts, and 
 give proper acquittances." ' 
 
 (a) The Power to sell. — That each partner may exercise 
 this power, after dissolution, in the absence of agreement to the 
 contrary, is undisputed. Some courts, however, hold that the 
 power ceases as soon as the debts of the firm to outside creditors 
 are paid. This doctrine is based on the theory that "after dis- 
 solution partners are tenants in common, with no right in either" 
 to sell the interest of the others, except so far as might be neces- 
 sary to settle up the partnership affairs and pay the partnership 
 debts.* 
 
 ner authorized to act in liquidation may indorse, in the name of the firm, 
 promissory notes, or other obhgations held by the partnership, for the 
 purpose of collecting the same, but he cannot create any new obligation 
 in its name, or revive a debt against the firm, by an acknowledgment, 
 when an action thereon is barred under the provisions of the code of civil 
 procedure." 
 
 The Georgia Civil Code provides : " § 2635. A dissolution puts an end 
 to aU the powers and rights resulting from the partnership to the part- 
 ners, except for the purpose of a general account and winding up the 
 business. As to third persons, it absolves the partners from all liability 
 for future contracts and transactions, but not for the transactions that 
 are past." 
 
 1 Wild V. Milne, 26 Beavan, 504 (1859) ; Burdick's Cases on Part. 166. 
 But see Mohneaux v. Raynolds, 54 N. J. Eq. 559, 35 At. 536 (1896), and 
 supra, Chap. III. § 2, 3. 
 
 2 Gray v. Green, 142 N. Y. 316, 320, 37 N. E. 124, 40 Am. St. R. 596 
 (1894). 
 
 ' Van Keuren v. Parmelee, 2 N. Y. 523, 525-526 (1849) ; Pease v. 
 Dawson, 197 lU. 340, 64 N. E. 366 (1902). 
 
 ^Brewer, J., in Hogendobler v. Lyon, 12 Kan. 276, 281 (1873). A 
 similar statement in Stair v. Richardson, 108 Ind. 429 (1886) is referred 
 to in Needham v. Wright, 140 Ind. 190, 39 N. E. 510 (1895) ; Burdick's 
 
242 THE LAW OF PARTNERSHIP 
 
 It has been shown, in an earlier chapter,^ that this conception 
 of partnership title is erroneous. Moreover, when a receiver is 
 appointed to wind up the affairs of a partnership, his power to sell 
 property does not cease with the satisfaction of the claims of out- 
 side creditors. He converts the entire assets into cash, and, after 
 paying outside creditors, distributes the remainder between the 
 partners in accordance with their claims upon the firm.^ 
 
 It is to be borne in mind, however, that while each partner 
 can transfer the firm title, after dissolution, he cannot, in con- 
 nection with the sale, bind his late partners by a new and distinct 
 contract, such as a covenant in an assignment of a judgment re- 
 covered by the firm, that all the judgment debtors remained 
 liable upon the judgment.^ 
 
 Nor can he subject them to a claim for damages caused by his 
 failure to deliver goods, which he contracted to sell ; such failure 
 being due to the fact that he had already sold the goods to an- 
 other.* 
 
 (b) The Power to pledge Firm Property. — That this power 
 belongs to a surviving partner is well settled.^ We have seen 
 that the English courts ^ accord it also to each partner, after 
 dissolution inter vivos, provided he employs it in winding up the 
 firm's affairs. There is some judicial authority '' in this country, 
 too, for this view, which it is submitted is entirely sound. On 
 the other hand, the continuance of a partner's power to pledge 
 firm property after dissolution has been denied.* 
 
 Cases on Part. 260 n., as "an inadvertent expression . . . unnecessary to 
 the decision of that case." 
 
 ^ Supra, Chap. III. See Rice v. MeMartin, 39 Conn. 573 (1873); 
 Bach V. The State Ins. Co., 64 Iowa, 596 (1884). 
 
 ■' Infra, Chap. VIII. 
 
 3 Bennett v. Buchan, 61 N. Y. 222 (1874). 
 
 «Bass Dry Goods Co. v. Granite City Co., 116 Ga. 176, 42 S. E. 415 
 (1902), distinguishing the same case in 113 Ga. 1142, 39 S. E. 471. 
 
 5 Bohler v. Tappan, 1 Fed. 469 (1880) ; Breen v. Richardson, 6 Colo. 
 605 (1883). In the latter case, a trust deed of firm realty by the surviv- 
 ing partner was held valid, its purpose and effect being to prevent a sac- 
 rifice of the property. 
 
 » Butchart v. Dresser, 4 De G. M. & G. 542 (1853) ; Burdick's Cases 
 on Part. 363 ; In re Clough, 31 Ch. Div. 324 (1885). 
 
 'MiUer v. Florer,, 15 Oh. St. 148, 153 (1864). 
 
 8 Roots V. Mason City Salt Co., 27 W. Va. 483 (1886). 
 
POWERS OF PARTNERS 243 
 
 In the last cited case, the learned judge writing the opinion 
 remarked, "There can, I presume, be no question as to the law, 
 that none of the partners can, after the dissolution of the partner- 
 ship, without the consent of the others, buy or sell or pledge goods 
 or other property on account of the partnership," citing as his 
 leading authority Story on Partnership, § 322. It is true, that 
 Judge Story did say, in that section, that "none of them can buy 
 or sell or pledge goods on account thereof", but this language 
 was used with reference to the statement in the preceding clause 
 of the same sentence, viz. : "None of the partners can create any 
 new contracts or obligations binding upon the partnership." 
 In §§ 325 to 328, the distinguished author explains fully his views 
 concerning the implied powers of partners after dissolution. He 
 carefully limits the foregoing statement to new transactions "in 
 the course of the former trade", and announces as the admitted 
 doctrine of the common law that the dissolution ^of the firm 
 "leaves every partner in possession of the full power (unless, 
 indeed, upon the dissolution it has been exclusively confided and 
 delegated to some other partner or person) to pay and collect 
 debts due to the partnership ; to apply the partnership funds and 
 effects to the discharge of their own debts ; to adjust and settle 
 the unliquidated debts of the partnership ; to receive any property 
 belonging to the partnership; and to make due acquittances, 
 discharges, receipts and acknowledgments of their acts in the 
 premises." 
 
 5. Power to give and to indorse Firm Paper. — If each 
 partner possessed this power after dissolution, it would be pos- 
 sible for him to postpone indefinitely the settlement of partner- 
 ship affairs, as well as to impose upon his copartners new con- 
 tracts, which are not necessary and incidental to winding up the 
 business of the firm. It is uniformly held, therefore, that this 
 power does not survive partnership dissolution. In order to 
 bind the firm as a party to negotiable paper after dissolution, the 
 partner issuing or indorsing it in the firm name must have actual 
 authority therefor from his associates.* 
 
 In some jurisdictions, it is thought to follow necessarily from 
 
 ' Potter V. Tolbert, 113 Mich. 486, 71 N. W. 849 (1897) ; Burdick's 
 Cases on Part. 367 ; Bank of Monroe v. Drew, 126 La. 1028, 53 So. 129, 
 32 L. R. A. N. s. 265, with note (1910). 
 
244 THE LAW OF PARTNERSHIP 
 
 the doctrine just stated, that the title of a firm to paper, payable 
 to its order, cannot be transferred even by an indorsement without 
 recourse. It is said "that such an indorsement is a contract, 
 and would imply certain obligations on the part of the firm, 
 though they could not be charged as indorsers." ^ 
 
 Other courts have held that a partner, under his implied power 
 to sell firm property, may effectually transfer paper payable to 
 its order, by indorsing it without recourse.^ This is certainly the 
 better view ; for the obligations of the firm growing out of such 
 a transfer are substantially the same as those which attend the 
 sale of paper payable to bearer,' or the sale of other firm property.* 
 
 6. Power to pay and settle Firm Debts. — The only 
 differences of opinion here relate to the extent of this authority. 
 It is admitted that a partner may pay debts, not only by turning 
 over cash, but by transferring firm property to the creditor in 
 satisfaction of his claim.* If the amount due is in dispute, a 
 bona fide settlement by the creditor with one partner is binding 
 upon all. For mere mistakes or errors in judgment, on the part 
 of the acting partner, his adjustment of the claim cannot be set 
 aside. ^ If the copartners are not willing to trust each other in 
 adjusting doubtful liabilities, they should apply for a receiver. 
 
 7. Expenses of Winding Up. — The implied authority of 
 each partner to convert the firm property into cash and apply 
 it to the satisfaction of firm debts cannot be exercised without 
 incurring expense. Oftentimes the preservation of firm property 
 necessitates new outlays.. For expenditures of such a character, 
 therefore, either partner may bind not only the firm property, 
 but his former associates.^ Contracts, however, for improv- 
 
 1 FeUows V. Wyman, 33 N. H. 351, 356 (1856), foUowing Sanford v. 
 Mickles, 4 Johns. (N. Y.) 224 (1809) ; Stair v. Richardson, 108 Ind.429, 
 9 N. E. 300 (1886). 
 
 2 Yale V. Eames, 1 Met. (42 Mass.) 486 (1840) ; Waite v. Foster, 33 
 Me. 424 (1851). 
 
 ' Parker v. Macomber, 18 Pick. (35 Mass.) 505 (1836). 
 
 * See British Bills of Bxoh. Act, 1882, § 58 ; Neg. Inst. Law of N. Y. 
 Ch. 612, Laws of 1897, § 115. 
 
 = Milliken v. Loring, 37 Me. 408 (1854) ; Feigley v. Whitaker, 22 Oh. 
 St. 606, 10 Am. R. 778 (1872). 
 
 » Bass V. Taylor, 34 Miss. 342 (1857) ; Moist's Administrator's Appeal, 
 74 Pa. St. 166 (1873). 
 
 ' Conrad v. Buck, 21 W. Va. 396, 413 (1883). 
 
POWERS OF PARTNERS 245 
 
 ing the property which are not incidental to its preservation, or 
 to its conversion into money, he has no implied power to 
 make.^ 
 
 8. Admissions op Liability. — Upon this point the conflict 
 of authority is irreconcilable; and, curiously enough, the lead- 
 ing cases ^ on each side were decided in the same year. In each 
 case the question at issue was whether one partner, after dissolu- 
 tion, could bind his copartner by a statement of the amount of 
 the debt owing by the firm at the time of dissolution. Each court 
 considered the case a perfectly clear one; so clear that any ex- 
 tended statement of its reasons was deemed unnecessary; but 
 the conclusions reached by the courts were diametrically opposed. 
 
 In the English case, Mansfield, C. J., said, "Since it is clear 
 that one partner can bind the other during all the partnership, 
 upon what principle is it that from the moment when it is dis- 
 solved, his account of their joint contracts should cease to be 
 evidence?" The Supreme Court of New York (consisting of 
 Kent, Ch. J., Thompson, Spencer, Van Ness, and Yates, JJ.) 
 said : " This is a clear case ; after dissolution of copartnership 
 the power of one partner to bind the other wholly ceases. There 
 is no reason why his acknowledgment of an account should 
 bind his copartner any more than his giving a promissory note in 
 the name of the firm, or any other act. The plaintiff ought to 
 have produced other evidence of the debt." 
 
 Probably no better statement of the rule which ought to pre- 
 vail on this subject has ever been made than the following: 
 "After a dissolution, however caused, the new words and acts 
 of those who were partners shall have no effect upon the rights or 
 obligations of their former copartners, excepting so far as these 
 words and acts fairly belong to the settlement of the concern, 
 and the power which each partner has in winding it up." ^ This 
 
 1 Stebbins v. WiUard, 53 Vt. 665 (1881). 
 
 2 Wood V. Braddiok, 1 Taunt. 104 (1808) ; Burdick's Cases on Part. 369 ; 
 Hackley v. Patrick, 3 Johns. (N. Y.) 536 (1808). Opinion quoted in full, 
 Burdick's Cases on Part. 371 . See also Hart v. Woodruff, 24 Hun (N. Y.), 
 510 (1881) ; Burdick's Cases on Part. 370. See note to Gilmore v. Ham 
 (142 N. Y. 1, 1894) in 40 Am. St. R. 566, 567, for list of authorities on 
 each side of this controversy. 
 
 'Parsons on Part. (4th ed.) § 128; Barnes ». Northern T. Co., 169 
 111. 112, 48 N. E. 31 (1897). 
 
246 THE LAW OF PARTNERSHIP 
 
 doctrine accords with the provisions of the Uniform Partnership 
 Act.i 
 
 9. Taking Firm Debts out of the Statute of Limitations. 
 — Whether the power, which a partner possesses before dissolu- 
 tion, to waive the benefit of the statute of limitations,^ continues 
 after dissolution is another question upon which the authorities 
 are divided. 
 
 It ought to be held that this power is unaffected by a dissolu- 
 tion of which due notice is not given. A creditor receiving part 
 payment or a new promise from a partner, in such circmnstances, 
 has a right "to rely on it as a partnership act, with the incidents 
 and legal consequences of such an act." ' And this is the pre- 
 vailing view.^ 
 
 When due notice of dissolution has been given, however, the 
 power of either partner to subject the firm or his copartners to 
 a new obligation ceases.^ The proper determination, therefore, 
 of the question which we are now considering "depends upon 
 another, that is, whether the acknowledgment or promise is to 
 be deemed a mere continuation of the original promise, or a new 
 contract, springing out of and supported by the original consid- 
 eration." ^ For a considerable period, the statute of limitations 
 was not regarded with favor by the courts, whose hostility led 
 them to treat it as founded on the presumption of payment. 
 During this period, it has been said, "One who was spoken to on 
 the subject of an old debt, could not well give a civil answer, with- 
 out saying enough to take the case out of the statute." ' It is 
 now treated by the judiciary as a beneficial statute, designed to 
 afford security against stale demands, and to produce speedy 
 settlements of accounts. This modern conception of the statute 
 
 1 L. of Md. 1916, Ch. 175, §§ 11 and 30. 
 
 ■^ Goodwin ^. Parton, 41 L. T. Rep. 91 (1879). 
 
 ' Sage V. Ensign, 2 Allen (84 Mass.), 245 (1861) ; Forbes v. Garfield, 
 32 Hun (N. Y.), 389 (1884) ; Clement v. Clement, 69 Wis. 599, 35 N. W. 
 17 (1887) ; Robertson Lumber Co. v. Anderson, 96 Minn. 527, 105 N. W. 
 972 (1905). 
 
 * Contra, Tate v. Clements, 16 Fla. 339, 26 Am. R. 709 (1878). 
 
 ^ The Uniform Partnership Act, L. of Md. 1916, Ch. 175, § 35. 
 
 « Bell V. Morrison, 1 Pet. (U. S.) 351, 371, 27 L. Ed. 174 (1828). 
 
 ' Van Keuren v. Parmelee, 2 N. Y. 523, 51 Am. Dec. 322 (1849), with 
 valuable note. 
 
POWERS OF PARTNERS 247 
 
 has resulted in the doctrine, generally accepted, that an acknowl- 
 edgment or promise which will take a precedent debt out of the 
 statute must amount to a new contract, although a contract 
 founded upon the original consideration. Wherever this doc- 
 trine is accepted, it is held that neither part payment of the old 
 debt nor a new promise to pay it, made by one partner, after 
 dissolution, will bind the others, without proof of authority, in 
 addition to the former partnership relation, to make the payment 
 or the promise on their behalf.^ 
 
 (a) The Minority View. — Although this doctrine prevails 
 generally in England and in this country, it is not accepted by 
 all of our courts. The minority view is rested at present not 
 upon principle but upon precedent. A brief and unreasoned 
 judgment of Lord Mansfield is at the bottom of this judicial 
 heresy. He declared that "payment by one" of four makers 
 of a joint and several promissory note "is payment by all, the 
 one acting, virtually, as the agent for the rest ; and in the same 
 manner, an admission by one is an admission by all, and the 
 law raises the promise to pay when the debt is admitted to be 
 due." ^ Partners are joint debtors. Therefore, it is said, each 
 partner, even after dissolution, is " by force of the rule of law pro- 
 ceeding from the case of Whitcomb v. Whiting ", " empowered as 
 their agent to stop, as against his associates, the running of the 
 statute." ' 
 
 In the case last cited. Chief Justice Beasley declared: "It is 
 enough for me to know that the rule in question has, for many years, 
 been regarded by my predecessors as the settled law of this State ; 
 that it rests upon respectable grounds, to say the least of it, and 
 that, in its operation upon the affairs of business, it has not been 
 attended with any serious inconveniences. Under such condi- 
 tions, I think the rule cannot be abolished, even though it should 
 seem that it is not entirely reconcilable with the highest ideal of 
 a perfect theory of the legal subject to which it appertains." * 
 
 1 Watson V. Woodman, L. R. 20 Eq. 721, 730 (1875) ; Davis v. Poland, 
 92 Va. 225, 23 S. E. 292 (1895), and cases in the last two-notes. 
 
 2 Whitcomb v. Whiting, 2 Doug. 652 (1781). 
 
 3 Merritt v. Day, 38 N. J. L. 32, 20 Am. R. 362 (1875). 
 
 * Cf. statement by Royce, J., in Mix v. Shattuck, 50 Vt. 421, 424, 
 28 Am. R. 511 (1878). 
 
248 THE LAW OF PARTNERSmP 
 
 (6) Payment or New Promise after Statutory Period. — Some 
 of the courts, holding the minority view, Hmit the power of a 
 partner to payments and new promises made by him before the 
 expiration of the statutory period. The Supreme Court of New 
 Jersey has expressed the opinion that "the doctrine that a joint 
 debt, when barred by the statute, can be revived as against all 
 the original debtors by the unauthorized act of one of them, has 
 neither reason nor justice for its support." ^ In other jurisdic- 
 tions no distinction is made "whether the promise or acknowl- 
 edgment was before or after the statute had run. The debt is 
 none the less morally and justly due," say these courts, " whether 
 a longer or a shorter time has elapsed since it was contracted." ^ 
 
 (c) If Statute pleaded, Lex Fori prevails. — As the statute 
 of limitations regulates and restricts the right of suing, the lex 
 fori and not the lex loci contractus will determine which of the 
 foregoing doctrines is applicatory in a particular case. There- 
 fore, although the legal effect of a partner's part payment or new 
 promise, in the State where it is made, is to prolong the running 
 of the statute or to remove the statutory bar, this will not avail 
 the plaintiff who sues in a State where the law denies such effect 
 to a partner's act.^ "When the lex fori says that a suit cannot 
 be maintained, then it cannot be maintained, notwithstanding^ it 
 is in force by the lex loci contractus." * % 
 
 10. Power to dishonor Negotiable Paper. — While the 
 members of a partnership are jointly liable on negotiable paper 
 issued by the firm, they are not joint obligors simply. The 
 distinction between the negotiable paper of joint makers who 
 are not partners and that of a partnership "rests upon the fact 
 that partners are but one person in legal contemplation. . . . 
 And so a demand of one partner is sufficient because he repre- 
 sents the firm, and a dishonor by one is a dishonor by all, and 
 each is presumed to have authority to act for the others ; while 
 in the case of a note of joint makers, not partners, the indorser 
 has a right to rely upon the responsibility of all and each, and 
 
 1 Parker v. Butterworth, 46 N. J. L. 244, 254 (1884) ; s. p. Hicks Vi 
 Lusk, 19 Ark. 692, 694 (1858). 
 
 2 Wheelock v. Doolittle, 18 Vt. 440, 442 (1846). 
 
 3 Mayberry v. Willoughby, 5 Neb. 368, 25 Am. R. 491 (1877) ; Kerper 
 V. Wood, 48 Oh. St. 613, 29 N. E. 501 (1891). 
 
 * Wharton's Comm. on Am. L. § 335. 
 
POWERS OF PARTNERS 249 
 
 may insist upon a dishonor by each." The dissolution of a part- 
 nership does not change the nature of the contract it made when 
 it issued a promissory note ; nor can such subsequent event modify 
 the indorser's contract on the paper. The indorser's engagement 
 was to pay, if the maker, that is, the partnership, did not pay on 
 due presentment, and if due notice of dishonor was given to him. 
 After dissolution, as before, the partners have a common interest 
 in having firm paper paid, they have a common liability thereon, 
 and each is legally chargeable with knowledge of the firm's ability 
 and willingness to pay. "Again, the purpose of demand and 
 notice to the indorser is that he, being informed of the failure to 
 pay by the partnership, may be put at once on his guard, to save 
 himself, it may be, from loss. This end is achieved when one of 
 former partners has refused to pay, as when all have." Such is 
 the reasoning of the courts, leading to the conclusion that a 
 demand of payment, made at the proper time and place, of one 
 partner and his refusal are a dishonor of the paper, whether the 
 partnership has been dissolved or not, and that due notice of such 
 dishonor to the indorser fixes his liability.^ Such is the rule 
 formulated in the Negotiable Instruments Law.^ 
 
 (a) Power to waive Presentment, Demand, and Notice. — In 
 the case of paper indorsed by a partnership, either member may 
 waive presentment, demand, and notice even after dissolution, 
 as this act does not impose a new obligation upon his associates, 
 but is incidental to adjusting existing liabilities.^ If the indorsing 
 firm has been discharged from liability, however, by the holder's 
 failure to make demand and give notice, a subsequent promise by 
 one partner to pay the paper will bind only himself. He cannot 
 re-obligate his associates without their assent.^ 
 
 1 Gates V. Beecher, 60 N. Y. 518 (1875) ; Burdick's Cases on Part. 372. 
 In Hubbard v. Matthews, 54 N. Y. 43, 13 Am. R. 562 (1873), it was held 
 that a notice of dishonor duly given to one partner of an indorsing firm 
 is due notice as to all. 
 
 2 Crawford's Annotated Neg. Insts. Law (4th ed.), pp. 152, 175; N. Y. 
 Statute, §§ 137, 170. 
 
 3 Seldner v. Mt. Jackson Bank, 66 Md. 488, 8 At. 262, 59 Am. R. 190 
 (1886) ; cf. Cady v. Shepherd, 11 Pick. 400, 22 Am. Dec. 379 (1831), hold- 
 ing that a partner can change place of dehvery after dissolution. 
 
 4 Schoneman v. Fegley, 7 Pa. St. 433 (1848) ; Myers v. Standart, 11 
 Oh. St. 29 (1860). 
 
250 THE LAW OF PARTNERSHIP 
 
 11. Powers of a Liquidating Partner. — Although, upon 
 dissolution, the power of winding up the affairs of the firm is 
 committed to a single partner, by agreement, his implied au- 
 thority is not thereby increased. Such an agreement is con- 
 strued, save in Pennsylvania,^ as withdrawing powers from the 
 others but not adding to the powers of the liquidator. He "be- 
 comes the agent of the partnership for the one specific purpose. 
 His duty is to collect and adjust debts due to the firm, to turn the 
 assets into money, to pay and discharge the outstanding liabilities, 
 and then to pay over to the other partners their just shares of the 
 remaining surplus." ^ 
 
 1 Estate of Davis & Desauque, 5 Whart. 530, 34 Am. Dee. 574 (1840). 
 In this case it was held that a liquidating partner is empowered to renew 
 notes given by the firm, and even to borrow money with which to pay 
 firm debts. Approved in Houser v. Irvine, 3 W. &. S. 345, 347 (1842), 
 and Brown v. Clark, 14 Pa. 469, 475 (1850). 
 
 " Gilmore v. Ham, 142 N. Y. 1, 36 N. E. 826, 40 Am. St. R. 554 (1894) ; 
 Woodson V. Wood, 84 Va. 478, 5 S. E. 277, 37 A. L. J. 389 (1888). 
 
CHAPTER V 
 
 EIGHTS AND REMEDIES OF CREDITORS 
 
 f 1. Firm Creditors at Law. 
 
 We have seen that the members of a firm are not only jointly 
 liable for its debts, but that they are personally liable to the 
 extent of their several fortunes for all firm obligations.^ In other 
 words, the creditors of a firm are also the creditors of the several 
 partners. We have discovered, also, that, the common law does 
 not recognize a partnership as a legal entity. Therefore, common 
 law actions by and against a firm must proceed in the names of 
 its members and not in its business name.^ 
 
 1. The Property which may be reached. — Firm creditors, 
 who institute common law proceedings against the partners, are 
 not limited to firm property, for the satisfaction of their claims. 
 Nor are they bound to exhaust the assets of the firm, before levy- 
 ing process upon the individual property of a partner. As soon 
 as they obtain judgment, or issue execution, its lien covers indi- 
 vidual as well as firm property. "The judgment is several, 
 the writ runs against the defendants as individuals."^ 
 
 Neither partner, therefore, has a right to demand of the credi- 
 tor, that he proceed against the firm assets, although they are 
 ample to satisfy his claim.^ Nor can a debtor of either partner, 
 
 1 Ante, Chap. III. § 6 (A). 
 
 2 Lewis V. Cline, 5 So. (Miss.) 112 (1888). In Duaham v. Sehindler, 
 17 Ore. 256, 20 Pac. 326 (1889), the course pursued by plaintiff's attorney, 
 in bringing an action against partners in the firm name, is spoken of as 
 "discreditable to the profession." In Stout v. Baker, 32 Kan. 113, 4 
 Pae. 141 (1884), judgment was recovered against Stout and Wingert by 
 their firm name, but each partner was served with process and appeared 
 in the suit, and the court held both bound as individuals as well as partners. 
 
 ' Hamsmith v. Espy, 13 Iowa, 439 (1862) ; Burdick's Cases on Part. 
 ^76 ; Louden v. BaU, 93 Ind. 232 (1883) ; Barrett v. Furnish, 21 Ore. 
 17, 26 Pac. 861 (1891). 
 
 251 
 
252 THE LAW OF PARTNERSHIP 
 
 when subjected to trustee process by a firm creditor, escape 
 liability on the ground that his indebtedness is not to the firm, 
 but to an individual partner.^ In the language of Stevens v. Perry, ^ 
 "As the debt due from the partners jointly is also due from each, 
 it may be enforced against the separate property of each. It is 
 immaterial whether this separate property is in the form of goods 
 and movable chattels, or goods, effects, and credits intrusted and 
 deposited in such a manner that they can only be attached upon 
 a trustee process. It is not necessary that the principal debtors 
 should have made a joint deposit, or that the fund should belong 
 to them jointly. It is enough if funds attachable upon a trustee 
 process are due from the alleged trustee to either one of the prin- 
 cipal defendants." In New Hampshire, courts of law secure to 
 the separate creditor a preference to the debtor partner's prop- 
 erty over the firm creditor.^ But this rule does not apply in 
 favor of a creditor whose claim was contracted after the firm 
 creditor levied his attachment or execution on the debtor part- 
 ner's property.^ 
 
 The equitable rights of separate creditors, in the cases now 
 under consideration, will be considered hereafter. 
 
 (a) Statutory Modifications. — The common law rule that 
 actions against a firm must be brought against the partners by 
 name, was often productive of inconvenience and prejudicial 
 delay to creditors. To remedy this mischief, statutes have 
 been enacted in many jurisdictions, permitting partnerships to 
 be sued in the firm name.* It is inconsistent with the plan of 
 
 1 Stevens v. Perry, 113 Mass. 380 (1873) ; Burdiek's Cases on Part. 377. 
 But an indebtedness due to a firm cannot be garnisheed in the hands of 
 the debtor, to pay the separate debt of one of the partners. Myers v. 
 Smith, 29 Oh. St. 120 (1876). In Crowninshield v. Strobel, 2 Brev. 
 (S. C.) 80 (1806), the court declared, without citing authorities or giving 
 reasons therefor, that "The partnership effects must first be taken to 
 pay the partnership debt and the partnership fund must first be' exhausted 
 before the private estate of a partner can be taken." 
 
 2 Jarvis v. Brooks, 23 N. H. 136 (1851). 
 
 3 Miles V. Pennook, 50 N. H. 564 (1871). 
 
 ' Yarbrough v. Bush, 69 Ala. 170 (1881), applying code provisions 
 (§ 2904 of Code of 1876, § 40 of Code of 1896) ; Stuart v. Corning, 32 Conn. 
 105 (1864) ; Hamsmith v. Espy, 13 Iowa, 439 (1862) ; O'Brien v. Fogle- 
 song, 3 Wyo. 58, 31 Pae. 1047 (1883), applying § 3485 of R. S.; Lindley 
 on Part. (7th ed.) 299. 
 
EIGHTS AND REMEDIES OF CREDITORS 253 
 
 this work to discuss these statutes; but, perhaps, this should 
 be said, that none of them operates to turn the firm into a legal 
 entity for all purposes. "When a firm's name is used, it is only 
 a convenient method for denoting those persons who compose 
 the firm at the time when that name is used ; and a plaintiff who 
 sues partners in the name of their firm in truth sues them indi- 
 vidually, just as much as if he had set out all their names." ^ 
 Under such statutes, a partnership is not a deemed a citizen. 
 If a partnership is sued in a federal court and jurisdiction depends 
 on diversity of citizenship, each partner must be a citizen of a 
 different State from the plaintiff.^ 
 
 (&) The Louisiana Doctrine. — In Louisiana, the legal status of 
 a partnership is quite different from that which is recognized by 
 the common law. Under the jurisprudence of that State, "a 
 partnership is a legal and moral entity, a civil person, with pecul- 
 iar rights and attributes separate and distinct from the individuals 
 composing it, . . . and while not capable of suing and being sued 
 by itself, is capable of suing and being sued joined with the part- 
 ners. When sued with the partners, and the plaintiff recovers, 
 judgment is rendered against it and the partners individually." 
 Nor is it necessary to join all of the partners as defendants with 
 the firm, in case some of them are non-residents. Suit may be 
 brought and judgment rendered against the firm and the resident 
 members, even though the non-joinder of the non-resident part- 
 ners is pleaded in defence.^ Suits in its favor, it has been judi- 
 cially declared, "should be brought as a partnership, in the firm- 
 name, and as appearing through and represented by all of the 
 partners composing the partnership; their full names and resi- 
 dence being set out in the petition." * 
 
 2. Attachment Proceedings. — These are the creatures of 
 statutes, with different features in different jurisdictions. Not- 
 
 1 Lindley, L. J., in West. Nat. Bank v. Perez, [1891] 1 Q. B. 304, 314, 
 60 L. J. Q. B. 272. 
 
 2 Columbia Digger Co. v. Rector, 215 Fed. 618 (1914) ; Bruett & Co. 
 V. Austin, 174 Fed. 668 (1909). Whether the partners should be joined 
 with the firm as defendants, or substituted for it, is a question of local 
 law. McLaughlin v. Hallowell, 228JJ . S. 27 8, 33 Sup. Ct. 465 (1913), 
 dismissing writ of error from 12rNrwrTc)39 (1909). 
 
 3 Martin v. Meyer, 45 Fed. 435 (1891). 
 
 « Wolf V. New Orleans &e. Co., 62 La. Ann. 1357, 27 So. 893 (1900). 
 
254 THE LAW OF PARTNERSHIP 
 
 withstanding their variations, however, the rules governing these 
 proceedings, when instituted against partners, are not very 
 divergent. 
 
 In the first place, the courts are generally agreed in holding 
 that an attachment is a harsh and extraordinary remedy, and 
 that a statute authorizing it should receive a strict construction,, 
 as being in derogation of the common law rights of debtors. It is 
 likened ^ to the remedy of arrest in civil actions, which was briefly 
 discussed in the last chapter.^ It is intended as a remedy against 
 a debtor who has been guilty of some misconduct, or whose non- 
 residence would be productive of hardship to the creditor, were 
 the latter confined to ordinary common law proceedings. 
 
 (a) Partner's Misconduct outside Firm Affairs. — Although 
 this may be of such a nature as to authorize an attachment against 
 his individual property, it will not warrant such a proceeding 
 against the firm assets nor against the separate estate of his co- 
 partners. Accordingly, if firm creditors, in an action against 
 all the partners on a firm debt, ask for an attachment because of 
 the non-residence of one partner ^ or because of the fraudulent 
 transfer by one partner of his separate property,* the attachment 
 will be limited to the property of the offending partner.^ It is 
 true, the attachment may be levied on the firm assets, but its 
 lien will be confined to the interest of the offending partner, 
 which, if the firm is then insolvent, is nothing.® 
 
 (&) Partner's Misconduct in Connection with Firm Affairs. — 
 The transfer of firm property in fraud of its creditors will un- 
 doubtedly warrant an attachment against the firm and all of its 
 members, when all have concurred in the act.'' But suppose 
 
 ' Bogart V. Dart, 25 Hun (N. Y.) 395 (1881). 
 
 2 Supra, Chap. IV. ' gtaats v. Bristow, TSN. Y. 274 (1878). 
 
 « Evans v. Virgin, 69 Wis. 153, 33 N. W. 569 (1887). 
 
 5 Williams v. Muthersbaugh, 29 Kan. 730 (1883), shows that, by 
 reason of peculiar statutory provisions in that State, firm creditors can 
 levy an attachment, issued against one partner only, on partnership 
 property as a security for the firm debt. "To this extent the partner- 
 ship must suffer for the individual wrongs of each of its members." 
 
 "Staats V. Bristow, 73 N. Y. 274 (1878); Andrews v. Mundy, 36 
 W. Va. 22, 14 S. E. 414 (1892). 
 
 ' So if all the members are non-residents, an attachment may issue 
 against firm property. Yerkes v. McFaddon, 141 N. Y. 136, 36 N. E. 7, 
 
EIGHTS AND REMEDIES OF CREDITORS 255 
 
 one partner, in an insolvent firm, without the knowledge or assent 
 of his copartners, is applying partnership property to the payment 
 of his individual deists, and thereby fraudulently withdrawing 
 the property from firm creditors, can the latter obtain an attach- 
 ment against the firm assets? 
 
 Keith V. Armstrong ^ is sometimes cited in support of an affirm- 
 ative answer. But that case, as explained in a more recent opin- 
 ion of the Wisconsin Supreme Court,^ was decided on the ground 
 that Armstrong, the fraudulent actor, was the managing partner, 
 who was doing all the business of the firm, with his partner's con- 
 sent, and that, therefore, his act was, in legal effect, the act of 
 both. Clearly, Armstrong's use of the partnership assets, in 
 paying his individual debts, was in excess of his implied authority 
 as a partner, and but for the actual authority which the court 
 declared had been given to him by his copartner, his attempted 
 transfer could not operate to devest the firm title .^ Unless his 
 act was done with the consent of his copartner, it would not 
 authorize an attachment against the firm and its property.* 
 
 (c) Attachment against Innocent Partner's Property. — A more 
 difficult question is this : When one partner has committed an 
 act, in the course of the partnership business, which entitles the 
 creditor to an attachment against the firm, can the creditor levy 
 the attachment on the separate property of the innocent partner ? 
 If the creditor brings an action for deceit against all the partners, 
 he can recover damages against all even though the deceit was 
 practised by one without the knowledge or assent of the others, 
 provided the culpable partner was acting in the ordinary course 
 of the business of the firm." And having recovered judgment, 
 he can levy his execution upon the separate property of any inno- 
 cent partner.^ It would seem to follow, therefore, that if an attach- 
 ment may issue against the firm, in an action for deceit, it may be 
 
 344 (1896). Under tlie New York statute, the attachment can be levied, 
 although service of the summons has been made on but one partner. 
 
 1 65 Wis. 225, 26 N. W. 445 (1886). 
 
 2 Winner v. Kuehn, 97 Wis. 394, 72 N. W. 227 (1897). 
 
 3 Supra, Chap. III. § 3. 
 
 ' Evans v. Virgin, 69 Wis. 148, 158, 33 N. W. 569 (1887). 
 ^ Supra, Chap. IV. § 2; Lindley on Part. (7th ed.) 175; British 
 Partnership Act of 1890, § 10 ; Uniform Partnership Act, § 13. 
 6 Randolph v. Daly, 16 N. J. Eq. 313, 316 (1863). 
 
256 THE LAW OF PARTNERSHIP 
 
 levied on the separate property of the partners as well as upon firm 
 assets. 
 
 The Supreme Court of Michigan,^ however, has held such a 
 levy invalid, under the statutes of that State. In the opinion 
 of the majority of the court, the statutory remedy of attachment 
 is limited to the debtor who is guilty of the fraud, and its use 
 is denied " against all honest persons, though they have the mis- 
 fortune to be connected in business as partners with dishonest 
 persons." ^ 
 
 § 1. (A.) Effect of Novation. 
 
 While the right of a partnership creditor to sue the partners 
 and to enforce his judgment against their separate property, 
 as well as against the firm effects, cannot be impaired by the 
 withdrawal of a partner, or by an agreement between the part- 
 ners that one or more shall discharge the creditor's claim,' it 
 may be lost by novation. The rule upon this subject has been 
 formulated in the Uniform Partnership Act with much precision.* 
 
 (a) Novation by Implied Agreement. — In order to establish 
 his discharge from a firm obligation, it is not necessary for the 
 partner to prove an express agreement therefor, on the part of 
 the creditor. It is enough for him to show "such facts, circum- 
 stances, acts, and conduct as would suffice to establish any other 
 agreement or contract, in the absence of statutory provisions 
 affecting the mode of execution or proof." ^ 
 
 1 Jaffray v. Jennings, 101 Mich. 515, 60 N. W. 52, 25 L. R. A. 645 
 (1894) ; Burdick's Cases on Part. 378. 
 
 ' Cf. the dissenting opinion of Montgomery, J., in which McGrath, 
 C. J., concurred, 101 Mich. 623-625. 
 
 3 Briggs V. Briggs, 16 N. Y. 471 (1857) ; supra, p. 162. 
 
 ' L. of Md. 1916, Ch. 175, § 36 (2) : "A partner is discharged from 
 any existing liability upon dissolution of the partnership by an agreement 
 to that effect between himself, the partnership creditor and the person 
 or partnership continuing the business ; and such agreement may be in- 
 ferred from the course of dealing between the creditor having knowledge 
 of the dissolution and the person or partnership continuing the business." 
 
 The corresponding provision in the British Partnership Act is found 
 in § 17. 
 
 6 Bank v. Green, 40 Oh. St. 431 (1884). In Peyser v. Myers, 135 N. Y. 
 599, 32 N. E. 699 (1892) it is said: "It is indisputable that an incoming 
 partner is not, as of course, liable for the debts or transactions of the firm, 
 
RIGHTS AND BEMEDIES OP CREDITORS 257 
 
 Still the burden is upon the withdrawing partner to show 
 that he has been discharged. He must plead and prove an 
 agreement between himself, the firm, and the creditor.^ It will 
 not be presumed. On the other hand, "from the nature of the 
 alleged agreement" — changing as it does established legal rela- 
 tions, and substituting a new security for an old one — "the 
 absence of express words touching payment and release ought to 
 weigh against its existence." ^ Mere silence of the creditor, 
 when informed of an agreement between the partners that one 
 has assumed, and is thereafter to be responsible for firm debts, 
 will not establish his consent to the agreement nor make him a 
 party thereto ; ' nor will the creditor's statement that he is aware 
 he has no further claim on the retiring partner, have such effect.^ 
 Even the creditor's receipt of payments from the assuming part- 
 ner or firm on account of the old firm's debt will not warrant the 
 inference that he has contracted to discharge the retiring part- 
 ner.^ He has a right to receive payment from any partner, and 
 such receipt would not be prejudicial to the one who has retired.* 
 
 (b) New Security for Old Debt. — Not only may a creditor 
 allow a deposit, which he made with a firm, to remain in the 
 custody of a partner or a new firm, after his or its assumption 
 of the old firm's debts, and receive payments thereon, without 
 discharging the retiring partner, but he may go further and re- 
 ceive the negotiable paper of the new firm or assuming partner, 
 without releasing his hold upon his original debtors, provided he 
 
 and that he can be made liable in an action at law by the creditor only by 
 some agreement on his part to assume such liability. The mere fact that 
 lie becomes a member of the firm creates no presumption of the existence 
 of such agreement. The fact, however, may be established by indirect as 
 -well as by direct evidence, and may, in the absence of an express agree- 
 ment, be inferred from the facts and circumstances which justly raise an 
 implication of its existence." See statute cited in preceding note. 
 
 1 Benson v. Hadfield, 4 Hare, 32, 37 (1844). 
 
 2 Bank v. Green, 40 Oh. St. 431, 440 (1884). 
 sWadhams v. Page, 1 Wash. 420, 25 Pac. 462 (1890). 
 
 * Kirwan v. Kirwan, 2 C. & M. 617, 4 Tyrwh. 491 (1834) ; Burdiok's 
 Cases on Part. 384. 
 
 6 In re Head, [1893] 3 Ch. 426 ; Burdiok's Cases on Part. 387 n. ; Chapin 
 V. Brown, 101 Cal. 500, 35 Pac. 1051 (1894). 
 
 8 Campbell v. Floyd, 153 Pa. St. 84, 95, 25 At. 1033, 1037 (1893) ; 
 Harris v. Farwell, 13 Beav. 403 (1846). 
 
258 THE LAW OF PARTNERSHIP 
 
 takes it simply as security for the old debt.^ If it is given and 
 received, however, with the intention to substitute it for the old 
 firm's liability, the retiring partner will be discharged.^ Such 
 an intention appears clearly, when a bank depositor notifies the 
 partner who continues the business of the bank after dissolution 
 of the firm, that he wishes to withdraw his deposit for investment, 
 and, upon the advice of the continuing partner, consents to leave 
 it with him in a new account, upon terms radically different from 
 those relating to the original account.' 
 
 If, however, "the partnership articles of a banking firm pro- 
 vide that the death of any partner shall not dissolve the partner- 
 ship, but the business shall be continued by the surviving part- 
 ners, who shall settle with the administrator of the deceased 
 partner as soon as practicable, the surviving partners may take 
 up certificates of deposit, issued before the death of the deceased 
 partner and issue new certificates, and the action of the depositor 
 in receiving the new certificates with knowledge of the deceased 
 partner's death does not amount to a novation, so as to release 
 the estate of the deceased partner upon insolvency of the bank 
 in the absence of an express agreement." * 
 
 (c) Novation by Express Agreement.^ — When the creditor 
 has expressly agreed to substitute the liability of one partner or 
 of a new firm for that of the old partnership, the retiring part- 
 ner is discharged, provided the agreement is made upon a legal 
 consideration. If the new firm contains a member who was not 
 in the old firm, or if a third person joins with the continuing, 
 partner in his promise to the creditor to pay the old firm debts, 
 there can be no doubt that the creditor's agreement rests upon 
 a legal consideration. 
 
 "The promise of a creditor," however, it has been said, "to 
 release the outgoing and look to the continuing partners for pay- 
 ment, is not binding for want of consideration. The creditor 
 
 1 Smith V. Eogers, 17 Johns. (N. Y.) 340 (1820). 
 
 2 Bank v. Green, 40 Oh. St. 431 (1884) ; L. of Md. 1916, Ch. 175, § 36, 
 (3). 
 
 ' In re Head, [1894] 2 Ch. 236; Burdiok's Cases on Part. 386. 
 
 « Henry v. Caruthers, 196 111. 136, third headnotes, 63 N. E. 629 
 (1902) ; L. of Md. 1916, Ch. 175, § 36, (4). 
 
 5 Frye & Bruhn v. Phillips, 46 Wash. 190, 89 Pac. 559 (1907), a nova- 
 tion, though all three parties were not acting together. 
 
RIGHTS AND REMEDIES OF CREDITORS 259 
 
 had the several liability of the continuing partner already in the 
 joint obligation." ^ But the weight of authority, both in Eng- 
 land and in this country, is opposed to this view. 
 
 (d) Assumption of Firm Debts by one Partner} — In a leading 
 case on this subject, Baron Parke gave the following reasons 
 for holding such an agreement, as we are now considering, bind- 
 ing on the creditors : " It cannot be doubted that the sole security 
 of one of two joint debtors may be more beneficial than the joint 
 responsibility of both. In the latter case, you are not entitled 
 to sue one with safety, for the defendant may plead in abatement 
 the non-joinder of his co-contractor. In the case of the bank- 
 ruptcy of one of the partners, there would also be a difference. . . . 
 Where there is more than one debtor, the creditor's right is dif- 
 ferent. There is, therefore, no doubt that the thing substituted 
 is altogether different from the original debt." ' 
 
 This is undoubtedly the better doctrine. The sole obligation 
 of one partner is a different thing from the obligation of the 
 firm. If the creditor consents to substitute the former for the 
 latter, the law will not inquire into the amount of the considera- 
 tion for his promise, nor concern itself with the question whether 
 his bargain is a good or a bad one.^ 
 
 (e) Novation by Estoppel. — A creditor of a dissolved partner- 
 ship, who has not agreed to discharge a retiring partner, may so 
 conduct himself as to be estopped from proving his non-agree- 
 ment. The case of Regester v. Dodge * may be referred to as an 
 example. 
 
 Plaintiff's intestate was a creditor of Jay, Cooke, & Co. In 
 1871 Dodge withdrew, and a new firm was formed, composed 
 
 ' Parsons (James), Principles of Part. § 95 ; Walstrom v. Hopkins, 103 
 Pa. 118 (1883); Early v. Burt, 68 Iowa, 716, 28 N. W. 35 (1886). In 
 the last ease it is said, the assuming partner's "undertaking was simply 
 a promise to pay a debt for which he was already liable." 
 
 2 Fish V. First Nat. Bank, 150 Fed. 524, 80 C. C. A. 266 (1907). 
 
 3 Lyth V. Ault, 7 Exch. 669 (1852) ; Burdick's Cases on Part. 385. 
 
 « Luddington v. Bell, 77 N. Y. 138 (1879) ; Allison ■.. Abendroth, 108 
 N. Y. 470, 15 N. E. 606 (1888) ; Parsons (T.) on Part. (4th ed.) § 240. 
 
 ■= Regester v. Dodge, 19 Blatch. (U. S. C. C.) 79, 6 Fed. 6, 61 How. 
 Pr. 107 (1881). Cf. Harris v. Farwell, 13 Beav. 403, 15 L. J. Ch. 185 
 (1846), where the creditor was held not to waive any right by accepting 
 a dividend from the new firm, as he was compelled to do this by an order 
 of the court. 
 
260 THE LAW OF PARTNERSHIP 
 
 of the remaining old members and two new ones, which assumed 
 all the obligations. In 1873 the new firm went into bankruptcy, 
 and in 1877 Dodge died. Plaintiff made no claim against Dodge 
 during his lifetime; but in 1878 he demanded payment of the 
 debt of Dodge's executor, who repudiated any liability. Plain- 
 tiff had proved his claim against the bankrupt firm, and upon the 
 final settlement of that estate received certain stocks in lieu of 
 money, which, without notice to Dodge's executor, he sold. 
 After the final distribution of the bankrupt estate, plaintiff brought 
 suit in equity against Dodge's executor for the balance of his 
 claim. The court held that it would be inequitable for the plain- 
 tiff to maintain his suit after his conduct had not only indicated 
 that he accepted the new firm as his debtor, in place of the old 
 firm, but had deprived defendant of his right to take part in the 
 bankruptcy proceedings and to receive and to dispose of the 
 stocks which had been distributed to plaintiff. 
 
 Another example of estoppel, in connection with novation, is 
 afforded by a Minnesota case. The defendants, as partners, 
 contracted with the plaintiffs for the purchase of a quantity of 
 furniture, which was to be shipped before a fixed date. Before 
 the date for shipment arrived, one of the defendants withdrew from 
 the firm, and the business was thereafter carried on by the others, 
 as a new firm. With notice of these facts, plaintiff failed to ship 
 the goods at the agreed time, and a month later shipped them to 
 the new firm. Such a departure from the terms of the original 
 contract was held to relieve the withdrawing partner from all 
 liability, and to limit the plaintiffs to a claim against the new firm.^ 
 
 § 1. (B.) Efiect of Judgment against One Partner. 
 
 The common law doctrines that actions upon partnership obli- 
 gations could not be brought against the firm, as an entity, but 
 must be brought against the individuals composing the firm, and 
 that such individuals were jointly ^ — not jointly and severally ' 
 
 > Porter v. Baxter, 71 Minn. 195, 73 N. W. 844 (1898). 
 
 ' The Uniform Partnership Act declares the tort UabUity of partners 
 to be joint and several ; the contract liability to be joint. L. of Md. 
 1916, Ch. 175, § 15. 
 
 3 Dinwiddie ti. Glass, 111 Miss. 749, 71 So. 745 (1916), holds that "the 
 liability of partners is joint and several" ; Ryckmar^ v. Manerud, 68 Ore. 
 
EIGHTS AND REMEDIES OF CREDITORS 261 
 
 — liable upon firm contracts, resulted in serious hardships to 
 partnership creditors. 
 
 (a) Non-Joinder must be pleaded. — The first improvement 
 in the condition of firm creditors was effected by Lord Mans- 
 field, who held that a creditor could recover against one or more 
 partners, unless they pleaded in abatement the non-joinder of 
 their associates, and thereby disclosed who the partners were.-' 
 "A creditor," said Lord Mansfield, "may be non-suited twenty 
 times before he learns them all, or driven to a suit in equity for 
 a discovery who they are. It is cruel to turn a creditor round, 
 and make him pay the whole costs of a non-suit, in favor of a de- 
 fendant who is certainly liable to pay his whole demand, and who 
 is not injured by another partner's not being made defendant; 
 because what he pays he must have credit for in his account with 
 the partnership." 
 
 (6) Absconding or Non-Resident Partners. — But the woes of 
 a firm creditor were not wholly cured by this doctrine of Lord 
 Mansfield. After he had discovered all of the partners, there 
 still remained the task, sometimes an arduous one, of compelling 
 their appearance in the case, as a condition of his making further 
 progress towards a judgment.^ In case some of them were non- 
 residents, he might resort to one of two methods, if his action 
 was brought in a law court; he could distrain on firm property 
 if he could find any within the jurisdiction, or he could proceed to 
 outlawry. As the former was the shorter and easier method, it 
 was favored by the courts.^ If he chose to go into a court of 
 equity, he could file a bill against the-resident partner and obtain 
 a decree for the whole debt.* 
 
 350, 136 Pae. 826, 37 Ann. Cas. 522, with note (1913), "liability is joint." 
 See Joint and Several Liability of Partners, 11 Col. L. Rev. 101 (1911), 
 where the author has set forth the authorities in detail in commenting 
 on Sehgman v. Friedlander, 199 N. Y. 373, 92 N. E. 1047 (1910). 
 
 1 Rice V. Shute, 5 Burr. 2611, 2 W. Bl. 695 (1770) ; 1 Wm. Saund. 291 
 o, n. 4; Armour & Co. v. J. J. Ward & Co., 78 Vt. 60, 61 At. 765 (1905). 
 If the non-joinder appears on the face of the complaint, a plea in abate- 
 ment is unnecessary. Sandusky v. Sidwell, 173 111. 493, 50 N. E. 1003 
 (1898). 
 
 2 Gow on Part. (2d ed.) 177. 
 
 3 Morley v. Strombom, 3 Bos. & P. 254 (1802). 
 « Darwent v. Walton, 2 Atk. 510 (1742). 
 
262 THE LAW OF PARTNERSHIP 
 
 In this country the process of outlawry has not been resorted 
 to.^ Some courts have held that the sheriff's return of non est 
 inventus, as to one or more of the partners who are defendants, 
 is sufficient to enable the creditor to proceed in his action against 
 the other partners served with process.^ Most of the States, 
 however, have adopted statutes, called joint-debtor acts,' which 
 are a substitute for the common law process of outlawry. By 
 legislation of this character, the condition of a partnership cred- 
 itor has been greatly improved. His failure to secure service of 
 process upon all the members of a firm does not prevent his 
 obtaining a judgment which can be enforced against the firm prop- 
 erty as well as the separate property of the partners who were 
 found and served.^ 
 
 (c) Merger of Firm Debt in a Judgment against One Partner. 
 — Perhaps the most grievous hardship imposed upon firm cred- 
 itors by the common law doctrines, mentioned at the beginning 
 of this section, was the absolute bar which a judgment against 
 one or more of the partners interposed to a suit upon the same 
 claim against the other partners. The rule upon this subject 
 has been stated by a distinguished judge,* as follows: "A judg- 
 ment against one upon a joint contract of several persons bars 
 an action against the others, though the latter were dormant 
 partners of the defendant in the original action, and this fact 
 was unknown to the plaintiff when that action was commenced. 
 When the contract is joint, and not joint and several, the entire 
 cause of action is merged in the judgment. The joint liability 
 of the parties not sued with those against whom the judgment is 
 recovered, being extinguished, their entire liability is gone. They 
 cannot be sued separately, for they have incurred no several obli- 
 gations; they cannot be sued jointly with the others, because 
 judgment has been already recovered against the latter, who 
 would otherwise be subjected to two suits for the same cause." 
 
 ' Nathanson v. Spitz, 19 R. I. 70, 31 At. 690 (1895) ; Burdick's Cases 
 on Part. 393. 
 
 2 DiUman v. Schultz, 5 S. & R. (Pa.) 35 (1819). 
 
 ' Hall V. Lanning, 91 U. S. 160, 168, 23 L. Ed. 271 (1875). 
 
 * Stimson's Am. St. L. § 5015. For some of tte earliest American 
 statutes, see Gow on Part. (2d Am. ed.) *179 (1). 
 
 5 Field, J., in Mason v. Bldred, 6 Wall. (U. S.) 231, 18 L. Ed. 783 (1867) ; 
 Burdick's Cases on Part. 388. 
 
EIGHTS AND REMEDIES OF CREDITORS 263 
 
 (d) Statutory Changes. — The foregoing doctrine has been 
 modified by legislation in many of our States. Some of the 
 statutes go no fiu-ther than regulating the effect of a judgment 
 against a part of the partners which is taken in an action brought 
 against all.^ Others declare that every partner is jointly and 
 severally liable with his copartners for all the obligations of the 
 partnership.^ The joint liability of partners on contract obliga- 
 tions is continued in England by the Partnership Act of 1890, § 9, 
 and by The Uniform Partnership Act, § 15, here. 
 
 1. Liability of Partners for Partnership Torts. — This 
 has always been several as well as joint.^ Accordingly, if a 
 part only are made defendants, they cannot compel the plain- 
 tiff to bring in the others ; * nor will a judgment against one or 
 more of the partners for the wrong be a bar, in this country, to a 
 new action against the others ; ^ although, in England, a judgment 
 against one of several joint wrongdoers, even when unsatisfied, 
 is a bar to an action against the others.^ 
 
 1 See the Michigan statute which controlled the decision in Mason v. 
 Eldred, supra; also Ohio statute referred to in Yoho v. McGovern, 42 
 Oh. St. 11 (1884). 
 
 2 Stimson's Am. St. L. § 4113; Ch. 420, L. of 1897, N. Y. The ten- 
 dency appears to be to construe these provisions as merely declaratory of 
 the common law, — as meaning that the action must be joint, but that 
 the judgment may be severally enforced against each partner. See 
 Sandusky v. SidweU, 173 lU. 493, 50 N. B. 1003 (1898); Pope Mfg. Co. 
 II. Cycle Co., 65 S. C. 528, 33 S. E. 787 (1899). 
 
 3 Rice V. Shute, 5 Burr. 2611 (1770) ; British Partnership Act of 1890, 
 §§ 11, 12 ; Murphy v. Coppieters, 136 Cal. 317, 68 Pae. 970 (1902) ; Matter 
 of Black ford. 35 App. Div. 330, 54 N. Y. Supp. 972 (1898) ; Matter of 
 Peck^Oey^ Y^ 55, 99 N. E. 25 8, 41 L. R. A. n. s. 1223, 31 Ann. Cas. 
 798, with note (1912) ; IrTre Coe, 183 Fed. 745, 106 C. C. A. 181 
 (1910); Reynolds v. N. Y. Trust Co., 188 Fed. 611, 110 C. C. A. 409, 
 39 L. R. A. N. s. 391, with note (1911) ; Boston Foundry Co. v. WMteman, 
 31 R. I. 88, 76 At. 757 (1910) ; In re Davison, 13 Q. B. D. 60 (1884). 
 
 < White V. Smith, 12 Rich. L. (S. C.) 695 (1860) ; Roberts v. Johnson, 
 68 N. Y. 613 (1874). But see Whittaker v. Collins, 34 Minn. 299, 26 
 N. W. 632 (1885). The cases cited in the opinion do not bear out the 
 decision, that a tort action for malpractice must be brought against all 
 the members of the fibrm of physicians, when the contract is with the 
 firm. 
 
 5 Lovejoy v. Murray, 3 WaU. (70 U. S.) 1, 18 Q. Ed. 129 (1866). 
 
 » Brinsmead v. Harrison, L. R. 7 C. P. 547, 41 L. J. C. P. 190 (1872). 
 
264 THE LAW OP PARTNERSHIP 
 
 § 1. (C.) Remedies against Dormant Partners.' 
 
 The common law doctrine of merger operated necessarily 
 to discharge a dormant partner, although his connection with 
 the firm was unknown to the creditor when he took judgment 
 against the ostensible partners.^ No such consequence, however, 
 attends upon those transactions between the creditor and the 
 ostensible partners which do not work a merger of the creditor's 
 claim against the firm. 
 
 For example, a person sells goods to A upon his individual 
 credit, and later discovers that the business, in which the goods 
 were ordered and used, is that of a partnership composed of A and 
 B. He is entitled to hold both partners for the debt, on the ground 
 "that the property having been obtained for their joint benefit 
 and to enable them to make a common profit, it is but just, that 
 they should be jointly liable to pay for it." ^ Again, the creditor's 
 right to sue the dormant partner, when discovered, is not affected 
 by his having taken, in settlement of the firm debt, a bill of 
 exchange drawn by the ostensible partner, although the bill is 
 accepted by a third person ; * nor by the creditor's taking a sealed 
 note of the ostensible partner,^ provided such paper is not paid. 
 " It is clear law," said the courts, in the cases cited in the last two 
 notes, "that a dormant partner cannot discharge himself from 
 liability, to pay the debts of a creditor, through the medium of his 
 ostensible partner, by any acts of his during the concealment of 
 the unknown partner." 
 
 1. Dormant Partner's Liability on Partnership Paper. 
 — If he is a member of a trading partnership, his liability upon its 
 negotiable paper is the same as that of the ostensible partners. 
 When the business is carried on in the individual name of his 
 
 ' The right of the ostensible partners to sue, without joining the dor- 
 mant partner, has been considered, supra, Chap. IV. § 2. 
 
 2 Kendall v. Hamilton, 4 App. Cas. 504 ; Burdick's Cases on Part. 
 488 (1879) ; Robertson v. Smith, 18 John. (N. Y.) 459 (1821). See Har- 
 beck V. Pupin, 123 N. Y. 115, 118, 25 N. E. 311 (1890), applying § 1278 
 of the N. Y. Code of Civ. Proc, which permits a judgment to be taken 
 against one of several joint debtors. 
 
 3 Grifath V. Buffum, 22 Vt. 181, 184, 54 Am. Deo. 64 (1850). 
 
 ■* Robinson v. Wilkinson, 3 Price, 538 (1817) ; Burdick's Cases on 
 Part. 396. 
 
 » Chamberlain v. Madden, 7 Rich. L. (S. C.) 395 (1854). 
 
RIGHTS AND REMEDIES OF CREDITORS 265 
 
 copartner, who is also engaged in a separate business, the dormant 
 partner will be liable on firm paper issued in that name.^ He 
 will also be liable as indorser on paper owned by the firm, indorsed 
 in the firm name, and transferred to a bona fide holder. Under 
 this doctrine, a bank which has discounted such paper for the 
 partner who appears to be the sole owner of the business and of 
 the paper, can recover against the dormant partner on the indorse- 
 ment, although it did not know of the latter's connection with the 
 business when it took the paper.^ 
 
 (a) The Doctrine of Swan v. Steele. — In a leading English 
 case ^ on this subject, ' it appeared that two partners carried 
 on a grocery business in the name of Wood & Payne; at the 
 same time they with Steele carried on the business of cotton 
 dealers in the same firm name, Steele being a dormant part- 
 ner therein. The grocery firm, being indebted to plaintiffs, 
 gave them in payment a note payable to Wood & Payne and 
 indorsed in that name. The note was not paid by the maker, 
 and plaintiffs, discovering that the note was payable to the 
 cotton firm, sued the members of that firm as indorsers. Steele 
 pleaded non assumpsit; but judgment was given against him. 
 
 In the course of his opinion. Lord Ellenborough said : " Now 
 here the three persons were trading under the firm of Wood & 
 Payne, and in the course of their dealings as partners received 
 the bill in question ; and it was competent to either of them by 
 his indorsement in the name of the firm to pass their interest in 
 the bill ; and the plaintiffs, ignorant of any fraud at the time, take 
 it by such indorsement from one of the partners. Then, if the 
 interest of the plaintiffs in the bill were once well vested, no sub- 
 sequent knowledge that such indorsement was made without the 
 consent of one of the partners will divest it." * 
 
 1 Supra, Chap. III. § 1. 
 
 2 Mohawk Nat. Bank. v. Van Slyck, 29 Hun (N. T.), 188 (1883) ; 
 Burdiek's Cases on Part. 396. 
 
 3 Swan V. Steele, 7 East, 210, 3 Smith, 199 (1806). 
 
 * The true test of the dormant partner's UabiHty in this class of cases 
 has been stated as follows : "If a member of only one of the two firms is 
 sued on the bill, his Habihty will depend, first, on the authority of the 
 person giving the bill to use the name of the firm of which the defendant 
 is a member ; and, secondly, on whether the name of that firm has in fact 
 been used." Lindley on Part. (7th ed.) 210. 
 
266 THE LAW OF PARTNERSfflP 
 
 Nor, in such a case as the preceding, could the dormant part- 
 ner, either in his own behalf or in behalf of the creditors of his 
 firm, maintain an action to recover the paper from the plaintiffs. 
 The dormant partner, having clothed the ostensible partners 
 with authority to pass a perfect title to the paper, is estopped to 
 set up the title of his firm against a bona fide purchaser.^ 
 
 (6) Dormant Partner estopped to set up Firm Title. — It appears 
 to be well settled that "in a dormant partnership, the funds of 
 the visible partner and those purporting to be his, although actually 
 belonging to the partnership, are, with respect to the rights of 
 innocent third parties, to be regarded as his sole property." ^ 
 The dormant partner is estopped from setting up the firm title as 
 against such persons. He has held out the ostensible owner, as 
 the true owner of the property. It would be manifestly unjust 
 towards those, who have dealt with such owner upon that basis, 
 to permit the dormant partner to defeat their claims by setting 
 up the firm title, or by questioning the ostensible owner's author- 
 ity to deal with the property as his own.^ Hence a creditor of the 
 ostensible owner of the partnership business may set off against 
 a firm claim a debt due from the ostensible owner individually.* 
 
 2. Termination of Dormant Partner's Liability. — We 
 have seen that an ostensible partner must give notice of his 
 withdrawal from the firm, in order to absolve himself from lia- 
 bility for its subsequent obligations.^ This duty does not rest 
 upon a dormant partner. His connection with the firm has not 
 increased its credit, for this connection was unknown. "There 
 is no room, therefore, for the presumption that the public" will 
 be "misled by the omission to give notice of the termination of 
 the partnership." ^ 
 
 1 Kellogg V. Fancher, 23 Wis. 21, 99 Am. Dec. 66 (1868) ; Willey v. 
 Crooker-Woolwortk Nat. Bank, 141 Cal. 508, 75 Pac. 106 (1904). In 
 Sullivan v. Louisville & N. R., 128 Ala. 77, 30 So. 528 (1901), it was held 
 there was no estoppel. 
 
 2 White V. Farnham, 99 Me. 100, 107, 58 At. 425 (1904). 
 
 3 French v. Chase, 6 Me. 166 (1829) ; Lord v. Baldwin, 6 Pick. (23 
 Mass.) 348 (1828) ; Cammaek v. Johnson, 2 N. J. Eq. 163 (1839). 
 
 ^ Dixon Livery Co. v. Bond, 117 Va. 656, 86 S. E. 106, L. R. A. 1916 
 A., 1211, with note (1915). » Supra, Chap. II. § 4. 
 
 ' Kelley v. Hurlburt, 5 Cow. (N. Y.) 534 (1826) ; Clapp v. Rogers, 12 
 N. Y. 283, 288 (1855) ; Armstrong v. Hussey, 12 S. & R. (Pa.) 315 (1825). 
 
RIGHTS AND REMEDIES OP CREDITORS 267 
 
 3. Who is a Dormant Partner ? — The authorities are 
 not in accord upon this point. In England the term' includes 
 every member of the firm whose name does not appear in the 
 firm style, and whose connection with the firm has not been 
 known to the plaintiff. 
 
 The leading English case is that of Carter v. Whalley} Four 
 persons, the defendants in the action, had carried on a partner- 
 ship under the name of "The Plas Madoc Colliery Company"; 
 but before plaintiff discounted the bill in suit for the partnership, 
 Saunders, one of the partners, retired. No notice of his retire- 
 ment, however, was given. Baron Parke said that in order to 
 render Saunders liable on the ground of estoppel, it was necessary 
 for the plaintiffs to show that he had been known to them as a 
 member of the firm, either by direct transactions or by public 
 notoriety. This the plaintiff, he said, had failed to do. "The 
 name of the company gave no information as to the parties com- 
 posing it, and the plaintiffs did not show that Saunders had dealt 
 with them in the character of a partner, or had held himself out 
 so publicly to be one as that the plaintiffs must have known it." 
 
 The statutory provision upon the subject is as follows: "The 
 estate of a partner who dies, or who becomes bankrupt, or of a 
 partner who, not having been known to the person dealing with 
 the firm to be a partner, retires from the firm, is not liable for 
 partnership debts contracted after the date of the death, bank- 
 ruptcy, or retirement, respectively." ^ 
 
 Under this rule, if the partnership remains perfectly secret, 
 the dormant partner will not be affected by partnership trans- 
 actions after his withdrawal, "but if the partnership had be- 
 come known to any person or persons, he would be in the same 
 situation, as to all such persons, as if the existence of the partner- 
 ship had been notorious." ' 
 
 (a) Dormancy involves Inactivity as well as Secrecy. — While 
 the foregoing doctrine of the English courts and statute has 
 been adopted in some of our States,* in others it is held that "a 
 
 1 1 Barn. & Ad. 11 (1830). " Britisli Partnership Act, § 36 (3). 
 
 3 Farrar v. Deflinne, 1 Car. & K. 580 (1843) ; Lieb v. Craddock, 87 Ky. 
 525, 9 S. W. 838 (1888). 
 
 * Austin V. Appling, 88 Ga. 54, 13 S. E. 955 (1891). In that State, 
 the statutory provision is quite similar to that in the British Partnership Act. 
 
268 THE LAW OF PARTNERSHIP 
 
 dormant partner is one who takes no part in the business, and 
 whose connection with it is unknown. Both secrecy and inac- 
 tivity are impHed by the word." ^ 
 
 Accordingly, though a particular partner's name may not 
 appear in the firm style, and though he may not have been known 
 to a particular dealer or to the public as a partner, yet, if he has 
 been an active member of the firm, he must give due notice of 
 his withdrawal to former customers, if he would effectually ter- 
 minate his liability for its subsequent obligations to them.^ In 
 the last cited case, the court said : " It was not necessary that 
 the plaintiffs should have known the names of the defendants. 
 They might, from their own experience and otherwise, have be- 
 come satisfied that the Spring Brook Mills Company (the firm 
 name of defendants), contained, and was managed by persons, as 
 members of the firm, who were men of means, as well as regular 
 and prompt in paying all their debts, although they never had 
 ascertained the names of such persons. ... It could not prop- 
 erly be ruled, as matter of law, that the defendants owed no duty 
 of giving notice to the plaintiffs of their withdrawal from the 
 firm, merely because the plaintiffs did not know that these indi- 
 viduals were the responsible parties in the firm." 
 
 (6) Other Authorities for this View. — This view has received 
 the approval of the courts of last resort of Pennsylvania ' and New 
 York,* in two very carefully considered cases, and is embodied 
 
 > Nat. Bank of Salem v. Thomas, 47 N. Y. 15, 19 (1871). 
 
 2 EUrinton v. Booth, 143 Mass. 479, 10 N. E. 460 (1887). 
 
 3 Shamburg v. Ruggles, 83 Pa. St. 148 (1876). 
 
 * Elmira Iron Co. o. Harris, 124 N. Y. 280, 26 N. E. 541 (1891) ; Bur- 
 dick's Cases on Part. 398. In Rowland v. Estes, 190 Pa. Ill, 42 At. 528 
 (1899), the court said: "As no notice of his withdrawal was given, his 
 habiHty continued, unless he was a dormant partner. His testimony 
 was very distinct that he had not sold goods ; but on the vital question 
 whether he had bought goods, or, by his known connection with the part- 
 nership, had lent it credit, he was silent. The firm name indicated that 
 one or more persons were associated with T. W. Estes, and the plaintiffs 
 appear to have extended credit to the partnership after inquiries made of 
 commercial agencies as to its members and their financial standing, and 
 McFarland was unwilling to testify that during the earlier years of the 
 partnership he had not given statements to those agencies. Taking into 
 view the whole testimony, we cannot say that there was error in directing 
 a verdict for the plaintiffs." 
 
EIGHTS AND REMEDIES OF CREDITORS 269 
 
 in the Uniform Partnership Act.^ In the opinion of these tri- 
 bunals, when a business is carried on, not in an individual's name, 
 but in a name which indicates a partnership, it is not only fair to 
 presume that credit has been given upon the reputation of the 
 firm, rather than upon the names of the individuals composing 
 it, but such presumption is supported by modern business methods. 
 In the language of the New York court : "The inquiry addressed 
 naturally is, what is the financial condition of Jones & Co. ? For 
 having no acquaintance with the individuals comprising the 
 firm, information as to membership does not aid the in- 
 quirer." 
 
 (c) Notice to the Public Unnecessary. — While a secret but active 
 partner is bound to give notice of his withdrawal to former cus- 
 tomers under the rule last stated, he owes no such duty to those 
 who have never dealt with the firm during his connection with 
 it. To such persons, it has been judicially declared, "He will 
 not be liable, even though no notice of dissolution of any kind 
 be given, unless he does some act or acts, or permits or suffers 
 acts or things to be done, which would lead such persons, having 
 knowledge thereof, to believe that the firm continued to exist at 
 the time of their dealing with the other partners on the credit 
 of such firm." ^ 
 
 (d) Dormant Partner as Plaintiff. — The dormant partner need 
 not be joined as a coplaintifl with the ostensible owner of the 
 business.' 
 
 ^ 2. Remedies of Separate Creditors at Law. 
 
 So long as the separate creditors of a partner confine their 
 attempts to enforce legal process to his individual property, 
 
 1 L. of Md. 1916, Ch. 175, § 35 (2) ; "The liability of a partner under 
 Paragraph (16) shall be satisfied out of partnership assets alone when such 
 partner had been prior to dissolution 
 
 (a) Unknown as a partner to the person with whom the contract is 
 made ; and 
 
 (6) So far unknown and inactive in partnership affairs that the business 
 j-epiitation of the partnership could not be said to have been in any degree 
 <iue to Ms connection with it." 
 
 2 Benjamin v. Covert, 47 Wis. 375, 385, 2 N. W. 625 (1879). 
 
 s Council V. Teal, 122 Ga. 61, 49 S. E. 806 (1905) ; Lindley on Part. 
 <7th ed.) 313 and English cases there cited. 
 
270 THE LAW OF PARTNERSHIP 
 
 no serious legal difficulties are encountered. The lien of their 
 judgment or levy will depend upon its priority. To the vigilant 
 and not to the sleepy creditor does the common law give its 
 reward of merit, and it does not inquire whether he is a partner- 
 ship or a separate creditor. But quite different principles are 
 applied when the separate creditor undertakes to enforce his 
 common law process against his debtor's interest in partnership 
 property; and the situation often becomes painfully compli- 
 cated. 
 
 1. The Value of his Judgment Lien Uncertain. — We 
 have seen that a partner has no individual title to any of the 
 firm assets ; that his interest is but a chose in action — a right 
 to a share of what remains after the partnership debts are paid 
 and the equities of the partners are adjusted.^ 
 
 Hence, a separate creditor may secure the levy of his execu- 
 tion on firm assets which are worth ten times the amount of his 
 judgment, this, too, before any other judgment or execution lien 
 has attached ; and yet he may not realize a cent as the fruits of 
 his diligence. If, at any time before a sale under his process, firm 
 creditors issue valid executions to the sheriff sufficient to exhaust 
 the firm property, the separate creditor's executions must be 
 returned nulla bona? 
 
 2. Partnership Property is seizable under Separate 
 Execution. — Under the doctrine established by the common 
 law courts in England, the sheriff levied a separate creditor's 
 execution by seizing a part or all of the tangible property of 
 the firm. In no other way, it was thought, could the levy be 
 made effectual, the shares of the two partners being undivided.* 
 This practice has been followed generally by the law courts of 
 this country. In some jurisdictions, however, a constructive 
 levy only is permitted ; and actual seizure and removal of specific 
 
 » Supra, Chap. III. § 3. 
 
 2 Eighth Nat. Bank v. Fitch, 49 N. Y. 539 (1872) ; Burdick's Cases on 
 Part. 403. In Hacker v. Johnson, 66 Me. 21, 25 (1877), it is said that 
 the execution creditor is entitled to a sale of the debtor partner's interest, 
 for it may sell for something whether the firm is insolvent or not. In 
 Willis V. Freeman, 35 Vt. 44, 82 Am. Dec. 619 (1862), it is held that an 
 attachment against an individual partner becomes a hen, and remains 
 such although subsequently the firm becomes insolvent. 
 
 ' Johnson v. Evans, 7 Man. & Gr. 240 (1844). 
 
EIGHTS AND REMEDIES OF CREDITORS 271 
 
 chattels of a partnership, under attachment or execution against 
 one raember, are deemed a trespass.^ 
 
 Even the jurisdictions which permit actual seizure of firm assets, 
 in levying an individual execution, are not agreed as to whether 
 the sheriff must seize all of the tangible property of the firm, or 
 may seize a part only. In favor of the former view, it is said : 
 "In an action against one of the partners, the officer must seize 
 all the goods, because the moieties are undivided ; for if he seize 
 but a moiety and sell that, the other partners will have a right to 
 a moiety of that moiety. He must seize the entire leviable prop- 
 erty of the copartnership. He must take and retain custody of 
 the property, for in no other way can he legally execute the writ 
 and sell as much of the interest of his judgment debtor as may be 
 sufficient to satisfy the execution." ^ 
 
 (a) Execution may be levied on Specific Chattels. — On the 
 other hand, it is argued that to require a levy upon all the part- 
 nership effects, however small the judgment, is to impose an un- 
 necessary duty upon the individual creditor and an unnecessary 
 hardship upon the firm. The debtor's interest in the entire 
 property might be greatly in excess of what was required to sat- 
 isfy the execution. Again, the firm assets might be situated in 
 various jurisdictions, and a levy upon all of them might be im- 
 possible.^ 
 
 (6) Under the Uniform Partnership Act. — This statute declares 
 that "a partner's interest in specific partnership property is not 
 subject to attachment or execution, except on a claim against the 
 partnership,".,* but may be subjected to a charging order, in the 
 manner described hereafter. 
 
 1 Sanborn v. Royce, 132 Mass. 594 (1882) ; RusseU v. Cole, 167 Mass. 
 6, 44 N. E. 1057, 57 Am. St. R. 432 (1896). 
 
 2 Branch v. Wiseman, 51 Ind. 1, 3 (1875), following Heydon v. Hey- 
 don, 1 Salk. 392 (1693). In WMgham's Appeal, 63 Pa. 194, 198 (1869), 
 Sharswood, J., said : "Partners have no separate title in any aliquot part 
 of the partnership property. Their interest is an incorporeal, intangible 
 thing, a right to an account, and to their share of the balance after all 
 the partnership debts are paid, and all the equities between the partners 
 adjusted. If, upon an execution against one partner, the sheriff should 
 levy upon and sell his interest in a single bale of goods, it could not be 
 maintained that his vendee would acquire his interest in all the assets." 
 
 3 Fogg V. Lawry, 68 Me. 78, 28 Am. R. 19 (1878). 
 * L. of Md. 1916, Ch. 175, § 25 (2) (c). 
 
272 THE LAW OF PAETNEESHIP 
 
 3. Execution Ceeditoe's Rights after a Levy. — While 
 the separate creditor can have his execution levied on firm assets, 
 at common law, he does not acquire thereby any legal interest 
 in such assets. Accordingly, if the firm goes into bankruptcy,^ 
 or makes an assignment for the benefit of creditors,^ after the 
 levy, the title to the assets will pass to the assignees, who may 
 dispose of them free from the lien of the levy ; and, if the firm is 
 insolvent, free from any lia'bility, to pay to the execution creditor 
 any part of the proceeds.^ 
 
 4. The Sheriff's Rights after a Levy. — According to 
 the old English cases, the sheriff laid hold of any firm chattels 
 which he could find, and sold the debtor partner's interest therein, 
 as though it were the share of a tenant in common, and paid the 
 proceeds over to the execution creditor.* Later, however, it 
 was held that the sheriff had no right to take the goods of the 
 firm out of the possession of the solvent partners,^ although, in 
 order to make an effective levy, he could seize them. 
 
 But in American jurisdictions, where an actual levy is author- 
 ized, the sheriff is permitted to take actual and exclusive posses- 
 sion of the firm property.^ "For what purpose," said Judge 
 Cowen, in the case last cited, "does a sheriff seize property on a 
 fi. fa. if not to remove and sell it ? . . . Is the law so absurd as 
 to command a sheriff by its writ to seize and sell an article, yet 
 forbid him to remove it, or declare him a breaker of the peace for 
 selling it, because he was resisted, and put to the exercise of force ? 
 This is a sort of imbecility which the common law has been care- 
 ful to avoid in all cases." 
 
 Still, even in these jurisdictions, it is admitted that the rights 
 of the execution creditor and of the sheriff are subordinate to those 
 of the other partnerp, and of the firm creditors " to have the prop- 
 erty applied in payment of the partnership debts, if necessary for 
 
 1 Garbett v. Veale, 5 Q. B. 408, 13 L. J. Q. B. 98 (1843). 
 
 ' Staats V. Bristow, 73 N. Y. 264 (1878). 
 
 3 Darnell v. State Bank, — Okla. — , 158 Pac. 921 (1916). In this 
 ■case the purchaser of such a share sought to recover the amount of his 
 bid, but failed. 
 
 ^ See Lord Eldon's account of the old cases in Button v. Morrison, 17 
 Ves. 193 (1810). 
 
 » Patterson, J., in Burnett v. Hunt, 5 Jur. 650, 651 (1841). 
 
 » Phillips V. Cook, 24 Wend. (N. Y.) 389, 393, 394 (1840). 
 
EIGHTS AND REMEDIES OF CREDITORS 273 
 
 that purpose." ^ Hence, although the solvent partners cannot 
 maintain replevin against the sheriff who seizes and removes 
 firm assets under legal process against one of their associates,^ 
 and may subject themselves to an action for damages if they re- 
 take the property from the sheriff ; ' yet, if they can show that 
 all the property levied on was needed for firm debts, damages will 
 be nominal, and a purchaser from the sheriff under such an exe- 
 cution will get nothing by his purchase.* 
 
 (a) Sheriff may be Liable in Tort. — Moreover, if the sheriff 
 removes the property and undertakes to transfer the entire 
 title thereto, instead of selling merely the debtor's interest therein, 
 he will be guilty of conversion.^ His right is limited to such cus- 
 tody of the property as is necessary to bring the debtor partner's 
 interest to a valid sale. The purchaser is not entitled to take and 
 hold possession of any specific chattel as against the firm. He 
 " acquires only the interest sold, — the right to demand an account- 
 ing, and any surplus due, after such accounting from the partner- 
 ship, to the interest which he purchased." * 
 
 5. The Rights of the Purchaser. — Under the old English 
 cases above referred to,^ the purchaser became a true tenant in 
 common with the solvent partner in the particular chattel sold 
 by the sheriff. Lord Mansfield introduced a change, which has 
 been described as follows : " The sheriff seized and sold the whole 
 of a sufficient portion of the partnership goods, . . . and then an 
 account was directed to be taken of the judgment debtor's share 
 of the proceeds of the sale, and that share, or a sufficient part of 
 it, was handed over to the execution creditor." * This innova- 
 
 1 Eighth Nat. Bank v. Fitch, 49 N. Y. 539 (1872) ; Burdick's Cases on 
 Part. 403, 404. 
 
 2 Smith V. Orser, 42 N. Y. 132 (1870). 
 
 3 Haskins v. Everett, 4 Sneed (36 Tenn.), 531 (1857). 
 
 ' Johnson v. Wingfield (Tenn.), 42 S. W. 203 (1897) ; Burdick's Cases 
 on Part. 406. The entire subject is fully discussed in this case. 
 
 " Daniel v. Owens, 70 Ala. 297, 302 (1881) ; Lane v. Lenfest, 40 Minn. 
 375, 42 N. W. 84 (1889) ; Michalover v. Moses, 19 App. Div. (N. Y.) 343 
 (1897) ; Burdick's Cases on Part. 417; Richard v. AUen, 117 Pa. 199, 11 
 At. 552, 2 Am. St. R. 652 (1887) ; Skavdale v. Moyer, 21 Wash. 10, 56 
 Pae. 841 (1899). 
 
 « Skavdale v. Moyer, 21 Wash. 10, 56 Pae. 841 (1899). 
 
 ' Heydon v. Heydon, 1 Salk. 392 (1693), is an example. 
 
 s Lindley on Part. (5th ed.) 357. 
 
274 THE LAW OF PARTNERSHIP 
 
 tion was discontinued because a law court could not conduct a 
 partnership accounting, and therefore could not do full justice 
 to the parties. Thereafter, until the adoption of the Partnership 
 Act of 1890, the English practice was for the sheriff to sell the 
 debtor partner's interest in the goods levied upon, making the 
 purchaser a quasi tenant in common, and leaving him to ascer- 
 tain as best he might what interest he had acquired.^ 
 
 Such, in the main, has been the practice of the law courts 
 in this country.^ Under this practice, the purchaser did not 
 become the owner of any chattels, nor even a true tenant in 
 common of any chattels. He acquired "a mere right in equity 
 to call for an account, and thus to entitle himself to the interest 
 of the partner in the property, which may be ascertained to exist 
 upon a settlement, which may be something or nothing." ' 
 
 6. Resort to Equity. — In England, and in some American 
 jurisdictions,^ the debtor partner or his solvent associates, in 
 such circumstances as we have been considering, can obtain 
 relief in a court of equity. He is allowed to maintain a suit 
 to which all the partners and the creditor are parties, for a part- 
 nership accounting, the appointment of a receiver, and an in- 
 junction restraining the sheriff from selling the debtor's uncertain 
 interest in the property.^ Equity intervenes for the purpose of 
 preventing a multiplicity of suits, of securing the unquestionable 
 lien of the solvent partners, and of preventing a needless sacri- 
 fice of the debtor partner's interest by compelling a sale of it at a 
 time when its value is wholly problematical.® 
 
 In other jurisdictions, equity has declined to intervene, partly 
 because of a lack of precedent, partly because it is thought that, 
 
 1 Holmes v. Mentze, 4 A. & E. 127 (1835). 
 
 2 Atwood V. Meredith, 37 Miss. 635, 642 (1859). 
 
 3 Farley v. Moog, 79 Ala. 148, 153, 58 Am. R. 585 (1885) ; Johnson v. 
 Wingfleld, 42 S. W. 203 (1897) ; Burdick's Cases on Part. 406; Claggett 
 V. Kilbourne, 1 Black (66 U. S.), 346, 349, 17 L. Ed. 213 (1861). 
 
 "Aultman v. Puller, 53 Iowa, 60, 4 N. W. 809 (1880), applying 
 §§ 3053, 3054, now §§ 3977, 3978 of the Code. 
 
 '5 Bevan v. Lewis, 1 Sim. 376 (1827) ; Place v. Sweetzer, 16 Ohio, 142 
 (1847). 
 
 « Story on Part. (7th ed.) § 264. In Gaines v. Fourth Nat. Bank 
 (Tenn.), 52 S. W. 467 (1898), it was held that an accounting in equity 
 could be had of a non-resident partnership. 
 
EIGHTS AND REMEDIES OF CREDITORS 275 
 
 as the execution sale must be made subject to the rights of part- 
 nership creditors, no harm is done to them by the sale, and partly 
 because it is said the principle of enjoining the sale "would go to 
 stay executions at law in every case against the partnership 
 property of one partner, who owed separate debts, until the dis- 
 closure and liquidation of the concerns of the copartnership." ^ 
 
 7. Garnishment of Debts due the Firm. — It is generally 
 held that a creditor of one partner cannot maintain garnish- 
 ment proceedings against the debtor of the firm. These statutory 
 proceedings have been treated by the courts as legal and not equi- 
 table in their nature, and the rights, credits, and effects which 
 may be reached by them^ "in the hands of the garnishee, are 
 such as are not encumbered with trusts, and such as may be deliv- 
 ered over, or paid by the officer under the direction of the court, 
 free from encumbrances. ... It was not contemplated by the 
 Legislature to authorize a court of law, in a mere side issue grow- 
 ing out of an attachment suit, to exercise the intricate and com- 
 plicated duties of a chancellor", nor to compel the garnishee "to 
 await the determination of a chancery proceeding requiring an 
 adjustment of accounts between parties and partnerships." 
 
 8. Statutory Modifications of Common Law Procedure. 
 — The evils ' consequent upon the common law methods of 
 enforcing the judgments of separate creditors against firm prop- 
 erty have been remedied to a greater or less extent by legislatiop. 
 
 For example, in New York, the partners other than the judgment 
 debtor may get rid of the sheriff upon due application to the 
 court, by giving an undertaking that they will account to the 
 purchaser of the debtor partner's interest in the property seized, 
 
 1 Moody V. Paine, 2 Johns. Cli. 548 (1817), 3 Kent's Comm. (14tli ed.) 
 65, note 6. 
 
 2 Sheedy v. Sec. Nat. Bank, 62 Mo. 17, 21 Am. R. 407 (1876) ; Win- 
 ston V. Ewing, 1 Ala. 129, 34 Am. Dee. 768 (1840) ; Hoaglin v. Henderson, 
 119 Iowa, 720, 94 N. W. 247, 61 L. R. A. 756, 97 Am. St. R. 335 (1903) ; 
 Myers v. Smith, 29 Oh. St. 120 (1876) ; FeweU v. Am. Surety Co., 80 Miss. 
 782, 28 So. 755 (1900) ; contra, Thompson v. Lewis, 34 Me. 167 (1852). 
 
 3 In Trafford o. Hubbard, 15 R. I. 326, 762 (1886), it is said: "Un- 
 doubtedly this (the exclusive possession of the sheriff under a levy) tends 
 to embarrass and possibly to break up the copartnership business; but 
 we do not see how these consequences can be avoided at law, even if they 
 can in eqxiity, without remedial legislation." 
 
276 THE LAW OF PARTNERSHIP 
 
 and pay to him the balance due the partner oh such accounting, 
 as they would be bound to do to an assignee of such interest.^ 
 
 In Kentucky, the sheriff is forbidden to' deprive the other 
 partners of the possession of the property, except for the pur- 
 pose of having it inventoried and appraised; and upon the offi- 
 cer's return of the inventory and appraisement with a statement 
 of the claim of the other partners, the creditor may enforce the 
 lien acquired under the levy, by an action in equity.^ If in such 
 action it appears that the debtor partner had no interest in the 
 property levied on, because of the insolvency of the firm, or for 
 any other reason, the creditor will take nothing by his action.* 
 
 (a) Separate Creditor prohibited from Levying on Firm Prop- 
 erty.— The Georgia Code declares that "the interest of a partner 
 in the partnership assets may be reached by a judgment creditor 
 by process of garnishment served on the firm, and shall not be 
 subject to levy and sale." ^ After the service of the process of 
 garnishment, the firm answers, and the issue thus raised as to 
 the interest of the debtor partner in the firm is submitted to a 
 jury, upon whose verdict judgment is entered for the creditor, in 
 case it is shown that the debtor will be entitled to a share in the 
 firm property after settlement of its affairs; otherwise judgment 
 passes against the creditor.^ 
 
 (&) Statutory Change in Britain. — By the British Partner- 
 ship Act, a still more radical change has been made in the methods 
 of enforcing a separate creditor's judgment against firm property. 
 The issue of an execution on such a judgment against any part- 
 nership property is prohibited ; and the creditor is authorized 
 to apply for an order charging the debtor partner's interest in the 
 partnership property and profits with the payment of his judg- 
 ment with interest. The court may also appoint a receiver cf 
 
 'N. Y. Code of Civ. Proe. §§ 1413 to 1417. Other sections provide 
 for the release of firm property from attachment by a separate creditor, 
 §§ 693-696. 
 
 2 Kentucky Civil Code of Prac. § 660. 
 
 ' Holmes v. Miller, 41 S. W. (Ky.) 342 (1897) ; Burdick's Cases on 
 Part. 417. 
 
 * Code of the State of Ga. (1895) § 2661 ; Willis v. Henderson, 43 Ga. 
 325 (1871) ; Burdick's Cases on Part. 418. 
 
 5 Code of the State of Ga. (1895) §§ 4705-4729; Armand v. Burrun 
 Company, 69 Ga. 758 (1882). 
 
EIGHTS AND EEMEDIES OF CREDITOES 277 
 
 such interest, and may "direct all accounts and inquiries, and 
 give all other directions which might have been directed or given 
 if the charge had been made in favor of the judgment creditor by 
 the partner, or which the circumstances of the case may require." ^ 
 
 (c) The Uniform Partnership Act. — This statute follows 
 closely the British Act, referred to in the last preceding para- 
 graph.^ 
 
 9. Right of Judgment Ceeditob or Purchaser to an 
 Account. — The purchaser of the debtor partner's interest in 
 the firm property under a separate creditor's execution does 
 not become a partner in the debtor's stead. The doctrine of 
 delectus personarum prevents such a result. Having acquired 
 the partner's interest, however, courts of equity, even in juris- 
 dictions which do not accord an accounting to the judgment 
 creditor before sale under his execution, permit him to call the 
 solvent partners to an accounting, in order that he may receive 
 the distributive share which he has bought.^ Nor will his action 
 for an accounting be defeated by the fact that the only partnership 
 assets consist of a stock of goods of which he has an inventory.* 
 The sale of the debtor partner's interest, according to the pre- 
 vailing view in this country, works a dissolution of the partner- 
 ship, and entitles the purchaser to ask for a final settlement and 
 adjustment of the partnership affairs.^ 
 
 If the sale has been made under a levy upon a part only of the 
 firm effects, the debtor partner as well as the other members of 
 the firm must be made parties.^ Indeed, in such a case, the 
 debtor partner would have the right to institute an action for an 
 
 1 Partnership Act of 1890, § 23. "It is no secret that the present 
 amendment of the law is due to the counsels of Lord Justice Lindley." 
 Pollock's Digest of Part. (6th ed.) 71. The section has been construed in 
 Brown, Janson, & Co. v. Hutchinson & Co., [1895], 2 Q. B. 126, 64 L. J. 
 Q. B. 619; Sutton v. EngHsh &c. Co., [1902], 2 Ch. 502, 71 L. J. Ch. 685. 
 
 2 L. of Md. 1916, Ch. 175, § 28. 
 
 ' Eighth Nat. Bank v. Fitch, 49 N. Y. 539 (1872) ; Burdick's Cases on 
 Part. 403, 405. Doubt is expressed in Pratt v. McGuinness, 173 Mass. 
 170, 53 N. E. 380 (1899), whether a bill in equity will lie in such a case; 
 but it was allowed in Henderson v. Farley Nat. Bank, 123 Ala. 647, 26 
 So. 226, 82 Am. St. R. 140 (1899). 
 
 ^ Marx V. Goodnough, 23 Ore. 545, 32 Pac. 511 (1893). 
 
 6 Miller v. Brigham, 50 Cal. 615 (1875). 
 
 « Gerard v. Bates, 124 lU. 150, 16 N. E. 258, 7 Am. St. R. 350 (1888).. 
 
27ii THE LAW OF PARTNERSHIP 
 
 accounting, for he has not been completely divested of his inter- 
 est in the firm.' 
 
 When a part only of the partnership assets is levied upon 
 and sold, the mode of determining what interest has been ac- 
 quired by the purchaser "is to take an account in equity of the 
 other assets and of the debts of the firm, and in case the firm 
 debts are paid from the other assets, the purchaser will be en- 
 titled to the execution, debtor's proportion of the property pur- 
 chased, as in what should remain after payment of such debts." ^ 
 
 (a) The Present English Doctrine. — Prior to the Partner- 
 ship Act, the right of a purchaser of a partner's share to call 
 the other partners to an account, had been judicially upheld, 
 and had been judicially denied. All doubt upon the subject 
 has been removed by that Act. Sections 23 and 31 deny to the 
 separate creditors, or to any assignee of a partner's share, the 
 right to interfere in the management or administration of the 
 partnership, during its continuance, or to require any accounts 
 or to inspect the books. He is, indeed, entitled to the share of 
 profits of the debtor or assigning partner, but "must accept the 
 account of profits agreed to by the partners." Nor does the 
 assignment of a partner's share necessarily dissolve the firm; 
 although it gives the other partners a right to apply for a decree 
 of dissolution ; ^ and if a partner suffers his share to be charged, 
 under § 23, the partnership may be dissolved at the option of the 
 other partners.* 
 
 The Act also provides that the other partners may redeem 
 the debtor partner's interest, or, in case a sale of it is ordered 
 by the court, they may purchase it.^ If they avail themselves 
 of this privilege, they miist act with the utmost good faith 
 towards the debtor partner ; ^ and if they pay for the share with 
 
 ' Habershon v. Blurton, 1 DeG. & S. 121 (1847), and preceding note. 
 
 ' Eighth Nat. Bank ». Fitch, 49 N. Y. 539 (1872) ; Burdick's Cases on 
 Part. 403, 405. 
 
 » Partnership Act of 1890, § 35. 
 
 < Partnership Act of 1890, § 33 (2) ; see Brown, Janson, & Co. v. Hutch- 
 inson & Co., [1895] 2 Q. B. 126, 64 L. J. Q. B. 619; Burdick's Cases 
 on Part. 419, for the present English doctrine. 
 
 5 Partnership Act of 1890, § 23 (3). 
 
 » Perens v. Johnson, 3 Sm. & G. 419 (1857). The solvent partners in 
 a coal mine, before the sale of the debtor partner's interest by the sheriff. 
 
EIGHTS AND REMEDIES OF CREDITORS 279 
 
 partnership funds, they do not become its owners, nor thereby 
 cut off the debtor partner from membership in the firm with a 
 partner's right to an accounting from them.^ 
 
 (6) The Uniform Partnership Ad. — Most of the provisions 
 referred to in the last preceding paragraph are reproduced in the 
 Uniform Act.^ It also provides for the dissolution of the partner- 
 ship on the application of the purchaser of a partner's interest, in 
 certain cases.' 
 
 10. Specific Legal Liens. — In the next section it will ap- 
 pear that the relative rights of firm creditors and of separate 
 creditors, with respect to the separate estate of a partner, are 
 quite different, when the firm and separate estate have been 
 brought within the jurisdiction of courts of equity, from the 
 rights which are enforced in the courts of common law. Still, 
 if the firm creditor has obtained a specific legal lien on a part- 
 ner's separate estate, before the separate creditor has brought 
 that estate under equity jurisdiction, the latter must abide the 
 consequences of his tardiness. Accordingly, the absolute lien 
 on a partner's real estate of a judgment in favor of a firm creditor,^ 
 or on his personal property under the levy of a firm creditor's 
 execution^ cannot be destroyed or affected by proceedings sub- 
 sequently instituted in a court possessing equity powers and 
 
 prevented access to tte coal mine, so as to prevent this partner or bidders 
 from knowing tJiat the seam of coal was almost reached, and then bid in 
 his interest for themselves. They were held to be trustees of the share 
 for the debtor partner who had thus been overreached. 
 
 1 Helmore v. Smith, 35 Ch. D. 436 (1887). 
 
 2 L. of Md. 1916, Ch. 175, §§ 27, 28. 
 
 3 Ibid., § 32 (2). 
 
 « Meech v. AUen, 17 N. Y. 300, 72 Am. Dee. 465 (1858). 
 
 6 In re Sandusky, 17 N. B. R. 452 (1878) ; Burdick's Cases on Part. 
 421. In the two last cited cases, it is intimated that equity may interfere 
 if the separate creditor shows that there is sufficient partnership property, 
 subject to the firm creditor's hen, to satisfy his claim, while if he enforces 
 it against the separate estate, the separate creditor will not be able to 
 collect his debt. See U. S. Bankruptcy Act of July 1, 1898, § 67 (d), 
 -which protects vahd liens, and § 5 (</), which authorizes the court to mar- 
 shal assets "so as to prevent preferences, and secure the equitable distri- 
 bution of the property of the several estates", and § 67 (/), which annuls 
 all levies, judgments, attachments or other liens, obtained within four 
 months prior to the filing of the petition in bankruptcy against the bank- 
 rupt. 
 
280 THE LAW OF PARTNERSHIP 
 
 administering the two estates under equity rules. Such courts 
 never set aside or interfere with "an absolute right of priority 
 obtained at law." 
 
 § 3. The Rights of Creditors in Equity. 
 
 In administering the partnership estate and the separate 
 estates of the partners which have been brought within its juris- 
 diction, a court of equity proceeds upon different principles from 
 those which we have found to obtain in courts of law. 
 
 1. The Vigilant Creditor cannot gain a Preference. 
 — As soon as a court of equity acquires jurisdiction of the prop- 
 erty, the race between creditors for precedence is at an end. It 
 does not matter whether this jurisdiction is obtained by an assign- 
 ment in trust for the benefit of creditors, or by a petition in bank- 
 ruptcy, or by a bill for the adjustment of the affairs of an insol- 
 vent partnership : in each case, further contest between creditors 
 for advantage of position is bootless.^ Specific legal liens, which 
 have been acquired before equity obtains jurisdiction, will, as we 
 saw in the last section, be respected ; but from the moment juris- 
 diction is obtained the rule of equal distribution between creditors 
 of the same class is enforced. 
 
 Hence, if an equity action is brought by one partner against 
 the others, for the purpose of winding up the affairs of an insol- 
 vent partnership, the receiver, who is appointed therein, can hold 
 the firm property, free from judgments thereafter obtained by 
 partnership creditors.^ 
 
 This view is not accepted in New Jersey, where it has been 
 held, that " in a suit in equity by one partner against the other, 
 for settlement of the partnership concerns, the court does not 
 get such control of the assets as to enable it to prevent the firm's 
 creditors from proceeding at law to judgment and execution, 
 
 1 This topic is discussed most instructively in chapters 14r-22 inclu- 
 sive, Glenn's Creditors' Rights and Remedies (1915). 
 
 2 Holmes v. McDoweU, 15 Hun (N. Y.) 585 (1878) ; affirmed 76 N. Y. 
 596 (1879) ; Burdick's Cases on Part. 434. But if the firm is solvent, 
 the partners cannot thus hold their creditors at bay, by an equity action 
 and the appointment of a receiver. Matter of Thompson, 10 App. Div. 
 (N. Y.) 40 (1896). In accord with Holmes v. McDowell are Jackson v. 
 Lahee, 114 111. 287, 2 N. E. 172 (1885), and Veith v. Ress, 60 Neb. 62, 82 
 N. W. 116 (1900). 
 
EIGHTS AND REMEDIES OF CREDITORS 281 
 
 and levy upon the assets, until after decree of dissolution provid- 
 ing for calling in the creditors, and some creditor has come in." ^ 
 
 2. Firm Creditors restricted to Firm Estate. — We have 
 seen that a firm creditor at law could levy his execution upon 
 the firm assets or upon the separate property of a partner, at 
 his option ; and that if he obtained a lien on the separate prop- 
 erty, he could enforce it, although he thereby exhausted this 
 estate and left the separate creditor with a claim against a penni- 
 less debtor. . 
 
 A different doctrine was established in equity, at an early 
 day. It is stated as follows in a decree by Lord Chancellor 
 Cowper, in one of the first reported cases upon the subject : 
 "That, as the joint or partnership estate was in the first place 
 to be applied to pay the joint or partnership debts, so in like 
 manner the separate estate should be in the first place to pay 
 all the separate debts : and as separate creditors are not to be 
 let in upon the joint estate, until all the joint debts are paid ; 
 so likewise the creditors to the partnership shall not come in, 
 for any deficiency of the joint estate, upon the separate estate, 
 until the separate debts are first paid." ^ 
 
 This doctrine has been embodied in the Bankruptcy Statutes 
 of England ^ and of this country. The provision of the United 
 States bankruptcy law of 1898 upon this topic reads as follows : 
 "The trustee shall keep separate accounts of the partnership 
 property and of the property belonging to the individual part- 
 ners. The expenses shall be paid from the partnership prop- 
 erty and the individual property in such proportions as the court 
 shall determine. The net proceeds of the partnership property 
 shall be appropriated to the payment of the partnership debts, 
 and the net proceeds of the individual estate of each partner to 
 the payment of his individual debts. Should any surplus remain 
 of the property of any partner after paying his individual debts, 
 such surplus shall be added to the partnership assets and be 
 applied ,to the payment of the partnership debts. Should any 
 surplus of the partnership property remain after paying the part- 
 nership debts, such surplus shall be added to the assets of the 
 
 1 Ross V. Titsworth, 37 N. J. Eq. 333 (1883). 
 
 2 Ex parte Crowder, 2 Vern. 706 (1715). 
 ' Bankruptcy Act of 1883, §§ 43, 59. 
 
282 THE LAW OF PARTNERSHIP 
 
 individual partners in the proportion of their respective interests 
 in the partnership." ^ This rule is followed in the Uniform Part- 
 nership Act.^ 
 
 (a) The Doctrine not unimrsally axicepted. — Although this 
 doctrine has long been the prevailing one, it was repudiated 
 in England by Lord Thurlow, so far as the limitation it imposed 
 on the firm creditor's right is concerned ; he holding that a cred- 
 itor of the firm is a creditor of each partner and entitled to share 
 pari passu with the separate creditors in the separate estate.* 
 This view was rejected in turn by Lord Rosslyn, who declared 
 that a bankruptcy proceeding against a partner was not to be 
 treated as an execution at law, but that the effects of the bankrupt 
 were to be administered according to equitable rules, one of 
 which was "that each estate is to pay its own creditors." * Lord 
 Eldon, while expressing his preference ^ for Lord Thurlow's rule, 
 declined to unsettle the rule adopted by the earliest cases and 
 restored by his immediate predecessor.^ This he did, not be- 
 cause he looked upon such rule as the best in principle, nor as 
 founded upon any clear principle of equity, '^ but as one which had 
 originated and was to be maintained upon considerations of 
 convenience.^ 
 
 (&) Lord Thurlow's Rule in this Country. — The rule laid down 
 by Lord Thurlow has been preferred by several courts of last 
 resort in this country. A well considered case of this class is 
 that of Camp v. Grant} In answer to the charge that if a court 
 of equity, while devoting the firm property in the first instance 
 to firm creditors, does not secure to separate creditors a like pref- 
 erence in the separate estate of the partners, it gives an advan- 
 tage to firm creditors over separate creditors, the majority of 
 the court said: "This is so: but it is no other advantage than 
 
 1 U. S. Bankruptcy Act of July 1, 1898, § 5 (d), (e), and if). 
 " L. of Md. 1916, Ch. 175, § 40, (h), (i). 
 ' Ex parte Copland, 1 Cox Eq. 420 (1787). 
 * Ex parte Elton, 3 Ves. Jr. 238 (1796). 
 5 Ex parte Hill, 2 Bos. & P. 191, note a (1802). 
 » Ex parte Kensington and Taylor, 14 Ves. 447 (1808). 
 ' Gray v. Chiswell, 9 Ves. 118, 126 (1803). 
 ' Button V. Morrison, 17 Ves. 193 (1810). 
 
 » 21 Conn. 41, 54 Am. Dee. 321 (1851) ; Robinson v. Security Co., 87 
 Conn. 268, 87 At. 879, 37 Ann. Cas. 170, with note (1913). 
 
RIGHTS AND REMEDIES OF CREDITORS 283 
 
 what appertains to a creditor having two securities over another 
 creditor who has but one. . . . The inequahty or advantage does 
 not grow out of an unequal appHcation of a rule of equity, but out 
 of the nature of the debt and property in question." 
 
 (c) Modifications of Lord Thurlow's Rule. — In Vermont ^ 
 and South Carolina,^ it is held that equity ought not to inter- 
 fere, in such cases as we are now considering, beyond the point 
 of requiring the firm creditors to confine themselves to the firm 
 property in the first instance. After this is exhausted, the firm 
 creditors should be allowed to share pari passu with the separate 
 creditors in the whole of each separate estate. The prevailing 
 doctrine in equity, which gives a preference to separate creditors 
 in the separate estate, is declared by the Vermont Court to rest 
 cither "upon the mere ground of the English bankrupt laws, 
 or else upon the mistaken ground, that a partnership creditor has 
 no separate and entire claim upon the individual responsibility 
 of each partner, for his whole debt." ^ Similar decisions have 
 been made in Louisiana and Virginia, based in part upon statutory 
 provisions.* 
 
 (d) The Prevailing Rule Empirical. — As early as 1728 the 
 rule was characterized by Lord Chancellor King as "a resolu- 
 tion of convenience ", ^ and a modern English judge has spoken 
 of it as belonging to "a sort of rough code of justice ", established 
 "because some rule must be laid down for the purpose of keep- 
 ing joint and separate estates distinct, and for paying the joint 
 and separate creditors." ^ Sir Frederick Pollock remarks that 
 
 1 BardweU v. Perry, 19 Vt. 292 (1847). 
 
 2 Hutzler Bros. v. Phillips, 26 S. C. 136, 1 S. E. 602 (1886). In Ken- 
 tucky, "If the partnership creditors exhaust the partnership assets -with- 
 out being paid in fuU, the individual creditor has the right to make a 
 like amount out of the individual assets, and when this is done the in- 
 dividual estate remaining wiU be distributed among all the creditors 
 (partnership and individual) in proportion to their respective debts." 
 Payette Nat. Bank v. Kenney, 79 Ky. 133, 140 (1880). 
 
 ' This view is approved in Story on Part. (7th ed.) §§ 376, 377, while 
 Chancellor Kent upholds the prevailing rule as "upon the whole reason- 
 able and just." 3 Kent's Comm. (14th ed.) *65, note (b). 
 
 « Gueringer v. His Creditors, 33 La. Ann. 1279 (1881) ; Pettyjohn v. 
 Woodruff, 86 Va. 478, 10 S. E. 715 (1890). 
 
 » Ex parte Cook, 2 P. W. .500 (1728). 
 
 " Lord Justice James, in Laeey v. Hill, L. R. 8 Ch. 441, 444 (1872). 
 
284 THE LAW OF PARTNERSHIP 
 
 this and other "rules of administration between the creditors 
 of the firm and the separate creditors of the partners have been 
 settled and adhered to after much hesitation in the earlier cases 
 ... as an empirical way of dealing with a pressing necessity, 
 rather than as being reasonable in themselves." ^ 
 
 This characterization of the rule is undoubtedly correct, and 
 yet many learned judges both in this country and in England 
 have undertaken to sustain it, not simply as an established rule 
 and one which works fairly well, but as a rule which accords with 
 equitable principles.^ 
 
 (e) Exceptions to the above Rule. — The courts have found 
 it necessary to establish some exceptions to the foregoing rule. 
 These will be considered at length in the next two sections, in con- 
 nection with various corollaries from the rule, inasmuch as they 
 are applied in the same way by courts of bankruptcy and by 
 equity tribunals. 
 
 3. The Rights of Secured Creditors. — Upon this topic, 
 bankruptcy statutes, generally, have not followed the principles 
 which have been established in equity. According to these prin- 
 ciples, a creditor who has obtained from his debtor specific secur- 
 ity for the debt is entitled to prove against the debtor's estate, 
 when brought into equity for distribution, the full amount of his 
 claim, and to receive a dividend on that amount. He may also 
 enforce his security. If the latter produces more than is needed 
 to pay the balance due on the claim, after the application of the 
 dividend, the surplus belongs to the debtor's estate, and is distrib- 
 utable among the other creditors.' 
 
 This result accords with the contract between the debtor 
 and creditor, and with the general rule of equity that "the cred- 
 
 ' Pollock's Digest of Part. (6th ed.) 146. 
 
 ' Rodgers v. Meranda, 7 Oh. St. 179 (1857) ; Burdiek's Cases on 
 Part. 424 ; Davis v. Howell, 33 N. J. Eq. 72 (1880) ; Burdiek's Cases 
 on Part. 438. 
 
 ' People V. E. Remington & Sons, 121 N. Y. 328, 24 N. E. 793 (1890) ; 
 Burdiek's Cases on Part. 442 and cases therein cited. Contra, Amory v. 
 Francis, 16 Mass. 308 (1820), following the English bankruptcy rule; 
 Wurtz V. Hart, 13 Iowa, 515 (1862). In Third Nat. Bank v. Lanahan, 
 66 Md. 461 (1886), it was held that if the secured creditor has realized 
 on his security, before a dividend is declared, he is entitled to a dividend 
 on the balance only of his claim. 
 
RIGHTS AND REMEDIES OF CREDITORS 285 
 
 itor is not bound to apply his collateral securities before enforc- 
 ing his direct remedies against the debtor." 
 
 Since the publication of the first edition of this book, the fore- 
 going topic has received very careful consideration from the 
 Supreme Court of the United States and also from the Supreme 
 Court of New Hampshire. The former of these tribunals, al- 
 though by a divided court, held, in accordance with the pre- 
 ponderance of decisions in this country, that a creditor, with 
 collateral, is not on that account to be deprived of the right to 
 prove for his full claim against an insolvent estate, which is being 
 distributed in a court of equity.^ The New Hampshire decision 
 is rested mainly upon the conclusion that the legislature of that 
 state intended the bankruptcy rule should apply in the proof of 
 secured claims against all insolvents, although it had not specifi- 
 cally enunciated that rule in the statutes relating to insolvent 
 banks. This conclusion was thought to follow from the clear 
 enunciation of the rule in statutes governing the settlement of 
 deceased persons' estates and of estates assigned for the benefit 
 of creditors.^ 
 
 In England the equity rule, which was carefully expounded 
 in Mason v. Bogg^ and Kellock's Case,* was set aside for the 
 bankruptcy rule by the Judicature Act of 1875.^ 
 
 (a) The Bankruptcy Rule. — If the debtor's estate has been 
 brought within a bankruptcy court for distribution, the creditor 
 who holds a secmity on such estate finds himself subject to a dif- 
 ferent rule from that which prevails in equity. "The principle 
 of the bankrupt laws is, that all creditors are to be put on an 
 equal footing, and therefore, if a creditor chooses to prove under 
 the commission, he must sell or surrender whatever property, he 
 holds belonging to the bankrupt." ^ 
 
 1 Merrill v. Nat. Bank of Jacksonville, 173 U. S. 131, 19 Sup. Ct. 360, 
 43 L. Ed. 640 (1899). Vigorous and learned dissenting opinions were 
 delivered by Justice White and by Justice Gray. Decision is followed in 
 Aldrich v. Cbemical Nat. Bank, 176 U. S. 618, 638, 20 Sup. Ct. 498 (1900) ; 
 Tebbetts v. Rollins, 192 Mass. 169, 78 N. E. 299 (1906). 
 
 2 Bank Commissioners v. Security Trust Co., 70 N. H. 536, 49 At. 113 
 (1901). ' 2 Mylne & C. 443, 1 Jur. 330 (1837). 
 
 < L. R. 3 Ch. 769 (1868). = Chap. 77, § 10. 
 
 « In re Plummer, 1 Phillips, 56 (1841) ; Burdick's Cases on Part. 444, 
 note ; British Bankruptcy Act of 1883, § 39, and Schedule 2, rules 9 to 17. 
 
286 THE LAW OF PARTNERSHIP 
 
 This rule has been embodied in our present Federal Bankruptcy- 
 Law, which provides that " The value of securities held by secured 
 creditors shall be determined by converting the same into money 
 according to the terms of the agreement pursuant to which such 
 securities were delivered to such creditors or by such creditors 
 and the trustee, by agreement, arbitration, compromise, or liti- 
 gation as the court may direct, and the amount of such value 
 shall be credited upon such claims, and a dividend shall be paid 
 only upon the unpaid balance." ^ 
 
 If the security equals or exceeds the debt, the creditor, of 
 course, has no need to prove his claim; and any surplus in his 
 hands after satisfying his claim will belong to the bankrupt's 
 estate. If, however, he proves his claim at all, he must state 
 under oath what securities he holds therefor.^ 
 
 Xb) Creditors secured by Third Persons. — Neither in Eng- 
 land nor in this country is the creditor bound to apply the secur- 
 ity in diminution of his claim, nor to surrender it, unless the 
 debt and the security rest upon the same estate. Our statute 
 defines a "secured creditor" as one "who has security for his 
 debt upon the property of the bankrupt, of a nature to be assign- 
 able under this Act, or who owns such a debt for which some 
 indorser, surety, or other person secondarily liable for the bank- 
 rupt has such security upon the bankrupt's assets." ' 
 
 Accordingly, if a firm creditor holds security upon the sepa- 
 rate estate of a partner, he may prove his whole claim against 
 the firm estate, nevertheless, and receive a dividend thereon, 
 without having the security valued or sold.-* For this purpose, 
 the firm is treated, both in England and in this country, as dis- 
 tinct from the individuals composing it, and the debts of the firm 
 are sharply distinguished from the debts of the individual partners. 
 
 1 U. S. Bankruptcy Law of July 1, 1898, § 57 (ft). 
 
 2 U. S. Bankruptcy Law of July 1, 1898, § 57 (o) ; see The Skylark, 
 4 Biss. (U. S. Dist. Ct.) 388 (1869) ; Wicks v. Perkins, 1 Woods (U. S. 
 Dist. Ct.) 383 (1871) ; In re Busby, 124 Fed. 469, 11 Am. B. R. 506 
 (1903) ; Flower v. Commercial Trust, 223 Fed. 318 (1915). 
 
 ' U. S. Bankruptcy Law of July 1, 1898, § 1 (23) ; In re Thompson, 208 
 Fed. 207 (1913). 
 
 < In re Thomas & Sivyer, 8 Biss. 139, 17 N. B. R. 54, 23 Fed. Cas. No. 
 13,886 (1878); Miller's River Nat. Bank v. JefEerson, 138 Mass. Ill 
 (1884) ; Burdick's Cases on Part. 471. 
 
EIGHTS AND EEMEDIES OF CREDITORS 287 
 
 This is brought out very clearly in a recent New Jersey case. 
 A firm creditor, who had obtained judgment on his claims for 
 $4,121.95, brought suit to set aside a deed by one of the partners 
 to his wife of certain real estate owned by him as an individual. 
 The deed was set aside, as fraudulent against the plaintiff, and 
 the real estate was sold for $2,118.19. Thereafter, the creditor 
 was allowed to prove his claim for $4,121.95 against the insol- 
 vent firm estate in the hands of a receiver, without giving credit 
 for the proceeds of the individual real estate. Said Vice-Chancellor 
 Reed : " Under the rules recognized in the administration of 
 bankrupt estates it is quite clear that the firm and the partners 
 are to be regarded as distinct parties ; and that, inasmuch as the 
 creditor would have had the right to hold a security given him by 
 a partner, so he has the right to sue a partner for a firm debt, and 
 also to prove for his entire debt against the insolvent firm. Nor 
 am I aware that this doctrine has been questioned in the distri- 
 bution of insolvent estates by receivers or assignees." ^ 
 
 This topic will be referred to again in the section dealing with 
 the order of proofs and marshalling.^ 
 
 § 4. The Bankruptcy of the Firm. 
 
 When all the members of a firm are adjudicated bankrupts, 
 it becomes the duty of the trustee to keep separate accounts 
 of the partnership property and of the individual property of 
 the partners.^ Ordinarily the separation of the two estates is 
 not a matter of difficulty. If, however, they have become in- 
 extricably blended, they may be consolidated in England ; * but 
 the mere fact that it is difficult to determine what is firm estate 
 and what is separate property, or whether particular creditors 
 are entitled to prove against the joint estate, or the separate 
 estates, will not justify the court in making a consolidation.^ 
 
 1. Holding-out Partners. — In case persons are adjudi- 
 cated bankrupts, who have held themselves out as partners, 
 but between whom in fact there has been no partnership rela- 
 
 1 Lawson v. Dunn, 66 N. J. Eq. 90, 57 At. 415 (1904). 
 
 2 Infra, § 4 (B). 
 
 3 U. S. Bankruptcy Act of July 1, 1898, eh. 3, § 5 (d). 
 
 « Ex parte Sheppard, In re Bulwer, Mon. & Bl. 415 (1833). 
 6 Ex parte Trotman, In re Kriegel, 68 L. T. 588 (1893). 
 
288 THE LAW OF PARTNERSHIP 
 
 tion/ the question arises whether the assets of the apparent 
 firm are to be treated as partnership property, or as the sepa- 
 rate estate of their real owner. 
 
 In Great Britain, the answer is given by statute. A provi- 
 sion of the Bankruptcy Act ^ declares the property of a bank- 
 rupt divisible among his creditors shall include "all goods being, 
 at the commencement of the bankruptcy, in the possession, 
 order, or disposition of the bankrupt, in his trade or business, 
 by the consent and permission of the owner thereof; provided 
 that things in action other than debts due or growing due to the 
 bankrupt, in the course of his trade or business, shall not be 
 deemed goods within the meaning of this section." 
 
 The English courts have declared that the doctrine of reputed 
 ownership, established by this statutory provision, does not 
 apply to a case " where property belongs to a partnership of two, 
 and there is only one ostensible partner. . . . The property is 
 that of the two, and you cannot say that, because there is only 
 one ostensible partner, the court will, in the event of bankruptcy, 
 treat the property of the firm as in his order and disposition. The 
 possession in such a case is quite consistent with the real title, 
 and therefore the reputed ownership clause does not apply." 
 But when the real owner of property pretends to have formed 
 a partnership with others, and permits this ostensible partner- 
 ship to have possession and to appear as the owner of the prop- 
 erty, the clause of the statute does apply, for the possession and 
 apparent title are quite at variance with the real title.^ 
 
 ' In Hanson v. Paige, 3 Gray (69 Mass.) 239 (1855), it was held that a 
 mere partner by estoppel could not be adjudicated an insolvent in proceed- 
 ings instituted by the actual partners ; but in Re Kjueger, 2 Low. (U. S. 
 Dist. Ct.) 66 (1871), it was decided that he could be adjudicated a bank- 
 rupt upon a petition of firm creditors. The U. S. Bankruptcy Law of 
 July 1, 1898, § 5, does not seem to authorize an adjudication in bankruptcy 
 of partners by estoppel, as a partnership. The adjudication would be 
 against them as individuals. This view has been followed in In re Ken- 
 ney, 97 Fed. 554, 3 Am. B. R. 353 (1899) ; Lott v. Young, 109 Fed.' 798, 
 48 C. C. A. 654, 6 Am. B. R. 436 (1901) ; In re Beckwith, 130 Fed. 475, 
 12 Am. B. R. 453 (1904). ^ Bankruptcy Act, 1883, § 44 (3). 
 
 3 Ex parte Hayman, In re Pulsford, 8 Ch. D. 11, 22, 23 (1879), approv- 
 ing Reynolds v. Bowley, L. R. 2 Q. B. 474 (1867), a case of a dormant 
 partner. The doctrine of reputed ownership is fully treated in Lindley 
 on Part. (6th ed.) Bk. 4, ch. 4, § 3. 
 
EIGHTS AND REMEDIES OF CREDITORS 289 
 
 (a) Varimis Views in this Country. — We saw, in an earlier 
 chapter,! that some of our courts are disposed to expand this 
 statutory doctrine of reputed ownership into a comprehensive 
 principle of equity jurisprudence, and to hold, "that, if a person 
 allows another to carry on business in such a way as to amount 
 to a holding out to persons generally ^ that he and such other 
 are partners, and a credit is given to both on the supposition that 
 they are partners in fact, the property with which such business 
 is carried on, though in law that of such person, in equity will be 
 treated as the joint property of such person and such other; 
 and neither of them, nor the creditors of either, can prove up in 
 insolvency in competition with the creditors who have trusted 
 the two as partners and the business as that of the two." ' 
 
 This view has been repudiated in other jurisdictions, on the 
 ground that while the person holding himself out as a partner 
 is "under a personal estoppel to deny his liability, a creditor 
 , . . cannot extend this estoppel so as to bind the property 
 which was in the possession and use of the actual partners. The 
 ostensible partner himself has no equity to have this property 
 applied to the payment of the claims upon which he is liable, and 
 therefore the creditors holding those claims who are merely sub- 
 rogated to his rights and equities, have no such equity." ^ 
 
 A third view has been expressed by still other courts, viz. 
 that the individual property which is used in such a business 
 
 1 Chap. II. § 4 (7). 
 
 2 In Ex parte Sheen, 6 Ch. D. 235 (1877), it was decided that the 
 doctrine of reputed ownership did not apply where a person had been 
 held out as a partner to some only of the creditors, there being no osten- 
 sible nor real partnership. Whiteworth v. Patterson, 6 Lea (Tenn.), 
 (1880) accord. 
 
 3 Supra, Chap. II. § 4 ; Thayer v. Humphrey, 91 Wis. 276, 64 N. W. 
 1007, 51 Am. S. R. 887, 30 L. R. A. 549 (1895) ; Burdiek's Cases on Part. 
 117, 121 ; Kelly v. Seott, 49 N. Y. 596 (1872), accord. Hillman v. Moore, 
 3 Tenn. Ch. 454, 458 (1877), approves of Kelly v. Scott, but refuses to 
 apply the doctrine between execution creditors of the real owner and 
 those of the ostensible firm. 
 
 4 Broadway Nat. Bank v. Wood, 165 Mass. 312, 43 N. E. 100 (1896) ; 
 Burdiek's Cases on Part. 129, 130. In HiUman v. Moore, 3 Tenn. Ch. 
 454, 460 (1887), it is said: "The prior right of a partnership creditor to 
 be paid out of the common property in preference to a separate creditor 
 of either of the partners does not exist in such a case." 
 
290 THE LAW OF PARTNERSHIP 
 
 is liable in the first instance for the individual debts of the owner ; 
 but that "the products of the business" are liable in the first 
 instance for the business debts.^ 
 
 2. The Capital of a Retired Partner. — The doctrine 
 of Thayer v. Humphrey^ has been still further extended by the 
 New York Court of Appeals, in a recent decision, which holds 
 that "when a retired partner allows his unliquidated interest 
 to be continued in the business of a new firm, the interest thus 
 left becomes liable for the partnership debts subsequently in- 
 curred, as well as the prior debts ", and that such retired partner 
 cannot assume the position of a creditor of the new firm in com- 
 petition with its other creditors, although the latter are notified 
 of the dissolution of the old firm and become creditors of the 
 new firm with such knowledge, and although the retired partner 
 informed them that the capital which he had had in the business 
 was, upon his withdrawal, loaned in part to his son, who suc- 
 ceeded him in the partnership, and the balance was loaned to 
 the firm.^ The only authorities cited in the prevailing opinion, 
 for this conclusion, are quotations from Lindley * and from Par- 
 sons on Partnership. Both extracts are from passages dealing 
 with the statutory doctrine of reputed ownership. The quota- 
 tion from Parsons is followed by a note (not referred to by the 
 court), to the effect that the cases "go no further than to hold 
 that, where the real owner of the property stands by and vir- 
 tually assents to its sale by the reputed owners, it is a fraud on 
 the purchaser, and the real owner is estopped from subsequently 
 setting up title." ^ 
 
 3. Conversion of Partnership Property into Separate 
 Estate. — This subject was discussed quite fully in an earlier 
 
 ' Swann v. Sanborn, 4 Woods (U. S. Cir. Ct.) 625 (1878). 
 
 2 91 Wis. 276, 64 N. W. 1007, 30 L. R. A. 549, 51 Am. S. R. 887 (1895). 
 This case is repudiated by The Uniform Partnership Act, L. of Md. 1916, 
 Ch. 175, § 16. See comments by draftsman of the statute, 29 Harv. L. 
 Rev. 300-302 (1916). 
 
 3 Adams & Co. v. Albert, 155 N. Y. 356, 49 N. E. 929, 63 Am. S. R. 
 675 (1898). The authority of this decision is weakened by the dissent of 
 Vann, J., and Parker, C. J. Brower v. His Creditors, 11 La. Ann. 117 
 (1856), is contra in principle. 
 
 • Lindley on Part. (5th ed.) 700, 702. See 7th ed. 745-761. 
 5 Parsons on Part. (4th ed.) 492, note (0. 
 
EIGHTS AND REMEDIES OF CREDITORS 291 
 
 chapter/ and it will not be necessary at present to do more than 
 recapitulate the conclusions then reached. 
 
 While a partnership is solvent it can by the agreement of 
 all the partners convert the firm property into the individual 
 property of the partners. If after such an agreement has been 
 executed, the various partners become bankrupt, there will be 
 no partnership estate for distribution.^ 
 
 In case the agreement of partners is fraudulent as against 
 the firm creditors, they or the trustee in bankruptcy may have 
 the transfer set aside.' The same result may be attained in 
 most jurisdictions, whenever the firm is insolvent at the time 
 of the transfer,* or the agreement is made in contemplation of 
 insolvency.* 
 
 In Peyser v. Meyers,^ the New York Court of Appeals declared : 
 "The corpus of the firm property belongs to the firm, as an entity, 
 and not to the individual partners. . . . This priority of lien 
 of the firm creditors is not divested by a transfer by an insolvent 
 firm of the firm assets to one or more of the partners, nor can it 
 be affected, as we conceive, by any mere change in the personnel 
 of the firm, as by the withdrawal of one partner from the firm 
 on the introduction of a new member." ' 
 
 (a) Agreement by Purchaser of Firm Title to pay Firm Debts. 
 — It is well settled in England that the creditors of a firm do 
 not become separate creditors of a partner by force of an agree- 
 ment between the partners that one or more of them shall assume 
 and pay the firm debts. "Unless the creditor accedes to that 
 
 1 Supra, Chap. III. § 3. 
 
 ^Ex parte Ruffin, 6 Ves. 119 (1801); Burdick's Cases on Part. 192; 
 In re WUey, 4 Biss. (U. S. Dist. Ct.) 214 (1868). 
 
 3 Wiggins V. Blackshear, 86 Tex. 666, 670, 26 S. W. 939 (1894) ; Bur- 
 dick's Cases on Part. 198; Southern Commission Co. v. Porter, 122 N. 
 C. 692; 30 S. E. 119 (1898). < 
 
 ' Jackson Bank v. Duriey, 72 Miss. 971, 13 So. 456 (1895) ; Burdick's 
 Cases on Part. 201. 
 
 5 In re Byrne, 1 N. B. R. 464 (1868) ; and see U. S. Bankruptcy Law 
 of July 1, 1898, §§ 5, 67, and 70. In re Head, 114 Fed. 489, 7 Am. B. R. 
 556 (1902). 
 
 « 135 N. Y. 599, 604, 32 N. E. 699 (1892). 
 
 'The doctrine stated in the text is affirmed in the Draft of "The 
 Uniform Law of Conveyances in Fraud of Creditors," prepared by Wil- 
 liam Draper Lewis for the Commissioners on Uniform State Laws. 
 
292 THE LAW OF PARTNERSHIP 
 
 arrangement, he is not bound by it, nor can he avail himself of 
 it ; his position in fact is unaltered, he does not lose his old right 
 nor does he gain any new one." ^ 
 
 This doctrine has been adopted by a few of our courts; such 
 an agreement being treated as "only a private executory con- 
 tract, intended to regulate the rights, duties, and obligations of 
 the copartners between themselves, consequent on a dissolu- 
 tion of the firm, to which the creditors were neither parties nor 
 privies." ^ 
 
 Even when the consideration for this promise of the partner 
 who assumes the firm debts is the transfer to him of the firm title 
 to its property, the firm creditors have no right, under the fore- 
 going doctrine, to have such property distributed as partnership 
 assets, unless the transfer can be set aside as fraudulent against 
 firm creditors, or unless it appears that the retiring partners have 
 retained their equitable right to have the firm property applied 
 by the purchasing partner in discharge of firm debts.^ 
 
 (6) Prevailing View in this Country. — Such is not the doc- 
 trine of the majority of our courts. On the contrary, the pre- 
 vailing view * is that the firm creditors can avail themselves of 
 the promise made by the purchasing partner to the retiring 
 partner, as one made for their benefit: "That such promise, 
 on the election of the creditors of the firm to avail themselves 
 of it, is cumulative to their rights; that they need not release 
 the firm in order to be able to obtain the benefit of such promise ; 
 and that such creditors may assent to and claim the benefit of 
 such promise at any time, either before or after the bankruptcy 
 of the promisor." 
 
 1 Lindley on Part. (6th ed.) 723, note (d), (7th ed.) 776, note (I), and 
 authorities there cited. 
 
 "i Wild V. Dean, 3 Allen (85 Mass.) 579, 582 (1862). This was modi- 
 fied by statute, 1865, ch. 113. See Bucklin v. Bucklin, 97 Mass. 256 
 (1867) ; Priesing v. Crampton, 181 Mass. 492, 63 N. E. 936 (1904). 
 
 ' Ex parte Dear, 1 Ch. D. 514 (1876) ; In re Daniel, 3 Manson's Bky. 
 R. 312, 75 L. T. 143 (1896) ; Howe v. Lawrence, 9 Cush. (63 Mass.) 653 
 (1852). 
 
 < In re Long and Corey, 7 Ben. (U. S. Dist. Ct.) 141, 148, 9 N. B. R. 
 227 (1874); In re Rice, 9 N. B. R. 373 (1874); Blake v. Atlantic 
 Nat. Bank, 33 R. I. 464, 82 At. 225, 39 L. R. A. n. s. 874, with note 
 (1912). 
 
EIGHTS AND KEMEDIES OF CREDITORS 293 
 
 It is also held that the creditors of a sole trader can elect to 
 avail themselves of an agreement, between him and his copart- 
 ner, that the firm shall assume and pay his individual debts, 
 provided the agreement does not operate as a fraud upon the 
 other firm creditors.^ 
 
 4. No Joint Estate and no Living Solvent Partner. — 
 In case there is no partnership estate, and no living solvent part- 
 ner, firm creditors are permitted to share pari passu with the 
 individual creditors in the separate estates of the bankrupt part- 
 ners. 
 
 This exception to the rule, which we have found to obtain in 
 the distribution of firm and separate estates, has been much crit- - 
 icised,^ but it has maintained itself both in England and in this 
 country, even though its operations have been capricious, and 
 although its existence has been ignored in the provisions of the 
 bankruptcy statutes covering this topic. Such statutory pro- 
 visions have been interpreted both in this country ' and in Eng- 
 land,^ not as complete codifications which exclude reference to 
 previous decisions or to previous legislation, but as legislative 
 statements of the general principles which govern the distribu- 
 tion of property in bankruptcy proceedings. Accordingly, as 
 the exception had been recognized and enforced by the courts, 
 during a long period, it was not to be treated as abolished, in the 
 absence of affirmative expressions to that effect. 
 
 A different view prevails in Massachusetts. The omission 
 of this exception from the insolvency statute of that State has 
 been held to indicate clearly the intention of the Legislature not 
 to recognize its existence.* This ruling has been applied by 
 some judges to the present bankruptcy statute of the United 
 States.^ The opinion in the case last cited contains a learned 
 
 1 Arnold v. Nichols, 64 N. Y. 117 (1876). In this case the agreement 
 was made upon the formation of the partnership. 
 
 ' McCuUoh V. DashieU, 1 H. & GiU (Md.) 96, 105, 18 Am. Bee. 271 
 (1827); Story on Part. (6th ed.) § 378; Pollock's Digest of Part. (6th 
 ed.) 149, 150; In re Wilcox, 94 Fed. 84, 2 Am. B. R. 117 (1899). The 
 last cited case is approved in CoUier on Bankruptcy (5th ed.), 78. 
 
 ' In re Knight, 8 N. B. R. 436, 2 Biss. (U. S. Cir. Ct.) 518 (1871). 
 
 » In re Budgett ; Cooper v. Adams, [1894] 2 Ch. 657. 
 
 6 Howe V. Lawrence, 9 Gush. (63 Mass.) 553 (1852). 
 
 « In re Wilcox, 94 Fed. 84, 2 Am. B. R. 117 (1899). 
 
294 THE LAW OP PARTNERSHIP 
 
 account of the historical development in England and in this 
 country of the law on this subject, and a powerful argument for 
 the abrogation of this exception. Considerable authority, how- 
 ever, favors upholding the exception.^ It has been judicially 
 declared that "a construction of the statute so as to preclude 
 the exception to the general rule would practically nullify the 
 fundamental principles of the bankrupt act, which aim to effec- 
 tuate an equitable division of assets pro rata among all the cred- 
 itors." ^ This view has been rejected by the Federal Supreme 
 Court, which holds that the exception does not exist, under the 
 present bankruptcy act.^ 
 
 (a) Amount of Firm Estate. — If any firm property comes to 
 the hands of the trustee in bankruptcy for administration,* the 
 firm creditors are precluded from sharing 'pari passu with the 
 separate creditors in the individual estates of the partners. The 
 amount is immaterial. "If, in point of fact, there is joint prop- 
 erty, whether to the amount of five pounds or five shillings", 
 the firm creditors are confined in the first instance to such prop- 
 erty.^ The same result follows, in England, although the trustee 
 is obliged to expend all of the joint funds in costs.^ 
 
 In this country, however, it is held generally, that if the costs 
 of the bankruptcy proceedings, or the expenses legally incurred 
 in collecting firm assets, exhaust the firm estate, firm creditors 
 may prove and share pari passu with separate creditors in the 
 
 1 In re Green, 116 Fed. 118, 8 Am. B. R. 553 (1902) ; In re Conrader, 
 118 Fed. 676, 9 Am. B. R. 85 (1902) ; Com-ader v. Cohen, 121 Fed. 801, 
 58 C. C. A. 249, 9 Am. B. R. 619 (103). 
 
 2 In re Janes, 128 Fed. 527, 11 Am. B. R. 792 (1904), reversed in 133 
 Fed. 912, 67 C. C. A. 216 (1904). 
 
 8 Farmers' Bank v. Ridge Ave. Bank, 240 U. S. 498, 36 Sup. Ct. 461 
 (1916). 
 
 « Ex parte HiU, 2 B. & P. 191, note a (1802). In this ease all the firm 
 property was pledged to firm creditors for more than its value, and Lord 
 Eldon held that it was a case of no joint effects. In re MUls, 95 Fed. 269, 
 2 Am. B. R. 667 (1899), holds that if firm creditors have received divi- 
 dends in proceedings to wind up the firm, and subsequently one partner 
 is adjudicated a bankrupt, firm creditors are to be postponed to the sepa- 
 rate creditors of the bankrupt. But the cases in the two preceding notes 
 are contra. 
 
 5 Ex parte Peake, 2 Rose, 54 (1814). 
 
 « Ex parte Kennedy, 2 DeG. M. & G. 228 (1852). 
 
EIGHTS AND REMEDIES OF CREDITORS 295 
 
 separate estates.^ This conclusion was based in part upon the 
 language of our bankruptcy statute.^ 
 
 (b) Odd Consequences of this Exception. — Under the excep- 
 tion which we have been considering, it is quite possible for 
 the separate creditors to benefit themselves by paying more 
 than the market value for firm assets. If firm accounts are 
 offered for sale, the separate creditors may pay a substantial 
 sum for them, although they are deemed worthless, and thus 
 put the partnership estate in funds and prevent firm creditors 
 from sharing pari passu with the separate creditors in the sep- 
 arate estate.^ 
 
 In the case last cited, the court viewed the exception as an 
 arbitrary and inequitable one, and declared : " If we were to 
 adopt the principle of going behind the fact of there being a 
 fund, to inquire whether that had not been inequitably created 
 by the management of the separate creditors, the court would 
 at once be involved in inextricable difficulties." 
 
 (c) No Living Solvent Partner. — This term, in the exception 
 now under consideration, means a non-bankrupt partner. Even 
 though the partner who has not been adjudged a bankrupt is 
 insolvent, yet as the firm creditors may proceed against him at 
 law for the firm debts, their exceptional right in bankruptcy to 
 share pari passu with separate creditors in the separate estate does 
 not accrue.* 
 
 On the other hand, whenever a firm creditor cannot have an 
 action at law and take out an execution against the represen- 
 tative of a deceased partner, his right to share with separate 
 creditors in the separate estate of the bankrupt partner will 
 not be affected by the fact that the deceased partner's estate is 
 solvent.^ 
 
 1 In re McEwen & Sons, 12 N. B. R. 11 (1875) ; In re Sloeum, 22 Fed. 
 Cases, 338, Nos. 12, 950, 12, 951 (1879). 
 
 2 "The net proceeds of the partnership property shall be appropriated 
 to the payments of the partnership debts, and the net proceeds of the 
 individual estate of each partner to the payment of his individual debts." 
 U. S. Bankruptcy Law of 1898, § 5 (/). The Act of 1867, ch. 176, § 36, 
 U. S. R. S. § 5121, contained the words "net proceeds." 
 
 ' In re Marwick, 2 Ware, 233 (1845) ; Burdick's Cases on Part. 446, 447. 
 * In re Marwick, in last note; Ex parte Janson, 3 Madd. 229 (1818). 
 6 Ex parte Bauerman, 3 Dea. 476, 486 (1838). 
 
296 THE LAW OF PARTNERSHIP 
 
 5, Exempt Property. — We have seen, in an earlier chap- 
 ter,^ that, according to the prevaihng view, firm property is 
 not included within the statutory exemptions from execution; 
 that such exemptions are intended for the benefit of natural 
 persons and are confined to the separate property of the partners. 
 
 The same doctrine is recognized by the weight of authority, 
 in the case of exemptions under bankruptcy ^ or insolvency 
 statutes. The right to exemption is an individual, not a joint 
 right ; and the property which is exempted is individual, not 
 joint property.' Accordingly, a bankrupt who is also the surviv- 
 ing partner in a bankrupt firm, is not entitled to treat any part 
 of the firm assets as his exempt property.* It has been held, 
 however, that in Georgia, a partner in a bankrupt firm "who 
 has no individual property is entitled to exemptions out of the 
 partnership assets, provided he has an interest in such assets 
 to the amount and extent of the exemption claimed, although 
 the firm property is not sufficient to pay the firm debts." ® Sim- 
 ilar decisions have been made in other parts of the United States, 
 based largely upon peculiar provisions of State statutes.^ The 
 Federal Bankruptcy Act does not affect the exemptions allowed 
 by State laws. "The intention was to adopt the State laws gov- 
 erning exemptions." '' 
 
 § 4. (A.) The Bankruptcy of a Partner. 
 
 The present bankrupt Act of the United States provides for 
 the adjudication of a partnership as a bankrupt person, and 
 also for the adjudication of the partners.^ It has been held, ac- 
 
 1 Supra, Chap. III. § 2 (C). 
 
 ^ The present bankruptcy law of the United States exempts to bank- 
 rupts only such property as is exempt by the State statutes in their place 
 of domicile at the time of filing the petition in bankruptcy, § 6. 
 
 ^In re Corbett, 5 Sawyer (U. S. Dist. Ct.), 206 (1878); Aultman v. 
 Wilson, 55 Oh. St. 138, 44 N.E. 1092 (1896) ; Burdick's Cases on Part. 448. 
 
 • In re Hosier, 112 Fed. 138, 7 Am. B. R. 268 (1901). 
 
 5 In re Camp, 91 Fed. 745, 1 Am. B. R. 165 (1899). 
 
 ° Collier on Bankruptcy (5th ed.), pp. 85, 86, and eases there cited. 
 
 ' Richardson v. Woodward, 104 Fed. 873, 44 C. C. A. 235 (1900) ; 
 Page V. Edmunds, 187 U. S. 596, 23 Sup. Ct. 200, 47 L. Ed. 318 (1903). 
 Bankruptcy Act of 1898, § 6 ; 1 Fed. Statutes Annotated, 592-610. 
 
 s In re Forbes, 128 Fed. 137 (1904), holding that an adjudication in 
 bankruptcy against all the partners is essential to one against the firm. 
 
EIGHTS AND REMEDIES OF CREDITORS 297 
 
 cordingly, that where the partners in a firm of two, upon fiUng 
 a voluntary petition, desire to be adjudicated bankrupts indi- 
 vidually, i.e. as against their individual creditors as well as against 
 the firm creditors, they should each file an individual petition. 
 And that in a case, where there are two partners each desiring 
 an individual discharge, there should be three orders of adjudi- 
 cation, and of reference, and that in all the other proceedings the 
 idea of three separate "cases" should be carried out, certainly 
 three separate estates are to be administered, and in strictness 
 three discharges are sought.^ 
 
 When one or more, but not all, of the members of a firm are 
 adjudged bankrupts, the trustees of such bankrupts do not be- 
 come members of the partnership. To give them that position 
 would be to violate that fundamental principle of partnership 
 law which secures to each partner the right to choose his asso- 
 ciates. Hence, the courts have uniformly held that upon the 
 bankruptcy of a partner, his trustee cannot meddle with the 
 interest of his copartners ; ^ and that the trustee acquires title 
 only to the individual property of the bankrupt and to his share 
 of interest in the firm estate.* This share, as has been stated 
 repeatedly, is the balance remaining after the payment of firm 
 debts and the adjustment of the equities between the bankrupt 
 and his copartners.* 
 
 1. The Trustee and Solvent Partners as Tenant:s in 
 Common. — The relation subsisting between the solvent part- 
 ners and the trustee of a bankrupt partner is generally described 
 as that of tenants in common.* If they are true tenants in com- 
 
 1 In re Farley, 115 Fed. 359, 8 Am. B. R. 266 (1902) and cases therein 
 cited. In In re Mercur, 122 Fed. 384, 68 C. C. A. 472, 10 Am. B. R. 
 505 (1903) the Circuit Com-t of Appeals decided that "where all the 
 members of a firm are adjudicated bankrupts, but there has been no ad- 
 judication against the firm, the trustee appointed in the individual cases 
 has no authority to interfere with firm assets, though all the cases were 
 instituted simultaneously by the same creditor, and the same trustee ap- 
 pointed for all the partners." 
 
 2 Anonymous, 3 Salk. 61 (1696). 
 
 3 Anonymous, 12 Mod. 446 (1701). 
 
 * Parker v. Muggridge, 2 Story (U. S. Cir. Ct.) 334 (1842) ; L. of Md. 
 1916, Ch. 175, § 26. 
 
 5 Lindley on Part. (6th ed.) 666, (7th ed.) 716. 
 
298 THE LAW OF PARTNERSHIP 
 
 mon, it follows necessarily that neither has a legal right to call 
 the firm property out of the hands of the other; and there is 
 most respectable judicial authority in support of this con- 
 clusion. 
 
 Judge Lowell declared : ^ The trustee in bankruptcy " is tenant 
 in common with the solvent partner of the joint stock. It usually 
 happens that the latter will be in possession of the stock, and his 
 possession will not be disturbed excepting for good reasons; 
 and, on the other hand, if, as in this case the assignee (trustee 
 under the present statute) is in possession, that will not be dis- 
 turbed without good cause." 
 
 Chancellor Kent went even further, declaring that the trus- 
 tees of a bankrupt partner hold firm funds, of which they happen 
 to gain possession, " by an equal title in law with him (the sol- 
 vent partner), as tenants in common, and by a superior equitable 
 title, as trustees, charged with the payment of both the joint 
 and separate debts." ^ 
 
 (a) The Modern Doctrine. — Other judges, however, have 
 entertained a different view.^ Starting with the idea that a 
 partnership is an entity distinct from the individuals composing 
 it, whose title to firm property is not the sum of the several titles 
 of its members, but is a peculiar species of ownership,* these 
 judges have declared that the bankruptcy of a partner does not 
 "transfer the corpus of the partnership property"; that the 
 dissolution of the firm, by the bankruptcy of a partner, does not 
 devest the firm title ; this remains intact, as it does upon dissolu- 
 tion by the natural death of a partner ; and that the solvent part- 
 ners have the same right to wind up the affairs of the firm as the 
 surviving partner possesses. 
 
 The doctrine has received legislative approval in the United 
 
 1 WilMns V. Davis, 2 Lowell, 511, 15 N. B. R. 60, 64 (1876). 
 
 ' Murray v. Murray, 5 Johns. Ch. 60 (1821), Burdiek's Cases on Part. 
 451. 
 
 ' Jones V. Newsom, 7 Biss. (U. 8. Cir. Ct.) 321 (1876) ; Ogden v. 
 Arnot, 29 Hun (N. Y.), 146 (1883), Burdiek's Cases on Part. 460, 461; 
 cf. Collins V. Barker, [1893] 1 Ch. 578, 62 L. J. Ch. 316. 
 
 ■• The Uniform Partnership Act, as pointed out in a previous connec- 
 tion, does not recognize a firm as an entity but does treat the ownership 
 of the firm assets, neither as that of tenancy in common nor joint tenancy, 
 but as that of tenancy in partnership. L. of Md. 1916, Ch. 175, § 25. 
 
EIGHTS AND REMEDIES OF CREDITORS 299 
 
 States Bankruptcy Law of 1898. It provides that: "In the 
 event of one or more but not all of the members of a partner- 
 ship being adjudged bankrupt, the partnership property shall 
 not be administered in bankruptcy, unless by consent of the 
 partner or partners not adjudged bankrupt; but such partner 
 or partners not adjudged bankrupt shall settle the partnership 
 business as expeditiously as its nature will permit, and account 
 for the interest of the partner or partners adjudged bank- 
 rupt." 1 
 
 2. Transfers of Firm Property before Bankruptcy. — 
 Where this doctrine prevails, a transfer by the firm of prop- 
 erty in payment of a firm debt, although voidable under the 
 statute by a trustee in bankruptcy of the firm, because made 
 within a specified period before the filing of the petition in bank- 
 ruptcy,^ cannot be avoided by the trustee of a partner. Cer- 
 tainly such a preference is no fraud, either actual or statutory, 
 upon the individual creditors of the bankrupt; and if the firm 
 creditors would have it set aside as a preference in violation of the 
 statute, they must take care that the partnership is adjudged 
 a bankrupt within the time limited by statute.^ 
 
 3. Liens on Firm Property before Bankruptcy. — Whether 
 the bankruptcy of a partner will dissolve the lien of a levy under 
 an execution or attachment which had been acquired by a firm 
 creditor, depends upon the legal relation between the solvent 
 partner and the bankrupt's trustee. If they are true tenants in 
 
 ' § 5 (h). TMs provision is discussed and applied in In re Samuels, 
 215 Fed. 845, 132 C. C. A. 187 (1914), reversing 207 Fed. 195 (1913) ; 
 In re Kobre, 224 Fed. 106 (1915), adjudicating the firm and two of its 
 members bankrupt, and appointing the non-bankrupt partner one of 
 the trustees, thus enabling him to settle the partnership business. Af- 
 firmed 224 Fed. 104, 139 C. C. A. 660 (1915) ; In re Hansley v. Adams, 
 228 Fed. 564 (1916). 
 
 2 U. S. Bankruptcy Law of 1898, §§ 67, 70. This right may be waived, 
 as in the ease of a secret partner, whose connection with the business 
 has been concealed, until the ostensible owner has been adjudged a bank- 
 rupt. • In re Harris, 108 Fed. 517, 4 Am. B. R. 132 (1899). It does not 
 belong to an infant partner. In re Duguid, 100 Fed. 274, 3 Am. B. R. 
 794 (1900), nor to one who has sold out to the bankrupt, before bank- 
 ruptcy. In re Denning, 114 Fed. 219, 8 Am. B. R. 133 (1902). 
 
 3 Forsaith v. Merritt, 1 Lowell (U. S. Dist. Ct.), 336, 3 Bank. Reg. 11, 
 3 N. B. R. 48 (1869), Burdick's Cases on Part. 458. 
 
300 THE LAW OF PARTNERSHIP 
 
 common, and the trustee's title vests as of the date of the act of 
 bankruptcy, the lien will be dissolved.^ 
 
 On the other hand, if the firm title is unaffected by the bank- 
 ruptcy of a partner, such bankruptcy will not impair the lien of 
 an execution or attachment levied on behalf of firm creditors.* 
 The latter view seems to have been embodied in the present 
 bankruptcy statute of the United States.' Such a lien would 
 not work a preference, for the firm creditors have the right to 
 apply the firm estate to the payment of their debts, before the 
 bankrupt's assignee can take anything. Moreover, the statute 
 provides that the property affected by the lien shall, after it is 
 annulled, "pass to the trustee as a part of the estate of the bank- 
 rupt", thus showing that the liens referred to are those on the 
 separate estate of the bankrupt. 
 
 4. Suits on Firm Claims or Liabilities. — Under the early 
 English doctrine, that the solvent partner and the trustees of 
 the bankrupt partner were tenants in common, it was held that 
 they must join in actions at law for the enforcement of firm rights.* 
 Such is still the rule in this country,^ unless the provision of the 
 Bankruptcy Law of 1898, securing to the non-bankrupt partners 
 the right to settle the partnership business, has modified it. The 
 decisions, since the publication of the first edition of this work, 
 leave no doubt that the statute has modified this rule.® It ex- 
 pressly provides that the partnership property shall not be ad- 
 ministered in bankruptcy, unless by the consent of the partner 
 or partners not adjudged bankrupts, but that the partner or 
 
 ' Button V. Morrison, 17 Ves. 193 (1810) ; In re Wait, 1 Jac. & W. 
 606 (1820). 
 
 2 Fern v. Gushing, 4 Gush. (Mass.) 357 (1849) ; Burdick's Cases on 
 Part. 464; Mason.?). Warthens, 7 W. Va. 532, 14 N. B. R. 346 (1874) ; 
 Russell V. Gole, 167 Mass. 6 (1896) ; Burdick's Cases on Part. 469. 
 
 'Bankruptcy Law of 1898, § 67 (c), (/). American Steel & Wire Go. 
 V. Goover, 27 Okla. 131, 111 Pac. 217, 25 Am. B. R. 58, 30 L. R. A. n. s. 
 787, with note (1910). 
 
 4 Bckhardt v. Wilson, 8 D. & E. 140, 4 R. R. 618 (1799). 
 
 ' Halsey v. Norton, 45 Miss. 703, 7 Am. R. 745 (1871) ; Browning v. 
 Marvin, 22 Hun (N. Y.), 547 (1880) ; RusseU v. Cole, 167 Mass. 6; 44 
 N. E. 1057 (1896) ; Burdick's Gases on Part. 469. 
 
 8 In re Meyer, 98 Fed. 976, 39 G. G. A. 368, 3 Am. B. R. 559 (1899) ; 
 In re Polidori, 2 N. B. N. & R. 945 (1900) ; In re Blair, 99 Fed. 76, 79, 
 3 Am. B. R. 588 (1900). 
 
EIGHTS AND REMEDIES OF CREDITORS 301 
 
 partners not adjudged bankrupt shall settle the partnership busi- 
 ness as expeditiously as its nature will permit, and account for 
 the interest of the partner or partners adjudged bankrupt. 
 
 In the absence of statutory provision to the contrary, suits 
 for the enforcement of partnership liabilities may be brought 
 against all of the partners, although one or more are bankrupt, 
 unless the latter have obtained their discharge in. bankruptcy.^ 
 
 In England, both of these rules have been changed by explicit 
 provisions of the bankruptcy statute,^ the most important of 
 which is the following: "Where a bankrupt is a contractor in 
 respect of any contract jointly with any person or persons, such 
 person or persons may sue or be sued in respect of the contract 
 without the joinder of the bankrupt." The present bankruptcy 
 statute of the United States contains no such provisions. It does 
 not even give to the courts power to stay actions brought against 
 the bankrupt after the filing of a petition against him/ except 
 for the benefit of his estate and to enable the bankruptcy court 
 to control and administer such estate.^ Hence the bankruptcy 
 ■courts have power to stay proceedings in other tribunals which 
 are directed against the possession of the bankrupt's property, 
 -although instituted after the filing of the bankruptcy petition.^ 
 It has been recently decided by the Supreme Court, that the broad 
 powers, conferred in section two of the bankrupt act, authorize a 
 bankruptcy court to entertain "jurisdiction of a proceeding in 
 the nature of a plenary action brought by the trustee to deter- 
 mine controversies in relation to property held by the bankrupt, 
 or by other parties for him, and the extent and character of liens 
 
 iCoUyer on Part. (Wood's ed.) § 726; Parsons on Part. (4tli ed.) 
 § 375 and eases cited. 
 
 2 Bankruptcy Act of 1883, §§ 10, 113, 114. 
 
 3U. S. Bankruptcy Act of 1898, § 11; cf. U. S. R. S. §§ 5105, 5106, 
 for provisions of the Act of 1867 prohibiting suits against bankrupts, and 
 providing for the staying of proceedings. In re San Gabriel Sanatorium 
 Co., Ill Fed. 892, 7 Am. B. R. 206 (1901), denying an injunction to re- 
 strain the foreclosure of a mortgage on bankrupt's property in a state 
 ■court. 
 
 " U. S. Bankruptcy Act of 1898, § 2 ; In re Federal Biscuit Co. 203 
 Fed. 37, 121 C. C. A. 373 (1913) ; Glenn's Creditors' Rights & Remedies, 
 Ch. xxii. 
 
 5 In re Kleinhans, 113 Fed. 108, 7 Am. B. R. 604 (1902) ; In re Gut- 
 man, 114 Fed. 1009, 8 Am. B. R. 252 (1902). 
 
302 THE LAW OF PAKTNEESfflP 
 
 thereon", including "a suit brought against parties claiming 
 possession of goods in the bankrupt's store, as warehousemen, 
 under a nominal lease of the store from a bankrupt." ^ 
 
 5. DiscHAEGE OF A BANKRUPT PARTNER. — The English 
 statute makes it perfectly clear that the discharge of a bank- 
 rupt partner has the same effect, when the proceedings are against 
 him individually, as when they are against the firm of which he 
 is a member. In either case, he is freed from firm debts as well 
 as from his individual debts, because every particle of his prop- 
 erty — not only his separate property but his interest in the 
 firm estate — is taken from him for the benefit of all his creditors.^ 
 
 Whether the discharge of a partner, in bankruptcy proceed- 
 ings against him individually, operated to free him from firm 
 debts, was the subject upon which the decisions were at vari- 
 ance, under former bankruptcy and insolvency statutes.' The 
 present bankruptcy law of the United States appears to leave 
 no ground for doubt on the subject. It takes from the bank- 
 rupt his share in the firm property as well as his individual estate ; 
 it permits firm creditors to prove against his estate; it provides 
 that the liability of a co-debtor with the bankrupt shall not be 
 altered by the bankrupt's discharge ; and it declares that " a dis- 
 charge in bankruptcy shall release a bankrupt from all his prov- 
 able debts, except such as (1) are due as a tax levied by the United 
 States, the State, county, district, or municipality in which he 
 resides; (2) are liabilities for obtaining property by false pre- 
 tences or false representations, or for wilful and malicious in- 
 juries to the person or property of another,^ or for alimony due 
 or to become due, or for maintenance or support of wife or child, 
 or for seduction of an unmarried female, or for criminal conversa- 
 
 1 Whitney «. Wenman, 198 U. S. 539, 552-553 ; 25 Sup. Ct. 778, 49 
 L. Ed. 1167 (1905). 
 
 2 Ex parte Hammond, L. R. 16 Eq. 614, 42 L. J. Bk. 97 (1873) ; Bank- 
 ruptcy Act of 1883, § 30. The remarks in the text are made subject 
 to the statutory exceptions, such as debts due the government, etc. 
 
 3 Corey v. Perry, 67 Me. 140 (1877), Burdick's Cases on Part. 466, holds 
 that his discharge does not extend to partnership debts. Mattix v. 
 Leach, 16 Ind. App. 112, 43 N. E. 969 (1896) ; Burdick's Cases on Part. 
 468 holds that it does extend to firm debts. 
 
 ' Kavanaugh v. Mclntyre, 210 N. Y. 175, 104 N. E. 135, 31 Am. B. 
 R. 712 (1914). 
 
RIGHTS AND REMEDIES OF GKEDITORS 303 
 
 tion; (3) have not been duly scheduled in time for proof and 
 allowance, with the name of the creditor, if known to the bank- 
 rupt, unless such creditor had notice or knowledge of the pro- 
 ceedings in bankruptcy ; ^ or (4) were created by his fraud, em- 
 bezzlement, misappropriation, or defalcation, while acting as an 
 officer or in any fiduciary capacity." ^ 
 
 6. An Insolvent Firm of Solvent Partners. — In a juris- 
 diction where a partnership is treated as an entity, the firm may 
 be proceeded against as an insolvent person, although one or 
 more of its members may be able to pay his or their individual 
 debts as well as the firm debts in full. "Although the partners 
 as individuals may be perfectly solvent, the firm, as such, may be 
 insolvent." ^ 
 
 Under our present bankruptcy law, it appears to be possible 
 to have a partnership adjudicated a bankrupt, while the part- 
 ners remain solvent. This statute declares that "a partnership 
 . . . may be adjudged a bankrupt"; that a person who sufl'ers 
 or permits, "while insolvent, any creditor to obtain a preference 
 through legal proceedings, and not having at least five days be- 
 fore a sale or final disposition of any property affected by such 
 preference, vacated or discharged such preference", commits 
 an act of bankruptcy; that the word "'persons' shall include 
 . . . partnerships"; that "it shall be a complete defence to any 
 proceedings in bankruptcy ... to allege and prove that the 
 party proceeded against was not insolvent as defined in this Act 
 at the time of filing the petition against him, and if solvency at 
 such date is proved by the alleged bankrupt, the proceedings shall 
 be dismissed", and that a person is deemed insolvent, "whenever 
 
 1 Had this provision appeared in the Bankruptcy Act of 1867, prob- 
 ably it would have warranted the conclusion reached in Corey v. Perry 
 supra. Slvan v. Grollman, 113 Md. 192, 77 At. 577, Ann. Cas. 1912 A, 
 544 (1910), deals with the burden of proof of knowledge in such cases. 
 
 2 U. S. Bankruptcy Law of 1898, §§ 5 (/i), 63, 16, and 17. In re Kauf- 
 man, 136 Fed. 262 (1905). Inge v. StillweU, 88 Kan. 33, 127 Pac. 527, 
 42 L. R. A. N. s. 1093 (1912) holds that the relation of partners is not 
 fiduciary within this statute. Discussion of "fiduciary capacity" is found 
 in Am. Ag. Chem. Co. v. Berry, 110 Me. 528, 87 At. 21S, Ann. Cas. 1915 A, 
 1293, with note. 45 L. R. A. n. s. 1106 (1913) ; Crawford v. Burke, 195 
 U. S. 176, 25 Sup. Ct. 9, 49 L. Ed. 147 (1904). 
 
 ' Ransom v. Wardlaw & Co., 99 Ga. 540, 27 S. E. 158 (1896), Burdick's 
 Cases on Part. 468 n. 
 
304 THE LAW OF PARTNERSfflP 
 
 the aggregate of his property, exclusive of any property which he 
 may have conveyed, transferred, concealed or removed, or per- 
 mitted to be concealed or removed, with intent to defraud, hin- 
 der, or delay his creditors, shall not at a fair valuation be sufficient 
 in amount to pay his debts." ^ 
 
 To permit the adjudication of a firm as a bankrupt, although 
 one or more of the partners is solvent, would be to give full effect 
 to the entity conception of a firm which is contained in the statute.^ 
 
 Some courts have hesitated to press the theory to this extent, 
 holding that a fijm is not insolvent within the meaning of the 
 bankrupt act, unless the property of the firm, together with that 
 of all the partners applicable to partnership debts, is insufficient 
 to pay such debts.^ These tribunals have preferred the Massa- 
 chusetts view, that a court of insolvency acquires jurisdiction to 
 settle the affairs of a partnership, under the insolvency law of 
 that State, "only when two or more persons who are partners be- 
 come insolvent, that is, when the partnership is insolvent through 
 the insolvency of all the members of the firm." * Such is the view 
 of the Federal Supreme Court.^ 
 
 § 4. (B.) Order of Proofs and Marshalling. 
 
 When a court of bankruptcy or insolvency is administering 
 the firm estate as well as the separate estates of the partners, 
 
 1 U. S. Bankruptcy Law of 1898, §§ 5 (a), 3 (a), (c), 1 (a), (15), (19). 
 
 2 In re Meyer, 98 Fed. 976, 39 C. C. A. 368, 3 Am. B. R. 559 (1899) ; 
 In re Stein & Co., 127 Fed. 547. 62 C. C. A. 272, 11 Am. B. R. 536 (1904). 
 
 ' In re Blair, 99 Fed. 76, 3 Am. B. R. 588 (1900) ; Davis t>. Stevens, 
 104 Fed. 235, 4 Am. B. R. 763 (1900) ; Vacoaro v. Security Bank, 103 Fed. 
 436, 43 C. C. A. 279, 4 Am. B. R. 474 (1900). 
 
 " Russell V. Cole, 167 Mass. 6, 44 N. E. 1057 (1896) ; Burdick's Cases 
 on Part. 469, construing § 120, eh. 157, Gen. Laws. 
 
 5 Francis v. McNeal, 228 U. S. 695, 33 Sup. Ct. 701, 57 L. Ed. 1029 
 (1913), Aff'g 186 Fed. 481, 108 C. C. A. 459, 25 Am. B. R.555 (1911) : 
 "Partnership debts are debts of the members of the firm, and the indi- 
 vidual liability of the members is not collateral like that of a surety, but 
 primary and direct, whatever priorities there may be in the marshalling 
 of assets. The nature of the liability is determined by the common law, 
 not by the possible intervention of the Bankruptcy Act. Therefore 
 ordinarily it would be impossible that a firm should be insolvent while 
 the members of it remained able to pay its debts with money available 
 for that end. A judgment could be got and the partnership debt satisfied 
 •on execution out of the individual estates." 
 
EIGHTS AND REMEDIES OF CREDITORS 305 
 
 important and sometimes diflBcult questions arise concerning 
 the order in which claimants are to share the estates, and the 
 manner in which the diEFerent funds are to be marshalled. 
 
 1. Creditors Holding Joint and Several Obligations. — 
 If a creditor has obtained the obligation of the firm and the 
 several obligations of the partners for the same debt, he ought 
 to "have the benefit of the caution he has used", and, upon 
 the bankruptcy of the partners, to be permitted to prove against 
 both the firm and the separate estates.^ The English bankruptcy 
 courts reached a different conclusion, however, and, in the case 
 last cited. Lord Eldon was forced to admit that it was settled, 
 that "the advantage of a joint and separate creditor is no more 
 than that he can elect whether he will be in the first instance a 
 joint or a separate creditor; but if he has once elected, his fate 
 must be the same as that of all other joint creditors." 
 
 The reasons assigned by the English courts for adopting this 
 rule were the following, in brief : That the obligors in a joint and 
 several bond cannot be sued at one and the same time both jointly 
 and severally, but the obligee must make his election; hence, 
 the obligee should not be allowed to prove in bankruptcy against 
 both estates at once.^ That, although at law, if the obligee sued 
 the obligors jointly, he might levy his execution upon both the 
 joint and the several property of the partners, yet to permit the 
 obligee to take dividends on the same debt from both estates in 
 banlcruptcy would be to give him a preference over other joint 
 creditors in the firm estate, and a preference over the other sepa- 
 rate creditors in the separate estate, which, it was thought, would 
 violate the fundamental principle of bankruptcy law, "that all 
 persons should have an equal satisfaction, and not one more 
 than another." ^ 
 
 (a) The Present Rule. — In England, the foregoing rule has 
 been so modified by statute as to permit a creditor, holding a 
 joint and several obligation, to prove against both estates, pro- 
 viding that the joint and the separate liabilities arise out of 
 
 1 Lord Eldon, in Ex parte Bevan, 10 Ves. 107 (1904). 
 
 2 Ex parte Rowlandson, 3 P. W. 405 (1735). 
 
 ' Ex parte Bond and Hill, 1 Atk. 98 (1743). These eases also settled 
 the law, that the creditor was entitled to a reasonable time to inquire into 
 the state of the funds, before making a final election. 
 
306 THE LAW OF PARTNEESHIP 
 
 "distinct contracts." ' While the statute does not abrogate the 
 old rule entirely, yet as " joint and several liabilities arising other- 
 wise than by distinct contracts are, comparatively speaking, few 
 in number", the remnant of the old rule is "practically of little 
 consequence to partners or their creditors." ^ 
 
 The earlier English rule never found favor in this country, 
 and has been expressly repudiated by Federal and State courts.* 
 In a leading case upon this topic, the learned judge declared : 
 "In this country . . . existing contracts have been made under, 
 and with reference to, the rule of law which gives to a party hold- 
 ing two valid obligations the benefit of both. This right, founded 
 both in law and justice, I do not think myself bound or authorized 
 to set aside on account of an arbitrary rule, justly reprobated 
 by the most eminent judges and jurists in England, and never 
 recognized in this country." ^ While the United States Bank- 
 ruptcy Law of 1898 does not expressly grant the right of double 
 proof to a creditor holding the joint and several obligations of 
 partners, it contains no provision denying this right. On the 
 other hand, many of its provisions bearing on this subject are 
 similar to those contained in the Act of 1867 ; and that Act was 
 construed as sanctioning the right of double proof. 
 
 {b) A Peculiar Doctrine in Kentucky. — On a previous page * 
 the fact has been noted, that the equity rule in Kentucky for 
 distributing the partnership and the separate estates to the 
 two classes of creditors is a peculiar one. That rule is applied 
 even against a creditor who has secured the joint and several 
 obligations of the partners. He is not allowed to reap the benefit 
 of his diligence. He must elect to proceed in the first instance 
 
 1 Bankruptcy Act of 1883, Sehed. 2, § 18, re-enacting § 37 of Act of 
 1869; c/. Ex parte Honey, L. R. 7 Ch. 178 (1871), a joint and several 
 note; Ex parte Stone, L. R. 8 Ch. 914 (1873), joint and several bond. 
 
 2 Lindley on Part. (7th ed.) 822. See In re Kent County Gas L. & 
 C. Co. Limited, (1913) Ch. 92, 82 L. J. Ch. 28, creditor forced to elect 
 and not allowed double proof. 
 
 " Emery v. The Canal Nat. Bank, 3 CUff. (U. S. Cir. Ct.) 507, 7 N. B. 
 R. 217, 5 L. T. B. 419 (1872) ; Ex parte Nason, 70 Me. 363 (1880) ; Roger 
 Williams Nat. Bank v. HaU, 160 Mass. 117, 35 N. E. 666, (1893); Bur- 
 diek's Cases on Part. 473. 
 
 « In re Farnum, 6 Bos. L. R. 21 (1843). 
 
 ^ Chap. V. § 3, 1, (c), supra. 
 
EIGHTS AND REMEDIES OF CREDITORS 307 
 
 either against the firm estate or the several estates. Having so 
 elected, and taken his dividend from the chosen estate, he cannot 
 share in the other estate until the other creditors of such estate 
 have received a dividend equal to that which has been paid to him.^ 
 
 The foregoing doctrine has been adopted in Georgia, by the 
 following code provision : " When a partnership is insolvent, 
 and one of the partners is deceased insolvent, the creditors of 
 the partnership, in equal degree with individual creditors, can- 
 not claim to share in the individual assets of the deceased partner 
 until the individual creditors shall have first received upon their 
 debts such a percentage from the individual assets as such part- 
 nership creditors have received from the partnership assets." ^ 
 
 (c) Joint and Several Liability in Tort. — We have seen that 
 the liability of partners for torts, committed by the partnership, 
 or its authorized agents, is joint and several. Suppose the in- 
 jured party brings a joint action and recovers a judgment against 
 all the members of the firm, as joint tortfeasors; can he there- 
 after prove his claim against the separate estate of one of the 
 partners ? It has been held that he can ; that a court could look 
 into the record so as to see the relations of the judgment debtors, 
 and that upon discovering that the relations were those of per- 
 sons jointly and severally liable, the creditor should be in no 
 worse position after the claim has been put into judgment than 
 before.' In such cases of partnership torts the creditor has the 
 right of double proof against the firm estate and the separate 
 estates of the partners.* 
 
 2. A Partner as Creditor of the Firm. — "In keeping 
 partnership accounts the firm is made debtor to each partner 
 for what he brings into the common stock." ^ The English 
 
 1 HiU V. CornwaU, 95 Ky. 512, 26 S. W. 540 (1894) ; Burdiek's Cases 
 on Part. 474. 
 
 2 Johnson v. Gordon, 102 Ga. 350, 30 S. E. 507 (1897), applying 
 § 2660, quoted above. 
 
 3 Matter of Blackford, 35 App. Div. 330, 54 N. Y. Supp. 972 (1898). 
 The reasoning of Wallace, J., in Re Herrick, 13 N. B. R. 312 ; Fed. Cases, 
 No. 6420 (1876), seems to accord. 
 
 * In re Peck, 206 N. Y. 55, 99 N. S. 258, 41 L. R. A. n. s. 1223, Ann. 
 Cas. 1914 A, 798 (1912). 
 
 ■^ Bank of Buffalo v. Thompson, 121 N. Y. 280, 24 N. E. 473, (1890) ; 
 Burdiek's Cases on Part. 286, 288, quoting Lindley on Part. (5th ed.) 110. 
 
308 THE LAW OF PARTNERSHIP 
 
 common law, as we have seen, does not adopt this view of the 
 relations subsisting between a firm and its members. It is true 
 that Lord Hardwicke treated a bankrupt firm and its members 
 as distinct persons, and allowed the individual estate of a creditor 
 partner to prove against the firm estate, and the firm to prove 
 against a debtor partner.^ That practice was changed by his 
 successor, and for more than a century the. rule which has pre- 
 vailed in bankruptcy cases in England has been, that a partner 
 "shall not prove in competition with the creditors of the firm." 
 The reason assigned for the rule is that such creditors being "in 
 fact his own creditors", he "shall not take part of the fund to 
 the prejudice of those who are not only creditors of the partner- 
 ship but of himself." ^ 
 
 (a) Rule of United States BanJcruptcy Law of 1898. A subsec- 
 tion of this statute appears to have restored Lord Hardwicke's 
 practice, and to " permit the proof of the claim of the partnership 
 estate against the individual estates, and vice versa." ^ But it has 
 been construed so as to prevent a partner from coming into com- 
 petition with firm creditors, in the firm estate, and the partnership 
 from sharing in the individual estate, until individual creditors 
 are paid in full.'* The subsection "merely abolishes certain tech- 
 nical rules of procedure to secure equitable distribution of such 
 estates." 
 
 (6) Exceptions to the Old Rule. — First. After stating the 
 English rule, in the language which has been quoted from Ex 
 parte Sillitoe,^ Lord Eldon said: "To that rule there is an ex- 
 ception, manifestly founded in justice, and that is, when a part- 
 ner becomes a creditor in respect of the fraudulent conversion of 
 his separate estate to the use of the partnership, an exception 
 established in Ex parte Kendal ^ and other cases." 
 
 1 Lord Blackburn in Read v. Bailey, 3 App. Cas. 94, 101, 47 L. J. Ch. 
 161 (1877), referring to Ex parte Hunter, 1 Atk. 357 (1742). 
 
 ' Ex parte SiUitoe, 1 Gl. & J. 374 (1824) ; Gibbs v. Humphrey, 91 
 Wis. Ill, 64 N. W. 760 (1895) ; Burdiok's Cases on Part. 475. 
 
 " § 5 (g), of. § 56 (m), also § 5 (o), § 3 (d), and § 1 (19). 
 
 * In re Denning, 114 Fed. 219, 8 Am. B. R. 133 (1902) In re Telfer, 184 
 Fed. 224, 106 C. C. A. 366, 25 Am. B. R. 148 (1910); In're Effinger, 
 184 Fed. 728, 25 Am. B. R. 930 (1911). ' 1 Gl. & J. 374 (1824). 
 
 " 1 Rose, 71. This reference is certainly erroneous. Probably Lord 
 Eldon referred to Ex parte Lodge and Feudal, 1 Ves. Jr. 166 (1790). 
 
EIGHTS AND KEMEDIES OF CREDITORS 309 
 
 The question, what amounts to a fraudulent conversion of a 
 partner's property by the firm, so as to give to the estate of the 
 defrauded partner this exceptional right to prove against the 
 firm estate, has not been an easy one for the courts. Lord Eldon 
 intimated that the fraud must be such as would warrant the rep- 
 resentation that it had been stolen.^ Certainly the misconduct 
 must be something more than a breach of the duty which each 
 partner owes to his copartners, of exercising the utmost good 
 faith in partnership dealings; more even than a deliberate vio- 
 lation of the partnership articles ; ^ it must amount, at least, to a 
 fraudulent conversion of the separate property of the partner 
 to the use of the firm, without such partner's consent or subse- 
 quent ratification.' But it seems to be settled that it need not 
 amount to more than this. 
 
 Accordingly, if the partner's property is used for the firm with- 
 out his knowledge or consent, and if that use is concealed from 
 him by means of fictitious entries in the partnership books, his 
 estate may prove therefor against the firm estate.* 
 
 (c) Second Exception — Trade Debts. — Another exception has 
 long been recognized in England, under which the estate of one 
 or more members of a firm may prove against the firm estate 
 for a trade debt. In order to bring a case within this excep- 
 tion, it must appear that the creditor partner or partners were 
 carrying on a business wholly distinct from that of the firm, 
 and that the debt was contracted for articles furnished to the 
 firm by the creditor partner or partners in the ordinary course 
 of dealings between the two trades.^ If all that can be shown 
 is that the creditor estate has loaned money to the firm, the gen- 
 eral rule applies, and cuts the estate off from the benefit of proof. ^ 
 
 See Ms reference to this as the leading case in point, in Ex parte Harris, 
 1 Rose, 437, 438. 
 
 1 Ex parte Yonge, 3 Ves. & B. 31 (1814), adopted in Lindley on Part. 
 (6th ed.) 752, (7th ed.) 807. 
 
 2 Blackburn, L., in Read v. Bailey, 3 App. Cas. 94, 103 (1877), ex- 
 plaining Lodge and Fendal, 1 Ves. Jr. 166. 
 
 3 Pollock's Digest of Part. (6th ed.) 154. 
 
 ■* Haines & Co.'s Estate; Grove's Appeal, 176 Pa. St. 354, 35 At. 237 
 (1896) ; Burdiok's Cases on Part. 482. 
 
 5 Ex parte Sillitoe, 1 Gl. & J. 374 (1824). 
 
 6 Ex parte Hargreaves, 1 Cox, 440, 1 R. R. 74 (1788) ; Rodgers v. Me- 
 
310 THE LAW OF PARTNERSHIP 
 
 This exception was favored by Lord Eldon because of the 
 compHcated nature of modern commercial relations which had 
 compelled the courts to " say that a man may be half a dozen 
 men for the purpose of binding himself and benefiting others, 
 and for that purpose may put his name upon bills in different 
 characters, and may be a member of many partnership houses." ^ 
 Lord Brougham supported the exception on the ground that the 
 dealers who supplied the business of the creditor partner with 
 goods which were sold by him to the firm might fairly be consid- 
 ered as creditors of such firm, "inasmuch as the" creditor partner's 
 "house was no more than a sort of funnel for the transmission of 
 the goods ; and there would seem no injustice, therefore, in allow- 
 ing them to go at once 'per saltum and prove against the parties 
 to whom the goods were really supplied." ^ 
 
 (d) Exception Limited in this Country. — Our courts have 
 refused to accept Lord Brougham's view. They permit one 
 firm to prove against another, provided all of the members of 
 the proving firm are not included in the other ; ^ but they refuse 
 to allow proof by the estate of a partner, or of a firm all of whose 
 members are partners in the debtor firm, although the claim has 
 arisen between distinct trades.* The reason given for this hold- 
 ing is, that, as the partner or the smaller firm could not, if sol- 
 vent, "claim anything against the copartnership assets until its 
 creditors, who are also his creditors, are fully paid, his creditors 
 upon his insolvency can take no greater rights than he had." 
 
 (e) Third Exception: Proof by a Discharged Partner. — As 
 the rule which prohibits a partner from proving against the firm 
 estate is founded upon the principle that he ought not to be a 
 
 randa, 7 Oh. St. 179 (1857) ; Burdick's Cases on Part. 424, 432; Gibbs v. 
 Humphrey, 91 Wis. Ill, 64 N. W. 750 (1895) ; Burdick's Cases on Part. 
 475. 
 
 ' Ex parte SiUitoe, 1 Gl. & J. 374 (1824). 
 
 2 Ex parte Cook, Mon. 228 (1831). 
 
 ' In re Buokhause, 10 N. B. R. 206; 2 Low. (U. S.) 331 (1874) ; In re 
 Stevens, 104 Fed. 323, 5 Am. B. R. 9 (1900). 
 
 ' In re Savage, 16 N. B. R. 368, 370 (1877). In re Rieser, 19 Hun, 
 202 (1879), affirmed on the opinion of the court below, 81 N. Y. 629 (1880). 
 In re Lane, 10 N. B. R. 135, 2 Low. (U. S.) 333 (1874) ; Somerset Potters 
 Works V. Minot, 64 Mass. (10 Cush.) 592, 598 (1852) ; Uniform Partner- 
 ship Act, § 40, {h). 
 
EIGHTS AND REMEDIES OF CREDITOKS 311 
 
 competitor with his own creditors, as soon as he ceases to be 
 liable to firm creditors, the reason for the rule ceases. Hence, a 
 partner who has been discharged in bankruptcy, or otherwise, 
 from firm debts, is allowed to prove any valid claim which he 
 thereafter holds against the firm estate.^ The same result fql- 
 lows, when the claims of partnership creditors have become barred 
 by the statute of limitations as against the creditor partner's 
 estate.^ 
 
 (/) Proof by a Retired Partner. — When a partner sells his 
 interest in the partnership to a copartner, who agrees to pay 
 the firm debts, the retiring partner, as we have seen in a former 
 connection,* is generally treated as a surety, for the purchasing 
 and continuing partner. If the latter thereafter becomes bank- 
 rupt, and the retiring partner is compelled to pay a firm debt, he 
 is entitled to prove the amount so paid as a claim against the bank- 
 rupt's estate, making such proof in the name of the creditor; 
 or if the creditor has proved the debt, the retiring partner upon 
 paying the debt is entitled to be subrogated to the creditor's 
 claim to dividends.'* 
 
 (g) Proof by Purchaser of Creditor Partner's 'Claim. — In case 
 the creditor partner transfers his claim against the firm to a 
 purchaser for value prior to the institution of bankruptcy pro- 
 ceedings, the transferee can prove it against the firm estate and 
 share with other firm creditors ; ® but if the transferree is not a 
 pin-chaser for value, he can "occupy no higher ground in the dis- 
 tribution than" his transferrer "would have occupied", and his 
 proof will be postponed to the claims of the firm creditors.^ 
 
 {h) A Partner as a Surety for the Firm. — It sometimes hap- 
 
 1 Ex parte AtMns, 1 Buck, 479 (1820). 
 
 2 In re Hepburn, Ex parte Smith, 14 Q. B. D. 394 (1884). 
 5 Supra, Chap. III. § 6 (C). 
 
 4 In re Dillon, 100 Fed. 627, 4 Am. B. R. 63 (1900). But a retiring 
 partner, who has received notes for the price of his interest, cannot prove 
 them against the estate of the purchasing partner, since to permit such 
 proof would enable him to compete with his own creditors; In re Den- 
 ning, 114 Fed. 219, 8 Am. B. R. 133 (1902). 
 
 5 Miller's River Nat. Bank v. Jefferson, 138 Mass. Ill (1884) ; Bur- 
 dick's Cases on Part. 471. 
 
 " McCruden v. Jonas, Yetta Greenboum's Appeal, 173 Pa. St. 507, 34 
 At. 224 (1896) ; Burdick's Cases on Part. 478. 
 
312 THE LAW OF PARTNERSHIP 
 
 pens that a firm creditor receives individual property of a partner 
 as collateral security. If he sells this and applies the proceeds 
 to the satisfaction of the firm debt, the partner is entitled to 
 reimbursement from the firm. But if the partner has not been 
 reimbursed before bankruptcy proceedings are commenced, the 
 general rule which we have been considering prohibits his estate 
 from proving this claim against the firm estate. In case the 
 creditor applies the security to the payment of the debt after 
 bankruptcy, however, the separate estate is not without remedy. 
 It cannot make formal proof against the firm estate, it is true, for 
 to permit that would be to violate the bankruptcy rule of distri- 
 bution ; but. a bankruptcy court, in the exercise of its equity 
 powers, will order the separate estate to be reimbursed to the 
 amount which such a proof would have produced. 
 
 In support of this practice, it is said, the joint creditors could 
 not have been heard to complain if the second creditor had seen 
 fit to surrender the collaterals, and to prove his debt against the 
 partnership estate. As he did not see fit to exercise this option, 
 but satisfied his claim out of the separate property of the partner, 
 the separate creditors of that partner should be subrogated to 
 the rights of the secured firm creditor against the firm estate.^ 
 
 By the present bankruptcy statute of the United States, "the 
 technical difficulties in the way of obtaining relief" by a proof 
 of the creditor partner's claim against the partnership estate 
 appear to have been removed, and resort to " the benign vigor of 
 the rules of equity" is no longer necessary in order to evade the 
 general bankruptcy rule of distribution. The separate estate may 
 now accomplish directly, whenever it is a creditor of the firm es- 
 tate, what could be gained formerly in but a limited class of cases 
 and then only by indirection and through equitable circumlocu- 
 tion. 
 
 3. The Firm as a Creditor of a Partner. — Our Fed- 
 eral bankruptcy statute also recognizes the right of the firm 
 estate to prove against the individual estates of the partners.^ 
 This is not permitted in England, nor has it been allowed under 
 other statutes in this country, except in a few cases soon to be 
 
 1 Inre Foot, 12 N. B. R. 337 (1875) ; Burdick's Cases on Part. 480. 
 
 2 U. S. Bankruptcy Law of 1898, § 5 (g). See In re Shapiro, 106 Fed. 
 495, 5 Am. B. R. 839 (1901). 
 
EIGHTS AND REMEDIES OF CREDITORS 313 
 
 mentioned. As English law does not recognize a firm as an 
 entity, but as an association of individuals, to say that a part- 
 nership may prove against its members is to say that a man may 
 prove with others against himself.^ 
 
 (a) First Exception: Fraudulent Conversion by a Partner. — 
 This is but the converse of an exception, which we have found 
 to exist in favor of proof by a partner. Perhaps the best state- 
 ment of the principle upon which it rests is found in the following 
 extract from an opinion of Lord Chancellor Cairns : ^ "So long as 
 you have distinct estates, so long as you keep distinct the joint 
 estate and the separate estate, if you allow the firm, the partner- 
 ship concern, to make contracts with its separate members, and 
 to stand upon those contracts as affording a ground of proof as 
 against the separate creditors, you run a risk, to say the least — 
 perhaps I might say you have the certainty — that contracts 
 will be made between the firm and the individual members which 
 in effect will defeat the rights of the creditors of the individual 
 members. But where you have a conversion of the property of 
 the firm to the purposes of the individual members, not by way 
 of contract or agreement with the firm, not within the knowledge 
 or the cognizance of the firm, but by a fraud of an individual 
 partner, to which the firm is no assenting party, of which its other 
 members are not cognizant and cannot be cognizant, there the 
 reason for the rule ceases, and the firm whose assets have thus 
 been fraudulently abstracted ought not to suffer, and ought not 
 to be deprived of the right to proceed against the separate estate 
 in competition with any other claimants. Whether the separate 
 estate has in the result been increased or not, — whether at the 
 time of the proof it is larger than it otherwise would have been or 
 not, — is a matter which does not concern the application of the 
 rule, and it is sufficient that at one time the separate estate was 
 increased when the property was thus fraudulently converted and 
 taken for the purpose of one partner." 
 
 (6) Second Exception : Trade Debts. — This exception, like 
 the corresponding exception in favor of a creditor partner, is 
 based upon the mercantile view of the relation subsisting be- 
 tween a partnership and its members. According to that view, 
 
 1 Lindley on Part. (6tli ed.) 756, (rib. ed.) 794. 
 
 2 Read v. Bailey, 3 App. Cas. 94 (1877). 
 
314 THE LAW OF PARTNERSHIP 
 
 the partnership may be a creditor of a partner, and a partner 
 may be a creditor of the partnership. In establishing the pres- 
 ent exception, English judges have acted in a characteristic 
 manner. They have adopted mercantile usage in part, and 
 have rejected it in part. Only when the firm b&omes a creditor 
 of a partner, or of a distinct firm composed of some of its mem- 
 bers, as the result of business dealings between the principal firm 
 and the partner or smaller firm carrying on a distinct trade, is 
 the trustee of the principal firm estate allowed to prove against the 
 estate of the partner or of the smaller firm.^ 
 
 This exception has not been recognized by the courts in this 
 country.^ 
 
 4. A Partner as a Creditor of a Copartner. — Neither 
 a solvent partner nor the estate of a bankrupt partner is allowed 
 to prove against a copartner's estate in competition with the 
 firm creditors. This is entirely in accordance with the principle 
 underlying the general rule which, we have been considering. 
 If he has paid all the partnership debts,' or if they have been 
 barred by the statute of limitations, or in any other way have 
 ceased to exist as against him,* he may prove against his debtor 
 partner's estate. So he may if that estate is insufficient to pay 
 the other separate creditors in full; for in that case there is no 
 possibility of his claim competing with the claims of the joint 
 creditors.^ 
 
 As a creditor of his bankrupt copartner he has the same rights 
 against the debtor's individual property as are possessed by other 
 separate creditors, while with regard to the bankrupt's share in 
 the firm property he may have an advantage over them. For 
 example, if a balance is due to him from the firm, after the pay- 
 ment of firm creditors and the adjustment of partnership ac- 
 counts, he has a lien therefor upon the bankrupt's share of the 
 
 » Ex parte St. Barbe, 11 Ves. 413 (1805) ; Ex parte Castell, 2 Gl. & J. 
 124 (1826). 
 
 2 Cases cited supra, p. 311; MeCruden v. Jonas, Burdick's Cases on 
 Part. 478, 173 Pa. 507, 34 At. 224 (1893). 
 
 > In re DeU, 5 Sawyer (U. S. Dist. Ct.), 344 (1878). The mere fact 
 that he has indemnified the joint estate will not entitle him to prove 
 againt the separate estate. Ex parte Moore, 2 GI. & J. 166 (1826). 
 
 * Ex parte Grazebrook, 2 Dea. & Ch. 186 (1832). 
 
 ' Ex parte Topping, In re Levey, 4 DeG. J. & S. 551 (1865). 
 
RIGHTS AND REMEDIES OP CREDITORS 315 
 
 Temaining partnership funds. All that the other separate cred- 
 itors of the bankrupt can claim, as his share, is " that part of the 
 partnership effects which shall remain after the demands of his 
 partner upon the partnership are satisfied." If this share is in- 
 sufficient to pay the balance due the creditor partner, he is en- 
 titled to prove for such deficiency pari passu with the other 
 separate creditors of the bankrupt.^ 
 
 (a) Assignee of a Creditor Partner. — A bona fide transferee 
 of a creditor partner's claim against a copartner is entitled to 
 prove against the debtor partner's estate, whether firm creditors 
 Jbave been paid or not. They are not his creditors, and therefore 
 the principle which would have postponed proof by his assignor 
 ■does not affect him. If the transferee is not a bona fide purchaser, 
 lie will be subject to the disabilities of his transferrer, unless he 
 can show that he has been substituted by a valid novation as a 
 creditor of the now bankrupt partner.^ 
 
 But even in such a case, if the claim in the form of a negotiable 
 note from the debtor partner to the assignor be transferred while 
 the partners are solvent, and thus free from equities at that time, 
 the transferee will not be affected by subsequent dealings and 
 complications between the partners. On the other hand, he may 
 prove his claim even in competition with joint creditors.^ 
 
 5. Separate Estate of a Partner in an Illegal Part- 
 nership. — Even when the partnership is illegal, it is perfectly 
 lawful for one of the partners to assign his interest in the firm 
 property to his copartner, to be applied by the latter for the 
 benefit of firm creditors. If the assigning partner thereafter 
 becomes bankrupt, his separate creditors have no right to com- 
 plain of the assignment. The property acquired by the illegal 
 partnership was not the several property of the partners, simply 
 because the partnership was illegal; nor had the "individual 
 creditors of one of the partners a prior right to satisfaction out of 
 such assets over the creditors of the partnership." * 
 
 1 Ex parte King, 17 Ves. 115 (1810). Cf. L. of Md. 1916, Ch. 175, § 26, 
 ■defining the nature of a partner's share. 
 
 2 Ex parte Todd, DeG. 87 (1844); Parsons v. Tillman, 95 Ind. 452 (1884). 
 5 First Nat. Bank of Champlain v. Wood, 128 N. Y. 35, 27 N. E. 1020 
 
 <1891). 
 
 « Patty-Joiner Co. v. City Bank, 15 Tex. Civ. App. 475, 41 S. W. 173 
 (1897) ; Burdick's Cases on Part. 484. 
 
316 THE LAW OF PARTNERSHIP 
 
 § 5. Death of a Partner. 
 
 The effect of a partner's death upon the title to firm property, 
 and the liabilities of the slirviving partners to firm creditors, 
 have been dealt with in a former chapter. It is the purpose 
 of the present section to state the rights and remedies of firm 
 creditors against the deceased partner's estate. 
 
 1. The Rule in Great Britain. — This is stated in the 
 Partnership Act^ as follows: "Every partner in a firm is 
 liable jointly with the other partners, and in Scotland sev- 
 erally also, for all debts and obligations of the firm incurred 
 while he is a partner; and after his death his estate is also 
 severally liable in a due course of administration for such debts 
 and obligatiras, so far as they remain unsatisfied, but subject 
 in England or Ireland to the prior payment of his separate 
 debts." 
 
 Prior to the decision of Kendall v. Hamilton,'^ there was abun- 
 dant authority in England for the statement that, "in the con- 
 sideration of a court of equity, a partnership debt is several as 
 well as joint." ^ The House of Lords decided, however, in Ken- 
 dall V. Hamilton that this was an inaccurate statement ; that the 
 liability of partners for firm debts is joint in equity as well as in 
 law ; but that as in equity there is no survivorship of property so 
 there is in equity no survivorship of liability. It is true that, 
 after the death of a partner, firm creditors can sue only the sur- 
 vivors at law; "but that is only because the executors of a de- 
 ceased partner never could be sued at law." * The estate of the 
 deceased partner remains liable to firm creditors in equity, and 
 is entitled to receive from the survivors his share of the firm 
 estate. 
 
 Nor does it matter, in England, "in what order the partner- 
 ship creditor pursues his concurrent remedies, provided the two fol- 
 lowing conditions are substantially satisfied : first,^ he must not 
 
 1 Partnership Act of 1890, § 9. 
 
 2 4 App. Cas. 504, 48 L. J. C. P. 705 (1879). 
 
 3 Wilkinson v. Henderson, 1 M. & K. 682, 2 L. J. Ch. 191 (1833) ; 
 Pollock's Digest of Part. (5th ed.) 40. 
 
 ^ Mellish, L. J., in Beresford v. Browning, 1 Ch. D. 30, 45 L. J. Ch; 
 3'i (1875). 
 
 6 Gray v. Chiswell, 9 Ves. 118 (1802). 
 
EIGHTS AND REMEDIES OF CREDITORS 317 
 
 compete with the deceased partner's separate creditors ; secondly,^ 
 the surviving partner must be before the court." ^ 
 
 2. Conflicting Rules in this Country. — The English 
 rule prevails in many of our States, where it is held that " Every 
 partnership debt being joint and several, it necessarily follows that 
 resort may be had, in the first instance, for the debt, to the sur- 
 viving partners, or to the assets of the deceased." ^ 
 
 On the other hand, the weight of authority in this country, 
 in the absence of statutory provisions on the subject, favors 
 the rule that upon the death of a partner, firm creditors cannot 
 proceed in equity against his estate "without showing, either 
 that the surviving partners have been proceeded against to exe- 
 cution at law, or that they are insolvent." * In Voorhis v. Child's 
 Executor this rule is supported on the following grounds: "The 
 surviving partners succeed primarily to all the rights and interests 
 of the partnership. They have the entire control of the partner- 
 ship property, and the sole right to collect the partnership dues. 
 The assets of the firm are of course to be regarded as the primary 
 fund for the payment of the partnership debts, and it would seem 
 equitable, at least, that the parties having the exclusive possession 
 of this fund should be first called upon. The answer given to 
 
 1 Wilkinson v. Henderson, 1 M. & K. 582 (1833); In re Hodgson, 
 31 Ch. D. 177, 55 L. J. Cli. 241 (1885). 
 
 2 Pollock's Dig. of Part. (5tli ed.) 40; Lindley on Part. (7th ed.) 659- 
 665. 
 
 ' Doggett V. DiU, 108 lU. 560, 48 Am. R. 565 (1884) ; Burdiok's Cases 
 on Part. 495, 496, and cases cited in the opinion; Newman v. Gates, 165 
 Ind. 171, 72 N. E. 638 (1904). "While rights of action for habilities due 
 to a partnership survive, and vest exclusively in the surviving members 
 of the firm, the liabilities of the partnership, on the death of a partner, 
 survive not only against the surviving partners, but also against the estate 
 of the deceased partner." But Indiana does not permit a firm creditor 
 to compete with the separate creditors of the deceased partner in his 
 individual estate. Warren v. Farmer, 100 Ind. 593 (1884) ; Greene v. 
 Butterworth, 45 N. J. Eq. 738, 17 At. 949 (1889) ; Ely Walker Dry Goods 
 Co. V. Blake, — Okla. — , 158 Pac. 381 (1916), holding that firm creditors 
 may join the personal representative of the deceased partner with the 
 survivor, without having exhausted their remedy against the latter. 
 
 ■> Voorhis v. Child's Executor, 17 N. Y. 354 (1858) ; Burdick's Cases 
 on Part. 490, 491 ; Pope i-. Cole, 55 N. Y. 124, 14 Am. R. 198 (1873) ; 
 Alsop V. Mather, 8 Conn. 584, 21 Am. Dec. 703 (1831) ; PuUen v. Whit- 
 field, 55 Ga. 174 (1875) ; Sherman v. Kreul, 42 Wis. 33 (1877). 
 
318 THE LAW OF PARTNEKSHIP 
 
 this by the English courts, that the representatives of the deceased' 
 partner have their remedy over, seems hardly satisfactory. The 
 presumption is, that the primary fund is suflScient to meet the 
 demands upon it. Why, then, permit in equity a resort to an- 
 other fund, and thus give rise to a second action for its reimburse- 
 ment. Besides, these English decisions permitting the creditor 
 to proceed in the first instance in equity against the estate of the 
 deceased partner are in conflict with the established doctrine, 
 that parties must first exhaust their legal remedies before resort- 
 ing to courts of equity." 
 
 (a) No Joint Estate or Living Solvent Partner. — In some 
 American jurisdictions firm creditors are not allowed to com- 
 pete with the separate creditors of a deceased partner, even 
 though there is no joint estate and no living solvent partner.^ 
 
 (6) Statutory Provisions. — In Rhode Island it is declared by 
 statute that "unless otherwise provided in the contract, upon 
 the death of any joint contractor, his representatives may be 
 charged in the same manner as such representatives might have 
 been charged if such contract had been several instead of joint : 
 provided that the plaintiEf shall first exhaust the partnership 
 estate if such contract is a partnership contract." ^ 
 
 In a number of States the liability of partners for firm debts 
 has been changed by legislation from joint to joint and several.' 
 The language of the New York statute, referred to in the last 
 note, is as follows: "Every general partner is liable to third 
 
 1 Stewart's Case, 4 Abb. Pr. (N. Y.) 408 (1857) ; Burdick's Cases on 
 Part. 493; Warren v. Fanner, 100 Ind. 593 (1884). 
 
 The EngUsh courts recognize an exception in sucb cases ; but if tbe sepa^ 
 rate creditors show that there was joint estate at one time available to firm 
 creditors, this wiU bar the latter from competing with the former, although 
 before the separate estate is brought into a court of equity for distribu- 
 tion, the joint estate has been exhausted. Lodge v. Prichard, 1 DeG. J. 
 & S. 610 (1863). In the Matter of Striker, 24 Misc. (N. Y.) 422 (1898), 
 firm creditors, after exhausting firm assets, were permitted to share pari 
 passu with those who became separate creditors of the deceased, after the 
 firm estate was turned over to creditors. 
 
 2 Island Savings Bank v. Galvin, 19 R. I. 569, 36 At. 1125 (1896) r 
 Burdick's Cases on Part. 500. 
 
 3 Stimson's Am. St. Law, § 4113; Ch. 420, Laws of N. Y. 1897, § 6, 
 Consolidated Laws, Ch. 39, §6; Liability of Partners, 11 Col. L. Rev. 101 
 (1911). 
 
RIGHTS AND REMEDIES OF CREDITORS 319 
 
 persons for all the obligations of the partnership, jointly and 
 severally with his general copartners." This appears to abro- 
 gate the rule laid down in Voorhis v. Child's Executors,^ and to 
 give to partnership creditors the right to proceed against a de- 
 ceased partner's estate in the first instance, and to share pari 
 passu with his separate creditors.^ 
 
 A different view of this statutory provision has been taken 
 by the New York courts, which hold that it did not change the 
 rule that general partners are liable jointly at lav/.* In several 
 States, similar statutory provisions have been interpreted as 
 giving to firm creditors the right to proceed against the partners 
 severally.* In others they have been interpreted as not author- 
 izing a proceeding against an individual partner, unless the 
 partnership assets are insufficient to pay firm debts.^ 
 
 > 17 N. Y. 354 (1858) ; Burdick's Cases on Part. 490. 
 
 2 Matter of Gray, 111 N. Y. 404, 18 N. E. 719 (1888). Such construc- 
 tion was put upon the statute, in Seligman v. Friedlander, 138 App. Div. 
 784, 123 N. Y. Supp. 583 (1910), and Davis v. Bessemer City Cotton Mills, 
 178 Fed. 784 (1910). See LiabiUty of Partners, 11 Col. L. Rev. 101 (1911). 
 
 ' Leggatt V. Leggatt, 79 App. Div. 141, 143-144; affirmed without 
 opinion, 176 N. Y. 590 (1903) ; Seligman v. Friedlander, 199 N. Y. 373, 
 92 N. E. 1047 (1910). 
 
 * Hamilton v. Buxton, 6 Ark. 24 (1830) ; Ryerson v. Hendrie, 22 Iowa, 
 480 (1867) ; WiUiams v. Rogers, 14 Bush (77 Ky.), 776 (1879) ; Gates v. 
 Watson, 64 Mo. 585, 590 (1874). 
 
 5 Thompson v. White, 25 Colo. 226, 54 Pac. 718 (1898), and cases cited, 
 supra, p. 317 n. ; Erskine v. Russell, 43 Colo. 453, 96 Pac. 249 (1908) ; 
 Fleming v. Ross, 225 lU. 149, 80 N. E. 92 (1907). 
 
CHAPTER VI 
 
 DUTIES AND LIABILITIES OF PARTNERS INTER SE 
 
 § 1. The Utmost Good Faith. 
 
 One of the cardinal obligations of a partner is to exercise per- 
 fect fairness and good faith towards his associates in all partner- 
 ship matters. "If fiduciary relation means anything," said an 
 eminent English judge, "I cannot conceive a stronger case of 
 fiduciary relation than that which exists between partners. Their 
 mutual confidence is the life blood of the concern. It is because 
 they trust one another that they are partners in the first instance ; 
 it is because they continue to trust one another that the business 
 goes on." ^ No stipulation on this subject is needed in the part- 
 nership articles. The duty to observe the utmost good faith is 
 imposed upon the partners by the partnership relation.^ Under 
 the Uniform Partnership Act, each partner is trustee for the firm 
 " of any profits derived by him without the consent of the other 
 partners from any transaction connected with the formation, con- 
 duct, or liquidation of the partnership, or from any use by him of 
 its property." ^ 
 
 (a) Preliminary Negotiations. — Even in matters preliminary 
 to the launching of the partnership, each member is subject to 
 
 ' Bacon, V. C, in Helmore v. Smith, 35 Ch. D. 436, 444 (1887). 
 
 2 In societatis contractibus fides exuheret, Cod. iv. 37, 3 ; Pollock's Digest 
 of Part. (6th ed.) 85 ; Lindley on Part. (7th ed.) 342 ; Richards v. Fraser, 
 122 Cal. 456, 55 Pac. 246 (1898), applying § 2411 of the Civil Code, viz. : 
 "In all proceedings connected with the formation, conduct, dissolution, 
 and liquidation of a partnership every partner is bound to act in the 
 highest good faith with his copartners. He may not obtain any advan- 
 tage over them in the partnership affairs by the slightest misrepresenta- 
 tion, concealment, threat, or adverse pressure of any kind." 
 
 > L. of Md. 1916, Ch. 175, § 21. 
 
 320 
 
DUTIES AND LIABILITIES OF PARTNERS INTER SB 321 
 
 this duty.^ If the partnership is to be formed for the purpose of 
 buying certain property with a view of selling it at a profit, a 
 partner who secures title to it before the partnership is organized 
 is bound to turn it over to the firm at the price which he paid.^ 
 In case one partner induces the other to enter into copartnership 
 by means of fraudulent representations as to the property which 
 the former puts into the business, the latter may have the partner- 
 ship contract annulled, and may recover whatever he has contrib- 
 uted to the firm. It is not necessary for him to show that he has 
 sustained actual damage. He is entitled to be entirely released 
 from partnership relations with one who has thus betrayed his 
 confidence.^ 
 
 (6) Purchase of a Copartner's Interest. — A partner, who seeks 
 to acquire his copartner's interest in the firm, is bound to act 
 with the utmost frankness and honesty. Not only must he 
 render true accounts of all business transactions, but he must give 
 "full information of all things affecting the partnership."^ If 
 he knows that his copartner is "laboring under incorrect views 
 in reference to the amount of the debts due by the concern", 
 or in reference to the fair value of its assets, it is "his duty to 
 furnish all the data he may have, by which such views may be 
 corrected." ^ Certainly, if he has entered into trade combina- 
 tions whereby the value of the partnership business has been 
 increased, it is his duty to inform his copartner of this fact. Sup- 
 pression of this fact and a purchase upon the basis of the apparent 
 
 1 Selwyn & Co. v. WaUer, 212 N. Y. 507, 106 N. E. 321, L. R. A. 1915 
 B, 160 (1914). 
 
 2 Hiohens v. Congreve, 1 R. & M. 150 (1829) ; Bloom v. Lofgren, 64 
 Minn. 1, 65 N. W. 960 (1896) ; Buidick's Cases on Part. 501. 
 
 ' Harlow v. La Brum, 151 N. T. 278, 45 N. E. 859 (1897) ; Burdick's 
 Cases on Part. 502. Nor need actual bad faith, or intentional dishonesty 
 be shown on the part of the defendant. Butler v. Prentiss, 158 N. Y. 49, 
 52 N. E. 652 (1899) ; Powell v. Cash, 54 N. J. Eq. 218, 34 At. 131 (1896). 
 See § 41 of the British Partnership Act ; L. of Md. 1916, Ch. 175, § 39 ; 
 Frankfort Construction Co. v. Meneely, — Ind. App. — , 112 N. E. 244 
 (1916). 
 
 ^ British Partnership Act (1890), § 28; CaldweU v. Davis, 10 Col. 481, 
 15 Pac. 696, 3 Am. S. R. 699 (1887) ; L. of Md. 1916, Ch. 175, § 20. 
 
 6 Sexton V. Sexton, 9 Gratt. (50 Va.) 204, 215 (1852) ; Tennant v. 
 Dunlop, 97 Va. 234, 33 S. E. 620 (1899) ; Aronhime v. Levinson, 119 Va. 
 411, 89 S. E. 893, 16 Col. L. Rev. 693 (1916). 
 
322 THE LAW OF PAETNEKSHIP 
 
 valuation will amount to a fraud upon the ignorant copart- 
 ner.^ 
 
 (c) Clandestine Profits. — A partner who secures any private 
 advantage or benefit from "any transaction concerning the 
 partnership, or from any use by him of the partnership property, 
 name, or business connection ",^ without his copartners' consent, 
 even though the transactions are "undertaken after a partner- 
 ship has been dissolved by the death of a partner, and before 
 the affairs thereof have been completely wound up ",' acts in 
 bad faith towards his associates or their representatives, and can 
 therefore be compelled to account as trustee for the profits which 
 he has gained. 
 
 Accordingly, if a lease of premises occupied by the firm is 
 secretly renewed by a partner in his name, the firm will be en- 
 titled to the lease. He will not be permitted to say to his co- 
 partner, "The premises on which we carried on our trade have 
 become mine exclusively; and I am entitled to demand from 
 you whatever terms I think fit, as the condition of permitting 
 you to carry on that trade." * Again, in case a partnership 
 exists for the purpose of locating and developing mining prop- 
 erties, all mines located and sold by any of the partners during 
 the partnership must be accounted for to the firm.* So secret 
 commissions received by a partner on firm purchases ® or firm 
 sales ^ belong to the firm. 
 
 {(£) Prohibited Competition. — AVhen a partnership has been 
 formed with a view to reaping the profits of a particular busi- 
 ness, none of its members can carry on a "business of the same 
 nature as and competing with that of the firm", without cutting 
 
 1 Meyers v. MeriUion, 118 Cal. 352, 50 Pae. 663 (1897). 
 
 2 Hurst V. Brennen, 239 Pa. 216, 86 At. 778, 34 Ann. Gas. 428 (1913). 
 Defendant partner made secret profits by becoming interested in a business 
 which controlled the sale of the firm's output. 
 
 3 British Partnership Act (1890), § 29; Williamson v. Monroe, 101 
 Fed. 322 (1900) ; L. of Md. 1916, Ch. 175, § 21 (2). 
 
 < Featherstonaugh v. Fenwick, 17 Ves. 298, 11 R. R. 77 (1810) ; John- 
 son's Appeal, 115 Pa. 129, 8 At. 36, 2 Am. S. R. 539 (1886) ; Deutschman 
 V. Dwyer, 223 Mass. 261, 111 N. E. 877 (1916) ; Knapp v. Read, 88 Neb. 
 754, 130 N. W. 430, 32 L. R. A. n. s. 869, with note (1911). 
 
 s Jennings v. Rickard, 10 Col. 395, 15 Pae. 677 (1887). 
 
 « Hodge V. TwitoheU, 33 Minn. 389, 23 N. W. 547 (1885). 
 
 ' NeweU v. Cochran, 41 Minn. 374, 43 N. W. 84 (1889). 
 
DUTIES AND LIABILITIES OF PARTNERS INTER SE 323 
 
 down its profits. Hence, if he does carry on such a business, 
 without his copartners' consent, "he must account for and pay 
 over to the firm all profits made by him in that business." ^ 
 
 (e) Non-com-petitive Transactions. — Although a partner car- 
 ries on a business for his private benefit which is similar to that 
 of the firm, he will not be answerable to his copartners for the 
 profits if the business is really different from that of the firm, or 
 one that cannot be conducted by the firm.^ For example, a mem- 
 ber of a firm of warehousemen does not compete with his part- 
 nership in owning and managing wharf boats.^ Nor does a part- 
 ner in a firm of real estate brokers interfere with its business by 
 engaging in the purchase and sale of real estate as an individual 
 speculation.* The case last cited shows that the question of fact 
 whether a partner is carryiug on a business in competition with 
 his firm may be a difficult one, — one upon which different courts 
 will entertain contradictory opinions, but that the rule of law 
 applicable, when the facts have been determined, is clear and 
 simple. 
 
 (J) Information gained as a Partner. — Repeated attempts 
 have been made to compel a partner to account to his firm for 
 all profits resulting from his use of the knowledge or skill ac- 
 quired in the partnership business. Undoubtedly, if a partner 
 acquires information which is the property of the firm, — e.g. 
 news gathered by a newspaper partnership,^ — "that is to say, 
 information the use of which is valuable to them as a partner- 
 
 1 British Partnership Act, 1890, § 30; Latta v. Kilbourn, 150 U. S. 
 524, 541, 14 Sup. Ct. 201 (1893); Burdiok's Cases on Part. 503, 508; 
 Civil Code of Cal. § 2438. The Uniform Partnership Act is silent on this 
 point, although the earlier drafts contained a reproduction of § 30 of 
 the British Act. Sir Frederick Pollock refers to the section as stating an 
 elementary rule. Pollock on Partnership (8th ed.) 94. Accordingly, 
 cases of this sort would fall under § 5 of the Uniform Partnership Act, 
 and be decided in accordance with the doctrine stated in the text. 
 
 2 Shrader v. Downing, 79 Wash. 476, 140 Pac. 558, 52 L. R. A. n. s. 
 389, with note (1914). 
 
 sNorthrup v. Phillips, 99 111. 449 (1881). 
 
 ' Latta V. Kilbourn, 150 U. S. 524, 14 Sup. Ct. 201, 37 L. Ed. 1169 
 (1893) ; Burdick's Cases on Part. 503, reversing the decision of the Su- 
 preme Court of the District of Columbia, 5 Mackey, 304 (1886), 7 Mackey, 
 80 (1888). 
 
 6 Glassington v. Thwaites, 1 Sim. & St. 124 (1823). 
 
324 THE LAW OF PARTNERSHIP 
 
 ship, and to the use of which they have a vested interest "/ he 
 will not be permitted to use it for his personal profit. But, 
 "to hold that a partner can never derive any personal benefit 
 from the information which he obtains as a partner would be 
 manifestly absurd. Suppose a partner to become, in the course 
 of carrying on his business, well acquainted with a particular 
 branch of science or trade, and suppose him to write and publish 
 a book on the subject, could the firm claim the profits thereby 
 obtained? Obviously not, unless by publishing the book he in 
 fact competed with the firm in their own line of business." ^ 
 
 § 2. To Devote Themselves to the Business. 
 
 The duty of every partner to devote himself honestly and 
 zealously to the business of the partnership has never been ques- 
 tioned by the courts. Even "an express covenant in partner- 
 ship articles not to 'engage in any trade or business except upon 
 the account and for the benefit of the partnership ', has been 
 held to add nothing to the duty already imposed by law." ' 
 
 The reasons for prohibiting partners from engaging in another 
 business have been stated by an eminent English judge* sub- 
 stantially as follows. It may divert his mind from the partner- 
 ship business, and take away his time and attention; or it may 
 make him liable for the losses of the other business, and so may 
 involve him and damage the partnership in which he is engaged. 
 
 ' Bowen, L. J., in Aas v. Benliam, [1891] 2 Ch. 244, 258; L. of Md. 
 1916, Ch. 175, § 21 (1). 
 
 '^ These remarks of Lindley, L. J., in the last cited case at p. 256 are 
 expressly approved in Latta v. Kilbourn, supra; Burdick's Cases on Part, 
 at p. 514. They are also in accord with Jennings t). Rickard, 10 Col. 395, 
 400, 401, 15 Pae. 677 (1887), holding that information concerning a min- 
 ing district, acquired by a partner while prospecting for his firm, if not 
 fraudulently withheld from his firm, could be used for his sole advantage 
 after the dissolution of the partnership ; and with Burr v. De La Vergne, 
 102 N. Y. 415, 7 N. B. 366 (1886), holding that inventions made by a 
 partner, although relating to improvements of machinery owned by the 
 firm, are his separate property, unless the making of such inventions is 
 within the scope of the partnership business, or there is an agreement 
 that they shall belong to the firm. 
 
 « PoUock's Digest of Part. (6th ed.) 88, (8th ed.) 94. 
 
 < Jessel, M. R., in Dean v. MacDoweU, 8 Ch. D. 345, 348, 47 L. J. Ch. 
 637 (1878). 
 
DUTIES AND LIABILITIES OF PARTNERS INTER SE 325 
 
 (a) His Liability upon Violating this Duty. — In case he vio- 
 lates this obligation, without the consent of his copartners, they 
 may intervene by injunction,^ or may have the partnership dis- 
 solved, or, if they can show that the firm has been damaged by his 
 breach of duty or of contract stipulation on the subject, may 
 recover damages.^ They are not entitled, however, to any share 
 of the profits of his separate business,^ unless it is a competitive 
 business in the sense pointed out in a former paragraph, nor do 
 they become joint owners with him of property acquired in that 
 business.* 
 
 (6) The Copartners' Right to Compensation. — It follows from 
 the duty resting on each partner, to devote his time and energies 
 to the partnership, that he is not entitled to extra compensation, 
 in the absence of an agreement express or implied securing it to 
 him,^ although by the sickness ^ or death of a copartner extraor- 
 dinary responsibility and labor are thrown upon him. Such a 
 risk is incidental to the partnership relation.'^ 
 
 The bar to extra compensation by a surviving partner, however, 
 is not an absolute one.^ "The tendency is to deal with such ques- 
 
 » Levine v. Michel, 35 La. Ann. 1121 (1883). 
 
 ' Whether an action at law for damages, for the breach of such a stip- 
 ulation, will lie, or whether such damages form an item in the partnership 
 accounts is perhaps doubtful. Lord Lindley appears to think such an ac- 
 tion wiQ He. Lindley on Part. (7th ed.) 353, note (1). But see infra § 4 
 and cases cited. This claim for damages may be lost by a sale of the in- 
 jured partner's interest in the business. Givens v. Berry (Ky.), 52 S. W. 
 942 (1899). 
 
 •" Latta V. Kilbourn, 150 U. S. 524, 14 Sup. Ct. 201, 37 L. Ed. 1169 
 (1893) ; Burdick's Cases on Part. 503, 512 ; Dean v. MacDoweU, 8 Ch. D. 
 345 (1878). 
 
 « Belcher v. Whittemore, 134 Mass. 330 (1883) ; Burdick's Cases on 
 Part. 515. 
 
 = Gray v. Hamil, 82 Ga. 375, 10 S. E. 205, 6 L. R. A. 72 (1889) ; Askew 
 V. Springer, 111 111. 662 (1884) ; Smith v. Brown, 44 W. Va. 342, 30 S. E. 
 160 (1898). ' Heath v. Waters, 40 Mich. 457 (1879). 
 
 ' Consaul v. Cummings, 222 U. S. 262, 32 Sup. Ct. 83, 56 L. Ed. 192 
 (1911); Harrah v. Dyer, 180 Ind. 229, 102 N. E. 14, Ann. Cas. 1916 
 B, 868 (1913) ; Condon v. CaUahan, 115 Tenn. 285, 89 S. W. 400, 1 L. 
 R. A. N. s. 643, 5 Ann. Cas. 659, 112 Am. St. R. 833, with note (1905) ; 
 Williams v. Pederson, 47 Wash. 472, 92 Pae. 287, 17 L. R. A. n. s. 384, 
 with long note (1907). 
 
 8 ZeU's Appeal, 126 Pa. 329, 17 At. 647 (1889). In this case the sur- 
 
326 THE LAW OF PARTNERSHIP 
 
 tions on their particular circumstances, rather than by absolute 
 rules." ^ Moreover, if one partner wilfully withdraws from the 
 business, and casts upon his associates the entire burden of pro- 
 viding capital, labor, and skill, he has no right to complain if the 
 court, upon an accounting, awards to his copartner an extra 
 allowance.^ Even though there is no such withdrawal, the 
 circumstances in a particular case may show that the parties 
 intended that one or more of the partners should receive extra 
 compensation for certain services.' 
 
 § 3. To Contribution. 
 
 A learned writer has expressed the opinion, that the "duty 
 imposed on the firm to indemnify any one of its members against 
 extraordinary outlays for necessary purposes is one of a class of 
 duties quasi ex contractu which are recognized by the law of Eng- 
 land only very sparingly and under special circumstances. It is 
 outside the rules of agency, and has still less to do with trust; 
 real analogies are to be found in salvage and average." ^ 
 
 (a) Duty of Contribution imposed by the Partnership Contract. 
 — Judicial authority for this view is not very abundant, and the 
 learned writer admits that eminent judges have based a partner's 
 right to indemnity against extraordinary outlays upon his implied 
 authority to make the expenditures. In the case referred to,^ 
 
 vivor, more than thirteen years after the liquidating partner's death, dis- 
 covered a firm claim, prosecuted it successfully for four years, and because 
 of the exceptional facts was allowed extra compensation. 
 
 1 Thayer v. Badger, 171 Mass. 279, 50 N. B. 541 (1898). Cf. PoUock's 
 Digest of Part. § 24 (6) and comments, p. 77 (6th ed.), and Lindley on 
 Part. (6th ed.) 394, (7th ed.) 426. The provision of the Uniform Partner- 
 ship Act on this point is as follows : "No partner is entitled to remuner- 
 ation for acting in the partnership business, except that a surviving partner 
 is entitled to reasonable compensation for his services in winding up the 
 partnership affairs." § 18 (/). 
 
 2 Mattingly v. Stone's Adm'r, 35 S. W. 921, 18 Ky. L. R. 187 (1896) ; 
 Burdick's Cases on Part. 516. 
 
 5 Hoag V. Alderman, 184 Mass. 217, 68 N. E. 199 (1903). The CaU- 
 fornia Civil Code, § 2413, declares : "A partner is not entitled to any com- 
 pensation for services rendered by him to the partnership." 
 
 * Pollock's Digest of Part. (6th ed.) 76. 
 
 ' Ex parte Chippendale, In re German Mining Co., 4 De G. M. & G. 
 19, 40, 18 Jur. 710 (1853). 
 
DUTIES AND LIABILITIES OF PAETNEES INTER SE 327 
 
 Lord Justice Turner held that a partner might be entitled to reim- 
 bursement of moneys paid out for his firm, although he could 
 not have subjected it to liability to a third person from whom he 
 had borrowed the money. Borrowing money by the manager of 
 a mining partnership, he said, was not within his implied authority, 
 but paying the necessary expenses of the business was.^ In his 
 opinion, there was no injustice in holding the partners "liable for 
 wages incurred, and debts contracted for the purposes of the 
 mine, for then they have the benefit of the expenditure." 
 
 This is quite in accord with the doctrine declared in an earlier 
 case,^ " that a partnership creates an agreement that, in case any 
 partner pays more than his share, the others shall indemnify him." 
 The same doctrine was laid down by Chancellor Kent. After 
 stating that a partner who had paid a firm debt with his own 
 funds was entitled to contribution from his copartner, he added, 
 "This is the intendment in the first instance." ^ 
 
 In this country the right of a partner to contribution has been 
 treated by the courts generally as being within "the rules of 
 agency ",* and as having, in some cases, a good deal " to do with 
 trust." 5 
 
 (6) May he modified by Contract. — Because of "the common 
 saying, that the right to contribution is independent of agree- 
 ment". Lord Justice Lindley ® has felt it necessary to call atten- 
 
 1 TMs appears to be the theory underlying the provision of the British 
 Partnership Act on this topic, § 24 (2) : "The firm must indemnify every 
 partner in respect of payments made and personal liabilities incurred by 
 him, (a) in the ordinary and proper conduct of the business of the firm ; 
 or (6) in or about anything necessarily done for the preservation of the 
 business or property of the firm ; " and the CaUfornia Civil Code, § 2412 : 
 "Each member of a partnership ... is entitled to reimbursement, there- 
 from, for everything that he properly expends for the benefit thereof ; and 
 to be indemnified thereby for all losses and risks which he necessarily 
 incurs on its behalf;" and the Uniform Partnership Act, § 18 (6) : "The 
 partnership must indemnify every partner in respect of payments made 
 and personal liabilities reasonably incurred by him in the ordinary and 
 proper conduct of its business, or for the preservation of its business or 
 property." ' Wright v. Hunter, 5 Ves. 792, 793 (1800). 
 
 5 SeUs V. HubbeU, 2 Johns. Ch. 394, 397 (1817). 
 * Meserve v. Andrews, 106 Mass. 419 (1871). 
 
 » Lee V. Dolan, 39 N. J. Eq. 193 (1884). 
 
 6 Ldndley on Part. (6th ed.) 372, (7th ed.) 404. 
 
328 THE LAW OF PARTNERSHIP 
 
 tion to the very obvious fact, that by agreement the partners may 
 limit the right to contribution ^ or may exclude it altogether.^ 
 Such power is expressly recognized in the Uniform Partnership 
 Act.^ 
 
 (c) Incidental to a Partnership Settlement. — The duty to make 
 contribution is enforceable, as a rule, only after a final settlement 
 of partnership affairs.* Until that is made, it is obviously im- 
 possible to fix the amount to which the plaintiff partner is entitled.* 
 Although he may have paid various sums for the benefit of the 
 firm, a final settlement may disclose still larger overdrafts by him, 
 or still larger payments by his copartners.* 
 
 If, after such a settlement has been made, and the firm assets 
 are exhausted, a partner pays a firm debt, he may bring his action 
 for contribution ; ^ and so he may, whenever an accounting is 
 not necessary to determine the amount which each partner should 
 contribute.^ 
 
 The shares payable by each contributory will be considered 
 in a subsequent chapter.^ 
 
 (d) Contribution may be denied. — If the outlays for which 
 a partner seeks contribution were not made "in the ordinary 
 and proper conduct of the business of the firm" ,'" his claim for 
 
 1 Scudder v. Ames, 89 Mo. 496, 508, 14 S. W. 525 (1886), 142 Mo. 
 187, 217, 43 S. W. 659 (1897). The agreement was implied from the 
 usages of the partners. 
 
 ^McFadden v. Leeka, 48 Ohio, 513, 28 N. E. 874 (1891). Managers 
 were forbidden to make contracts or create debts beyond the available 
 capital. 
 
 3 L. of Md. 1916, Ch. 175, § 18, foUowing the British Act, § 24. 
 
 * In Sullivan v. Sullivan, 122 Wis. 326, 99 N. W. 1022 (1904), a part- 
 ner was forced to contribute his proportion of a sum paid by the flcrm, 
 before an accounting : it was deducted from his share of the profits. 
 
 s Brans V. Heise, 101 Md. 163, 60 At. 604 (1905) ; L. of Md. 1916, Ch. 
 175, § 18 (a). 
 
 « Warring t). Arthur, 98 Ky. 34, 32 S. W. 221 (1896) ; Burdick's Cases 
 on Part. 518. Overdrafts of partners may not create a debt if consented 
 to by each. Scudder v. Ames, 142 Mo. 187, 43 S. W. 659 (1897). 
 
 ' Sears v. Starbird, 78 Cal. 225, 20 Pac. 547 (1889). 
 
 s Jepson V. Beck, 78 Cal. 540, 21 Pac. 184 (1889). 
 
 » Chap. VIII. 
 
 i» British Partnership Act, 1890, § 24 (2) (o) ; L. of Md. 1916, Ch. 175, 
 § 18 (6). 
 
DUTIES AND LIABILITIES OF PARTNERS INTER SB 329 
 
 contribution will be denied,^ unless his acts have been duly rati- 
 fied by the firm.^ 
 
 This doctrine applies where the plaintiff partnep has been com- 
 pelled to pay damages for fraudulent representations made by 
 him to a purchaser of firm property, without the knowledge or 
 assent of his copartner. A wilful wrongdoer has no right to 
 indemnity from an innocent copartner.' Nor, if all of the part- 
 ners have joined in the commission of a pure tort, or have violated 
 a penal statute, will either be entitled to contribution from the 
 others.^ "Otherwise 'where the matter is indifferent in itself, 
 and the wrongful act is not clearly illegal, but may have been 
 done in honest ignorance or in good faith to determine a claim of 
 right, there is no objection to contribution or indemnity being 
 claimed." ^ 
 
 If a partnership is itself illegal, a learned judge has said, "no 
 member of it can, in respect of any transaction tainted with the 
 illegality which infects the firm, obtain relief against any other 
 member; but there is no authority for saying that if one of the 
 members of a firm sustains a loss, owing to some illegal act not 
 attributable to him, but nevertheless imputable to the firm, such 
 loss must be borne entirely by him, and that he is not entitled 
 to contribution in respect thereof from the other partners." ^ 
 
 Not only will contribution be denied to a partner whose cul- 
 pable negligence, or breach of duty, or wrongful conduct causes 
 a loss to the firm; but such loss will be charged to him exclu- 
 sively on the partnership accounting.^ Mere errors of judgment, 
 however, will not cut off his right of contribution, nor compel him 
 to exonerate the firm from loss thus occasioned.^ 
 
 1 Thomas v. Atherton, 10 Ch. D. 185, 48 L. J. Ch. 370 (1877). 
 
 2 Cragg V. Ford, 1 Y. & C. C. C. 280 (1842). 
 
 3 Clayton v. Davitt (N. J. Eq.), 38 At. 308 (1897) ; Burdick's Cases 
 on Part. 521. 
 
 " Lindley on Part. (6tli ed.) 382, (7th ed.) 415. 
 
 5 PoUock on Torts (5th ed.), 191 ; Clayton v. Davitt, supra; Horbach 
 V. Elder, 18 Pa. 33 (1851). 
 
 « Lindley on Part. (7th ed.) 413 ; quoted and applied in Smith v. Ay- 
 rault, 71 Mich. 475, 39 N. W. 724, 1 L. R. A. 311, with note (1888). 
 
 ' Childers v. Neely, 47 W. Va. 70, 34 S. E. 828, 49 L. R. A. 468, 81 
 Am. St. R. 777 (1899). 
 
 8 Knipe v. Livingston, 209 Pa. 49, 57 At. 1130 (1904). 
 
330 THE LAW OP PARTNERSHIP 
 
 (e) Purchaser of a Partner's Share. — The duty of contribu- 
 tion does not pass to the purchaser of a partner's share.^ Un- 
 doubtedly the copartner who remains in control of the firm assets 
 may reimburse himself out of their proceeds, and thus diminish 
 the sum going to the purchaser. But, if with full knowledge of 
 all the facts, he pays a sum to the purchaser in full of the assigned 
 share, he cannot thereafter maintain an action against the pur- 
 chaser for contribution, upon being compelled to pay a claim 
 against the firm. The fact that he believed the claim to be 
 groundless will not avail him. It is at most a case of voluntary 
 payment made under a mistake of law.^ 
 
 § 4. Actions at Law between Partners. 
 
 Partners are not allowed to sue each other at law upon matters 
 which are properly items in the partnership accoimt. In such 
 cases "it would be useless for one partner to recover what, upon 
 taking a general account among all the partners, he might be 
 liable to refund." ^ Moreover, such transactions do not result 
 in one partner becoming a debtor to or a creditor of the others, 
 but his liability or his claim runs to or against the firm.^ Ac- 
 cordingly, a partner cannot maintain an action at law against 
 his copartners for services * rendered or for premises leased to the 
 firm,® although the partnership agreement secures to him a fixed 
 sum therefor ; nor for damages caused by his copartner's breach 
 of an express covenant to devote his whole time to the partner- 
 ship ; ^ nor for the copartner's breach of his contract to make an 
 annual settlement of accounts and annual payments thereunder ; ^ 
 nor for money loaned to or paid for the firm.^ 
 
 ' See Uniform Partnership Act, § 27, covering assignment of a part- 
 ner's interest. 
 
 2 Clayton v. Davitt (N. J. Eq.), 38 At. 308 (1897); Burdick's Cases 
 on Part. 521, 524. 
 
 ' Sadler v. Nixon, 5 B. & Ad. 936 (1834). 
 
 « Ives V. MUler, 19 Barb. (N. Y.) 196 (1855). 
 
 » Causten v. Burke, 2 Har. & G. (Md.) 295 (1828) ; King v. Moore, 72 
 Ark. 469, 82 S. W. 494 (1904). 
 
 « Estes V. Whipple, 12 Vt. 373 (1840). 
 
 ' Capen v. Barrows, 1 Gray (67 Mass.), 376 (1854). 
 
 » Ryder v. Wilcox, 103 Mass. 24 (1869). 
 
 9 Springer v. Cabell, 10 Mo. 640 (1847) ; White v. Harlow, 5 Gray (71 
 Mass.), 463 (1855). 
 
DUTIES AND LIABILITIES OP PARTNERS INTER SE 331 
 
 (a) Common Law Action of Account. — Lord Justice Lind- 
 ley has stated that he knows of no instance of an old common 
 law action of account brought by one partner against another; 
 adding that courts of law had no machinery enabling them to 
 do justice in matters of account.^ Chancellor Kent declared 
 that "an action of account at law may be brought by one part- 
 ner against another", and that, as in such an action the auditors 
 could compel the parties to be examined under oath, he had 
 " not been able to discern any good reason why that action has so 
 totally fallen into disuse." ^ Judge Bronson assigned the fol- 
 lowing reason for its obsolescence : "All the books agree that this 
 is one of the most diflBcult, dilatory, and expensive actions that 
 ever existed." ^ He said it did not "appear that more than one 
 action of account was ever brought before,^ and," he added, "the 
 present experiment will probably be the last." 
 
 This was a mistaken prophecy. Another experiment was 
 made, but that also resulted in failure, chiefly, however, because 
 the firm consisted of three members.^ In such a case, it was 
 declared that two of the partners "cannot join as plaintiffs, as 
 against the other, because two cannot have a joint right of re- 
 covery against the third. And one of them cannot recover against 
 the other two, as codefendants, because there is no joint liability. 
 Neither can any one of the three recover against either of the 
 others singly, since the mutual claims of any two of them can- 
 not be completely adjusted without deciding upon those of the 
 third." « 
 
 (b) Modified Forms of Action of Account. — In some of our 
 States a partner is allowed to maintain an action at law against 
 his copartner, although it involves an inquiry into the partnership 
 
 1 Lindley on Part. (6th ed.) 547. 
 
 2 Duncan v. Lyon, 3 Johns. Ch. 351 (1818), approved in Wilhelm v. 
 Caylor, 32 Md. 151, 168 (1869). 
 
 ' McMurray v. Rawson, 3 Hill (N. Y.), 59 (1842). He did not propose 
 to encourage the action by removing any of its difficulties. "If parties 
 chose to bring account," he remarked, "they must take the action as it 
 was left by the ancients." 
 
 • Jacobs V. Fountain, 19 Wend. 121 (1838). 
 
 ^ Appleby v. Brown, 24 N. Y. 143 (1861). See dissenting opinion of 
 James, J., p. 147. 
 
 s Beach v. HotohMss, 2 Conn. 425 (1818). 
 
332 THE LAW OF PARTNERSHIP 
 
 accounts, where "the partnership was in a single and completed 
 transaction "} or where the deahngs between two partners em- 
 brace but a few items, and a settlement of the accounts is simple.* 
 Indeed, it has been declared that though the statement of an 
 account between partners might be difficult, resort might be had 
 to a common law action of account, nevertheless, "there being^ 
 only two partners concerned, and discovery being now obtain- 
 able as well at law as in equity." ' 
 
 1. Action for Wrongful Ouster of Copartner. — In 
 England a partner cannot work a dissolution of the firm by ex- 
 cluding his copartner from participation in the firm business, 
 where the partnership has been entered into for a fixed term, 
 nor can a majority of its members expel a partner, unless the 
 partnership agreement expressly confers the power.* Accordingly, 
 a partner who has been wrongfully ousted from the partnership 
 should proceed against his copartner, not for damages, but for 
 "reinstatement in his rights as a partner." ^ 
 
 In this country a partner who has been excluded wrongfully 
 from the partnership for a fixed term may recover in an action at 
 law damages against his former copartners for their breach of 
 the partnership contract ; ^ or he may compel them to account in 
 equity for the profit of the business carried on with the partner- 
 
 1 Kutz V. Dreibelbis, 126 Pa. 335, 17 At. 609 (1889) ; Dorwart v. BaU, 
 71 Neb. 173, 98 N. W. 652 (1904). 
 
 2 Clarke v. Mills, 36 Kan. 393, 13 Pac. 569 (1887). 
 
 3 Wheeler v. Arnold, 30 Mich. 304, 306 (1874). 
 ^British Partnership Act, §§24 (5), 25. 
 
 5 Pollock's Digest of Part. (6th ed.) 80, citing Wood v. Woad, L. R. 
 9 Ex. 190, 43 L. J. Ex. 153 (1874), and BUsset v. Daniel, 10 Ha. 493 (1853) ; 
 Lindley on Part. (7th ed.) 674. See Green v. HoweU, (1910) 1 Ch. 495, 
 79 L. J. Ch. 549. 
 
 6 Hunter v. Land, 81* Pa. 296 (1875). The California Civil Code pro- 
 vides, § 2451 : "A general partnership may be dissolved, as to himself 
 only, by the expressed will of any partner, notwithstanding his agreement 
 for its continuance; subject, however, to liability to his copartners for 
 any damage caused them thereby, unless the circumstances are such as to 
 entitle him to a judgment of dissolution." McCollum v. Carlucei, 206 
 Pa. 312, 55 At. 979 (1903). The Uniform Partnership Act recognizes 
 the power of a partner to dissolve the firm in contravention of the part- 
 nership contract, § 31 (2), but accords to the other partners the right to 
 damages for such breach, § 38 (2). 
 
DUTIES AND LIABILITIES OF PARTNERS INTER SB 333 
 
 ship property, subject to proper allowances.^ If the partnership 
 is one at will, no action at law lies in favor of the partner who 
 wishes to continue the partnership against the one who terminates 
 it arbitrarily.^ 
 
 (a) Action for Refusal to launch a Partnership. — If no part- 
 nership business has been transacted, and no accounting is neces- 
 sary to adjust the rights of the partners, an action at law for 
 damages may be maintained by a partner, who was ready and 
 willing to carry out the contract, against his copartner for pre- 
 venting the launching of the partnership.' 
 
 In a recent Kentucky case, the coiu-t said : " Ordinarily one 
 copartner cannot sue another at law until there has been a settle- 
 ment of the partnership affairs. But this suit is by one party to 
 a contract against the other party for its breach, because he failed 
 to perform those things required of him for the purpose of creat- 
 ing the partnership" ; and the action was held to be maintain- 
 .able.* 
 
 2. Actions which do not Involve Partnership Accounts. 
 (a) Voluntary Settlement between the Partners. — If the mem- 
 bers of a firm have settled its affairs, and have agreed upon the 
 halance due from one to the other, an action at law may be main- 
 tained therefor.^ If, however, they have gone no further than 
 to state the account between the firm and its niembers, an action 
 at law will not lie between them. Such an account would show 
 the indebtedness of the several partners to the firm, or its indebted- 
 ness to them, but would not furnish evidence of an agreement 
 that any partner was to pay to another a stipulated sum.^ 
 
 1 Karrick v. Hannaman, 168 U. S. 328, 337, 18 Sup. Ct. R. 135, 42 
 L. Ed. 484 (1897). 
 
 2 Freund v. Murray, 39 Mont. 539, 104 Pac. 683, 25 L. R. A. n. s. 959, 
 with note (1909). 
 
 2 HiU V. Palmer, 56 Wis. 123, 43 Am. R. 703, 14 N. W. 20 (1882). 
 
 «Tevis V. Carter, 111 Ky. 938, 65 S. W. 17 (1901). Accord. Owen v. 
 Meroney, 136 N. C. 475, 48 S. E. 821 (1904) ; Newman v. Ruby, 54 W. Va. 
 381, 46 S. E. 172 (1903). 
 
 5 Wray v. Milestone, 5 M. & W. 21 (1839) ; Benton v. Hunter, 119 Ga. 
 381, 46 S. E. 414 (1903) ; Holt v. Howard, 77 Vt. 49, 58 At. 797 (1904) ; 
 Smith V. Putnam, 107 Wis. 155, 82 N. W. 1077 (1900). 
 
 6 Ross V. CorneU, 45 Cal. 133 (1872) ; Arnold v. Arnold, 90 N. T. 580 
 <1882). 
 
334 THE LAW OF PARTNERSHIP 
 
 When the partnership relates to a single transaction, for ex- 
 ample, the sale of particular mining property, and it is agreed 
 that the partners shall share equally in the commissions received 
 on the sale, an accounting is unnecessary, and an action at law 
 for his share may be maintained by a partner against the co- 
 partners who have received and retained the whole sum.^ 
 
 (b) Agreements antecedent to the Partnership. — It often hap- 
 pens during the negotiations for a partnership that one of the 
 parties loans to another his share of the firm capital,^ or that 
 they join in a note upon which they raise the money which they 
 are severally to put into the business, and one of them is com- 
 pelled to pay the entire note.^ In such cases, the claim of the 
 creditor against the debtor cannot be made an item in the part- 
 nership accounts without the subsequent consent of all the part- 
 ners. Accordingly, it may be recovered in an action at law, even 
 during the continuance of the partnership.'* 
 
 (c) Insulated Agreements. — It is entirely competent for part- 
 ners to make "special bargains by which particular transactions 
 are insulated and separated from the winding up of the concern, 
 and are taken out of the general law of partnership." ^ Of such 
 bargains, the following are examples. One partner agrees to pay 
 his copartner a stipulated sum for the latter's interest in certain 
 partnership chattels.* One partner promises to pay another 
 partner a fixed sum for his personal attention to the affairs of the 
 firm.^ One or more partners give a promissory note to another 
 for his share in the profits ' or in the assets * at a particular time. 
 One partner binds himself to a copartner "to keep the books of 
 
 1 Mason v. Sieglitz, 22 Col. 320, 44 Pac. 588 (1896) ; Burdiek's Cases 
 on Part. 537; Galbreath v. Moore, 2 Watts (Pa.), 86 (1833); Canfleld 
 V. Johnson, 144 Pa. 61, 78, 22 At. 974 (1891). 
 
 ' Venning v. Leckie, 13 East, 7 (1810) ; Haskins v. Curran, 4 Idaho, 573, 
 43 Pac. 559 (1895) ; Burdiek's Cases on Part. 534. 
 
 » Halleck v. Streeter, 52 Neb. 827, 73 N. W. 219 (1897). 
 
 « Cook V. Canny, 96 Mich. 398, 55 N. W. 987 (1893) ; Sprout v. Crowley, 
 30 Wis. 187 (1872). 
 
 5 Bayley, B., in Jackson v. Stopherd, 2 Cr. & M. 361 (1834). 
 
 « Paine v. Thacher, 25 Wend. (N. Y.) 450 (1841). 
 
 ' Sturges V. Swift, 32 Miss. 239 (1856). 
 
 8 Wilson V. Wilson, 26 Or. 251, 38 Pac. 185 (1894); Burdiek's Cases 
 on Part. 538. 
 
DUTIES AND LIABILITIES OF PARTNERS INTER SB 335 
 
 the firm in a careful and worlcmanlike manner, and to render a 
 just, true, and accurate account of all" the partnership business.^ 
 
 In these cases, and all similar ones,^ the contract is between 
 the partners as individuals. The partnership, it is true, fur- 
 nishes the occasion for the agreement, but the firm is not a party 
 to the contract. , Hence, an action for its breach in no way in- 
 volves the partnership accounts. 
 
 So, if a partnership is dissolved by the purchase by one partner 
 of his copartner's interest, the purchaser agreeing to pay the 
 debts, the seller can maintain an action against the buyer, upon 
 the latter's breach of his agreement. This breach occurs, it has 
 been held, as soon as any of the debts mature and are unpaid by 
 the purchasing partner ; and the selling partner can maintain an 
 action to recover, as damages, whatever sum is necessary to pro- 
 tect him from liability on account of the debts so unpaid.^ 
 
 (d) Wrongful Use of Firm Property. — As each partner has 
 authority to use the firm property, and even to dispose of it in 
 the ordinary course of the business, his negligent use of it does 
 not give his copartners a right of action for damages against him ; 
 nor does his failure to account for the proceeds of property which 
 he sells. Such matters are properly adjusted upon an accounting. 
 But if he actually ousts his copartners from firm realty, they can 
 maintain an action at law against him.'* So they may if he wrong- 
 fully sells the firm property as his own, and converts the proceeds 
 to his use ; ^ or if he issues negotiable paper in the firm name for 
 his personal benefit, which his copartners are compelled to pay ; ® 
 
 1 McCauley v. Cooley, 45 Neb. 582, 63 N. W. 871 (1895) ; Burdict's 
 Cases on Part. 535. . 
 
 2 CampbeU v. Bane, 119 Mich. 40, 77 N. W. 322 (1898), a sale by one 
 partner of all Hs interest in the firm to the other, gives the latter an action 
 at law against the former on a debt due to the firm from the selling part- 
 ner; Miller v. Ferguson, 110 Va. 217, 65 S. E. 562, 28 L. R. A. n. s. 618 
 (1909), one partner bought a judgment against the other, and was al- 
 lowed to sue upon it. 
 
 s Tucker v. Murphey, 114 Ga. 662, 40 S. E. 836 (1902). 
 
 4 Doe V. Horn, 5 M. & W. 564, 9 L. J. Ex. 129 (1839) ; Lindley on Part. 
 (6th ed.) 549, (7th ed.) 593. 
 
 5 Morris v. Wood, 35 S. W. 1013 (Tenn.) (1896) ; Burdick's Cases on 
 Part. 531 ; Lonergan v. Lonergan, 60 Kan. 855, 55 Pac. 851 (1899). 
 
 « Fuller V. Percival, 126 Mass. 381 (1879) ; Calkins v. Smith, 48 N. Y. 
 614, 8 Am. R. 575 (1872). 
 
336 THE LAW OF PAETNERSHIP 
 
 or if he makes a fraudulent settlement of a firm claim, thereby 
 causing damage to his partners ; ^ or if he fraudulently diverts 
 firm funds from the payment of firm debts to the payment of his 
 individual indebtedness.^ 
 
 Some of the cases cited in the last four notes were not actions 
 at law ; but the principles which they enunciate are fairly stated 
 in the preceding paragraph.' A partner who, in Lord Eldon's 
 language, "may be represented as having stolen property out of 
 the joint fund ",* has no right to insist that his copartners content 
 themselves with charging its value against him in the firm ac- 
 counts. 
 
 The right of action at law against the defrauding partner 
 may be lost by purchasing his interest in the firm. Such a transfer 
 would not carry to the defrauded and purchasing partner any 
 right of action growing out of the selling partner's prior miscon- 
 duct. If redress can be had in such a case, the plaintiff must go 
 into equity.* 
 
 (e) . Tortious Conduct toward a Copartner. — The existence 
 of partnership relations between the plaintiff and the defendant 
 is no bar to an action for a personal wrong done by the defendant 
 to the plaintiff. If a partner violently thrusts his copartner 
 from the place of business of the firm, and threatens the latter's 
 life if he returns, the latter may have him put under bonds to keep 
 the peace.* So a partner may maintain an action at law against 
 a copartner who wrongfully injures the plaintiff's separate prop- 
 erty, although it was at the time in the possession and use of the 
 partnership.^ He may maintain such an action also for fraudu- 
 
 • Sweet V. Morrison, 103 N. Y. 235, 8 N. E. 396 (1886). In tMs case 
 plaintiff charged his four copartners and a firm debtor with fradulently 
 setthng a firm claim. The court held that he could not recover the firm 
 debt, for that was discharged by the act of the four ; but if he coidd show 
 a fraudulent settlement, his damages would be measured by the diminution 
 of his partnership share produced by a collusive waste of partnership assets. 
 
 2 Patrick v. Weston, 22 Col. 45, 43 Pac. 446 (1895) ; Burdick's Cases 
 on Part. 529. ' See Ldndley on Part. (6th ed). 549. 
 
 » Ex parte Yonge, 3 V. &. B. 31, 2 Rose, 40 (1814). 
 
 "Riddell v. Ramsey, 31 Mon. 386, 78 Pac. 597 (1904); Taylor v. 
 Thompson, 176 N. Y. 168, 68 N. E. 240 (1903). 
 
 » Regina v. Mallison, 16 Ad. & E. n. s. 367 (1851). 
 
 ' Newby v. Harrell, 99 N. C. 149, 5 S. E. 284 (1888) ; Burdick's Cases 
 on Part. 543; Newberry v. Gibson, 125 Iowa, 575, 101 N. W. 428 (1904). 
 
DUTIES AND LIABILITIES OP PARTNERS INTER SE 337 
 
 lent representations made to him by the defendant upon a sale 
 of the latter's interest to him/ or upon the formation of the 
 partnership.^ 
 
 If a partner fraudulently procures the conveyance of his co- 
 partner's interest in firm property to third parties, the wronged 
 partner may have the conveyance set aside.' 
 
 3. Actions between Firms having a Common Member. — 
 These could not be maintained at common law. Various reasons 
 were assigned for the doctrine. It was said that no legal con- 
 tract could subsist between the common member and his copart- 
 ners on the one side and himself with his other copartners on the 
 other side, although they could so far enter into the contract as 
 to render it available in equity.* It was also declared that all 
 the partners must join and be joined in the action, and that the 
 common member could not be at the same time both a plaintiff 
 and a defendant.' 
 
 Under the reformed procedure prevailing in most of our States ^ 
 and in England,'' these technical objections have no longer any 
 force. The fact that a partner in the plaintiff firm is also a 
 member of the defendant firm, will not prevent either firm from 
 maintaining an action at law, against the other. All of the parties 
 being before the court, "it will proceed to pronounce such judg- 
 ment as the facts of the case require." Even though an account 
 may be necessary in order to determine the equitable rights of 
 the individual parties, the better doctrine is "to let the debtor 
 firm pay its debt, and the creditor firm, after receiving its debt, 
 adjust their individual equities among themselves." ^ 
 
 1 Glade v. White, 42 Neb. 336, 60 N. W. 556 (1894) ; Burdick's Cases 
 on Part. 541 ; Crockett v. Burleson, 60 W. Va. 252, 54 S. E. 341, 6 L. R. A. 
 N. s. 263, with note (1906). 
 
 2 Hale V. Wilson, 112 Mass. 444 (1873). See L. of Md. 1916, Ch. 175, 
 § 39, following § 41 of the British Partnership Act, 1890. 
 
 3 Weirich v. Dodge, 101 Wis. 621, 77 N. W. 906 (1899). 
 « Bosanquet v. Wray, 6 Taunt. 597 (1815). 
 
 5 Beaeannon v. Liebe, 11 Or. 443, 5 Pac. 273 (1884). 
 
 8 Crosby v. Timolat, 50 Minn. 171, 52 N. W. 526 (1892) ; Alexander 
 Brothers v. King & Co., 87 Ala. 642, 6 So. 382 (1888), applying § 2605 of 
 the code of 1886; Gibson v. Ohio Co., 2 Disney (Ohio), 499 (1859). 
 
 ' Lindley on Part. (6th ed.) 276, 277, (7th ed.) 303. 
 
 8 Cole V. Reynolds, 18 N. Y. 74 (1858) ; Sohnaier v. Schmidt, 13 N. Y. 
 Supp. 725 (1891) ; Mangels v. Shaen, 21 App. Div. 507, 48 JQ^. Y. Supp. 
 
338 THE LAW OF PARTNERSHIP 
 
 This doctrine does not obtain in all of our jurisdictions ; ' 
 although, in most, a recovery in equity is allowed between the 
 firms as entities.^ Even in New York, where there have been 
 repeated dicta and some decisions in favor of the doctrine, as 
 shown by the cases cited in the foregoing notes, the Court of 
 Appeals has recently declared that "in an action at law to re- 
 cover damages for deceit, it is well settled that no action can 
 be maintained between the members of two firms having one 
 member in common." ' This statement, it is submitted, is 
 scarcely more than a dictum, for the action was brought by one 
 member of the firm of Culbert & Taylor, to recover damages 
 which he claimed to have sustained by false representations of 
 his partner Culbert, while acting as agent of Thompson, Culbert 
 & Co., in effecting a sale of the latter firm's business to the firm of 
 Culbert & Taylor. The real ground of decision is found in this 
 sentence : " That the plaintiff failed to show a state of facts 
 supporting any action by him individually against the defend- 
 ants." * It is certainly to be hoped that the Court of Appeals 
 has not retreated to the technical doctrine of Bosanquet v. 
 Wray.^ 
 
 (a) Actions between a Partnership and a Partner. — Here 
 again common law technicalities operated to defeat the plaintiff. 
 If, however, a firm gave its negotiable note or bill to a partner, 
 or vice versa, the payee could negotiate the instrument and give 
 
 526 (1897) ; Burrows v. Leech, 116 Mich. 32, 34-37, 74 N. W. 296 (1898), 
 semhle; First Nat. Bank v. Wood, 128 N. Y. 35, 39, 27 N. E. 1020 (1891), 
 semble; Frye v. Sanders, 21 Kan. 26, 29 (1878), semble. 
 
 1 Aylett V. Walker, 92 Va. 540, 24 S. B. 226 (1896). 
 
 2 Haven v. Wakefield, 39 111. 509, 518, 519 (1866) ; Englis v. Furniss, 
 2 Abb. Pr. (N. Y. Com. PI.) 333, 339, 341, 4 E. D. Smith 587 (1855). 
 
 3 Taylor v. Thompson, 176 N. Y. 168, 176, 68 N. E. 240 (1903). 
 
 ■• Ibid., p. 177. This, the court said, upon the assumption that the 
 plaintiff's theory of Culbert's agency for the defendants was correct. 
 "If," continued the court, "on the other hand, we assume the defendants' 
 theory to be correct, that the undisputed facts warrant the conclusion that 
 Thompson, Culbert & Company sold out to Culbert, agreeing to transfer 
 the property to him, or to such person or firm as he might form, then in 
 negotiating with plaintiff Culbert was primarily and principally acting 
 for himself and in his own interest," and the action would not lie against 
 any one but Culbert. 
 
 ^ 6 Taunt. 597 (1815), cited approvingly by the court, at p. 177. 
 
DUTIES AND LIABILITIES OF PARTNERS INTER SE 339 
 
 to his transferee a right of action against the maker.^ The same 
 result follows from an assignment of his claim against the firm 
 by a partner, or of its claim against a partner by the firm, in a 
 jurisdiction where the assignee of a chose in action may sue in 
 his own name.^ 
 
 Under the reformed procedure in some of our States,' and 
 under legislation in others declaring the contracts of a firm to 
 be the joint and several contracts of its members,* it is possible 
 for a partner to maintain an action at law against his copartners 
 on a firm indebtedness to him. Such action has been sustained 
 by a partner against his firm for damages done to his property by 
 the negligence of the firm acting through its board of manage- 
 ment.^ 
 
 In Kentucky it has been held that when a promissory note 
 is signed by the firm to the order of one of its partners, the com- 
 mon law treats the contract of the payee partner as void, and the 
 note becomes the individual contract of the other partner.^ 
 
 1 Pitcher v. Barrows, 17 Pick. (34 Mass.) 361, 28 Am. Dec. 306 (1835) ; 
 contra, Davis v. Merrill, 51 Mich. 480, 16 N. W. 684 (1883). 
 
 2 Frank v. Anderson, 13 Lea (81 Tenn.), 695 (1884) ; Walker v. Wait, 
 50 Vt. 668 (1878) ; Jennings v. Pratt, 19 Utah, 129, 56 Pac. 951 (1899). 
 
 3 Stettheimer v. Tone, 114 N. Y. 501, 505, 21 N. E. 1018 (1889). The 
 partner's claim here was that of a depositor in a bank owned by his firm. 
 
 ' Alexander Brothers v. King & Co., 87 Ala. 642, 6 So. 382 (1888) ; 
 Willis V. Barron, 143 Mo. 450, 45 S. W. 289, 65 Am. St. R. 673 (1898). 
 In this ease it was also held that defendants could not plead as a eoimter 
 claim an unliquidated partnership account. In order "to oust a court of 
 law of jurisdiction, a party must go further and state some specific ground 
 for invoking the jurisdiction of equity." 
 
 5 Bigelow V. Powers, 25 Ont. L. R. 28, 24 Ann. Cas. 959 (1911). 
 
 6 Morrison v. Stockwell, 9 Dana (39 Ky.), 172 (1839). 
 
CHAPTER VII 
 
 DISSOLUTION OF PARTNERSHIPS 
 
 Dissolution of a partnership is defined in the Uniform Partner- 
 ship Act as the change in the relation of the partners caused by 
 any partner ceasing to be associated in the carrying on as dis- 
 tinguished from the winding up of the business.^ 
 
 § 1. By Operation of Law. 
 
 A partnership may be dissolved without the assent of the 
 parties and without a judicial decree. Upon "the happening 
 of any event which makes it unlawful for the business of the 
 firm to be carried on, or for the members of the firm to carry it 
 on in partnership ", the firm is dissolved by operation of law.^ 
 If a partnership exists between a citizen of Great Britain and a 
 citizen of the United States, it is at once dissolved upon the 
 breaking out of war between the two countries. Not only is 
 the continuance of the partnership thereafter inconsistent with 
 the allegiance which each partner owes to his country, but if the 
 business includes commercial transactions between the two 
 countries, the law puts them under the ban. As one of the main 
 purposes for which the partnership was organized has thus be- 
 come legally unattainable, it would be unjust for the law to con- 
 tinue the partnership relation.' 
 
 1 L. of Md. 1916, Ch. 175, § 29. 
 
 2 British Partnership Act of 1890, § 34 ; copied in L. of Md. 1916, Ch. 
 175, § 31 (3). 
 
 « Griswold V. Waddington, 16 Johns. N. Y. 57 (1818), 16 Johns. 438 ; 
 Burdick's Cases on Part. 544 ; McStea v. Matthews, 50 N. Y. 166, 170 
 (1872) ; Hubbard v. Matthews, 54 N. Y. 43, 47, 13 Am. R. 562 (1873) ; 
 California Civil Code, § 2450 (5). In Hugh Stevenson & Sons v. Ak- 
 tiengesellschaft &c., (1916) 1 K. B. 763, 85 L. J. K. B. 847 ; Griswold v. 
 
 340 ■ 
 
DISSOLUTION OP PAETNERSHIPS 341 
 
 In a jurisdiction where a judge is absolutely prohibited from 
 practising law in any court, a partnership of attorneys is dis- 
 solved by the appointment and qualification of one of its mem- 
 bers as a judge.^ 
 
 (a) By the Death or Bankruptcy of a Partner. — " Subject 
 to any agreement between the partners, every partnership is 
 dissolved as regards all the partners by the death or bankruptcy of 
 any partner." ^ 
 
 Either of these events must necessarily dissolve the firm, so 
 far as the decedent's or bankrupt's estate is concerned ; for that 
 passes by operation of law to his personal representative or his 
 trustee, neither of whom has a right to enter the firm without 
 the consent of the other partners, nor is either bound to become 
 a partner without his own consent. 
 
 Either of these events must operate also to dissolve the part- 
 nership as between the surviving partners, unless they have 
 agreed ' that it shall not have that effect. "The delectus per- 
 sonarum lies at the foundation of the agreement of the parties, 
 and is one of the main considerations on which it rests. The 
 personal qualities of each member of a firm enter largely into the 
 inducements which lead parties to form a copartnership ; and of 
 the abilities and skill or the character and credit of any one are 
 withdrawn the contract between them is terminated and the 
 copartnership is dissolved." * 
 
 Moreover as the death or bankruptcy of a partner is a public 
 fact, every one is bound in law to take notice of it; and conse- 
 
 Waddington, supra, is approved, and it was held that the German part- 
 ner was entitled to have his interest at the time of dissolution valued and 
 to be paid the amount thereof when such payment becomes legally 
 possible. To secure this he has an equitable lien on the firm assets ; but 
 if the English partner carries on the business after the commencement of 
 the war, the German partner is not entitled to any of the profits made 
 thereafter. 
 
 1 Justice V. Lairy, 49 N. E. 459, 19 Ind. App. 272 (1898). 
 
 2 British Partnership Act of 1890, § 33 (1) ; Cal. Code, § 2450 (3) ; 
 La. Code, Art. 2876 (3). 
 
 3 Shaw et al.. Appellants, 81 Me. 207, 16 At. 662 (1889) ; Carter v. 
 McClure, 98 Tenn. 109, 38 S. W. 585 (1897) ; Burdiok's Cases on Part. 
 37,40; Louisiana Code, Arts. 2881, 2882. 
 
 ^Marlett v. Jackman, 3 Allen (85 Mass.), 287 (1861); Burdick's 
 Cases on Part. 547. 
 
342 THE LAW OF PARTNERSHIP 
 
 quently any new contract entered into by a survivor in the name 
 of the firm, but without the knowledge or consent of his co- 
 partners, will bind him only, even though he and the other con- 
 tracting party were in fact ignorant of the firm's dissolution.^ 
 
 The foregoing doctrine has been modified by the Uniform Part- 
 nership Act. It declares a partnership is dissolved by the death 
 of a partner or by the bankruptcy of a partner or the partner- 
 ship ; ^ but " Where the dissolution is caused by the act, death or 
 bankruptcy of a partner, each partner is liable to his copartners 
 for his share of any liability created by any partner acting for 
 the partnership as if the partnership had not been dissolved 
 unless (a) The dissolution being by act of any partner, the part- 
 ner acting for the partnership had knowledge of the dissolution, or 
 (&) The dissolution being by the death or bankruptcy of a partner, 
 the partner acting for the partnership had knowledge or notice 
 of the death or bankruptcy." ' 
 
 (6) By the Marriage of a Female Partner. — At common law 
 the share of a feme sole in a partnership passed to her husband 
 upon marriage, and her legal personality for many purposes be- 
 came merged in his. It followed that her marriage produced an 
 instantaneous dissolution of a partnership in which she was a 
 member.^ Under the Married Women's Property Act in Britain, 
 and similar legislation in many of our States, the marriage of a 
 female partner "no longer causes the dissolution of a partner- 
 ship." 5 
 
 § 2. Dissolution by Act of the Parties. 
 
 The partners may stipulate in their original contract that 
 the partnership shall continue for a fixed term. In such case, 
 
 iMartlett v. Jaekman, 3 Allen (85 Mass.), 287 (1861); Burdick's 
 Cases on Part. 547. 
 
 2 L. of Md. 1916, Ch. 175, § 31 (4), (5). ' lUd., § 34. 
 
 4 Nerot V. Burnand, 4 Russ. 247, 260 (1827) ; Bassett v. Shepardson, 
 52 Mich. 3, 17 N. W. 217 (1883) ; Burdick's Cases on Part. 553 ; Little 
 V. Hazlett, 197 Pa. 591, 47 At. 855 (1901) ; Brown v. Chancellor, 61 Tex. 
 437, 445 (1884). 
 
 6 Lindley on Part. (6th ed.) 575, (7th ed.) 619. For the Scotch law 
 on this topic, see Lindley on Part. (7th ed.) 859; Burney v. Savannah 
 Grocery Co., 98 Ga. 711, 25 S. E. 915 (1896) ; Burdick's Cases on Part. 
 11 ; suvra, Ch. I, § 1, 2, (b). 
 
DISSOLUTION OF PAETNERSHIPS 343 
 
 it will be dissolved by the expiration of that term.^ If, however, 
 the parties go on in business after the stipulated period, but "with- 
 out any express new agreement, the rights and duties of the part- 
 ners remain the same as they were at the expiration of the term, 
 so far as is consistent with the incidents of a partnership at will." ^ 
 
 By mutual consent the partners may dissolve the partnership 
 at any moment ; and this consent may be express ^ or implied.^ 
 
 (a) A Particular Adventure. — If a partnership is formed 
 for a single adventure or undertaking, its dissolution occurs 
 with the completion of the contemplated business.^ In accord- 
 ance with this rule, it has been held that the organization of a 
 corporation works the instant dissolution of a partnership whose 
 articles provided that the firm should be incorporated "as soon 
 as may be." ^ 
 
 (6) Partnerships at Will. — If the term of the partnership 
 is not fixed either expressly or by implication, it may be ter- 
 minated at the will of either partner by giving notice to his co- 
 partners of his intention to dissolve it, and the motive of the 
 partner giving notice is immaterial.' The British Partnership 
 Act provides that in such a case "the partnership is dissolved 
 as from the date mentioned in the notice as the date of dissolu- 
 tion, or if no date is so mentioned, as from the date of the com- 
 munication of the notice." ^ Such appears to be substantially 
 
 ' British Partnership Act of 1890, § 32 (a) ; Cal. Code, § 2450 (1) ; 
 La. Code, Art. 2876 (1) ; L. of Md. 1916, Ch. 175, § 31 (1), (a). 
 
 ' British Partnership Act of 1890, § 27 (1) ; L. of Md. 1916, Ch. 175, 
 §23. 
 
 3 Bank of Montreal v. Page, 98 111. 109 (1881) ; L. of Md. 1916, Ch. 
 175, § 31 (1), (c). 
 
 ^ Kennedy v. Porter, 109 N. Y. 526, 551, 17 N. E. 476 (1888). By 
 the return of the original capital to the several partners and the final dis- 
 tribution of the assets. 
 
 5 British Partnership Act of 1890, § 32 (5) ; Bohrer v. Drake, 33 Minn. 
 408, 23 N. W. 840 (1885) ; L. of Md. 1916, Ch. 175, § 31 (1), (a). 
 
 6 Hennessy v. Griggs, 1 N. Dak. 52, 59, 44 N. W. 1010 (1890) ; Sen- 
 fert V. Gille, 230 Mo. 453, 131 S. W. 102, 31 L. R. A. n. s. 471, with note 
 (1910). 
 
 ' Freund v. Murray, 39 Mont. 539, 104 Pac. 683, 25 L. R. A. n. s. 
 959 (1909). 
 
 8 § 32 (c). The La. Code requires the notice to be given bona fide and 
 seasonably, §§ 2884-2886. No such specific provision in the Uniform 
 Partnership Act. 
 
344 THE LAW OP PARTNERSHIP 
 
 the rule recognized by our courts.^ As the consent of the other 
 partners to the dissolution is unnecessary, the insanity of the 
 partner to whom the notice is given is immaterial.^ After a 
 valid notice has been given, the consent of all the partners is 
 necessary to its retraction.^ 
 
 1. Partnerships for a Fixed Term. — Whether a partner- 
 ship, which the parties have agreed shall continue for a definite 
 period, can be dissolved by the act of one partner without his co- 
 partner's consent, is a question upon which there is much differ- 
 ence of opinion. 
 
 (a) The English Doctrine. — It appears to be settled in Eng- 
 land that it cannot be thus dissolved. A partner, as we have 
 seen,^ cannot be expelled from such a partnership, unless the 
 partnership articles confer the power of expulsion upon his asso- 
 ciates; nor can he, by attempting to withdraw from the firm, 
 break it up. Neither can he by suffering his share to be charged 
 with the lien of a judgment, nor by assigning his share, force the 
 purchaser or assignee into the firm, or confer upon such purchaser 
 or assignee the right to call the other partners to an account.* 
 Such conduct does give to his copartners, however, the right to 
 have the partnership dissolved by judicial decree.^ 
 
 (&) Different Views in this Country. — The English doctrine 
 appears to be sound in principle; and it has received the ap- 
 proval of distinguished writers, as well as of a few courts in this 
 country.'' However, the weight of judicial authority, in both 
 the Federal and the State courts, is opposed to that doctrine.^ 
 
 1 Fletcher v. Reed, 131 Mass. 312 (1881) ; Burdick's Cases on Part. 
 554 ; Green v. Waco State Bank, 78 Tex. 2 (1890). 
 
 2 MeUersh v. Keen, 27 Beav. 236 (1859). 
 
 ' Jones V. Lloyd, L. R. 18 Eq. 265, 43 L. R. Ch. 826 (1874). 
 
 * Chap. VI. § 4, 1, supra; cf. Barnes v. Youngs (1898), 1 Ch. 414, 67 
 L. J. Ch. 263. 
 
 "British Part. Act of 1890, §§ 24 (7), 31, 32; Brown v. Hutchinson, 
 [1895] 2 Q. B. 126; Burdick's Cases on Part. 419; Lindley on Part. 
 (6th ed.) 563, 575, (7th ed.) 397, 535. 
 
 " British Partnership Act of 1890, §§ 33 (2), 35. 
 
 ' Ferero v. Buhlmeyer, 34 How. Pr. (N. Y.) 33 (1867) ; Hannaman v. 
 Karrick, 9 Utah, 236, 33 Pac. 1039 (1893) ; Story on Part. (6th ed.) § 275 ; 
 Cole V. Moxley, 12 W. Va. 730 (1878). 
 
 8 Solomon v. Kirkwood, 55 Mich. 256, 21 N. W. 336 (1884) ; Burdick's 
 Cases on Part. 554 ; 3 Kent's Comm. (14th ed.) *54. 
 
DISSOLUTION OF PARTNERSHIPS 345 
 
 In a recent case/ the United States Supreme Court states 
 the principal reasons for the prevailing view in this country, 
 as follows : " A contract of partnership is one by which two or 
 more persons agree to carry on a business for their common 
 benefit, each contributing property or services, and having a 
 community of interest in the profits, 'it is, in effect, a con- 
 tract of mutual agency, each partner acting as a principal in 
 his own behalf and as agent for his copartner. ' Every part- 
 nership creates a personal relation between the partners, rests 
 upon their mutual consent, and exists between them only. With- 
 out their agreement or approval, no third person can become 
 a member of the partnership, either by act of a single partner 
 or by operation of law ; alid the death or bankruptcy of a partner 
 dissolves the partnership. So, an absolute assignment by one 
 partner of all his interest in the partnership to a stranger dis- 
 solves the partnership, although it does not make the assignee 
 a tenant in common with the other partners in the partnership 
 property. No partnership can efficiently or beneficially carry 
 on business without the mutual confidence and co-operation of 
 all the partners. Even when, by the partnership articles, they 
 have covenanted with each other that the partnership shall 
 continue for a certain period, the partnership may be dissolved 
 at any time, at the will of any partner, so far as to put an end 
 to the partnership relation, and to the authority of each partner 
 to act for all, but rendering the partner who breaks his covenant 
 liable to an action at law for damages, as in other cases of breaches 
 of contract." 
 
 Reasoning similar to the foregoing is found in a recent Con- 
 necticut decision.^ 
 
 (c) Dissolution in Breach of Contract, causing Damage. — 
 According to this view, a stipulation in a partnership contract 
 
 1 Karrick v. Hannaman, 168 U. S. 328, 335, 18 Sup. Ct. R. 135, 42 
 L. Ed. 484 (1897), refusing to assent to the opinion of the court below 
 (9 Utali, 236, supra), that "a partnership for a definite time cannot be 
 dissolved by one partner at his own wiU and without the consent of his 
 copartner, within that time." The Civil Code of Cahfornia, § 2450 (4), 
 and the Code of Louisiana, Art. 2887, foUow the majority view, as does 
 the Uniform Partnership Act, § 31 (2). 
 
 2 Lapenta v. Lettieri, 72 Conn. 377, 44 At. 730, 77 Am. St. R. 315, 
 and note (1899). 
 
346 THE LAW OF PARTNERSHIP 
 
 that the relation shall continue for a fixed period, has this effect 
 only: it entitles the non-consenting partners to such damages 
 as they can show they have sustained by the breach of the agree- 
 ment/ which may be only nominal.^ 
 
 In Solomon v. KirJcwood, it is intimated that "there may be 
 cases in which equity would enjoin a dissolution for a time, where 
 the circumstances are such as to make it specially injurious"; 
 but in Karrich v. Hannaman, it is declared that, while equity 
 "will not assist the partner breaking his contract to procure a 
 dissolution, . . . generally speaking, neither will it interfere 
 at the suit of the other partner to prevent dissolution, because 
 while it may compel the execution of articles of partnership so 
 as to put the parties in the same position as if the articles had 
 been executed as agreed, it will seldom, if ever, specifically com- 
 pel subsequent performance of the contract by either party, 
 the contract of partnership being of an essentially personal char- 
 acter." 
 
 It is undoubtedly the general rule, both in England ' and in 
 this country,* that the specific performance of contracts for 
 partnership will not be enforced. 
 
 § 3. Dissolution by the Court. 
 
 Allusion has been made to some of the causes for which a court 
 of equity will decree the dissolution of a partnership. Fraud, 
 practised by the defendant on the plaintiff, which induced the 
 latter to enter into the relation, may, as we have seen, authorize 
 a decree annulling the partnership.* Suffering his share to be 
 
 • Cases cited in the last three notes. California Civ. Code, § 2451. 
 
 2 Kebart v. ArMn, 232 Fed. 454, 146 C. C. A. 448 (1916), the partner- 
 ship was insolvent and had only ten days to run. 
 
 ' Lindley on Part. (7th ed.) 517 ; Byrne v. Reid (1902), 2 Ch. 735, 71 
 L. J. Ch. 830. 
 
 * Gusdorf V. Schleisner, 85 Md. 360, 37 At. 170 (1897), and authorities 
 therein cited. 
 
 = Chap. VII. § 3 (c), infra; Oteri v. Scalzo, 145 U. S. 578, 12 Sup. 
 Ct. R. 895, 36 L. Ed. 824 (1892). Cf. Brew v. Hastings, 196 Pa. 222, 46 
 At. 257, 79 Am. St. R. 706 (1900), holding, that "Insolvency of a partner, 
 unknown to the others, at the time a partnership is formed, the agreement 
 providing for continuance of the firm for a certain number of years, 
 though a partner dies, is not a fraud on his creditors, so as to authorize 
 a forced dissolution on his death." 
 
DISSOLUTION OF PAETNERSHIPS 347 
 
 charged or seized under a separate judgment against him, or the 
 sale and assignment of h is share wit.hnnt bis partripr'a fmiRfi al..^ 
 will justify his copartner in bringing a suit in equity for a disso- 
 lution. Let us now consider the other causes for which dissolu- 
 tion may be decreed. 
 
 (a) Lunacy of a Partner. — There is some authority for the 
 proposition that a judicial declaration of the lunacy of a partner 
 works the immediate dissolution of the partnership, because it 
 "suspends the whole functions and rights of the party to act 
 personally." ^ It is held generally, however, both in England and 
 in this country, that the lunacy of a partner does not of itself 
 produce a dissolution, although it is a valid reason for dissolution 
 by the court upon the application of the sane partner, or on behalf 
 of the insane partner.^ 
 
 This is clearly the better view. As insanity renders its victim 
 incapable of performing his duties as a partner, it furnishes a good 
 ground for dissolution. But unless an application is made for a 
 ■dissolution, it is fair to presume that the sane partner and those • 
 interested in the estate of the insane partner are content that the 
 partnership should continue, in the expectation that the sufferer 
 may recover from his malady.* 
 
 (6) Permanent Incapacity. — Whenever a person becomes 
 "permanently incapable of performing his part of the partner- 
 ship contract",^ the same principle upon which a dissolution is 
 decreed in case of insanity justifies a court in dissolving the firm, 
 upon the application of the other partner.* 
 
 > Chap. VII. § 2 (6), supra. 
 
 2 Story on Part. (6tli ed.) § 295 ; Isler v. Baker, 6 Humph. (25 Tenn.) 
 S5 (1S45). 
 
 3 Jurgens v. Ittmann, 47 La. Ann. 367, 16 So. 952 (1895) ; Burdick's 
 €ases on Part. 558 ; British Partnership Act of 1890, § 35 (o) ; L. of Md. 
 1916, Ch. 175, § 32 (1), (a). 
 
 Art. 2883 of the La. Code provides that "the interdiction of one of 
 the partners or his bankruptcy has, as to the dissolution of the partner- 
 ship, the same effect as the death of one of the partners." 
 
 * Raymond v. Vaughn, 128 lU. 256, 21 N. E. 566, 15 Am. St. R. 112, 
 4 L. R. A. 440 (1889). 
 
 s British Partnership Act of 1890, § 35 (6) ; L. of Md. 1916, Ch. 175, 
 ^ 32 (1), (6). 
 
 6 Whitwell V. Arthur, 35 Beav. 140. Paralytic attack. As the evi- 
 <ience indicated that defendant's incapacity was but temporary, disso- 
 
348 THE LAW OF PARTNERSHIP 
 
 (c) Misconduct of a Partner. — While a court of equity will 
 not decree a dissolution of a partnership for trifling reasons, 
 nor encourage partners in bringing their petty disputes to it for 
 settlement, it will entertain a suit for dissolution against a part- 
 ner whose misconduct "is calculated to prejudicially affect the 
 carrying on of the business", or which renders the successful 
 conduct of the business by his copartners impracticable.^ 
 
 Hence, a bill will not be dismissed on demurrer which charges 
 the defendant with wilfully and persistently neglecting to comply 
 with the terms of the partnership contract.^ A partner who 
 fails or refuses to advance the money required by the partnership 
 articles subjects himself to a suit for dissolution.^ So does a 
 partner who insists upon selling spirituous liquors as a part of the 
 firm business, when the partnership contract provides the firm 
 shall not sell such liquors.^ The same is true of a partner who is 
 shown to have resolved " to break up and ruin the business of the 
 firm ", and whose personal relations with his copartners " are 
 . such that they can never carry on the business together to advan- 
 tage ",^ or who denies the existence of the partnership and ex- 
 cludes plaintiff from any share in the profits.^ 
 
 (d) A Losing Business. — Even though there be no misconduct 
 on the part of the members and no unpleasant personal relations 
 between them, if a partner can show that the business " can only 
 be carried on at a loss", he is entitled to a decree of dissolution.'^ 
 
 lution was not decreed, but "proceedings were stayed with leave to 
 apply"; Barclay v. Barrie, 209 N. Y. 40, 102 N. E. 602, 29 Ann. Cas. 
 1143, 47 L. R. A. n. s. 839, with full note (1913). Paralysis was perma/- 
 nent. Text cited by counsel on each side. 
 
 1 British Partnership Act of 1890, § 35 (c) and (d) ; California Civil 
 Code, § 2452 (2) ; L. of Md. 1916, Ch. 175, § 32 (1), (c), (d) ; PhiUip v. 
 Von Raven, 57 N. Y. Supp. 701 (1899) ; Wood v. Beath, 23 Wis. 254 
 (1868). 
 
 2 Rosenstein v. Burns, 41 Fed. 841 (1882) ; Burdick's Cases on Part. 
 557. 5 Turnipseed v. Goodwin, 9 Ala. 372 (1846). 
 
 * Abbott V. Johnson, 32 N. H. 9 (1855). 
 
 « Sutro V. Wagner, 23 N. J. Eq. 388 (1873). 
 
 » Gaddie v. Mann, 147 Fed. 960 (1906). 
 
 ' HoUaday v. EUiott, 8 Ore. 84 (1879) ; Rosenstein v. Burns, 41 Fed. 
 841 (1882) ; Burdick's Cases on Part. 557 ; British Partnership Act of 
 1S90, § 35 (e) ; California Civil Code, § 2452 (3) ; L. of Md. 1916, Ch. 
 175, § 32 (1), (e). 
 
DISSOLUTION OF PARTNERSHIPS 349 
 
 (e) For JiLst Cause. — After enumerating the foregoing causes 
 for the dissolution of partnerships by judicial decree, the British 
 statute adds : "Whenever in any case circumstances have arisen 
 which, in the opinion of the court, render it just and equitable 
 that the partnership be dissolved ",^ the court may decree a 
 dissolution. 
 
 This clause, it has been suggested, "will be limited in its appli- 
 cation to cases ejiisdem generis as those mentioned in the previous 
 parts of the section; but," the writer adds, "the court ought not 
 to fetter itself by any rigid rules ; and any case in which it is no 
 longer reasonably practicable to attain the object with a view 
 to which the partnership was entered into, or to carry out the 
 partnership contract according to its terms, will, it is apprehended, 
 be within this section." ^ 
 
 Under a similar provision of the Louisiana statute ' it has been 
 held that, as the legislature did not furnish an interpretation of 
 the term "just cause for a dissolution ", "it is a question for the 
 court to determine for itself in any given case"; and that as 
 "partnership is essentially a relation of mutual- trust and confi- 
 dence ", when they cease, a just cause for dissolution exists.* 
 Such appears to be the generally accepted doctrine in this country.^ 
 
 (/) On behalf of Purchaser of a Partner's Interest. — The Uniform 
 Partnership Act provides for a judicial dissolution, " On the 
 application of the purchaser of a partner's interest under sections 
 27 or 28 : (a) After the termination of the specified term or par- 
 ticular undertaking, (6) At any time if the partnership was a 
 partnership at will when the interest was assigned or when the 
 charging order was issued." ® 
 
 1 British Partnership Act of 1890, § 35 (/) ; L. of Md. 1916, Ch. 175, 
 § 32 (1), (/) : "Other circumstances render a dissolution equitable." 
 
 2 Lindley on Part. (6th ed.) 574, 575, (7th ed.) 619. 
 ' Revised Civil Code, Art. 2887. 
 
 * Breaux v. Le Blanc, 50 La. Ann. 228, 23 So. 281 (1898). 
 
 = Moore v. Price, 116 Ala. 247, 22 So. 531 (1897). In Meaher v. Cox, 
 37 Ala. 201 (1864), the court declared that a combination of circum- 
 stances, no one of which alone might have justified a decree of dissolu- 
 tion, did warrant the court in dissolving the partnership. 
 
 6 L. of Md. 1916, Ch. 175, § 32 (2). 
 
CHAPTER VIII 
 
 ACCOUNTING AND DISTRIBUTION 
 
 § 1. The Right to an Accounting. 
 
 We have seen that each partner owes to his associates the 
 duty of rendering "true accounts and full information of all 
 things affecting the partnership ", including secret profits de- 
 rived by him at the expense of the partnership.^ If he fails 
 to perform his duty, his associates are entitled to maintain a 
 suit for an accounting against him. So they are, if he disavows 
 the partnership relation and attempts to exclude them from the 
 partnership business.^ If one partner fraudulently releases a 
 firm debtor, he and the debtor may be made parties defendant 
 to an equity action for an accounting.' 
 
 (a) During the Continuance of the Partnership. — Generally, 
 such a suit is brought only upon the dissolution of the firm or 
 with a view to a dissolution; but it is now well settled, both 
 in England and in this country, that the suit will lie in some 
 cases, even though a dissolution is not sought. It may be main- 
 tained for the recovery of secret profits which the defendant is 
 withholding from his firm ; * also, when the defendant is attempting 
 to expel or exclude the plaintiff from the partnership,^ or when 
 the partnership agreement calls for settlements during the con- 
 
 ' Supra, Chap. VI. ; L. of Md. 1916, Ch. 175, § 21. 
 
 ' Reilly v. Woolbert, 196 Ala. — , 72 So. 10 (1916) ; L. of Md. 1916, 
 Ch. 175, § 22 (a) ; McCabe v. Sinclair, 66 N. J. Bq. 24, 58 At. 412 (1904). 
 
 ' Anable v. McDonald L. & M. Co., 144 Mo. App. 303, 128 S. W. 38 
 (1910); L. of Md. 1916, Ch. 175, §22 (d). "Any partner shall have 
 the right to a formal account as to partnership officers, whenever other 
 circumstances render it just and reasonable." 
 
 ' Beck V. Kantorowicz, 3 K. & J. 230 (1857) ; Sanger v. French, 157 
 N. Y. 213, 51 N. E. 979 (1898). 
 
 6 Richards v. Davies, 2 R. & M. 347 (1831). 
 
 350 
 
ACCOUNTING AND DISTRIBUTION 351 
 
 tinuance of the firm/ even though the plaintiff does not ask to 
 have the affairs of the firm wound up. 
 
 But it has been held that " a court of equity will not take cog- 
 nizance of an actio^ for an accounting as a mere incident to the 
 settlement of a solitary matter in dispute between partners, 
 when it is not vital to either party or to the business and disso- 
 lution is not sought. Actions to establish a partnership, the 
 existence of which was denied by the partner in control ; to give 
 a partner access to the books after persistent refusal, or to per- 
 mit him to take part in the business from which he had been 
 excluded, are founded on intentional and continuous wrong-, 
 doing which, unless arrested, might subvert the partnership. 
 When one party seizes or absorbs the entire business, or usurps 
 rights of his copartner which are essential to his safety or the safety 
 of the firm, or persists in misconduct, so gross as to threaten de- 
 struction to the interests of all, the court may intervene to restore 
 the rights of the innocent party or to rescue a paying business 
 from ruin. Extreme necessity only, however, will justify inter- 
 ference without a dissolution." ^ 
 
 (6) Right to Accounting not a Test of Partnership. — Lord 
 Eldon declared ^ that if a person " agrees for a part of the profits, 
 as such, giving him a right to an account, though having no 
 property in the capital, he is, as to third persons, a partner." 
 This view is not in accordance with the modern definition of a 
 partnership.* It often happens that a person has a right to an 
 accounting, although he is not a partner of the defendant in the 
 business, to which the accounting relates.* 
 
 If, while negotiations are in progress for a partnership between 
 several persons, property of A is put into the possession of B and 
 C to be used in the business of the contemplated partnership, 
 and it is used by them and they realize a profit therefrom in the 
 
 ' Patterson v. Ware, 10 Ala. 444, 449 (1846). 
 
 2 Lord V. HuU, 178 N. Y. 9, 70 N. E. 69 (1901). The opinion in this 
 case contains a full enumeration and careful discussion of the authori- 
 ties upon this point. 
 
 3 Ex parte Hamper, 17 Ves. 403, 413 (1811). 
 « Ante, Chap. II. § 3. 
 
 6 The Uniform Partnership Act gives the right to an account to the 
 assignee of a partner's interest, in certain circumstances. L. of Md. 1916, 
 Ch. 175, § 27, (2). 
 
352 THE LAW OF PARTNERSHIP 
 
 business, but a partnership is never perfected, A may maintain 
 a suit for an accounting against B and C " upon principles anal- 
 ogous to those adopted in winding up a common-law partner- 
 ship." 1 
 
 It is also held in this country, that, although a partnership 
 for a fixed term may be dissolved by one partner without the 
 consent of his copartner, the partner who after such a dissolu- 
 tion "carries on the business with the partnership property, is 
 liable, at the election of the other partner or his representative, 
 to account for the profits thereof, subject to proper allowances." ^ 
 
 We have seen, that it is also held by many courts in this coun- 
 try that the transferee of a partner's share and even a sub-partner ' 
 may maintain a suit for an accounting. Such a plaintiff is not 
 recognized by these courts as a partner, however, and his claim 
 is subject to any defences available against the partner from whom 
 he derives his interest. 
 
 (c) Right to an Accounting not easily lost by a Partner. — Equity 
 favors the exercise of this right by a partner.* It is no answer 
 to a bill for an account, that, upon the dissolution of a partner- 
 ship between the parties, it was agreed that the defendant should 
 receive all the assets and settle all the affairs of the firm, and that 
 defendant has paid, in settling the affairs, much more than he 
 has received from the assets.^ Nor is it an answer, that the 
 parties had largely settled their affairs before the commencement 
 of the suit,^ and that plaintiff was authorized by the defendant 
 to liquidate the business. "Each partner has a right to an 
 accounting from his copartner as to all dealings and transactions 
 
 1 Stringfellow v. Wise (Va.), 27 S. E. 432 (1897). A similar right 
 lias been accorded to one who had sold his interest to a copartner, who 
 was to use the old name, but not to contract new liabilities, and who vio- 
 lated the agreement. Joselove v. Bohrman, 119 Ga. 204, 45 S. E. 982 
 (1903). 
 
 2 Karrick v. Hannaman, 168 U. S. 328, 18 Sup. Ct. R. 135 (1897). 
 Cf. L. of Md. 1916, Ch. 175, § 38 (2). 
 
 3 Nirdlinger v. Bernheimer, 133 N. Y. 45, 30 N. E. 561 (1892) ;' Henry 
 V. Evans, 95 Iowa, 244, 63 N. W. 687 (1895). 
 
 * In Hanna v. McLaughlin, 158 Ind. 292, 63 N. E. 475 (1902), it is 
 held that "no demand is necessary as a condition precedent to a suit 
 between partners for an accounting and settlement." 
 
 ' Sharp V. Hibbins, 42 N. J. Eq. 543, 9 At. 113 (1887). 
 
 « Joseph V. Herzig, 198 N. Y. 456, 92 N. E. 103 (1910). 
 
ACCOUNTING AND DISTRIBUTION 353 
 
 connected with the business of the firm, and, as the result may 
 indicate, either to a ratable distribution of any surplus there may 
 be after payment of the debts, or to a ratable contribution to 
 make up the sum required to discharge the debts. Thus all the 
 obligations, both express and implied, arising from the copart- 
 nership agreement, may be enforced in a convenient and effective 
 manner, by a court having power to adapt its action to every 
 variety of circumstances." ^ 
 
 The fact that the books of the firm are defective, or that for 
 any other reason it is difficult to state an accurate account of 
 the partnership transactions, will not bar an action for an ac- 
 counting.^ Nor will mere delay for any time short of that pre- 
 scribed by the statute of limitations be deemed a bar.^ The 
 general rule is that the statute begins to run at the date of the 
 dissolution.* But this may be modified by agreement, or by par- 
 ticular circumstances.^ 
 
 The right to an accounting may be lost, however, by a sale 
 of the plaintiff's interest in the partnership to the defendant. 
 Such a sale, it has been said, "is practically an account stated 
 between the parties in respect to their relations as members of 
 the firm." « 
 
 § 1. (A.) Bules of Distribution. 
 
 In the absence of any agreement between the partners on 
 the subject, the rules governing the distribution of firm assets, 
 upon a final settlement of the- partnership accounts, are stated 
 as follows in the British Partnership Act: 
 
 1 Watts V. Adler, 130 N. Y. 646, 29 N. E. 131 (1891). Other cases, in 
 whicli the right to an account has been upheld, are : Oglesby v. Thompson, 
 59 Oh. St. 60, 51 N. E. 878 (1898) ; Smith v. Zumbro, 41 W. Va. 623, 24 
 S. B. 653 (1896). 
 
 2 Hughes V. Love, 138 Mich. 169, 101 N. W. 536 (1904) ; Lamb v. 
 Kowan, 83 Miss. 45, 35 So. 427 (1903). 
 
 ' Morrill v. Weeks, 70 N. H. 178, 46 At. 32 (1900). 
 
 « Brooks V. Campbell, 97 Kan. 208, 155 Pac. 41 (1916) ; L. of Md. 
 1916, Ch. 175, § 43. 
 
 6 Moore v. Westbrook, 156 N. C. 482, 72 S. E. 842, 26 Ann. Cas. 168 
 (1911) ; McPherson v. Swift, 22 S. D. 165, 116 N. W. 76, 133 Am. St. R. 
 907 (1908). 
 
 5 Schlicher v. Vogel, 61 N. J. Eq. 158, 47 At. 448 (1900). 
 
354 THE LAW OF PARTNERSHIP 
 
 "(a) Losses, Including losses and deficiencies of capital, shall 
 be paid first out of profits, next out of capital, and lastly, if nec- 
 essary, by the partners individually in the proportion in which 
 they were entitled to share profits. (6) The assets of the firm, 
 including the sums, if any, contributed by the partners to make 
 up losses or deficiencies of capital, shall be applied in the follow- 
 ing manner and order : (1) In paying the debts and liabilities of 
 the firm to persons who are not partners therein; (2) In paying 
 to each partner ratably what is due from the firm to him for 
 advances as distinguished from capital; (3) In paying to each 
 partner ratably what is due from the firm to him In respect of 
 capital ; (4) The ultimate residue. If any, shall be divided among 
 the partners in the proportion in which profits are divided." ^ 
 
 These rules have been much modified by the Uniform Partner- 
 ship Act, as is apparent from the corresponding section reprinted 
 in the note.^ It will be observed that this provision adopts the 
 
 1 Partnership Act of 1890, § 44. 
 
 2L. of Md. 1916, Ch. 175, § 40. "[Rules for Distribution.] In 
 settling accounts, between the partners after dissolution, the foUowiug 
 rules shall be observed, subject to any agreement to the contrary : 
 (a) The assets of the partnership are : 
 I. The partnership property, 
 II. The contributions of the partners necessary for the payment 
 of all the habilities specified in clause (b) of this paragraph. 
 (6) The liabiKties of the partnership shall rank in order of payment, 
 as follows : 
 
 I. Those owing to creditors other than partners, 
 II. Those owing to partners other than for capital and profits, 
 III. Those owing to partners in respect of capital, 
 IV. Those owing to partners in respect of profits. 
 
 (c) The assets shall be applied in the order of their declaration in 
 clause (a) of this paragraph to the satisfaction of the liabilities. 
 
 (d) The partners shall contribute, as provided by section 18 (a), the 
 amount necessary to satisfy the liabilities ; but if any, but not all, of the 
 partners are insolvent, or, not being subject to process, refuse to con- 
 tribute, the other partners shall contribute their share of the UabiUties, 
 and, in the relative proportions in which they share the profits, the addi- 
 tional amount necessary to pay the liabilities. 
 
 (e) An assignee for the benefit of creditors or any person appointed 
 by the court shall have the right to enforce the contributions specified in 
 clause (d) of this paragraph. 
 
 (f) Any partner or his legal representative shall have the right to 
 
ACCOUNTING AND DISTRIBUTION 355 
 
 view that the contributions of the partners towards the losses of 
 the business are partnership assets.^ 
 
 1. Modified by Agreement. — The partnership articles or 
 subsequent agreements between the partners may contain pro- 
 visions which modify these rules in one or more respects. For 
 example, it may be provided ^ that the contributions by the 
 partners to the firm stock shall not be deemed capital to be re- 
 paid by the partnership to the contributors, but firm assets to be 
 distributed upon settlement as profits. In such a case, the court 
 will not treat these contributions as debts due from the firm to 
 the several partners, either in respect of capital, or in respect of 
 advances. 
 
 Or it may be provided that the yearly profits shall be added 
 to the capital, instead of accumulating in a separate fund; in 
 which case, after paying outside debts and reimbursing the 
 partners for any advances made by them, the balance of the 
 firm assets will be divided among the partners in payment of 
 the sums due to each in respect of his capital.^ Such a provision 
 works a material change in the distributive shares of the partners, 
 
 enforce the contributions specified in clause (d) of this paragraph, to the 
 extent of the amount which he has paid in excess of his share of the 
 liabiKty. 
 
 (g) The individual property of a deceased partner shall be hable for the 
 contributions specified in clause (d) of this paragraph. 
 
 {h) When partnership property and the individual properties of the 
 partners are in the possession of a court for distribution, partnership 
 creditors shall have priority on partnership property and separate cred- 
 itors on individual property, saving the rights of lien or secured creditors 
 as heretofore. 
 
 (i) Where a partner has become bankrupt or his estate is insolvent 
 the claims against his separate property shall rank in the following order : 
 I. Those owing to separate creditors, 
 II. Those owing to partnership creditors, 
 III. Those owing to partners by way of contribution." 
 
 1 In re Forbes, 128 Fed. 137 (1904) ; Fogg v. Tyler, 111 Me. 546, 
 90 At. 481 (1914). 
 
 2 Groth V. Kersting, 23 Col. 213, 47 Pae. 393 (1896) ; Burdick's Cases 
 on Part. 563. 
 
 ' Molineaux v. Raynolds, 54 N. J. Eq. 559, 35 At. 536 (1896) ; Bur- 
 dick's Cases on Part. 169; Binney v. Mutrie, 12 App. Cas. 160 (1886). 
 The form of the order in the latter case, at pp. 165 and 166, wiU repay a 
 careful examination. 
 
356 THE LAW OF PARTNERSHIP 
 
 whenever the proportion in which profits are to be divided is 
 different from the ratio existing between their capitals. 
 
 In Molineaux a7. Raynolds, referred to in the last note, it reduced 
 the plaintiff's share from about eighteen per cent to about six- 
 teen per cent ; and in Binney v. Mutrie, it depleted the plaintiff's 
 claim, not only in respect of his share of the assets at the time of 
 distribution, but also in respect of his loss of capital. 
 
 2. The Burden of Losses. — According to the rules stated 
 above, this is to be borne ultimately by the partners in the pro- 
 portion in which they are entitled to share profits,^ unless they 
 have agreed upon a different proportion. Each partner has the 
 right to insist, however, as against his copartners, that before he 
 contributes from his private means to the satisfaction of such 
 losses, not only shall all profits made in prior transactions be ex- 
 hausted, but his associates shall pay into the partnership fund 
 every debt due from either of them, whether on account of capi- 
 tal ^ which they have failed to contribute, or on account of over- 
 drafts by them.^ 
 
 3. Illegal Partnerships. — The rules which we have been 
 considering will not be applied in an action for an accounting 
 between members of an illegal partnership. Indeed, an action 
 for an accounting between such partners will not be entertained 
 by the courts.'* The illegality of the partnership need not be 
 set up by the defendant. If it appears at any stage of the liti- 
 gation, the court may "refuse to aid either party and leave them 
 where they had placed themselves. ... To hold otherwise 
 would subordinate the courts to the ingenious devices of men 
 engaged in illegal and even criminal transactions, and compel 
 them to carry out in the solemn forms of law, and by its resist- 
 less power, transactions which the same law had pronounced 
 criminal and void." ^ 
 
 1 L. of Md. 1916, Ch. 175, § 18 (a). 
 
 ^ Sangston v. Hack, 52 Md. 173 (1879). 
 
 ' Neudeoker v. Kohlberg, 3 Daly (N. Y.) 407 (1871). 
 
 "Everett v. Williams (1725), 1 European Mag. 360, 9 L. Q. R. 197. 
 Bill in equity for an account by a highwayman against his partner. 
 
 ' Wright V. Cudahy, 168 111. 86, 48 N. B. 39 (1897) ; Burdick's Cases 
 on Part. 568, 670 ; Morrison v. Bennett, 20 Mont. 560, 52 Pac. 553 (1898) ; 
 Gould V. Kendall, 15 Neb. 549, 19 N. W. 483 (1884) ; Wiggins v. Bisso, 
 92 Tex. 219, 47 S. W. 637, 71 Am. S. R. 837 (1898) ; Williams v. Kendrick, 
 
ACCOUNTING AND DISTRIBUTION 357 
 
 In a recent case before the Supreme Court of the United States, 
 it appeared that the parties to a suit for an accounting had en- 
 tered into a written agreement of partnership to perform a con- 
 tract for pubKc work, which had been awarded to one of them. 
 The contract had been performed and profits had been realized 
 which the defendant refused to divide with the plaintiff. It 
 appeared further that this partnership agreement was but a 
 portion of a larger agreement between them that they should 
 combine their interests; that they should put in bids known to 
 each; that they should conceal the fact of their combination; 
 that they should put in fictitious bids, without expectation or 
 purpose of having them taken; that, if the contract were pro- 
 cured, they should perform the work as partners, and share ex- 
 penses and divide profits. Such larger agreement was clearly 
 illegal and void. But the plaintiff insisted that as the agreement 
 had been fully executed, the court would not be lending itself 
 to the enforcement -of the illegal portion by compelling the de- 
 fendant to account for the profits of this executed transaction, and 
 to pay over to plaintiff his share. However, the court declared 
 "that to permit a recovery in this case is, in substance, to enforce 
 an illegal contract, and one which is illegal because it is against 
 public policy to permit it to stand. The court refuses to enforce 
 such a contract, and it permits defendant to set up its illegality, 
 not out of any regard for the defendant who sets it up, but only 
 on account of the public interest. It has often been stated in 
 similar cases that the defence is a very dishonest one, and it lies 
 ill in the mouth of the defendant to allege it, and it is only allowed 
 for public considerations, and in order the better to secure the 
 public against dishonest transactions. To refuse to grant either 
 party to an illegal contract judicial aid for the enforcement of his 
 alleged rights under it tends strongly towards reducing the num- 
 ber of such transactions to a minimum. The more plainly parties 
 understand that when they enter into contracts of this nature 
 they place themselves outside the protection of the law, so far 
 as that protection consists in aiding them to enforce such contracts, 
 the less inclined will they be to enter into them. In that way the 
 
 105 Va. 791, 54 S. E. 865 (1906) ; Kennedy v. Lonabaugh, 19 Wyo. 352, 
 117 Pae. 1079, 30 Ann. Gas. 133 (1910), containing a full digest of author- 
 ities. 
 
358 THE LAW OF PARTNERSHIP 
 
 public secures the benefit of a rigid adherence to the law. Being 
 of the opinion that the contract proved in this case was illegal, 
 in the sense that it was fraudulent, and entered into for improper 
 purposes, the law will leave the parties as it finds them." ^ 
 
 The foregoing doctrine does not apply where the business is 
 legal, but the defendant partner is resisting an accounting for 
 profits which he gained by defrauding from creditors.^ 
 
 If, however, the plaintiff is not asking for an accounting by his 
 associate in the illegal partnership, and does not require the aid 
 of the partnership contract to make out his case, but is seeking 
 to enforce an obligation which is supported by an independent 
 consideration, although indirectly connected with the illegal 
 partnership, he may be able to recover.^ But most courts are 
 not disposed to extend * the doctrine of Brooks v. Martin, cited 
 in the last note ; although in a few jurisdictions, it must be con- 
 fessed, a tendency is apparent to broaden rather than to narrow 
 the scope of the doctrine.* 
 
 § 2. Repaying Advances. 
 
 A partner who makes advancements to a firm, during its exist- 
 ence or in winding up its affairs, becomes, as against his copartners, 
 a creditor of the firm. He is not in the position of a volunteer. 
 His interest in the firm property and his liability for its debts 
 entitle him to make the advances, and to call on the firm and his 
 
 ' McMuUen v. Hoffman, 174 U. S. 639, 19 Sup. Ct. 839, 43 L. Ed. 1117 
 (1899). Accord. Central Trust & S. D. Co. v. Respass, 112 Ky. 606, 66 
 S. W. 421, 66 L. R. A. 479, 99 Am. S. R. 317, with valuable note (1902) ; 
 Smith V. Richmond, 114 Ky. 303, 70 S. W. 846, 102 Am. S. R. 283 (1902) ; 
 Vandergrift v. Vandergrift, 226 Pa. 254, 75 At. 365, IS Ann. Cas. 404, 
 with note (1910). 
 
 2 Pennington v. Todd, 47 N. J. Bq. 569, 21 At. 297, 24 Am. S. R. 419, 
 11 L. R. A. 689 (1890). 
 
 ' Armstrong v. Am. Exch. Bank, 133 U. S. 433, 469, 10 Sup. Ct. 450 
 (1890), thus explaining Brooks v, Martin, 2 Wall. 70 (1863) ; Lindley on 
 Part. (6th ed.) 114. 
 
 ' MoMuUen v. Hoffman, 174 U. S. 639, 19 Sup. Ct. 839, 43 L. Ed. 1117 
 (1899), and oases cited in note, 99 Am. S. R. 326-328. 
 
 s Crescent Ins. Co. v. Bear, 23 Pla. 50, 1 So. 318, 11 Am. S. R. 331 
 (1887) ; Patty-Joiner Co. v. City Bank, 41 S. W. (Tex. Civ. App.) 173 
 (1897) ; Burdick's Cases on Part. 184 ; Fryer v. Harken, 142 la. 708, 
 121 N. W. 526, 23 L. R. A. n. s. 477 (1909). 
 
ACCOUNTING AND DISTRIBUTION 359 
 
 associates for reimbursement. Moreover, this reimbursement 
 is to be made before his associates are entitled to repayment on 
 account of their capitals, for, as already stated, his advancement 
 is a loan to the firm, and not an increase of its capital.-^ 
 
 After outside debts are satisfied, the advances which have 
 been made by partners are to be repaid in full, if the firm assets 
 are sufficient therefor. In Leserman v. Bernheimer,^ the firm funds, 
 after paying all the liabilities of the firm to outsiders, were $128,920. 
 The three partners had contributed $75,000 of capital each, and 
 were to share the profits and losses equally. Bernheimer had 
 advanced for the use of the firm $56,621.39, while his copartners 
 had advanced nothing, but on the other hand had drawn out 
 large sums over and above their shares of the yearly profits. 
 Upon an accounting before a referee, the rules which have been 
 stated in this chapter were not observed. The referee gave to 
 each partner one-third of the $128,920, because they had con- 
 tributed equally to the original capital, and then gave judgment 
 to Bernheimer against each of his copartners for one-third of the 
 $56,621.39, thus compelling him to lose one-third of the advances 
 which he had made, and throwing upon him the risks of collect- 
 ing the several judgments from his copartners. The decision was 
 reversed in the Court of Appeals, where the rules above stated 
 were recognized and applied. Bernheimer's advance was declared 
 to be a debt due from the firm, which was to be paid out of the 
 surplus, before any division was made of the partnership capital. 
 
 A partner, who makes advances for the firm without the knowl- 
 edge of his copartners, and in excess of contributions which they 
 have assented to, cannot call upon them for reimbursement,' 
 
 ' L. of Md. 1916, Ch. 175, §§ 18 and 40. 
 
 ' Leserman v. Bernheimer, 113 N. Y. 39, 20 N. E. 869 (1889) ; Bur- 
 dick's Cases on Part. 565. 
 
 3 Thomas v. Winchester Bank, 105 Ky. 694, 49 S. W. 539 (1899). 
 The court said : "The partner who makes a contribution in violation of 
 an agreement cannot compel another partner to contribute a like amount 
 or sustain a loss which resulted from that unauthorized contribution. In 
 this case, Clay made the unequal contribution, if at all, without the 
 knowledge of Thomas, and concealed it from him. It is not reasonable 
 to suppose, for one moment, that Thomas would have become a partner 
 of Clay if he liad known he was to be required to contribute an unlimited 
 amount to the firm capital, or that he was to be bound to contribute an 
 
360 THE LAW OF PARTNERSHIP 
 
 although if such advances enured to the benefit of the firm, he 
 may be entitled to a distributive share of any balance of firm 
 assets which remains after the payment of debts.^ 
 
 (a) Interest on Advances. — The partner making advances 
 will be allowed interest thereon, if there is an express agree- 
 ment to that effect, or if such an agreement can be implied from 
 the circumstances of the case, including trade usages applicable 
 to the particular partnership. Whether he can recover interest, 
 in the absence of such an express or implied agreement, is a ques- 
 tion upon which the American coittts are divided. 
 
 On the one hand, it is said that interest ought not to be al- 
 lowed because such advances are only items in a fluctuating 
 account, and not separate and distinct loan transactions.^ On 
 the other hand, it is contended that such advances are loans, 
 especially if made with the knowledge of the copartners, and 
 should bear interest at the statutory or customary rate.* 
 
 amount equal to every unauthorized and surreptitious contribution whieh 
 Clay might choose to make ; and to make Thomas, in this proceeding, con- 
 tribute a like amount, in our opinion, would be unjust and inequitable." 
 
 1 Thomas v. Winchester Bank, 105 Ky. 694, 49 S. W. 539 (1899). 
 The court said : "After the payment of the firm debts out of the assets of 
 the firm, whatever remains shall be divided between the two partners in 
 proportion to the amounts of their respective contributions, which are as 
 follows to wit: Thomas $6,889.31;. Clay $24,170.77;" Van Tine v. 
 Hilands, 142 Fed. 613 (1906). 
 
 2 Prentice v. Elliott, 72 Ga. 154, 157 (1883). This decision is based in 
 part on § 2885 of the Georgia Code, viz. : "That all accounts of mer- 
 chants, tradesmen and mechanics (and all others), which by custom be- 
 come due at the end of the year, bear interest from that time upon the 
 amount actually due, whenever ascertained ; " the court declaring that the 
 sum advanced was not due until the firm affairs were settled, and a bal- 
 ance ascertained. Accord. Lee v. Kashbrooke, 8 Dana (38 Ky.) 214 
 (1839); Clark v. Warden, 10 Neb. 87 (1880), an advance of capital; 
 Jones V. Jones, 1 Ired. Eq. (36 N. C.) 332 (1841), also an advance of capi- 
 tal ; Holden v. Peace, 4 Ired. Eq. (39 N. C.) 223 (1846) ; Ice v. Kilworth, 
 84 Kan. 458, 114 Pac. 857, 35 L. R. A. n. s. 220, with full note (1911). 
 
 sPolsom V. Mariette, 23 Nev. 459, 49 Pac. 39 (1897); Burdick's 
 Cases on Part. 570, and cases cited. In Rodgers v. Clement, 162 N. Y. 
 422, 425, 56 N. E. 901, 76 Am. S. R. 342 (1900), the court said: "A 
 partner may loan money to the firm of which he is a member, and when 
 he does, his right to interest is to b^ determined in the same way as that 
 of any other creditor. In such cases the general rule is to allow interest 
 upon the advances, although there was no express agreement by the firm 
 
ACCOUNTING AND DISTRIBUTION 361 
 
 Such is the rule laid down in the Uniform Partnership 
 Act.i 
 
 In Britain the matter is regulated by a statutory provision.^ 
 (6) Firm Assets Insufficient to repay Advances. — If the assets 
 of the partnership are insufficient for the repayment of advances, 
 the creditor partner must bear his proportion of the loss,^ unless 
 he is exempted therefrom by agreement. In Magilton v. Steven- 
 son,'^ it was agreed that the profits and losses should be borne 
 equally by the four partners "provided, however, that the said 
 Magilton shall in no event be put to a loss of more than $1,250, 
 and the balance shall be made up and paid to him, in case of 
 greater loss, by the other parties." Magilton having advanced 
 all the funds used by the partnership to the amount of $4,770, 
 and the business having proved a total failure, recovered a joint 
 and several judgment against his copartners for $3,520. Interest 
 thereon was allowed in his favor after his demand for the balance, 
 
 to pay it, in the absence of some agreement to the contrary, express or 
 implied. The right to interest, or an agreement to pay or allow it, is to 
 be implied in such cases without any express promise, as in like transac- 
 tions between parties holding no partnership relations to each other. 
 Reid V. Factory, 3 Cow. 399, 436, 437, affirmed in 5 Cow. 687 ; Liotard 
 V. Graves, 3 Gaines 243 ; Gillet v. Van Rensselaer, 15 N. Y. 397 ; Foley 
 V. Foley, 15 App. Div. 276, 44 N. Y. Supp. 688 ; Chester v. Jumel, 125 
 N. Y. 237, 26 N. E. 297 ; Lloyd v. Carrier, 2 Lans. 364 ; Beach v. CoUes, 
 86 N. Y. 515 ; CoUender v. Phelan, 79 N. Y. 366 ; Morris v. Allen, 14 
 N. J. Eq. 44 ; Baker v. Mayo, 129 Mass. 517 ; In re German Min. Co., 4 
 DeGex, M. & G. 19, 35 ; 1 Lindley on Part. 390 ; In re Norwich Yarn Co., 
 22 Beav. 143, 169 ; Troup's Case, 29 Beav. 353 ; In re Beulah Park 
 Estate, L. R. 15 Eq. 43 ; Hodges v. Parker, 17 Vt. 242 ; Ligare v. Peacock, 
 109 lU. 94 ; Matthews v. Adams, 84 Md. 143, 35 Atl. 60 ; Woerz v. Schu- 
 macher, 161 N. Y. 530, 56 N. E. 72;" Blum v. Mayer, 189 N. Y. 153, 
 81 N. E. 780 (1907). 
 
 1 L. of Md. 1916, Ch. 175, § 18 (c) : "A partner, who in aid of the 
 partnership makes any payment or advance beyond the amount of 
 capital which he agreed to contribute, shall be paid interest from the 
 date of the payment or advance." 
 
 2 British Partnership Act, § 24 (3). See Lindley on Part. (6th ed.) 
 391, for authorities prior to the Act. 
 
 ^NoweU V. NoweU, L. R. 7 Eq. 538 (1869). One partner had ad- 
 vanced £1900, and the net assets were £1400. The deficiency had to be 
 borne equally by the partners. 
 
 ' 173 Pa. St. 560, 34 At. 235 (1896) ; Burdick's Cases on Part. 
 573. 
 
362 THE LAW OF PARTNERSHIP 
 
 on the ground that the defendants had unjustly refused to "ad- 
 just the accounts in accordance with the agreement." 
 
 § 3. Repaying Capital. 
 
 We have seen that partners may stipulate that their contri- 
 butions to the firm stock shall not be treated as capital owing 
 from the firm to them, but shall be dealt with upon distribu- 
 tion as profits.^ It is also possible for them to agree that money 
 or property, furnished by one of them for the firm's use, shall 
 not become the property of the firm, but that the title and the 
 risk shall remain in the original owner .^ 
 
 Such agreements are unusual, however. Ordinarily, the 
 ownership of property contributed by the partners vests in the 
 firm,^ and the firm becomes indebted to them respectively for 
 the capitals thus contributed. It follows, therefore, that in the 
 absence of agreement to the contrary, "if the assets of the part- 
 nership, upon a final settlement, are insufiicient to satisfy this" 
 indebtedness, "all the partners must bear it in the same propor- 
 tion as other debts of the partnership." Nor does it matter that 
 the capital is contributed wholly by one partner. To the extent 
 of such contribution he is a creditor of the firm, and if the firm 
 assets are insufficient to pay the debt to him, he is entitled to 
 contribution from his copartners.* 
 
 "If the matter be tested by one adventure," said Vice-Chan- 
 cellor James,^ "the rule is made very clear. Two persons engage 
 in a speculation, say in the purchase of £1,000 worth of cotton. 
 One partner has the £1,000 at his command, the other has not. 
 The first partner advances his £1,000 for the purpose of the 
 speculation. If the cotton produces £1,100, the £100 is divided 
 
 1 Chap. VIII. § 1 (A), supra. 
 
 2 Heran v. HaU, 1 B. Mon. (40 Ky.) 159 (1840) ; Baker v. Safe Dep. 
 &c. Co., 90 Md. 744, 45 At. 1028, 78 Am. S. R. 463 (1900). 
 
 3 Taft V. Schwamb, 80 111. 289 (1875) ; Burdick's Cases on Part. 577. 
 " Whitcomb v. Converse, 119 Mass. 38 (1875) ; Burdick's Cases on 
 
 Part. 575 ; Woelfel v. Thompson, 173 Mass. 301, 53 N. E. 819 (1899) ; 
 Sangston v. Hack, 52 Md. 173 (1879) ; Raymond v. Putnam, 44 N. H. 
 160 (1862) ; Simpson v. Feltz, 1 MoCord, Eq. (8. C.) 213, 16 Am. Dec. 
 602 (1826) ; Binney v. Mutrie, 12 App. Cas. 160, 165 (1886) ; L. of Md. 
 1916, Ch. 175, §§ 18, 40. 
 
 ■^ NoweU V. NoweU, L. R. 7 Eq. 538, 541 (1869). 
 
ACCOUNTING AND DISTRIBUTION 363 
 
 between the two parties. If it only produces £900, could it be 
 contended that the capitalist partner is to put up with the entire 
 loss ; and that the game of partnership between the man without 
 money, and the man with, was to be on the principle of 'Heads, 
 I win ; tails, you lose' ? " 
 
 A different view prevails in a few jurisdictions. The Court 
 of Appeals of Kentucky ha^ held recently, following earlier deci- 
 sions to the same effect, that, if the partnership agreement pro- 
 vides that one partner shall advance money as his part of the 
 capital, and the other shall render services as his part of the 
 capital, nothing else appearing, in the event of a loss, each would 
 lose his capital ; the one his money and the other his labor, and 
 neither would be responsible to the other.^ 
 
 (a) Insolvency or Non-residence of one or more Partners. — In 
 case some of the partners are insolvent, the capital losses and 
 deficiencies, like other partnership losses, must be borne by the 
 solvent partners, in the proportion in which they were entitled 
 to share profits. Thus, in Whitcomb v. Converse,^ one of the four 
 partners being insolvent, and they having agreed that each 
 should receive one-fourth of the profits, it was decreed in equity 
 that the three solvent partners should contribute equally towards 
 the loss of capital. Moreover, when some of the partners are 
 non-residents, and thus wholly beyond the reach of process, losses 
 must be borne by the resident, solvent partners in the proportion 
 stated above. ^ Such is the rule in the Uniform Partnership Act.^ 
 
 (6) Interest on Capital. — Partnership articles often provide 
 that the capitals contributed by the various partners shall bear 
 interest at a specified rate, especially if the contributions are 
 unequal.^ In the absence of an agreement, either express or 
 implied, however, interest is not allowed on capital.^ Even 
 
 1 Meadows v. Moequot, 110 Ky. 220, 61 S. W. 28 (1901). 
 
 2 119 Mass. 38 (1875) ; Burdiok's Cases on Part. 575. Approved in 
 Manson v. Williams, 213 U. S. 453, 29 Sup. Ct. 519 (1909). 
 
 3 Henry v. Jaekson, 37 Vt. 431, 438 (1865) ; Scott v. Bryan, 96 N. C. 
 289, 3 S. E. 235 (1887). 
 
 ^ L. of Md. 1916, Ch. 175, § 40 (d). 
 
 6 Taft V. Sehwamb, 80 lU. 289 (1875) ; Burdick's Cases on Part. 577 ; 
 KeUey v. Turner, 81 Md. 269, 31 At. 700 (1895). 
 
 8 Rodgers v. Clement, 162 N. Y. 422, 425, 56 N. E. 901, 76 Am. S. R. 
 342 (1900) ; McGibbon v. Tarbox, 205 N. Y. 271, 98 N. E. 390 (1912). 
 
364 THE LAW OF PARTNERSHIP 
 
 though one partner furnishes all the capital, the courts will infer 
 that the parties considered the skill and labor of the other as a 
 contribution of equal value to the earning power of the firm.^ 
 
 In case one partner has paid in his capital, and the other has 
 not, the former should not be allowed interest on his contribution 
 in the absence of an agreement for interest. This is not a loan, 
 and stands upon a different footing from an advance by a partner.^ 
 
 An agreement for interest on capital does not extend beyond 
 the dissolution of the firm, unless the parties have clearly evinced 
 their intention to the contrary.' "The reason for this general 
 rule is obvious. During the partnership, all the partners have 
 the benefit of the capital to make profits, while upon dissolution 
 this benefit ceases." * 
 
 The Uniform Partnership Act provides: "A partner shall 
 receive interest on the capital contributed by him only from the 
 date when repayment should be made." ^ 
 
 (c) Sharing Profits. — Subject to any agreement between the 
 parties, each partner shall share equally in the profits and surplus 
 remaining after all liabilities, including those to partners, are 
 satisfied.* 
 
 § 4. Adjusting the Equities of Partners. 
 
 Although the assets of a firm are to be applied in paying its 
 debts to outsiders before either partner is to receive any part 
 thereof, the individual creditors of a partner are not entitled to 
 the same priority. They have a right to his individual interest 
 only, and this, as has been stated repeatedly, is his " share of what 
 
 » Jackson v. Jolinson, 11 Hun (N. Y.) 509 (1877). 
 
 2 Lindley on Part. (6th ed.) 391, (7th ed.) 423-424 ; British Partnership 
 Act, 1890, § 24 (4) ; Clark v. Warden, 10 Neb. 87 (1880). Some cases 
 appear to state a contrary doctrine, but the decisions are based on the 
 ground that the moneys furnished, nominally as capital, were really loans. 
 See cases analyzed in Clark v. Warden, supra, and Ligare v. Peacock, 109 
 111. 94, 102 (1884). 
 
 ' Barfield v. Loughborough, L. R. 8 Ch. 1 (1872) ; Bradley v. Brig- 
 ham, 137 Mass. 645 (1884). 
 
 < Johnson v. Hartshorne, 52 N. Y. 173, 177 (1873). 
 
 " L. of Md. 1916, § 18 (d). 
 
 « Ibid., § 18 (a) ; British Partnership Act, 1890, § 24 (1) ; Smiley v. 
 Smiley, 112 Va. 490, 71 S. B. 532, 27 Ann. Cas. 1169 (1911). 
 
ACCOUNTING AND DISTRIBUTION 365 
 
 may remain after payment of the partnership debts, and after a 
 settlement of the accounts between the partners." ^ 
 
 1. The Lien op a Creditor Partner. — From the prin- 
 ciples stated above, it follows, that "if one partner has become 
 more indebted to the firm" than his copartner, his share "will 
 stand incumbered by a lien, to make good such deficit to his 
 •copartner." ^ 
 
 This is well illustrated by the case from Alabama cited in the 
 last note. Warren ^led a bill for a partnership accounting and 
 settlement against his copartner Taylor and Mrs. Benagh, a 
 mortgagee of Taylor's interest in the firm. Taylor had given a 
 mortgage on his share to Warren also, to indemnify the latter 
 against the use of the firm name on a bill of exchange which was 
 issued for Taylor's personal benefit, and was not taken care of 
 by Taylor, but was paid by Warren. As Warren's mortgage was 
 recorded four days after Mrs. Benagh's mortgage, it was subordi- 
 nate to hers, and he was obliged to rest his claim to priority upon 
 iis equities as a partner. This claim was denied by the Chan- 
 cellor, but fully sustained by the Appellate Court. It was de- 
 clared that Mrs. Benagh could realize under her mortgage "what 
 Taylor could claim if he were suing Warren, and no more. She 
 purchased no other right. She cannot complain of this; for, 
 purchasing a partner's interest in partnership effects, it was her 
 duty to inquire of the other partner, how the account stood be- 
 tween them." 
 
 In case a partnership has been dissolved, and the firm assets 
 have been exhausted in the payment of partnership debts; and, 
 upon a settlement of the firm accounts, it appears that one part- 
 ner is not only in advance to the firm, but has paid, with his 
 individual means, judgments against it, such creditor partner is 
 entitled to be subrogated to the rights of such judgment creditors 
 against the separate estate of the debtor partner.^ 
 
 (a) No Lien for Non-Partnership Indebtedness. — The foun- 
 
 1 Bank v.' CarroUton Ry., 11 WaU. 624, 78 U. S. (1870) ; L. of Md. 
 1916, Ch. 175, § 26. 
 
 2 Warren v. Taylor, 60 Ala. 218 (1877) ; Burdick's Cases on Part. 680 ; 
 Brandt v. Edwards, 91 Minn. 506, 98 N. W. 647 (1904) ; L. of Md. 1916, 
 Ch. 176, § 38. 
 
 ' Sands v. Durham, 99 Va. 263, 38 S. E. 145 (1901). 
 
366 THE LAW OP PARTNERSHIP 
 
 dation of a creditor partner's lien being the obligation of the 
 firm to indemnify him in respect to payments made or liabili- 
 ties incurred in the firm business, or for the preservation of its 
 property/ it is apparent that the lien does not include all claims 
 which may be held by one partner against another; but that it 
 is limited to claims which are properly items in the partnership 
 account. The following remark of Lord Hardwicke ^ is in point : 
 "In all partnerships, when more money is advanced by one 
 partner, or even lent for a partnership account and trade, the 
 share must be considered as liable ; for nothing must be divided 
 as the share of the partner, but what is coming clear on the bal- 
 ance of the account ; for when the final account comes to be made 
 up, everything which is the subject-matter thereof must be 
 valued." ' 
 
 Clearly, debts accruing to one partner from another outside 
 the partnership business cannot be brought into the firm ac- 
 counts by the creditor,^ unless the partnership articles permit 
 him to bring them in.^ With respect to such debts, the cred- 
 itor partner stands on the same footing with all other individual 
 creditors. If the debtor partner has died or made an assign- 
 ment, the survivor or the solvent partner, as the case may be, 
 must pay over the debtor partner's share to the personal represent- 
 ative or assignee, and prove with other separate creditors against 
 the estate.^ 
 
 (6) If the Debtor Partner is Insolvent. — Courts of equity have 
 modified this rule, to some extent, when the insolvency of the 
 debtor partner has been shown. A recent case in Wisconsin '' 
 affords a good illustration. The plaintiff brought an action for 
 a partnership accounting and settlement. His copartners, who 
 
 iBritisli Partnership Act, 1890, §§24 (2), 39; L. of Md. 1916, Ch. 
 175, §§ 18 (6), 38 (1) ; Harlan & Co. v. Bennett, 127 Ky. 572, 106 S. W. 
 287 (1907). 
 
 2 Doddington v. Hallet, 1 Ves. Sr. 497 (1750). 
 
 ' Cf. Pierce v. Tiernan, 10 GiU & J. (Md.) 253, 266 (1838) ; Mum- 
 ford V. NiooU, 20 John. (N. Y.) 611 (1822). 
 
 Niohol V. Stewart, 36 Ark. 612, 625 (1880). 
 
 5 Lewis «. Harrison, 81 Ind. 278 (1881). 
 
 'Moffatt V. Thomson, 5 Rich. Eq. (S. C.) 155, 161 (1852). 
 
 " Pendleton v. Beyer, 94 Wis. 31, 68 N. W. 415 (1896) ; Burdick's 
 Cases on Part. 584. Cf. Niehol v. Stewart. 
 
ACCOTJNTING AND DISTRIBUTION 367 
 
 appear to have been in possession of the firm assets, alleged in 
 their answers that the plaintiff was insolvent, and set up by way 
 of counterclaim various claims owned by them severally. An 
 order overruling plaintiff's demurrer to the part of the answer 
 setting up these counterclaims was affirmed by the Supreme Court. 
 The decision was based not on the right of the defendants to bring 
 these claims into the partnership accounting, nor on the ground 
 that such claims could be counterclaimed or set off against the 
 plaintiff's right of action, either at common law or under the 
 State statute, but on the ground that the insolvency of the plain- 
 tiff gave a court of equity jurisdiction to compel a set off. 
 
 "If," said the court, "on the accounting and settlement of 
 the partnership matters, anything shall be found due the plain- 
 tiff from the partnership, and it should be paid over to him, it 
 would, apparently, be impossible for the defendants to obtain 
 satisfaction of their claims against him. Actions at law upon 
 these claims would be futile. So it seems that justice requires 
 whatever sum may be found due to the plaintiff shall be applied 
 to the payment of these claims to the defendants." 
 
 This view is rejected by the Uniform Partnership Act.^ 
 
 2. Interest payable by a Partner. — If it is shown upon 
 an accounting that any partner has used the assets of the firm 
 for his individual benefit, or has neglected unreasonably to ac- 
 count to his copartners for firm property put into his hands 
 for the purpose of winding up firm affairs,^ he will be charged 
 with interest on the fair value thereof by way of damages for 
 the wrongful detention of money due to his copartners.^ The 
 mere fact, however, that firm property is in one partner's hands 
 for the purpose of winding up firm affairs, will not of itself render 
 him liable for interest on its value, nor will delay in settling 
 accounts, if this is chargeable as much to his copartners as to 
 himself.* 
 
 3. Losses chargeable to a Partner. — We have seen that 
 a wilful wrongdoer has no right to indemnity or contribution 
 
 1 L. of Md. 1916, Ch. 175, § 40 (t). 
 
 2 Harrah v. Dyer, 180 Ind. 229, 102 N. E. 14, Ann. Cas. 1916 B, 868 
 (1913). 
 
 'Buckley v. Kelly, 70 Conn. 411, 39 At. 601 (1898) ; Moore v. Raw- 
 son, 185 Mass. 264, 70 N. E. 64 (1904). 
 
 " Randolph v. Inman, 172 lU. 575, 50 N. E. 104 (1898). 
 
368 THE LAW OF PARTNERSHIP 
 
 from his innocent copartner.^ Indeed, upon an accounting, 
 losses svistained by the firm because of such wrongful conduct^ 
 would be chargeable to him exclusively; as would losses caused 
 by his clear negligence.^ But a partner is not to be charged 
 with losses due to honest mistakes of judgment nor to his failure 
 to exercise extraordinary skill in the management of firm affairs.* 
 
 If a partner binds himself to devote his whole time to the 
 business of the firm, his violation of this provision of the part- 
 nership articles will authorize a court of equity to charge back 
 to his account the value of the services thus withdrawn from 
 the firm.^ If the valuation of such services has been fixed in 
 the partnership articles, it will be treated as the standard by 
 which remuneration for his neglect should be estimated.* 
 
 4. Costs of an Accounting. — The costs of litigation, inci- 
 dent to a partnership accounting and distribution, are usually 
 paid out of the partnership assets, as a necessary expense of wind- 
 ing up firm affairs. '' If there is no fund in court for distribution, 
 the costs will be divided between the parties, ordinarily.^ But 
 in case the court is of the opinion that one party necessitated the 
 litigation, by putting an unauthorized construction on the part- 
 nership contract,' or by other misconduct, he will be charged 
 personally with the payment of costs.^" 
 
 When the assets of the firm are more than suflBcient to pay 
 its debts, including the claims of partners for advances and cap- 
 ital, the costs, when chargeable against firm effects, will be paid 
 
 ^ Supra, Chap. VI, § 3; Clayton v. Davitt (N. J. Eq.), 38 At. 308; 
 Burdick's Cases on Part. 521 (1897). 
 
 2 Devall V. Burbridge, 6 W. & S. (Pa.) 529 (1843). 
 
 3 Jessup V. Cook (1 Hals. 434), 6 N. J. L. 529 (1798). 
 
 * Exchange Bank of Leon v. Gardner, 104 Iowa 176, 73 N. W. 591 
 (1897) ; Hurter v. Larabee, 224 Mass. 218, 112 N. E. 613 (1916). 
 
 5 Lay V. Emery, 8 N. D. 515, 79 N. W. 1053 (1899) ; Marsh's Appeal, 
 69 Pa. 30, 8 Am. R. 206 (1871). 
 
 8 Brandt v. Edwards, 91 Minn. 605, 98 N. W. 647 (1904). 
 
 ' Gyger's Appeal, 62 Pa. 73 (1869) ; Burdick's Cases on Part. 586. 
 
 8 Groth V. Kersting, 23 Col. 213, 47 Pae. 393 (1896) ; Burdick's Cases 
 on Part. 562; Folsom v. Marlette, 23 Nev. 459, 49 Pac. 39 (1897) ; Bur- 
 dick's Cases on Part. 570; Austin v. Jackson, 11 Ch. D. 942 n. (1879). 
 
 »Taft V. Sohwamb, 80 111. 289 (1875); Burdick's Cases on Part. 
 577. 
 
 »» Hamer v. Giles, 11 Ch. D. 942, 48 L. J. Ch. 508 (1879). 
 
ACCOUNTING AND DISTRIBUTION 369 
 
 before profits are divided.^ They will not be paid, however, in 
 preference to the claims of a partner for advances,^ or for capi- 
 tal ; ^ and if one partner is indebted to the firm, he must make 
 good what is due from him to the assets, before he is entitled to 
 have the costs paid out of the assets.' 
 
 5. When Partnership is dissolved for Fraud. — In such 
 cases, The Uniform Partnership Act provides that "the party 
 entitled to rescind is, without prejudice to any other right, en- 
 titled, (a) To a lien on, or right of retention of, the surplus of the 
 partnership property after satisfying the partnership liabilities 
 to third persons for any sum of money paid by him for the pur- 
 chase of an interest in the partnership and for any capital or 
 advances contributed by him; and (6) To stand, after all lia- 
 bilities to third persons have been satisfied, in the place of the 
 creditors of the partnership for any payments made by him in 
 respect of the partnership liabilities; and (c) To be indemnified 
 by the person guilty of the fraud or making the representation 
 against all debts and liabilities of the partnership." * 
 
 § 6. The Good- Will of the Firm Business. 
 
 The legal rules upon this subject are not in a very satisfac- 
 tory state. This is due, in part, to the fact that the "good-will 
 of a partnership" is one of the most modern topics in this modern 
 branch of English law. Watson ^ does not allude to it. Mon- 
 tague's ® comments upon it are confined to half a page. Gow ^ 
 refers to but three cases bearing on the subject, from which he 
 draws the conclusion that the good-will of a professional partner- 
 ship survives, but that it seems doubtful whether the good-will 
 of a trading firm survives, or forms a portion of the partnership 
 
 1 Maljtingly v. Stone's Adm'r, 35 S. W. (Ky.) 921 (1896) ; Burdick's 
 Cases on Part. 516, and cases in the next two notes. 
 
 2 Potter V. Jackson, 13 Ch. D. 845 (1880) ; Patrick v. Patrick, 71 N. J. 
 Eq. 347, 63 At. 848 (1906). 
 
 3 Ross V. White, [1894] 3 Ch. 326 ; Burdick's Cases on Part. 587. 
 
 * L. of Md. 1916, Ch. 175, § 39 ; McCandless v. Crouse, 220 111. 344, 
 77 N. E. 202 (1906). 
 
 = Watson on Part. (1st ed. 1794). 
 
 ' Montague on Part. (1st Am. ed. 1824) 211, citing only Farr v. Pearce, 
 3 Madd. 74 (1818). 
 
 ' Gow on Part. (2d Eng. ed. 1825) 377. 
 
370 THE LAW OF PARTNERSHIP 
 
 stock. Chancellor Kent disposes of the topic in three sentences, 
 the first of which is as follows : "The good-will of a trade is not 
 partnership stock." ^ 
 
 This doctrine, based upon a decision of Lord Loughborough/ 
 has been rejected both in Britain and in this country, but neither 
 the judiciary nor the legislature has substituted for it a complete 
 and consistent body of principles. 
 
 1. What is "Good-Will"? — The term has not received 
 an authoritative definition in Britain. Lord Justice Lindley * 
 has expressed the opinion that the term "can hardly be said 
 to have any precise signification"; and Sir Frederick Pollock* 
 has observed that it is "a commercial rather than a legal" term. 
 "It is well understood in business," he adds, "but not easy to 
 define." 
 
 In a few of our States it has received legislative definition. 
 For example, the Civil Code of California declares: "The good- 
 will of a business is the expectation of continued public patron- 
 age, but it does not include a right to use the name of any person 
 from whom it was acquired. The good-will of a business is prop- 
 erty, transferable like any other." ^ 
 
 (a) Judicial Definitions. — One of the fullest and most impor- 
 tant of these is that given by Vice-Chancellor Wood in Churton 
 V. Douglas. Referring to Lord Eldon's statement® that "the 
 good-will which has been the subject of sale, is nothing more than 
 
 1 3 Kent's Comm. *64. 
 
 2 Hammond v. Douglas, 5 Ves. 539 (1800). Doubted by Lord Eldon 
 in Crawshay v. Collins, 15 Ves. 227 (1808), but reaflSrmed by Shadwell, 
 V. C, in Lewis v. Langdon, 7 kSim. 421 (1835). The non-survivorship of 
 partnership good-will was recognized by Lord Hardwieke in Gibblett v. 
 Read, 9 Mod. 459 (1743). 
 
 3 Lindley on Part. (6th ed.) 441, (7th ed.) 476. 
 
 ^Pollock's Digest of Part. (6th ed.) 109. In his original draft of 
 the Partnership Act, this learned author did not attempt to define the 
 term, but .contented himself with formulating the rules governing the 
 rights of partners as to the good-will, and the rights and duties of the 
 vendor and the purchaser thereof. These rules formed Art. 57 of the 1st 
 ed., and are reprinted with some modifications in the 6th ed. at pages 
 107 and 108, in the 8th ed. at pages 117 to 120. 
 
 ' §§ 992, 993. These provisions have been enacted in Montana Civil 
 Code, §§ 1371, 1372, and in North Dakota Civil Code, §§ 3486, 3487. 
 
 « CruttweU v. Lye, 17 Ves. 335, 346 (1810), and in other cases. 
 
ACCOUNTING AND DISTRIBUTION 371 
 
 the probability that the old customers will resort to the old place," 
 he says : ^ " but it would be taking too narrow a view of what is 
 there laid down by Lord Eldon to say that it is confined to that. 
 'Good-wiir, I apprehend, must mean every advantage, — every 
 positive advantage, if I may so express it, — as contrasted with 
 the negative advantage of the late partner not carrying on its 
 business, whether connected with the premises in which the busi- 
 ness was previously carried on, or with the name of the late firm, 
 or with any other matter carrying with it the benefit of the busi- 
 ness. When Lord Eldon is speaking of a nursery garden, or 
 a locality which the customers must frequent to look at the 
 plants and other things; and when Sir Thomas Plumer, in an- 
 other case, is speakiag of a retail shop which a person must enter 
 in order to buy the goods there exposed — they are only, as it 
 appears to me, giving those as illustrations of what good-will 
 is. But it would be absurd to say, that, where a large whole- 
 sale business is conducted, the public are mindful whether it is 
 carried on at one end of the Strand or the other, or in Fleet Street, 
 or in the Strand, or any place adjoining, and that they regard 
 that, and do not regard the identity of the house of business, — 
 namely, the firm. . . . When you are parting with the good- 
 will of the business, you mean to part with all that good disposi- 
 tion which customers entertain towards the house of business 
 identified by the particular name or firm, and which may induce 
 them to continue giving their custom to it. You cannot put it 
 anything short of that." 
 
 This definition has been approved expressly in a recent deci- 
 sion of the House of Lords,^ and has formed the basis of many 
 judicial definitions in this country.* 
 
 The New York Court of Appeals has recently declared * that : 
 "Good-will embraces at least two elements, the advantage of 
 
 1 Churton v. Douglas, H. R. V. Johns. 174, 188 (1859). 
 
 2 Trego V. Hunt, [1896] App. Cas. 7, 17, 65 L. J. Ch. 1. 
 
 3 CHttenden v. Whitbeck, 50 Mich. 401, 15 N. W. 526 (1883) ; Snyder 
 Mfg. Co. V. Snyder, 54 Oh. St. 86, 43 N. E. 325, 31 L. R. A. 657 (1896) ; 
 Menendez v. Holt, 128 U. S. 514, 522, 9 Sup. Ct. 143 (1888) ; Didlake v. 
 Roden Grocery Co., 160 Ala. 484, 49 So. 384 (1909) ; White v. Trowbridge, 
 216 Pa. 11, 64 At. 862 (1906). 
 
 * People ex rel. A. J. Johnson Co. v. Roberts, 159 N. Y. 70, 53 N. E. 
 685 (1899). 
 
372 THE LAW OF PARTNERSHIP 
 
 continuing an established business in its old place, and of contin- 
 uing it under the old style or name. While it is not necessarily 
 altogether local, it is usually to a great extent, and must, of 
 necessity, be an incident to a place, an established business or a 
 name known to the trade." Accordingly it held that the good- 
 will of the A. J. Johnson Co., a corporation organized in West 
 Virginia, but doing business in New York, " is the result of exer- 
 cising its corporate franchises and carrying on its business in the 
 latter state, and is inseparable from that business. ... It 
 exists at the place where it has a market value, which is where 
 the relator carried on its business and earned a reputation for 
 superior work, and honorable conduct. This reputation was not 
 built up in West Virginia, where it did no business, but in New 
 York, where it did all its business. It could neither be sold nor 
 used to advantage in the former state." 
 
 2. Partnership Good-Will is Property. — Although the 
 good-will of a partnership is rarely, if ever, valued by a firm at 
 its annual stock-taking and entered upon its books as an asset,^ 
 nevertheless it may be a thing of great value. "Often it hap- 
 pens," to quote from an eminent judge,^ "that the good-will is 
 the very sap and life of the business, without which the business 
 would yield little or no fruit. It is the whole advantage, what- 
 ever it may be, of the reputation and connection of the firm, which 
 may have been built up by years of honest work, or gained by 
 lavish expenditure of money." In such case, it may be taken 
 into account in determining whether at a given date the partner- 
 ship was solvent.' 
 
 1 Steuart v. Gladstone, 10 Ch. Div. 626, 659, 47 L. J. Ch. 423 (1879). 
 
 ' Lord Maonaghton in Trego v. Hunt, [1896] App. Cas. 7 ; Burdick's 
 Cases on Part. 602, 604. In Rowell v. RoweU,' 122 Wis. 1, 99 N. W. 473 
 (1904), the court said : "The good-will is a sort of beaten pathway from 
 the seller to the buyer, usually established and made easy of passage by 
 years of effort and expense in advertising, solicitation, and recommenda- 
 tion by traveling agents, exhibition tests or displays of goods, often by 
 acquaintance with local dealers who enjoy confidence of their own neigh- 
 bors, and the like. In many instances it costs a large sum, and is valu- 
 able as it relieves from a continuance of the above-suggested exertions, at 
 least in any such degree as would be necessary to establish a new concern 
 on a parity." 
 
 s Bell V. ElUs, 33 Cal. G20, 625 (1867). 
 
ACCOUNTING AND DISTRIBUTION 373 
 
 (a) May not be Valuable. — While it is always a part of the 
 firm property,^ so long as the partnership is a going concern, 
 in some partnerships it may have little or no money value.^ 
 
 Some judges have gone so far as to assert^ that there is no 
 salable good-will in a professional partnership, because it "has 
 no local existence, but is entirely personal,^ depending upon the 
 trust and confidence which persons may repose in the integrity 
 and ability" of its members. This view is based largely upon 
 Lord Eldon's narrow definition of good-will. The better doc- 
 trine appears to be that such partnerships have a good-will which 
 may or may not possess a money value, according to the circum- 
 stances of each case.^ 
 
 This is in accord with English decisions relative to the good- 
 will of commission merchants and stock-brokers. 
 
 In Steuart v. Gladstone,^ it was held that the plaintiff, who 
 had been expelled from a firm, was not entitled to have the good- 
 will valued as an asset in taking the partnership account. This 
 decision was not based on the ground that such a partnership 
 was not possessed of a good-will, but on the ground that the 
 nature of the business and the language of the partnership articles 
 disclosed an intention that the good-will should not be included 
 in the accounts to be taken upon dissolution. In Wilson v. 
 Williams,'' the Vice-Chancellor declared that the good-will of a 
 
 1 Statutes cited above, and Potter v. Commissioner, 10 Exch. 147 
 (1854), holding that the transfer of a partner's interest in the good-will of 
 the business is a conveyance of property and liable to ad valorem duty. 
 It was valued by the parties at £20,000. In people ex rel. A. J. Johnson 
 Co. V. Roberts, 159 N. Y. 70, 53 N. E. 685 (1899), the Court of Appeals 
 held the good-will of the relator was properly taxable as capital. 
 
 2 Ryan v. Franklin, 199 N. Y. 347, 92 N. E. 473 (1910), holding that 
 this limited partnership had no good-will in which the special partner was 
 entitled to share. 
 
 3 Austen v. Boys, 2 DeG. & J. 626, 636 (1858) ; Hoyt v. Holby, 39 
 Conn. 326, 328 (1872) ; Smith v. Smith, 51 La. Ann. 72, So. 618 (1899). 
 
 ^Wrightman v. Wrightman, 223 Mass. 398, 111 N. E. 881 (1916), 
 holding the good-will of a dentist's business is personal not local. 
 
 = Lindley, L. J., in ArundeU v. Bell, 52 L. J. Ch. 537, 540 (1883) ; 
 Sheppard v. Boggs, 9 Neb. 257, 2 N. W. 370 (1879) ; the good-wiU of the 
 firm of insurance agents was valued by the court at $901.36. 
 
 6 10 Ch. Div. 626 (1879). 
 
 ' L. R. 29 Ir. Ch. 176, 181 (1892) ; cf. Warfield v. Booth, 33 Md. 63 
 
374 THE LAW OF PARTNERSHIP 
 
 firm of stock-brokers would be valueless to any purchaser who 
 did not also purchase the business premises or get the protection 
 of a covenant preventing the retiring partners from carrying on 
 the business within certain limits or from using the partnership 
 name. Similar statements have been made regarding the good- 
 will of non-trading partnerships by American judges; but, as 
 noted above, these statements have been based upon Lord Eldon's 
 narrow definition of the term.^ 
 
 On the other hand, the salable value of the good-will of non- 
 trading partnerships has been assumed, or expressly declared, in 
 several carefully considered cases both in England ^ and in this 
 country.' 
 
 (6) The Good-Will may he dissipated. — Even when the good- 
 will is susceptible of a money valuation, it may be dissipated and 
 lost by the acts of the partners. This will occur "when a firm is 
 dissolved, its effects distributed, or sold in parcels to purchasers 
 not wishing to embark in a similar business, and its affairs are 
 wound up." Such acts render "the good-will unavailable as a 
 salable article, for it is not a distinctive article of property which 
 may be sold separate from the tangible effects of the partnership." * 
 
 (1870), sale of "his good-will of practice" by a physician who agreed to 
 "quit the practice in favor of" the purchaser; Dwight v. Hamilton, 113 
 Mass. 175 (1873), sale by a physician of "his practice and good-wiU." 
 
 1 Tiemey v. Klein, 67 Miss. 173, 6 So. 739, 8 So. 424 (1889) ; a part- 
 nership of insurance agents, whose agency was terminable at the will of 
 tke insurance companies, and was terminated upon the insolvency of 
 one of the partners ; Rice v. AngeU, 73 Tex. 350, 11 S. W. 338 (1889) ; 
 a partnership of insurance agents, "the agency having no particular 
 locality." 
 
 2 James v. James, 22 Q. B. D. 669, 675 n. (1), L. J. Q. B. 300 (1889) ; 
 BurcheU v. Wilde (1900), 1 Ch. 551, 69 L. J. Ch. 314. 
 
 3 Whitney v. Whitney, 115 Ky. 552, 74 S. W. 194 (1903). In the last 
 case, the court said of a firm of insurance agents: "We have no doubt 
 that the business agency, as a whole, including the good-will of the firm, 
 leasehold of the office, furniture and books, and, along with it, the infor- 
 mation sought to be sold in the order complained of, constitutes an asset 
 which may be sold and conveyed to a purchaser by the court." 
 
 ' The Snyder Mfg. Co. v. Snyder, 54 Oh. St. 86, 94, 31 L. R. A. 657, 
 43 N. E. 325 (1896) ; cf. Menendez v. Holt, 128 U. S. 514, 522, 9 Sup. Ct. 
 143, 32 L. Ed. 526 (1888) ; Hutchinson v. Nay, 187 Mass. 262, 72 N. E. 
 974, 68 L. R. A. 186, 105 Am. S. R. 390 (1905) ; Didlake v. Roden Gro- 
 cery Co., 160 Ala. 484, 49 So. 384, 22 L. R. A. n. s. 907 (1909), the repre- 
 
ACCOUNTING AND DISTRIBUTION 375 
 
 3. Good-Will is to be converted into Cash. — "On the 
 dissolution of a partnership every partner has a right, in the 
 absence of an agreement to the contrary, to have the good-will 
 of the business sold for the common benefit of all the partners." ^ 
 
 If they cannot agree upon the disposition to be made of the 
 business, the court will appoint a receiver, upon a bill filed to 
 close the partnership concerns, who will continue the business, 
 if continuance be practicable, until it can be sold to best ad- 
 vantage as a going concern, and thus the full value of the estab- 
 lishment be realized by the partners.^ If it is impossible for a 
 receiver to conduct the business, he must sell immediately.^ 
 In the meantime every partner will be enjoined from conduct- 
 ing the same business, but not from conducting a similar business, 
 if he carries it on as his own, and in such a manner as to indicate 
 that it is not the business of the old firm.* 
 
 (a) Duty of a Surviving Partner. — It would seem to follow 
 from the principles stated above that the surviving partner is 
 bound not only to sell the good-will of the partnership business, 
 but to bring it to a sale in the most advantageous manner and 
 under such circumstances that it will produce the largest sum 
 for all the parties interested.^ Some courts have held him to a 
 strict performance of this duty ; ^ or have compelled him to ac- 
 
 sentative of the deceased partner held to have assented to dissipation of 
 good-will by survivor. 
 
 ' PoUoek's Digest of Part. (6th ed.) 107. Accord. Slater v. Slater, 175 
 N. Y. 143, 67 N. E. 224, 61 L. R. A. 796, 96 Am. S. R. 605, and oases 
 cited at p. 613, note (1903) ; Moore v. Rawson, 185 Mass. 264, 70 N. E. 
 64 (1904) ; Pish Bros. Co. v. La Belle Co., 82 Wis. 646, 52 N. W. 595, 
 16 L. R. A. 453, 33 Am. S. R. 72 (1882) ; Rowell v. RoweU, 122 Wis. 1, 
 «9 N. W. 473 (1904). 
 
 2 Marten v. Van Sehaick, 4 Paige's Ch. (N. Y.) 479 (1834). 
 
 3 Williams v. Wilson, 4 Sand. Ch. (N. Y.) 380 (1846). 
 
 « Dayton v. Wilkes, 17 How. Pr. (N. Y.) 510 (1859). See the decrees 
 in the last three cases, and also Seton's Forms of Decrees (5th ed.), 588 
 to 593 and 1799 to 1819. 
 
 = Tennant v. Dunlop, 97 Va. 234, 33 S. E. 620 (1899) ; cf. MeUersh 
 V. Keen, 28 Beav. 453 (1860), not a case of surviving partner. 
 
 " Fenn v. Bolles, 7 Abb. Pr. (N. Y.) 202 (1858). The representative 
 of the deceased partner obtained an injunction against the survivor's 
 carrying on the firm business, and a receiver to sell the firm business, 
 and good-will and wind up the affairs of the firm. 
 
376 THE LAW OF PARTNERSHIP 
 
 count for the amount which the good-will would have produced if 
 it had been brought to such a sale.^ 
 
 It must be admitted, however, that other courts have per- 
 mitted the survivor to destroy the salability of the partnership 
 good-will by engaging at once in a new business of the same 
 kind, at the same place, and in substantially the same name.^ 
 Undoubtedly, the survivor ought not to be precluded from carry- 
 ing on the same line of business, after the firm affairs are wound 
 up, in the absence of a contract on his part to withdraw from com- 
 petition; and upon a sale of the good-will, the ptirchaser ought 
 to be advised that the survivor is at liberty to exercise this right ' 
 but the survivor ought to be prevented from destroying or vol- 
 untarily impairing the salability of the good-will. If he does 
 either of these things, he must account for the value thus lost to 
 the firm estate.* 
 
 4. The Rights op a Purchaser. — In the absence of ex- 
 press stipulations to the contrary, the purchaser of all the part- 
 nership property, wherever situated, becomes the owner of the 
 good-will.^ Moreover, the purchaser acquires the sole right 
 to hold himself out as the successor to the business of the firm.^ 
 If the name of the old firm is a part of the good-will, the pur- 
 chaser would seem to acquire a right to use the name, to the 
 
 1 Rammelsberg v. Mitchell, 29 Oh. St. 22, 55 (1875) ; Rowell v. RoweU, 
 122 Wis. 1, 99 N. W. 473 (1904) ; Costa v. Costa, 222 Mass. 280, 110 
 N. E. 309 (1905), distinguishing the Hutchinson ease, in next note. The 
 good-will was valued by the master in this case at $2,000. 
 
 2 Loebeck v. Lee-Clark- Andreesen Co., 37 Neb. 168, 55 N. W. 650, 23 
 L. R. A. 795 (1893) ; Scudder v. Ames, 142 Mo. 187, 43 S. W. 659 (1897) ; 
 Hutchinson v. Nay, 183 Mass. 355, 67 N. E. 601 (1903). 
 
 ' Davies v. Hodgson, 25 Beav. 177, 182, 27 L. J. Ch. 449 (1858). 
 
 * Costa V. Costa, 222 Mass. 280, 110 N. E. 309 (1915). 
 
 5 Hoxie V. Chaney, 143 Mass. 592, 10 N. E. 713 (1886) ; Jennings v. 
 Jennings (1898), 1 Ch. 378, 67 L. J. Ch. 190 ; Menendez v. Holt, 128 U. S. 
 514, 9 Sup. Ct. 143, 32 L. Ed. 526 (1888) ; Merry v. Hoopes, 111 N. Y. 
 415, 18 N. E. 714 (1888) ; Steinfeld v. Nat. Shirt Waist Co., 99 App. 
 Div. 286, 90 N. Y. Supp. 984 (1904) ; Herring-Hall-Marvin Safe Co. v. 
 Hall's Safe Co., 208 U. S. 554, 28 Sup. Ct. 550 (1907). 
 
 « Pollock's Digest of Part. (6th ed.) 108 ; Churton v. Douglas, H. R. 
 V. Johns. 174, 190 (1859) ; Holbrook v. Nesbitt, 163 Mass. 120, 39 N. E. 
 794 (1895) ; Pite v. Dorman, 57 S. W. (Tenn.) 129 (1900) ; Kaufmann v. 
 Kaufmann, 239 Pa. 42, 86 At. 634 (1913) ; Boggs v. Friend, — W. Va. — . 
 87 S. E. 873 (1916). 
 
ACCOUNTING AND DISTRIBUTION 377 
 
 exclusion of the sellers, "subject to this qualification, that the 
 purchaser may use the vendor's name only 'so long and so far as 
 he does not by so doing expose him to any liability.' The pur- 
 chaser has the right to trade as the vendor's successor, but not 
 to hold out the vendor as still in the business and personally 
 answerable." ^ ^ 
 
 Such is undoubtedly the established doctrine in England, 
 and it has been approved by some of our courts.^ Others, how- 
 ever, have declared that "the purchaser will not, in the absence 
 of an express agreement, be allowed to continue the business in 
 the name of the old firm." ^ 
 
 The question was carefully considered in recent cases by the 
 court of last resort in New York and in Wisconsin. In the for- 
 mer case, the trial court decided that the right to continue the 
 use of the firm name, after dissolution by the death of a partner, 
 was not a firm asset, nor a part of the good-will, and that the 
 estate of the deceased partner had no interest therein. On Appeal 
 to the Appellate Division, that court modified the judgment in 
 this respect, namely : That the firm name is a firm asset and 
 part of the good-will, that the estate of the deceased had an equal 
 right and interest therein, and that the good-will to be sold under 
 the decree includes the exclusive right of the purchaser to hold 
 himself out as the successor of the firm and its business, but that 
 such good-will does not include the right to continue the busi- 
 ness in the old firm name, unless such purchaser be the surviving 
 
 1 Pollock's Digest of Part. (6tli ed.) 109, citing Levy v. Walker, 10 Ch. 
 Div. 436 (1879); Thynne v. Shove, 45 Ch. Div. 577 (1890). Accord. 
 BurcheU v. Wilde (1900), 1 Ch. 551, 69 L. J. Ch. 314, where it was de- 
 cided that the defendants were' not holding out the vendor as their part- 
 ner, by continuing the old firm name. Cf. In re Eraser, ex parte Central . 
 Bank (1892), 2 Q. B. 633; Burdick's Cases on Part. 108, holding that 
 a retired partner who consents that the continuing partner may use 
 the old firm name is not liable to the creditors of the new business as a 
 partner by estoppel; Moore v. Rawson, 199 Mass. 493, 85 N. E. 586 
 (1908). 
 
 2 Snyder Mfg. Co. v. Snyder, 54 Oh. St. 86, 43 N. E. 325, 31 L. R. A. 
 657 (1896). 
 
 3 Williams v. Farrand, 88 Mich. 473, 50 N. W. 446, 14 L. R. A. 161 
 (1891); Burdick's Cases on Part. 588; Morgan w. Schuyler, 79 N. Y. 
 490 (1880) ; White v. Trowbridge, 216 Pa. 11, 64 At. 862 (1906). This 
 is the rule of the California statute, supra. 
 
378 THE LAW OF PARTNERSHIP 
 
 partner. On appeal to the Court of Appeals, that tribunal held 
 that the firm name was a part of the good-will and, therefore, 
 partnership assets, which should be sold without any restriction or 
 limitation upon its use by the purchaser ; and that the purchaser, 
 whether the surviving partner or a stranger, would acquire the 
 right to continue the business under the firm name, upon comply- 
 ing with the provisions of the statute^ upon that subject; that 
 such a continuance of the business by a stranger purchaser could 
 cause the surviving partner no embarrassment, as the purchaser 
 is required by the statute to make the facts, relating to the con- 
 tinued use of the firm name, a matter of public record, so that 
 every one thereafter dealing with the purchaser, would know who 
 the proprietor of the business was; and, consequently, no legal 
 liability could attach to the survivor from the business thus car- 
 ried on.^ 
 
 In the Wisconsin case,' the court said: "The general rule 
 may be stated that so far as a firm name serves to designate 
 the establishment, and not merely existing individuals, it be- 
 longs to the partnership, and can be transferred to a stranger 
 purchasing the business. So far as that name merely consists 
 of the names of existing individuals, there is not such property 
 in it as to prevent the surviving or outgoing partners from using 
 their own names to describe themselves in a new business, so 
 long as they do not, either by the structure of a new Gim name 
 or otherwise, convey the idea of their identity with or succession 
 to the old concern. Meanwhile the successors to the old business 
 must not, without express agreement, so use the old firm name 
 as to convey the idea that the retiring individuals are still con- 
 nected with it. This rule was originally put on the ground that 
 thereby pecuniary liability might fall upon the retiring partner, 
 but other grounds of equal importance support it — such, for 
 example, as that his reputation may suffer by reason of inferiority 
 of goods or dishonorable business conduct, to which he is thereby 
 
 1 These provisions are §§20 and 21 of the New York Partnership 
 Law ; Chap. 420, Laws of 1897, reprinted in the Appendix, infra. 
 
 ' Slater v. Slater, 175 N. Y. 143, 67 N. E. 224, 61 L. R. A. 796, 96 
 Am. S. R. 605 (1903). The firm name was "J. & J. Slater ", and the 
 survivor was one of the "J. Slaters." 
 
 > Rowell V. Rowell, 122 Wis. 1, 99 N. W. 473 (1904), 
 
ACCOUNTING AND DISTRIBUTION 379 
 
 made ostensibly a party .^ There are, of course, multitudinous 
 varieties of firm names to which the foregoing rule is not appli- 
 cable, as where some arbitrary or fancy name is used, which does 
 not naturally describe any individual ; ^ where the name or names 
 of individuals have continued to be used after their death, so that 
 the name does not designate any existing individual, and has 
 practically become an artificial one, designating nothing but 
 the establishment.^ In such cases the right of succession to 
 the business and good-will usually carries the exclusive right to 
 use the old firm name, but they are not applicable to the situation 
 in the instant case." * 
 
 The buyer does not acquire any implied warranty as to the 
 value of the good-will.* 
 
 Even when the purchaser has acquired by express contract 
 the right to use the old firm name, he may not be entitled to 
 turn it over to a corporation, or other transferee. The right 
 to use the old name is generally deemed to be personal to the 
 original purchaser.^ 
 
 5. The Rights of the Sellee. — In the absence of express 
 stipulations to the contrary,' the sellers of a partnership good- 
 will may engage in the same line of business in the same locality 
 a,nd under their own names,* unless the use of such names amounts 
 
 1 Fish Bros. Co. v. La BeUe Co., 82 Wis. 546, 62 N. W. 595, 16 L. R. A. 
 453, 33 Am. S. R. 72 (1892) ; WilHams v. Farrand, 88 Mich. 473, 50 
 N. W. 446, 14 L. R. A. 161 (1891) ; CottreU v. Mfg. Co., 54 Conn. 122, 
 ■6 At. 791 (1886). 
 
 2 Myers v. Kalamazoo Buggy Co., 54 Mich. 215, 19 N. W. 961, 20 Ibid. 
 545, 52 Am. R. 811 (1884). 
 
 3 Rogers v. Taintor, 97 Mass. 291 (1867) ; Slater v. Slater, 175 N. Y. 
 143, 67 N. E. 224, 61 L. R. A. 796, 96 Am. S. R. 605 (1903). 
 
 * In the "instant ease ", the firm name included the individual name 
 of the surviving partner. 
 
 6 Johnson v. Friedhoff, 27 N. Y. S. 982, 7 Misc. 484 (1894) ; Harsh- 
 barger v. Eby, 28 Idaho 753, 156 Pae. 619 (1916). 
 
 6 Bagby & Rivers Co. v. Rivers, 87 Md. 400, 40 At. 171, 40 L. R. A. 
 632, 67 Am. St. R. 357 (1898) ; Fite v. Dorman, 57 S. W. (Tenn.) 129 
 (1900). 
 
 ' Southworth v. Davison, 106 Minn. 119, 118 N. W. 363, 19 L. R. A. 
 N. s. 769 (1908), the selling partners agreed not to engage in laundry busi- 
 ness within five miles of old place of business. 
 
 8 Wilhams v. Farrand, 88 Mich. 473, 50 N. W. 446, 14 L. R. A. 161 
 <1891) ; Hutchinson v. Nay, 183 Mass. 355, 67 N. E. 601 (1903). 
 
380 THE LAW OF PARTNERSHIP 
 
 to a representation that they are the successors of the old firm/ 
 or unless the good-will of the business was due to the personal 
 qualities of the seller.^ 
 
 This doctrine was established at a time when contracts in 
 restraint of trade were under popular and judicial disfavor. In the 
 language of a distinguished judge : " Courts of equity could not 
 of course enforce, even in a modified form, and within reasonable 
 limits, an agreement, express or implied, which the law would 
 have held void on the ground of public policy ; nor could they 
 treat the mere non-observance of such an agreement as fraudulent 
 or inequitable. And so it has resulted that a person who sells the 
 good-will of his business is under no obligation to retire from the 
 field." 3 
 
 The seller, therefore, "may do much to regain his position, 
 and yet keep on the windy side of the law. . . . He may do 
 everything that a stranger to the business, in ordinary course, 
 would be in a position to do." ^ Indeed, it was held in England 
 at one time,* as it still is held in many of our jurisdictions,® 
 that he may solicit the customers of the old firm. 
 
 Such is no longer the rule in England, the House of Lords 
 having declared that "it is not an honest thing to pocket the 
 prize and then to recapture the subject of sale, to decoy it away, 
 or call it back before the purchaser has had time to attach it to 
 himself and make it his very own." ' 
 
 1 Cliurton V. Douglas, H. R. V. Johns. 174 (1859). 
 
 "Foss V. Roby, 195 Mass. 292, 297, 81 N. E. 199 (1907), seller was a 
 dentist, and was not allowed to impair tlie value of the good-will by 
 practicing in the vicinity. 
 
 ' Lord Maonaghton in Trego v. Hunt, [1896] App. Cas. 7, 24, 25 ; 
 Burdick's Cases on Part. 602. Followed in Jennings v. Jennings, [1898] 
 1 Ch. 378, 67 L. J. Ch. 190. 
 
 * Ibid.; HaU Mnfg. Co. v. Western S. & I. Works, 227 Fed. 588, 142 
 C C. A. 220 (1915), tracing the development of these restrictive covenants ; 
 Boggs V. Friend, — W. Va. — , 87 S. E. 873 (1916). 
 
 5 Pearson v. Pearson, 27 Ch. Div. 145, 55 L. J. Ch. 32 (1884). 
 
 « Williams v. Farrand, supra; CottreH v. Mfg. Co., 54 Conn. 122, 6 
 At. 791 (1886). 
 
 ^ Trego !). Hunt (1896), App. Cas. 7 ; Von Bremen v. MacMonnies, 200 
 N. Y. 41, 93 N. E. 186, 32 L. R. A. n. s. 293 (1910), modifying 138 App. D. 
 319, 122 N. Y. S. 1087, by extending the injunction so as to forbid the 
 defendants from soliciting business from any customers of the former 
 firm of Von Bremen, MacMonnies & Co. 
 
ACCOUNTING AND DISTRIBUTION 381 
 
 This doctrine does not apply to a sale in bankruptcy.-' The 
 purchaser of the good-will of a bankrupt's business enters into 
 no contract with the bankrupt, and has no legal right to com- 
 plain if, after his discharge in bankruptcy, the former owner 
 sets up in the same line of business and solicits old customers. 
 
 In Massachusetts the doctrine has been held not to apply 
 to the sale of the property of a partnership, whose term has 
 come to an end by its own limitation, and whose articles pro- 
 vided "for a sale of the property and assets of the firm, upon 
 its termination, at their value as it appears by the books of the 
 firm." After such a sale, the court declared, the former partners 
 were all at liberty to do any kind of business, and to gain such 
 advantages as they could from their relations to the former 
 business.^ In this, and in a still later case,^ the court declined to 
 commit itself upon the question whether the seller of the good- 
 will of a firm may thereafter solicit its old customers. But it is 
 now established that he may not so solicit, if the sale is voluntary. 
 He may not so conduct his new business as to injure the business 
 which he has voluntarily sold.* 
 
 6. Partnership Stipulations concerning the Good-Will. 
 — Attention has been called to the fact that the foregoing rules 
 are subject to modification by agreements between the partners. 
 The partnership articles often have provisions covering this topic, 
 and they ought to have them always. Such provisions may re- 
 late to the manner of valuing the good-will,^ or may determine 
 the time and circumstances of its sale, or may provide that it 
 shall belong to the continuing or the surviving partner.^ In the 
 
 1 Walker v. Mottram, 19 Ch. Div. 355, 51 L. J. Ch. 108 (1881) ; Grif- 
 fith V. Kirley, 189 Mass. 522, 76 N. E. 201 (1905), sale under judicial 
 decree ; Von Bremen v. MaeMonnies, in previous note ; Green v. Morris, 
 (1914) 1 Ch. 562, 83 L. J. Ch. 559, 68 S. J. 398, 110 L. T. 508, 30 T. L. R. 
 301. 
 
 2 Webster v. Webster, 180 Mass. 310, 62 N. B. 383 (1902). 
 
 ' Hutchinson v. Nay, 187 Mass. 262, 72 N. E. 974, 68 L. R. A. 186, 
 105 Am. S. R. 390 (1905). 
 
 4 Fairfield v. Lowry, 207 Mass. 352, 93 N. E. 598 (1911). 
 
 5 Wade V. JenMns, 2 Giff. 509 (I860). The articles declared the 
 good-wiU should be valued at £6,000 ; Kaufmann v. Kaufmann, 239 Pa. 
 42, 86 At. 634 (1913). 
 
 " Blake v. Barnes, 26 Abb. N. C. 208 (1890) ; Trego v. Hunt (1896), 
 App. Cas. 7; Burdick's Cases on Part. 602. 
 
382 THE LAW OF PARTNERSHIP 
 
 latter case, the purchaser is one for value and the sale to him does 
 not fall under Transfer Tax Laws as a gift.^ 
 
 Agreements of this character simplify the questions connected 
 with the good-will of a firm, and make their solution an easier 
 matter for the courts. 
 
 In the absence of a stipulation upon the subject, if the value 
 of the good-will cannot be arrived at by a sale, it will be esti- 
 mated at one or more years purchase of the average net annual 
 profits of the business.^ "It is a question of fact in view of the 
 surrounding circumstances how many years purchase of the aver- 
 age annual profits should be taken as the value of the good-will." ' 
 In a carefully considered case, the number of years was fixed at 
 three, and six per cent interest on the capital invested was de- 
 ducted from the net profits.* 
 
 1 In re Borden's Estate, 159 N. Y. S. 346, 95 Misc. 443 (1916). 
 
 s MeUersh v. Keen, 28 Beav. 453 (1860). The clerk to whom an in- 
 quiry was directed found that "the good-will was worth one year's pur- 
 chase of the net annual profits of the banking business, calculated on an 
 average of the last three years," viz. £2,229 13s. Id. This was affirmed 
 by the Master of the RoUs. The English authorities are reviewed in 
 AUan's Law of GoodwiU, 84-103 (London, 1889). 
 
 'Von Au V. Magenheimer, 126 App. Div. 257, 270, 110 N. Y. S. 629 
 (1908), aff'd 196 N. Y. 510, 89 N. E. 1114 (1909), and cases cited ; Matter 
 of BaU, 161 App. Div. 79, 146 N. Y. S. 499 (1914). 
 
 * Matter of Seaich, 170 App. Div. 686, 156 N. Y. S. 579 (1915). The 
 average yearly profits were found by the appraisers to have been 
 $122,235.84. The annual interest on the capital was $50,101.24. This 
 was deducted from the yearly profits and the remainder — $72,134.60 — 
 multiplied by 3, making the value of the good'-wiU to be $216,403.80. 
 
CHAPTER IX 
 
 LIMITED PARTNERSHIPS 
 
 § 1. Their Origin and Nature. 
 
 Each member of a partnership is Uable, according to Eng- 
 lish law, for all the partnership obligations. He may evade 
 this liability by keeping his connection with the firm a secret; 
 but he cannot exempt himself from it by any agreement with 
 his copartners. In other words, the common law of England 
 does not permit a partner to limit his liability for firm debts 
 to his contribution to its capital, although he may have no voice 
 in its management, and although he may stipulate in the part- 
 nership contract that his loss shall not extend, beyond his contri- 
 bution.^ 
 
 1. The Creatures of Legislation. — Limited partnerships,^ 
 therefore, wherever the English common law prevails, are the 
 creatures of statutes, which were suggested by certain provisions 
 in the French Code of Commerce. New York was the pioneer ^ 
 in this line of legislation, followed closely by Connecticut,* and 
 then by other States and Territories; until, at present, legisla- 
 
 ' CUft V. Barrow, 108 N. Y. 187, 15 N. E. 327 (1888) ; Burdiek's Cases 
 on Part. 93. 
 
 ^ Called special partnerships in some States. See Civ. Code of Cal. 
 § 2477 et seq. 
 
 ' Ch. 244, L. 1822. Chancellor Kent has remarked upon this as "the 
 first instance in the history of the legislation of New York, that the stat- 
 ute law of any other country than that of Great Britain has been closely 
 imitated and adopted." 3 Comm. 36. For some of the important differ- 
 ences in the two statutes, see Jacquin v. Buisson, 11 How. Pr. (N. Y.) 
 385 (1855). 
 
 * The Connecticut statute was adopted in 1822, a few months later 
 than the New York statute. See Clapp v. Lacey, 35 Conn. 463 (1868) ; 
 Burdiek's Cases on Part. 611. 
 
 383 
 
384 THE LAW OF PARTNERSHIP 
 
 tive authority for limited partnerships exists in nearly every 
 political jurisdiction of the United States. 
 
 An attempt was made to introduce a system of limited part- 
 nership, when the Law of Partnership was codified in Britain, 
 but without success,^ and the institution remained "unknown 
 in the United Kingdom, and these kingdoms alone, or almost 
 alone, among all the civilized countries of the world", ^ until 1907.^ 
 
 (a) Distinctive Characteristic of Limited Partnership. — This 
 consists in "the conjunction of at least one managing partner 
 who is liable without limit for the partnership debts, like a partner 
 in an ordinary firm, with one or more contributing partners who 
 do not take an active part in the business, and are liable only 
 to the extent of what they contribute to its capital." ^ 
 
 (&) Limited Partnership Associations. — The statutes of some 
 jurisdictions^ authorize a second form of limited partnership, 
 "in which the capital subscribed shall alone be responsible for 
 the debts of the association, except under certain circumstances." 
 If the statutory provisions are complied with, none of the part- 
 ners in these associations is subject to any personal liability. 
 The business is conducted by a board of managers ; the association 
 sues and is sued in the association name ; real estate is held, owned, 
 and conveyed in the association name, and the association is 
 permitted to adopt and use a common seal. Such associations 
 are very similar to the statutory joint stock companies of Britain 
 and New York. 
 
 They have some of the characteristics of a corporation, but 
 for most purposes they are treated by the courts not as corpo- 
 
 ' Pollock's Digest of Part. (3d ed.) Appendix. 
 
 " Pollock's Essays in Jurisprudence, 100. 
 
 5 An Act to Establish Limited Partnerships, 1907, Ch. 24, 7 Ed. 7 : 
 Limited Partnership in America and England, by Francis M. Burdiek, 
 [ 6 Mich. L. Rev. 625 (1908). 
 
 ' In Pennsylvania, Act of June 2, 1874, Brightly's Purd. Digest (12th 
 ed.), 1086-1088, Act of July 9, 1901, P. L. 625, Pepper & Lewis's Dig. 
 Partnership; in Virginia, Act of March 2, 1875, Code of 1877, §§ 2878- 
 2886; in Michigan, Act of May 22, 1877, 1 Howell's Statutes, §§ 2365- 
 2375; in New Jersey, Act of March 12, 1880, 2 Gen. Statutes, 2440; 
 in Ohio, Act of April 20, 1881, R. S. (17th ed.) 773. Germany has adopted 
 this form of limited partnership. See 9 Law Quar. Rev. 62 for comments 
 on the statute passed April 20, 1892. 
 
LIMITED PARTNERSHIPS 385 
 
 rate bodies, but as partnerships.^ Some of the' principal reasons 
 assigned for this doctrine are these : "The formation of a limited 
 partnership association is materially different from the creation 
 of a corporation. Such association is treated in the statute as 
 a partnership, which, upon the performance of certain acts, shall 
 possess specified rights and immunities. In contemplation that 
 the association may consist of many members, for convenience, it 
 is clothed with many of the features and powers of a corporation, 
 such as the right to sue and be sued, grant and receive, in the 
 association name. But no man can purchase the interest of a 
 member, and participate in the subsequent business, unless by 
 a vote of a majority of the members in number and value of their 
 interests. No charter is granted to the persons who record their 
 statement." ^ 
 
 2. Limited Partnership is a True Partnership. — Although 
 limited partnership is the creature of statutes, it is not a new 
 species of legal institutions.' It is a common law partnership, 
 modified in certain respects by statutory provisions. It results 
 from the voluntary contract of the parties, and is not a relation 
 into which they are forced by the law. "Both as to the rights 
 of the parties to the contract, and as to the world, it is in itself 
 a proper partnership, except as it limits the liability of the special 
 partner, and restricts his control over the business of the firm. 
 The members are partners, and by slight irregularities may easily 
 be turned into general partners. The statute terms them part- 
 ners ; except for the statute they would be general partners, and 
 from participating in the profits, it would seem to be a just conse- 
 quence that they are partners in every sense, subject to liabilities 
 
 1 Edwards v. Warren, 168 Mass. 564, 47 N. E. 502 (1897) ; Burdick's 
 Cases on Part, 615. See Sturgeon v. Apollo Oil Co., 20 3 Pa._3 69, 53 At. 
 189 (1902) ; Deekert v. Chesapeake Western Co., 101 Va. 8 04, 45 S. E. 
 799 (1903), in wMch this class of partnerships figured. 
 
 2 EHot V. Himrod, 108 Pa. 569 (1885) ; Great So. Fire Proof Hotel Co. 
 V. Jones, 177 U. S. 449, 20 Sup. Ct. 690 (1900). 
 
 ' The Louisiana Civil Code divides partnerships into commercial and 
 ordinary partnerships and subdivides the former into general and special, 
 and the latter into universal and particular. It then declares that "part- 
 nership in commendam", or limited partnership, is "a modification of 
 "which the several kinds of partnerships are susceptible, rather than a sep- 
 arate division of partnerships." 
 
386 THE LAW OF PARTNERSHIP 
 
 and enjoying privileges as partners in every particular, except as 
 otherwise specially provided. The common law regulates the 
 mutual rights, and duties, and liabilities of partners, and gov- 
 erns these limited partnerships, in every respect not excepted 
 out of the general rule by this statute." ^ 
 
 Accordingly, as held in the case last cited, the death of any 
 partner, whether general or special, dissolves the firm, in the 
 absence of a stipulation to the contrary between the partners. 
 And undoubtedly a limited partnership is dissolved by opera- 
 tion of law whenever an ordinary partnership would be so dis- 
 solved.^ Moreover, it may be dissolved, at any time, by the acts 
 of the parties.^ Its books are evidence against it in favor of third 
 persons, precisely as are the books of an ordinary partnership.* 
 
 The foregoing doctrine has been much modified by the Uniform 
 Limited Partnership Act.^ 
 
 (a) Purpose of Limited Partnership Legislation. — The prin- 
 cipal object which legislators had in view, in authorizing limited 
 partnerships, was the encouragement of trade. In the language 
 of a leading case ^ on this subject : "Looking, then, to the statute 
 as a whole, and its history, in connection with the then condition 
 of commercial law, we find a clear, general purpose and intent 
 of the legislature to encourage trade by authorizing and permit- 
 ting a capitalist to put his money into partnership with general 
 
 lAmes V. Downing, 1 Brad. (N. Y. Surrogate Court) 321 (1850); 
 Burdiok's Cases on Part. 606. This ease contains a valuable historical 
 sketch of Limited Partnerships ; 6 Mich. L. Rev. 527, 528 ; Jaffe v- Krum, 
 88 Mo. 669 (1886). 
 
 2 Wilkins ;;. Davis, 2 Lowell (U. S. C. C.) 511, 15 N. B. R. 60 (1876) ; 
 bankruptcy of a general partner. See Pepper & Lewis's Digest, Vol. l,p. 
 2696, § 34, for Pennsylvania rule, in case of insolvency of special partner. 
 
 ' Cf. Laws of N. y. 1897, Ch. 420, § 42. See § 13, infra. 
 
 * Hotopp V. Huber, 160 N. Y. 524, 55 N. E. 206 (1899) ; Chick v. 
 RoWnson, 95 Fed. 619, 37 C. C. A. 205, 52 L. R. A. 833 (1899). 
 
 VytJnder this proposed Act, a limited partner is not in any sense a 
 partner, though he is a member of the association. His failure to comply 
 with the statutory requirements does not convert him into a partner. 
 His death or withdrawal does not dissolve the firm. He is not a princi- 
 pal in the partnership transactions. Draftsman's introduction to the 
 Act, pp. 5 and 6; and §§ 1, 11, 19, 21, and 26. 
 
 « Clapp V. Laoey, 35 Conn. 463 (1868) ; Burdiok's Cases on Part. 
 611, 613. 
 
LIMITED PARTNERSHIPS 
 
 387 
 
 partners possessed of skill and business character only, without 
 becoming a general partner, or hazarding anything in the busi- 
 ness except the capital originally subscribed." The same view 
 has been expressed by other courts,^ and by the draftsman of the 
 Uniform Limited Partnership Act.^ 
 
 § 2. Who may compose Them. 
 
 In the absence of express statutory provisions on the subject, 
 any person can become a member of a limited partnership who 
 can become a member of an ordinary firm. Hence, the fact 
 that one of the general partners in a limited partnership is a 
 minor, does not affect the liability of the special partner. The 
 contract of partnership between the minor and his copartners, 
 is not void, but voidable only.' Even in the case of an ordinary 
 partnership, as we saw in an earlier chapter,* the infant cannot 
 withdraw from the firm his contribution, as against its creditors. 
 Certainly he cannot make such a withdrawal from a limited 
 partnership whose assets, in case of insolvency, are treated by 
 the statutes as to some extent a trust fund for ratable distribu- 
 tion among its creditors.^ 
 
 In a jurisdiction where married women are emancipated from 
 common law disabilities, and are authorized to incur contract 
 liabilities as if they were unmarried,^ they may become members 
 of limited partnerships.' 
 
 1 Singer v. Kelly, 44 Pa. 145, 149 (1863) ; Riper v. Poppeahausen, 43 
 N. Y. 68 (1870) ; Burdick's Cases on Part. 653, 655. 
 
 2 Introduction, p. 5: "The draft proceeds on the assumption, that 
 persons in business should be able, while remaining themselves liable 
 without limit for the obligations contracted in its conduct, to associate 
 with themselves others who contribute to the capital and acquire rights 
 of ownership," provided that such contributors do not compete with 
 creditors for the assets of the partnership." 
 
 3 The Cont. Nat. Bank v. Strauss, 137 N. Y. 148, 32 N. E. 1066 (1893) ; 
 Burdick's Cases on Part. 619. 
 
 Supra, Chap. Ill, § 1. 
 
 See L. of N. Y. 1897, Ch. 420, § 40 ; Innes v. Lansing, 7 Paige (N. Y. 
 Ch.) 583 (1839) ; Crouch v. First Nat. Bank, 156 111. 342, 40 N. E. 974 
 (1895) ; Burdick's Cases on Part. 667. 
 
 « Steffen v. Smith, 159 Pa. St. 207, 28 At. 295 (1893). 
 ' Benard v. Packard, 64 Fed. 309, 12 C. C. A. 123 (1894) ; Burdick's 
 Cases on Part. 623. 
 
388 THE LAW OF PAETNERSHIP 
 
 (a) The Number of Partners. — As a rule the statutes pro- 
 vide that two or more persons may form a limited partnership, 
 one or more of whom shall be general partners, and the others 
 shall be special partners.^ Occasionally, two or more general 
 partners ^ are required, and in some jurisdictions the number 
 of special partners is limited.^ The statutes, authorizing limited 
 partnership associations, require three or more to unite in the 
 organization.'* 
 
 (6) Fictitious Special Partner. — We shall see in the next 
 section, that the statutes require the certificate to state the 
 names of the general and of the special partners, and that they 
 provide, that any false statement in the certificate shall render 
 "the persons interested in the partnership liable as general part- 
 ners." In a recent case, it appeared that the one naraed in the 
 certificate as the special partner, never intended to occupy that 
 position and that the general partners never expected him to 
 occupy it. His only connection with the partnership, the court 
 declared, was that of a masquerader. Two persons, whose 
 connection with the firm was kept secret, supplied the money 
 which the nominal special partner contributed, and were to re- 
 ceive the profits therefrom. The statement in the certificate, 
 that this masquerader was the special partner in the firm, v\'as 
 clearly false, but whether its falsity rendered him liable as a 
 general partner, the court declined to decide, because it was not 
 presented by the pleadings or upon the trial.^ That the persons 
 who contributed the special partner's share of the capital, and for 
 whom the man, masquerading in that capacity, acted, were liable 
 as general partners, does not seem to admit of doubt. If the mas- 
 querader was so liable, it would be because he was estopped from 
 asserting that he was not one of "the persons interested in the 
 partnership." 
 
 ' L. of N. Y. 1897, Ch. 420, § 30. This statute appears to require 
 all members to be of full age ; The Uniform Limited Partnership Act, 
 
 §1- 
 
 2 Gen. St. of Wash. § 2917 ; Code of 1912, Title, 377, § 3. 
 
 » Code of Md. Art. 73, § 2. 
 
 * Pa. Act of June 2, 1874, § 1. Ohio limits the number to twenty-five ; 
 R. S. § 3161 a. 
 
 » Webster v. Lanum, 137 Fed. 376, 70 C. C. A. 56 (1905). 
 
LIMITED PARTNERSHIPS 389 
 
 § 3. Requisites to their Formation. 
 
 In addition to a contract between the parties, the statutes 
 require them to do certain acts before a limited partnership 
 shall be deemed to be formed. While there is considerable differ- 
 ence in matters of detail, the general provisions of the statutes 
 on this topic are substantially the same.^ The most important 
 acts are those of making a specified certificate and afiidavit, of 
 registering and publishing these documents, and of making the 
 advertised contribution of capital by the special partner.^ It 
 is to be borne in mind, that, if a partnership is admitted, the pre- 
 sumption is that it is a general partnership. If any of its mem- 
 bers would escape from this presumption, the burden of proof is 
 upon him to show the organization of a valid limited partnership.^ 
 
 1. Contents of the Certificate. — The certificate, which 
 the partners severally * are required to sign and acknowledge, . 
 must state (1) The name under which the partnership is to be 
 conducted ; (2) The general nature of the business intended to 
 be transacted; (3) The names and residences of all the part- 
 ners, specifying which are general and which are special part- 
 ners ; (4) The amount of capital contributed by the special 
 partners; (5) The times at which the partnership is to begin 
 and end.^ Under the Uniform Limited Partnership Act (§ 2), 
 the certificate is to be sworn to, and may contain divers other 
 provisions than those named above. 
 
 (a) Rules of Statutory Construction. — In soine cases courts 
 have shown a disposition to give a harsh and technical con- 
 struction to limited partnership statutes, on the ground that 
 they are in derogation of the common law.® Undoubtedly 
 
 ' Since tte New York statute has been the basis of similar legislation 
 in most of the States, its provisions will be referred to more frequently 
 than those of any other enactment. 
 
 2 R. S. Oglesby Co. v. Lindsey, 112 Va. 767, 72 S. E. 672, 27 Ann. Cas. 
 913 (1911), applying the Virginia statute which requires the names of 
 members to appear conspicuously on the front of the building. 
 
 3 Walker v. Wood, 170 111. 463, 48 N. E. 919 (1897). 
 
 * Several signing is not required by the Uniform Limited Partnership 
 Act. 
 
 5 L. of N. Y. (1897) Ch. 420, § 30 ; Cal. Civ. Code, § 2479. 
 
 « In Jacquin v. Buisson, 11 How. Pr. (N. Y.) 385, 393 (1855), Hoff- 
 man, J., spoke of the English common law as "the strong enemy of lim- 
 
390 THE LAW OF PARTNERSHIP 
 
 they were enacted for the protection of the special partner, and 
 were intended to confer upon him a privilege which was denied 
 by the common law; but, as already pointed out, they had an- 
 other purpose in view, that of encouraging trade. Accordingly, 
 they have been treated by most courts as remedial statutes, which 
 are entitled to a liberal construction.^ 
 
 Wherever this doctrine prevails, all that is requisite to the 
 valid formation of a limited partnership is an honest and sub- 
 stantial compliance with those statutory provisions which are 
 conditions precedent to its existence.^ 
 ~— (&) The Partnership Name. — Not only must the names of 
 the various members of the partnership be stated in the certifi- 
 cate, and the general partners be distinguished from the special 
 partners, but the partnership name must be set forth. The 
 rule upon this point, it will be observed, is radically different 
 from that which obtains in the case of an ordinary partnership, 
 where a name is not essential to the firm's existence.^ That a 
 firm name should be agreed upon, stated in the certificate, and 
 published to the world, is not only a reasonable, but it is a neces- 
 sary requirement in the cases of limited partnerships. Without 
 it, the registration of these firms would be of little value, for their 
 identity could not be established by mere inspection of the public 
 records. 
 
 Generally the statutes permit the insertion of the names of 
 general partners only in the firm name. Often they prohibit 
 the use of a special partner's name in the firm style, under the 
 penalty of his being liable as a general partner, if his name is 
 so used with his privity.* The purpose of such provisions is 
 
 ited partnerships" ; and Judge Woodruff declared in another case that 
 "parties cannot claim under the statute, which derogates from the gen- 
 eral riile of law, without showing a strict compliance with the statute" ; 
 In re MerriU, 12 Blatoh. 221, 224; Fed. Cas. No. 9467 (1874). Similar 
 views are expressed in Pierce v. Bryant, 5 Allen (87 Mass.) 91 (1862) ; 
 Burdick's Cases on Part. 631 ; and Durant v. Abendroth, 69 N. Y. 148 
 (1877). 
 
 1 This is required by the Uniform Limited Partnership Act, § 28. 
 
 2 Manhattan Co. v. Laimbeer, 108 N. Y. 578, 582, 15 N. B. 712 (1888). 
 See dissenting opinion for argument in favor of a narrow construction, 
 at p. 600 ; Webster v. Lamim, 137 Fed. 376, 70 C. C. A. 56 (1905). 
 
 ' Supra, Chap. Ill, § 1. " L. of N. Y. (1897) Ch. 420, § 35. 
 
LIMITED PARTNERSHIPS 391 
 
 "doubtless to prevent credit being given to a person not liable 
 as general partner for the debts or liabilities of the firm." ^ 
 
 In some States, however, the name of a special partner may 
 appear in the firm name, when the limited partnership succeeds 
 to the business of a former firm, whose name it adopts in a manner 
 authorized by statute.^ 
 
 (c) The Use of " and Company." — The statutes are far from 
 uniform upon this point. In some States, the names of all the 
 general partners must appear in the firm name and the use of 
 the words "and Company" or "and Co." is not allowed.' In 
 other States, these words may be added to the names of one or 
 more of the general partners, if there are more than one,* while 
 in still others, there is no statutory provision on the subject.^ 
 Even when the use of these words is prohibited, their insertion 
 in the firm name may not subject the special partner to the lia- 
 bilities of a general partner. Whether it does or not depends 
 upon the language of the statute.® If their use is prohibited, 
 but no penalty is attached to this violation, while the statute 
 declares that certain other violations of its requirements shall 
 subject the special partner to the liabilities of a general partner, 
 their prohibited use neither prevents a limited partnership from 
 being formed nor converts it into a general partnership.'' 
 
 (d) The Nature of the Business. — While a certificate which 
 describes the business of the partnership as that of "general 
 dealers" does not satisfy the statute,^ it is not necessary that 
 it should set forth all the details of the partnership agreement,^ 
 
 1 Buok V. AJley, 145 N. Y. 488, 40 N. E. 236 (1895) ; Burdick's Cases 
 on Part. 624. Uniform Limited Partnership Act, § 5 (2). 
 
 2 Groves v. Wilson, 168 Mass. 370, 47 N. B. 100 (1897) ; Burdick's 
 Cases on Part. 630 ; the New York statute appears to permit this, §§ 20, 
 21. Uniform Limited Partnership Act, § 5 (1), (6). 
 
 3 Civil Code of Ala. (1896) § 3220. 
 
 « L. of N. Y. (1897) Ch. 420, § 35 ; the statutory provisions on this 
 point have been altered several times in New York. 
 
 5 Cal. Civ. Code, §§ 2477-2510. 
 
 ^ The Uniform Limited Partnership Act has no provision on this topic. 
 
 ' Buck V. AUey, 145 N. Y. 488, 40 N. E. 236 (1895) ; Burdick's Cases 
 on Part. 625. See Andrews v. Schott, 10 Pa. St. 47 (1848), contra. 
 
 8 Benedict v. Van Allen, 17 Upper Can. Q. B. 234 (1859). 
 
 ' MetropoKtan Nat. Bank v. Sirrett, 97 N. Y. 320, 15 Abb. N. C. 318 
 (1884) ; Burdick's Cases on Part. 633. 
 
392 THE LAW OF PARTNERSHIP 
 
 nor that its statement of the nature of the business should be 
 in the very words of the partnership articles.^ In the case last 
 cited the court held the certificate to be valid, although it de- 
 scribed the firm's business as "a general commission business, 
 buying and selling grain, flour, and produce on commission", 
 while the articles declared that the partnership was formed "for 
 the purpose of carrying on a general produce and commission 
 business." 
 
 That the certificate should disclose the nature of the firm busi- 
 ness, clearly and honestly, follows both from the aflSrmative 
 requirement of the statutes and from the fact that limited part- 
 nerships are prohibited from engaging in particular kinds of busi- 
 ness, notably banking and insurance.^ Certainly the certificate 
 ought to show whether or not the partnership is engaged in a 
 prohibited business; for if it is so engaged, the special partner 
 is not entitled to the privileges accorded by the statute to such a 
 member of the firm, but is subject to all the liabilities of a general 
 partner. ^ 
 
 (e) The Amount of Capital contributed. — It is of the highest 
 importance to those dealing with the firm that the certificate 
 should contain a definite and trustworthy statement of the amount 
 of capital contributed by the special partner. Hence, in almost 
 every case, the statute requires an affidavit by one or more of the 
 general partners, or by all the partners, that the siuns specified 
 in the certificate to have been contributed by the special partners * 
 have been actually and in good faith paid in cash ; and it declares 
 that if any false statement be made in the certificate or affidavit 
 all the persons interested in the partnership shall be liable for all 
 its engagements as general partners. 
 
 Substantial compliance with these provisions is necessary, 
 unquestionably, to the formation of a limited partnership ; and 
 
 1 Manhattan Co. v. Phillips, 109 N. Y. 383, 17 N. E. 129 (1888). 
 
 2 See L. of N. Y. (1897) Ch. 420, § 30. 
 
 ' McGehee v. Powell, 8 Ala. 827, 835 (1846). He is not subjected to 
 this liability, under the Uniform Limited Partnership Act, § 6. 
 
 " In Speneer Optical Co. v. Johnson, 63 S. C. 533, 31 S. B. 392 (1898), 
 it was held not to be " either a strict or a substantially accurate compliance 
 with the statute merely to state what all the special partners in the aggre- 
 gate contribute. The statute, for reasons of its own, insists that the 
 amount each special partner contributes shall be specified." 
 
LIMITED PARTNERSHIPS 393 
 
 in many States this is expressly asserted in the statutes.^ The 
 following language from a decision of the New York Court of 
 Appeals ^ expresses the unanimous opinion of the courts upon this 
 subject: "The amount contributed by the special partner is an 
 essential part of the terms of the partnership. . The mode of con- 
 tribution is just as explicitly fixed as that there shall be a contri- 
 bution ; and it is just as explicitly required that the mode of con- 
 tribution prescribed by the statute shall be followed, and shall 
 ' be averred in the affidavit, as that there shall be an amount of 
 contribution, and that the amount shall be stated. To guard 
 against unsafe practices and to secure the public against even 
 innocent deception, or mistake, the statute demands that a limited 
 partner shall pay into the capital a sum which he shall specify; 
 that he shall make 'actual cash payment' of that sum. . . . 
 The purpose was that a limited partnership should start in its 
 business on a fixed and certain basis, with a sum in its possession 
 of that which does command the markets, and makes the possessor 
 of it equal, as a buyer, to any other, and to its extent as solvent 
 as any other." 
 
 (f) Contributed Cash may be invested in Goods at Once. — In 
 Van Ingen v. Whitman, cited in the last note, the special part- 
 ner did not make a cash contribution to the capital of the limited 
 partnership, but being entitled to an interest in the assets of a 
 former firm to an amount of more than $30,000, he authorized 
 one of the general partners to convert it into cash, and to pay the 
 cash into the new firm. There was no evidence that this ever 
 was done, although it did appear that the limited partnership 
 acquired the special partner's interest in the former firm's assets, 
 
 1 Cal. Civ. Code, § 2482; N. Y. L. 1897, Ch. 420, §§ 33, 34. 
 
 2 Van Ingen v. WHtman, 62 N. Y. 513, 519 (1875). See Pierce v. 
 Bryant, 5 Allen (87 Mass.) 91 (1862) ; Burdick's Cases on Part. 631. 
 But see Deokert v. Chesapeake Wes. Co., 101 Va. 804, 45 S. E. 799 (1903), 
 holding, in the case of a partnership association, where the parties in good 
 faith attempted to form such an association, "but failed to comply with 
 the statutory provisions, they are not liable as general partners, but only 
 to the extent of the unpaid portions of their subscriptions to the capital, 
 determined, as to those contributing property, by deducting the fair cash 
 value thereof at the date of contribution from the amount subscribed," 
 distinguishing such a case from that of the ordinary limited partnership. 
 
 Similar is the liability imposed by the Uniform Limited Partnership 
 Act, §§ 6, 11, 17. 
 
394 THE LAW OF PARTNERSHIP 
 
 the estimated value of which was.not disputed. It was held that 
 a limited partnership had not been formed. The affidavit and 
 accompanying papers made out a presumptive case, it was said, 
 that the partnership was a limited one ; but this case was over- 
 thrown by evidence of the affidavit's falsity. 
 
 The court did not hold, however, that had the special part- 
 ner paid the $30,000 in cash to the general partners, they could 
 not have used their capital thus acquired in buying the assets 
 of the former firm ; and in a later case the Court of Appeals has 
 held ^ that such a purchase is valid. The special partner,- said 
 the court, did not receive the purchase price " as a return of his 
 capital paid in. The transaction on his part was not in form or in 
 legal effect the same as though he had put in the goods as part of 
 his capital, instead of the money. The money when paid was 
 beyond his control, and placed in the legal possession of the gen- 
 eral partners, and was subject to any disposition they might make 
 of it. The purchase, in effect, was a transaction of the firm after 
 the firm had been organized, and not the consummation of a 
 prior contract, or at least the jury were at liberty so to find." 
 
 Later in its opinion the court said : " If the purchase of the 
 stock was made a condition of his contribution of capital, a 
 different question would be presented." That very question 
 was presented in a subsequent case, and the same court declared ^ 
 that when such a condition attends the contribution of capital 
 by the special partner, his payment cannot be upheld as one 
 made in good faith, for the new firm has " only the sight of money, 
 but no continued possession nor any benefit of it." The appro- 
 priation is made before the firm's formation. 
 
 (g) Cash may be borrowed. — The statute does not require 
 the cash, which is contributed by the special partner, to be made 
 from his own accumulations. He may borrow it.^ The statute 
 simply requires that his contribution be made in good faith. 
 "What difference," it is asked, "can it make whether he has 
 borrowed it or received it in payment of an obligation ? In either 
 
 1 Metropolitan Nat. Bank v. Sirrett, 97 N. Y. 320 (1884) ; Burdick's 
 Cases on Part. 633. 
 
 ' Manhattan Co. v. Phillips, 109 N. Y. 383, 17 N. E. 129 (1888) ; Line- 
 weaver V. Slagle, 64 Md. 465, 2 At. 693 (1886), accord. 
 
 3 Metropolitan Nat. Bank v. Sirrett, 97 N. Y. 320 (1884). 
 
LIMITED PARTNERSHIPS 395 
 
 case the effect upon the financial abihty of the general partner 
 is the same. Concededly the special partner can borrow the 
 money for the purpose from any other person than the general 
 partner. His financial ability is a matter of which the statute 
 takes no notice." In the case from which the foregoing quotation 
 is taken/ the court declared that the special partner is not pro- 
 hibited from borrowing from the general partners, or from either 
 of them, the sum which he contributes to the firm's capital. It 
 says: "The learned trial judge, in some of his observations to 
 the jury, expressed the opinion that to permit the special part- 
 ner to make his contribution out of money borrowed from the 
 general partners could not have been contemplated by the statute, 
 because the transaction would leave the assets of the partnership 
 just as they were before. By this he probably meant that if the 
 general partners had not loaned the money they could have used 
 it in the business of the partnership, and therefore the assets of 
 the partnership would not be increased by the contribution of the 
 special partner. But the statute does not require the amount 
 of the capital contributed by the general partners to be stated 
 in the certificate, and it thereby treats any information to the 
 creditors respecting their financial responsibility as something 
 which is not essential." 
 
 (h) Contribution of Property other than Cash. — In a few States 
 the special partner is not required to make his contribution to 
 firm capital in cash, but may put in other forms of property.^ 
 Here, again, the statutory requirements must be carefully com- 
 plied with. He must describe the property so that creditors may 
 ascertain from the certificate and affidavit the real character 
 of the firm assets, and may estimate intelligently the credit to 
 which the partnership is entitled.^ If the statute provides that 
 
 1 Webster v. Lanum, 137 Fed. 376, 70 C. C. A. 56 (1905) ; Lawrence 
 V. Merrifield, 42 N. Y. Sup. Ct. (10 J. & S.) 36 (1877), aff'd 73 N. Y. 
 590 (1878), witliout an opinion. In the latter ease it is declared: "No 
 part of the statute regulates the means which may be used by the special 
 partner to obtain the money he makes special capital. If they be fraudu- 
 lent or unlawful, the remedy is not given by this statute, nor while the 
 other demands of the statute are satisfied do these means injure the credi- 
 tors or other persons." 
 
 2 This is allowed by the Uniform L. P. Act, § § 1 and 6. 
 
 3 HoUiday v. Union Bag Co., 3 Col. 342 (1877). 
 
396 THE LAW OF PARTNERSHIP 
 
 the property shall be valued by all the partners, such a valuation 
 must be made, and an honest statement of the facts must be 
 incorporated in the certificate.^ 
 
 The courts do not construe these statutes, however, as impos- 
 ing impossibilities upon persons, nor permit them to operate as 
 traps "to catch those who have honestly complied with their 
 substantial requisites." If the property is described with suffi- 
 cient fulness "to enable parties dealing with the partnership tO' 
 ascertain readily the kind, amount, and value of the contribution 
 to its capital", and if the other provisions of the statute have 
 been complied with substantially and honestly, the validity of the 
 limited partnership will be sustained.^ 
 
 (i) When must the Contribution he made ? — Although there 
 is some authority for the proposition that the special partner 
 must make his statutory contribution before the afiBdavit and 
 certificate are executed,' the better view appears to be that he 
 complies with the statute if he makes his contribution before those 
 papers are filed. "It is the act of filing the certificate and afii- 
 davit which gives life to the partnership and confers immunity 
 from the debts of the firm upon the special partner, and from, 
 that moment those who deal with the partnership become entitled 
 to know the truth as to its formation, and from and after that 
 time a wrong is done to those who deal with it, if a false state- 
 ment is published through the filing of the certificate. The truth 
 of the statements contained in the certificate is to be determined, 
 therefore, at the time of its being filed with the county clerk. If 
 true at the instant of filing, there is no liability, because, being 
 true at the instant of the creation of the limited partnership, they 
 fulfil the purpose for which the law was enacted." * 
 
 If, however, the special partner does not make the contribution 
 until a week after the filing of the papers and the commencement 
 of business by the firm, his liability for all partnership engage- 
 
 1 First Nat. Bank of DanviEe v. CreveKng, 177 Pa. St. 270, 35 At. 
 595 (1896) ; Burdiok's Cases on Part. 638. 
 
 2 Robbins v. Weber, 172 Pa. St. 635, 34 At. 116 (1896). 
 ' Durant v. Abendroth, 69 N. Y. 148 (1877). 
 
 ^ Ropes V. Colgate, 17 Abb. N. C. 136, 143 (1886), cited and approved 
 in White v. Eiseman, 134 N. Y. 101 (1892) ; Burdiok's Cases on Part. 
 640 ; La Montagne v. Bank of New York, 94 App. Div. 219, 88 N. Y. 
 Supp. 21 (1904), modified, 183 N. Y. 173, 76 N. E. 33 (1905). 
 
LIMITED PARTNERSHIPS 397 
 
 ments is that of a general partner.^ It will not matter that the 
 intentions of the parties were honest, nor that firm creditors can- 
 not show that they have been harmed by this non-compliance 
 with a plain and peremptory requirement of the statute. The 
 acts have not been done which alone entitle the special partner 
 to exemption from firm engagements.^ 
 
 If there are two or more special partners, the failure of either 
 to comply with the essential requirements of the statute, although 
 the others have done all the acts required of them, will be fatal 
 to all. Each special' partner is compelled to see that every other 
 member of the firm complies with the statute.' No such duty or 
 liability is imposed by the Uniform Limited Partnership Act.'* 
 
 (j) A Check as Cash. — There is practical unanimity on the 
 part of the courts in holding that a special partner does not con- 
 tribute cash to the firm, when he turns over to it promissory 
 notes,^ or stock or bonds. ^ Nor is a post-dated check to be con- 
 sidered as cash.' But "where the money is actually in the bank 
 to the credit of the special partner, and he gives absolute and 
 final control of it to the general partner" by delivering to him a 
 certified check, or a check which the general partner procures to 
 be certified, the transaction has been held to amount to a pay- 
 ment of cash.* 
 
 2. Registration of Certificate and Affidavit. — In order 
 to secure a permanent public record of every limited partner- 
 ship, the statutes require the certificate and afiidavit to be filed, 
 and the certificate to be recorded, in a designated office, usually 
 the clerk's office of the county where the principal place of busi- 
 
 ' Myers v. Edison General Electric Co., 59 N. J. L. 153, 35 At. 1070 
 <1896) ; Burdick's Cases on Part. 644. 
 
 2 Pierce v. Bryant, 5 Allen (87 Mass.), 91 (1862) ; Burdick's Cases on 
 Part. 631. 
 
 3 WMttemore «. Macdonell, 6 Upper Can. C. P. 547 (1857). 
 * §§ 2 and 17. 
 
 5 Pierce v. Bryant, supra. Promissory notes of the special partner, 
 ■who was a man of large wealth. 
 
 «Haggerty v. Foster, 103 Mass. 17 (1869); United States bonds 
 payable to bearer and worth more than par. Doubted in Chick v. Rob- 
 inson, 95 Fed. 619, 37 C. C. A. 205, 52 L. R. A. 833 (1899). 
 
 ' Durant v. Abendroth, 69 N. Y. 148 (1877). 
 
 "White V. Eiseman, 134 N. Y. 101, 31 N. E. 276; Burdick's Cases 
 on Part. 640 ; Chick v. Robinson, 95 Fed. 619, supra. 
 
398 THE LAW OF PARTNERSHIP 
 
 ness of the partnership is located, and if it has places of business 
 in different counties, a certified copy of the certificate must be 
 filed and recorded in the clerk's ofiice of each county.^ 
 
 Until this requirement is complied with, the partnership is 
 not formed as a limited partnership.^ It is made the duty of 
 the partners to deliver the documents at the proper office for 
 filing and recording, and to leave them there. If they receive 
 them back and retain them, negligently supposing the law to 
 have been complied with, the business carried on will be that 
 of a general partnership.' The law does not impose upon them, 
 however, the duty of supervising the county clerk, or of com- 
 pelling him to perform his duty. "When the parties have done 
 all that they can do in the way of complying with the terms and 
 conditions of the limited partnership act, and when all that 
 remains to be done is for a public officer (entrusted with the care 
 and custody of the papers filed with him) to perform the duties 
 placed upon him under the provisions of the law, it must be 
 regarded as a compliance with the terms of the statute by the 
 parties interested, and the record must be assumed to be made 
 when the paper goes for the purpose of record out of the control 
 of the individual into the control of the public officer." * 
 
 3. Publication of the Certificate. — The statutes usu- 
 ally impose upon the partners the duty of promptly publishing, 
 in the local or other newspapers, either the certificate or the 
 terms of the partnership for a designated period, and of filing 
 proof of the publication with the original certificate ; ^ although 
 some statutes authorize a publication by posting notices, "if 
 there be no newspaper published in the county." * When publi- 
 
 ' L. of N. Y. (1897) Ch. 420, §§ 30, 31, Cal. Civ. Code, § 2480; La. 
 Civ. Code, § 2848. 
 
 2 L. of N. Y. (1897) Ch. 420, § 33, Cal. Civ. Code, § 2482. 
 
 ■' Henkel v. Heyman, 91 111. 96 (1878). 
 
 ^ Manhattan Co. v. Laimbeer, 108 N. Y.' 578, 15 N. E. 712 (1888) ; 
 Stradley v. Cargill El. Co., 135 Mich. 367, 97 N. W. 775 (1904). 
 
 ^ The Cal. Civ. Code, § 2483, calls for the publication of the certifi- 
 cate. So does the present New York statute; L. 1897, Ch. 420, § 32. 
 The Revised Statutes called for the publication of the terms of the part- 
 nership. Part II. Chap. , IV. Tit. I. § 9. The original New York act 
 did not require a publication, nor does the Uniform L. P. Act. 
 
 8 Maryland Code, Art. 73, § 7. 
 
LIMITED PARTNERSHIPS 399 
 
 cation is required, it generally is declared to be a condition pre- 
 cedent to the legal existence of a limited partnership. Not only 
 are the partners bound to see that the publication is made, but 
 they are bound to see that all the material facts are accurately 
 stated in the published announcement. If the special partner's 
 contribution is mistakenly stated in one of the newspapers to be 
 $5,000, when it is but |2,000, the error will prove fatal.^ The 
 misspelling of a name,^ or the duplication of it,^ or a mistake in 
 the date when the partnership is to begin business,^ will be treated 
 generally as immaterial errors. 
 
 When the statute provides that the publication shall be made 
 "immediately after" the filing of the certificate, the requirement 
 is satisfied if the publication begins within a week or ten days 
 after the filing.^ Nor will the publication be deemed invalid, 
 because one of the designated newspapers changes its name dur- 
 ing the statutory period of publication.^ 
 
 (a) Failure to file Proof of Publication. — The New York 
 statute does not impose any penalty for a failure to file proof 
 of the publication of the certificate; although it commands 
 such proof to be filed with the original certificate.'' Accord- 
 ingly, it has been held that the failure to file the proof does not 
 make the special partner liable as a general partner. The court 
 said : * " The publication of the certificate is the protection to 
 the public, and for failure to publish, the act justly makes a spe- 
 cial partner liable as a general partner, but the failure to file proof 
 of publication can in no way prejudice the rights of creditors of 
 a limited partnership. The failure to perform an act required 
 
 ' Smitli V. ArgaU, 6 HiU (N. Y.), 479 (1844), s. c. on appeal, 3 Den. 
 (N. Y.) 435 (1846). 
 
 2 Bowen v. Argall, 24 Wend. 496 (1840). 
 
 3 Carter-Battle Grocer Co. v. Jackson, 45 S. W. 615, 18 Tex. Civ. App. 
 353 (1898). 
 
 * Madison County Bank v. Gould, 5 HiU (N. Y.), 309 (1843). 
 
 5 Manhattan Co. v. Phillips, 109 N. Y. 383, 17 N. E. 129 (1888). 
 
 « Metropolitan Bank v. Sirrett, 97 N. Y. 320 (1884) ; Burdick's Cases 
 on Part. 633, 638. 
 
 ' Section 32. The California Code, § 2484, provides that an affidavit 
 of publication ''may be filed with the county recorder with whom the 
 original certificate was filed, and is presumptive evidence of the facts 
 therein stated." 
 
 8 Buckle V. Her, 81 N. Y. Supp. 631, 40 Misc. 214 (1903). 
 
400 THE LAW OF PAETNEKSHIP 
 
 by the statute will not impose liability of a general partner upon 
 the special partner unless the statute so declares." 
 
 § 4. Notice to Creditors. 
 
 The registration of the statutory certificate by a limited part- 
 nership not only gives to those dealing with it an opportunity 
 to learn the nature of its business, but it operates as constructive 
 notice to them upon this subject. Accordingly, if the certificate 
 describes the business as that of "the purchase, sale, and manu- 
 facture of all kinds and descriptions of furniture ", every one 
 dealing with the general partners is bound to know, that a con- 
 tract for the purchase of clothing for the individual general part- 
 ners, to be paid for with furniture belonging to the firm, is not 
 within the usual course of business of the firm, and, therefore, 
 that they have no implied authority to bind the firm by such a 
 contract.^ 
 
 Nor have the general partners the power to change the busi- 
 ness of the firm, without the special partner's consent.^ Their 
 practices, therefore, which are inconsistent with the nature and 
 scope of the business, as set forth in the certificate, do not war- 
 rant third persons in assuming that the scope of the business has 
 been changed.' 
 
 § 5. Creditors may be estopped. 
 
 Undoubtedly a special partner who has not complied with 
 the substantial requirements of the statute may exempt himself 
 from the liability of a general partner by an express stipulation 
 made with those who contract with the firm.'* But has he the 
 right to say that persons who have become creditors of the firm, 
 knowing that it claims to be a limited partnership, are estopped 
 from insisting that it is a general partnership, and that he is liable 
 as a general partner ? The principles which were found to obtain 
 
 • Taylor v. Rasoh, 11 N. B. R. 91, 1 Flip. 385 (1875) ; Burdiok's Cases 
 on Part. 646. 
 
 ' Umform L. P. Act requires an amended certificate, §§9 and 24. 
 ' Singer v. Kelly, 44 Pa. St. 145 (1863) ; Burdiok's Cases on Part. 
 674. 
 
 * See opinion of Gibson, J., in Hess v. Werts, 4 S. & R. (Pa.) 356, 
 361 (1818). 
 
LIMITED PARTNEESHIPS 401 
 
 in the case of joint stock companies,^ as well as the plain declara- 
 tion of the statutes,^ would seem to lead to a negative answer; 
 and this answer has been given by some courts.^ 
 
 In other jurisdictions, however, it has been held that persons 
 who become creditors of a limited partnership, with knowledge 
 of its defective organization, are estopped from denying its valid 
 existence ; ^ and the Supreme Court of Michigan has gone so far 
 as to hold that a creditor of a limited partnership association, 
 having dealt with and trusted the association, as a body of per- 
 sons with a limited liability, cannot recover against its members 
 either as individuals or as general partners.^ 
 
 (a) An Advising Creditor. — A person who has advised and 
 assisted in the defective organization of a limited partnership 
 ought not to be allowed to allege thereafter that the partnership 
 was not lawfully launched, and that the special partner was 
 liable to him as a general partner.* 
 
 (b) Estoppel by Judgment. — If a creditor brings an action 
 against all the members of a limited partnership, as general part- 
 ners, and judgment is rendered in favor of the special partner 
 against the creditor, but in favor of the creditor against those 
 named in the certificate as general partners, that judgment is a 
 bar to any other action by the same creditor proceeding upon the 
 
 1 Supra, Chap. I. § 4. 
 
 2 Cal. Civ. Code, § 2482, L. of N. Y. (1897) Ch. 420, § 33. In sub- 
 stance, that no limited partnership is formed until the statutory require- 
 ments are complied with. Cf. Uniform L. P. Act. §§1 and 11. 
 
 3 Manhattan Brass Co. v. AJlin, 35 111. App. 336 (1889) ; Sheble v. 
 Strong, 128 Pa. St. 315, 18 At. 397 (1889). In the latter case it is said : 
 "The question is not one of good faith on the part of the defendants, or 
 of notice to creditors, but whether, in their attempt to form a limited 
 partnership, they conformed to the law. If they did not, their attempt 
 was abortive, and it is no defence that creditors had actual knowledge 
 of the facts required to he set out in the recorded statement;" R. S., 
 Ogelsby Co. v. Lindsey, 112 Va. 767, 72 S. E. 762, 27 Ann. Cas. 913 
 (1911). 
 
 * Tracy v. Tuffly, 134 U. S. 206, 10 Sup. Ct. 527 (1889) ; Burdick's 
 Cases on Part. 647. 
 
 5 Staver Mfg. Co. v. Blake, 111 Mich. 282, 69 N. W. 508 (1896) ; 
 Burdick's Cases on Part. 649. The court declared that the rule should 
 be applied in this case which is applied in the case of a defectively organ- 
 ized corporation. See supra. Chap. I. § 4. 
 
 « Allegany Nat. Bank v. Bailey, 147 Pa. St. Ill, 23 At. 439 (1892). 
 
402 THE LAW OF PARTNERSHIP 
 
 theory that the special partner has made himself liable as a gen- 
 eral partner, for it conclusively determines that he was not a 
 general partner.^ 
 
 An adjudication in bankruptcy against a limited partnership, 
 upon the petition of a general partner, does not estop its creditors 
 from denying that it was legally organized under the statute, and 
 from asserting that the special partner is liable as a general partner. 
 In the bankruptcy proceeding, no issue is raised between the 
 creditors and special partner as to the validity of the partnership 
 organization, nor are the creditors parties to the proceeding. 
 Consequently the adjudication is wholly ex 'parte, so far as the 
 creditors are concerned, and cannot operate as an estoppel upon 
 them. They remain at liberty, even after taking dividends in the 
 bankruptcy proceedings, to show that the pretended limited part- 
 nership was not organized in conformity with the statute, and 
 that the special partner's liability to them was unlimited.^ 
 
 (c) Defective Organization does not invalidate Firm Contracts. 
 — A limited partnership is not an illegal association, simply 
 because the statutory requirements have not been complied with 
 upon its organization. Non-compliance with the statute enables 
 a creditor to hold all the members of the firm as general partners, 
 but it does not relieve a firm debtor from his liability to the part- 
 nership, nor does it invalidate contracts made with the firm.^ 
 
 § 6. Removal to Another County. 
 
 The statutes provide for the registration of limited partner- 
 ships in a public office * of the locality in which the firm has its 
 
 iBeU V. Merrifield, 109 N. Y. 202, 16 N. E. 55 (1888). The judg- 
 ment was held not a bar, however, to an action against the special part- 
 ner for an unlawful withdrawal of capital. 
 
 2 Durant o. Abendroth, 97 N. Y. 132 (1884). In Sheble v. Strong, 
 128 Pa. St. 315, 18 At. 397 (1889), it was held that a judgment against a 
 limited partnership association did not estop the judgment creditor from 
 maintaining a subsequent action against its members as general partners. 
 Under the Pennsylvania statute, the two actions are different in form 
 and effect; the parties are not the same, and the issues involved are 
 different. 
 
 3 Clement v. British Am. Assurance Co., 141 Mass. 298, 5 N. E. 847 
 (1886) ; Briar Hill Co. v. Atlas Works Co., 146 Pa. St. 290, 23 At. 326 
 (1892). 
 
 * In California, the office of the recorder of the county. Civ. Code, 
 
LIMITED PARTNERSHIPS 403 
 
 principal place of business, and the publication of the certificate 
 in local newspapers.^ These provisions are intended to secure 
 to the local business public "full knowledge of the situation of the 
 firm." As a rule, however, the statutes do not authorize the 
 removal of a limited partnership from one county, or similar 
 subdivision of a State, to another, nor do they provide in any 
 way for such a change in its place of business. Accordingly, it 
 has been held that if a limited partnership, although properly 
 organized under the statute, discontinues its business in the 
 original county and removes to another, the special partners will 
 no longer enjoy the protection of the statute, but will become 
 liable as general partners in the business carried on in the new 
 location.^ 
 
 Under the Uniform Limited Partnership Act, a change of loca- 
 tion pursuant to an agreement of the partners may be effected by 
 an amended certificate.^ 
 
 § 7. Renewal Certificates. 
 
 The statutory provisions on this topic are quite indefinite, 
 as will appear from the following section of the New York statute 
 which has been copied with but few modifications in most of the 
 States : " Every renewal or continuance of such partnership be- 
 yond the time originally fixed for its duration shall be certified, 
 acknowledged, and recorded, and an affidavit of a general part- 
 ner be made and filed, and notice given in the manner herein 
 required for its original formation." * 
 
 It is not strange that courts have differed in their interpre- 
 tation of this provision. In Pennsylvania, they have held that 
 it requires a true statement not only of the capital originally 
 contributed by the special partner, but of the fact that such 
 
 § 2480. In Loiiisiana, the ofQce for mortgage records, Rev. Civ. Code, 
 Art. 2848. In New York, the county clerk's office, L. 1897, Ch. 420, § 32. 
 In Alabama, the county probate judge's office. Civil Code of 1896, § 3212. 
 
 ' Chap. IX. § 3, supra. 
 
 2 Riper v. Poppenhausen, 43 N. Y. 68 (1870) ; Burdiek's Cases on 
 Part. 653. 
 
 M§ 24 and 25. 
 
 « R. S. Part. II. Chap. IV. Tit. I. § 11. It has been shortened by L. 
 of 1897, Ch. 420, § 33. 
 
404 THE LAW OF PARTNEESHIP 
 
 capital is unimpaired at the time of renewal.^ While in other 
 jurisdictions they have declared that the renewal certificate and 
 affidavit need not refer to the then condition of the special capi- 
 tal; that they are to be read in connection with the original 
 papers ; and that it is not a condition precedent to a valid renewal 
 of the partnership, that its capital is unimpaired.^ 
 
 The failure to make and record any certificate renders those 
 who carry on the renewed partnership liable as general partners, 
 although one of the parties was ignorant of the failure, and did 
 not intend to become a general partner.' 
 
 In Massachusetts, the section on this subject has. been amended 
 so as to read as follows : " No such renewal or continuation shall 
 be made unless the capital contributed by the special partners is 
 equal in amount or more than the aggregate capital the special 
 partners originally contributed." * In deciding a case under 
 this section, the Supreme Court of that State said:^ "The legis- 
 lature by the words 'equal in amount', meant equal in value as a 
 resource or asset of the partnership. This is the most natural 
 signification of the language of the amendment, which never 
 could have been used to show that the original section was in- 
 tended to allow a limited partnership to be renewed with a spe- 
 cial capital impaired or lost, and without a fresh contribution. 
 Money originally contributed as capital of a firm, and then iost 
 in its business, is not thereafter capital of that firm, and cannot be 
 contributed as capital of the renewed firm. If the only contri- 
 bution then made to capital is the interest of the special partner 
 in the old firm, depreciated in amount by a substantial impair- 
 ment due to losses in business, it cannot be equal in amount to the 
 original contribution. The present case is one in which the per- 
 sons who made the certificate of renewal had good ground for 
 believing that there had been no impairment of the original 
 capital, and we do not decide that if, at the expiration of a lim- 
 
 ' Fourth Street Nat. Bank v. Whitaker, 170 Pa. St. 297, 33 At. 100 
 (1895) ; Burdick's Cases on Part. 655. 
 
 ' Hogan V. Hadzets, 113 Mich. 568, 71 N. W. 1092 (1897) ; Burdick's 
 Cases on Part. 660 ; Fifth Ave. Nat. Bank v. Colgate, 120 N. Y. 381, 24 
 N. E. 799 (1890) ; Arnold v. Danziger, 30 Fed. 898 (1887). 
 
 ' Strang v. Thomas, 114 Wis. 599, 91 N. W. 237 (1902). 
 
 ^ Statutes of 1887, Ch. 248, § 3. 
 
 » Durgin v. Colburn, 176 Mass. 110, 57 N. E. 213 (1900). 
 
LIMITED PARTNERSHIPS 405 
 
 ited partnership, the partners beheved, with good reason, that 
 the whole capital was intact, and so agreed to and certified a 
 renewal upon that basis, the mere fact that it thereafter turned 
 out that there had been an impairment not then ascertained or 
 ascertainable would make the renewal contrary to the statute. 
 Here the certificate of renewal was made upon the theory that the 
 continuation of the interest of the special partner in the assets 
 of the expiring firm was a contribution to the capital of the new 
 firm equal in amount to that originally contributed. But be- 
 cause the capital had been substantially impaired by losses in 
 business, and no fresh capital was then contributed, the statute 
 was not complied with, and all the members of the new firm are 
 subject to the liabilities of general partners." 
 
 § 8. Ante- Partnership Negotiations. 
 
 These are to be distinguished from contract engagements 
 entered into by a limited partnership before the statutory re- 
 quirements have been complied with. In a recent Pennsylvania 
 case, it appeared that negotiations were opened with the plain- 
 tiffs by certain members of a limited partnership before its cer- 
 tificate was filed or recorded, but that they did not ripen into a 
 contract until after the partnership had complied with the statute. 
 The court held, without hesitation, that the special partners were 
 not liable as general partners upon the contract.^ It is the status 
 of the partnership when the contract is made, not when negotiations 
 are opened, that determines the liability of the special partners. 
 
 Even when business has been carried on by a limited part- 
 nership before its certificate is filed and recorded, a subsequent 
 compliance with the requirements of the statute entitles the 
 special partner to its protection as to all business engagements 
 entered into thereafter.^ 
 
 § 9. Partnership Capital. 
 
 The capital of a limited partnership, like that of a general 
 partnership, is owned by the firm. A special partner, as we 
 
 1 Hinds V. Battin, 163 Pa. St. 487, 30 At. 164 (1894) : Burdick's Cases 
 on Part. 664. Cf. West Point Foundry Association v. Brown, 3 Edw. 
 Ct. (N. Y.) 284 (1839). 
 
 2 Levy V. Lock, 47 How. Pr. (N. Y.) 394, 5 Daly 46 (1874). 
 
406 THE LAW OF PARTNERSHIP 
 
 have seen, cannot make an actual contribution to firm capital, 
 without parting with all his individual title to it. Any string 
 attached to it for his benefit will render the organization of a 
 limited partnership invalid. His contribution will be deemed 
 illusory and not real.^ 
 
 As soon as his contribution is made, "actually and in good 
 faith ", although it constitutes the entire capital of the firm, 
 his individual title to it is gone.^ Thereafter the title is in the 
 firm; and goods bought with it are firm goods. Accordingly 
 in a jurisdiction where the separate creditor of a general partner 
 may levy an execution upon firm property, such a creditor may 
 levy upon the goods of a limited partnership; and the special 
 partner cannot maintain trespass against a sheriff for seizing the 
 goods under such a levy, even though his contribution constituted 
 the entire capital of the partnership.^ 
 
 1. Withdrawal of Capital by Special Partner. — This 
 is expressly prohibited by all of the statutes, although they 
 are not agreed in their penalties for violations of the provision.* 
 In most States * it is declared that if the original capital has 
 been reduced by the payment of interest or profits to any spe- 
 cial partner, he shall restore the amount necessary to make 
 good his share of capital with interest. In others, it is enacted 
 that a special partner who withdraws capital from the firm, 
 contrary to the statutory prohibition, thereby becomes a gen- 
 eral partner.^ 
 
 (a) Bona fide Receipt of Interest or Dividends. — The special 
 partner is permitted to receive interest ^ on his capital or a pro- 
 
 1 Manhattan Co. v. PhiUips, 109 N. Y. 383, 17 N. E. 129 (1888) ; 
 Line-weaver v. Slagle, 64 Md. 465, 2 At. 693 (1886). 
 
 2 Uniform L. P. Act, §§16 and 18. 
 
 ' Bradbury v. Smith, 21 Me. 117 (1842) ; Burdiek's Cases on Part. 
 666 ; Vandike v. Rosskam, 67 Pa. ' St. 330 (1871) ; Buckingham v. First 
 Nat. Bank, 131 Fed. 192, 65 C. C. A. 498, 12 Am. B. R. 465 (1904). 
 
 * The Uniform L. P. Act permits withdrawal upon certain conditions, 
 when made in accordance with the partnership contract, §§2, 16, and 17. 
 
 5 N. Y. R. S. Part II. Chap. IV. Tit. I. §§ 15, 16. In § 39 of Ch. 420, 
 N. Y. L. (1897), it is declared that such a special partner "becomes liable 
 as a general partner for debts contracted until he returns such amount, to 
 the extent of the amount so withdrawn." 
 
 « Cal. Civ. Code, § 2495. 
 
 ' Even when the statute refers to the annual receipt of interest, a pro- 
 
LIMITED PARTNERSHIPS 407 
 
 portion of the profits, if such payments do not reduce the original 
 amount of his capital; and some statutes declare that he is not 
 bound to refund such payments to meet subsequent losses.* 
 If, however, the payments were made and received under the 
 honest but mistaken belief that they did not reduce the special 
 partner's capital, he is bound, upon discovering the mistake, 
 to repay so much thereof as is necessary to make good his original 
 capital. 
 
 If the limited partnership is insolvent at the expiration of 
 the term for which it was formed, the special partner has no 
 right to withdraw any part of his capital, until the firm creditors 
 are paid. If the general partners do transfer firm funds to him, 
 for the purpose of restoring his contribution of capital, the trans- 
 fer will be deemed voluntary as against unpaid creditors, and 
 may be set aside by them.^ 
 
 (6) Indirect Withdrawals. — In Lachaise v. Marks, cited in 
 the last note but one. Judge Woodruff remarked, that if the 
 receipt of dividends by the special partner "was a device, re- 
 sorted to in bad faith for the purpose of withdrawing his capital ", 
 it would render him liable as a general partner upon all firm 
 engagements, thereafter entered into. The California statute 
 declares that " no special partner, under any pretence, may with- 
 draw any part of his capital invested by him in the partnership, 
 during its continuance." ^ 
 
 In accordance with this doctrine it has been held that a special 
 partner who sells his interest in the firm to his general partner 
 and takes a chattel mortgage on the stock to secure the purchase 
 price, before the partnership has been dissolved in the manner 
 prescribed in the statute, violates the provision as to the with- 
 drawal of capital.* This provision is also violated when the 
 
 vision in the partnership agreement that the special partner shall receive 
 interest monthly does not violate the statute. Metropolitan Bank v. 
 Sirrett, 97 N. Y. 320 (1884) ; Burdick's Cases on Part. 633, 637. 
 
 • Cal. Civ. Code, § 2494. See dictum in Lachaise v. Marks, 4 E. D. 
 Smith (N. Y.) 610, 625-626 (1855), to the same effect. 
 
 ' Baily v. Hornthal, 154 N. Y. 648, 49 N. E. 56 (1898) ; Uniform L. P. 
 Act, § 17 (4). 
 
 3 Cal. Civ. Code, § 2493. 
 
 < Beers v. Reynolds, 11 N. Y. 97 (1854). In Lachaise v. Marks, 4 E. D. 
 Smith (N. Y.) 610 (1855), it was held that a contract for the sale of a 
 
408 THE LAW OF PARTNERSHIP 
 
 general partners assume, as a firm obligation, a debt owing by 
 the special partner for the money contributed by him to the part- 
 nership capital ; ^ or when the general partners repay to the special 
 partner his capital, at the expiration of the partnership, the firm 
 then being insolvent.^ 
 
 Such withdrawals of capital are also alterations in the capital 
 and operate under another section ' of the statute to make the 
 special partner liable as a general partner. 
 
 (c) Actions to compel Restoration. — The general partners, 
 who have assented to the prohibited withdrawal of capital, 
 cannot bring an action to compel the special partner to refund.* 
 If, however, the latter has bound himself in the partnership 
 articles to bear a certain share of the losses, the general part- 
 ners can enforce this agreement by proper proceedings.^ But 
 the general partners' assent to the withdrawal cannot affect 
 the rights of firm creditors. Still, if they seek to .hold the spe- 
 cial partner liable to the extent of his prohibited withdrawals, 
 they are bound to show that they have already had recoiu-se to 
 the general partners to collect their claims and have exhausted 
 their remedy at law against them in an unsuccessful effort to ob- 
 tain payment thereof.^ It has been intimated ' that an assignee 
 in bankruptcy of the general partner may maintain an action at 
 law for the recovery of such withdrawals. 
 
 special partner's interest, the transfer to take effect after the statutory- 
 dissolution, did not operate as a withdrawal of his capital at the time of 
 making the contract, although the special partner received at that time 
 the purchaser's negotiable promissory notes for the price, payable after 
 the dissolution ; distinguishing Beers v. Reynolds, supra. 
 
 1 CofSn's Appeal, 106 Pa. St. 280 (1884). 
 
 2 Baily v. Hornthal, 154 N. Y. 648, 49 N. E. 56 (1898). 
 
 3 N. Y. R. S. Part II. Chap. IV. Tit. I. § 12, L. of 1897, Ch. 420, 
 §41. 
 
 ' BeU V. Merrifleld, 109 N. Y. 202, 209-210, 16 N. E. 55 (1888). 
 
 5 WilMns V. Davis, 2 Lowell 511 ; Fed. Cas. No. 17,664, 15 N. B. R. 
 60, 67 (1876) ; Baily v. Hornthal, 154 N. Y. 648, 49 N. E. 56 (1898). 
 
 « Bell V. Merrifleld, 109 N. Y. 202, 209-210, 16 N. E. 55 (1888). 
 
 ' WilMns V. Davis, 2 LoweU, 511 ; Fed. Cas. No. 17,664, 15 N.B. R. 
 60, 67 (1876) ; Baily v. Hornthal, 154 N. Y. 648, 49 N. E. 56 (1898). 
 
LIMITED PARTNERSHIPS 409 
 
 § 10. Preferences Forbidden. 
 
 Following a provision of the earliest New York act/ the statutes 
 generally declare that all transfers of property by a limited part- 
 nership or its members, as well as all judgments confessed, liens 
 created, or securities given with the intent of giving a preference 
 to any firm or individual creditor, over other creditors of the firm, 
 are void as against the partnership creditors, if such acts are done 
 by an insolvent partnership or partner, or in contemplation of 
 insolvency.^ 
 
 (a) The Meaning of Insolvency. — To bring a preferential 
 transfer or lien under the ban of this section, it is not neces- 
 sary to show an adjudication in insolvency or bankruptcy, or 
 that proceedings leading to such an adjudication were contem- 
 plated. On the other hand, it is not enough to show the com- 
 mission of an act, by the firm or by a partner, which might sub- 
 ject him or the firm to an involuntary proceeding under an 
 insolvency or bankruptcy statute. The term insolvency, in this 
 connection, has been held to mean the financial condition of a 
 firm or a partner whose property is insufficient to pay his 
 debts.' 
 
 (&) The Object of this Provision. — We have seen in an earlier 
 chapter,* that a general partnership or any of its members can 
 make a valid transfer of firm or individual property to one firm 
 creditor with the avowed intent to prefer him over all others. 
 Such a right is denied to limited partnerships and their members. 
 Clearly the Legislature intended to secure a pro rata distribution 
 of the property of these partnerships, when insolvent, among all 
 their creditors, if proper proceedings were instituted by them. 
 It was held, therefore, in an early case ^ and has remained unques- 
 tioned,® that a creditor of an insolvent partnership is not bound to 
 
 1 L. of 1822, Ch. 242, § 9 ;• now L. of 1897, Ch. 420, § 40. See the 
 provisions of tlie Illinois statute in Burdiek's Cases on Part. 669. 
 
 * The Uniform L. P, Act has no such provision. 
 
 ' McArthur v. Chase, 13 Gratt. (54 Va.) 683 (1857) ; Walkenshaw v. 
 Perzel, 32 How. Pr. (N. Y.) 233; 4 Robt. 426 (1866). 
 
 > Chap. III. § 3. 
 
 6 Innes v. Lansing, 7 Paige (N. Y.), Ch. 583 (1839). 
 
 6 Crouch V. Pu-st Nat. Bank of Chicago, 156 lU. 342, 40 N. B. 974 
 (1895) ; Burdiek's Cases on Part. 667. 
 
410 THE LAW OF PARTNERSHIP 
 
 proceed to judgment and execution at law before filing a bill to set 
 aside prohibited transfers, or to prevent future preferences; but 
 that he may file a bill in behalf of himself and other creditors of 
 the firm, and may have a receiver appointed to take the prop- 
 erty and distribute it ratably among all the creditors who may 
 come in and prove their debts under the decree.^ 
 
 The statute does not prevent a vigilant creditor, however, 
 from obtaining an advantage over other creditors in any manner. 
 It does not invalidate every payment made or judgment suffered 
 by an insolvent limited partnership. In the language of a leading 
 case on this point, the statutory provisions "declare void only 
 judgments confessed or liens created, — referring clearly to pref- 
 erences expressly and voluntarily given by the partners, or one of 
 them, fraudulently or in collusion with the creditor. They do 
 not inhibit or apply to judgments recovered against the members 
 of a limited partnership in invitum, or suffered by them by default 
 or otherwise. They merely render void judgments confessed. 
 The members of a limited partnership, before or after insolvency, 
 are just as liable to be sued for their debts as other natural per- 
 sons. Their creditors are entitled to recover judgments against 
 them, with the view to reach the individual property as well as 
 the partnership property. . . . The assets of a limited partner- 
 ship are trust funds . . . when the courts of equity are properly 
 appealed to in behalf of the partners, or any partner or creditor, 
 to protect and distribute the same upon equitable principles, and 
 on such application assert the control over them. . . . There is no 
 rule in equity which makes them trust funds in any other sense, 
 or which gives the court of equity any control over them, or which 
 forbids any creditor of the copartnership or of any individual 
 partner from obtaining a lien on them by due process of law in 
 any hostile proceedings." * 
 
 ' Kerr v. Blodgett, 48 N. Y. 62 (1871). In this ease, after the part- 
 nership made a general assignment, which was executed by the general 
 partner, a firm creditor brought an action on behalf of all creditors for an 
 accounting and distribution by the assignee ; and the court held that it 
 was not the duty of the assignee to produce and prove the claims of firm 
 creditors ; and that only those who had proved their claims under the 
 decree could share in the proceeds. 
 
 2 Van Alstyne v. Cook, 25 N. Y. 489, 493, 495 (1862) ; Hall v. Gless- 
 ner, 100 Mo. 155, 13 S. W. 349 (1889). 
 
LIMITED PARTNERSHIPS 411 
 
 § 11. Transformed into General Partnerships. 
 
 Although a limited partnership has been organized in strict 
 conformity with the" statute, it may be transformed into a gen- 
 eral partnership, as regards creditors, without a new agreement 
 between its members. Such a transformation is produced by 
 certain violations of the statute, which we will now consider.^ 
 
 1. Prohibited Interference by a Special Partner. — 
 As a rule, only the general partners are allowed to transact the 
 business of a limited partnership. Legal proceedings are to be 
 brought by them and against them, as though there were no 
 special partners.^ In most jurisdictions they are bound to per- 
 mit the special partners to "examine into the state and progress 
 •of the partnership business and advise as to its management";* 
 and some statutes permit them on behalf of the firm to borrow 
 money or hire property from the special partners, and even to 
 ■employ the latter as agents for specified purposes.* 
 
 If a special partner, however, interferes in the business affairs 
 •of the firm beyond the limits set by the statutes, they declare 
 "he shall be deemed and be liable as a general partner." This 
 stringent provision is rigorously enforced by the courts. A single 
 ■clear violation of it by the special partner forfeits forever his 
 statutory exemption from personal liability. It is an unpardon- 
 able offence. He cannot regain in that partnership his original 
 status.^ Indeed such a violation makes him liable as a general 
 partner in that partnership from the beginning.* 
 
 ' Under the Uniform L. P. Act, § 7, "A limited partner shall not be- 
 <!ome liable as a general partner unless, in addition to the exercise of his 
 rights as a limited partner, he takes part in the control of the business." 
 
 2 Safe Dep. & T. Co. v. Cahn, 102 Md. 530, 62 At. 818 (1906), a ease 
 -where the special partner was held a proper defendant. See Uniform 
 X. P. Act, § 26. 
 
 3 L. of N. Y. 1897, Ch. 420, § 37, Cal. Civ. Code, § 2490. 
 * Ohio Rev. Statutes of 1892, § 3153. 
 
 " Hutchinson v. Bo-wes, 15 Upper Can. Q. B. 156 (1858). The court 
 said: "We think there is nothing in the point of Ms having ceased to 
 interfere in the business before these goods -were furnished." 
 
 s The First Nat. Bank of Canandaigua v. Whitney, 4 Lans. (N. Y.) 
 34 (1871); Farnsworth v. Boardman, 131 Mass. 115 (1881); Strang ». 
 Thomas, 114 Wis. 599, 91 N. W. 237 (1902) ; cf. McKnight v. RatcUff, 
 44 Pa. St. 156, 166 (1863), holding that a special partner, who had vio- 
 
412 THE LAW OF PARTNERSHIP 
 
 A special partner does not incur the statutory penalty by insti- 
 tuting an action for dissolution and becoming the receiver of the 
 firm, where the firm's affairs have become embarrassed through 
 the general partner's misconduct. Such an action is in the in- 
 terest of creditors, and not a prohibited interference in the busi- 
 ness affairs of the firm.-' 
 
 2. Prohibited Alteration by a Special Partner. — Other 
 acts by the special partner, which operate to transform the lim- 
 ited partnership into a general one, are those altering the names 
 of the general partners, or the nature of the business, or the capr 
 ital of the firm. It is of the utmost importance to those dealing 
 with a limited partnership, that none of the matters set forth in 
 its registered certificate should be changed. Hence the severity 
 of the penalty imposed upon the special partner who participates ^ 
 in any such changes. 
 
 These alterations, when made with the assent of the special 
 partner, are declared by the statutes, generally, to dissolve the 
 firm, and if it is thereafter continued, to constitute it a general 
 partnership as to all business thereafter transacted.^ They 
 have no retroactive effect, however, differing in this respect 
 from prohibited acts of interference. Accordingly, it has been 
 held that a suit brought by a limited partnership for the recovery 
 of debts which accrued before a prohibited alteration, must be 
 brought in the names of the original general partners, although 
 when the suit is begun the partnership is a general partnership.* 
 
 In some States the special partner is permitted to increase 
 his contribution to the capital stock, or to sell his share, and 
 
 lated the statutory prohibition as to interference, was not liable as a 
 general partner for a trespass by the other partners and their agents. 
 
 1 The Continental Nat. Bank v. Strauss, 137 N. Y. 148, 32 N. E. 1066 
 (1893) ; Burdick's Cases on Part. 619. 
 
 == In Singer v. Kelly, 44 Pa. St. 145 (1863) ; Burdick's Cases on Part. 
 674, it was held that the special partner should not suffer for attempted 
 alterations by the general partners of which he was ignorant, and for 
 which he was in no way responsible. 
 
 ' L. of N. Y. 1897, Ch. 420, § 41, Cal. Civ. Code, § 2507. 
 
 * Perth Amboy Mfg. Co. v. Condit, 21 N. J. L. 659 (1847) ; Burdick's 
 Cases on Part. 673. Actions upon claims accruing after the transforma- 
 tion of a limited into a general partnership, are properly brought in the 
 names of all the partners. Sarmiento v. The Catherine C, 110 Mich. 
 120, 67 N. W. 1085 (1896) ; Burdick's Cases on Part. 678. 
 
LIMITED PARTNERSHIPS 413 
 
 one or more special partners may be added to the partnership 
 without working a dissolution or alteration, upon filing with 
 the original papers an additional certificate or notice.^ 
 
 § 12. Creditors of the General Partners. 
 
 While the statutes commit the conduct of partnership affairs 
 almost exclusively to the general partners, they do not treat 
 these members as the individual owners of the firm property. 
 Frequently they declare in express terms that the general part- 
 ners "shall be liable to account to each other and to the special 
 partners, for their management of the business, as other part- 
 ners are at law." ^ Hence actions for the dissolution of a limited 
 partnership and an accounting may be brought either by the 
 general or the special partners,^ and the rules of distribution and 
 of marshalling assets are those * which we have found to obtain 
 in winding up the affairs of a general partnership.^ 
 
 1. The Rights of a Mortgagee of a General Partner's 
 Interest. — Even when there is but one genera} partner, the 
 mortgagee of his interest does not acquire a lien upon the firm 
 property as against firm creditors. The lien extends only to 
 the mortgagor's share in that property, which may be some- 
 thing or nothing of value. The mortgagee's "only recourse is 
 on the residuum which might accrue to his debtor after the full 
 liquidation of the partnership." ^ 
 
 2. Assignment for Creditors by the General Partners. — 
 An assignment of firm property by the general partners in trust 
 for creditors is void if it contains preferences.' If, on the other 
 
 ' L. of N. Y. 1897, Ch. 420, § 41. Upon this point, as upon many 
 otters relating to Umited partnerships, the statutory provisions in each 
 jurisdiction must be carefully consulted. See Uniform L. P. Act, § § 2, 8, 
 24, 25. 
 
 2 Ihid., § 37. 
 
 3 The Continental Nat. Bank v. Strauss, 137 N. Y. 148, 32 N. E. 1066 
 (1893) ; Burdick's Cases on Part. 619. Infra, § 14 (3) ; Uniform L. P. 
 Act, §§ 10 and 26. 
 
 « Van Alstyne v. Cook, 25 N. Y. 489, 493-495 (1862). 
 5 Supra, Chaps. V. and VIII., Uniform L. P. Act, § 23. 
 « Sherwood v. His Creditors, 42 La. Ann. 103, 7 So. 79 (1890) ; Bur- 
 dick's Cases on Part. 678 ; Uniform L. P. Act, § 9. 
 ' L. of N. Y. (1897), Ch. 420, § 40. 
 
414 THE LAW OF PAETNERSHIP 
 
 hand, it provides for a pro rata distribution of firm assets among 
 the firm creditors, it is valid, although the special partner does, 
 not join in its execution.^ This seems to follow from the broad 
 powers of management conferred by the statutes on the general 
 partners, and the strict prohibition upon interference by the 
 special partner.^ 
 
 Whether the assent of a special partner to an assignment for 
 creditors is necessary, when the statute has not been complied 
 with or has been violated, so that he is liable to creditors as a, 
 general partner, is a question upon which the courts have differed. 
 In New York, it has been held ^ that his assent is unnecessary ;, 
 while in Minnesota, not only his assent to the general partner's- 
 act, but an assignment of all his separate property, has been held 
 necessary to the validity of the partnership assignment.* The 
 latter holding is based upon the policy of the State insolvent law, 
 which requires the surrender of all the property of each of the 
 debtors who are parties to the assignment. 
 
 3. The Special Pabtner as a Creditor. — The contribu- 
 tion of the special partner to the firm capital does not entitle 
 him to share in the firm estate without side creditors. So far as 
 his share of capital is concerned, he has no greater rights against 
 the firm estate than any other partner has. Nor, in case he takes 
 a mortgage on the general partner's interest in the firm, will his 
 rights be different from those of any other individual creditor of 
 such general partner.^ 
 
 But, suppose he becomes a creditor of the firm by lending it 
 money, or indorsing it paper, or selling property to it, what are 
 his rights? In the absence of any statutory provision on the 
 
 1 Schwartz v. Soutter, 103 N. Y. 683, 9 N. B. 448 (1886). 
 
 ^ The prohibitions upon interference by the special partner are not so 
 strict in the Uniform L. P. Act. See § § 7, 9, 10, 11 and 13. 
 
 3 Robinson v. Mcintosh, 3 E. D. Smith 221 (1854). In Durant v. 
 Abendroth, 97 N. Y. 132 (1884), it is declared that a limited partnership 
 remains such in form even though the special partner has so acted as to 
 enable creditors to treat him as a general partner, and if voluntary pro- 
 ceedings in bankruptcy are to be instituted, only general partners are to 
 join in the petition. 
 
 * In re Allen, 41 Minn. 430, 43 N. W. 382 (1889). 
 
 5 Sherwood v. His Creditors, 42 La. Ann. 103, 7 So. 79 (1890) ; Burdick's 
 Cases on Part. 678. 
 
LIMITED PARTNEBSHIPS 415 
 
 subject, he would be treated, probably, as an ordinary creditor. 
 He could sue the firm and levy upon its property ; or in case of 
 insolvency, or bankruptcy, he could prove his claims and take 
 ratable dividends thereon. As a rule, however, the statutes 
 contain a provision that in case of the insolvency or bankruptcy 
 of a limited partnership, the special partner shall not be allowed 
 to claim as a creditor until the claims of all the other creditors of 
 the partnership are satisfied.^ 
 
 The courts have disagreed in their construction of this clause. 
 On the one hand, it has been limited to the special partner's 
 claim for capital ; and he has been permitted to prove and share 
 ratably with other firm creditors, for loans made to the firm after 
 its due organization.^ On the other hand, the clause has been 
 construed to extend to every claim acquired by the special part- 
 ner against the firm during its existence; and the weight of 
 authority is in favor of this view.^ 
 
 The provision, however, does not apply to debts due from the 
 limited partnership to a firm of which the special partner is a 
 member,* nor to debts acquired by the special partner from bona 
 fide partnership creditors after the dissolution of the partnership.* 
 
 It has been held that the special partner is not entitled to share 
 in the good-will of the firm, unless he shows that the value of "the 
 firm name and good-will was a profit of the partnership business 
 or an asset contemplated by the articles of copartnership as divis- 
 ible between the parties on dissolution." ^ 
 
 § 13. Creditors and Assignees of Limited Partners. 
 
 The Uniform Limited Partnership Act deals with this topic 
 carefully. A judgment creditor of a limited partner is entitled 
 
 1 The Uniform L. P. Act, § 13, permits loans by the limited partner, 
 on which he may share pro rata with other firm creditors. 
 
 2 Clapp V. Lacey, 35 Conn. 463 (1868) ; Burdick's Cases on Part. 611. 
 
 3 White V. Haokett, 20 N. Y. 179 (1859) ; Dunning's Appeal, 44 Pa. 
 St. 150 (1863) ; Jaffe v. Krum, 88 Mo. 669 (1886). In 1857 the New 
 York statute was amended so as to permit the special partner to claim as 
 a creditor in certain cases. See § 37 of Ch. 420, L. of N. Y. 1897, to the 
 same effect. 
 
 ' McArthur v. Chase, 13 Gratt. (54 Va.) 683, 697 (1857). 
 
 6 Hayes v. Heyer, 35 N. Y. 326 (1866). 
 
 « Ryan v. Franklin, 199 N. Y. 347, 92 N. E. 673 (1910). 
 
416 THE LAW OF PARTNERSHIP 
 
 to an order charging such partners interest with payment of the 
 judgment, and to a receiver if necessary. The interest may be 
 redeemed with the separate property of the general partner.^ 
 The assignment of a limited partner's interest, while regulated 
 with much detail, is not discouraged by the Act, which specifically 
 declares the rights and liabilities of the assignee.^ 
 
 § 14. Dissolution of Limited Partnerships. ^ 
 
 In most respects, the rules relating to the dissolution of general 
 partnerships are applicable to limited partnerships. The death 
 of any member dissolves the fijm as to all the partners.* It is 
 dissolved, also, by the bankruptcy of a partner ; ^ and by the 
 expiration of the period for which it was organized, as stated in 
 the certificate. 
 
 1. Dissolution by Expiration of Term. — As "the times 
 at which the partnership is to begin and end" must be stated 
 in the certificate, which is publicly registered, neither former 
 dealers nor the general public are entitled to any notice of disso- 
 lution. They are bound to take notice of the terms of the certifi- 
 cate, as they are of the death or of the bankruptcy of a partner. 
 Accordingly, if the general partners pretend to continue the busi- 
 ness of the limited partnership, after its certified term, debts 
 contracted by them in such business cannot be enforced, either 
 against the former special partner,^ nor against the assets of the 
 limited partnership to the detriment of its creditors.' 
 
 2. Dissolution by Alteration. — Reference has been made 
 in a former section to the statutory provision on this subject. 
 Every alteration made in the names of the general partners, or 
 
 1 Uniform L. P. Act, § 22. 
 
 2 Ihid., § 19. 
 
 ' The Uniform L. P. Act ignores this topic. 
 
 ^Ames V. Downing, 1 Brad. (N. Y. Surrogate Court) 321 (1850); 
 Burdick's Cases on Part. 606. The doctrine of this case is now quaUfled 
 by § 41, Ch. 420, Laws of 1897, which permits the partnership to continue 
 after the death of a partner, if the original articles provide for such a 
 continuance. 
 
 B Wilkins v. Davis, 2 Low. 511, 15 N. B. R. 60, Fed. Cases, No. 17,664 
 (1876). 
 
 » Marshall v. Lambeth, 7 Rob. (La.) 471 (1844). 
 
 ' Haggerty v. Taylor, 10 Paige 261 (1843). 
 
LIMITED PARTNEESHIPS 417 
 
 in any matter which is an essential part of the original certifi- 
 cate, works a dissolution of the firm ; and if the partnership 
 be continued thereafter, it is continued as a general partnership. 
 
 3. Dissolution by Judicial Decree. — In a few jurisdic- 
 tions, the statutes expressly provide that a limited partnership 
 is subject to dissolution in the same manner as a general part- 
 nership ; ^ but such a provision is not necessary to give a court 
 of equity power to decree a dissolution for any cause which would 
 warrant such a decree in the case of a general partnership. Ac- 
 cordingly, a dissolution may be ordered by the court where the 
 special partner has been induced by fraud to enter the firm,^ 
 or where, through mistake, the organization is defective and the 
 special partner is liable as a general partner ; ^ or where a general 
 partner is guilty of serious mismanagement.* 
 
 4. Dissolution by Act of the Partners. — The statutes per- 
 mit the partners to dissolve the partnership prior to the expi- 
 ration of the certified term,^ but it is provided generally that this 
 kind of dissolution shall not take effect until a notice thereof has 
 been filed in the office where the original certificate is recorded, 
 and until this notice has been published for a stated period in a 
 designated manner.® Even though a dissolution has been agreed 
 to by all the partners, and a notice thereof has been filed in the 
 proper office, the partnership continues to be a limited partnership 
 until the statutory publication has been completed. Hence, dur- 
 ing this period it cannot give preferences ; ^ and any prohibited 
 interference by the special partner renders him liable as a general 
 partner.* 
 
 1 Cal. Civ. Code, § 2509. 
 
 2 Toumade v. Methfessel, 3 Hun (N. Y.) 144 (1874). 
 
 « Patterson v. Holland, 7 Grant's Ch. (Upper Can.) 1 (1858). 
 
 * The Continental Nat. Bank v. Strauss, 137 N. Y. 148 (1893) ; Bur- 
 diek's Cases on Part. 619, 622. 
 
 • 5 Tiie dissolution of a partnership association in Michigan is consid- 
 ered in Emery v. Kalamazoo & H. C. Co., 132 Mich. 560, 94 N. W. 19 
 (1903). 
 
 6 L. of N. Y. 1897, Ch. 420, § 42 ; Cal. Civ. Code, § 2509. 
 
 ' Fanshawe v. Lane, 16 Abb. Pr. (N. Y.) 71, 73 (1862). 
 
 8 Buckley v. Bramhall, 24 How. Pr. (N. Y.) 455, 462 (1863). 
 
APPENDIX A 
 
 THE PARTNERSHIP LAW OF NEW YORK 
 
 (Chapter 420 of the Laws op 1897 : Chaptee LI op the General 
 Laws : Chapter 39 op the Consolidated Laws) 
 
 ARTICLE I 
 short title; definitions 
 
 § 1. Short Title. — This chapter shall be known as the " part- 
 nership law." 
 
 § 2. Partnership defined. — A partnership, as between the 
 members thereof, is the association, not incorporated, of two 
 or more persons who have agreed to combine their labor, prop- 
 erty and skill, or some of them, for the purpose of engaging in 
 any lawful trade or business, and sharing the profits and losses, 
 as such, between them. 
 
 § 3. General Partnership. — A partnership formed otherwise 
 than in the manner prescribed in this chapter for the formation 
 of a limited partnership, is a general partnership. 
 
 § 4. Limited Partnership. — A limited partnership consists of 
 one or more persons, called general partners, and also one or 
 more persons called special partners. 
 
 ARTICLE II 
 
 GENERAL provisions 
 
 § 5. Authority of General Partner. — Every general partner is 
 agent for the partnership in the transaction of its business, and 
 has authority to do whatever is necessary to carry on such busi- 
 ness in the ordinary manner. 
 
 419 
 
420 APPENDIX A 
 
 § 6. Liability of General Partner. — Every general partner is 
 liable to third persons for all the obligations of the partnership, 
 jointly and severally, with his general copartners. 
 
 § 7. Liability of Special Partner. — A special partner, except as 
 declared in this chapter, is liable for the obligations of the limited 
 partnership only to the amount of the capital invested by him 
 therein. 
 
 ARTICLE III 
 
 BUSINESS AND PARTNERSHIP NAMES 
 
 § 20. When Partnership or Business Name may be continued. 
 — The use of a partnership or a business name may be continued 
 in either of the following cases. 
 
 1. Where the business of any firm or partnership in this State, 
 having business relations with foreign countries or which has 
 transacted business in this State not less than three years, con- 
 tinues to be conducted by some or any of the partners, their as- 
 signees, or appointees ; 
 
 2. Where a majority of the members, general or special, of a 
 general or limited partnership formed under the laws of this 
 State, or of the stockholders of any corporation, domestic or foreign 
 which may theretofore have carried on its business within this 
 State, and where said general or limited partnership or corpora- 
 tion has discontinued, or shall be about to discontinue its busi- 
 ness within the State, and where a majority of the partners, 
 general or special, in either of such last mentioned copartnerships or 
 of the survivors thereof shall be members of the new limited copart- 
 nership, or where a majority of the members of such copartner- 
 ship theretofore existing, or of the surviving members thereof or 
 of the stockholders of such corporation shall consent in writing 
 to the use of such firm or corporate name by the new limited 
 partnership; or 
 
 3. Where any resident of this State dies, who at the time of 
 his death and for at least five years immediately prior thereto, 
 conducted and carried on in his sole name, any business in this 
 State, or who at the time of his death, so conducted and carried 
 on any business having relation with other States or foreign 
 countries, the right to use the name of such person, for the pur- 
 
APPENDIX A 421 
 
 pose of continuing and carrying on such business, shall survive 
 and pass and be disposed of and accounted for as part of the per- 
 sonal estate of such deceased person, and such business may be 
 continued and carried on under such name by any person who 
 comes into legal possession thereof. 
 
 §21. Certificate to be filed and recorded; Clerk's Fees. — 
 Whenever a partnership or business name continues to be used 
 as provided by the last preceding section, the person or persons 
 using such name shall sign and acknowledge a certificate, declaring 
 the person or persons intending to deal under such name, with 
 their respective places of residence, and file the same in the clerk's 
 ofiice of the county where the principal place of business is located, 
 and cause a copy of such certificate to be published once in each 
 week for four consecutive weeks in a newspaper of the city or 
 town in which such principal place of business is located, or if 
 none be published in. such city or town, in the newspaper nearest 
 thereto. A county clerk with whom any such certificate is filed 
 shall keep a book in which all such certificates shall be recorded, 
 with their date of record, and also a register in which shall be 
 entered in alphabetical order the name of every such partnership 
 and of the partners thereof, and every such business name of a 
 deceased person and the names of persons filing certificates there- 
 for. The clerk is entitled to a fee of one dollar for filing and 
 recording such certificate and entering such names, and to an 
 additional fee of ten cents for every name of a partner beyond 
 two, and to a fee of fifty cents for a certified copy of such cer- 
 tificate. 
 
 ARTICLE IV 
 
 LIMITED PAETNEESmP 
 
 § 30. Formation. — Two or more persons may form a limited 
 partnership, which shall consist of one or more partners of full 
 age, called general partners, and also of one or more partners of full 
 age, who contribute in actual cash payments, a specified sum as 
 capital, to the common stock, called special partners, for the trans- 
 action within this State of any lawful business, except banking 
 and insurance, by making, severally signing and acknowledging, 
 and causing to be filed and recorded in the clerk's oflS.ce of the 
 
422 APPENDIX A 
 
 county where the principal place of business of such partnership 
 is located, a certificate, in which is stated : 
 
 1. The name or firm under which such partnership is to be con- 
 ducted, and the county wherein the principal place of business 
 is to be located ; 
 
 2. The general nature of the business intended to be trans- 
 acted ; 
 
 3. The names, and whether of full age, of all the general and 
 special partners interested therein, distinguishing which are gen- 
 eral and which are special partners, and their respective places 
 of residence ; 
 
 4. The amount of capital which each special partner has con- 
 tributed to the common stock; 
 
 5. The times at which the partnership is to begin and end. 
 
 If the partnership has places of business situated in different 
 counties, a copy of the certificate, and of the acknowledgment 
 thereof, certified by the clerk in whose office it is filed, under his 
 official seal, shall be filed and recorded in like manner, in the 
 office of the clerk of each such county. 
 
 § 31. Afladavit to be filed. — At the time of filing such origi- 
 nal certificate, an affidavit of one or more of the general partners, 
 stating that the sunis specified in the certificate to have been con- 
 tributed to the common stock by each of the special partners have 
 been actually and in good faith paid in cash, shall also be filed 
 in the same office, and a copy thereof certified by the county clerk, 
 filed in each office in which a copy of the original certificate is 
 filed. 
 
 § 32. Terms of Partnership to be published. — Immediately 
 after the filing of the certificate, a copy of the same or a notice 
 containing the substance thereof, shall be published once in each 
 week for six successive weeks, in two newspapers of the county, 
 in which such original certificate is filed, to be designated by the 
 county clerk, one of which newspapers shall be a newspaper pub- 
 lished in the city or town in which the principal place of business 
 is intended to be located, if a newspaper be published therein ; or, 
 if no newspaper is published therein, in the newspaper nearest 
 thereto, and proof of such publication by affidavit of the printer 
 or publisher of each of such newspapers must be filed with the 
 original certificate. 
 
APPENDIX A 423 
 
 § 33. Renewal or Continuance of Partnership. — Every such 
 partnership may be renewed or continued beyond the time fixed 
 for its duration, in the manner required for its original formation ; 
 and no such partnership shall be deemed to have been originally 
 formed, or so renewed or continued, until a certificate is made, 
 acknowledged, filed and recorded, an affidavit filed, and certificate 
 or notice published as required by law. 
 
 § 34. Effect of False Statements or Failure to publish Terms. 
 — If any false statement be made in any such certificate or affi- 
 davit, made either upon the formation or renewal or continuance 
 or increase of capital of such partnership, or if any such certifi- 
 cate or notice is not so published, or if such partnership be re- 
 newed or continued in any other manner, the persons interested 
 therein shall all be liable as general partners. 
 
 § 35. The Firm Name ; List of Members to be posted. — The 
 business of the partnership must be conducted under a firm name, 
 which must consist of the name of the general partner, or if there 
 be two or more general partners, of the names of one or more of 
 such partners, with or without the addition of the words " and 
 Company", or " and Co." If the name of any special partner be 
 used in such firm name, with his privity, he shall be deemed and 
 be liable as a general partner. The partnership must cause to be 
 placed in a conspicuous place on the outside and in front of the 
 building in which is its principal place of business, a sign on 
 which is printed in legible English, the names in full, of all the 
 members of such partnership, designating which are general 
 and which are special partners. If such sign be not so placed, 
 no action against the partnership shall abate or be dismissed 
 by reason of the failure of the plaintiff to correctly allege in his 
 pleadings, or prove as alleged the number and names of the mem- 
 bers of the partnership; but his pleadings may be amended on 
 the trial to conform to the proof in that respect, without costs. 
 
 § 36. Liability of Partners. — The general partners in such 
 partnership shall be jointly and severally liable as general part- 
 ners are by law. The special partners shall not be liable for the 
 debts of the partnership beyond the fund contributed by them 
 respectively to the capital of the partnership. 
 
 § 37. General Powers of Partners. — Except as provided in 
 this section, the general partners only may transact the business 
 
424 APPENDIX A 
 
 of the partnership, and they shall be liable to account to each 
 other and to the special partners, for their management of the 
 business, as other partners are by law. Except as provided in 
 this section, a special partner may not sign for the partnership 
 nor bind the same, nor transact any business on account of the 
 partnership, nor be employed for that purpose, as agent, attorney 
 or otherwise. A special partner may, from time to time, examine 
 into the state and progress of the partnership business, and advise 
 as to its management ; may loan money to, and advance and pay 
 money for the partnership; and may take and hold the notes, 
 drafts, acceptances, and bonds of or belonging to the partnership, 
 as security for the repayment of such money and interest, and 
 may use and lend his name and credit as security for the part- 
 nership, in any business thereof, and has the same rights and 
 remedies in these respects as other creditors might have; may 
 lease to the general partner or partners any real or other prop- 
 erty for the purposes of the partnership, at such rents and on 
 such terms as may be agreed on ; and may negotiate sales, pur- 
 chases and other business for the partnership, but no business 
 so negotiated is binding on the partnership until approved by a 
 general partner. If a special partner interfere contrary to these 
 provisions, he shall be deemed and be liable as a general partner. 
 If such partnership become Insolvent or bankrupt, a special part- 
 ner shall not, except for claims contracted in pursuance of this 
 section, be allowed to claim as creditor, until the claims of all 
 the other creditors of the partnership are satisfied. 
 
 § 38. Actions by and against the Partnership. — Actions and 
 special proceedings in relation to the business of the partnership 
 may be brought and conducted by and against the general part- 
 ners, in the same manner as if there were no special partners. 
 
 § 39. Capital of Special Partner not to be withdrawn; when 
 he may receive Interest. — No part of the sum which any spe- 
 cial partner contributes to the capital stock shall be withdrawn 
 by him or paid or transferred to him in the shape of dividends, 
 profits or otherwise, at any time during the continuance of the 
 partnership ; but any such partner may annually receive lawful 
 interest on the sum so contributed by him, if the payment of 
 such interest does not reduce the original amount of such capital ; 
 and if, after the payment of such interest, any profits remain to- 
 
APPENDIX A 425 
 
 be divided, he may also receive his portion of such profit. But, if 
 by the payment of such interest or profits to any special partner, 
 the original capital is reduced, the partner receiving the same must 
 restore the amount necessary to make good his share of capital, 
 with interest, and he becomes liable as a general partner for debts 
 contracted until he returns such amount, to the extent of the 
 amount so withdrawn. 
 
 § 40. Fraudvdent Transfers of Property by Partnership or Part- 
 ner. — Every sale, assignment or transfer of any of the property 
 or effects of such limited partnership made by such partnership 
 when insolvent or in contemplation of insolvency, or after or in 
 contemplation of the insolvency of any partner, or of any of the 
 property or effects of a general or special partner, made by any 
 general or special partner, when insolvent or after or in contem- 
 plation of the insolvency of such partnership or such partner, 
 with the intent of giving a preference to any creditor of such 
 partnership, or insolvent partner over other creditors of the part- 
 nership, and every judgment confessed, lien created, or security 
 given, by such partnership or partner, under the like circum- 
 stances, and with like intent, is void as against the creditors 
 of the partnership. 
 
 Every special partner who violates this section, or concurs in, 
 or assents to, any such violation by the partnership, or by any 
 individual partner, is liable as a general partner. 
 
 § 41. Dissolution by Alteration; by Death of Partner; when 
 Partnership may be continued by Survivors. — Except as pro- 
 vided in this section, every alteration made in the names of the 
 general partners, in the nature of the business, or in the capital, 
 or shares thereof contributed, held, or owned, or to be contributed, 
 held, or owned, by any of the special partners, and the death of 
 any partner, whether general or special, dissolves the limited 
 partnership, or if such partnership be continued, constitutes 
 such partnership, a general partnership, in respect to all busi- 
 ness transacted after such alteration or death, unless the articles 
 of partnership provide that, in the event of the death of a part- 
 ner, the partnership may be continued by the survivors, in which 
 case it shall be so continued with the consent of the personal rep- 
 resentatives of the deceased partner, and personal representatives 
 may succeed to the partnership rights of such deceased partner. 
 
426 APPENDIX A 
 
 and continue the business the same as if such partner had re- 
 mained alive. But any special partner may from time to time 
 increase the amount of capital stock contributed, held, or ov/ned 
 by him, or one or more special partners may be added to the 
 partnership, on actually paying in an additional amount of the 
 capital to be agreed on by the general and special partners, and 
 on filing in the office of the clerk with whom the original certif- 
 icate was filed, an additional certificate of the general partners in 
 the partnership name, verified by the oath of one of them, stating 
 the increase of such capital stock, and by whom, and the names 
 and residences of such additional special partners, and whether 
 of full age, and the amounts contributed by each to the common 
 stock, together with the affidavit of one or more of the general 
 partners stating that the sums specified in such additional certif- 
 icate have been actually and in good faith paid in cash; and 
 such alteration does not make the partnership general. No ad- 
 ditional publication of the terms of the partnership nor of the 
 alteration thereof is required in any of the cases provided for in 
 this section. Any special partner or the legal representatives of 
 any such special partner, deceased, may sell his interest in the 
 partnership, without working a dissolution thereof, or rendering 
 the partnership general, if a notice of such sale be filed within 
 ten days thereafter in the office of the clerk with whom the orig- 
 inal certificate of partnership was filed, and the purchaser thereof 
 thereupon becomes a special partner with the same right as an 
 original special partner. 
 
 §, 42. Dissolution by Act of Partners. — A limited partner- 
 ship may be dissolved by the acts of the partners before the 
 time specified for its termination in the certificate of forma- 
 tion, renewal, or continuance. But such a dissolution does not 
 take effect until a notice of the dissolution has been filed with 
 the clerk of the county in which the original certificate is filed 
 and published at least once in each of four successive weeks in a 
 newspaper published in each county where the partnership has 
 a place of business. 
 
APPENDIX B 
 
 THE UNIFORM PARTNERSHIP ACT 
 PART I 
 
 PEELIMINAKY PROVISIONS 
 
 Section 1. [Name, of Act.] This act may be cited as Uni- 
 form Partnership Act. 
 
 Sec. 2. [Definition of Terms.] In this act, "Court" in- 
 cludes every court and judge having jiu-isdiction in the case. 
 
 "Business" includes every trade, occupation, or profession. 
 
 "Person" includes individuals, partnerships, corporations, 
 and other associations. 
 
 "Bankrupt" includes bankrupt under the Federal Bankruptcy 
 Act or insolvent under any state insolvent act. 
 
 "Conveyance" includes every assignment, lease, mortgage, or 
 encumbrance. 
 
 "Real property" includes land and any interest or estate in 
 land. 
 
 Sec. 3. [Interpretation of Knowledge and Notice.] (1) A 
 person has "knowledge" of a fact within the meaning of this 
 act not only when he has actual knowledge thereof, but also when 
 he has knowledge of such other facts as in the circumstances 
 shows bad faith. 
 
 (2) A person has "notice" of a fact within the meaning of 
 this act when the person who claims the benefit of the notice 
 
 (a) States the fact to such person, or 
 
 (&) Delivers through the mail, or by other means of com- 
 munication, a written statement of the fact to such person or 
 to a proper person at his place of business or residence. 
 
 Sec. 4. [Rules of Construction.] (1) The rule that statutes 
 in derogation of the common law are to be strictly construed shall 
 have no application to this act. 
 
 427 
 
428 APPENDIX B 
 
 (2) The law of estoppel shall apply under this act. 
 
 (3) The law of agency shall apply under this act. 
 
 (4) This act shall be so interpreted and construed as to effect 
 its general purpose to make uniform the law of those states which 
 enact it. 
 
 (5) This act shall not be construed so as to impair the obliga- 
 tions of any contract existing when the act goes into effect, nor to 
 affect any action or proceedings begun or right accrued before 
 this act takes effect. 
 
 Sec. 5. [Rules for Cases not Provided for in this Act.] In 
 any case not provided for in this act the rules of law and equity, 
 including the law merchant, shall govern. 
 
 PART II 
 
 NATTJEE OF A PAETNBBSHIP 
 
 Sec. 6. [Partnership Defined.] (1) A partnership is an asso- 
 ciation of two or more persons to carry on as co-owners a business 
 for profit. 
 
 (2) But any association formed under any other statute of 
 this state, or any statute adopted by authority, other than the 
 authority of this state, is not a partnership under this act, unless 
 such association would have been a partnership in this state 
 prior to the adoption of this act ; but this act shall apply to limited 
 partnerships except in so far as the statutes relating to such part- 
 nerships are inconsistent herewith. 
 
 Sec. 7. [Rules for Determining the Existence of a Partner- 
 ship.] In determining whether a partnership exists, these rules 
 shall apply : 
 
 (1) Except as provided by section 16 persons who are not 
 partners as to each other are not partners as to third persons. 
 
 (2) Joint tenancy, tenancy in common, tenancy by the en- 
 tireties, joint property, common property, or part ownership does 
 not of itself establish a partnership, whether such co-owners do 
 or do not share any profits made by the use of the property. 
 
 (3) The sharing of gross returns does not of itself establish 
 a partnership, whether or not the persons sharing them have a 
 joint or common right or interest in any property from which the 
 returns are derived. 
 
APPENDIX B 429 
 
 (4) The receipt by a person of a share of the profits of a busi- 
 ness is prima facie evidence that he is a partner in the business, 
 but no such inference shall be drawn if such profits were received 
 in payment : 
 
 (a) As a debt by installments or otherwise, 
 
 (6) As wages of an employee or rent to a landlord, 
 
 (c) As an annuity to a widow or representative of a deceased 
 partner, 
 
 {d) As interest on a loan, though the amount of payment 
 A^ary with the profits of the business, 
 
 (e) As the consideration for the sale of the good-will of a busi- 
 ness or other property by installments or otherwise. 
 
 Sec. 8. [Partnership Property.] (1) All property originally 
 brought into the partnership stock or subsequently acquired, by 
 purchase or otherwise, on account of the partnership is partner- 
 ship property. 
 
 (2) Unless the contrary intention appears, property acquired 
 with partnership funds is partnership property. 
 
 (3) Any estate in real property may be acquired in the part- 
 nership name. Title so acquired can be conveyed only in the 
 partnership name. 
 
 (4) A conveyance to a partnership in the partnership name, 
 though without words of inheritance, passes the entire estate of 
 the grantor unless a contrary intent appears. 
 
 PART III 
 
 TIBLATIONS OF PABTNEBS TO PEESONS DEALING WITH THE PAETNEESmP 
 
 Sec. 9. [Partner Agent of Partnership as to Partnership 
 Business.] (1) Every partner is an agent of the partnership 
 for the purpose of its business, and the act of every partner, in- 
 cluding the execution in the partnership name of any instrument, 
 for apparently carrying on in the usual way the business of the 
 partnership of which he is a member binds the partnership, 
 unless the partner so acting has in fact no authority to act for 
 the partnership in the particular matter, and the person with 
 whom he is dealing has knowledge of the fact that he has no such 
 authority. 
 
 (2) An act of a partner which is not apparently for the carry- 
 
430 APPENDIX B 
 
 ing on of the business of the partnership in the usual way does not 
 bind the partnership unless authorized by the other partners. 
 
 (3) Unless authorized by the other partners or unless they 
 have abandoned the business, one or more but less than all the 
 partners have no authority to : 
 
 (a) Assign the partnership property in trust for creditors 
 or on the assignee's promise to pay the debts of the partnership, 
 (6) Dispose of the good-will of the business, 
 
 (c) Do any other act which would make it impossible to carry 
 on the ordinary business of the partnership, 
 
 (d) Confess a judgment, 
 
 (e) Submit a partnership claim or liability to arbitration or 
 reference. 
 
 (4) No act of a partner in contravention of a restriction on his 
 authority shall bind the partnership to persons having knowledge 
 of the restriction. 
 
 Sec. 10. [Conveyance of Real Property of the Partnership.] 
 (1) Where title to real property is in the partnership name, 
 any partner may convey title to such property by a conveyance 
 executed in the partnership name; but the partnership may 
 recover such property unless the partner's act binds the partner- 
 ship under the provisions of paragraph (1) of section 9, or unless 
 such property has been conveyed by the grantee or a person 
 claiming through such grantee to a holder for value without 
 knowledge that the partner, in making the conveyance, has 
 exceeded his authority. 
 
 (2) Where title to real property is in the name of the partner- 
 ship, a conveyance executed by a partner, in his own name, passes 
 the equitable interest of the partnership, provided the act is one 
 within the authority of the partner under the provisions of para- 
 graph (1) of section 9. 
 
 (3) Where title to real property is in the name of one or more 
 but not all the partners, and the record does not disclose the 
 right of the partnership, the partners in whose name the title 
 stands may convey title to such property, but the partnership may 
 recover such property if the partners' act does not bind the part- 
 nership under the provisions of paragraph (1) of section 9, unless 
 the purchaser or his assignee, is a holder for value, without knowl- 
 edge. 
 
APPENDIX B 431 
 
 (4) Where the title to real property is in the name of one or 
 more or all the partners, or in a third person in trust for the 
 partnership, a conveyance executed by a partner in the partner- 
 ship name, or in his own name, passes the equitable interest of the 
 partnership, provided the act is one within the authority of the 
 partner under the provisions of paragraph (1) of section 9. 
 
 (5) Where the title to real property is in the names of all the 
 partners a conveyance executed by all the partners passes all their 
 rights in such property. 
 
 Sec. 11. [Partnership Bound by Admission of Partner.] 
 An admission or representation made by any partner concerning 
 partnership affairs within the scope of his authority as conferred 
 by this act is evidence against the partnership. 
 
 Sec. 12. [Partnership Charged with Knowledge of or Notice 
 to Partner.] Notice to any partner of any matter relating to 
 partnership affairs, and the knowledge of the partner acting in 
 the particular matter, acquired while a partner or then present 
 to his mind, and the knowledge of any other partner who reason- 
 ably could and should have communicated it to the acting part- 
 ner, operate as notice to or knowledge of the partnership, except 
 in the case of a fraud on the partnership committed by or with 
 the consent of that partner. . 
 
 Sec. 13. [Partnership Bound by Partner's Wrongful Act.] 
 Where, by any wrongful act or omission of any partner acting in 
 the ordinary course of the business of the partnership, or with the 
 authority of his co-partners, loss or injury is caused to any per- 
 son, not being a partner in the partnership, or any penalty is 
 incurred, the partnership is liable therefor to the same extent as 
 the partner so acting or omitting to act. 
 
 Sec. 14. [Partnership Bound by Partner's Breach of Trust.] 
 The partnership is bound to make good the loss : 
 
 (a) Where one partner acting within the scope of his appar- 
 ent authority receives money or property of a third person and 
 misapplies it ; and 
 
 (6) Where the partnership in the course of its business receives 
 money or property of a third person and the money or property 
 so received is misapplied by any partner while it is in the custody 
 of the partnership. 
 
 Sec. 15. [Nature of Partner's Liability.] All partners are liable 
 
432 APPENDIX B 
 
 (a) Jointly and severally for everything chargeable to the 
 partnership under sections 13 and 14. 
 
 (b) Jointly for all other debts and obligations of the partner- 
 ship; but any partner may enter into a separate obligation to 
 perform a partnership contract. 
 
 Sec. 16. [Partner by Estoppel.] (1) When a person, by 
 words spoken or written or by conduct, represents himself, or 
 consents to another representing him to any one, as a partner in 
 an existing partnership or with one or more persons not actual 
 partners, he is liable to any such person to whom such represen- 
 tation has been made, who has, on the faith of such representa- 
 tion, given credit to the actual or apparent partnership, and if he 
 has made such representation or consented to its being made 
 in a public manner he is liable to such person, whether the repre- 
 sentation has or has not been made or communicated to such 
 person so giving credit by or with the knowledge of the apparent 
 partner making the representation or consenting to its being 
 miade. 
 
 (a) When a partnership liability results, he is liable as though 
 lie were an actual member of the partnership. 
 
 (6) When no partnership liability results, he is liable jointly 
 with the other persons, if any, so consenting to the contract or 
 representation as to incur liability, otherwise separately. 
 
 (2) When a person has been thus represented to be a partner 
 in an existing partnership, or with one or more persons not actual 
 partners, he is an agent of the persons consenting to such repre- 
 sentation to bind them to the same extent and in the same man- 
 ner as though he were a partner in fact, with respect to persons 
 who rely upon the representation. Where all the members of 
 the existing partnership consent to the representation, a partner- 
 ship act or obligation results ; but in all other cases it is the joint 
 act or obligation of the person acting and the persons consenting 
 to the representation. 
 
 Sec. 17. [Liability of Incoming Partner.] A person admitted 
 as a partner into an existing partnership is liable for all the obli- 
 gations of the partnership arising before his admission as though 
 he had been a partner when such obligations were incurred, 
 except that this liability shall be satisfied only out of partnership 
 property. 
 
APPENDIX B 433 
 
 PART IV 
 
 RELATIONS OF PARTNERS TO ONE ANOTHER 
 
 Sec. 18. [Rules Determining Rights and Duties of Part- 
 ners.] The rights and duties of the partners in relation to the 
 partnership shall be determined, subject to any agreement be- 
 tween them, by the following rules : 
 
 (a) Each partner shall be repaid his contributions, whether 
 by way of capital or advances to the partnership property and 
 share equally in the profits and surplus remaining after all lia- 
 bilities, including those to partners, are satisfied ; and must con- 
 tribute towards the losses, whether of capital or otherwise, sus- 
 tained by the partnership according to his share in the profits. 
 
 (6) The partnership must indemnify every partner in respect 
 of payments made and personal liabilities reasonably incurred 
 by him in the ordinary and proper conduct of its business, or for 
 the preservation of its business or property. 
 
 (c) A partner, who in aid of the partnership makes any pay- 
 ment or advance beyond the amount of capital which he agreed 
 to contribute, shall be paid interest from the date of the pay- 
 ment or advance. » 
 
 (d) A partner shall receive interest on the capital contributed 
 by him only from the date when repayment should be made. 
 
 (e) All partners have equal rights in the management and 
 conduct of all the partnership business. 
 
 (J) No partner is entitled to remuneration for acting in the 
 partnership business, except that a surviving partner is entitled 
 to reasonable compensation for his services in winding up the 
 partnership affairs. 
 
 (g) No person can become a member of a partnership with- 
 out the consent of all the partners. 
 
 (A) Any difference arising as to ordinary matters connected 
 with the partnership business may be decided by a majority of 
 the partners ; but no act in contravention of any agreement 
 between the partners may be done rightfully without the con- 
 sent of all the partners. 
 
 Sec. 19. [Partnership Books.] The partnership books shall 
 be kept, subject to any agreement between the partners, at the 
 
434 APPENDIX B 
 
 principal place of business of the partnership, and every partner 
 shall at all times have access to and may inspect and copy any of 
 them. 
 
 Sec. 20. [Duty of Partners to Render Information.] Part- 
 ners shall render on demand true and full information of all 
 things affecting the partnership to any partner or the legal repre- 
 sentative of any deceased partner or partner under legal disability. 
 
 Sec. 21. [Partner Accountable as a Fiduciary.] (1) Every 
 partner must account to the partnership for any benefit, and 
 hold as trustee for it any profits derived by him without the con- 
 sent of the other partners from any transaction connected with 
 the formation, conduct, or liquidation of the partnership or from 
 any use by him of its property. 
 
 (2) This section applies also to the representatives of a de- 
 ceased partner engaged in the liquidation of the affairs of the part- 
 nership as the personal representatives of the last surviving partner. 
 
 Sec. 22. [Right to an Account.] Any partner shall have the 
 right to a formal account as to partnership affairs : 
 
 (a) If he is wrongfully excluded from the partnership busi- 
 ness or possession of its property by his co-partners, 
 
 (6) If the right exists under the terms of any agreement, 
 
 (c) As provided by section 21, 
 
 (d) Whenever other circumstances render it just and reasonable. 
 Sec. 23. [Continuation of Partnership beyond Fixed Term.] 
 
 (1) When a partnership for a fixed term or particular under- 
 taking is continued after the termination of such term or par- 
 ticular undertaking without any express agreement, the rights 
 and duties of the partners remain the same as they were at such 
 termination, so far as is consistent with a partnership at will. 
 
 (2) A continuation of the business by the partners or such of 
 them as habitually acted therein during the term, without any 
 settlement or liquidation of the partnership affairs, is prima facie 
 evidence of a continuation of the partnership. 
 
 PART V 
 
 PROPERTY RIGHTS OF A PARTNER 
 
 Sec. 24. [Extent of Property Rights of a Partner.] The 
 property rights of a partner are (1) his rights in specific partner- 
 
APPENDIX B 435 
 
 ship property, (2) his interest in the partnership, and (3) his 
 right to participate in the management. 
 
 Sec. 25. [Nature of a Partner's Right in Specific Partnership 
 Property.] 
 
 (1) A partner is co-owner with his partners of specific part- 
 nership property holding as a tenant in partnership. 
 
 (2) The incidents of this tenancy are such that : 
 
 (a) A partner, subject to the provisions of this act and to 
 any agreement between the partners, has an equal right with 
 his partners to possess specific partnership property for part- 
 nership purposes ; but he has no right to possess such property 
 for any other purpose without the consent of his partners. 
 
 (6) A partner's right in specific partnership property is not 
 assignable except in connection with the assignment of the rights 
 of all the partners in the same property. 
 
 (c) A partner's right in specific partnership property is not 
 subject to attachment or execution, except on a claim against 
 the partnership. When partnership property is attached for a 
 partnership debt the partners, or any of them, or the repre- 
 sentatives of a deceased partner, cannot claim any right under 
 the homestead or exemption laws. 
 
 {<£) On the death of a partner his right in specific partner- 
 ship property vests in the surviving partner or partners, ex- 
 cept where the deceased was the last surviving partner, when 
 his right in such property vests in his legal representative. Such 
 surviving partner or partners, or the legal representative of the 
 last surviving partner, has no right to possess the partnership 
 property for any but a partnership purpose. 
 
 (e) A partner's right in specific partnership property is not 
 subject to dower, curtesy, or allowances to widows, heirs, or 
 next of kin. 
 
 Sec. 26. [Nature of Partner's Interest in the Partnership.] 
 A partner's interest in the partnership is his share of the profits 
 and surplus, and the same is personal property. 
 
 Sec. 27. [Assignment of Partner's Interest.] (1) A convey- 
 ance by a partner of his interest in the partnership does not of 
 itself dissolve the partnership, nor, as against the other partners 
 in the absence of agreement, entitle the assignee, during the con- 
 tinuance of the partnership, to interfere in the management or 
 
436 APPENDIX B 
 
 administration of the partnership business or affairs, or to require 
 any information or account of partnership transactions, or to 
 inspect the partnership books ; but it merely entitles the assignee 
 to receive in accordance with his contract the profits to which the 
 assigning partner would otherwise be entitled. 
 
 (2) In case of a dissolution of the partnership, the assignee 
 is entitled to receive his assignor's interest and may require an 
 account from the date only of the last account agreed to by all 
 the partners. 
 
 Sec. 28. [Partner's Interest Subject to Charging Order.] 
 (1) On due application to a competent court by any judgment 
 creditor of a partner, the court which entered the judgment, order, 
 or decree, or any other court, may charge the interest of the debtor 
 partner with payment of the unsatisfied amount of such judgment 
 debt with interest thereon ; and may then or later appoint a re- 
 ceiver of his share of the profits, and of any other money due or to 
 fall due to him in respect of the partnership, and make all other 
 orders, directions, accounts and inquiries which the debtor partner 
 might have made, or which the circumstances of the case may 
 require. 
 
 (2) The interest charged may be redeemed at any time before 
 foreclosure, or in case of a sale being directed by the court may be 
 purchased without thereby causing a dissolution : 
 
 (a) With separate property, by any one or more of the part- 
 ners, or 
 
 (b) With partnership property, by any one or more of the 
 partners with the consent of all the partners whose interests are 
 not so charged or sold. 
 
 (3) Nothing in this act shall be held to deprive a partner of 
 his right, if any, under the exemption laws, as regards his interest 
 in the partnership. 
 
 PART VI 
 
 DISSOLUTION AND WINDING UP 
 
 Sec. 29. [Dissolution Defined.] The dissolution of a part- 
 nership is the change in the relation of the partners caused by 
 any partner ceasing to be associated in the carrying on as dis- 
 tinguished from the winding up of the business. 
 
APPENDIX B 437 
 
 Sec. 30. [Partnership not Terminated by Dissolution.] On 
 dissolution the partnership is not terminated, but continues until 
 the winding up of partnership affairs is completed. 
 
 Sec. 31. [Causes of Dissolution.] Dissolution is caused : 
 
 (1) Without violation of the agreement between the partners, 
 (a) By the termination of the definite term or particular 
 
 undertaking specified in the agreement, 
 
 (6) By the express will of any partner when no definite term 
 or particular undertaking is specified, 
 
 (c) By the express will of all the partners who have not assigned 
 their interests or suffered them to be charged for their separate 
 debts, either before or after the termination of any specified 
 term or particular undertaking, 
 
 (d) By the expulsion of any partner from the business bona 
 fide in accordance with such a power conferred by the agreement 
 between the partners ; 
 
 (2) In contravention of the agreement between the partners, 
 where the circumstances do not permit a dissolution under any 
 other provision of this section, by the express will of any partner 
 at any time ; 
 
 (3) By any event which makes it unlawful for the business of 
 the partnership to be carried on or for the members to carry it on 
 in partnership ; 
 
 (4) By the death of any partner ; 
 
 (5) By the bankruptcy of any partner or the partnership ; 
 
 (6) By decree of court under section 32. 
 
 Sec. 32. [Dissolution by Decree of Court.] (1) On applica- 
 tion by or for a partner the court shall decree a dissolution when- 
 ever : 
 
 (a) A partner has been declared a lunatic in any judicial pro- 
 ceeding or is shown to be of unsound mind, 
 
 (&) A partner becomes in any other way incapable of perform- 
 ing his part of the partnership contract, 
 
 (c) A partner has been guilty of such conduct as tends to 
 affect prejudicially the carrying on of the business, 
 
 (d) A partner wilfully or persistently commits a breach of 
 the partnership agreement, or otherwise so conducts himself in 
 matters relating to the partnership business that it is not reason- 
 ably practicable to carry on the business in partnership with him, 
 
438 APPENDIX B 
 
 (e) The business of the partnership can only be carried on at a 
 loss, 
 
 (f) Other circumstances render a dissolution equitable. 
 
 (2) On the application of the purchaser of a partner's interest 
 under sections 27 or 28 : 
 
 (a) After the termination of the specified term or particular 
 undertaking, 
 
 (6) At any time if the partnership was a partnership at will 
 when the interest was assigned or when the charging order was 
 issued. 
 
 Sec. 33. [General Effect of Dissolution on Authority of 
 Partner.] Except so far as may be necessary to wind up partner- 
 ship affairs or to complete transactions begun but not then fin- 
 ished, dissolution terminates all authority of any partner to act 
 for the partnership, 
 
 (1) With respect to the partners, 
 
 (a) When the dissolution is not by the act, bankruptcy or death 
 of a partner ; or 
 
 (b) When the dissolution is by such act, bankruptcy or death 
 of a partner, in cases where section 34 so requires. 
 
 (2) With respect to persons not partners, as declared in sec- 
 tion 35. 
 
 Sec. 34. [Right of Partner to Contribution from Copartners 
 after Dissolution.] Where the dissolution is caused by the act, 
 death or bankruptcy of a partner, each partner is liable to his co- 
 partners for his share of any liability created by any partner 
 acting for the partnership as if the partnership had not been dis- 
 solved unless 
 
 (a) The dissolution being by act of any partner, the partner 
 acting for the partnership had knowledge of the dissolution, 
 or 
 
 (6) The dissolution being by the death or bankruptcy of a 
 partner, the partner acting for the partnership had knowledge 
 or notice of the death or bankruptcy. 
 
 Sec. 35. [Power of Partner to Bind Partnership to Third 
 Persons after Dissolution.] (1) After dissolution a partner can 
 bind the partnership except as provided in paragraph (3). 
 
 (a) By any act appropriate for winding up partnership affairs 
 or completing transactions unfinished at dissolution 
 
APPENDIX B 439 
 
 (&) By any transaction which would bind the partnership if 
 dissolution had not taken place, provided the other party to the 
 transaction 
 
 (1) Had extended credit to the partnership prior to dissolution 
 and had no knowledge or notice of the dissolution ; or 
 
 (II) Though he had not so extended credit, had nevertheless 
 known of the partnership prior to dissolution, and, having no 
 knowledge or notice of dissolution, the fact of dissolution had not 
 been advertised in a newspaper of general circulation in the place 
 (or in each place if more than one) at which the partnership busi- 
 ness was regularly carried on. 
 
 (2) The liability of a partner under paragraph (16) shall be 
 satisfied out of partnership assets alone when such partner had 
 been prior to dissolution 
 
 (a) Unknown as a partner to the person with whom the con- 
 tract is made ; and 
 
 (6) So far unknown and inactive in partnership affairs that 
 the business reputation of the partnership could not be said to 
 have been in any degree due to his connection with it. 
 
 (3) The partnership is in no case bound by any act of a part- 
 ner after dissolution 
 
 (a) Where the partnership is dissolved because it is unlawful 
 to carry on the business, unless the act is appropriate for winding 
 up partnership affairs ; or 
 
 (b) Where the partner has become bankrupt ; or 
 
 (c) Where the partner has no authority to wind up partner- 
 ship affairs, except by a transaction with one who 
 
 (I) Had extended credit to the partnership prior to disso- 
 lution and had no knowledge or notice of his want of authority ; 
 or 
 
 (II) Had not extended credit to the partnership prior to disso- 
 lution, and, having no knowledge or notice of his want of author- 
 ity, the fact of his want of authority has not been advertised in 
 the manner provided for advertising the fact of dissolution in para- 
 graph (16 II). 
 
 (4) Nothing in this section shall affect the liability under sec- 
 tion 16 of any person who after dissolution represents himself 
 or consents to another representing him as a partner in a partner- 
 ship engaged in carrying on business. 
 
440 APPENDIX B 
 
 Sec. 36. [Effect of Dissolution on Partner's Existing Lia- 
 bility.] (1) The dissolution of the partnership does not of itself 
 discharge the existing liability of any partner. 
 
 (2) A partner is discharged from any existing liability upon 
 dissolution of the partnership by an agreement to that effect 
 between himself, the partnership creditor and the person or part- 
 nership continuing the business ; and such agreement may be in- 
 ferred from the course of dealing between the creditor having 
 knowledge of the dissolution and the person or partnership con- 
 tinuing the business. 
 
 (3) Where a j/erson agrees to assume the existing obligations 
 of a dissolved partnership, the partners whose obligations have 
 been assumed shall be discharged from any liability to any cred- 
 itor of the partnership who, knowing of the agreement, consents 
 to a material alteration in the nature or tiiiie of payment of such 
 obligations. 
 
 (4) The individual property of a deceased partner shall be 
 liable for all obligations of the partnership incurred while he 
 was a partner but subject to the prior payment of his separate 
 debts. 
 
 Sec. 37. [Right to Wind Up.] Unless otherwise agreed the 
 partners who have not wrongfully dissolved the partnership or 
 the legal representative of the last surviving partner, not bank- 
 rupt, has the right to wind up the partnership affairs ; provided, 
 however, that any partner, his legal representative, or his as- 
 signee, upon cause shown, may obtain winding up by the court. 
 
 Sec. 38. [Rights of Partners to Application of Partnership 
 Property.] (1) When dissolution is caused in any way, except 
 in contravention of the partnership agreement, each partner, as 
 against his co-partners and all persons claiming through them in 
 respect of their interests in the partnership, unless otherwise 
 agreed, may have the partnership property applied to discharge 
 its liabilities, and the surplus applied to pay in cash the net 
 •amount owing to the respective partners. But if dissolution 
 is caused by expulsion of a partner, bona fide under the partner- 
 ship agreement, and if the expelled partner is discharged from all 
 partnership liabilities, either by payment or agreement under 
 section 36 (2), he shall receive in cash only the net amount due 
 him from the partnership. 
 
APPENDIX B 441 
 
 (2) When dissolution is caused in contravention of the part- 
 nership agreement the rights of the partners shall be as follows : 
 
 (a) Each partner who has not caused dissolution wrongfully 
 shall have, 
 
 I. All the rights specified in paragraph (1) of this section, and 
 
 II. The right, as against each partner who has caused the dis- 
 solution wrongfully, to damages for breach of the agreement. 
 
 (6) The partners who have not caused the dissolution wrong- 
 fully, if they all desire to continue the business in the same name, 
 either by themselves or jointly with others, may do so, during 
 the agreed term for the partnership and format purpose may 
 possess the partnership property, provided they secure the payr 
 ment by bond approved by the court, or pay to any partner who 
 has caused the dissolution wrongfully, the value of his interest 
 in the partnership at the dissolution, less any damages recover- 
 able under clause (2a II) of this section, and in like manner indem- 
 nify him against all present or future partnership liabilities. 
 
 (c) A partner who has caused the dissolution wrongfully shall 
 have: 
 
 I. If the business is not continued under the provisions of 
 paragraph (26) all the rights of a partner under paragraph (1), 
 subject to clause (2a II), of this section, 
 
 II. If the business is continued under paragraph (26) of 
 this section the right as against his copartners and all claim- 
 ing through them in respect of their interests in the partnership, 
 to have the value of his interest in the partnership, less any dam- 
 ages caused to his copartners by the dissolution, ascertained 
 and paid to him in cash, or the payment secured by bond ap- 
 proved by the court, and to be released from all existing liabilities 
 of the partnership ; but in ascertaining the value of the partner's 
 interest the value of the good-will of the business shall not be 
 considered. 
 
 Sec. 39. [Rights where Partnership is Dissolved for Fraud 
 or Misrepresentation.] Where a partnership contract is rescinded 
 on the ground of the fraud or misrepresentation of one of the 
 parties thereto, the party entitled to rescind is, without prejudice 
 to any other right, entitled, 
 
 (a) To a lien on, or right of retention of, the surplus of the 
 partnership property after satisfying the partnership liabilities 
 
442 APPENDIX B 
 
 to third persons for any sum of money paid by him for the pur- 
 chase of an interest in the partnership and for any capital or 
 advances contributed by him; and 
 
 (fe) To stand, after all liabilities to third persons have been 
 satisfied, in the place of the creditors of the partnership for any 
 payments made by him in respect of the partnership liabilities ; and 
 
 (c) To be indemnified by the person guilty of the fraud or 
 making the representation against all debts and liabilities of the 
 partnership. 
 
 Sec. 40. [Rules for Distribution.] In settling accounts be- 
 tween the partners after dissolution, the following rules shall be 
 observed, subject to any agreement to the contrary : 
 
 (a) The assets of the partnership are : 
 
 I. The partnership property, 
 
 II. The contributions of the partners necessary for the pay- 
 ment of all the liabilities specified in clause (6) of this paragraph. 
 
 (b) The liabilities of the partnership shall rank in order of pay- 
 ment, as follows : 
 
 I. Those owing to creditors other than partners, 
 
 II. Those owing to partners other than for capital and profits, 
 
 III. Those owing to partners in respect of capital, 
 
 IV. Those owing to partners in respect of profits. 
 
 (c) The assets shall be applied in the order of their declara- 
 tion in clause (a) of this paragraph to the satisfaction of the 
 liabilities. 
 
 (d) The partners shall contribute, as provided by section 
 18 (a) the amount necessary to satisfy the liabilities ; but if any, 
 but not all, of the partners are insolvent, or, not being subject 
 to process, refuse to contribute, the other partners shall contribute 
 their share of the liabilities, and, in the relative proportions in 
 which they share the profits, the additional amount necessary to 
 pay the liabilities. 
 
 (e) An assignee for the benefit of creditors or any person ap- 
 pointed by the court shall have the right to enforce the contribu- 
 tions specified in clause (d) of this paragraph. 
 
 (/) Any partner or his legal representative shall have the 
 right to enforce the contributions specified in clause {d) of this 
 paragraph, to the extent of the amount which he has paid in 
 excess of his share of the liability. 
 
APPENDIX B 443 
 
 ig) The individual property of a deceased partner shall be 
 liable for the contributions specified in clause (d) of this para- 
 graph. 
 
 (h) When partnership property and the individual proper- 
 ties of the partners are in the possession of a court for distribu- 
 tion, partnership creditors shall have priority on partnership 
 property and separate creditors on individual property, saving 
 the rights of lien or secured creditors as heretofore. 
 
 (i) Where a partner has become bankrupt or his estate is 
 insolvent the claims against his separate property shall rank in 
 the following order : 
 
 I. Those owing to separate creditors, 
 
 II. Those owing to partnership creditors, 
 
 III. Those owing to partners by way of contribution. 
 
 Sec. 41. [Liability of Persons Continuing the Business in 
 •Certain Cases.] (1) When any new partner is admitted into an 
 existing partnership, ol- when any partner retires and assigns 
 (or the representative of the deceased partner assigns) his rights 
 in partnership property to two or more of the partners, or to one or 
 more of the partners and one or more third persons, if the busi- 
 ness is continued without liquidation of the partnership affairs, 
 creditors of the first or dissolved partnership are also creditors of 
 the partnership so continuing the business. 
 
 (2) When all but one partner retire and assign (or the repre- 
 sentative of a deceased partner assigns) their rights in partner- 
 ship property to the remaining partner, who continues the busi- 
 ness without liquidation of partnership affairs, either alone or 
 with others, creditors of the dissolved partnership are also cred- 
 itors of the person or partnership so continuing the business. 
 
 (3) When any partner retires or dies and the business of the 
 dissolved partnership is continued as set forth in paragraphs (1) 
 and (2) of this section, with the consent of the retired partners 
 or the representative of the deceased partner, but without any 
 assignment of his right in partnership property, rights of cred- 
 itors of the dissolved partnership and of the creditors of the person 
 or partnership continuing the business shall be as if such assign- 
 ment had been made. 
 
 (4) When all the partners or their representatives assign their 
 rights in partnership property to one or more third persons who 
 
444 APPENDIX B 
 
 promise to pay the debts and who continue the business of the 
 dissolved partnership, creditors of the dissolved partnership are 
 also creditors of the person or partnership continuing the busi- 
 ness. 
 
 (5) When any partner wrongfully causes a dissolution and 
 the remaining partners continue the business under the provi- 
 sions of section 38 (26), either alone or with others, and M'ithout 
 liquidation of the partnership affairs, creditors of the dissolved 
 partnership are also creditors of the person or partnership con- 
 tinuing the business. 
 
 (6) When a partner is expelled and the remaining partners 
 continue the business either alone or with others, without liqui- 
 dation of the partnership affairs, creditors of the dissolved part- 
 nership are also creditors of the person or partnership continu- 
 ing the business. 
 
 (7) The liability of a third person becoming a partner in the 
 partnership continuing the business, under this section to the 
 creditors of the dissolved partnership shall be satisfied out of 
 partnership property only. 
 
 (8) When the business of a partnership after dissolution is 
 continued under any conditions set forth in this section the cred- 
 itors of the dissolved partnership, as against the separate cred- 
 itors of the retiring or deceased partner or the representative of 
 the deceased partner, have a prior right to any claim of the re- 
 tired partner or the representative of the deceased partner against 
 the person or partnership continuing the business, on account of 
 the retired or deceased partner's interest in the dissolved partner- 
 ship or on account of any consideration promised for such interest 
 or for his right in partnership property. 
 
 (9) Nothing in this section shall be held to modify any right 
 of creditors to set aside any assignment on the ground of fraud. 
 
 (10) The use by the person or partnership continuing the 
 business of the partnership name, or the name of a deceased part- 
 ner as part thereof, shall not of itself make the individual prop- 
 erty of the deceased partner liable for any debts contracted by 
 such person or partnership. 
 
 Sec. 42. [Rights of Retiring or Estate of Deceased Partner 
 when the Business is Continued.] When any partner retires or 
 dies, and the business is continued under any of the conditions 
 
APPENDIX B 445 
 
 set forth in section 41 (1, 2, 3, 5, 6), or section 38 (26), without 
 any settlement of accounts as between him or his estate and the 
 person or partnership continuing the business, unless otherwise 
 agreed, he or his legal representative as against such persons or 
 partnership may have the value of his interest at the date of 
 dissolution ascertained, and shall receive as an ordinary creditor 
 an amount equal to the value of his interest in the dissolved part- 
 nership with interest, or, at his option or at the option of his legal 
 representative, in lieu of interest, the profits attributable to the use 
 of his right in the property of the dissolved partnership ; provided 
 that the creditors of the dissolved partnership as against the sepa- 
 rate creditors, or the representative of the retired or deceased part- 
 ner, shall have priority on any claim arising under this section, 
 as provided by section 41 (8) of this act. 
 
 Sec. 43. [Accrual of Actions.] The right to an account of 
 his interest shall accrue to any partner, or his legal representative, 
 as against the winding up partners or the surviving partners or 
 the person or partnership continuing the business, at the date of 
 dissolution, in the absence of any agreement to the contrary. 
 
APPENDIX C 
 
 AN ACT TO MAKE UNIFORM THE LAW RELATING 
 TO LIMITED PARTNERSHIPS 
 
 Be it enacted, etc., as follows : 
 
 Section 1. [Limited Partnership Defined.] A limited part- 
 nership is a partnership formed by two or more persons under the 
 provisions of Section 2, having as members one or more general 
 partners and one or more limited partners. The limited partners 
 as such shall not be bound by the obligations of the partnership. 
 
 Section 2. [Formation.] (1) Two or more persons desiring 
 to form a limited partnership shall 
 
 (a) Sign and swear to a certificate, which shall state 
 
 I. The name of the partnership, 
 
 II. The character of the business, 
 
 III. The location of the principal place of business, 
 
 IV. The name and place of residence of each member ; general 
 and limited partners being respectively designated. 
 
 V. The term for which the partnership is to exist, 
 
 VI. The amount of cash and a description of and the agreed 
 value of the other property contributed by each limited partner, 
 
 VII. The additional contributions, if any, agreed to be made 
 by each limited partner and the times at which or events on the 
 happening of which they shall be made, 
 
 VIII. The time, if agreed upon, when the contribution of each 
 limited partner is to be returned. 
 
 IX. The share of the profits or the other compensation by way 
 of income which each limited partner shall receive by reason of 
 his contribution, 
 
 446 
 
APPENDIX C 447 
 
 X. The right, if given, of a limited partner to substitute an 
 assignee as contributor in his place, and the terms and conditions 
 of the substitution, 
 
 XL The right, if given, of the partners to admit additional 
 limited partners, 
 
 XII. The right, if given, of one or more of the limited partners 
 to priority over other limited partners, as to contributions or as 
 to compensation by way of income, and the nature of such priority, 
 
 XIII. The right, if given, of the remaining general partner or 
 partners to continue the business on the death, retirement or 
 insanity of a general partner, and 
 
 XIV. The right, if given, of a limited partner to demand and 
 receive property other than cash in return for his contribution. 
 
 (6) File for record the certificate in the office of [here designate 
 the proper office]. 
 
 (2) A limited partnership is formed if there has been sub- 
 stantial compliance in good faith with the requirements of para- 
 graph (1). 
 
 Section 3. [Business which may be Carried on.] A limited 
 partnership may carry on any business which a partnership with- 
 out limited partners may carry on, except [here designate the 
 business to be prohibited]. 
 
 Section 4. [Character of Limited Partner's Contribution.] 
 The contributions of a limited partner may be cash or other prop- 
 erty, but not services. 
 
 Section 5. [A Name not to Contain Surname of Limited 
 Partner; Exceptions.] (1) The surname of a limited partner 
 shall not appear in the partnership name, unless 
 
 (a) It is also the surname of a general partner, or 
 
 (6) Prior to the time when the limited partner became such 
 the business had been carried on under a name in which his sur- 
 name appeared. 
 
 (2) A limited partner whose name appears in a partnership 
 name contrary to the provisions of paragraph (1) is liable as a 
 general partner to partnership creditors who extend credit to the 
 partnership without actual knowledge that he is not a general 
 partner. 
 
 Section 6. [Liability for False Statements in Certificate.] 
 If the certificate contains a false statement, one who suffers loss 
 
448 APPENDIX C 
 
 by reliance on such statement may hold liable any party to the 
 certificate who knew the statement to be false 
 
 (a) At the time he signed the certificate, or 
 
 (b) Subsequently, but within a sufficient time before the state- 
 ment was relied upon to enable him to cancel or amend the cer- 
 tificate, or to file a petition for its cancellation or amendment as 
 provided in section 25 (3). 
 
 Section 7. [Limited Partner not Liable to Creditors.] A 
 limited partner shall not become liable as a general partner unless, 
 in addition to the exercise of his rights and powers as a limited 
 partner, he takes part in the control of the business. 
 
 Section 8. [Admission of Additional Limited Partners.] 
 After the formation of a limited partnership, additional limited 
 partners may be admitted upon filing an amendment to the 
 original certificate in accordance with the requirements of sec- 
 tion 25. 
 
 Section 9. [Rights, Powers and Liabilities of a General Part- 
 ner.] (1) A general partner shall have all the rights and powers 
 and be subject to all the restrictions and liabilities of a partner 
 in a partnership without limited partners, except that without 
 the written consent or ratification of the specific act by all the 
 limited partners, a general partner or all of the general partners 
 have no authority to 
 
 (a) Do any act in contravention of the certificate, 
 
 (6) Do any act which would make it impossible to carry on 
 the ordinary business of the partnership, 
 
 (c) Confess a judgment against the partnership, 
 
 (d) Possess partnership property, or assign their rights in 
 specific partnership property, for other than a partnership pur- 
 pose, 
 
 (e) Admit a person as a general partner, 
 
 (/) Admit a person as a limited partner, unless the right so to 
 do is given in the certificate, 
 
 (g) Continue the business with partnership property on the 
 death, retirement or insanity of a general partner, unless the 
 right so to do is given in the certificate. 
 
 Section 10.' [Rights of . a Limited Partner.] (1) A limited 
 partner shall have the same rights as a general partner to 
 
 (a) Have the partnership books kept at the principal place 
 
APPENDIX C 449 
 
 of business of the partnership, and at all times to inspect and 
 copy any of them, 
 
 (b) Have on demand true and full information of all things 
 affecting the partnership, and a formal account of partnership 
 affairs whenever circumstances render it just and reasonable, 
 and 
 
 (c) Have dissolution and winding up by decree of court. 
 
 (2) A limited partner shall have the right to receive a share 
 of the profits or other compensation by way of income, and to the 
 return of his contribution as provided in sections 15 and 16. 
 
 Section 11. [Status of Person erroneously Believing Himself 
 a Limited Partner.] A person who has contributed to the capital 
 of a business conducted by a person or partnership erroneously 
 believing that he has become a limited partner in a limited part- 
 nership, is not, by reason of his exercise of the rights of a limited 
 partner, a general partner with the person or in the partnership 
 carrying on the business, or bound by the obligations of such 
 person or partnership ; provided that on ascertaining the mistake 
 he promptly renounces his interest in the profits of the business, 
 or other compensation by way of income. 
 
 Section 12. [One Person both General and Limited Part- 
 ner.] (1) A person may be a general partner and a limited 
 partner in the same partnership at the same time. 
 
 (2) A person who is a general, and also at the same time a 
 limited partner, shall have all the rights and powers and be sub- 
 ject to all the restrictions of a general partner; except that, in 
 respect to his contribution, he shall have the rights against the 
 other members which he would have had if he were not also a 
 general partner. 
 
 Section 13. [Loans and Other Business Transactions -with 
 Limited Partner.] (1) A limited partner also may loan money 
 to and transact other business with the partnership, and, unless 
 he is also a general partner, receive on account of resulting claims 
 against the partnership, with general creditors, a pro rata share 
 of the assets. No limited partner shall in respect to any such 
 claim 
 
 (a) Receive or hold as collateral security any partnership 
 property, or 
 
 (6) Receive from a general partner or the partnership any 
 
450 APPENDIX C 
 
 payment, conveyance, or release from liability, if at the time 
 the assets of the partnership are not sufficient to discharge part- 
 nership liabilities to persons not claiming as general or limited 
 partners. 
 
 (2) The receiving of collateral security, or a payment, con- 
 veyance, or release in violation of the provisions of paragraph (1) 
 is a fraud on the creditors of the partnership. 
 
 Section 14. [Relation of Limited Partners Inter Se.] Where 
 there are several limited partners the members may agree that one 
 or more of the limited partners shall have a priority over other 
 limited partners as to the return of their contributions, as to their 
 compensation by way of income, or as to any other matter. If 
 such an agreement is made it shall be .stated in the certificate, 
 and in the absence of such a statement all the limited partners 
 shall stand upon equal footing. 
 
 Section 15. [Compensation of Limited Partner.] A limited 
 partner may receive from the partnership the share of the profits 
 or the compensation by way of income stipulated for in the cer- 
 tificate ; provided, that after such payment is made, whether 
 from the property of the partnership or that of a general partner, 
 the partnership assets are in excess of all liabilities of the partner- 
 ship except liabilities to limited partners on account of their 
 contributions and to general partners. 
 
 Section 16. [Withdrawal or Reduction of Limited Partner's 
 Contribution.] (1) A limited partner shall not receive from 
 a general partner or out of partnership property any part of his 
 contribution until 
 
 (a) All liabilities of the partnership, except liabilities to general 
 partners, and to limited partners on account of their contributions, 
 have been paid or there remains property of the partnership suffi- 
 cient to pay them, 
 
 (6) The consent of all members is had, unless the return of 
 the contribution may be rightfully demanded under the pro- 
 visions of paragraph (2), and 
 
 (c) The certificate is cancelled or so amended as to set forth 
 the withdrawal or reduction. 
 
 (2) Subject to the provisions of paragraph (1) a limited partner 
 may rightfully demand the return of his contribution 
 
 (a) On the dissolution of a partnership, or 
 
APPENDIX C 451 
 
 (6) When the date specified in the certificate for its return 
 has arrived, or 
 
 (c) After he has given six months' notice in writing to all 
 other members, if no time is specified in the certificate either 
 for the return of the contribution or for the dissolution of the 
 partnership. 
 
 (3) In the absence of any statement in the certificate to the 
 contrary or the consent of all members, a limited partner, irre- 
 spective of the nature of his contribution, has only the right to 
 demand and receive cash in return for his contribution. 
 
 (4) A limited partner may have the partnership dissolved and 
 its affairs woimd up when 
 
 {a) He rightfully but unsuccessfully demands the return of 
 his contribution, or 
 
 (6) The other liabilities of the partnership have not been 
 paid, or the partnership property is insufficient for their pay- 
 ment as required by paragraph (la) and the limited partner 
 would otherwise be entitled to the return of his contribution. 
 
 Section 17. [Liability of Limited Partner to Partnership.] 
 (1) A limited partner is liable to the partnership. 
 
 (a) For the difference between his contribution as actually 
 made and that stated in the certificate as having been made, and 
 
 (6) For any unpaid contribution which he agreed in the certifi- 
 cate to make in the future at the time and on the conditions 
 stated in the certificate. 
 
 (2) A limited partner holds as trustee for the partnership 
 
 (a) Specific property stated in the certificate as contributed 
 by him, but which was not contributed or which has been wrong- 
 fully returned, and 
 
 (6) Money or other property wrongfully paid or conveyed to 
 him on account of his contribution. 
 
 (3) The liabilities of a limited partner as set forth in this sec- 
 tion can be waived or compromised only by the consent of all 
 members ; but a waiver or compromise shall not affect the right of 
 a creditor of a partnership, who extended credit or whose claim 
 arose after the filing and before a cancellation or amendment of 
 the certificate, to enforce such liabilities. 
 
 (4) When a contributor has rightfully received the return in 
 whole or in part of the capital of his contribution, he is neverthe- 
 
452 APPENDIX C 
 
 less liable to the partnership for any sum, not in excess of such 
 return with interest, necessary to discharge its liabilities to all 
 creditors who extended credit or whose claims arose before such 
 return. 
 
 Section 18. [Nature of Limited Partner's Interest in Part- 
 nership.] A limited partner's interest in the partnership is 
 personal property. 
 
 Section 19. [Assignment of Limited Partner's Interest.] 
 (1) A limited partner's interest is assignable. 
 
 (2) A substituted limited partner is a person admitted to all 
 the rights of a limited partner who has died or has assigned his 
 interest in a partnership. 
 
 (3) An assignee, who does not become a substituted limited 
 partner, has no right to require any information or account of 
 the partnership transactions or to inspect the partnership books; 
 he is only entitled to receive the share of the profits or other com- 
 pensation by way of income, or the return of his contribution, to 
 which his assignor would otherwise be entitled. 
 
 (4) An assignee shall have the right to become a substituted 
 limited partner if all the members (except the assignor) consent 
 thereto or if the assignor, being thereunto empowered by the cer- 
 tificate, gives the assignee that right. 
 
 (5) An assignee becomes a substituted limited partner when 
 the certificate is appropriately amended in accordance with 
 section 25. 
 
 (6) The substituted limited partner has all the rights and 
 powers, and is subject to all the restrictions and liabilities of his 
 assignor, except those liabilities of which he was ignorant at the 
 time he became a limited partner and which could not be ascer- 
 tained from the certificate. 
 
 (7) The substitution of the assignee as a limited partner does 
 not release the assignor from liability to the partnership under 
 sections 6 and 17 
 
 Section 20. [Effect of Retirement, Death or Insanity of a 
 General Partner.] The retirement, death or insanity of a general 
 partner dissolves the partnership, unless the business is continued 
 by the remaining general partners 
 
 (a) Under a right so to do stated in the certificate, or 
 
 (b) With the consent of all members. 
 
APPENDIX C 453 
 
 Section 21. [Death of Limited Partner.] (1) On the death 
 of a limited partner his executor or administrator shall have all 
 the rights of a limited partner for the purpose of settling his 
 estate, and such power as the deceased had to constitute his 
 assignee a substituted limited partner. 
 
 (2) The estate of a deceased limited partner shall be liable for 
 all his liabilities as a limited partner. 
 
 Section 22. [Rights of Creditors of Limited Partner.] (1) On 
 due application to a court of competent jurisdiction by any judg- 
 ment creditor of a limited partner, the court may charge the 
 interest of the indebted limited partner with payment of the 
 unsatisfied amount of the judgment debt; and may appoint a 
 receiver, and make all other orders, directions, and inquiries which 
 the circumstances of the case may require. 
 
 In those states where a creditor on beginning an action can attach 
 debts due the defendant before he has obtained a judgment against 
 the defendant it is recommended that paragraph 1 of this section read 
 as follows : 
 
 On due application to a court of competent jurisdiction by any 
 creditor of a limited partner, the court may charge the interest 
 of the indebted limited partner with payment of the unsatisfied 
 amount of such claim ; and may appoint a receiver, and make all 
 other orders, directions, and inquiries which the circumstances 
 of the case may require. 
 
 (2) The interest may be redeemed with the separate property 
 of any general partner, but may not be redeemed with partnership 
 property. 
 
 (3) The remedies conferred by paragraph (1) shall not be 
 deemed exclusive of others which may exist. 
 
 (4) Nothing in this act shall be held to deprive a limited part- 
 ner of his statutory exemption. 
 
 Section 23. [Distribution of Assets.] (1) In settling ac- 
 counts after dissolution the liabilities of the partnership shall 
 be entitled to pajonent in the following order : 
 
 (a) Those to creditors, in the order of priority as provided 
 by law, except those to limited partners on account of their 
 contributions, and to general partners, 
 
 (6) Those to limited partners in respect to their share of the 
 
454 APPENDIX c 
 
 profits and other compensation by way of income on their con- 
 tributions, 
 
 (c) Those to limited partners in respect to the capital of their 
 contributions, 
 
 (d) Those to general partners other than for capital and profits, 
 
 (e) Those to general partners in respect to profits, 
 (/) Those to general partners in respect to capital. 
 
 (2) Subject to any statement in the certificate or to subse- 
 quent agreement, limited partners share in the partnership assets 
 in respect to their claims for capital, and in respect to their claims 
 for profits or for compensation by way of income on their con- 
 tributions respectively, in proportion to the respective amounts 
 of such claims. 
 
 Section 24. [When Certificate shall be Cancelled or Amended.] 
 (1) The certificate shall be cancelled when the partnership is 
 dissolved or all limited partners cease to be such. 
 
 (2) A certificate shall be amended when 
 
 (a) There is a change in the name of the partnership or in 
 the amount or character of the contribution of any limited 
 partner, 
 
 (b) A person is substituted as a limited partner, 
 
 (c) An additional limited partner is admitted, 
 
 (d) A person is admitted as a general partner, 
 
 (e) A general partner retires, dies, or becomes insane, and the 
 business is continued under section 20. 
 
 (/) There is a change in the character of the business of the 
 partnership, 
 
 (g) There is a false or erroneous statement in the certificate, 
 
 (h) There is a change in the time as stated in the certificate 
 for the dissolution of the partnership or for the return of a contri- 
 bution, 
 
 (i) A time is fixed for the dissolution of the partnership, or the 
 return of a contribution, no time having been specified in the 
 certificate, or 
 
 (j) The members desire to make a change in any other state- 
 ment in the certificate in order that it shall accurately represent 
 the agreement Ijetween them. 
 
 Section 25. [Requirements for Amendment and for Cancella- 
 tion of Certificate.] (1) The writing to amend a certificate shall 
 
APPENDIX C 455 
 
 (a) Conform to the requirements of section 2 (la) as far as 
 necessary to set forth clearly the change in the certificate which 
 it is desired to make, and 
 
 (b) Be signed and sworn to by all members, and an amend- 
 ment substituting a limited partner or adding a limited or general 
 partner shall be signed also by the member to be substituted or 
 added, and when a limited partner is to be substituted, the amend- 
 ment shall also be signed by the assigning limited partner. 
 
 (2) The writing to cancel a certificate shall be signed by all 
 members. 
 
 (3) A person desiring the cancellation or amendment of a 
 certificate, if any person designated in paragraphs (1) and (2) as 
 a person who must execute the writing refuses to do so, may 
 petition the [here designate the proper court] to direct a cancella- 
 tion or amendment thereof. 
 
 (4) If the court finds that the petitioner has a right to have 
 the writing executed by a person who refuses to do so, it shall 
 order the [here designate the responsible official in the office 
 designated in section 2] in the office where the certificate is re- 
 corded to record the cancellation or amendment of the certifi- 
 cate ; and where the certificate is to be amended, the court shall 
 also cause to be filed for record in said office a certified copy of its 
 decree setting forth the amendment. 
 
 (5) A certificate is amended or cancelled when there is filed 
 for record in the office [here designate the office designated in 
 section 2] where the certificate is recorded 
 
 (a) A writing in accordance with the provisions of paragraph 
 (1), or (2) or 
 
 (b) A certified copy of the order of court in accordance with 
 the provisions of paragraph (4). 
 
 (6) After the certificate is duly amended in accordance with 
 this section, the amended certificate shall thereafter be for all 
 purposes the certificate provided for by this act. 
 
 Section 26. [Parties to Actions.] A contributor, unless he 
 is a general partner, is not a proper party to proceedings by or 
 against a partnership, except where the object is to enforce a 
 limited partner's right against or liability to the partnership. 
 
 Section 27. [Name of Act.] This act may be cited as The 
 Uniform Limited Partnership Act. 
 
456 APPENDIX C 
 
 Section 28. [Rules of Construction.] (1) The rule that 
 statutes in derogation of the common law are to be strictly con- 
 strued shall have no application to this act. 
 
 (2) This act shall be so interpreted and construed as to effect 
 its general purpose to make uniform the law of those states which 
 enact it. 
 
 (3) This act shall not be so construed as to impair the obliga- 
 tions of any contract existing when the act goes into effect, nor 
 to affect any action or proceedings begun or right accrued before 
 this act takes effect. 
 
 Section 29. [Rules for Cases not Provided for in this Act.] 
 In any case not provided for in this act the rules of law and equity, 
 including the law merchant, shall govern. 
 
 Section 30.^ [Provisions for Existing Limited Partnerships.] 
 (1) A limited partnership formed under any statute of this state 
 prior to the adoption of this act, may become a limited partnership 
 under this act by complying with the provisions of section 2; 
 provided the certificate sets forth 
 
 (a) The amount of the original contribution of each limited 
 partner, and the time when the contribution was made, and 
 
 (6) That the property of the partnership exceeds the amount 
 suflBcient to discharge its liabilities to persons not claiming as 
 general or limited partners by an amount greater than the sum 
 of the contributions of its limited partners. 
 
 (2) A limited partnership formed under any statute of this 
 state prior to the adoption of this act, until or unless it becomes 
 a limited partnership under this act, shall continue to be gov- 
 erned by the provisions of [here insert proper reference to the 
 existing limited partnership act or acts], except that such part- 
 nership shall not be renewed unless so provided in the original 
 agreement. 
 
 Section 31.^ [Act (Acts) Repealed.] Except as affecting 
 existing limited partnerships to the extent set forth in section 
 30, the act (acts) of [here designate the existing limited part- 
 nership act or acts] is (are) hereby repealed. 
 
 'Sections 30, 31, will be omitted in any state which has not a limited 
 partnership aot. 
 
INDEX 
 
INDEX 
 
 [References are to Pages] 
 
 ABNORMAL PARTNERSHIP IN TRADE, 199. 
 ABSCONDING PARTNER, 
 
 actions against, 261. 
 ACCOUNT STATED BY A PARTNER, 245. 
 ACCOUNTING, 
 
 right of separate creditor to, 277-279. 
 
 common law action for, 331. 
 
 claims by one partner against another not involved in, 331. 
 
 the right to an, 360-363. 
 
 right to, not a test of partnership, 351. 
 
 rules of distribution upon an, 353-364. 
 ACTIONS, 
 
 parties to, 70. 
 
 by and against a partnership, 83, 93. 
 
 by defrauded partner, 174. 
 
 by firm against a partner, 171. 
 
 power of a partner to carry on, 185, 186. 
 
 after the bankruptcy of a partner, 300. 
 
 at law between partners, 330-336. 
 
 at law between firms with a common member, 337. 
 
 at law between a firm and a partner, 338. 
 ADMINISTRATOR. See Executor. 
 ADMISSIONS BY A PARTNER, 92, 202-204. 
 ADULT PARTNER, 
 
 rights of, against infant partner, 99. 
 ADVANCES BY A PARTNER, 368-361. 
 AGENCY OF A PARTNER, 176-178. 
 AGREEMENT FOR A PARTNERSHIP, 36-38. 
 APPROPRIATION OF PAYMENTS, 127. 
 ARBITRATION, 
 
 power of a partner to submit firm dispute to, 186. 
 ARREST, 
 
 by a partner, UabiUty for, 215. 
 
 of a partner, 220. 
 ASSIGNMENT, 
 
 of one partner's share, 7. 
 
 of firm property in trust by one partner, 130-132, 142. 
 
 by limited partnership, 413. 
 ASSIMILATION OF DIFFERENT VIEWS, 
 
 attempts at, 3. 
 
 459 
 
460 INDEX 
 
 ASSUMPTION BY FIRM OF SEPARATE DEBTS, 121. 
 ATTACHMENT, 
 
 upon firm property, 253. 
 
 upon a partner's interest in firm property, 264. 
 
 upon a partner's separate property, 255. 
 ATTEMPTS TO ESCAPE PARTNERSHIP LIABILITIES, 19, 38, 65. 
 ATTORNEYS, 
 
 not a trading firm, 183, 197. 
 
 authority of a partner to employ, 185. 
 AUTHORITY OP A PARTNER, 125-132, 176-250. 
 
 B 
 BANKRUPTCY, 
 
 a firm has but one joint fund, 85. 
 
 of a firm with an infant member, 97. 
 
 of surviving partner, 147. 
 
 claims of joint creditors in, 153. 
 
 of firm, 287. 
 
 duties of trustee in, 287-302. 
 
 of holding out partners, 287-290. 
 
 doctrine of reputed ownership in, 288-291. 
 
 trustee in, may set aside fraudulent transfers, 291. 
 
 when firm creditors may prove against purchasing partner, 291-293. 
 
 no joint estate and no living solvent partner, 293-295. 
 
 exempt property in, 296. 
 
 of a partner, 296-304. 
 
 transfer of firm property, before, 299. 
 
 order of proofs and marshalling in, 304-315. 
 
 works dissolution of firm, 341. 
 
 of limited partnerships, 402, 409, 416. 
 BLACKSTONE'S ALLUSIONS TO PARTNERSHIP LAW, 1. 
 BONA-FIDE TRANSFERS OF FIRM PROPERTY, 120-125. 
 BURDEN OF PROOF, 
 
 that negotiable paper is binding on firm, 90-93, 190. 
 BUSINESS IN COMMON, 20-35. 
 
 C 
 
 CAPITAL, 
 
 agreement as to ownership of, 355. 
 
 repaying, upon an accounting, 362-364. 
 
 of limited partnerships, 392-398, 405-408. 
 COLLUSION, 
 
 between partner and third persons, 174, 175. 
 COMMON OWNERSHIP v. PARTNERSHIP, 25-3§. 
 COMPENSATION, RIGHT OF A PARTNER TO, 325. 
 COMPETITION WITH FIRM BY A PARTNER, 322. 
 COMPROMISING FIRM CLAIMS, 188. 
 
 CONSIDERATION IN PARTNERSHIP CONTRACTS, 9, 119. 
 CONTRACT, ITS RELATION TO PARTNERSHIP, 5-19. 
 
 if contract unenforceable, 9-15. 
 
 why contract is required, 7. 
 
INDEX 461 
 
 CONTRACT, ITS RELATION TO PARTNERSHIP — Continued. 
 
 consideration essential, 9. 
 
 contractual incapacity of parties, 10. 
 
 effect of fraud in, 11. 
 
 specific performance of, 13. 
 
 law governing, 13. 
 
 how affected by statute of frauds, 14. 
 
 construction of partnersMp contract, 17. 
 
 express contract not necessary, 16-18. 
 CONTRACTS OF A FIRM, 
 
 in name of one partner, 91. 
 
 nature of, 166-172. 
 
 effect of partner's death on, 166. 
 
 instances of dissoluble, 167-169. 
 
 not to engage in business, 169, 170. 
 
 with its members, 170. 
 
 performing, after dissolution, 236. 
 
 terminated by dissolution, 238. 
 CONTRIBUTION AMONG PARTNERS, 
 
 nature of right to, 326. 
 
 modified by contract, 327. 
 
 incidental to a partnership settlement, 328. 
 
 may be denied, 328. 
 
 does not belong to buyer of partner's share, 330. 
 
 when some are insolvent, 363. 
 CONVERSION, 
 
 of real estate into personalty, 106-112. 
 
 of firm property into separate property of a partner, 114-124. 
 
 agreement for, 115, 11 6. 
 
 requires good faith, 116. 
 
 of firm debt into separate debt of a partner, 162. 
 
 by firm of a partner's property, 308. 
 
 by a partner of firm property, 313. 
 CO-OPERATIVE ASSOCIATIONS AS PARTNERSHIPS, 20, 38-41. 
 CORPORATIONS, DEFECTIVELY ORGANIZED, 44r^9. 
 COSTS OF PARTNERSHIP ACCOUNTING, 370. 
 COURSE OF PARTNERSHIP BUSINESS, 179, 197, 198, 201, 224, 225. 
 CREDITORS, RIGHTS OF FIRM, 
 
 of partnership by estoppel, 77-79. 
 
 of firm having an infant member, 95-99. 
 
 against firm realty, 109. 
 
 to prevent conversion of firm property, 116-124. 
 
 to follow proceeds of firm property, 124. 
 
 against surviving partner, 143-150. 
 
 separate creditor of partner when entitled to, 157-159. 
 
 how affected by a partner's retirement, 163-166. 
 
 how affected by a partner's death, 166-169. 
 
 at law, 251-279. 
 
 Louisiana doctrine, 253. 
 
 effect of novation on, 256-260. 
 
 after judgment against one partner, 260-263. 
 
 against dormant partners, 264. 
 
462 
 
 INDEX 
 
 CREDITORS, RIGHTS OF FIRM — Continued. 
 
 to retain specific legal liens, 279, 299. 
 
 in equity, 274, 280-285. 
 
 to capital of retired partner, loaned to new firm, 290. 
 
 to prove in bankruptcy against a partner, 291. 
 
 when no joint estate and no living solvent partner, 293-295, 318. 
 
 holding joint and several obligations, 305. 
 
 when a partner is entitled to, 310-312. 
 
 against the estate of a deceased partner, 316-319. 
 
 against Kmited partnerships, 389-417. 
 CREDITORS, RIGHTS OF SEPARATE, 
 
 in case of partners by estoppel, 78-82. 
 
 how affected by his ignorance, 128. 
 
 at law against separate estate, 270. 
 
 at law against firm property, 270-279. 
 
 to levy execution on firm property, 271. 
 
 after a levy of execution, 272. 
 
 rights of purchaser, 273. 
 
 to resort to equity, 274. 
 
 to garnishment proceedings, 275. 
 
 statutory modifications of, 275-277. 
 
 to an account, 277. 
 
 to retain specific legal liens, 279, 299. 
 
 in equity, 280-286. 
 
 when the firm is entitled to, 313, 314. 
 
 when a copartner is entitled to, 314, 315. 
 
 assignee'of creditor partner entitled to, 315. 
 
 against estate of deceased partner, 316-319. 
 
 subordinate to copartner's equities, 364. 
 CRIMINAL PROSECUTIONS, 
 
 by a partner, liability for, 216. 
 
 .D 
 DAMAGES, 
 
 for partner's failure to devote himself to firm business, 325. 
 
 for wrongful conduct of copartner, 335, 336. 
 
 for premature dissolution of partnership, 346. 
 DEATH, 
 
 of a member of joint stock company, 39. 
 
 of a member of an ordinary firm, 8, 139, 148-151, 314r-319, 341. 
 
 of a member of a limited partnership, 386, 416. 
 DEBT OF FIRM, 
 
 and joint debt of partners, 152. 
 
 is debt of each member, 155. 
 
 joint debt of partners as a, 152, 154. 
 
 separate debt of a partner for firm benefit, 157-161. 
 
 converted into separate debt, 162-166. 
 
 assumed by one partner, 259. 
 
 discharge of bankrupt partner from, 302. 
 DEBT OF PARTNER FOR FIRM BENEFIT, 157-161. 
 DECISIONS, PAUCITY OF EARLY, 1. 
 DECLARATIONS BY A PARTNER, 202-204, 245. 
 
INDEX 463 
 
 DEED, 
 
 name of grantee in, 99-101. 
 
 of partner's interest in realty, 137, 138. 
 
 of a partner as collateral to firm obligation, 159, 160. 
 
 unauthorized, in firm name, 160-162. 
 
 power of partner to execute, 204^208. 
 DEFAMATION, 
 
 against a firm, 173. 
 
 by a partner, firm's liability for, 219-221. 
 DEFINITIONS OF PARTNERSHIP, 21, 22, 23. 
 DELECTUS PERSONABUM, 
 
 importance of, 8. 
 
 excludes personal representative of deceased partner, 8. 
 
 none in joint stock companies, 39. 
 
 its effect upon rights of surviving partner, 142. 
 DEMAND OF PAYMENT OF FIRM NOTE, 249. 
 DISCHARGE IN BANKRUPTCY, 
 
 effect of, 302-304. 
 DISSENT OF A PARTNER, 231-234. 
 DISSOLUTION, 
 
 when death of partner does not work a, 40. 
 
 using old firm name after, 76. 
 
 impUed authority of partners after, 235-250. 
 
 by operation of law, 340-342. 
 
 by act of the parties, 342-346. 
 
 by the court, 346-349. 
 
 of limited partnerships, 416, 417. 
 DISTRIBUTION, RULES OF, 
 
 firm estate to firm creditor; separate estate to separate creditors, 
 353-355. 
 
 no joint estate and no hving solvent partner, 293-295. 
 
 when creditor holds joint and several obligations, 305-308. 
 
 when partner may prove against firm estate, 307-311. 
 
 upon an accounting, 353-369. 
 DORMANT PARTNER, 
 
 UabiUty of, on paper in firm name, 91-93, 267. 
 
 estoppel on, 128, 129. 
 
 is not an agent of the firm, 176-179. 
 
 remedies against, 264-270. 
 
 termination of habihty of, 266. 
 
 estoppel on, 266. 
 
 who is a, 266-269. 
 
 notice of withdrawal by a, 269. 
 DOUBLE PROOF, RIGHT OF, 305-307. 
 DOWER IN PARTNERSHIP REALTY, 109-111. 
 
 E 
 
 ENTITY, PARTNERSHIP AS AN, 2. 
 EQUITIES OF PARTNERS, 
 
 foundation of creditors' rights, 364. 
 
 how adjusted, 364-367. 
 
464 INDEX 
 
 EQUITY, 
 
 recognizes ownership in Ann, 101. 
 
 enables firm to follow proceeds of its property, 102. 
 
 permits survivor to dispose of firm realty, 103-107. 
 
 position of a surviving partner in, 140-146.. 
 
 relief in, against execution by separate creditor, 274. 
 
 rules of, in administering &m and separate estates, 280-285. 
 
 rules of, when statute silent, 285. 
 
 power of, over limited partnerships, 409. 
 EQUITY OP A PARTNER, 115-118, 152. 
 
 is a property right of firm creditors, 120-124, 152-155. 
 ESTOPPEL, 
 
 partner by, 68-70. 
 
 by use of old firm name, 75. 
 
 on individual creditors, 81. 
 
 on partners, 128-130, 201. 
 
 on creditors of defective corporations, 44-49. 
 
 on creditors of general partnerships, 259. 
 
 on dormant partner, 266. 
 
 on creditors of limited partnership, 400-402. 
 
 See Partnership by Estoppel. 
 EXECUTION, 
 
 under a judgment against the firm, 251. 
 
 under a judgment against a partner, 270-277. 
 EXECUTOR OF DECEASED PARTNER, 
 
 cannot be made a partner without his consent, 8, 9. 
 
 in joint stock companies, 41. 
 
 in ordinary partnerships, 64. 
 
 rights of, against surviving partner, 142-148. 
 EXECUTORY AGREEMENT FOR CONVERSION, 115. 
 EXEMPT PROPERTY, 112-114. 
 EXPENSES OP WINDING UP, 244. 
 
 P 
 
 FARMING ON SHARES, 31. 
 
 FICTITIOUS SPECIAL PARTNER, 388. 
 
 FIDUCIARY RELATIONS BETWEEN PARTNERS, 320-324. 
 
 FIRM, ASSUMPTION BY OF SEPARATE DEBTS, 121. 
 
 FIRM, CHARACTERISTICS OF A, 82-98. 
 
 as an association of persons, 82. 
 
 as an entity, 83, 85, 94. 
 
 as two entities, 84, 85. 
 
 as a status, 86. 
 
 name not essential, 87-93. 
 
 not an entity, 82, 86. 
 
 individual signatures equivalent to firm name, 89-91. 
 
 death of a partner is not death of his firm, 94. 
 
 infant members of a firm, 95-99. 
 
 its title to firm property, 99-113. 
 
 as grantor in deed, 100. 
 
 may deal with its members, 116. 
 
INDEX 465 
 
 FIRM, CHARACTERISTICS OP A — Continued. 
 
 transferring its title, 114^132. 
 
 firm title survivors, 146, 147. 
 
 its debts, 152-167, 162. 
 
 nature of its contracts, 166-172. 
 
 a firm as a partner, 171. 
 
 injuries to a firm, 173-175. 
 
 a partner's implied powers, 176-250. 
 
 bankruptcy of a firm, 287-296. 
 
 bankruptcy of a partner, 296-304. 
 
 firm insolvent, though members solvent, 303. 
 FIRM NAME, 82 n., 87-93. 
 
 limitations on choice of, 89. 
 
 is name of each member, 89, 90. 
 
 assent to change of, 91. 
 
 name of one partner as a, 91-93. 
 FORMATION OF A PARTNERSHIP, 5-46, 389-402. 
 FORMER DEALERS, 75. 
 FRAUD, 
 
 partnership induced by, 11. 
 
 upon firm creditors, 120-124. 
 
 upon separate creditors, 155. 
 
 by a partner, liability for, 217-221. 
 
 notice of to copartner, 227. 
 
 upon the firm by a partner, 313. 
 FRAUD UPON A COPARTNER, 
 
 inducing the partnership, 11. 
 
 by a survivor, 143, 144. 
 
 by means of collusion with others, 173-175, 209. 
 
 by other partners, 309, 320-323. 
 
 as a cause for dissolution, 348. 
 FRAUDULENT TRANSFER OF FIRM PROPERTY, 119-124, 144, 
 
 291, 299. 
 FRAUDULENT USE OF FIRM NAME, 88. 
 
 G 
 
 GARNISHMENT BY CREDITOR OF A PARTNER, 275. 
 GOOD FAITH, 
 
 in firm transfers, 116-124. 
 
 majority must act in, 230. 
 
 of partner towards copartner, 320-324. 
 GOOD WILL, . 
 
 rules relating to are modem, 369. ^ 
 
 definitions of, 370-372. 
 
 is property of the firm, 372. 
 
 may not be valuable, 373. 
 
 may be dissipated, 374. 
 
 should be converted into cash, 375. 
 
 treatment of, by surviving partner, 375. 
 
 rights of purchaser of, 376-379. 
 
 rights of seller of, 379-381. 
 
466 INDEX 
 
 GOOD WILL — Continued. 
 
 partnership stipulations oonoerning, 381. 
 
 valuation of, 382. 
 GRANTEE, 
 
 name of, 99-101. 
 
 H 
 
 HOLDING OUT AS A PARTNER, 
 what amounts to, 72. 
 
 I 
 ILLEGALITY, 
 
 of firm business, 12, 315, 356-358. 
 
 of a partner's acts, 208, 211-230. 
 INCAPACITY TO CONTRACT, 10. 
 INCONGRUOUS ELEMENTS, 1-4. 
 INDISSOLUBILITY OF PARTNERSHIPS, 344-346. 
 INFANCY OF A PARTNER, 10, 95-99. 
 INJURIES TO A FIRM, 173-175. 
 INNOCENT PARTNER, LIABILITY OF, 209-228. 
 INSANITY OF A PARTNER, 347. 
 INTENTION OF PARTIES, 6, 19. 
 INTEREST, 
 
 stipulations for extra statutory, 53. 
 
 on a partner's advances, 360. 
 
 on a partner's capital, 363. 
 
 payable by a debtor partner, 367. 
 
 receivable by a special partner, 406-408. 
 ITALIAN BANKERS AS PARTNERS, 1. 
 
 J 
 
 JOINT DEBTORS, 
 
 partners are, 152. 
 
 statutory modification, 318. 
 JOINT DEBTS OF PARTNERS, 
 
 not distinguishable from firm debts, 152. 
 
 are distinguishable from firm debts, 153. 
 JOINT STOCK COMPANIES, 
 
 original objects of, 38. 
 
 legality of, 38. 
 
 no delectus personarum in, 39. 
 
 liability of shareholders of, 40-42. 
 
 liability of estate of deceased shareholder, 41. 
 
 statutes relating to, 43. 
 
 implied authority of members of, 179-204. 
 JUDGMENT, 
 
 against surviving partner, effect of, 146. 
 
 against one partner, effect of, 260-263. 
 
 in favor of separate creditor, value of, 270. 
 
 estoppel by, 401. 
 
 confessed by limited partnership, 410. 
 JUS ACCRESCENDI INTER MEBCATOBES, 139. 
 
INDEX 467 
 
 KNOWLEDGE OP ONE PARTNER, 
 when imputable to the firm, 226. 
 when not imputable to a copartner, 227. 
 
 L 
 LAND, 
 
 partnership in, 15, 28-33. 
 
 deed of, to a firm, 100. 
 
 how far, is treated as personalty, 100-113. 
 
 in name of one partner, purchaser of, 101. 
 
 partition of, 103, 104. 
 
 dower in, 109-111. 
 LAW MERCHANT, AND PARTNERSHIP, 2, 29, 34. 
 LEASE, 
 
 liability of firm on, 198. 
 LEVANT MERCHANTS NOT PARTNERS, 17 n. 
 LIABILITY OF A PARTNER. See Partners and Poweeb op 
 Partners. 
 
 of surviving partner, 150, 151. 
 LIBEL, 
 
 against a firm, 173. 
 
 by a firm, or its members, 219-221. 
 LICENSE TO A FIRM, EFFECT OF, 170. 
 LIEN, 
 
 of partners, 118, 123. 
 
 of creditors, 120. 
 
 waiver of, 120-123. 
 
 reservation of hen of partners by agreement, 124. 
 
 specific legal, 279. 
 
 on firm property before bankruptcy, 299. 
 
 none for non-partnership indebtedness, 365. 
 LIMITED PARTNERSHIP, 
 
 of statutory origin, 383. 
 
 distinctive characteristic of, 384. 
 
 associations not corporations, 384r-386. 
 
 purpose of legislation relating to, 386. 
 
 who may compose a, 387. 
 
 requisites to formation of, 389-400. 
 
 contents of certificate, 389. 
 
 statutes authorizing, how construed, 389, 396. 
 
 the partnership name, 390. 
 
 nature of its business, 391. 
 
 contribution of capital, 392-397. 
 
 contribution of property other than cash, 395. 
 
 when contribution must be made, 396. 
 
 registration of certificate, 397. 
 
 publication of the certificate, 398. 
 
 notice to creditors, 400. 
 
 creditors may be estopped, 400-402. 
 
 defective organization and firm contracts, 402. 
 
468 INDEX 
 
 LIMITED PARTNERSHIP — Continued. 
 
 removal to another county, 402. 
 
 renewal certificates, 403-405. 
 
 ante-partnership negotiations, 405. 
 
 partnership capital, 405-408. 
 
 withdrawal of special partner's capital, 406-408. 
 
 preferences forbidden, 409, 410. 
 
 transformed into general partnership, 411-413. 
 
 interference by special partner, 411. 
 
 alteration by special partner, 412. 
 
 powers of general partners, 413-415. 
 
 creditors of general partners, 413-415. 
 
 mortgagee of general partner's interest, 413. 
 
 assignment by general partners, 413. 
 
 special partner as a firm creditor, 414. 
 
 creditors and assignees of limited partner, 415. 
 
 dissolution of a, 416, 417. 
 
 New York Statute as to, 419-426. 
 
 uniform statute as to, 446-456. 
 LIQUIDATING PARTNER, 250. 
 LOSSES, 
 
 sharing of, as a test of partnership, 66. 
 
 how borne upon an accounting, 356-361. 
 LUNACY OF A PARTNER, 347. 
 
 M 
 
 MAJORITY, POWERS OF, 228-234. 
 MALICIOUS LEGAL PROCEEDINGS, 213, 219. 
 MANAGERS OF DEFECTIVE CORPORATIONS, 
 
 liabiUty of, 48. 
 MARRIAGE OF COPARTNERS, 342. 
 MARRIED WOMEN AS PARTNERS, 10, 342, 387. 
 MARSHALLING FIRM AND SEPARATE ASSETS, 305-315. 
 MERCANTILE CONCEPTION OF A PARTNERSHIP, 3, 156. 
 MERCHANTS, 
 
 courts of, 2. 
 
 law of, did not recognize partnership in land, 28. 
 
 customs of, 139. 
 MERGER OF FIRM LIABILITY, 
 
 in judgment against one partner, 262-264. 
 MINING PARTNERSHIP, 200. 
 MISAPPLICATION OF PROPERTY, 
 
 of firm to partner's debt, 127. 
 
 firm's liability for a partner's, 221-226. 
 MORTGAGE, 
 
 by a partner of firm property, 126. 
 
 by a partner of his share, 137. 
 
 N 
 
 NATURE OF A PARTNERSHIP, 82-98. 
 it is an entity, 83, 85, 94. 
 
INDEX 469 
 
 NATURE OF A PARTNERSHIP— Continued 
 
 it is not an entity, 82, 86. 
 
 as a status, 86. 
 
 death of a partner is not death of the firm, 94. 
 
 See FiEM, Characteristics op. 
 NEGOTIABLE PAPER, 
 
 in the name of one partner, 159. 
 
 implied power of partner to issue, 189-202. 
 
 after dissolution of firm, 243, 248, 249. 
 NOMINAL PARTNER, 
 
 as party litigant, 70. 
 
 who is a, 68-73. 
 NON-TRADING FIRM, 
 
 implied authority of members of, 185-198. 
 
 distinguished from trading firm, 193-197. 
 
 examples of, 195-197. 
 NOTICE, 
 
 retiring partner must give, 73. 
 
 to former dealers, 75. 
 
 to firm creditors that retiring partner is surety, 164. 
 
 of fraud by copartner, 227. 
 
 of limitations on a partner's power, 234. 
 
 of dormant partner's withdrawal, 269. 
 
 to creditors of Umited partnership, 400. 
 NOVATION, 
 
 necessary to convert firm debt into separate debt, 162. 
 
 effect of, 256-259. 
 
 by implied agreement, 256. 
 
 by express agreement, 258. 
 
 by estoppel, 259. 
 
 
 
 OUSTER, 
 
 actions for, of partner, 332. 
 OUTLAWRY, 262. 
 
 P 
 PARTITION, 
 
 rule in England, 103, 104. 
 
 rule in United States, 103-106. 
 PARTNER, DUTY OF, TO HIS COPARTNERS, 
 
 to exercise the utmost good faith, 320. 
 
 to account for all profits, 322. 
 
 to refrain from competition with the firm, 322. 
 
 to devote himself to the firm business, 323. 
 
 to make contribution, 326-330. 
 PARTNER, SHARE OP A, 120. 
 
 sale of, does not affect firm title, 132-137. 
 
 conveyance of, not a void instrument, 138. 
 
 rights of assignee of, 138 n. 
 
 rights of purchaser of, under execution, 270-279. 
 
 in an illegal partnership, 315. 
 
 habiMty of purchaser of, to contribution, 330. 
 
470 INDEX 
 
 PARTNERS, 
 
 who are not, 5-7. 
 
 married women as, 10. 
 
 alien enemies as, 10. 
 
 convicts and corporations as, 10. 
 
 induced by fraud, 11. 
 
 for an illegal purpose, 12. 
 
 common owners are not, 23-33. 
 
 participants in pools are not, 35. 
 
 promoters are not, 36. 
 
 managers of defectively organized corporations as, 44-49. 
 
 in profits but not in business, 67. 
 
 by estoppel, 68-79. 
 
 retiring, must give notice, 73-76. 
 
 liability of partner by estoppel for torts, 76. 
 
 liability of dormant, 91-93. 
 
 admissions by, 93. 
 
 rights of adult against infant, 99. 
 
 not tenants in common, 102-106. 
 
 creditor partner's hen on firm realty, 109. 
 
 equity and lien of, 114-119. 
 
 powers of, 125-132. 
 
 position of surviving, 139-151. 
 
 firms as, 171. 
 
 disabilities of, extend to their firms, 173. 
 
 powers of, 176-252. 
 
 may be estopped to deny copartner's authority, 201. 
 
 liability for torts of copartners, 209-230. 
 
 punishment of, 222. 
 
 tort Uability of, 263. 
 
 dormant, remedies against, 264-269. 
 
 bankruptcy of individual, 296-304. 
 
 liability of, on joint and several obUgations, 305-307. 
 
 liability of, after death of a copartner, 150, 316-319. 
 
 duties of, inter se, 320-330. 
 
 liabilities of, inter se, 320-338. 
 PARTNERSHIP, 
 
 incongruous elements in, 2. 
 
 mercantile conception of, 2, 5. 
 
 results from contract, 5-19. 
 
 consequences of unenforceable contract, 9-15. 
 
 induced by fraud, 11. 
 
 for an illegal purpose, 12. 
 
 express contract for unnecessary, 17. 
 
 popular use and legal signification, 18. 
 
 specific intent to form, not essential, 19. 
 
 definitions of, 21-23. 
 
 more than a common enterprise, 23. 
 
 more than common ownership, 25-33. 
 
 no longer limited to merchandizing, 25. 
 
 part ownership of vessels not a, 27. 
 
 in land, 15, 28-33. 
 
INDEX 471 
 
 PARTNERSHIP — Continued. 
 
 farming on shares not generally a, 31. 
 
 managing and improving land not a business, 32, 
 
 common business with a view of profit is, 33. 
 
 clubs and societies differ from a, 34. 
 
 pooling arrangement is not, 35. 
 
 an association of promoters is not, 36. 
 
 an unexecuted agreement for, 36-38. 
 
 joint stock company as a, 38-43. 
 
 trust estates aS, 43. 
 
 defectively organized corporation as a, 44-49. 
 
 as to third persons, tests of, 50-68. 
 
 by estoppel, 68-80. 
 
 no quasi, 79-81. 
 
 nature of a, 82-98. 
 
 suits by and against a, 93. 
 
 acquires title to an infant's contribution, 96. 
 
 may convey its title to a partner, 114-124. 
 
 how affected by death of a partner, 139-149. 
 
 nature of its contracts, 166-172. 
 
 licenses to, 170. 
 
 injuries to a, 173-175. 
 
 dissolution of, 340-349. 
 
 at will, 343. 
 
 for a fljced term, 344. 
 
 distribution of property of, 353-368. 
 
 good wiU of a, 369-381. 
 
 limited partnership is a true, 385. 
 PARTNERSHIP BY ESTOPPEL, 68-81. 
 
 holding out to the world as a, 69. 
 
 nominal partner as a party litigant, 70. 
 
 holding out is a question of fact, 71-73. 
 
 using old firm name, 75-76. 
 
 rights of firm creditors against, 77-81. 
 
 bankruptcy of, 287. 
 PARTNERSHIP LAW, 
 
 is a modern development, 1. 
 
 incongruous elements in, 2. 
 
 Roman law a source of, 2, 5, 9 n. 
 
 law merchant a source of, 2. 
 
 paucity of early judicial decisions, 2, 5. 
 
 not a coherent system, 3. 
 
 mercantile view not adopted by common law, 3. 
 
 attempts to systematize, 3-4. 
 
 evolution of, by litigation, 60 n. 
 PART OWNERS OF SHIPS, 27. 
 PAYING DEBTS OF FIRM, 
 
 by applying property, 127. 
 PLEDGE, 
 
 power of partner to, 244. 
 POLLOCK & MAITLAND'S REFERENCE TO PARTNERSHIP, 1. 
 POOLING PROFITS NOT A PARTNERSHIP, 35. 
 
472 INDEX 
 
 POWERS OF PARTNERS, 125-132, 176-252. 
 
 implied from nature of partnership, 176. 
 
 classification of, 177. 
 
 how affected by secret stipulations, 180. 
 
 none to sell for individual purposes, 181. 
 
 in a firm of attorneys, 183. 
 
 to do urgent but unusual acts, 184. 
 
 to buy on credit, 184. 
 
 to hire ser>vants, 185. 
 
 to collect firm debts, 186. 
 
 to institute legal proceedings, 186-188. 
 
 to borrow money, 188-189. 
 
 to issue negotiable paper, 190-202. 
 
 negatived by form of obligation, 200. 
 
 to make admissions and representations, 202-204. 
 
 to execute firm deed, 204-208. 
 
 to render firm liable in tort, 209-229. 
 
 to render firm liable for misapplication of property, 221-226. 
 
 to render firm liable for trust funds, 226-228. 
 
 of majority, 228-234. 
 
 notice of limitations on, 234. 
 
 after dissolution, 235-250. 
 
 in a limited partnership, 400-402. 
 PREFERENCES IN LIMITED PARTNERSHIPS, 409-411. 
 PROFITS, SHARING OF, 
 
 necessary to partnership, 33. 
 
 in pooling arrangements, 35. 
 
 as a test of partnership, 60-64. 
 
 exceptions to old rule, 54-58. 
 
 the modern rule, 59-67. 
 
 upon dissolution, 364. 
 
 when profits are clandestine, 322. 
 PROOF OF CLAIMS, 280-315. 
 PUNISHMENT OF PARTNERS, 220. 
 ^PURCHASER, 
 
 \ of firm property from holder of legal title, 101. 
 \ a partner as a purchaser of firm property, 121-123. 
 
 of firm property as the property of a partner, 128, 129. 
 
 of a partner's share, 133-136. 
 
 of a partner's interest in firm realty, 137. 
 
 of a partner's share under execution, 134. 
 
 rights of, to an account, 276. 
 
 of partnership good will, 376-378. 
 
 QUASI PARTNERS. See Partnership by Estoppel. 
 
 no quasi partnership, 79. 
 QUESTION FOR THE COURT, 
 
 construction of partnership contract, when a, 17-19. 
 
 the scope of a partner's authority as a, 182-187. 
 
 whether a partner is competing with. his firm, 323. 
 
INDEX 473 
 
 QUESTION OF FACT, 
 holding out is a, 71. 
 
 whether a person is a firm creditor is a, 158. 
 the scope of a partner's authority as a, 181-184. 
 whether a partner is competing with his firm, 323. 
 
 R 
 
 RATIFICATION OF PARTNER'S ACTS, 207. 
 REAL PROPERTY, 
 
 partnership in, 15, 28-33. 
 
 title to, how taken, 99-102. , 
 
 under uniform partnership act, 101. \ 
 
 how converted into personalty, 106-111. 
 
 sale of a partner's interest in firm, 137. / 
 
 RELEASE BY A PARTNER, 185, 207-208. 
 REMEDIES SURVIVE, 139. 
 
 RENEWAL OF LIMITED PARTNERSHIP, 403. 
 REPRESENTATIONS BY A PARTNER, 203. 
 REPUTED OWNERSHIP, DOCTRINE OF, 77, 78, 287-292. 
 RESCISSION FOR FRAUD, 12. 
 REVENUE, BREACHES OF, 213. 
 
 ROMAN LAW A SOURCE OF ENGLISH PARTNERSHIP LAW, 
 2, 5, 9 n. 
 
 S 
 
 SALE OF FIRM PROPERTY, 
 
 by the firm, 114^124. 
 
 by a partner, 125-132, 141-144, 179-182, 241. 
 
 including the good will, 374-376. 
 SCOPE OF PARTNER'S AUTHORITY, 125-132. 
 
 to sell firm property, 179-181. 
 
 to incur firm obhgations, 182-201. 
 
 after dissolution of firm, 235-250. 
 
 in limited partnership, 400. 
 SEAL, CONTRACTS UNDER, 128, 159-162, 204-208.' 
 SECURED CREDITORS, RIGHTS OF, 285, 286. 
 SET OFF, 368. 
 SHARE OF A PARTNER, 
 
 what is, 132. 
 
 what passes by sale of, 133-137. 
 SHERIFF, DUTIES AND RIGHTS OF, 
 
 under process against a firm, 261-269. 
 
 under process against a partner, 270-27^^ ' 
 SHIPS, PART OWNERS 01", 27. 
 SOLVENT PARTNER, 
 
 no living, 293. 
 
 and trustee of bankrupt, 297. 
 
 and insolvent firm, 303. 
 SOUTH SEA BUBBLE ACT, 38. 
 SPECIAL PARTNER, 383-417. 
 SPECIALTY, 
 
 unauthorized contract not merged in, 161. 
 
474 INDEX 
 
 SPECIFIC PERFORMANCE OF PARTNERSHIP CONTRACTS, 
 
 13. 
 STATUTE OF FRAUDS, 
 
 its application to partnership, 15, 16. 
 STATUTE OF LIMITATIONS, 
 
 partner's power to waive benefit of, 246-250. 
 STATUTES, 
 
 defining partnership, 21, 22. 
 
 relating to joint stock companies, 43. 
 
 regulating action between a firm and its members, 172. 
 
 defining a partner's agency, 177, 178, 183. 
 
 modifying common law actions against firm, 252, 264. 
 
 Louisiana doctrine, 253. 
 
 modifsring procedure against a partner's share, 275-279. 
 
 modifying liability of deceased partner's estate, 318. 
 
 defining good will, 370. 
 
 relating to limited partnership, 383, 419, 446. 
 SUB-PARTNERS, 67, 68. 
 SURETY, 
 
 surviving partner as a, 151. 
 
 on an unauthorized firm deed, 162. 
 
 retiring partner as a, 163-166. 
 
 for or to a firm, rights of, 168, 169. 
 
 rights of partner as a, in bankruptcy, 311. 
 SURPRISING PERSONS INTO A PARTNERSHIP, 6, 7. 
 SURVIVORSHIP AMONG PARTNERS, 
 
 mercantile rule, 139. 
 
 common law doctrine, 140-147. 
 
 legal remedies and title survive, 140, 146. 
 
 surviving partner not assignee of deceased, 141. 
 
 surviving partner can make a general assignment, 141. 
 
 surviving partner as a trustee, 143. 
 
 fraud by surviving partner, 144. 
 
 disabilities of surviving partner, 145. 
 
 judgment against surviving partner, 146. 
 
 bankruptcy of surviving partner, 147. 
 
 partnership article's may make survivor sole owner, 148. 
 
 liability of survivor, 150, 151. 
 
 power of surviving partner to pledge, 242. 
 
 duty of surviving partner as to good will, 375. 
 
 T 
 
 TENANTS IN COMMON, 
 
 distinguished from partners, 24-33. 
 
 partners are not, 94, 104, 105. 
 
 purchase of partner's share and copartners are not, 273. 
 
 solvent partner and trustee of bankrupt as, 297. 
 TENURE OF PARTNERS, 
 
 at common law, 102-111. 
 
 under Uniform Partnership Act, 3, 109.- 
 TERM, PARTNERSHIP FOR FIXED, 346-348, 418. 
 
IKDEX ■ 475 
 
 TESTS OF PARTNERSHIP, 50-68. 
 
 sharing profits as a test, 50-53. 
 
 origin of, 51-53. 
 
 its connection .with usury laws, 52, 53. 
 
 sharing gross returns, 54. 
 
 receiving a sum proportioned to profits, 55. 
 
 New York doctrine as to, 57-58. 
 
 intention of the parties as a test, 59-67. 
 
 sharing losses as a test, 66. 
 
 right to an accounting as a test, 351. 
 TITLE TO PARTNERSHIP PROPERTY, 
 
 how taken and held, 99-104. 
 
 not that of tenants in common, 102. 
 
 prevents exemptions out of firm property, 112. 
 
 devested by act of the firm, 114^124. 
 
 may be transferred to a partner, 114, 115. 
 
 devested by act of one partner, 125-129. 
 
 not affected by transfer of a partner's share, 132-139.- 
 
 how affected by death of a partner, 139-149. 
 
 of a limited partnership, 405-408. 
 TORTS, 
 
 liability of quasi partners for, 76. 
 
 against a firm, 173, 174. 
 
 by a partner, habiUty of firm for, 209-228. 
 
 partners are severally liable for, 263. 
 
 by a partner against his copartner, 336. 
 TRADE DEBTS, 309, 313. 
 TRADING FIRMS, 193-196. 
 
 TRESPASS, FIRM'S LIABILITY FOR, 217-223. 
 TRUST ESTATES AS PARTNERSHIPS, 43, 44. 
 TRUST FUNDS, WRONGFUL USE OF, 226-230. 
 TRUSTEE, 
 
 a living partner as a, 101-103. 
 
 surviving partner as a, 144. 
 
 in bankruptcy of a firm, 287-296. 
 
 in bankruptcy of a partner, 296-303. 
 
 U 
 
 UNIFORM PARTNERSHIP ACT, 
 draftsman of, 3. 
 
 partnership tenure under, 4, 298. 
 rescission for fraud under, 12, 369. 
 definition of partnership, 23. 
 and joint stock companies, 42. 
 holding oneself out as a partner, 72. 
 notice by retiring partner, 73, 74. 
 former dealers, 75. 
 no quasi partnerships under, 80. 
 firm may be grantee in deed, 101. 
 rights of firm creditors in firm realty, 109. 
 realty treated as personalty, 112. 
 
476 INDEX 
 
 UNIFORM PARTNERSHIP ACT — Continued. 
 
 exempt property under, 113. 
 
 rights of firm creditors, 116. 
 
 power of sale, 125. 
 
 general assignment, 132. 
 
 assignment of partner's share, 138. 
 
 powers of survivor, 146. 
 
 firm creditors are creditors of those continuing the business, 149. 
 
 partner as surety for firm, 158. 
 
 retiring partner as STirety, 165. 
 
 agency of partner, 177-227. 
 
 estoppel under, 202. 
 
 sealed instruments under, 207. 
 
 tort liability under, 209, 227. 
 
 powers of majority, 227. 
 
 notice of restrictions on partner's authority, 233. 
 
 powers of partner after dissolution, 235, 237, 240. 
 
 partner's admissions, 246. 
 
 novation under, 256, 258. 
 
 tort liability under, 260. 
 
 dormant partner, 269. 
 
 definition of a partner's share, 271, 315. 
 
 execution against a partner, 277. 
 
 firm estate to firm creditors, 282. 
 
 capital of retired partner, 290. 
 
 proof by partner's estate against firm, 310. 
 
 each partner a trustee, 320, 322. 
 
 prohibited competition, 323. 
 
 compensation for winding up, 326. 
 
 contribution and indemnity, 327-330. 
 
 wrongful ouster of partner, 332, 345. 
 
 action for fraud between partners, 337. 
 
 dissolution of partnerships, 340-349. 
 
 accounting under, 350-352. 
 
 rules of distribution, 354, 355. 
 
 burden of losses* 357. 
 
 repaying advances, 359-361. 
 
 repaying capital, 362, 363. 
 
 sharing profits, 364. 
 
 adjusting equities, 365-367. 
 
 text of Act, 427-445. 
 UNIFORM LIMITED PARTNERSHIP ACT, 
 
 modifies existing statutes, 386-389, 391. 
 
 to be liberally construed, 390. 
 
 liabiUty of limited partner, 392, 393, 397, 406, 411. 
 
 contribution of capital, 395, 406. 
 
 publication of certificate, 398. 
 
 amending certificate, 400, 403. 
 
 adding partners, 413. 
 
 mortgagee of general partner, 413. 
 
 limited partner as a creditor, 414-416. 
 
 dissolution under, 416. 
 
INDEX 477 
 
 USURY, 
 
 relation of, to partnership, 51-54. 
 implied power of partner to take, 189, 212. 
 
 W 
 WAIVER, 
 
 of partner's lien, 120-123. 
 
 by dissenting partner, 233. 
 
 of statute of limitations, 246-248. 
 
 of protest, 249. 
 WILL, PARTNERSHIP AT, 343. 
 WINDING UP FIRM AFFAIRS, 
 
 implied authority of partners in, 239-250. 
 
 expenses of, 244. 
 
 copartner's claim for compensation for services in, 325.