i (SnrnpU HauJ ^rl^nnl IGibrary Cornell University Library KF 1375.C71 1861 A practical treatise on the law of partn 3 1924 019 333 578 Cornell University Library The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924019333578 1 10 Washington St., Boston, March 1, 1861. A LIST OF LAW BOOKS, PUBLISHED BY LITTLE, BROWN AND COMPANY, 110 WASHINGTON STREET, BOSTON. tt^ Any of the following boohs will be sent by mail, free of postage, on receipt of the publicatum price. We invite the attention of the Profession to our extensive and continually increasing stock of Law Books, both Foreign and Domestic, embracing every branch and de- partment of Jurisprudence. Catalogues will be sent on receipt of postage. ABBOTT (Charles, Lord Tenterden). — A Treatise of the Law relative to Merchant Ships and Seamen. The Eighth Eng- lish Edition, by Williarii Shee. 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The above Catalogues sent by mail on receipt of postage. ' Boston, March 1, 1861. PRACTICAL TREATISE LAW OF PARTNERSHIP; AN APPENDIX OF FORMS. By JOHN COLLYEE, OF LINCOLN'S INN, ESQ., BAEKISTEK AT LAW. FIFTH AMERICAN FRok THE SECOND ENGLISH EDITION, WITH LARGE ADDITIONS TO THE TEXT AND NOTES, BY J. C. PEEKINS. BOSTON: LITTLE, BROWN AND COMPANY. 18 61. Entered according to Act of Congress, in the year 1853, by LITTLE, BROWN AND COMPANY, In the Clerk's Office of the District Court of the District of Massachusetts. Entered according to Act of Congress, in the year 1861, by LITTLE, BROWN AND COMPANY, In the Clerli's Office of the District Court of the District of Massachusetts. OAMBKIDQK : Allen and Farnh^m, Printers. TO SIMON GREENLEAF, ESQ., LL. D., DAHB PKOFEBBOB OP lAW IN THE UmVERSETY AT CAMBMBGE,— EMINENT ALIKE POE THOEOUGH PEACTICAL AND SCIENTIFIC KNOWLEDGE OP THE LAW, FOR AKDOE, SKILL, AND SUCCESS AS A PE0FES8I0NAL . INSIKnCTOE, AND POK THE PRECISION, ACCURACY, PER- SPICUITT, AND ABILITY OP THE VAEIOUS CON- TEIBCTIONS BY WHICH HE HAS EN- EICHED THE JUEISPEUDENCE OP OUR COUNTRY, THIS AMERICAN EDITION OP COLLYER ON PARTNERSHIP IS INSCRIBED, IN TOKEN OP REGARD AND GRATEFUL REMEMBRANCE, BY HIS FORMER PUPIL, THE EDITOR. PREFACE TO THE THIRD AMERICAN EDITION. The object in preparing the present edition of Colly er on Partnership has been to adapt it more fully to the use and convenience of practitioners and students in the United States. Large additions have been made, both to the text and the notes. Carefully preserving in arrangement and matter all the valuable parts of Mr. CoUyer's Treatise, the editor has labored to eluci- date more fully, by quotation and reference, those points in the subject of partnership which had been left doubtful in the English authorities, and have been settled in this country, — to show the difference be- tween the law as established in England and as settled in this country, wherever such diflference exists, — and to supply in the work of Mr. CoUyer those deficiencies which spring from the fact, that some points, which, in consequence of difference of position and circum- stances, or for other reasons, have arisen and been de- cided by the courts in the United States, have not arisen or been at all treated in England. The editor has added a section on Special and Lim- ited Partnerships. This subject has become important in the United States, from the circumstance, that most of the States have provided for such partnerships by legislative enactments. A' VI PREFACE. The principles upon which the courts have proceeded in their decisions in reference to the formation of part- nership contracts in holding one to be or not to be a partner in a concern, have been carefully considered, and the examples most important for illustration have been selected and cited. The grounds for the dissolution of a partnership, either fer se or by consideration of a court of equity, — the mode of notifying a dissolution and the effect thereof, — the question respecting the interest of part- ners in, and their rights, and the rights of their credi- tors or representatives over the real estate held by the firm, — the subject of interest on accounts between partners, for advances to or receipts from the firm, or on balances of account upon dissolution, — and the mode and effect of attaching and levying upon partner- ship property for separate debts, have been especially examined and treated at large. Labor has been be- stowed upon points as their importance demanded. Mr. CoUyer's chapter on Mines was not deemed of sufficient use to be retained. Much of his chapter on Joint Stock Companies has been struck out, and, in place of the matter thus removed, the late decisions on the same subject, as collected by Mr. Bisset, have been inserted. Besides the above changes, nothing important has been taken from Mr. CoUyer's work. The Index, which, as left by CoUyer, has been regarded as not sufficiently full, has been greatly enlarged, and made, it is hoped, more convenient and useful. With these observations the work is submitted, by the editor. J. C. PEEKINS. Salem, January 1, 1848. ADVERTISEMENT TO THE SECOND EDITION. The author begs to express his grateful sense of the favorable reception with -which the first edition of this Treatise has been honored, and to state that he has spared no pains to render the work equally acceptable to the Profession in its present form. The circumstance of this Treatise having been ably edited in America has led to the introduction of some few American cases into the present edition. This, it is hoped, will be considered an improvement ; but, at all events, the innovation seems justified by the opin- ion of one of our most eminent judges, who has char- acterized those authorities as being "intrinsically en- titled to the highest respect," ^ although they may not serve as a direct foundation for legal proceedings in England. 10 Seele Street, Lincoln's Inn, October, 1840. 1 See 6 Add. & Ell. 837 ; 2 Nev. & Per. 290. TO SIR ROBERT MONSBY ROLFE, Knt., ONE OF HER majesty's BAEONS OF THE EXCHEQUER, THE FOLLOWING PAGES AKB, SENTIMENTS OP SINCEEE EESPECT AND APPECTION, INSCRIBED BT THE AUTHOR. PREFACE. In oflfering to the Profession and the public a new work on the Law of Partnership, the author is aware that he is liable to the charge of presumption; tres- passing, as he does, upon ground which has been long and successfully occupied. But the great importance of the subject will, he trusts, be a partial, if not a com- plete, apology for his conduct. The principles which are imperfectly developed in the following pages afibrd a field for the continual exercise of the most distin- guished talents in our courts, both of law and equity. A treatise, therefore, which shall have the sole merit of containing the most recent decisions on questions of Partnership, may possibly meet with the approbation of practical men. Whether the present work possesses any other claim to general attention than that which has just been alluded to, is a question which the reader alone will be able to determine. On the one hand, the author has endeavored to arrange and abbreviate the numerous and complicated cases which he has met with in the course of his labors, so as to relieve the student of some portion of his toil. On the other hand, he has seldom been satisfied with the mere announcement of XU PREFACE. general principles, but has stated, in some degree of detail, for the convenience of the practitioner, the facts of each important case. One objection to the work may here be anticipated. The author fears that he has, in some instances, unnec- essarily multiplied illustrations of the same proposi- tion ; and that the learned but impatient reader may occasionally be tempted to exclaim, — "Utitur in re non dubiS, testibus non necessariis." Indulgence, how- ever, will perhaps be extended to a sincere desire of giving every information on the subject, and a fear of stating too much on self-authority. The treatise contains five Books. The first relates to the Constitution of the Contract of Partnership ; the second, to the rights of Partners inter se ; the third, to the Eelative Rights of Partners and Third Persons; the fourth, to the Bankruptcy of Partners; and the fifth, to Particular Partnerships. Tor a more particu- lar knowledge of the various divisions of the work, the reader is referred to the Table of Contents. The author will not conclude these observations without thanking his numerous friends for the kind and valuable assistance which they have afforded him in the course of the undertaking. Lincoln's Inn, 20th June, 1832. TABLE OF CONTENTS. BOOK I. OF THE CONSTITUTION OF THE CONTRACT OF PARTNERSHIP. CHAPTER I. OP THE POBMATION OF THE CONTRACT. Section Sect. 1. Of the Contract of Partnership between the Parties . 7 2. Of Partnership quoad Third Persons, or Quasi Partner- ship 78 3. Of Limited Partnerships 99 CHAPTER H. or THE DISSOLUTION OF THE CONTRACT. Sect. 1. Of the Time of the Dissolution 105 2. Of the Causes of the Dissolution 108 3. The Effect of the Dissolution 121 BOOK II. OF THE MUTUAL RIGHTS OF PARTNERS. CHAPTER I. OF THE INTEREST OP THE PARTNERS IN THE PARTNERSHIP STOCK. Sect. 1. Of the Nature of the Interest 123 2. Of the Distribution of Interest 167 B IV TABLE OF CONTENTS. CHAPTER n. OF THE PERSONAL RIGHTS AND OBLIGATIONS OF PARTNERS. Sect. 1. Of the Rights and Obligations of Partners in general . 1 78 2. Of the Rights and Obligations of Partners under the Arti- cles 202 CHAPTER m. OE THE LEGAL AND EQUITABLE REMEDIES BETWEEN PARTNERS. Sect. 1. Of the Enforcement of Covenants between Partners . 245 2. Of the Enforcement of Simple Contracts between Part- ners .......... 264 3. Of the Right to a Dissolution ..... 290 4. Of Account between Partners 298 5. Of the Right to an Injunction 340 6. Of the Right to a Receiver 353 7. Of the Pleadings in Equity between Partners . . 359 8. Of Tort between Partners 382 BOOK III. OF THE RELATIVE RIGHTS OF PARTNERS AND THIRD PERSONS. CHAPTER I. OP the liabilities of PARTNERS FOR THE ACTS OF THEIR COPART- NERS. Sect. 1. Of Liabilities under Loans, Purchases, Sales, Assignments, Pledges, and Mortgages effected in the Name of the Firm 390 2. Of Liabilities under Bills of Exchange and Promissor)' Notes negotiated in the Name of the Firm . . 401 3. Of Liabilities under Guaranties given in the Name of the Firm 417 4. Of Liabilities under Acts and Assurances in general, in the Name of the Firm ... . . 422 5. Of Liabilities for the Fraud of a Copartner . . . 445 6. Of Liabilities for Torts committed by a Copartner . . 457 TABLE OP CONTENTS. XV CHAPTER II. OF EXEMPTIONS FKOM LIABILITY. Sect. 1. Of Exemptions where the Contract is under Deed . .462 2. Of Exemptions where the Contract is several in Law . 473 3. Of Exemptions where the Contract is several in Fact . 492 CHAPTER III. OF THE LIMITS OF LIABILITY. Sect. 1. Of the commencement of Liabilities in general . . 509 2. Of the Liabilities of an incoming Partner . . . 520 3. Of the Liabilities of a Retiring Partner .... 530 4. Of the Liability of a deceased Partner's Estate . . 576 5. Of the Extinction of Liabilities 606 CHAPTER IV. OF THE RIGHTS OF PARTNERS AGAINST THIRD PERSONS. Sect. 1. Of the Limits of Right 613 2. Of Extinction of Right 636 CHAPTER V. OF ACTIONS BY PARTNERS. Sect. 1. Of the Parties to an Action ea; con(racto .... 649 2. Of the Parties to an Action ea; detoo .... 668 3. Of the Declaration 673 4. OfPleasinBar 681 5. Of the Evidence 685 6. Of Indictments by Partners 693 CHAPTER VL OF ACTIONS AGAINST PARTNERS. Sect. 1. Of Process 696 2. Of the Parties to Actions ea; coniracfu .... 712 3. Of the Parties to Actions. eK detoo 727 4. Of the Parties to Actions ex quasi contractu . . . 731 5. Of the Declaration 739 6. Of Pleas in Abatement 744 TABLE OF CONTENTS. 7. Of Pleas in Bar 751 8. Of the Evidence 769 9. Of Nonsuit, Verdict, Costs 807 10. Of Execution 818 CHAPTER VII. OF SUITS IN EQUITY BY AND AGAINST PARTNERS. 833 BOOK IV. OF THE BANKRUPTCY OF PARTNERS. CHAPTER I. or THE CAUSES AND CONSEQUENCES OF THE BANKRUPTCY. 847 CHAPTER n. OF THE ADMINISTRATION IN BANKRUPTCY. Sect. 1. Of Joint and Separate Estate 880 2. Of Joint and Separate Debts 906 3. Of Proof in general 920 4. Of Election of Remedy 935 6. Of Election of Proof 940 "6. Of the Time of Election and Waiver of Proof . . 952 7. Of Double Remedy 958 8. Of Double Proof 963 9. Of Proof between Partners 972 10. Of Proof between Estates 990 11. Of Set-off . 1007 CHAPTER III. OF THE PRACTICE IN BANKRUPTCY. Sect. 1. Of the Proceedings to Adjudication 1018 2. Of Proofs under Joint and Separate Fiats . . . 1027 3. Of the Choice and Removal of Assignees .... 1034 4. Of Actions by the Assignees 1037 5. Of the Certificate 1051 6. Of the Bankrupt's Allowance 1053 7. Of the Annulment of Fiats 1058 8. Of Costs . , 1073 TABLE OF CONTENTS. XVU BOOK V. OP PARTICULAR PARTNERSHIPS. CHAPTER I. OF JOINT-STOCK COMPANIES. Sect. 1. What makes a Man a Partner in a Joint-Stock Company 1081 2. Of the Mutual Rights of Shareholders .... 1096 3. Of the Relative Rights of Shareholders and Third Persons 1136 CHAPTER n. OF JOINT-STOCK COMPANIES BY STATUTE. Sect. 1. Legal Remedies affecting Joint-Stock Companies, their Individual Members and Strangers, under the late English Statutes respecting them .... 1141 2. Suits in Equity between Joint-Stock Companies and Stran- gers 1165 CHAPTER in. or PART-OWNERS OP SHIPS. Sect. 1. Of the Interest of Part-owners 1185 2. Of the Ship's Registry 1190 3. Of the Ship's Transfer ^ 1200 4. Of the Mutual Rights of Part-owners . . . . 1 205 5. Of the Relative Rights of Part-owners and Third Persons 1222 6. Of Actions and Suits by and against Part-owners . . 1230 APPENDIX. Page No. I. Deed of Partnership between two Persons . . . .1073 II. Deed of Dissolution 1081 Index 1086 TABLE OF CASES. [The figures refer to the Sections.] Abbot V. Bayley V. Smith 15 282, 580, 712 609 540-544, 869 920 Abel V. Forgue V. Sutton Abell, ex parte Abingdon, ex parte Abraham v. Plestero Acero v. Petroni Acherley v. Kowe Acker v. Burrall Ackerman, ex parte Aoraman v. Bristol Dock Com- pany ■ Adair v. New River Company Adam, ex parte Adams, ex parte V. Bankhart V. Bingley 940 857 687 874 166 923 Adderley v. Dixon Addis V. Knight Addison v. Overend , ex parte Afialo V. Fourdrinier Agace, ex parte Agar V. Macklew V. Regent's pany Agnew V. Piatt Aguttar V. Moses Ainsworth v. Dyer Akhurst v. Jackson Albee v. Fairbanks Albreteht v. Susman Alcock V. Taylor Alder v. Fouracre Alderson v. Clay - V. Popes 1174 840 964 960, ,987 439, 470 545 203 1016 671, 672, 1232 852, 1072 796, 858, 972 482 252 Canal Com- 1170 767,877 673 746 216, 853 298 14 107 343, 365 98, 387, 686 86, 443 Aldred v. North Midland Rail- way Company 1181 Alexander, ex parte 627, 653, 939 — ' V. Barker 630, 653 V. Coulter 129 V. Simms ■ 125 Alexandria v. Patten 552 Allan V. Hartley 848 Allegre v. Maryland Ins. Co. 250 Allen V. Blanchard 51, 687 V. Coit 315, 482 V. Dunn 44, 822 V. Jones 1174 V. Kilbre 855 V. Owens 779 V. Rostain 770, 777 V. Wells 166, 580, 584, 817, 822 V. White 644, 661 AUers v. Wilkinson 463 Alsager v. Rowley 361 Alsop V. Mather 602, 603 Ambler v. Bradley 35, 44 American Bank v. Doolittle 606 Anderson v. Henshaw 559, 725, 768 V. Levan 481, 757, 774 V. Maltby 575 r- V. Martindale 262, 649 V. Snow 795 V. Taylor 183 V. Tompkins 110, 135, 394, 395, 399, 467 V, Wallace 347 I'. Wanzer 441 V. Weston 781 Andrews v. Ellison 245, 1110 V. Planters' Bank 421 V. Schott 100, 104 Andi'us V. Andrus 606 Annett u. Carstairs 1221 Anon. (2 Ca. Ch.) 1205 (Ca. Ch. 38) 483 (1 Chit.) 708 (2 Freem. 62) 372 TABLE OF CASKS. Anon. (Holt, 67) 408 (1 Madd. Chan. 411) 206 (3 Mod.) 637 (12 Mod.) 638 (Styles) 401 (1 Vez.) 347 (2 Vez.) 206 (17Ves. 15) 1130 (19 Veg.) 375 V. Harrison 370, 379 V, Layfield 420, 433 V. Snow 707 Ansell V. Waterhouse 286, 735 Anthony v. Butler 465 Antram v. Chase 472, 851 Appleby, ex parte 565, 926 Appleton V. Binks 464 Apsey, ex parte 946, 947 Arden v. Sharpe 493, 496 V. Tucker 659 Ardly v. Kussel 769, 685 Arlington v. Merrick 616 Armistead v. Butler 761 Armsby v. Farnam 566, 651 Armstrong v. Armstrong 60, 74 — ^ I'. Hussey 536 V. Lewis 74 V. Eobinson 489, 471 Arnold v. Brown 111, 112, 114, 295, 382, 394, 446 V. Camp 566 Amot V. Redfern 338 Arthur v. Dale 490 V. Schooner Cassius 1228 Arton V. Booth 636 Arundel, ex parte 938 Ascue's case 715 Ashbrooke v. Snape 755 Aspinwall, ex parte 922, 1030 ' v. Williams 509 Astley V. Weldon 253 Atkins V. Treadgold 427—590, 591 V. Hunt 510, 1083 Atkinson, ex parte 956 V. Foster 1185 — ' V. Laing 658 Attorney-General v. Borrodaile 1 233 V. Burgess 461 V. Cradook 841 V. Davy 198 V. Stannyforth 459 V. Weekes 464 Attwater v. Fowler 281, 374 Attwood V. Davis 746 V. Rattenbury 655, 674, 685 Atty V. Parish 652 Aubert v. Maze 57 Augero v. Keen 620 Ault V. Austin Goodrich 121, 200, 374, 375, 631,591 V. Bostwick 423, 430 V. Vandermark 421 V. Williams 509 V. Walsh 656, 688, 1230 AveriU v. Loucks 135, 481, 962 V. Lyman 566, 608 V. Nesham 38, 78 Clarke 831 . Arden 824 V. Scrimshire 753 Axe V. Ayer v. Ayliffe B. Babcock v. Stone Backhurst v. Clinkhard Bacon, ex parte V. Fairman Baglehole, ex parte Bailey v. Clark Baines, ex parte Baird v. Baird 11. Cockran Baker v. Biddle V. Charlton V. Jewell V. Stackpole 642 822 883 332 14 98, 387 1077 135, 298 495 374 406 656, 667, 1228 423, 430, 780 719, 1233 Baldney v. Ritchie Baldwin v. Lawrence 840, 1114, 1135 Ball V. Dunsterville V. Stiinley Ballam v. Price Balmain v. Shore Bampton v. Birchall Bank, ex parte 465 739 609 9, 158, 228 374 444 Banks, ex parte V. Booth V. Judah of England, ex parte (2 G. & J.) 443 (2 Rose) 943, 964, 968 — of Port Gibson v. Baugh 130, 540 — of Rochester v. Monteath 215 940 1158 374 506 374, 376 822 614, 615 822, 920 533 918 566 291 841 589 522, 554, 565 Barber v. Backhouse V. Barber V. Hartford Bank Barclay v. Lucas Bardwell v. Perry Barfoot v. Goodall V. Stuckey Baring v. Crafts — V. Dix V. Noble Baring's case Barker v. Blake TABLE OF CASES. XXI Barker v. Goodair 828, 853, 857, 874, 87,7 ■ V. Parker Baker v. Richardson Barklie v. Scott Barlow v. Reno Baruardiston v. Chapman Barned, ex parte Barnes v. Bartlett Barnett v. Watson Barney v. Smith - V. Currier Barr v. Speirs Barrall v. Acker Barrett «>. Swann Barringer v. Snead Barrow, ex parte, Barry v. Foyles V. Jones Barstow v. Fossett V. Gray Bartle v. Nutt Bartlett v. Lambert — — — V. Levy Barton v. Hanson — ^ V. Williams Bas V. Steele Basarro, ex parte 929, Bascom v. Young Bass V. Bass V. Clive Basset v. Salter Bate, ex parte (3 Dea.) (1 Bro.) V. Russell Bateman v. Finder Batson, ex parte Battersby v. Smith Battley v. Bailey Baudier, ex parte Bauerman, ex parte Ipaxter v. Clark • V. Hosier - V. Rodman 615 468, 636 13-94 469 382, 1219 925, 1020 1219 574 129, 576, 666, 723 443 291 822 19,401 423 8, 886, 898 713 Bayley v. De Walkiers Baylis v. Dynely Beach v. Hotchkiss V. Hayward 129, 660, 666J 764 39, 171 1233 659, 687 301 1094 39, 171 489, 490 400 1235 1035, 1050 391 376 784 609 950 1054 797 430 995, 1035 1196 509 853 927 386 298 32, 840 380 815 281, 289 Beacham v. Eckford Beadles, ex parte Beak v. Beak Beale v. Mouls Beaman v. Whitney Beane v. Morgan Beard v. Webb Beaumont v. Grover V. Meredith Beckham v. Knight Beckwith, ex parte 189, 335, 339 1019 199, 318 520, 523 135, 509 15 15 301 53, 291 712, 719 1019 Beckworth v. Butler 315 Bedford v. Brutton 1109 555 3, 44, 95 Beecham v. Dodd Beecher v. Guilburn 196, 326 Beilby, ex parte Beitz V. Fuller 947, 955 426 Belcher v. Sykes 237 Belknap v. Givens 642 Bell, ex parte V. Ansley V. Banks 59 677 482, 757 V. Francis 1095 V. Humphries V. Layman V. Locke 1218 382 162 V. Lord Mexborough V. Morrison 426 1132 430, 539 V. Newman 584 V. Phyn 133, 138 ,139, 140, 150, 156 V. The Hull and Selby Rail- way Company Bellairs v. Fbsworth 1171, 1174 614 Bellotti V. Barella 709 Belote V. Wynne 430 Benedict v. Davis 86 Benfield, ex parte 1058 V. Solomons 363 Benham v. Bishop Benjamin v. Porteus Bennet v. Marshall V. Stickney Benson, ex parte V. Heathorn Bentley, ex parte ui Bates V. Smith I'. White Berkeley v. Hardy Bernard v. Torrance V. Wilcox 529 27—687 469 441, 698 964 1213 952 22, 346, 1131 674 430 464, 651 630, 537, 559, 777 661 Bernasconi v. Fairbrothcr 850 Berry v. Usher 332 Besley v. Lawrence 962 Besch V. Frolick 294 Bevan, ex parte 941, 951 V. Lewis 340, 361, 391, 401, 478, 831 Bevans v. Sullivan 183 Beverley i'. Lincoln Gas Co. 722 Biddlecomb v. Bond 233 Bigelow V. Bigelow 332 Bigg, ex parte 867, 943, 944 Biggs V. Fellows 640, 866 V. Lawrence 643; 645 Bignold, ex parte 444 — ^ V. Waterhouse 436 xxu TABLE OP CASES. Bill V. Porter 687, 793, 795, 909 Binford v. Dommett 364, 381, 948 Birbeck v. Tucker Birchett u. Boiling Bird 0. Aston V. Caritat V. Pierpont Birdseye v. Bay Birkett, ex parte • V. Wood 1223 202, 291 1086 665 665, 681 166, 822, 824 111, 872 795 Birmingham and Aylesbury Rail- way Company v. Thompson 1162 Birt u. Hood Bishop II. Breckles V. Church 587- V. Crawshay V. Kaye ■ V. Shepherd Bispham v. Patterson Bis^on, ex parte Bitzer v. Shunk Bixby V. Whitney V. Franklin Ins. Co. Black V. Bush V. Marvin Blackburn v. Graves V. Stupart Blackett v. Weir Black-well v. Ashton Blagden, ex parte Blain v. Agar Blair v. Drew V. Snover Blair Miller v. Douglas Blake's case Blake, ex parte Blake v. Dorgan V. Nutter • V. Williams 783, 799 119 ■578, 1009 873 810 32 423, 430 938 469 1200 1235 125 687, 795 671 609 282, 787 718 1011, 1015 1101 376 656 495, 496 237, 725, 808 990, 1069 297 135 877 Blakemore v. Glamorganshire Canal Navigation Company 1167, 1168, 1171 Blanchard, in re — ^ V. Coolidge V. Parstern 17, Bland, ex parte Bleaden v. Hancock Blew V. Wyatt Bligh V. Brent Blight V. Tobin Blin V. Peirce Bloxam, ex parte V. Hubbard V. Pell Boardman, ex parte V. Gore V. Jackson V. Keeler Boddam v. Ryley 1209 26,29 471 1226 672 565 140 445 719 934 668, 671 80—48, 81 930 98, 387, 446 315 659 338 Boddy V. Kent 361, 833 Bodenham v. Purchas 634 Bogert V. Haight 922 Boggs V. Curtin 649 Bold, ex parte 1060 Bolitho, ex parte 482 Bolton, ex parte 859, 925, 955, 1032 V. Puller Bonbonus, ex parte Bond, ex parte V. Aitkin V. Gibson V. Hays V. Pittard 43- Bonnaffe v. Fenner Booth V. Hodgson V. Parkes Borrodailes, ex parte Bosanquet v. Wray Boson V. Sandford Bostwick V. Champion Botifeur v. Wayman Bound V. Lathrop Bourne v. Bennett V. Freeth Bouser v. Curtis Bousfield V. Wilson Bovill V. Hammond Bowden, ex parte V. Schatzell Bowen v. Shepcott V. Argall Bower v. Swadlin Bowles V. Orr Bowling V. Dobyer Bowman v. Blodgett — — V. Bailey, V. Wethen V. Willis Bowsher v. Watkins Boyce v. Walton Boyd V. Emerson V. Plumb Boyer v. Anderson Boyers v. Elliot Boynton v. Page Bozannet, ex parte Bracken v. Kennedy Brackett v. Winslow Bradbury v. Smith 29, 100, 102, 173 Braden v. Gardner 1187 Bradford v. Kimberly 125, 183 Bradish v. Schenk 671 Bradlee v. Neal 791 Bradley v. Camp 70S V. Chamberlin 199, 214, 310, 328 439—853, 880 499—447, 481, 914, 964 940, 952 478, 481 392, 446 281 -13, 19, 24, 52, 96, 649, 656 269, 686, 769 58—762 121, 324 955 221, 642 732 490 373 423, 430, 441 765 1087, 1088 805 77 267—51 960, 961 589 747 101, 103 606 845 306 540 19, 35 874 806 366, 844t 779 489, 470 421 44, 51 125 190 935 265, 284 199 TABLE OF CASES. XXlll Bradley v. Miller 936 V. White 25, 39, 40, 44 Bradshaw, ex parte 1076 Brady v. Colhoun 20, 51 Brackenbury v. Brackenbury 59 Brady v. Hill 423 Braithwaite v. Britain 588, 590 V. Coleman 687 V. Skofield 1087 Bramah v. Roberts 1137 Brand v. Boulcott 271, 649 Brander v. Ferriday 777 Brandon v. Hubbard 659—54, 667 Brandram v. Wharton 428 Brasier v. Hudson 638 Bray v. Fromont 8, 115 Breckenridge u. Churchill 374 V. Shrieve 390 Brenchley, ex parte 1005 Bretherton v. Wood 735 Brett V. Beck with 16 Brewster u. Brewster 337 V. Hammet 822, 837 • V. Hardeman 118, 423, 430 Brickhead v. York (Archbishop) 727 Brickhouse v. Hunter 316 Brickland v. Newsome 444 Brickwood v. Miller 877, 878 Bridge v. Gray 423, 776 Bridges v. Mitchell 375, 376 Bridget v. Mills 937 Brierly v. Cripps 277 Briggs V. Wilkinson «t 1222, 1223 Brigham v. Eveleth 281 V. Dana 18 Brinley v. Kupfer 273, 281 Brisban v. Boyd 423, 530 Bristow V. James 712 ■ V. Potts 875 V. Taylor 638 British Linen Company u.Drum- mond 646 Broekenborough v. Hackley 430 Bromage v. Prosser 668 Bromley v. FUiot 18, 25, 38, 39, 41, 44 17. HoUand 860 Brooke v. Enderby 549— 279, 536 V. Evans 514 Brooks u Bondsey 1 223, 1 235 Broom V. Broom 145, 146, 154 Broome, ex parte 860, 972, 979 Brophy v. Holmes 68 Brotherson v. Hodges 1232 Brown, ex parte (1 Atk.) 481 (1 Kose) 925, 1059, 1074 (1 Ves. & B.) 1067 .Brown V. Agnew 285, 285, 298 u. Belcher 713 Brown V. Brown 791 V. Cook 19 V. Crandell 777 V. De Tastet 8, 194, 324, 826, 327, 865 V. Duncan 76 V. Fox 794 V. Hedges 383 V. Higginbotham 546 V. Lawrence 689 V. Lee 986 V. Leonard 98, 887, 535 V. Litton 824 V. Marsh 608 V. Selwyn 832 V. Vidler 824 Browne, ex parte (1 Rose) 1059 (6 Ves.) 893 V. Carr ■ 859 V. Gibbens 288, 515 Brownell v. Brownell 873 Brozee v. Poyntz 758 Bruen v. Marquand 469 Brutton v. Burton 469 Bryden v. Taylor 787 Bryer v. Weston 670, 686, 769, 770 Bryson v. Petty 867 V. Whitehead 161 Buchan v. Sumner 135, 156 Buchanan v. Curry 439, 470 V. Findley 1008 Buckingham v. Burgess 97 Buckland v. Newsome 444 Buckle, ex parte 923 Buckley u. Barber 124,129 V. Carter 291 V. Dayton 682 Bucknal v. Roiston 127 Bucknam v. Barnan 24, 25, 44 Budington v. Stewart 1205 Bufford V. McNeely 110 Bulkley u. Dayton 468 Bull t>..Strong 688, 791, 794 Bullock V. Dodds 681 V. Williams 699 Bunn V. Morris 656 Bunnel v. Taintor 3 Bunson V. Kincaid 606 Burbridge, ex parte 750 Burckle v. Eckart 25, 44 Burdekin, ex parte 1068 Burden v. Burden 183, 232, 328 Burgess v. Atkins 820 V. Lane 773 V. Merrill 721 V. Tucker 760 Burger v. Collins 281, 587 Burgue v. De Tastet 776 Burgwin v. Hostler 576 XXIV TABLE OF OASES. Burk V. McLean 877 Burke v. Winkle 15 Burleigh v. Scott 427, 752 Barley v. Harris 281, 642, 645 Burlton, ex parte 1071 V. Wall 1070 Burn, ex parte 891 V. Burn 465—578 V. Morris 1230 Burns v. Hall 674 Burnell v. Minot 286 Burnett v. Lynch 738 Burnham v. Whittier 401, 655 Burnside v. Merrick 129, 135, 157, 576, 580 Burrall v. Acker 822 Burrell, ex parte 972, 990 Burroughs v. Elton 843 Burt w. Moult 871 Burton, ex parte 533, 897, 1074 V. Green 822 V. Isset 442 V. Wookey 182, 186 Burnell v. Mandeville 113, 119, 602, 841 Butcher v. Forman 288, 796, 858, 972 Butler V. Burleston Butlin, ex parte Butt V. Monteaux Button V. Hampson Butts V. Bilke V. Genung Buxton V. Lyster Byers v. Dovey ■ V. Van Denson Bygrave, ex parte Byrd v. Fox C. 161 952 59 471 1060 843 202 649—712 235 1070 204, 273, 281 Cabell V. Vaughan 649, 671, 715, 718, 757 Caddick v. Masson 362 Gady V. Shepherd 121, 423, 430, 462, 467 Calder v. Rutherford 723 Caldwell v. Blake 710 V. Lieber 183,315,334,339 V. Stillman 538, 546, 580 Call V. Hagger 702 Calvert v. Marlow 281 Cambridge, University of, v. Bald- win 617 Camden v. Anderson 685 Cammack v. Johnson 822, 948 Campbell v. Leiber 54 V. Matthews 609 — ' V. Mesier 282 Campbell v. Mullett 165, 174, 176, 578 w. Stein 1218 Candler v. Candler 72 Canfield u. Hard 70,103,121 Cape Sable Co.'s case 115, 119 Capon V. Miles 371 Capper v. Desanges 849 Card V. Hope 1210 Garden v. Cemetery Company 1116 Carey v. Goodinge , 332 Carlen v. Drury 1078 Carlton v. Ludlow 89 Came v. Legh 713, 816 Carpenter, ex parte 574,985 V. Jones 797 Carrington v. Cantillon 441 Carruthers v. Shedden 678 Carter, ex parte (1 M. & A.) 1052 —, (2G. 8eJ.) 975 V. Douglas 777 ?;. Home 179 V. Lord Colrain 315 V. Southall 443 V. Whalley 86, 531, 536, 537 Carvick v. Vickery 95, 442, 545 Carver v. Tracy 315 Case V. Abeel 129 Casey v. Brush 267, 281 Cash V. Tozer 469 Castell, ex parte 1002, 1005 Caton, ex part^ 937 Catskill Bank v. Stall 421, 447 V. Messenger 606, 698 Catt V. Howard 520, 785 Causten v. Burke 264 Cawthorne v. Chalie 843 Central Turnpike Corporation v. Valentine 1085 Chaffee v. Jones 791 Chaffin V. Chaffin 333 Chambers, in re 1072 ex parte 830 Chaippion v. Bostwick 18, 38, 40, 44 Champlin v. Butler 1223 V. Tilley 770 Chancey v. May 834, 1130, 1135 Chanee v. Chambers 674, 708 Chandler, ex parte 924, 929 V. Brainard 95 u. Chandler 281, 361 V. Dorset 372 V. Herriok 608 V. Parkes 720, 721 Channel! v. Ditchburn 427 ■ V. Fassit 8 Chapman v. Beach 297 t'. Butler 374 TABLE OF CASES. XX Chapman v. Durant 1225 V. Eland 709 V. Graves 802 V. Koops 166, 829 Chappel V. Cadell 223 V. Wilson 769 Chardon v. Calder 423, 780 V. OlipLant ' 423 Charles River Bridge v. Warren Bridge 381 Charlton v. Poulter 340, 344, 352 Charrington v. Laing 255 Chase V. Barrett ' 40 V. Garvin 281 V. Vaughan 569, 570 Chavary v. Van Sommer 119, 206 Chazournes v. Edwards 494, 495, 502 Cheap V. Cramond 52—18, 78, 423, 609 Cheever u. Smith ' 1227 Chenango, Bank of, v. Osgood 608 V. Eoot 443 Cheney v. Clark 264 Chenowith v. Chamberlin 421 Cheshire v. Barret 529 Chevalier, ex parte 646, 971 Cheyne v. Koops 795, 798 Child V. Chamberlin 810 u. Sand 727 Childress v. Emory 666 Chippendale v. Thurston 426 Chissum v. Dawes 162 Cholmondeley v. Clinton 610 Christie, ex parte 851, 940, 1010, 1234 — V. Craig 1209 V. Walker 697 Chuck, ex parte 48, 887, 888 Church V. Knox 166, 822, 825 V. Sparrow 391, 480 Churchman v. Smith 78 Clagett V. Salmon 606 Clark, in re 71 u. Blackstock 412 V. Dibble 273, 281 V. Flint 203 V. Gleason 780 V. Holmes 712 V. Howe 656, 666 V. Lyman 166, 822 V. Miller 659 u. Price 219 V. Reed 95 V. Stoddard 441 Clarke, ex parte 930, 1071 V. Askew 1050 V. Imperial Gas Com- pany 1107 V. Richards 54, 166 Clarkson, ex parte V. Carter V. De Peyster 900 659,687 368 385 920 778 752 Clavering v. Westley Clay, ex parte V. Langston Clayton v. Kynaston Clayton's case 319, 548, 589, 600, 633 Clement v. Brush 462, 481 'v. Foster 301 V. Hadlock 44 V. Henley 251, 651 Clementson v. Williamson 430 Clerk V. Clement 609, 817 Clerk of Taunton Market v. Kein- berley 667 Cleveland v. Woodward 719 Cliflford V. Brooke Clowes, ex parte V. Brettell Coalter v. Coalter Coates V. Coates Cobb ». Abbott Cochran v. Perry Cock V. Tunno Cockburn v. Thompsoii 360 914, 946, 952 1146 376 221 38, 490 110, 298 1046 368, 834, 1121, 1123, 1130, 1132 Cocke V. Bank of Tennessee 443 V. Branch Bank of Mobile 437 319 606 533 371, 376 649, 667, 713 272 Cockerell v. Barber Cocks V. Nash Coddington v. Hunt Codman v. Rogers Coffee V. Eastland Coffey V. Brian Coffin V. Jenkins Coghill V. Coghill Coit V. Tracy Coldwell V. Gregory Cole V. Grant V. Terry Coleman, in re Coles V. Coles V. Gurney Colquin v. Cummins Colley V. Smith Collins V. Barrett V. Dickinson V. Flowers V. Prosser Colson V. Bonzey V. Selby 32 791 430 887 765 383 1070 135 441 335 797 680 " 135 793 263, 606 1223, 1235 749, 750 1099, 1100, 1101 914 Colt V. WooUaston — — V. Wilder Columbia Manufacturing Com- pany V. Dutch' 791, 794 Columbine v. Chichester 1132 Coming, ex parte 939 Commercial Bank v. Wilkins 125, 822 XXVI TABLE OF CASES. Commercial Bank of Manchester V. Lewis 401 Commonwealth v. Marsh . 688, 791 V. Simmonds 423 Conley v. Good 580, 659 Connecticut v. Jackson 336 Connell, ex parte 961 Connelly v. Cheevers 129, 666 Connor v. Allen 129 Const 17. Harris 197, 200, 353 Converse v. Symmes 671, 1230, 1232, 1233 Conwell V. Sandidge 110, 125, 167, 313, 318 Cook, ex parte 988, 1002 V. Bachelor 668 v. Collingridge 150, 312, 322, 327 Cooke, ex parte 853, 920 Cookson V. Cookson 137, 140, 149, 150, 151, 154, 227 Coope V. Eyre 20—384 Cooper V. Chitty 1038 V. Merrihew 199 V. Reid 199 V. Eowe 820 V. Smelting Lead Com- pany 1115 V. Watlington 222 V. Whitehouse 725, 769 Cope V. Warner 580, 600 Copeland, ex parte 398, 883, 920 V. Crane 315, 333 Copeman v. Gallant 74, 208, 883 Coppard v. Page 1236 Corbett u. Hawkins 379 Corp V. Overton 529 Corps V. Kobinson ' 441 Coryton I'. Lithbye 671,679 Cosack V. Wells 654 Cosio V. De Bernales 15, 646 Cossart, ex parte 1052 Cossham v. Goldney 788 Costeker v. Horrox 306 Coster u. Murray 376 Cottam V. Partridge 376 Cotton V. Evans 495 Cothafy V. Fennell 660 Couch V. Mills 608 Coulson t). Walton 374 Course v. Prince 281 Coursey v. Baker 401, 421 Cousins V. Smith 840 Cowan V. Burgess 382 Cowden v. Elhot 764 Cowell V. Edwards 986 V. Sikes 584 Cowslad V. Cely 840 Cox «. Delano 34, 38 Coxwell V. Bromett Cragin v. Carlton Crain !>. Prather Cram v. French Crandell v. Denny Crane v. Deming V. Ford V. French 325 773 374 822 674 368 354 469 Craven v. Edmondson 873, 1017 (Lord) V. Widdows 386 Crawford v. Hamilton 119, 228 u. Liddle . 376 V. Sterling 419 Crawshay u. Collins 109,309—116, 179,325, 327, 855 V. Maule 22, 105, 106—9, 107, 119, 142, 193, 209, 231, 309 Cremer v. Higginson Crew, ex parte Cridland, ex parte Crinsoz, ex parte Crisdee v. Bolton Crisp V. Perritt Crispe, ex parte Croft V. Pyke Crofter v. Horner Cropper v. Knapman Crosfield, ex parte Cross V. Jackson Crosse v. Smith Crossley, ex parte Crouch V. Emmerson V. Bowman Crousillat v. MoCall Crowder, ex parte Crutwell I'. Lye Cubitt V. Porter Cuffu. Platell Culbertson v. Alexander CuUen V. Duke of Queensbury Gumming v. Casily V. Forrester V. Prescott Cummack v. Johnson Cummins v. Coffin Cundall, ex parte Cunningham v. Little V. Littlefield V. Carpenter Currie, ex parte V. Child Currier v. Pennock Curtis V. Perry V. Belknap Gust, ex parte Custanee v. Bradshaw Cutbush V. Cutbush Cutler V. Windsor 421, 548, 624 . 1062 1060, 1065 949 255 850, 924 925 126 350 844 927 1111 762 935 412 401 298 922 162 382 368 795 840 462 654 1138 948 787, 793 939 333 438 691 1052 797 68? 1195 719 ■994 153 602 34, 85, 44, 1223, 1228 TABLE OF CASES. XXVll Cutten, ex parte Cutter V. Thurlo Cutts V. Gordon 1064 1222, 1223 720, 725, 766 D. Dabney v. Stridger Dacie v. John Dade v. Irwin Dakin v. Williams Dale V. Hall Dalghren v. Duncan Dame v. Hadlock Dana v. Lull V. Stearns Dance v. Girdler Dand v. Sexton Danels v. Taggart Daniel v. Cross Daniels v. Potter 443 610 1010 253 735 584 1223 110, 395 13, 528, 529 618, 1184 811 371 597 801 Darling v. March 417, 421, 423, 443, 506, 546 Darst V. Roth 465 Darston v. Earl of Oxford 315 Darthez v. Lee 835 Darwent v. Walton 88 Davenport v. Gear V. Rackstraw V. Runlett V. Whitmore Davey v. Prendergrass David V. EUice Davidson v. Napier V. Robertson Davies v. Davies V. Evans V. Hawkins 261, 656 V. Penton 281 661 495, 506 1196 ' 628 570 610 402 844 691 1111, 1119 255 536 673 674 452 1209 666 Davis V. Allen V. Abbott V. Hubbard V. Bank of England V. Brig Seneca 1205 V. Church v. Desaque 478, 481, 540, 557 V. Fisk 1123 V. Johnstone 1208, 1210 V. Lane 292 V. Living 805 Dawson, ex parte 1005, 1035 V. Dawson 371 Day, ex parte 1020 Dean v. jifewhall 753 De Begnis v. Armistead 75 De Berenger v. Hammel 297 De Berkon v. Smith 92, 95, 773 Deckard's case 395, 399 Decker u. Miller , 332 Decks V. Stanhope 361 Deffle V. Desanges 849 Delauny v. Strickland 53 Do la Vega v. Vianna 646 Delmonico v. Guillaume 133, 155 Deloraine v. Brown 374 De Mau tort u. Saunders 719 De Mazar v. Pybus 610 Demoss v. Brewster 178, 696 Demott V. Swain 441, 696 Dennett v. Chick 709, 746, 757 Dennie v. Elliot 765 Denny v. Cabot 35, 40, 44, 98 V. Metcalf 642 Denton v. Denton 367 v. Rodie 338, 482 Depeyster v. Wheelwright 1232 Desborough v. Curlewis 379 Descadillas v. Harris 909, 1227 Desplaces v. Goris 379 De Tastet, ex parte 924, 1030 V. Bordenave 342, 381 V. Carrol 433, 860 V. Shaw 642 V. Taylor 647 Devall V. Burbridge 178, 696 Devaux v. Steinkeller 574, 580 Devaynes v. Noble 581 — 580, 582, 599, 606 Deveau v. Fowler 129, 243, 256, 920 De wolf !>. Johnson 791 Dexter v. Arnold 335 De Zeng v. Bailey 606 Dias V. Merle 316 Dickenson v, Hatfield 431 Dickerson v. Wheeler 544, 545 V. Whittlesay 298 Dickins v. Jarvis 815 Dickinson v. Bold 214, 310 V. Granger 281 V. Legare 110, 395 V. Valpy 4, 86, 1085, 1137 Dickson, ex parte 937 V. Alexander 892, 446 V. Cass 873, 1017 V. Lodge 678 Diffenderffer v. Winder 336 Digby, ex parte 42, 1062 Dinsmore v. Dinsmore 430 Ditchburn !>. Spracklin 675,712 Divine v. Mitchum 135 Dixon V. Bowman 716 V. Cooper . 26 V. Hammond 1048, 1232 V. Hood 769 Doak V. Swan 44 Dob V. Halsay, 17, 19, 38, 44, 78, 86, 173,421,495, 501, 506, 644, 649, 661, 667 XXVIU TABLE OF CASES. Docker v. Somes Dockwray v. Dickenson Doddington v. Hallett Dodge V. Griswold . Wilkinson Dodgson, ex parte Doe V. Bluck V. Darnton V. Green V. Hulme V. Miles V. Sales d. Banks v. Booth d. Myat v. St. Helens and Kuncorn Gap Company 1158 d. Watton V. Penfold 1158 Dolman v. Orchard 410, 535 Domville v. Solly 305 Donaldson v. Cape Fear Bank 135 456 1232 1187 381 667 194, 989 121 765 791 422 121, 236 385 1158 V. Williams Donelson v. Posey Doner v. Stauffer Doniphan v. Gill Doo V. Chippenden V. London and Croydon Railway Company 1176 191 125, 167 822 471 719, 1233 649, 1233 804 413 1086, 1090 392,401,408 Doremus v. Selden Dormer v. Fortescue Doty V. Bates Doubleday v. Musket Dougal V. Cowles Dougherty v. Van Nostrand 162, 181, 183, 199, 337 Douglas V. Horsfall 1135 — V. Russell 1196 V. Patrick 684 Douglass V. Winslow 166, 821 Dow V. Sayward 387, 489, 491, 822 Dowse V. Jefferies Dowson V. Leake Drake v. Elwyn V. Mitchell V. Rogers Draper v. Bissel Drew V. Drew Dry V. Boswell V. Davy Dubois V. Ludert Ducarry v. Gill Duckworth v. Trafford' Dudley v. Littlefield Duff V. East India Company 361, 638 754 1223 95, 401 755 395 540 370 35, 85—19 614, 625 719 1107, 1140 358 3, 51, 447 Duke V. Pownall Duncan v. Clark V. Hill ■ V. Lowndes ■ V. Lynch ■ V. Lyon ' V. Meikleham 795 447, 494 782 417 246 270, 298 805 Duncan v. Tombeckbee Bank 441, 697 V. Worrall 360 Duncuft V. Albrecht 1132 Dundas v. Gallagher 530 Dunham v. Gillis 256 Dunklee v. Locke 765 Dunlop, ex parte 919 Dun River Navigation Com- pany V. North Midland Navigation Company 1171 Dupuy V. Johnson 286 Durbin v. Barber 297 Dutch West India Company v. Van Moses 646 Dutton V. Morrison 822, 829, 850, 857, 875, 920 Dwerry house v. Graham 697 Dwight V. Brewster 38, 435, 490 Dwinel v. Stone 18, 35, 39, 95,«123, 129, 171 Dyer v. Clark 113, 125, 129, 133, 135, 156, 319 Dyster, ex parte 886 E. Earl V. Hurd 777 Early v. Reed 421 Eastburn v. Kirk 352 East India Company v. Blake 254 u. Neave 1236 «. Vincent 1167 East London Water Works v. Bailey 1184 Eastman v. Cooper 437, 483 V. Wright 636 Eaton, w. Tayfor 542 Bccleston v. Clipsham 258, 262, 649 Eckhardt v. Wilson 665, 681, 849 Eddie D. Davidson 827,853 Edgar v. Donnally 135 Edmburgh and Leith Railway Company v. Kebblewhite 1163 Edmiston v. Wright 442, 622 Edmonson v. Davis 461 Edwards, ex parte 1015 V. Dick 1224 V. Grand Junction Railway Company 1175, 1183 Egbert v. Woods 110, 129, 395, 920 Ege V. Kyle 685 Ehle V. Purdy 649, 656 Elder V. Lusswell 761 Elgie V. Webster 264 Eliot V. Morgan 724, 783 Elliot V. Brown 136, 343 Elliott V. Davis 471—763 V. Sleeper 909 TABLE OP CASES. XXIX Ellis, ex parte, — ■— V. Jameson V. Walker !>. Watson Ellison V. Bignold V. Dezell Elton, ex parte Emerson v. Baylies Emerson u. Harmon V. Knower Emery v. Hersey Emly, ex parte V. Lye Emmet v. Bradley V. Butler Euderby, ex parte Endo V. Calenam England v. Curling 864, 976 769, 773 , 332 775, 781 244 689—468 857, 880, 920 681, 761 447 468 1228 477, 992 ■401, 739 797 237 885, 886 371 178, 202, 210, 339 696 387 401 447 475 Engleheart v. Eyre Ensign V. Ward Ensminger v. Marvin Esdaile v. La Nauze Essex Bridge Company v. Tut- tle 1161 Estes V. Whipple 264 Estwiok V. Couningsby 354, 358 Etheridge v. Binney 384, 390, 401, 411, 769 Eton College v. Great Western Railway Company Eyans v. Bennet V. Bickuell V. Corriell V. Curtis V. Drummond 1182 652 360 776 769, 770 559—120, 536, 637, 776 430 129, 308, 313, 356 716 685, 1040 644, 658, 688 1124, 1125 709, 739 794 337 841 V. Duberry V. Evans V. Lewis V, Mann V. Silverloek V. Stokes V. Whitehead — — r- V. Yeatherd Evarts V. Nason Everett v. Backhouse — ; V. Chapman 23, 38, 44, 78, 95 V. Coe 18, 40 Everingham v. Ensworth 501, 689, 764 Everit u. Strong 467 -, V. Watts 370 Everth V. Blackburne 62 Ewer V. Ambrose 749, 798, 799 Ewing V. Osbaldiston 60, 75, 379 Exeter Bank v. Sullivan 430 F. Faikney v. Reynous 56 Fairchild v. Holly 549, 552 27. Grand Gulf Bank 580, 757 Fairlie, ex parte 913 \ — V. Denton 651 Fairthorne v. Weston 353, 1131 Faith V. Richmond 215, 401, 412 Falkland u. Cheney 197 Fallowes v. Williamson 361, 362 Fall River Iron Works v. Croade 877 Fanning v. Chadwick 281, 298 Farlow, ex parte 857, 896, 1057 Farmer v. Davies 1225 Farnam v. Brooks 373, 374 Farr v. Pearce 161, 162 U.Smith 382,1219 Farrant v. Olmius 253 Farrar v. Defflinne 120, 537 u. Beswick 167 V. Hutchinson 352, 501, 689 Fasset v. Brown 718 Fawcett u. Whitehouse 179,361 -. V. Wrathall 788 Fearns v. Young 324 Featherstone a. Hunt 558 Featherstonhaugh v. Fenwick 165 — 107, 109, 181, 214, 226, 310,313,327 Feigley v. Sponeberger 389 Felichy v. Hamilton 514 Fell, ex parte 174, 902 Fellows V. Guiraarin 423 Fenn U.Craig 840,1135 Fenner v. Lewis 315 Fenning v. Lord Granville 383 Fenton v. HoUoway 12 Fereday v. Hordern 67 — 19 V. Wightwick 165, 313, 321, 322 Ferguson v. Alcorn 17, 44, 169 Fife, ex parte 444 Figes, ex parte ,, 855 V. Cutler 1 204, 270 Figgins V. Ward 443 Filley v. Phelps 822 Finch, ex parte 867 Finkle v. Stacey 21 Finney v. Ensign 332 V. Bedford Commercial Insurance Company 654 Fisber, ex parte 1056 V. Farrington 681 V. Taylor 390 V. Tucker 423, 430, 538, 541, 544, 600 Fisk V. Copeland 441 XXX TABLE OF CASES. Fisk V. Herrick 222 Fitch V. Hall 39 V. Stumps 44'3 Fitchthorne v. Boyer 462, 465 Fitzgerald v. Boehm 741 Flanigin v. Champion 423 Fleming v. Dunbar 462 Flemyng v. Hector / 53 Fletcher w. Dana 655 V. Dyche 763 V. Pollard 316 Flint 17. Sheldon 1223 Flintum, ex parte 920 Florida Territory v. Redding 1 29 Flower V. O'Conner V. Young Flyn, ex parte Fogg V. Green Foley V. Robards Foote V. Sabin Forbes v. Davison V. Phillips ' V. Skelton V. Webster Ford V. Haft V. Heron ■ V. Phillips Fordyce's case Forman v. Homfray Forster v. Hale V. Lawson Fort V. Oliver Fortune v. Brazier Foster v. Allanson V. Andrews V. Donald V. Fifield — V. Hall — V. Hodgson — V. Jackson ■ V. United States Insurance 129, 666 776, 1235 883 773 401, 412,478 421 686, 769 707 376 286 470 135 529 505, 993 298, 1131 160,381 679, 684 724 656 276, 280 401, 483 305 316 381,478 378 609 Company 438 Foultz V. Pourie 541 Fowler v. Coster 749, 1060 Fox V. Adams 876, 1149 V. Clifton 4, 97, 265, 1083, 1085 V. Fiske 375 K. Hanbury 111,112,383,395, 822, 853, 860, 872 ' V. Whitney 688, 791 Francis v. Doe 383 • V. Rand 751 Franco v. Bolton 360 Frankland v. M'Gusty 502 Franklin Glass Company v. Al- exander 1161 Franklin v. Robinson 183, 219 Frankly n, ex parte 932 Franklyn v. Thomas V. Tuton Fraser w. Case V. Hopkins Freakley v. Fox Frear v. Evertson Preel v. Campbell Freeland v. Cocke V. Heron w. Royall Freeman, ex parte Fairlie Freen, ex parte French v. Andrade V. Backhouse : V. Chase V. Connelly V. Fenn V. Price V. Styring Frietas v. Dos Santos Frink v. Ryan Frith, ex parte Fromont v. Coupland Frost V. Moulton Fry, ex parte Fuller, ex parte Funk V. Leachman Furlong V. Bartle'tt 13, Furnival v. Weston G. 831 1167 701, 703 776 332 - 791 536 315 371 845 894,895, 917, 946 456 962 764 1213 822, 948 360 285, 323, 1008 1185, 1227 18, 22 836 281 934, 935 18, 38, 277, 280 105 894, 917, 946 1033 318 382, 383, 1219 636 Gaines v. Catron Gainsborough v. Stork Galb V. Callaud Gale V. Leckie Gallimore, ex parte Galliott V. P. & M. Bank 135 225 471 270 1059 534, 538, 541 44 471,481 Gallop V. Newman Gait V. Callaud Galway (Lord) v. Matthew 388, 389, 412 Gano V. Samuel 421 Gansevoort v. Williams 421, 495, 506 Garbett v. Veale Garbutt, ex parte Gardiner v. Childs Gardner, ex parte V. Clevekind Gardom, ex parte Garland, ex parte V. Agee V. E|avidson V. Elxton 824, 827 939 515—537 849, 1018 1188, 1215, 1218 419 602 423 462, 743 750 TABLE OF CASES. XXXI Garland v. Noble 622 Garret v. Taylor 656 Garretson v. Weaver 353 Garrett v. Handley 629, 630, 653 Gass V. Stinson 548 Gay V. Bowen 423 Geddes v. Wallace 37—78, 209 Gedge V. Trail 844 Geiser v. Kersher 909 Gellar, ex parte 55, 396, 537 Geller, ex parte ■ , 939, 940 George v. (Jlaggett 763 Geortner v. Canajoharie 545, 546 Gerard v. Basse 462 Germain v. Frederick 715 Gernoe v. Boccaline 367 Getcliell V. Heald 430 Gibbons v. Wilcox 35, 773, 775 Gibbs, ex parte 1057 V. Bryant 759, 787 — V. Merrill 721, 749 Gibert v. Colt 369 Gibson, ex parte 896, 900 V. Lupton 20, 91 V. Moore 272, 278, 279 V. Stevens 671, 822 Gilbert v. Dickerson 383, 1219 V. Whidden 686 GilfiUan V. Henderson 70 Gill V. Kuhn 78, 86, 281 Gillam, ex parte 1064 Gilley v. Singleton 441 , 443 Gillow V. Gillie 766 Gillman v. Brown 167 Gilmore v. Black 8, 20 V. Holt 3 V. North American Land Company 822 Gilpin V. Enderby 19, 66, 68 V. Temple 779, 776—375 Given V. Albert 728 Glassford v. JafFrey 364 Crlassington v. Thwaites 185, 186, 222, 223, 340 Gleadon v. Tinkler 1228 Gleason v. Clark 423 Glossop V. Colman 13, 96, 661, 687 Glover, ex parte 934, 935, 937 V. Austin 668, 1185 V. Tuck 245, 246 Goddard v. Bullon 335 U.Hodges 265,1116 II. Ingram 470 V. Pratt 115, 533, 777 Godfrey's case 745 Godfrey v. TurnbuU 532, 534 Godson V. Good 723, 745 Goelet V. M'Kinistry 740 Gold V. Canham 301, 340, 342 Golding V. Vaughan Good V. Blewitt Goodacre v. Breame Goodall, ex parte 740 461, 1236 794 1054 Gbodburn v. Stevens 119, 335 Goode V. Harrison 90, 528—13, 664 V. Linecum 483 Gooden v. Morran 724 Goodman v. Whitcomb 296, 297, 345, 353 Goodnow V. Smith 606, 608 Goodsell V. Myers 529 Goodtitle v. Woodward 442 Goodwin v. Richardson 135 Gordon v. Bowne 760 V. Ellis 643 V. The Cheltenham and Great Western K. W. Co. 1172 Gorham v. Thompson 534 Goss V. Dufresnoy 853, 931, 985 Gough V. Davis 564 Gould, ex parte 856 V. Gould 167, 609, 649, 656, 667 Stanton 1208 Goulding, ex parte 499 Gourlay v. Duke of Somerset 251 Gouthwaite v. Duckworth 612, 513, 514, 527 Govett V. Radnidge 737 Gowan V. Forster 432, 1218 U.Jackson 443,777 V. Jeffries 112, 297, 353, 354, 355, 358 Gowland v. Warren 766 Grace v. Smith 44, 46, 47, 81 Graeff v. Hitchman 391, 474, 478 Grafton Bank v. Moore 777, 778 — V. Woodward 761, 776 Graham v. Harris 642 V. Holt 281 V. Hope 530 V. Mulcaster 1044 V. Partridge 758 V. Robertson 285, 1047 V. Torrance 374 V. Whichelo 538 Gram v. Cadwell 98, 387, 468, 501, 689, 761 V. Seton 467 Grant w. Jackson 779 U.Mills 900 V. Royal Exch. Ass. Co. 761 u. Shurter 576,723,740,793 Gratz w. Bayard 9,186,214 V, Stump 757 Graves v. Boston Mar. Ins. Co. 438, 654, 676 V. Merry 532, 534, 542 xxxu TABLE OF CASES. Graves v. Sawcer 1^19 Gray, ex parte 851 V. Chaplin 1121, 1135 V. Chiswell 575, 579—584 V. Mathias 360 V. Minnethorpe 3-73 V. Palmer 423 V. Portland Bank 218 «. Turnpike Company 1161 V. Washington 373 V. Wilson 250 Grazebrook, ex parte 978 Greeley v. Wyeth 195, 501, 643 Green, ex parte 1031, 1058 V. Barrett llOO, 1101 • V. Beals 462, 469 r. Beesley 17,30 V. Briggs 22, 125 V. Deakin 498—796 V. Graham 156 V. Greenbank 738 u. Tanner 391,412,478 V. Warburton 807 V. Waring 234 Greene v. Greene 125, 156, 822 V. Miller 198 Greenhalgh v. The Manchester and Birmingham Railway Company 1178 Greenham v. Gray 19 Greening, ex parte-, 655 Greenleaf u. Quincy 423, 430 Greenslade v. Dower 519 Gregg u. Jones 638,761 Gregory v. Hurrill 935 V. Paul 15 — V. Pierce 15 Grellier v. Neale 718, 719 Grier, ex parte 1053 Griffin v. Samuel 580 V. Doe 770 Griffith V. Chew 642 V. Willing 298 Griffiths V. Jones 814 Grigg V. Stoker 1220 Grill, ex parte 990 Grindley v. Barker 198 Griswold v. Waddington 8, 14, 109, 115, 175, 291, 292,538, 647 Groom, ex parte 961 V. Potts 1053 V. West 1008 Grosvenor v. Austin 584 V. Lloyd 120, 536 Grove, ex parte 939 V. Dubois 654 Groves V. Groves 59 Grozier v. Atwood 32, 840 Guidon v. Kobson 4, 86, 663 Gulick V. Guliek Guy V. Goddard Gwyn V. Godby H. Hacker v. Young Heckett V. Heme Hackley v. Patrick Hadfield v. Jameson Hadley, ex parte Hagar v. Mounts V. Stone 281 724 338 1224, 1235 637 423, 780 446 1052 495 719 653 104, 538 332 853 529 251 1200 Hagedorn v. Oliverson Haggerty v. Taylor Hagthorpe v. Hook Hague V. KoUeston Hale V. Gerrish Halfhide v. Penning Halkett, ex parte Hall, ex parte (1 Glyn. & Jam.) 444 (1 Rose) 444 (9 Ves.) 923 (3 Dea.) 852, 980, 1138 671 1115 787 132 69 332, 584 666 22, 171, 656 V. Adams V. Connell V. Curzon V. Digby V. Franklin V. Hall V. Huffam V. Leigh V. Bex V. Smith Hallam v. Mumford Hallet V. Hallet Halliday, ex parte V. Doggett V. MoDougal V. Ward 794 413, 653 720, 766 316 1036 649, 653 778 425 465, 467 281 1209 Halsey v. Whitney Halsted v. Schmolzel Haly V. Goodson Hambidge v. De la Croupe 438, 469, 470 Hamer, ex parte Hamill v. Purvis Hamilton v. Cummings V. Stokes V. Seaman Hammatt v. Wymau Hammersley v. Lambert Hammon v. Boll Hammond v. Douglas Hamon v. White Hamper, ex parte 40, 44, 78, 82, 171, 719, 880, 949, 1020, 1064 Hancock v. Haywood 1044 X034 421 360 360, 365 540 199 580, 600 606 162, 324 671 TABLE OF CASES. XXXIU Hankey v. Garrett 578, 922, 1030 V. Hammock 600 V. Smith 1008 Hannay v. Smith 810 Hanson, ex parte 1013 Harbert's case 819 Harcourt, ex parte 1059 Hardcastle, ex parte 1060, 1061 Hardenburg, ex parte 934, 935, 937, 1077 Harding v. Foxcroft • V. Glover 20, 23, 1185, 1186 354 890 749, 794 813 628 1001 937 681 469 1224 387 992, 995 669 811 770 557, 559 22, 1024, 1068, 1187 • V. Armitage 299, 300, 353, 1130, 1131 Hare, ex parte Hare v. Munn Harewood v. Matthews Hargrave v. Smee Hargreaves, ex parte Harley v. Greenwood Harmer v. Kingston Harper v. Fox Harrington v. Fry Harris, ex parte (1 Madd.) '■ '(2 Ves. & B.) • V. Bevington • i: Duncan ■ V. Hill ■ i). Lindsay Haslet V. Street V. Wotherspoon Harrison, ex parte ■ V. Close • V. Fitzhenry ■ V. Gardner ■ V. Heathorn • i>. Hoo;g V. Jackson 606 651 161, 348 1095 378 401,441,462, 464, 698 62 110, 395, 853 533, 570 1230, 1232 315 520 462 V. Millar V. Sterry Hart V. Alexander V. Fitzgerald V. Ten Eyck V. Tomlin^on V. Withers Hartness v. Thompson 720, 725, 766 Hartz V. Sehrader 129, 343, 366 Harvey H. Bignold 361 — '■ V. Collatt 60 V. Criekett 861, 862, 864, 865 V. Kay 1086 V. Morgan 1040 V. Ramsbottom 849 Harwood v. Edwards 441 Haskell v. Adams 281 Hasleham u. Young 4i7 Hatch V. Smith Hatcher v. Seaton Hathaway v. Haskell V. RuSsell Hatsall V. Griffith Haughey v. Strickler Havens v. Hussey Hawes v. Dunton V. Layton 441, 698 115 1200, 1235 245 427 765 1230 774 110, 395 401 822 Hawkins v. Appleby 445 V. Ramsbottom 743 V. Whitten 1007 Hawkshaw v. Parkins 468—360, 831 Hawley v. Cramer 659 V. Warner 361 Hay, ex parte 912, 945 V. Fairburn 891 Haydon v. Haydon 822 Hayes v. Leguih 380 Hays u. Jackson 332 Haythorn y. Lawson 680 Hazard v. Hazard 19, 78, 79, 83 Heard v. Bowers 254, 255 Heartt v. Corning 225, 316, 371 Heath v. Hall 859, 958 V. Percival 555 V. Sansom 109, 110, 120, 494, 536, 541, 776 Heathcote v. Hulme 335, 456 Heaton, ex parte 456, 947 Hebblewhite v. McMorine 1164 Heckert v. Fegely 44 Heimstreet v. Howland 1 9 Hellings v. Gregory 781 Helmei) Smith 1215 Helsby v. Mears 435—490, 524 Henderson, ex parte 720, 850, 1018 V. Eason 22 V. Hudson 3 V. Wjld 638, 644 Hendray v. Spencer 712 Hendricks v. Campbell 423 Henley v. Soper 278, 228 Henn v. Welsh 354 Hennell v. Lyon 772 Hennessy r. Western Bank 395 Hepburn v. Hoag 760 Herbert v. Nelson 386 Hercy v. Birch 205, 206 Herries v. Jameson 286, 745, 817 Hesham, ex parte 988 Hesketh v. Blanchard 25, 79, 83 Hewes V. Bayley 649 Hewitts. Buck 1213 V. Sturtevatit 134, 1214 — ^ V. Pi"ott 765 Heydon v. Heydon 166, 822 XXXIV TABLE 01' CASKS. Heyhoe v. Burge Heyne v. Middlemore Pleywood v. Watson Hiard v. Bigg Hibbert v. Hibbert Hichens v. Congreve Hickman v. Reineking Hicks V. Cram Higbee v. Bacon Higgens v. Sargent Higginbottom, in re Higgin's case Higgins V. Packard Higjfinson v. Air 19, 35, 55 301 415 491 203, 333, 334 1121,1130 496' 4, 777 315 338 930 755 1227 129, 357 Hill, ex parte (Co. B. L.) 922, 1030 (1 Dea. 123) (3 M. & A.) (2 N. R.) - V. Burnham - V. McNeil - V. Hill - V. Manchester Waterworks Company 915 954 926 324 674 332 770 378 659 659, 660, 661, 763 939 1132, 1135 698 164 918 110, 395 199, 328 255 20, 85, 384 243 332 526 423 44 395 125 310, 338 Hodgkinson, ex parte (Coop.) 361, 444, 467, 912, 945, 948 (19 Ves.) 444, 467 V. Reardon V. Sydney Hillaker v. Loop Hillier, ex parte Hills V. Nash V. Ross Hine v. Lart Hitchcock, ex parte V. St. John Hite V. Hite Hoag V. McGinnis Hoare v. Dawes Hobart v. Howard V. Stone Hoby V. Roebuck Hodenpyl v. Vingerhoed Hodges I'. Dawes V. Harris V. Holman V. Parker V. Travers Hodgson, ex parte V. Murray V. Temple Hogan V. Reynolds Hogg V. Ashe V. Bridges V. Kirby Holbrook v. Wright ■ V. Lackey 1067 920, 939 360 76 391 764 848, 1040, 1045 162 458 765 Holdsworth v. Hunter HoUiday v. Camsell V. McDougall Hollingsworth, ex parte HoUister v. Barkley Holman v. Jackson Holmes, ex parte V. Blogg Hglderness u. Shackles 125, 323, 853, 1188 784 388 777 1060 315, 335 77 1057 13, 529 V. Burton 412, 478 V. D'Camp 6 74 V. Biggins 265—55, 1116 V. Mentz 824 V. Old Colony Railroad 39,40 V. United Ins. Co. 20, 23 V. WiUiamson 282, 286 Holroyd v. Breare 799, 809 Holt u. Kernodle 17,38 V. Ward 13 Holtscombe v. Rivers 301 Holwell, ex parte 939 Holyland v. De Mendez 238 Hone V. Webb 353 Honore v. Colmesnil 167, 178, 196, 322, 335 Hood V. Aston 340, 341, 361 Hooper, ex parte 626 V. Lusby 438—1218 Hopeu. Cust 496—417,505 Hopkins a. Banks 423, 430, 780 V. Smith 71, 91, 315, 769 Hopkinson v. Smith 71 Horbach v. Huey 644, 656 Horn V. Baker 892, 901 V. Gilpin 1206 Horner u. Moore 712,718 Horseley, ex parte 1020 V. Rush 464 Horsey's case 853, 858 Horsey v. Heath 580 Horton v. Child 481 Hosack V. Rodgera 606, 608 Houghton, ex parte 891 V. Houghton 135, 152 Houlton's case 589 Hourguebie v. Girard 281 Houston V. Darling 1228 V. Stanton 125 Howard v. Cobb 779 V. Jemmett 883 V. Poole 858 V. Priest 125, 1 29, 135 V. Warfield 761 Howden (Lord) v. Simpson 1175 Howe I). Thayer 116, 533 Howell V. Brodie 510 — 265, 1083 V. Harvey 8, 109, 119, 181, 291, 297, 360, Howland v. Strickland 760 TABLE OF CASES. XXXV Hoxie V. Carr 125, 135, 155 Hubbard, ex parte 929 V. Johnstone 1224 Hubble V. Perrin 580 Hubert v. Nelson 384 Huckey, ex parte 762 Hudson V. Kobinson 713, 788 Hughes V. Ellison 395 V. Walker 674 Hume V. BoUand 452,453 Humphreys v. Knight 767 Humphries u. HoUis 365 V. Chastain 541 Hunt V. Benson 135, 998 V. Bridghatn 423 V. Koyal Exeh. Ass. Co. 442 Hunter, ex parte (1 Atk.) 476, 891, 918, 990 (Buck) 986 Hunter, ex parte (2 Rose) 981, 1020 V. Martin 135 Hurd V. Darling 382 Hurst V. Gwennop 1038 Husband, ex parte 952, 957, 969, 971 Hussey v. Allen 1223, 1224 Hutchings v. Sims 533 '•—^ — ■ V. Hudson 533 V. Bank of Tennessee 533 Hutchinson v. Smith 391, 456, 688, 920 U.Whitfield 237 Hutt V. Gfes 1149 Hutton V. Eyre 288, 608, 753 Hyatt V. Hare 392 Hyde V, Stone 383, 1217, 1219 I. lUingworth v. The Manchester and Leeds Railway Com- pany 1181 Ilsley V. Jewett 432 Inglis V. Haigh 376 Innes v. Lansing 103, 354 V. Stephenson 609 Instone v. Bridge Company 1161 Ipswich Manuf. Co. v. Story Irby V. Brieham V. Vimng Ireton v. Lewis Irons V. Perchard Irvine v. Hamlin V. Young Isler V. Baker Israel v. Simonds 332 105 533 361 54 298 371 292, 559 i ■ 674 Japaud V. French 449, 641, 642 Jackman v. Mitchell 360 Jackson, ex parte (1 Ves.) 522, 891, 921 (5 Ves.) — (8 Yes.) 938 1059 71 813 1132 920 428 687 141 401 22, 23, 1185 209, 223, 256 274, 281 Jacky V. Butler 822 Jacobs V. McBee 481 Jacobsen v. Hennekenius 339, 381 Jacomb v. Harwood 578, 587, 596 -, m re • V. Chambers ■ V. Cocker ■ V. Cornell ■ V. Fairbank - V. Galloway - V. Jackson - V. Petrie - V. Robinson - V. Sedgwick ■ V. Slopherd Jaffray v. Frebain Jaggers v. Binning James a. Bixby V. Bostwick V. Brown V. Clayton V. Hackly V. Kynnier V. Sadgrove Jameson v. Franklin Janson, ex parte Jaques v. Hulit V. Marquand 720 785, 1228 i222, 1224, 1226 47:1 288 818, 1226, 1227 909 1011 368 769 926 281 391,401,412, 456, 478 Jarvis v. Hyer 821 Jefifreys v. Small 124, 136 Jefferson, The Ship 177 Jefferys o. Smith (3 Russ.) 192 — 1 (1 J. & W.) 165 Jell u. Douglas ^ 674 Jenkins v. Blizard 533, 534, 690 V. De Groot 580 Jennings, ex parte V. Estes V. Griffiths V. Rundall Jennison v. Hapgood Jepson, ex parte Jervis v. Tayleure — ' — V. White Jessup V. Cook Jestons V. Brooke Jesus Coll. !). Gibbs Jewett V. Stevens John V. Dacie Johns, ex parte 939 774, 776, 778 1222, 1223 738 336, 337 1035 853 305, 306, 340, 341 178, 371 63 687 776 379 1002 XXXVl TABLE OF CASES. Johnson v. Ames 129, 374, 665 ^ V. Beardslee 423 «. Curtis 373 y. Evans 822,824 V. Hudson 76 V. Hunt 877 V. King 822 . V. Peck 449 Johnston v. "Warden 86, 774 Jones, ex parte 891 — : — t). Bird 1155 V. Clayton 822 0. Davids 378 V. Fleming 761 V. Garcia del Rio 1101 V. Gibbins 896 II. Gibson 808 V. Hardesty 129 V. Harraden 281 V. Herbert 636 V. Hunter 403, 783, 796 V. Jones 167, 315, 335, 338 V. Maund 635, 837 V. Morehead 339 V. Noy 292, 293 — u. Pengree 376 V. Perry 360 V. Pitcher 1235 V. Sheers 536, 537, 780 V. Yates 360, 498, 643, 644, 1037 Jordan v. Wilkins 78, 298, 667, 1230 Joseph V. Fisher 769, 777 Jowett i». Charnock 667 Judd V. Wilson 267, 289 Judson V. Adams 25, 39 ■ ■ V. Gibbons 720 Julia, The 647 K. Kane v. Bloodgood Karthaus v. Ferrer Kaskaskia Bridge v. Kay V. Johnston V. Pollock V. Stead Keasley v. Codd Keating v. Marsh Keble v. Thompson Kedie, ex parte Keeler v. Adams Kell V. Nainby Kellog V. Griswold Kelly V. Eckford V. Greenleaf V. Hurlburt V. Sanborn Kemble v. Farren 374, 375 438, 439 Shannon 779 22, 125 120 1050 1078 452 947 915 760 662 79 380 178, 182 4, 120, 536 430 254, 688 Kemble u.Kean 219 Kemp V. Andrews 666, 670 V. The London and Brigh- ton Railway Company 1155 Kempson v. Saunders 1098 Keriflall, ex parte 578, 934 Kennedy v. Lee 161, 162 V. McFadon 281 Kensington, ex parte (2 Ves. & B.) 623, 626 (14 Ves.) 925 Kentucky, Bank of, v. Brooking 421, ■447 Kerr v. Hawthorne 331 Kerridge v. Hesse 1091 Kershaw v. Matthews 231, 354 Ketohum v. Clark 110, 530, 533, 534 478, 514, 524 1008 Kaby 1102 655 768 845 454 541 250 281, 371 219 1009 116 930, 931, 935 198 • 769 757 757 638 667 ■ V. Durkee Key V. Flint Kidwelly Canal Co. v. Kieran v. Sanders Kiffin V. Willis Kilby V. Stanton Kilby V. Wilson Kilgour V. Finlyson Kill V. HoUister Killam v. Preston Kimberley v. Jennings Kinder v. Butterworth Taylor King, ex parte — — V. Beeston V. Ham V. Hoare V. Hobbs ». Smith Kingham v. Robins Kingman v. Spurr Kingston v. Llewellyn Kinnersley v. Hossack V. Mussen 764, Kinney v. Ensign Kinsman v. Barker V. Dallam Kirby, ex parte V. Carr V. Cogswell V. IngersoU Kirk V. Hodson Kirkley v. Hodgson Kirkman v. Newstead Kirkpatriok v. Love Kirwan v. Kirwan 521, Kitchen v. Campbell V. Strawbridge 110, 561, 708 1010 469 332 379 667 £03, 968 293 401, 655 365, 394 197, 389 891 657 315 569, 570 1038, Knapp V. McBride Knebellf White Knight V. Parry Knott V. Morgan 1040 298 113,401 800,345, 1131 ,1208 162 TABLE 01" CASES. XXXVU Knowles v. Haughton Knox V. Campbell V. Sohepler Kramer v. Arthurs Kyle V. Kyle 300, 1130— 37, 60 1185 129 3 816 L. Lacy V. Kynaston 753 V. M'Neil 424 -^— V. Woolcott 447—120, 866, 973 Ladbrooke, ex parte 950 Ladd V. Griswold 125 - — V. Hill 382 Ladue v. Hart 761 Lafavour u. Yandes 430 La Forest, ex parte 963 Lagow u. ]?atterson 469 Lake u. Cradock 133, 13S V. Duke of Argyll 1091 — — V. Silk 708 Lakin V. Watson 747 Lamalere v. Caze 281, 371 Lamb v. Durant 1185, 1194, 1217 !). Singleton 540 Lambert's case 394, 649 Lancester Canal Co., ex parte 1138 "• 840 258 1166 578, 587 1009 932, 1076 580, 723 197,421 381 366 Lanchester u. Thompson Lane v. Drinkwater ». Newdigate V. Williams Lanesborough v. Jones Lanfear, ex parte Lang u. Keppele Langan v. Hewett Langdale, ex parte Langley u. Earl of Oxford Lansing v- Gaine 495, 532, 540, 544 V. M'Killup 44 1 , 443 Lapham v. Green Latham v. Kenniston Lausdale v. Bradbear Lavender, ex parte Laverty v. Burr Law, ex parte V. Ford Lawler u. Kershaw 659, 660, 763 288, 787 51 1063 421, 447, 495 955 190, 354 1087 Lawrence v. Clark 264, 27?, 282, 284 437 394,467 529 340, 349, 352 719, 1018 463 537, 776, 779 181, 312 533, 896, 926 97, 389 • V. Dale u. Taylor Lawson v. Lovejoy V. Morgan Layton, ex parte V. Hastings Lea V. Guise Leach v. Leach Leaf, ex parte Leavitt w. Peck Leehmere v. Fletcher 431, 757 Ledden v. Colby 666 Lee, ex parte 935 , in re 926 V. Lashbrook 167, 183, 338 u. Milner 1169, 1182 Lees, ex parte ' 852 u. Smith 62, 263, 681 Leeson v. Holt 534 Lefevre K. Boyle 652,712 Legh V. Legh 636 Leigh V. Everhart 360 U.Thomas 361,837 Leighton v. Wales 253 Leonard v. Huntington 1200, 1222, 1223, 1226, 1235 V. Leonard 298 Le Roy U.Johnson 215,401,447,478, 530, 545 Le Texier v. Margravine of An- spach 364 Leveck u. Shaftoe 659 Levett, ex parte 1022, 1026 Levi, ex parte 1064 Levy V. Cadet 430 Lewin v. Smith 739 Lewis V. Billing 1132 ■ V. Culbertson 764 V. Langdon 162, 215, 360 V. Post 769 Liardet v. Adams 296 Liddel, ex parte 967, 1018 Liddell V. M'Vicker 337 Liddiard, ex parte 543, 942 Lightfoot u. Heron 12 Lingen u. Simpson 243 — 248 Linner v. Dare 580 Lister, ex parte 1062 Little u. Blunt 430 Littlewood v. Caldwell 351 Livingston v. Cox • 51 V. Hastie 447, 495 V. Lynch 198 17. Roosevelt 92, 98, 384, 387, 394,401, 421,437, 447, 483, 494, 495 Lloyd, ex parte (1 Glyn & Jam.) 440, 627 (3 Deac.) 627 ■■ (1 M. & A.) 440, 892 V. Archbowle 659 V. Ashby 408—384, 525 V. Williams 747, 748 Lobb, ex parte 911, 945 Locke V. Stearns 445, 446 Lockier w. Smith 332 Lockridge u. Wilson 777 Lodge u. Fendall, Assignees of, ex parte 990, 995 XXXVlll TABLE OF CASES. Lodge V. Dicas 488, 567, 712 Lomas, ex parte 1055, 1056 London Assurance Co. v. Bold 614 London and Brighton Railway Co. V. Fairclough 1161, 1162 — V. Wilson Long V. Carter V. Majestre V. Younge Longman, ex parte V. Pole 1149, 1163 421, 483 184 361, 1123, 1165 1075 455, 668 674 Longridge v. Brewer Loomis V. Marshall 40—24, 25, 35, 44 ■ V. Pearson 441, 541, 698 Lord V. Baldwin 659, 660, 763, 822, 948 V. Brig Watchman 877 V. Ferguson 1222, 1223, 1235 Loring v. Brackett 441, 636 Loscombe v. Kussell 300, 345, 1130, Lovejoy v. Bowers Lovelace's case Lovell V. Hicks . V. Whitridge Low V. Copestake V. Mumford Lowe V. Peers Lowndes v. Taylor Lowry v. Brooks Lowthrop V. Smith Loyd, ex parte V. i'reshfield Lucas V. Bank of Darieu . V. Beach V. De la Cour V. Sanders Luckett V. (iraham Lunt V. Stevens Lyles V. Styles Lyndon v. Gorham Lyon V. Haynes Lyons v. Hamilton Lyster v. DoUand M. 1131 123 465 55, 446 764 655 729 253 363, 830 35 382 929 391,401, 477, 480 120, 530 265 688 463 787 606, 645 178 821, 822 1150 580, 757 136 McAllister v. Montgomery 135 McArthur v. Ladd 44, 246, 465 McBride v. Hagan 468, 471 McCarthy v. Nixon 666 McConnel v. Hector 14, 647 McCoy V. Lightner 794 McCulloh V. Dashiell 580, 581, 920, 924, 1010 McCuUough V. Sommervile 110, 298, 467 McDaniel v. Wood 541 McDermot v. Lawrence 135 McDonald v. JSTeilson 760 McDowell V. Blackstone Canal Co. 548 V. Heath 374 V. Wood 15 McFarland v. Crary 451 McFadden v. Erwin 765 McGae, ex parte 623—873 Me Gee v. Bank of Mount Pleas- ant 462 McGillivray v. Simpson 761 McGraw v. Pulling 210 McGregor v. BainBridge 55 V. Cleveland 402, 655, 685 McGuire v. Ramsay 135 Machell, ex parte 928 V. Kiniiear 685 Mcllreath v. Margetson 196, 285 McJntire v. Oliver 426, 430 Mclver v. Humble 93, 533, 1223— 808 Mack V. Spencer 743 Mackay v. Bloodgood 462, 465 McKinney v. Bellows 761 McLain v. Carson 580, 757 McLellan v. Cumberland Bank 608 V. Crofton 376 McMahon v. Murphy 757 Macmahon v. Upton 1124 McMeekin v. Edmonds 360 McBIichael v. Johnson 742 McMicken v. Ficklin 770 McMurray v. Rawson 298 McNair v. Fleming 405 McNaughten v. Partridge 462, 467, 481 McNeil V. Reid 204 ■ — - V. Reynolds 437, 769 McNeillage v. HoUoway 655 McNeven v. Livingston 437 McOwen v. Hunter 972 McPherson v. Rathbone 540, 774, 776 MoWorter v. MoMahan 467 Maddeford v. Austwiok 178, 180 Madgwick v. Wimble 129, 357 Madison Co. Bank v. Gould 100, 101, 103 Magill M. Merrie 120 Main waring v. Mytton 7 » t V. Newman 642, 681 Mair v. Glennie 32 — 41 Makepeace v. Haythorne 368, 377 Mande v. Rodes 361 Manderston v. Robertson 427 Mandeville v. Wilson 376 Mann v. Locke 428, 430 TABLE OF CASES. XXXIX Mant V. Mainwaring 791 Manuf. and Mech. Bank v. Gore 446 V. Win- ship 401, 411 March u. Ward 413 Marchington v. Vernon 653 Marcy u. Clark 573 Mare v. Malaohy 1128, 1129, 1130, 1131 Markham v. Jones 86 : V. Merrill 156 Marks, ex parte 604 1). Pell 1223 Marlin, ex parte 946, 1031 Marquand v. New York Manuf. Co. 8, 109, 110, 119 V. Webb 787, 1226 Marriot v. Shaw 822 Marsh, ex parte 627 V. Blakesley 61 V. Gold 51, 483 V. Keating 452 V. Kobinson 654 Marshall v. Colman 215, 246, 247, 297, 346, 1131 V. Marshall 307 Marsteller v. Weaver 375 Marston v. Brackett 381 Marten v. Van Shaick 162, 354 Martin, ex parte 883,935, 1018, 1060 — ^ V. Crompe 132, 666 — V. Heathcote 376 V. Kirk 540, 541 V. Koote 779 V. Trumbull 135 V. Walton 534 Martineau v. Cox 846 Marvin v. Stone 332 Marwiek, in re 924, 926 Marzetti v. Williams 738 Mason, ex parte 1062, 1066 V. M'Connell 8, 110, 384 V. Jonett 608 V. May 332 -^ V. Rumsey 410 V. Wickersham 481 Masson," ex parte 953, 966 Master v. Kirton 297, 340, 361, 367 Matthews, ex parte 948, 950 , (3 Ves. & Bea. 125) 86, 1058 V. Wallwyn 373 Matthewson v. Lydiate 263 Maudslay v. Le Blanc 1090 Mauldin v. Bank of Mobile 533 V. Branch Bank 421, 496 Mauran v. Lamb 791 Mavor, ex parte 848 Mawman v. GUlett *660, 687 Max V. Koberts Maxey v. Averill May V. Brown V. May V. Smith Mayberry v. Barniton Mayhew v. Cricket V. Eames Mayor of Colchester v. Lowten of King's Lynn v. Pem- 733 580 764 649 690 421 606 442 360 berton Meader v. Leslie V. Scott Mears v. Serocold Medbury v. Watson Meeker v. Marsh Meinhertzhagen, ex parte Melan v. Duke de Fitz James Melane v. Spencer Meliorucchi v. Koyal Exchange Assurance Company 301 1170 764 764 463 668 371 911, 945 646 561 Mellish V. Bell Melville v. Brown Mercien v. Mack Merriam v. Wilkins Merrill v. Bartlett Merryweather v. Nixan Merseroau v. Norton Mervey, ex parte Mervick's case Merwin v. Smith Mastaer v. Gillespie Metcalf 's case Metcalfe v. Bruin 421 678 822 437, 483 529 1187 282, 286 382, 383, 822 922, 1030 877 352 1196 298 621 V. Royal Exchange As- surance Company 381, 396 V. Ry croft 651 Methodist Episcopal Church v. Jaques 315 Meux V. Humphrey 413, 442 u. Maltby 840 Meyer u. Sharpe 170 — 13, 172 Middleditch v. Sharland 373 Mifflin V. Smith Milbank v. Revett Milburn v. Codd Miles, ex parte V. Stanley V. Thomas 109, Millar v. Craig Millard v. Ramsdell Miller v. Bartlett V. Douglass V. Lord V. Manice V. M'Can V. Parnell V. Sims 214, 310, 411 354 266 1034, 1035 250 186, 219, 300, 345, 1131 316, 338 324, 335 44 495 335, 367 391, 496 368 819 13, 529 xl TABLE OE CASES. Milligan v. Milledge 840 Mills, ex parte 930 V. Argall 103, 110 V. Barber 392, 394, 395, 401, 462 V. Bennett 848 V. Hanson 304 V. Osborne 233 Miln V. Spinola 1223 Milne v. Bartlett 293 V. Moreton 877 Milton V. Mosher 399, 467 Mlnchin, ex parte 930, 1056 Minor V. Gawj 501 Minnet v. Whitney 98, 387, 388 Minturn v. Seymour 351 Mitchell, ex parte 444 V. Cookburne 57, 60, 62 w. Ball 4,659,667 V. Harris 250, 251 V. Lapage > 632 V. Lenox 368 V. Newark 1132 V. Oldfield 764 V. Ostrom 540 '— V. Koulstone 776 V. Tarbot 727, 747 ■ V. Williams 458 Mitohum v. Bank of Kentucky 533 Moale V. HoUins 481, 757 Mobley v. Lombat 822 Moderville v. Keever 8, 688 Modiset v. Lindley 465 Moffat V. Farquharson 22, 1218, 1220 V. Van Millengen 642 MoUer v. Lambert 621 Monkhouse v. Hay 891 Monro, ex parte 896 Munroe v. Ezzell 659 Montgomery, ex parte 855 Moody V. King 796 V. Payne 166, 340, 821, 822, 831 Moon V. Story 385, 339 Moor V. Hill 651 Moore, ex parte 974, 975, 986 V. Hammond 1106 V. Sample 822 V. Wilson 298 Moravia v. Levi 276, 280 Moreton v. Hardern 458 Morgan, ex parte 444 — V. Goode 352 V. Watmough 821 Morisset v. King 65 Morley v. Newsome 234 V. Strombom 701 Morony v. O'Dea 368 Morrell v. Parker Morris, ex parte V. Barret V. Colman 707 1056 133 221 V. Harrison 373—232, 371 V. Jones 467 V. Kearsley 146, 147, 154 Morrison v. Blodgett 166, 821, 831 V. Stockwell 269 Morrow v. Belcher 727 V. Saunders 207 Morse u. Bellows 467,545,546,638 V. Donelson 430 V. Slue 732 V. Wilson 64, 262, 645, 681 Morsly v. Hanford 631 Mortimer v. Capper 206 Morton v. Croghan 720 V. Webb 659, 662 Moss V. M'CuUough 759 Motley V. Dowman 162 Mouchet V. The Great Western Railway Company 1180 Moult, ex parte 969, 970, 1005 Mountjoys v. Holden 382 Mountstephen v. Brooke 636, 716 Mowatt V. Howland 533 Moyes v. Brumaux 770 Muldon V. Whitlock 478, 1225, 1226 MulhoUan v. Eaton 301 Mullet V. Hook 719 Mumford v. M'Kay 110, 115 Munn V. Baker 534 Monroe v. Conner 389 V. Cooper 119, 494 Murphy v. Donlan 808 Murray v. Boprt 8, 110, 281 V. Columbian Ins. Co. 654 V. Mumford ~ 113, 118, 129, 343, 383, 540, 545, 576, 666 V. Murray 125,362,665, 723, 853, 1061 V. Rawson 298 V. Somerville 749 V. Tolland 371 Murrill V. Neill 920 Musgrave v. Medex 358 — 247 V. Drake 494 Musier v. Trumpbour 24, 272 Musson V. May 331 Mutrie, ex parte 848 Muzzy V. Whitney 36, 44, 78, 79 Myatt V. St. Helens and Runcorn Gap Company 1158 Myers v. Edge 624 — 421 V. Myers 336 V. Huggins 642 TABLE OE CASES. xH N. Napier v. Catron National Banii v. Norton Natusch V. Irving Naylor v. Wellington Neal V. Fisher V. Hassan V. Keel Neale v. De Garay ■ V. Turtou 533 463 540, 544 212, 345 845 743 539 298 746 1117 332 606 379 1060 776 Norris, ex parte V. Harrison V. Kennedy 1058 229 834 Neave's estate Nedham's case Nelme v. Newton Nelson v. Cherrell V. Lloyd V. London Assurance Co. 1138 Neltliorpe v. Dorrington 671 Nerot V. Burnand 109, 115 Nesbit V. Patten 458 738 708 124, 830 1227 844 183 817 360 551 769 534 366 837 745 584, 97, Newberry v. Colvin Newcomb v. Peck Newell V. Townsend Newhall V. Hussey Newland v. Champion V. Tate Newman v. Bagley V. Miller Newmarch v. Clay Newnham v. Tetherington Newsome v. Coles Newton V. Bennett V. Earl of Egmont I'. Verbeke New York Fire Ins. Co. v. Ben- nett 387,421,447,480 Nicholls V. Dowding 771 Nichols V. Auguera 571 V. Hughes 437, 483 Nicholson v. Gauch 77 V. Revill 606 Nicoll V. Glennie 458, 727, 800, 809 V. Mumford 125, 822, 1185, 1186, 1187, 1188 Nivan v. Spickerman 245, 246 Noble V. M'Clintock 506 Nockles V. Crosby 271, 1085, 1097, 1098 282 724, 767, 769 109, 851 420, 421, 928 662, 674, 685 688, 791 361, 710, 948 787 Noel V. Bowman Noke t'. Ingham Nokes, ex parte Nolte, ex parte Norcross v. Clark Norden v. Williamson Norfolk, ex parte Norman v. Norman 419. North River Bank v. Aymar 447 Norton v. Seymour 412, 414 Norway v. Eowe 297, 352 Norwich and Lowestoft Naviga- tion Company v. Theobald 1104 Notley, ex parte 245, 264, 850 Nott V. Downing 443 Nowlan V. Geddes 748 NuUington v. Fox 162 Nutt V. Hunt 580, 739 Nuttall, ex parte 920 O. Oakley t). Aspinwall 40,46,48,77 2). Pasheller 563 Ocean Ins. Co. v. Kider 765 Ockendon, ex parte 1008 Odenwelder v. Odenwelder 298 Odiorne v. Lyford 382, 383 V. Maxcy 441, 779 Ogden u. Saunders 877 Ogilvy, ex parte 9 74 Ogle, ex parte 930, 972, 976, 990 Wrangham 1218 Ognel's case 208 Ohl V. Eagle Ins. Co. 1200 Oldaker v. Lavender 225, 360, 589, 841 Oliver v. Hamilton 353 Olmstead <,. Hill 44 O'Mealey v. Wilson 14 Omychund v. Barker 338 Onondaga Co. Bank v. De Puy 391, 480 Ord V. Portal 656, 674, 685, 1050 Orleans, The Steamboat, v. Phoe- bus 1205 Orr V. Chase 587 Osborne v. Brennan 23, 86 V. Harper 288, 649 ■ ~ o: Williams 373 Osgood V. Spencer 723 Ostrom V. Jacobs 776 Ouston V. Hebden 1205 Overton v. Tozer 469 Oviatt V. Sage 1218 Owen 0. Body 45 O wings V. Lowe 423 Owston V. Ogle 1231—261, 1150, 1220 u. Hebden 1209 Ozias V. Thompson 281 xlii TABLE OF CASES. Paehelor, ex parte Page, ex parte V. Carpenter V. Fry V. M'Crea V. Newman V. Thomas 1065, 1074 920 822 677 199 338 789 Paine v. Thatcher 183, 264, 271 Palmer v. Mitchell 456 V. Green 761 V. Stevens 215, 411, 412 Pardoe w. Price 1158 Parish v. Lewis 894 Parker, ex parte 1C32 V. Barker 89, 97, 774, 847 V. Cousins 540 u. Danforth 702 V. Gossage 233 V. Lawrence 768 V. Macomber 541, 544, 642 • V. Merrill 423 V. Muggridge 853, 861 U.Norton 767 V. Phillips 118, 121, 546 V. Pistor 827, 832 V. Eamsbottom 238, 574, 985 ^ V. Wise 683 Parkes, ex parte 851 Parkin v. Carruthers 480, 530, 534 Parks V. Rucker 374 Parminter, ex parte 940 Parr, ex parte 627, 958, 960, 1034 Parry, ex parte (2 Glyn & Jam.) 1053 — ^ (5 Ves.) 893 Parsons v. Crosby 661, 687 V. Spooner 1130 Part, ex parte 1033, 1034 Partridge v. Wallbank 702 Pasoall V. Horsley 767 Pasmore w. Bousfield 1233 Pate V. Bacon 674 Paterson v. Long 365 !/. Zachariah 543 Paton, ex parte 930 Patten v. Gurney 445, 668, 780, 1230 Patterson v. Choate 430 Pattison v. Blanchard 38, 281 V. Grace 51 Patten V. Calhoun 199 V. Schooner Randolph 1187 Payler, ex parte 939 V. Homersham 752 Payne u. Ives 417,420 V. Matthews 125, 920 Paynes v. Coles 315 Payntor v. Houston 330 Peacock, ex parte 960 Peacock v. Peacock (16 Ves.) 96, 109, 119, 168, 188, 352, 3.54, 381—16 Peake, ex parte (2 Rose) 926 (1 Madd.) 575, 900, 902 Pearce v. Chamberlain V. Piper !'. Solcombe Pearson v. Garden V, Keedy V. Lord V. Skelton ■ V. Williams 281 242 836 125, 187 654 283, 691 254 486 620, 631, 649, 655 Peel w. Thomas 97 Peele, ex parte (Buck) 401,444 (6 Ves.) 522, 651, 916 Peirce v. Bowles 754 V. Tobey 528 Pemberton, ex parte 901 Pease, ex parte V. Hirst V. Oakes 228, 421, 600, 617, 634, 635 Pendleton v. Phelps 580 Penny v. Martin 759 Penoyer v. Brace 817 People V. Norton 358 Perchard v. Whitmore 677 Perham v. Raynal 427 Perine v. Hankinson 44 Perley u. Brown 275 Perrin v. Keene 491, 540 Perring v. Hone 414, 1085 Perrot v. Bryant 840 Perry v. Jackson 443, 468, 684 — ^ — V. Nulfit 162 V. Osborne 34 V. Weller 1174 Person v. Carter 467 Peter v. Beverly 909 M. Rich 986 Peters v. Davis 663, 1230 V. Sandford 759 Petre (Lord) v. The Eastern Counties Railway Co. 1172 Petrie v. Bury 262, 652 V. Hannay 56 xj. Jackson 367 Petriken v. Collier 44, 107, 121 Pettit V. Shepherd 360 Petty V. Smith 697 Pettyt v. Janeson 209, 224 Pewtress v. McCullum 687 Phelps u. Sproule 872 Phillips V. Atkinson 357 V. Bridge 822 V. Cook 166, 824, 881 %>. Crammond 135 V. Hopwood 1060 TABLE OF CASES. xliii Phillips V. Phillips (Rep. temp. Pinch) 332 (1 M. & K.) 144, 145, 153, 154, 156 V. Purington 686, 1185 V. Turner 183, 316 Philson V. Bampfield 580 Piatt V. Oliver 135, 156, 216, 394 Pickens v. Garnet 674 Pickering v. Rigby 380 Pierce v. Jackson 445, 821 V. Kearney 756, 787 V. Pass 501, 506 V. Tiernan 125 V. Trigg 133, 135, 156, 313 Pierpont v. Graham 110, 119, 394, 395 Piersall v. Elliott 360 Pierson v. Hooker 394, 467, 468 V. Robinson , 1236 V. Steinmyer 64 Pigot V. Bagley 230 Pike V. Bacon ' 465, 467 ■■ V. Warren 430 Pillans V. Harkness 3S0 Pinder v. Wilks 540 Pine, ex parte 990 Pinkerton, ex parte 920, 927 Pinkney v. Hall 401, 408 Pipe V. Steele 792, 794 Pitcher v. Barrows 530, 533, 777 Pitchford v. Davis 1084, 1098 Pitkin V. Pitkin 602 Pitman v. Planters' Bank 178, 696 Pitt «. Smith 12 Pittam V. Foster 425 Pitts V. Waugh 3, 4, 51 Place V. Sweetser 822 Plant, ex parte 1138 Piatt V. Halen 763 Plowden, ex parte 986 Pocock I). O'Shaunnessy 814 Poignard v. Livermore 544 Poindexter v. Waddy 520 Pollard, ex parte 646 V. Stanton 78 Ponton u. Dunn 229 Poor V. Carlton 352 Poole, ex parte 1064 Pope V. Haman 827 Porter v. Cresson 674 !>. Cummings 401,743 V. Harris 809, 810 1'. Lane 765 J). McCIure 21 y. Neckervis 761 Porthouse v. Parker 443, 794 Portland Bank v. Hyde 642 Posey V. Bullitt 462 Post V. Kimberley 20—23, 38G, 514 Postan V. Stan way 723 Postmaster-General i'. Furber 548 Pott II. Eyton 35, 38, 40, 78 Poucher, ex parte 797 Powel, ex parte 1054, 1055 Powell V. Fullarton 747 V. Layton 733, 734 V. Waters 443 Powers V. Heery 352 Powrie v. Fletcher 761 Pozzi V. Shipton 736 Praris v. Marline 1229 Prentiss v. Sinclair 532, 533, 534 Prescott, ex parte 962 Preston !). Strutton 269,277,1118 Price V. Edmunds 631 V. Towsey 530 V, Williams 251 Prickett i). Down 879 Primrose v. Bromley 687 Prince v. Haydin 845 Princeton and Kingston Turn- pike Co. V. Gulick 120, 530 Pringle u. Crooks " 1236 Pritchard v. Draper 423, 639 Proctor u. Poole 129 Prosser v. Smith 850 Proud V. Coombes 373 Proudfoot, ex parte 1060 Pryce, ex parte 1072 Pugh V. Currie 135 Puller V. Roe 656, 762 Purviance v. Dryden 787 V. M'Clinter 86 Pusey V. Clemson 332 Putnam v. Wise 8 Q. Quinten, ex parte 1015 R. Raba v. Ryland 395 Raborg v. Bank of Columbia 740 Rackstraw v. Imber 237, 280 Radenhurst v. Bates 261, 656 Raleigh, ex parte 479 RamsDottom v. Cater 869 V. Duck 866 V. Lewis 869 V. Parker 206 Randall v. Chesapeake, &c.. Ca- nal Co. 250 V. Everest 255 V. Randall 149, 154 Randleson, ex parte 61 Ransford v. Bosanquet 1146 xliv TABLE OF CASES. Ransom v. Pomeroy Kapp V. Latham Raven v. Dunning Ravenscroft v. Wise Ray V. Davies Raymond's case Raynard v. Cliase Rawson, ex parte Rawstone v. Parr Read, ex parte V. Bowers V. Consequa — — V. Dews Reade v. Bentley Redington v. Farrar Reedu. Cole V. Howard V. Shephardsou V. Upton V. White Rees V. Berrington V. Bradford Reeve, ex parte V. Davis ■ V. Parkins Regina v. Birmingham and Glou- cester Railway Co. ■ V. Birmingham Canal Co. 166 166 909, 560, 930 580 450 797 726 1042 194 611 972 256 936 349 351 351 18 725 62 , 822 , 822 1227 1227 563 125 , 972 1222 291 1152 1154 — - V. Eastern Counties Rail- way Co. 1151, 1155 V. London and Birming- ' 1152 1154 1153 , 948 7,28 337 , 809 458 1154 1151 718 1185 1093 694 801 825 694 461 458 825 825 694 1151 ham Railway Co. — u. N. Midland R. W. Co. V. Scott Reid, ex parte 931 V. UoUinshead 173,397—1 V. Rens. Glass Factory Revett V. Browne 731, Rex V. Almon V. Brecknock and Aberga- venny Canal Co. V. Bristol Dock Company V. Chapman V. Collector of Customs at Liverpool V. Dodd V. Gaby V. Hardwick V. Hodge V. Leach — : — V. Manning V. Pearce V. Rock V. Sanderson ■ V. Scott V. Severn and Wye Rail- way Company Rex V. Shakespeare 747 V. Topham 458 V. Young 718 Reybold v. Dodd 183, 326 ReynelU'. Lewis 1127 Reynolds, ex parte 1036 V. Cleveland 386, 478 V. Toppan 34, 35, 44 Rhind v. Wilkinson 678 Rice V. Austin 32, 36, 44, 173, 822 V. Barnard 125, 154, 155, 576 V. Shute 580, 713, 715, 717 Rich V. Coe 1228 V. Pilkington 727 Richards v. Davis 299, 300, M30, 1131 V. Heather 723, 740 Richardson, ex parte (Buck) 602 (3 D. & C.) 851 V. Bank of England 803 V. Boright 13 V. Chapman 182 u. 'French 391 ■ ■ V. Goodwin 931 V. Hastings 300, 1125, 1131 ■ — V. Larpent 1126 V. Packwood 135 ■ V. Wyatt 133, 135, 156 Richmond o. Heapy 449, 537 Richter v. Selin 770 Ridgby v. The Great Western Railway Company Ridgeley v. Cary Ridgeway v. Darwin Ridgway v. Phillip Ridley v. Taylor Rigby, ex parte Rigden v. Pierce Riley, ex parte Ring V. Franklin Ripley v. Kingsbury V. Waterworth 1177 125, 128 315 786 502, 790 444 227, 313 1010 1223, 1235 401,478 142, 156, 158 761 Ritchie V. Moore V. Williams River Dun Nav. Co. v. North 332 Midland Railway Co. Rix, ex parte V. Smith Roach V. Pendergrast Robb V. Stevens Roberts, ex parte V. Anderson V. Bate 117 983 337 281 588, 920 1063 352 747 V. Great Western Rail- way Company 365 V. Hardy 14, 647 V. Rowan 674 Robertson v. Archer 315 TABLE OF CASES. xlv Robertson u. Lockie 293 V. Mills 696, 790 V. Smith 606, 725, 757, 1233 V. Wilkinson 384, 535 Robey v. Howard 749 Robins v. Cooper 822 V. Willard 776 Robinson, ex parte 862, 865, 972, 983 V. Alexander 376 65 506 110, 135, 395 1230 363 1218 442 374 352, 1166 668 668, 670 891 15 315 540 198 537, 719 281 298 273, 688 — V. Anderson V. Bland ■ V. Crowder V. Gushing V. Field V. Gleadow V. Hofman V. Hook V. Lord Byx'on V. Mansfield V. Marchant V. M'Donnel V. Reynolds V. Scotney V. Taylor V. Thompson V. Wilkinson V. Williams V. Wright Robson V. Curtis V. Drummond 625, 661 Rochester, Bank of, v. Bowen 421 V. Monteath 215, 386,411 Rockwell V. Wilder 269, 270, 231 Rodick V. Hinckley 1207 Rodriguez v. Hefiernan 125, 822 Rodwell V. Redge 6S0 Rogers k Batchelor 437,495,500 V. Coit 215, 411, 481 V. Mackenzie 1006 V. Rogers Rolfe !>. Peterson Rollins V. Stevens Rolston V. Click Roosevelt v. McDowell Rootes V. Welford Rooth V. Quin Rordasnz v. Leach Rose V. Hart V. Murohie V. Sims Ross, ex parte V. Drinkwater V. Knight Rothery v. Howard Rothwell V. Humphreys Rowe, ex parte — V. Wood 267, 642 254 421 421 723 540, 546 389, 534, 772 1050 1008 660, 763 1008 749, 1010 44 761 687 390 1024 189, 190 Rowland v. Boozer 51 Rowlandson, ex parte (3 P. W.) 757, 940, 952, 961 (1 Rose, 91, 92) 418) Rowley v. Adams V. Stoddard 37, 40, 44, 82, 1062 (1 Rose, 898, 1062 152, 166, 174 606, 608 Rowlinson v. Hallifax 368 Roxby, ex parte 912, 945 Ruddox's case 637 Ruffin, ex parte 125, 174, 876, 894, 905 Ruggles u. Patten 1233 Russell V. Austwick 180 V. Green 298 V. LangstaflF 544 V. Perkins 628, 629 V. Swan 644 Rutherford, ex parte 1075 Rutland's (Countess of) case 237 Ryall V. Rowles 896 Ryan v. Mackmath 360, 361 Ryder v. Bentham 1167 Sadler, ex parte V. Lee V. Nixon 927 293, 294 284, 1215 1053 1000, 1001 382, 383 44 Safibrd, ex parte St. Barbe, ex parte St. John V. Standring St. Victor V. Daubert Sale y. Dishman 471,481,580,600 Salem Mill Dam Corp. v. Ropes 1084 Sally V. Capps 281 Salmon v. Davis 468 V. Randall 1170 Salomons v. Nissen 55, 166, 393 Saltoun V. Houston 282 Sampson v. Lord Graves 702 Samson v. Braginton 1224, 1225 Sanborn v. Merrill 382 Sanders v. King 370 Sanderson v. Brooksbank 448 V. Milton Stage Co. 530 Sandford v. Handy 1084 Sandham, ex parte 521 Sandilands v. Marsh 418, 421, 437, 484, 485 Sandys v. Bladwell 376 Sanford v. Mickles 541, 544, 545 Sangar v. Gardiner 248, 378 Sangster v. Mazarredo 775 San Jose Indiano 14, 167 Sanson v. Bell 616 Saunders v. Williams 877 xlvi TABLE OF CASES. Saunderson v. Hudson Savage v. Carter Saville v. Robertson Sawyer v. Proctor Sayer u. Bennet V. Chaytor Scaife v. Jackson 742 135 516—416, 524, 527, 719, 783 272, 264 292 715 910 Schack V. Antony 652, 712 Schatzill V. Bolton 822 Schell V. Schroder 332 Schermerhorn v. Loines 478, 1225 t'. Schermerhorn 421, 688, 790 Schieffellin v. Stewart 336 937 9, 113, 119, 214 834 546 361 769, 777 536, 758 1040, 1041 262, 652 539 761 694 822 1185 430 910, 945 Schlesinaer, ex parte Scholefield v. Eichelberger V. Heafield Schoneman v. Fegley Scott V. Bank of England V. Blood I/. Colmesnil V. Franklin 17. Godwin I'. Shepherd V. Treat Scott's case Scrugham v. Carter Seabrook v. Rose Searight v. Craighead Seddon, ex parte Sedgworth v. Overend 667, 668, 672 Seeley v. Boehm Seely v. Schenck Selkrig v. Davies Sells V. Hubbel Servante v. James 844, 846 674 141, 145 584 261, 1220, 1230, 1231 481 129 Settle V. Davidson Shad V. Fuller Shakeshaft, Stirrup, and Salis- bury, case of 1000 Sharp V. Day 1127 V. Warren 275 Sharpe i>. United States Ins. Co. 1200, 1235 Shaw, ex parte V. Harvey V. Picton V. Pratt 444, 1036, 1068 646 552 606 608 757 Shed V. Pierce Sheehy v. Mandeville Sheffield, Ashton-under-Lyne, and Manchester Railway Co. V. Woodcock 1163 Shelton v. Cooke 423, 780 V. Pollock 743 V. Walker 1036 Shepard v. Hawley Shepley v. Waterhouse Sheppard, ex parte V. Bailie V. Oxenford Sheridan v. Medara Sherman v. Ballow V. Sherman Sherwood v. Marwick Ship Anne and Waterhen AppoUo Frances Jeiferson Julia Jonge Tobias Karasau Margaret Mary Nathaniel Hooper Nostra Signora de los Do lores Venus Sherreff v. Wilks 497—520, 724 Shott !;. Strealfield 4, 86, 774, 775 Shotwell V. Miller Shropshire v. Shepperd Shubrick v. Fisher Shurlds V. Tilson Shute V. Taylor SifFkin v. Walker Sigourney v. Drury V. Munn 443 430 1033 702 59 46 760 373 445 1205 1205, 1209 1195 177 647, 1067 1229 1229 1206 1224 1228 1224 1197 Sillitoe, ex parte Silsby V. Lunt Simmonds v. Du Barre Simmons v. Gutteridse V. Tongue Simms v. Kertley Simonds u. Centre Simons v. Johnson Simonton v. Boucher Simpson, ex parte V. Feltz V. Geddes V. Howden V. Rackhan V. Vaughan Sims V. Bond V. Britain V. Willing Simson ;;. Cooke V. Ingham Sisters, The Sitler V. Walker Skinner v. Dayton 119, 462, 467, 471 V. Stocks 660 Skipp V. Harwood 112, 353, 354, 825 Skrine v. Sloop Hope 1209 606 29 86 533, 534 254, 255 401, 474 426, 430 130, 135, 310, 312, 321, 324 1002, 1004 425 380 332 584 316 757 752 780 1035 44, 335, 339 423, 430 . 360 240, 275, 578 578, 584, 585 630 1213 23, 514 617, 620 384, 552, 620 1200 340, 822, 831 TABLE OF CASES. xlvii Slater, ex parte 607,914 V. Lawson 427, 590, 591 V. "Wheeler 834, 841 u. Willis 1195 Slatter v. Carroll 580 Sleech's case 683, 600, 859 Slegg V. Phillips 793, 794 Slingsby's case 262 Slipper V. Slidstone 674, 764 Sloo V. State Bank of Illinois 463 Sly, ex parte 937 Small V. Attwood 834 V. Lord Fitzwilliam 254 Smith, ex parte (Buck) 986 (1 Glyn & Jam.) 998, 1052, 1062 (Johns.) 822 (3 Mad.) 893—216, 889, 891 (2 Rose) 939 — (5 Ves.) Ill (1 Dea.) 952 (2 M. & A.) 1033 V. Allen 794 V. Argall 101 V. Bailey 401 V. Barker 822 V. Barrow 268, 674 0. Black 757 V. Barnham 3, 4, 51 V. Campbell - 815 V. Craven 477, 515, 517 V. De Sylva 323, 1188 V. Duke of Chandos 209 V. Edwards 95, 125 V. Fromont 346 V. Fuge 776 V. Goddard 1040, 1045, 1050 V. Goldsworthy 1148 V. Griffith 777 V. Hicks 649 V. Hunt 685 V. Jackson 135, 156 V. Jameson 386, 456, 476, 571, 947 V. Jeyes 297, 353 V. Jones 3, 51, 135, 315 U.Kerr 467 V. Lowe 454 V. Ludlow 423 V. Mapleback 753 V. Milles 1038 V. Oriel 383, 850, 853, 863 V. Pickering. 779 V. Rogers 561 V. Smith 156, 159, 217, 889 V. Stokes 383, 853 V. Stone 468 u. Tarlton 3,135 Smith V. Trivas 401 V. Tupper 463 V. Watson 28, 29, 30, 42, 887, 969 V. Winter 466, 542, 606 Smyth, ex parte 790, 960 Smythe v. Hawthorn 666 V. Smythe 352 Snaith V. Burridge 454, 500 V. Mingay 544 Sneed v. Wiester 551 Snellgrove v. Hunt 1039 Snow, ex parte 902 Soames, ex parte 1010 Society of Science v. Abbot 1121 Solly V. Forbes 606—752 Solomon, ex parte 957 V. Solomon 210, 335 Solomons v. Medex 692 V. Nissen 648 Somerville v. Mackay 379-221, 249 Soper, ex parte 970 South V. Tanner 718 Southard v. Lewis 580 V. Steele 439, 470 South Carolina Bank J). Case 386,482 V. Hum- phreys 534, 540, 54l South-Eastern Railway Co. v. Hebblewhite 1163 Southmayd v. Backus 702 Southwick V. Allen 533 Spalding v. Mure 707, 740 V. Smith 794 V. Swift 698 Sparhawk v. Russell 920 Sparrow v. Chisman 449 — 637 Spear u. Gillet 481 V. Newell 281, 289 Spencer, ex parte 1 1 38 V. Billing 87, 97, 770, 849 — — V. Spencer 235 V. The London and Birmingham Railway Co. 1172 Sperry's estate 584 Spicer V. James 164 Spring V. Gray 376 Spurs V. Houston 614 Squire v. Allen 298 Staats V. Howlett 162,413 Stables v. Ashley 739 V. Eley 530 Staeey v. Deeey 763 Staffiard, ex parte 1053 V. Bryan 374 u. Gold 674 Stagg V. Beekman, 332 Stanborough, ex parte 919 Staniforth v. Fellowes 761, 1049 xlviii TABLE OF CASES. Stanley v. Ayles 1230 Stanley v. Chester and Birken- head Railway Co. 1176 Stansfield v. Levy 71 9 Starling v. Cozens 814 Starr v. Knox 1222, 1235 Stead V. Mohun 715 ti. Salt 470—438,485 Steams v. Haven 86 Stebbins, ex parte 166, 822 Steele v. Jennings 391, 430 Steere v. Steere 1223 Steiglitz V. Egginton 464 Stent V. Bailis 1099 Stephens, ex parte 1018, 1014, 1015 Stephenson v. Chiswell 580 Sterndale v. Hankinson 375 Stevens v. Gaylord 332 V. Morse 189 Steward v. Graves 1144 Stewart v. Gibson 60 Stiles, ex parte 1053, 1054 Stocker v. Brocklebank 35, 40, 44 Stockton V. Dawson 232, 328 V. Frey 445 Stokes V. Stokes 681 Stone V. Dennis 250 V. Marsh 452 Stonehouse v. De Sylva 1040 Stones, ex parte 1068 Storeru. Gordon 753 V. Hinckley 401 V. Storer 337 Story, ex parte 1030 V. Johnson 235 Stoughton V. Lynch 182, 225, 316, 319, 224, 335, 336 Stoveld, ex parte 974, 983 Stowers v. Barnard 759 Strange u. Lee 616 — 620 Strangford v. Green 471 Stratford and Moreton Railway Co. V. Stratton 1104 Streatfield v. Halliday 850, 1041 Street v. Rigby 234, 251 Strelly v. Winson 1205 Strong V. Harvey 62 -' t. Stewart 1223 Strother v. Willan 776 Stroud, ex parte 1002, 1004 Strutt, ex parte 1033 Stuart V. Rogers 808 Studdy V. Sanders 772 Sturges V. Beach 581 St. "S^ictor V. Daubert 44 Sullivan v. Evans 780 V. Greaves 57 Sumner 1). Hampson 125, 133, 156,584 V. Powell 339, 581—585,256 Sumner v. Tileston V. Whitaker 729 1223 Supervisors of Chenango v. Birdsall 688, 790 Surridge, ex parte 1053 Sutton V. Clarke 727, 809 V. Gregory 401 V. Irwin 421 Swan V. Stedman 467 V. Steele 87, 401 Swanzey, ex parte 954 Sweetser v. French 421 Sylvester v. Smith 478 T. Taftu. Buffum 17,109,110 Taggard v. Loring 34, 35, 44, 1200 Taitt, ex parte 929 Talbott V. Rutledge 315 Talleyrand v. Boulanger 646 Tamplin v. DigginS 1009 Tanner v. Hague 609 Tapley v. Butterfield 384, 394, 399, 467 Tappan v. Abbott 720 V. Bailey 787, 788, 1078, 1084, 1139 V. Blaisdell 822 V. Bruen 702 Tarleton, ex parte 743 V. Backhouse 847 Tarlton «. Herbert 673 V. Hornby 363, 842 Tar River Navigation Company J). Neal 1161 Tatam v. Williams 374, 376 Tate, ex parte 922, 1030 Tatlock V. Harris 651 Tattersall v. Groote 360, 250 Taunton v. Pepler 377 Market, clerk of, v. Keinberley 667 ~, &c., Turnpike v. Whit- ing 1161 Taylor, ex parte 883, 974 V. Cawthorne 339 V. Clemson 1156 V. Coryell 439, 470, 698 V. Davies 300 V. Field 125, 340, 822, 831, 853 V. Harris 745 V. Haylin 373 V. Henderson 787 V. Hillyer 495 V. Knox 337 : V. Neville 203 V. Rutherman 708 TABLE OF CASES. xlix Taylor v. Salmon 834, 1121, 1129, 1180, 1131, 1135, 1166 — V. Shaw 371 V. Taylor 167 V. Terme 39 V. Thompson 156 Tearfue v. Hubbard 1118 Teed v. Baring 1125 V. Elworthy 661, 664, 762 Teller u.Muir 685 Temple v. Hamilton 808 Tennessee, Bank of, v. Saffarans 421 Terrell, ex parte 984 Terrill v. Richards 95, 245 Tevis V. Steele 156 Texiere v. Da Costa 354, 364 Thacker v. Shepherd 665—1047 Thames Tunnel Company v. Sheldon 1105 Thayer v. Lane 35 Thicknesse v. Bromilow 385, 390, 402, 774 Thomas v. Bishop 1140 V. Courtnay 753 V. Da Costa 617 V. Frazer 578 V. Graham 360 V. Harding 437 U.Leigh 361 V. Litchfield 287 V. Pike 256 ■ V. Kideing 1040 «. Shilliber 567 Thomason v. Frere 665, 761, 871, 1047, 1049 Thommon v. Kalbach 530, 770 Thompson, ex parte 987, 1052, 1061 V. Brown 603, 604, 605 '- V. Cook 382, 1219 V. Cotter 739 V. Finden 1226 V. Hamilton 1228 V. Haskins 667, 671, 1230, 1232 V. Lamb 315 '— u. Lay 13, 529 V. Leake 1195 I'. Percival 562—569, 570, 597 u. Powles 1101 V. Ryan 175, 176 V. Snow 34, 35, 40 V. Williamson 167 Thorndike v. De Wolf 23, 1185 Thorne v. Halsey 367 V. Hicks . 1200; 1222 Thornton v. Dixon 138, 140, 158 V. lUingworth 664, 720 V. Proctor 183, 334 E Thorpe, ex parte 499 <;. Jackson 583, 584, 587, 841 Thring v. Edgar 370 Thurston v. Perkins 105, 120 Thwaites v. Richardson 779 Tickel V. Short 371 Tiele v. Campbell 1233 Till V. Wilson 1060 Tillier v. Whitehead 442 Tillson V. Warwick Gas Co. 1116 Tinkler v. Walpole 776 Tippet V. Hawkey 256 Tobin, ex parte 1062, 1068 Todd V. Maxfield 767 Toland v. Sprague 376 Tom V. Goodrich. 481, 741 Tombeckbee Bank v. Dumell 530, 543, 544 Tomlin v. Preston 707 Tomlins v. Laurence 637 Tomlinson u. Burke 673 V. CoUett 769 V. Ward 333 Tooker's case 468 Tooker v. Bennett 606 Torrey v. Buck 360 Totty V. Donald 674 Toulmin v. Copeland 304, 306, 319, 361 Towle V. Kirkland 298 V. Pierce 840 Townsend, ex parte 1036 V. Devaynes 143, 144, 154 V. Goewey 267, 270, 281, IIU V. Neale 54 V. Riddle 606 Trafton v. United States 757, 758 Trappes v. Harter 140, 892 Tredwell v. Roscoe 822 Tredwen v. Bourne 97, 1085 Trimbey ji. Vignier 646 Trimble v. Coons 462 Troughton, ex parte 940 Trowbridge v. Cushman 822 Trueman, ex parte 1022 Tubbs V. Richardson 382 Tuber ville u. Ryan 467 Tucker v. Oxley 1010, 1011 Tuckerman v. Newhall 606 Tupper, ex parte 983 V. Hay thorn 396 Turner, ex parte 947, 999 V. Bissell 32, 35, 40, 44 V. Burrows 654, 1213 V. Davies 754 V. Portal _ 702, 707 Turnipseed v. Goodwin 167 1 TABLE OF CASES. Tuttle V. Cooper 720, 722, 733, 768, 776,794 Twiss V. Massay 819, 858, 922 Twogood, ex parte 1010 Twopenny v. Young 649 Tyson v. Pollock 481 U. Union Bank v. Eaton 478, 566 V. Hall 546 V. Knapp 373, 376 United Insurance Company v. Scott 23, 135 United States v. Astley 462, 468, 481 V. Cushman 580, 757 V. Hack 822, 823 V. Kennan 649 V. Kirkpatrick 548, 552 V. Wardwell 548 Bank v. Binney 386, , 401,411,214, 310,316, 384 University of Cambridge v. Bald- win 617 Universities of Oxford and Cam- bridge V. Richardson 221 Upbam, ex parte 1068 Usborne, ex parte 897 Usher v. Dauncey 544 Utica, Bank of, v. Messereau 379 Valentine v. Ford 15 Vallance, ex parte 1138 V. Siddell 63 Vallett V. Parker 401 Van V. Corpe 839 Van Bramer v. Cooper 720, 766 Vance v. Blair 204 Vanderburgh v. Hull 40, 44, 686 Van Deusen v. Blum 464 Van Epps v. Van Deusen 368 V. Dillaye 533 Van Hook v. Whitlock 374 Van Ness v. Forrest 269, 272 Van Eeimsdyke v. Kane 401, 580, 788 Van Sandau v. Moore 380, 1128 Van Vechten v. Terry 840 Van Zant v. Ray 788, 793 Vann v. Barnett 306 Vaughan, ex parte 941 Vauxhall Bridge Company v. Earl Spencer 1184 Venables v. Wood 18 Venning v. Leckie 246, 270 Vere v. Ashby 407, 524, 537 Vernon v. Jeffries 656, 712 V. Manhattan Co. 447, 533 V. Vawdry 373 Vicary's case 423 Vice V. Fleming 387, 389 Vinal V. Burrill 423, 779, 1200, 1235 Vincent v. Holt 629 Vining, ex parte 920 Voguel, ex parte 922, 1030 Vose V. Philbrook 761, 840, 844, 1010 VuUiamy v. Noble 103, 120, 361, 538, 593, 841, 1012, 1014 w. Waddell v. Cook 822 Waddington v. Vredenburg 129 Wade V. Stiff 748 Wadeson v. Richardson 241 Waggoner v. Gray 315, 361 Wagnon v. Clay 421, 483 WaQing V. Toll 315 Wainwright v. Waterman 230 Wait's case 862 Wait, in re 829, 874, 878 Waithman, ex parte 443 Wake V. Wake 953 Wakeman v. Grover 920 Waland v. Elkins 38, 458 Walburn u. Ingleby 1130 Walcott u. Canfield 437, 737 Walden v. Sherburn 78, 386, 392, 423, 446, 779 Waldo Bank v. Greely 401 V. Lumbert 447 Walker, ex parte 964 V. Consett 372 V. Duberry 423, 779 V. Fitz 668, 822 V. Harris 207, 245 V. Leighton 761 V. Long 281 V. M'CuUoch 606, 608 V. Eawson 667 Wallace v. Agry 909 V. Fitzsimons 666 Wallis V. Fairman 481 V. Savil 727 Wallworth v. Holt 300, 361, 113 », 1131, 1135 Walmsley v. Lindenberger 720 Wain V. Hewes 764 Walsh V. Adams . 822 Walstab v. Spottiswood 1098 Walton V. Dodgson 629, 674 V. Robinson 480 TABLE OP CASES. li Walton V. Shevburne 18 Walworth V. Holt 361 Wankford i>. Wankford 832 Want V. Reece 245 Ward V. Barber 132 V. Haydon 804 V. Howell 423, 780 V. Hotter 471, 478, 481, 597, 755, 757 V. Smith 679 V. Johnson 481, 606, 757 ■ V. Levinston 659, 660 Ward's case 589 Warder, ex parte ■ 938 Wardlaw v. Gray 580 Wardwell v. Haight 533 Waring v. Robinson 469 Warner v. Barber 1060 V. Griswold 50 Warren v. Taylor 243 ■ -in re 3,95,412,414 V. Wells 761, 766 Warwick i'. Bruce 13 Washburn v. Goodman 118, 119, 120, 199, 214, 328, 335 r. Bank of Bellows Falls 822, 920 Wassou V. Gould 761 Waters v. Paynter 685 V. Taylor 112, 243, 291, 292, 297, 353, 251, 828 - — ■■ V. Tomkins 426, 429, 552 Watklns, ex parte 999 (2 M. & A.) 883 V. Hill 909 Watkins v. Huntley 1098 Watkinson v. Bank of Pennsyl- vania 532, 533, 534 Watson, ex parte (Buck) 686 (19 Ves.) 617— 619, 4, 44, 948 (2 Ves. & B.) 456, 948 (4 Madd.) 972 (16 Ves.) 853 — ^- (3 Dea.) 1070 • (3 Mont. & A.) 682, 1071 VVatson v. Heusgl 761 — ; — V. Medex 937 V. Owens 696, 758 ■ V. Welles 443 Watton ». Penfold 1158 Watts V. Brooks 56, 60 AVaugh V. Carriger 481, 566 V. Carver 81—30, 46, 51, 83, Way V. Bassett Weal V. King 427, 592, 694 737 Weaver v. Prentice 776 V. Tapseote 471, 481 Webb, in re 196, 282 V. Manchester and Leeds Railway Company 1166, 1172, 1180 Webber v. Tyvell 376, 666 Webster v. Webster 120, 360, 538, 693 Wedderburn v. Wedderburn 188 — 130, 324, 327 Weed V. Richardson 495, 506 !'. Small 371 Weld V. Bonham 837 V. Oliver 382, 383, 1219 Welford v. Liddell 374, 376 Wellington v. Mackintosh 251 Wells V. Evans V. Masterman V. Wells Welsford u; Wood Welsh, ex parte V. Speakman 421, 447 410 275, 300 649 1060 769, 776 Wendell v. Van Rensselaer 361, 834 Wendover y. Hogeboom 1200,1222, 1235 West ». Randall 361 V. Skip 125, 166, 318, 363, 851, 853, 886 Westcott V. Price Westerlo v. Evertson Weston V. Barton V. Penniman Wetmore v. Baker Weymouth V. Boyer Whale V. Knight Whaley v. Moody Wharton v. Fisher V. Woodburn Whately v. Menheim Wheeler, ex parte V. Van Wort 642 50, 272, 281, 284 617 1200, 1135 38, 490, 491 840 593 421 863 471 773 41, 48, 898 109 Wheelwright v. Depeyster Whelan v. Watmough Whelpdale's case Whistler v. Webster Whitaker v. Brown 386, 390, V. Salisbury Whitamore v. Waterhouse Whitcomb v. Whiting V. Williams White,* ex parte V. Hale y. Murphy V. Osborne / V. Phelps V. Union Ins. Co. 671 298 714 963 391, 412 753 735 423, 426 1227 851 430 533 382, 1219 382 764 lii TABLE OF CASES. Whitehead, ex parte 1009 V. Bank of Pittsburg 792 - — V. Hughes 665 Whitesides v. Lafferty 324, 355 Whitford V. Tutin 774 Whiting V. Farrand 853, 546 Whitman U.Leonard 114,295,530,533 Whitmore, ex parte 562 Whitney v, Dutch 529, 654 D.Ferris 775,778 V. Sterling 776, 777 Whittle !;. M'Farlane 199,328 Whitton V. Smith 110, 394 Whitwell V. Thompson 869 V. Warner 115 Whitworth v. Davis 364 Whyte w. O'Brien 1011 Wickes V. Strahan 858 Widdifield v. Widdifield 686, 770 Widow's (The) case 1130 Wiggins V. Hammond 391, 423 V. Tudor 606, 607 Wightman v. Townroe 602, 604 Wilbran, ex parte 851, 1059 Wilby V. Phinney 199, 246, 281 Wilcox V. Singleton 439, 470 Wilde V. Jenkins 371 V. Keep 784 Wilder v. Keeler 580, 920, 962 Wildes V. Fessenden 567, 570 Wildman, ex parte 935 Wilkins u. Reed 1226,1227 Wilkinson v. Frasier 31 V. Henderson 582, 583, 591, 841 Wilkinson v. Jett 21 V. Root 801 V. Tockington 206 Wilksj;. Back 413 V. Davis 251 Willandon i>. Sylvestre 371, 388 Willet-t). Chambers 446—50 Willett V. Blanford 327 Williams, ex parte (Buck) 651, 902, 916, 917 (11 Ves.) 125, 174, 578, 895, 896, 902 V. Bingley 340 V. Dakin 254 V. Donaghe 840 V. Gilchrist 496 V. Gridley 426, 429 V. Henshaw 245, 270, 281 V. Hodson 481 V. Jones 213, 509 V. Keats 534, 535 V. Mudie 774 V. Thomas 447, 448, 483, 1227 Williams v. Walbridge V. Williams 421 347 Williamson, ex parte 1026 D.Johnson 412 V. Naylor 602 U.Wilson 112,119,358 Willings V. Blight 1205, 1208 V. Consequa 606, 757 Willis V. Dyson 388, 389 u. Hill 412,430,478 V. Jernegan 371 Willock, ex parte 928 Wilsford 0. Wood 656,667 Wilson, ex parte 49, 892, 1047 V. Barthrop 541 V. Conine 822 • V. Coupland 650 V. Cutting 275,1220 ■ — V. Dickson 1229 V. Edwards 710 V. Gamble 671 V. Greenwood 190, 227, 311, 355 V. Hirst 756, 793, 795 V. Jennings 561 V. Mower 636 — V. Niles 702 !;. Reddall 716 V. Reed 382, 1219 V. Stanhope 1132, 1135 t. Torbet 423 ■ V. Wallack 649, 659 V. Whitehead 18 ■ V. Williams 421, 506 V. Wilson 332 Winch V. Keely 883 Windham v. Patterson 851 Winship v. Bank of United States 384, 386, 391, 392,411, 480 V. Bass 332 Winslowu. Chifielle 135 V. Tarbox 1.223 Winsor v. Cutts 34, 1228 V. Savage 337, 338 Winston v. Ewing 822 Winter v. Kretchman 1040 I'. Innes 591,592,597 V. White 279 Wintle V. Crowther 384, 506, 537 Wish V. Small 35 Withers v. Withers 316, 334 Withington v. Herring 36 Withnell u. Gartham 198 Witter V. Richards 166, 822, 832, 948 Wood V. Braddiok 422, 423, 531 V. Connell 384 V. Dodgson 858, 972, 985 V. Vallette 78 V. Wilson 235 TABLE OF CASES. liii Wood's case Woodbridge v. Swann V. Wilkins Woodcock V. Kirby Woodford v. Darwin V. Downer Woodrop V. Price V. Ward Woods V. Carlisle V. Duke of Argyll Woodward, ex parte , in re V. Cowing V. Gyles V. Newliall V. Schatzell Wood worth v. Downer 423 AVooldridge v. Wilkins Wooley, ex parte v. Batte WooUey v. Kelly V. Gordon Worrall v. Grayson V. Jones Worthington, ex parte Worts V. Pern Wray, ex parte V. Hutchinson V. Milestone Wrenshall v. Cook Wrexham v. Hudleston 9, Wride, ex parte Wright V. Bonter V. Court V. Hunter 282, V. Paulin V. Post V. Powell 1024 862 156 709 544 546 920 125, 584 761 1091 428 70 21, 24 254 720 348 540, 541 135, 157 935 288 817 844 691 791 1029 317 1070 201, 296 277, 281 761 115, 292 1020 338 801 288, 986 805 649, 667 86 Wright V. PuUani V. Russell V. Welbie V. Wright Wrightson v. Pullan Wyatt V. Hodson Wych V. Meal Wyld V. Hopkins Wylie, ex parte Wynne v. Anderson Yale, ex parte V. Eames Yallop, ex parte Yandes i'. Lefavour Yateman v. Woods Yates V. Petty Yonge, ex parte York V. Blott Yorke V. Fry Young, ex parte V. Axtel V. Baimer V. Brick V. Goodson V. Hunter — V. Keighly Younge, ex parte 541 Z. Zeng V. Bailey Ziele V. Campbell 534 614, 616 078 336 532, 543 426 771 1227 928 800 858 , 542, 546, 666 891 423, 430, 468, 638 135 321 182, 997 789 330 22, 978, 1187 " 86—48 793, 796 281 441 384, 769, 958 828, 898 982 606 713 MEMORANDUM TO THE THIRD EDITION. As the original paging has not been preserved, the amount of matter that has been added to this Third American edition is not apparent. But, in fact, there have been added in this edition over three hundred pages of the size of those in the original work. [Iv] TREATISE ON PARTNERSHIP. BOOK THE FIRST. OP THE. CONSTITUTION OF THE CONTKACT OE PAETNEESHIP. CHAPTER I. OF THE FORMATION OF THE CONTRACT. § 1. The law of partnership, as administered in England and iu the United States, rests on a foundation composed of three materials : the common law, the law of merchants, and the Roman law. Thus, by the common law, a partner has no power to bind his copartner by deed. By the law of merchants, he has a power to bind his copartner by a bill of exchange ; again, by the law of merchants, there is no survivorship in the partnership stock. On the other hand, though there be no survivorship in the stock, yet by the Roman law, the surviving partners have the right to carry on the business by themselves, in exclusion of the children or representa;- tives of the deceased partner. § 2. But merchants were always considered as subject to the jurisdiction of the common law.^ And accordingly it is in the dis- cretion of the judges to determine how far the law of merchants, shall be permitted to control the law of the land. Thus, although in the words of Hobart, C. J., " the custom of merchants is part ' Beawes, 38. 1 2 CONSTITDTION OF PARTNERSHIP. [BOOK I. of the common law of this kingdom, of which the judges ought to take notice ; and if any doubt arise to them about their custom, they may send for the merchants to know their custom, as they may send for the civilians to know their law ;"^ yet, on the other hand, Lord Holt says, " we take notice of the laws of merchants that are general, not of those that are particular usages." ^ And again, in a case where it was contended, that, according to the usage of merchants, a partner ought to be allowed to bind his copartners by deed, the Court of King's Bench held the contrary, Lord Kenyon observing, that the law of merchants was part of the law of the land ; that in mercantile transactions, in drawing and accepting bills of exchange, it was never doubted that one partner might bind the rest. But the power of binding each other by deed was then for the first time insisted on ; and the consequences of permitting such a power to exist would be highly dangerous to the public interests.^ § 3. Persons in trade may be viewed in the situation either of partners as between themselves, or partners quoad third persons.* Partnership as between the parties themselves is a voluntary con- tract between two or more persons for joining together their money, goods, labor, and skill, or any or all of them, under an un- derstanding that there shall be a communion of profit between them, and for the purpose of carrying on a legal trade, business, or adventure.^ A learned writer has observed, that, under the » Wineh. 24. " 2 Salk. 443. ' 7 T. R. 210. * These latter are not in truth partners at all. What iscalled a partner- ship as regards third persons (^quasi partnership), is nothing more than a number of persons, who, in consequence of certain acts done by thera, are held liable for each other's conduct, as if they had entered into a conti-aet of partnership amongst themselves. This distinction should be borne in mind. * " Societas est contractus juris gentium, bonaj fidei, consensu constans, super re honest^, de luori et damni communione ; quam inire possunt omnes liberam habentes rcrum suar.um administrationem." Voet. Comm. lib. 17, tit 2, s. 1. " Societas est contractus quo inter aliquos res aut opera3 com- munioantur, lucri in commune faciendi gratia." Vinn. Comm. lib. 3, tit. 26, s. 1. " Ita posse coiri societatem non dubitatur, ut alter pecuniam conferat, alter non conferat; et tamen lucrum inter eos commune sit; quia ssepe opera alicujus pro pecunia valet." Inst. lib. 3, tit. 26, s. 2. And see Puifendorf, lib. 5, 8 ; Wats. Partn. 1. The following definition is adopted by Mr. Chan- ceflor Kent, — M Partnership is a contract of two or more competent persons to place their money, effects, labor, and skill, or some or all of them, in law- CH. I.] FORMATION OF THE CONTRACT. 3 Romans, the social contract or partnership needed no other solem- nity but the consent of the parties, -without any •writing at all ; and that, according to the civilians, a partnership is contracted some- times tacitly ; -where, for example, a thing being bought in com- mon is not di-vided, but the parties interested, -without explaining themselves further, enjoy it equally, each sharing in the profit that arises, and contributing his o-wn proportional part in the necessary expenses for its maintenance.^ The same observations are apph- cable to the la-w of England. To constitute a private unincor- porated partnership, no contract in "writing is necessary ; the acts and words of the parties are alone sufficient for that purpose.^ There may, however, be a partnership in the business of purchas- ing and selling real estate.^ And, although such a partnership, so ful commerce or business, and to divide the profit, and bear the loss, in cer- tain proportions." 3 Kent Comm. 24. Substantially the same is adopted by Mr. Justice Story. Story Partn. § 2. See also Gilmore v. Holt, 2 Fairf. 489 ; Beecham v. Dodd, 3 Harr. 485 ; Howell v. Harvey, 5 Ark. 278. A partnership may exist in a single transaction as well as in a series. 3 Kent, 30; In re Warren, Daveis's Rep. 323 ; Story, Partn. § 81. If there is a joint purchase, with a view to a joint sale, and a communion of profit and loss, it is a partnership trade, although it is confined to a single thing. In re "Warren, Daveis's Eep. 323. What is a partnership is a question of law ; ■whether it exists in a particular case and between any particular persons is a mixed question of law and fact. It is, however, in this latter case to be decided by the jury, who are to apply the law as given them by the court, to the facts established by the evidence. See Fox v. Clifton, 9 Bing. 117 ; 6 Conn. 347 ; Heyhoe v. Burge, 9 Man. G. & S., 457 ; Hickman v. Cox, 3 Com. B. (n. s.), 562, 563 ; Chase v. Stevens, 19 N. Hamp. 465 ; Beacham v. Dodd, 3 Harr. 485 ; Gilpin v. Temple, 4 Harr. 190. '■ Wats. Partn. 5, citing Barbeyrac's notes to Pnffendorf. See also. Dig. lib. 17, tit. 2, s. 4; and Dig. lib. 22, tit. 7, s. 5 ; also Voet. Comm. lib. 17, tit. 2, s. 1. The latter author says, — " Societas dividitilr in expressam, quaj expTessS conventione fit ; et tacitam, quse contrahi dicitur, dum rebus ipsis et factis, simul emendo, vendendo, lucra et damna dividendo, socii ineundas societatis voluntatem declarant." " Peacock v. Peacock, 16 Ves. 49; Featherstonhaugh v. Fenwiek, 17 Ves. 298; Alderson v. Clay, 1 Stark. 405 ;n3 Kent Comm. 27; Smith v. Tarlton, 2 Barbour Ch. 336 ; 1 Lindley Partn. 81. But if the partnership is to commence more than a year from the making of the agreement for it, a writing is necessary. 1 Lindley Partn. 81, 82. See per Holroyd, J., in Williams v. Jones, 5 Barn. & C. 108. ' Dudley v. Littlefield, 21 Maine, 418 ; Story Partn. §§ 82, 83 ; In re War- 4 CONSTITUTION OF PAETNEESHIP. [BOOK I. far as third persons are concerned, may be proved by the same evidence as other cases of partnership ; ^ yet it was held, by Mr. Justice Story, that a contract for a partnership of this kind, if by parol, would be void under the statute of frauds, so that it would not be enforced by a court of equity.^ § 4. An ostensible partner is he whose name appears to the ren, Daveis's Rep. 320; Kramer v. Arthurs, 7 Barr, 165 ; Post, § 51, note and cases cited; Ludlow v. Cooper, A Ohio (n. s.), 1. ' In re Warren, Daveis's Rop. 320, 323; Bunnel v. Taintor, 4 Conn. 568. But see contra. Pitts u. Waugh, 4 Mass. 424. In this last case, the plain- tiff brought an action against Waugh and Greeley, and attempted to charge Greeley on a note signed by Waugh alone, and offered to prove that before and at the time of making said note, the defendants were partners, jointly negotiating together in the purchase and sale of lands for their mutual. profit, and that the note was given by Waugh on the partnership account, for lands purchased for the joint benefit of the defendants, which were conveyed to Waugh alone, but the court held the evidence inadmissible on the ground that the law-merchant, relative to dormant partners did not extend to specu- lations in land. See Smith v. Jones, 3 Fairfield, 332, 336-338. " Smith V. Burnham, 3 Sumner, 435, 458, 471 ; Story Partn. § 83 ; In re Warren, Daveis's Rep. 323, 324; Henderson v. Hudson, 1 Munf 510 ; Gray u. Palmer, 9 Califor. 616. SeeperParsons,C. J.,in Pittsu.Waugh, 4Mass.426. But in a case where two persons enter into a parol agreement, by virtue of which they were to be jointly interested in the profits arising from the pur- chase and sale of certain tracts of land, and one of them was to make the bar- gain for the purchase, and render all necessary services for that purpose, and the other was to furnish the purchase-money, and take and execute deeds in his own name, it was held, in an action brought, by the party furnishing ser- vices against the party providing money and taking and giving deeds, for a moiety of the profits made by the operation, that the case was not within the statute of frauds. Bunnel v. Taintor, 4 Conn. 568. It has also been held in England, with respect to that part of the statute of frauds which relates to lands, (1) that a partnership constituted without writing is as valid as one constituted with writing ; Essejt v. Essex, 20 Beavan, 449 ; and (2) that if a p^tnership is proved to exist, then it may be shown that its property consists of land, although there may be no signed agreement as required by the statute. See Forster v. Hale, 5 Yes. 309 ; 1 Lindley Partn. 82 ; Dale v. Hamilton, 5 Hare, 369. In this last case Vice-Chancellor Wigram held that an agree- ment to form a partnership, for the purpose of buying and selling land might be proved by parol ; that it might then be shown by parol, that certain land had been bought for the purposes of the partnership, and, consequently, that the plaintiff was entitled to a share of the profits obtained by its resale. See Fall River Whaling Co. v. Borden, 10 Cush. 458 ; Caddick v. Simpson, 2 De G. & J. 52. CH. I.] FORMATION OF THE CONTRACT. 5 world as that of a partner. A nominal partner is an ostensible partner having np interest in the firm.^ A dormant partner is he whose name and transactions as a partner are professedly con- cealed from the world.^ When they are actually unknown to the world, he is more strictly speaking a secret partner.^ But, as the law, with perhaps one exception relative to notice of retirement, is equally applicable to partners of both kinds, we shall use the word dormant as applied to both.* § 5. The contract of partnership, as existing between the par- ties themselves, gives them a right of action in their character of partners against third persons. It also enables any one of them to file his bill in equity against the others for a dissolution of the * In this case the law imposes on him the responsibility of a partner to persons who have had dealings with the firm of which he has held himself out as a member, on the faith of his being' a member. See Guidon v. Kob- son, 2 Camp. 802 ; Porter, J., 5 Miller (Louis.), 406, 409 ; Fox v. Clifton, 5 Bing. 776 ; Dickenson v. Valpey, 10 Barn. & Cress. 140; Shott v. Streath- field, Mood. & Rob, 9 ; Ex parte Watson, 19 Ves. 459 ; Hicks v. Cram, 17 Vt. 449 ; 1 Lindley Partn. 46 et seq. ^ In Mitchell v. Dall, 2 Harr. & Gill, 159, it is maintained, that in the legal acceptation of the term dormant, as applied to partners in trade, every partner is considered dormant, unless his name is mentioned in the firm, or embraced under general terms in the name of the firm or company. See Kelley v. Hurlburt, 5 Cowen, 534. " In United States Bank v. Binney, 5 Mason, 186, Mr. Justice Story, in refei'ence to the subject of secret partnership, said, — "I understand the com- mon meaning of secret partnership to be a partnership where the existence of certain persons as partners is not avowed or made known to the public by any of the partners. Where all the partners are publicly made known, whether it be by one or all the partners, it is no longer a secret partnership, for this is generally used in contradistinction to notorious and open partner- ship. And it makes no difference in this particular, whether the business of the firm be carried on in the name of one person only, or of him and com- pany.' See s. c. 5 Peters, 529. * It may further be stated, that partnerships are usually divided into two sorts, general and limited. The former is where, the parties are partners in all their commercial business ; the latter, where it is limited to some one or more branches, and does not include all the business of the partners. United States Bank v. Binney, £ Mason, 183. See Livingston v. Roosevelt, 4 John. 265 ; Reynolds v. Cleveland, 4 Cowen, 282 ; 1 Lindley Partn. 54. Universal partnerships are also within the scope of the common law, but they are of very rare existence. United States Bank v. Binney, 5 Mason, 183 ; Story Partn. § 72 ; Lyman v. Lyman, 2 Paine C. C. 11. 1* 6 CONSTITUTION OF PARTNERSHIP. [BOOK I. partnership, a sale of the partnership effects, and a division of the proceeds amongst the partners. § 6. Persons become liable as partners to third persons, either by contracting the legal relation of partners inter se, or by holding themselves out to the world as partners. For, by the law of Eng- land, not only he who is actually a partner, but he who lends his name and credit to the firm, is liable for the debts and engage- ments of the body. No restriction of hability, except by charter in England, and by statute in many of the United States,^ is per- mitted to any of the partners ; all. are liable, not only to the extent of their interest ui the joint stock, but also to the whole extent of their separate property;'^ of this we shaU discourse more at krge hereafter. SECTION I. OF THE CONTRACT OF PARTKKRSHIP BETWEEN THE PARTIES. § 7. We shall now endeavor to explain the nature of that con- tract which in law constitutes a partnership ; and for this purpose ' See post, sec. 3, of this chapter. ' 1 Lindley Partn. 34 et seq. In France, anonymous partnerships (which closely resemble such of our trading companies as are corporations, strictly so called), are not legally constituted, unless their establishment be specially authorized by the king. But trading partnerships may be constituted either en nom colleclif, or en commandite, at the discretion of the interested parties. A partnership is denominated a partnership en nom collectif, when every partner, as between himself and strangers to the society, is liable, without limitation, for all its deljts and engagements. It takes the name of a partnership en commandite, when it subsists between one or more part- ners liable without limitation, and one or more partners liable to a limited extent. If there, be more than one partner liable without limi- tation, the partnership is, at one and the same time, a partnership en nom collectif, as to the two or more who are so liable, and a partnership en com- mandite, as to those whose liability is qualified. See, further, Pari. Hist. 1825, p. 709 ; and see Code de Commerce, arts. 22, 24. Partnerships may now be limited in England by charter. See stat. 1 Vict. 73 ; and also Stat. 7 & 8 Vict. ch. 110. Limited partnerships are authorized by statutes in many of the United States. This subject will be found more fully discussed hereafter, when the subject of limited partnerships is considered. Post, sec. 3, of this chapter. CH. I.] FORMATION OF THE CONTRACT, 7 we shall advert in their order to the several points of the definition already set forth. § 8. And, first, the contract must be voluntary. Therefore, no stranger can be introduced into a firm as a partner without the concurrence of the whole firm.^ In the case of Sir Charles Ray- mond,^ a banker in the city, a Mr. Fletcher, agreed with Sir Charles that he should be interested so far as to receive a share of his profits of the business, and which share he had a right to draw out from the firm of Raymond & Co. But it was held that he was no partner in that partnership, had no demand against it, had no account in it, and that he must be satisfied with a share of the profits arising and given to Sir Charles Raymond. So, where, upon the dissolution of partnership between A. and B., father and son, it was agreed that, until the son should be provided for, the father should allow him a third of the profits, and the affidrs of the firm should finally be adjusted by arbitration; and afterwards, before any adjustment, the father entered into a new partnership with C. ; Lord Eldon held clearly, that, until such provision for B. and such adjustment, B. was a partner with A, as to a third of his ■ interest, but not a partner with A. and C.^ Upon the same prin- ciple, it seems to have been held, that, where there is no partner- ship agreement, a person filing a bill against others as his copart- ners ought to give some evidence that he has been accepted by them as a partner.* § 9. Nor will a court of equity supply any apparent defect in a partnership agreement, in order to defeat or qualify this princi- ple. By articles between A. and B., it was agreed that A. should ' Story Partn. § 5 ; Kingman v. Spurr, 7 Pick. 235, 238 ; Gilmore v. Black, 2 Fairf. 488 ; Putnam u. Wise, 1 Hill, N. Y. 234; Murray u.Bogert, 14 John. 318; Marquand !7. New York Manuf. Co. 17 John. 535; Gris- wold V. Waddington, 15 John. 82 ; Moderville v. Keever, 8 Watts & S. 63 ; Channel v. Fassit, 16 Ohio, 166. Where one partner sells out his interest to a third person, he does not thereby, without the consent of the other part- ners, introduce such third person into the firm as a partner, but the assignee will be merely a tenant in common with the other partners. Kingman v. Spurr, 7 Pick. 235. See Mason v. M'Connell, 1 Whart. 381 ; Putnam v. Wise, 1 Hill, N. Y. 234. = Cited 2 Rose, 255. ' Ex parte Barrow, 2 Rose, 255. * Bray v. Fromont, 6 Madd. 5. See Brown v. De Tastet, Jac. 284. ■ 8 CONSTITUTION OP PARTNERSHIP. [BOOK I. take B. into partnership for nine years, if B. should so long live ; but if he lived to the end of the nine years, the partnership should continue for any further time not exceeding twenty-one years, as B. should desire, on giving notice to continue it. It was provided, that, notwithstanding the death of A., it should be carried on by his representative ; and that, even if B. should give that notice, he should not have it in his option to pay off the representatives of A. and carry it on himself, but with them. A. and B. having both died, a bill was filed by the widow and representatives of B., , against the representatives of A. for an account, and for liberty to carry on the trade with the defendants ; and it was contended, on behalf of the plaintiffs, that the provision which had been made for the representatives of one party negatived the idea that the parties intended that this should be a general partnership, subject to the ordinary consequences of dissolution ; and therefore, in the absence of any express provision for the representatives of the other party, the' provision which had been made ought to be consid^ ered mutual. But the Master of the Rolls held, that, on the face of the articles, the plaintiff was not entitled to a decree to. carry on the partnership. And he added, that, on general principles, it would be of ill consequence to say, that, in articles of partnership in trade, where no provision for the death of either is made, they might subsist for the benefit of an executor, who may not have skill therein. ^ It appears, therefore, that the delectus per- sonce, as it is called, is so essentially necessary to the constitution of a partnership, that even the executors and representatives of partners themselves do not, in their capacity of executors 'or repre- sentatives, succeed to the state and condition of partners.^ The civilians carried this doctrine so far, as not to permit it to be stipw- lated that -the heirs or executors of partners should themselves be partners .3 But m this respect the law of England is other- wise.* ' Pearce v. Chamberlain, 2 Ves. 33. = Engman w. Spurr, 7 Pick. 237, 238; Story Partn. § 195; 3 Kent Comm. 55, 56. ' Domat, lib. 1, tit. 8, s. 2. * 2 Ves. 34. See also Gratz v. Bayard, 11 Serg. & R. 41 ; Soholefield V. Eichelbergor, 7 Peters, 586 ; Balmain v. Shore, 9 Ves. 600 ; Crawshay v. Maule, 1 Swanst. 521 ; Wrexham v. Hudleston, id. 514, note ; 3 Kent Comm. 56. CH. I.] FORMATION OF THE CONTRACT. 9 § 10. Notwitlistanding, however, the general rule of law which has just been propounded, it appears to have been decided in a recent case that a person, though he be not accepted or known as. a partner by the members of a firm generally, may, to some pur- poses, at least to purposes of detriment to himself, become a part- ner by means- of an agreement with individual members, under which the latter are constituted his trustees. In Goddard v. Hodges,^ the plaintiff, as solicitor to an undertaking for building a bridge over the Thames, brought his action against the chairman of the company to recover, the amount of advertisements and the expenses of a journey for furtherance of the undertaking. The defence was, that the plaintiff was a partner in the undertaking ; he having prevailed upon a person of the name of Fall to allow him to take ten shares in Fall's name. It appeared that the plain- tiff told Fall, that, as sohcitor of the company, he could not take shares himself, but that, if Fall would allow him to use his name, he -would pay the deposit and every thing required. Fall con- sented to this, and in consequence of this agreement, registered his name as a shareholder, and the plaintiff afterwards brought him a receipt for ten shares, for which Fall was never called upon to pay any thing. It appeared also, that £200 had been paid on account of these shares. Upon this evidedee, the Court of Ex- chequer directed the plaintiff to be nonsuited ; Lord Lyndhurst, C. B., and Bayley, B., both considering him as a partner in the undertaking, independently of the question of fraud in his taking the benefit of these shares contrary to the rules. Lord Lyndhurst said that the plaintiff stood in the situation of being liable for the debts of the concern ; that the claim here was for a debt against the company, and that, therefore^ on the ordinary principle that one partner cannot recover against another at law, because he would be hable to contribute, the plaintiff must fail in the action ; that Fall was a mere agent, and the case was really the same as if Goddard's name was actually in the books of the company as a -member. And Bayley, B., said, that, though the plaintiff did not think fit to be entered in the books of the company as an ostensible partner, the question was, whether he was not a real partner. The shares were taken in Fall's name, but Goddard paid all the calls. Then, as between Fall and Goddard, who would be entitled. ' 1 Cromp. & M. 33 ; 3 Tyr. 209. 10 CONSTITDTION OF PAETNERSHIP. [BOOK I. to any benefit ? "Would not every thing received by Fall on such shares be received by him to Goddard's use ? If a loss happened, ought Fall, as between him and Goddard, to contribute to bear it ? It would be most unjust if he were. The substance of the case was, that Fall should be the nominal, and Goddard the real, part- ner ; but that was the same, as far as related to all other persons, as if the plaintiff had been the ostensible partner. The conceaUng that he was the real partner could make no difference either in justice or in law. But, with great deference to the opinions of the very learned judges by whom this case was decided, it is difficult to reconcile this decision with all the principles on which the con- tract of partnership is founded. The assumption that Goddard was the real partner in these shares appears to be far too strong. It is true, that, by his agreement with Fall, he was entitled to the benefit of the profits of the shares standing in Fall's naine, but there were many other substantial rights as a partner which he could not acquire by such agreement ; and, if so, it was foreign to the question in this action to advert to the equities subsisting be- tween him and Fall. In truth, there seems to have been no sub- stantial distinction between this agreement, and that where a per- son contracts with one of several partners to share in that partner's profits, — a contract which it is clear does not render the person so contracting a partner ia the concern.^ There might, no doubt, be equitable reasons why the plaintiff, in his character of sohcitor, ought not to have entered into the agreement in question, but those reasons would be equally cogent, whether the agreement ren- dered him a partner or not. § 11. The next question which arises under the definition, is, What number of persons may be partners ? Generally speaking, there is no restriction as to the number of persons who may carry on business in copartnership.^ Where the number is great, the partnership is usually one of those which are called joint-stock companies ; which conipanies, unless they are incorporated, are Uable, with but slight exceptions, to all the laws affecting private partnership. As these companies differ in some respects from other partnerships in their formation, it will be convenient to ^ See post, Book 2, chap. 2, see. 1, art. 6, sec. 194 ; 1 Lindley Partn. 52, 53. ' There is an exception in the case of bankers; see post, Book 5, chap. 1. CH. I.] FORMATION OF THE CONTRACT. 11 speak of them more at large la a separate chapter. At present, it is proposed to consider tlie law of partnership with reference only, to ordinary partnerships. § 12. We hare next to consider what description of persons, in regard to their legal capacity, may be partners. It is obvious, that any person of sound mind, and not under knj legal restraint, may enter into a contract of partnership. It is clear, howeyer, tKat, if a person signing a partnership agreement were, at the time, in a state of perfect intoxication, evidence of this fact would be admissible to avoid the agreement ; for, in the words of Lord El- lenborough, such a person has no agreeing 'mind.^ § 13. An infant may enter into a contract of partnership, as into any other trading contract, which may possibly turn out to be for his benefit.2 And this contract may be avoided by him, either before, or within a reasonable time after he has come of age,^ though the person with whom he contracts wiU be bound by all the consequences.* It seems, likewise, to fdllow'from this doc- ' Pitt V. Smith, 3 Campb. 33; and see Fentbn v. Holloway, 1 Stark. 126 ; Liglitfoot v. Heron, 3 You. & Col. 586. But "a lunatic is hot absolutely- incapable of being a partner. Lunacy does not, of itself, dissolve a copart- nership. Post, §§ 292, 293 ; 3 Kent Comm..58 ; Jones v. Noy, 2 Myl. & K. 125; 1 Lindley Partn. 76, 77. ' See Glossop v. Colman, 1 Stark. 25 ; Holmes v. Blogg, 8 Taunt. 35 ; Goode V. Harrison, 6 Barn. & Aid. 147 ; Furlong v. Bartlett, 21 Pick. 401. In reference to -wrongs, as an infant is not liable for the torts of his agent, so he cannot be held responsible for the misconduct of his copartners. 1 Lind- ley Partn. 74. ' Co. Lit. 380 b; Ne-wry v. Enniskillen Rail. Co. u. Coombe, 3 Exch. 565 ; Dublin & Wicklo-w Kail. Co. u. Black, 8 Exch. 181. Unless he avoid or disaffirm his contract of partnership -within a reasonable time after his com- ing of age, he -will be deemed to have confirmed it, and -will be liable on subsequent contracts made on the credit of the partnership. See Goode v.' Harrison, 5 Barn. & Aid. 147 ; Holmes u. Blogg, 8 Taunt. 35 ; Eichardson v. Boright, 9 Vt. 368 ; Thompson v. Lay, 4 Pick. (2d ed ), 48, and note ; Chitty Cont. (ed. 1860), 170, 171, and notes; Miller v. Sims, 2 Hill, S. C. 479; Post, § 528. If the partnership has been dissolved before the infant partner comes of age, and the infant partner has received a note secured by a mort- gage upon the stock of the concern for his share, including profits of the partnership, he -will not be deemed to have ratified the partnership, so as to render himself liable for its debts, merely by attempting to enforce his claim upon the note and mortgage, after he has come of age. Dana v. Stearns, 3 Gushing, 372. * Hoit V. Ward, Str. 939 ; War-wick v. Bruce, 2 M. & S. 205. But see 12 CONSTITUTION OF PARTNERSHIP. [BOOK I. trine, that a father may place out his infant son as a partner, with- out incurring any responsibility aS a partner himself, provided he himself receive no advantage or emolument from the connection, and is not in the receipt of any of the profits in trust for his son. In a, case before the Court of King's Bench in Dublin, it appeared that A. B., on the formation of a partnership, invested a sum of money in the firm of his infant son ; and it was stipulated, in a letter written by the other partners of the house, that they should correctly account with A. B., as the trustee of his son for one third profit of his son's capital, or any loss that might accrue, and should he governed and directed by his advice in all matters rela- tive to the business. It was held, that this letter did not consti- tute A. B. a partner, the jury having found that the money was not invested by A. B. for his own benefit, and that he had not re- served to himself the power of drawing out the principal or profits as trustee for his son.^ At the trial of this case, at Nisi Prius, Burton, J., directed the jury, that, if a person deposit £1,000 in a partnership concern, as a capital for an infant son, and 'reserve no power over either it or the profits, he does not thereby make himself liable as a partner ; , otherwise, if he embark it in his son's name, reserving to himself a power of drawing profits or calling the partners to account, or having the profits paid to him as a trustee, although he may be Hable afterwards to account for them. § l4. As an alien ami may be a trader, and sue in personal actions,^ it follows that he may be, to all intents and purposes, a partner. But an Englishman domiciled in a foreign country at war with this country, and a fortiori, an alien enemy, cannot be a partner,^ -y- at least, he cannot sue in this country for a debt post, Book 4, chap. 1, art. 4. If the infant avoids the contract, and has de- rived no benefit from it, he is entitled to recover back any money paid by him in part performance of it. Corpe v. Overton, 10 Bing. 253 ; but he can- not do this if he Jias already obtained advantages under the contract, and cannot restore the party contracting with him to the same position as if no contract had been entered into. Holmes v. Blogg, 8 Taunt. 508 ; Ex parte Taylor, 2 Jur. (n. s.), 220 ; 1 Lindley Partn. 75 ; Breed v. Judd, 1 Gray, 455. ' Bai-klie v. Scott, 1 Huds. & Bro. 88. 2 Co. Litt. 129 b. = As soon as war is commenced, all trading, negotiation, communication, CH. I.] FORMATION OF THE CONTEACT. 13 due to the firm. "The reason," said Rooke, J., "of the dis- ability of a person resident in an enemy's country is, that the fruits of the action may not be remitted to a hostile country, and so furnish resources against this country." ' But a person is not disqualified from suing or taking out a comnjission of bankruptcy, as a partner, although he be resident in an enemy's country, if he do not trade there,^ or if he be resident there for the purposes of trade, licensed by the government of this country, — as, for in- stance, if he be resident for the purpose of receiving payments for licensed consignments.^ § 15. A feme covert cannot sustain the character of partner, because she is legally incapable of entering into the contract of or intercourse between the respective resident citizens of the belligerent nations becomes unlawful. It follows, as a necessary consequence, that a commercial partnership cannot continue to exist between such citizens, but is in fact dissolved by the breaking out of war between the countries of which its members are respectively citizens. Griswold a. Waddington, 16 John. 438. Mr. Chancellor Kent, in giving his opinion in this case, has thoroughly examined and fully exhausted all the learning on the subject. See 3 Kent Com. 62, 67 ; San Jose Indiano, 2 Gall. 289 ; Evans v, Kichardson, 3 Mer. 469; 1 Lindley Partn. 79. It is to be remembered that whether a person can be considered as an enemy or not depends, not on whether there is war between this country and his native land, but upon whether there is war between this country and the country in which he is voluntarily resi- dent. It is the place of his domicil, and not the place of his birth, which is of importance in these matters ; see Albretcht v. Sussmann, 2 Ves. & B. 323 ; Willison v. Patteson, 7 Tauni. 440; Houriet v, Morris, 3 Camp. 303 ; and therefore, if a foreigner comes over here, enters into partnership here, and dwells here, and then war breaks out between this country and that of which he is a native, the partnership would not, nor would his rights as a partner be affected by the war, any more than if he w«re an American. See Wells V. Williams, 1 Ld. Kay""- 282 ; 1 Salk. 46. On the other hand, if a partnership consists wholly of Americans, some of whom reside here and some in another country, and war breaks out between that country and this, the partners become enemies, for all purposes of trade and commerce, just as much as if those abroad were natives of the country in which they reside. M'Connell v. Hector, 3 Bos. & P. 113 ; O'Mealey v. Wilson, 1 Camp. 482 ; 1 Lindley Partn. 79, 80. ' M'Connell v. Hector, 3 B. & P. 113; and see Albretcht d. Sussmann, 3 Ves. & B. 323 ; O'Mealey v. Wilson, 1 Camp. 482, and the cases mentioned in the note. ^ Roberts v. Hardy, 3 M. & S. 533. ' Ex parte Baglehole, 18 Ves. 524, Sumner's ed., note (a), and cases cited ; 1 Rose, 271. 2 14 CONSTITUTION OF PARTNERSHIP. [BOOK I. . partnership ; and althougli married women are, not unfrequently, entitled to shares in banldng-houses and other mercantile concerns, under positive covenants, yet, where this happens, their husbands are entitled to such shares, and become partners in their stead.^ But it should seem, .that, by the custom of London, a feme covert trading separately from her husband may be a partner.^ A wife may also acquire a separate character and power to contract by the civil death of her husband, as by his exile, banishment, profes- sion, or abjuration of the realm. In Gregory v. Pierce,^ it was observed by Shaw C. J., that^the principle is now to be consid- ered as estabUshed in Massachusetts, as a necessary exception to the rule of the common law placing a married woman under dis- ability to contract or maintain a suit, that where the husband was never within the Commonwealth, or has gone beyond its jurisdic- tion, has wholly renounced his marital rights and du|;ies, and de- serted his wife, she may make and take contracts, and sue and be sued in her own name, as a feme sole. It is an application of an old rule of the common law, which took away the disability of coverture when the husband was exiled or had abjured the realm.* In Abbot V. Bayley,^ it was held that in this respect the residence of the husband in another State of these United States was equiv- alent to a residence in any foreign State ; he being equally be- yond the operation of the laws of the Commonwealth and the juris- diction of its courts.^ In the above cases, where the law allows the wife to act as a feme sole, there may be just ground to pre- sume, that, as she is thereby generally restored to her rights as a feme sole, she may enter into a partnership in trade ; but as the question has never been directly decided, it must be regarded as still open for examination and decision.'^ ■ ' Cosio V. De Bernalcs, Ryan & Moody, 102 ; 1 Carr. & Payne, 266 ; Gow Partn. 2. 2 Bohun, Priv. Lond. 187 ; Beard v. Webb, 2 B. & P. 93. See Burke v. Winkle, 2 Serg. & R. 189 ; M'Dowall v. AVood, 2 N. & M'Cord, 242. " 4 Metcalf, 478. * Gregory v. Paul, 15 Mass. SI ; Abbot v. Bayley, 6 Pick. 89. " '6 Pick. 89. ° See also, Beane v. Morgan, 4 M'Cord, 148 ; s. c. 1 Hill, 8 ; Valentine v. Pord, 2 Browne, 193; Robinson v. Reynolds, 1 Aiken, 174; 1 Daniell Ch. Pr. (Perkins's ed.), 110, 112, and cases cited; Story Partn. § 10. ' Story Partn. § 12; Burke u. Winkle, 2 Serg. & R. 189; 1 Lindley Partn. 78. CH. I.] FORMATION OF THE CONTRACT. 15 § 16. There is no general principle of law whicli prevents a corporation from being a partner -vvith another corporation or with ordinary individuals, except the principle that a corporation cannot lawfully employ its funds for purposes nOt authorized by its consti- tution. It has been assumed by the legislature, in many of the English statutes relating to companies, that corporations may law- fully be shareholders, and there seems to be no doubt that, at com- mon law, one corporation may be a member of another.^ § 17. Again, the parties must join together their money, goods, labor, or skill, for the purposes of trade. One partner, therefore, may bring into the trade money, another goods, and a third labor or skill ; and they will thenceforth be partners as between them- selves, provided they share proportionally the profit and loss of the concern.^ In Peacock v. Peacock,* a father took his son into business with him as a partner ; and it was agreed that the son should be entitled to a moiety of the profits, although he contrib- uted neither money nor effects, but only his personal labor. There was no question as to this being a partnership between the parties, and that the son might file a bill against the father, praying for a dissolution, an account of profits, and a receiver of the outstand- ing estate.' And in a subsequent case it was held, that where, by agreement, persons have a joint interest of the same nature in, a particular adventure, they are partners iriter se, although some may contribute money, and others labor. " Such a partnership," observed Abbott C. J., " may well exist, although the whole price is, in the first instance, advanced by one party, the other contrib- uting his time, and skill, and security in the selection and purchase of the commodities." * § 18. Consistently with these principles, it frequently happens • Grant on Corp., p. 5 ; 1 Lindley Partn. 78, 79. See Holmes v. Old Colony R. R. Co.,. 5 Gray, 58. ' A contract to share profit and loss is an agreement for a partnership, although the words partners or partnership do not occur in it. Green v. Beesly, 2 Bingh. N. C. 108 ; Brett v. Beckwith, 3 Jur. (n. s.) 31 ; 1 Lindley Partn. 12. ' 16 Ves. 49. * Reid V. Hollinshead, 4 B. & C. 878 ; 7 Dow. & Byl. 444 ; 3 Kent Com. 24, 25 ; Story Partn. § 15 ; Dob v. Halsey, 16 John. 34 ; Taft v. Buffum, 14 Pick. 324; Ferguson v. Alcorn, 1 B.Monroe, 160; Holt v. Kernodle, 1 Iredell, 199. See also, Blanchard v. Coolidge, 22 Pick. 161. 16 CONSTITUTION OF PAETNBRSHIP. [BOOK I. that one party is the sole owner of tlie goods, and tlie other the sole disposer or maiiiager of them ; in this case, if they share the profits they are partners in the profits, although one contributed goods and the other only trouble.^ And sometimes neither party contributes goods, but both act as managers and disposers of the goods of others, receiving a commission for their pains. In this case, if they share the commission, they are partners quoad hoc?' But of this, more hereafter. § 19. Again, to constitute a partnership between the parties themselves there must be a communion of profit between them.^ A communion of profit implies a communion of loss ; for " every man who has a share of the profits of a trade ought also to bear his share of the loss." * It is not, however, necessary that every 'Meyer v. Sharpe, 5 Taunt. 74; Everett «. Coe, 5 Denio, 130; Brig- ham*. Dana, 29 Vt. 1; Bromley u. Elliot, 38 N. Hamp. 308. In Cham- pion V. Bostwick, 18 AVendell, 183, it is said by Mr. Chancellor Wal- worth, that " it is not necessary to constitute a partnership, that there should be any property' constituting the capital stock, which shall be owned jointly by the partners. But the capital may consist in the mere use of property owned by the individual partners separately. It is sufficient to constitute a partnership, if the partners agree to have a joint interest in, and to share the profits and losses arising from the use of property or skill, either sep- arately or combined." See Dwinel v. Stone, 30 Maine, 385, 386 ; Fromont V. Coupland, 2 Bingh. 170; French i'. Styring, 2 Com. B. (n. s.), 357; Venables v. Wood, 3 Eoss Com. L. 529 ; 1 Lindley Partn. 1'6 ; Reade v. Bentley, 3 K. & J. 271, and 4 id. 656 ; Wilson v. Whitehead, 10 Mees. & W. 503. ^ Cheap V. Cramond, 4 B. & A. 663 ; Walton v. Sherburne, 15 John. 409, 421, 422. ' Ileimstreet v. Rowland, 5 Denio, 68. * An agreement to share profits, nothing being said about the losses, amounts prima facie to an agreement to share losses also ; and it follows from this, that an agreement to share profits is prima facie an agreement for a partnership ; and accordingly it is held, that, unless an intention to the contrary can be shown, persons engaged in any business or adventure and sharing the profits derived from it, are partners as it regards that business or adventure. Greenliam v. Gray, 4 Irish Com. L. Kep. 501 ; Dry v. Bos- well, 1 Camp. 330 ; Heyhoe v. Burge, 9 Com. B. 440, per Parke B. ; per De Grey C. J., 2 Sir W. Bl. 999 ; Dob v. Halsey, 16 John. 34; Bowtnan v. Bailey, 10 Vt. 170; Brown v. Cook, 3 N. Hamp. 64. See Dry v. Bos- well, 1 Camp. 329; It is not necessary that there should be an express stipulation between partners to share the profit and loss, as that is an inci- dent to the prosecution of their joint' business. Barrett v. Swann 17 Maine, 180. CH. I.] FORMATION OF THE CONTRACT. 17 party to the contract should undertake to share the loss. A man, on entering a partnership, may stipulate to be free from all liability to loss; and such stipulation will hold good as between himself and his co-contractors.^ In such case, he will still be a partner, enjoying, in addition to the advantages of partnership, the indem- nity afforded him by his companions.^ Vinny, after giving his definition^ of partnership, says : " Be damno nihil adjeci, quia lucrum tantum sperant spectantque, socii ; damnum prceter votum coram accidit. Sed nee damni communio ad substantiam so- cietatis pertinet : quippe quce etiam ita constitui potest, ut unus e sociis damni sit expers." * § 20. By a communion of profit is intended a joint and mutual interest in profit. First, the interest must be joint ; for, although persons may be jointly concerned in the purchase of goods, yet if they be not jointly concerned in the profit arising from the goods when purchased, they are not partners inter se. And it will make no difference in such cases whether the purchase is made in their joint- names, or in the name of one of them, or through the in- strumentahty of an agent.^ " « Gilpin V. Enderbey, 5 B. & A. 954 ; Bond v. Pittard, 3 Mees. & W. 357. ' Fereday v. Horden, Jac. 144. See Hazard v. Hazard, 1 Story C. C. 373, 374. There is nothing to prevent one or more partners from agreeing to indemnify the others against loss, or to prevent full effect being given to a contract of partnership, containing such a clause of indemnity. The true effect of such a complex agreement would seem to be, to entitle each of the partners to a share of the excess of the returns over the advances, ■while some of the partners would be entitled to be indemnified by the others for all \osses beyond the advances. Pothier Partn. §§ 21, 22; 1 Lindlcy Partn. 1 7, 18. ' Ante, § 3, note. * Vinn. Comm. lib. 3, tit. 26. * See Kent (5th ed.), 25, 26 ; Gibson v. Lupton, 9 Bingh. 297 ; Post v. Kimberley, 9 John. 470 ; Holmes v. United Ins. Co., 2 John. Ca- 329 ; Hard- ing V. Foxcroft, 6 Greenl. 76.; Gilmore v. Black, 2 Fairf. 488, 489; Brady V. Gplhoun, 1 Pennsylv. 147. Thus, in Hoare v. Dawes, Doug. 371, an action for money lent and advanced was brought against the defendant, un- der the following circumstances : — The plaintiffs, who were bankers, had advanced a sum of money on certain tea-warrants of the East India Com- pany to Contencin, a broker, who deposited the tea-warrants with the plain- tiffs as a security, and also gave them his note of hand for the sum advanced- He had been employed by a number of persons, of whom the defendants were two, to purchase a lot of tea at the East India Company's sale, of which they (together with himself) were to have separate shares, the lots being in general too large for any one dealer. The practice at such sales is, 2* 18 CONSTITOTION OP PARTNERSHIP. ' , [BOOK I. \ 21. Again, upon similar principles, if two persons jointly agree to do a particular piece of work, but the money received for the Company to give a warrant, or warrants, to the broker or purchaser, for the delivery of the quantity of tea purchase^, on payment being made. At the time of the sale, £25 per cent, is advanced, and is forfeited unless the whole is paid on the third, which is the laU day of payment ; if paid sooner, allowance is made for prompt payment. The warrants ' are often pledged, and money raised upon them ; generally, considerably less than the sup- posed, value of the, tea. It happened, however, in this instance, that, be- tween the time of the deposit of the warrants with the plaintiffs, and the time when the payment was to be made at the India House, the value of the tea sunk so much as to be considerably under the amount of the sum ad- vanced. The broker, in the mean time, had become a bankrupt, and had informed the plaintiffs who his employers were, all of whom, except the de- fendants, were since either dead or become bankrupts. The shares of the defendants, were to be two sixteenths of the whole lot. The ground of the action was, that all the employers of the broker were to be considered as partners, and jointly and severally liable for the whole. The defendants owed nothing upon their own two-sixteenths. There was not any joint con- cern in the re-disposal of the tea. Upon this evidence the defendants ob- tained a*verdict, and the Court of King's Bench afterwards discharged the rule which had been obtained for a new trial. Lord. Mansfield : " I cour sidered this, at first, as a case of dormant partners. The law with respect to them is not disputed, namely, that they are liable when discovered, because they would otherwise receive usurious interest without any risk ; but, towards the end of the cause, the nature of the transaction and of these loans was more clearly explained, and I was satisfied with the verdict, and am now confirmed in my opinion. Is this a partnership between the, buyers? I think it is not; but merely an undertaking with the broker by, each for a particular quantity. There is no undertaking by one to advance money for another, nor any agreement to share with one another, in the profit or loss. The broker undertakes to buy and sell, but makes no ad- vance without the security of the tea-warrants, which are considered as cash, and pass by delivery, like East India bonds. These warrants, are pawned with the lender, but the broker has no power to pledge the personal security of the principals ; he cannot sell the warrants, and borrow more money on such personal security. It makes no difference whether specific tea, or the warrants, are delivered at the sale. It would be most dangerous if the credit of a person, who engages for a fortieth part,, for instance, should be considered as bound for all the other thirty-nine parts. Non hcec in fcedera venil." Butler J.: "This is a very plain case. The plaintiffs had no reason to consider the broker as a partner with the other persons ; for, though he had a share, he did not act or appear as a partner ; nor were they partners as among themselves. They had never met or contracted together as partners. If this transaction were suflicient to constitute a part- nership, a broker would have it in his power to make five hundred persons CH. I.] FOEMATIOK OF THE CONTRACT. 19 for such work is not to be employed on their joint account, the persons so contracting are not partners.^ Thus, in the case of partners, -who had never seen or heard of one another ; or might at his pleasure, convert his principals into partners or not, without any authority from them, by taking joint or separate warrants.'' Rule discharged. The same principles were acted upon in the case of Coope v. Eyre, 1 H. Bl. 37, which was an action brought to recover the amount of a loss sus- tained by the sale of somg oil, under the following circumstances : — The defendants. Eyre for himself and partners (who were Atkinson and Wal- ton), general merchants, Hattersley for himself and Stephens, who were oil- merchants, and Pugh for himself and son, who were also oil-merchants, agreed to purchase jointly as much oil as they could procure, on a prospect that the price of that commodity would rise. That Eyre should be the os- tensible buyer, and the others share in his purchase at the same price which he might give. Hattersley & Co. were to have one fourth, Pugh one fourth, and Eyre & Co. the remaining moiety. In consequence of this agreement, Eyre alone gave general orders to a broker to purchase any quantity of oil which might offer. The plaintiifs accordingly contracted with Eyre to sell the oil in question. The contract with them was signed by Eyre for himself and Co. ; and by way of collateral security two bills of exchange were de- posited in the hands of the plaintiff's, one of which was accepted by the defendants Eyre, Atkinson, and Walton. The oil hot having been paid for nor taken away, the plaintiffs, in pursuance of a power they had in that contingency, authorized the broker to sell it. The deficiency on this resale was very great; the bill of exchange accepted by the defendants was pre- sented to them for payment, ^nd refused; and before the action was brought, Eyre & Co. had become bankrupts. The question was, whether or not the other defendants, Hattersley, Stephens, and Pugh, were liable for the amount of the loss sustained by the plaintiffs. At the trial. Lord Lough- borough declared his opinion, that, as the defendants did not appear to have! been jointly concerned further than the purchase of the oil, they had not such a joint interest in the profit and loss as the law made necessary to a partnership. The jury accordingly found a verdict for the defendants ; and the Court Of Common Pleas, with the exception of Wilson J., held the verdict to be right. " In the present case," observed Gould J., " there was no communication between the buyers as to the profit or loss. Each party was to have a distinct share of the whole, the one to have, no interference with the sihare of the other, biit each to manage his own share as he judged best; I am of opinion, therefore, that the Court cannot adjudge the present case a partnership.'' Mr. Justice Heath, likewise, observed, that this was a sub-contract ; Pugh, Hattersley, and Stephens were not partners, inasmuch as they were interested in the purchase of the commodity, and not in the subsequent disposition of it. And Loughborough said, " This being See Porter v. McClure, 15 Wendell, 187: Wilkinson v. Jett, 7 Leigh, 20 CONSTITUTION OF PARTNERSHIP. [BOOK I. Finckle v. Stacey,^ joint articles were entered into by the plain- tiff and defendant for doing a particular piece of work for the Duke of Marlborough, on account of which several sums of money had been jointly received by them, and immediately divided be- tween them. There being a sum demanded by them in arrear, which the Duke refused to pay, as being unreasonable, Stacey applied to Finckle to join him in a suit to recover what was in arrear ; which he refused to do, declaring he had several advan- tageous works under the Duke, which he should lose should he join in a suit ; on which Stacey applied, and got his own half of the sum which was due to the two. A bill was then brought for a moiety of the money so received, and insisted it should be consid- ered as a partnership in trade, and this money as so much re- ceived on the joint account. But the court were of opinion it an action on a contract of sale, the vendor can have no remedy against any person with whom he has not contracted, unless there be a partnership, in which case all the partners are liable as one individual. It has been justly observed, that a secret partnership can be no consideration to the vendor, though, for reasons of policy and general expedience, the law is positive with respect to the secret partner, that when discovered, he shall be liable to the whole extent. In many parts of Europe limited partnerships are admitted, provided they be entered on a register ; but the law of England is otherwise, the rule being, that, if a partner share in advantages, he also shares in all disadvantages. In order to constitute a partnership, a com- munion of profit and loss is essential. The shares must be joint, though it is not necessary they should be equal. If the parties be jointly concerned in the purchase, they must also be jointly concerned in the future sale, otter- wise they are not partners. Eyre was a mere speculator, and the other defendants were to share in the purchase, but were not jointly interested in any subsequent disposition of the property. Though they may, by other purchases, have concluded themselves as to some particular vendors, yet, in the transaction in question, there was not that communion between them necessary to make them partners ; their agreement was a sub-contract, which, as my brother Heath observed, may be executory ; it was to share in a purchase to be made. The seller looked to no other security but Eyre & Co., to them the credit was given, and they only were liable." 115 ; 1 Lindley Partn. 19. An association, each member of which agrees in writing to pay the sum subscribed by him for the purpose of building a meeting-house, which, when completed, is to be the property of the subscri- bers in the proportions of the amounts invested in it by them respectively, is not a partnership. Woodward v. Cowing, 41 Maine, 9. ' Sel. Ca. Ch. 9. CH. I.] FORMATION OP THE CONTRACT. 21 was not to be considered as a partnership, but only an agree- ment to do a particular act ; between wMcb there is great dif- ference ; and that it is so is plain, for the money which they had received they immediately divided, and did not lay out on a common account. The bill was dismissed with costs. Upon this case, however, it is to be observed, that, if no apphcation had been made to the plaintiff to sue the Duke, a bill for an account, sup- posing an account necessary, would clearly have been sustainable against the defendant on other grounds than those of partnership. Here, however, the plaintiff, for his . own private ends, had abso- lutely refused to join in suing for the money ; and the court ob- served : " It is pretty extraordinary that he should have come here to have the benefit of another's act, in which he refused to join ; which refusal was with a corrupt view for his own advantage, and not on a common account, the money due on which he would rather sacrifice than forego his own particular advantage. And here is no insolvency in the Duke ; if there had, perhaps it would have deserved consideration." § 22. Upon a like principle with that upon which the above decisions were made, stand the cases where several owners of mer- chandise consign it to the same consignee for sale, informing him that each owns a part thereof, and giving him separate and distinct instructions, each for his own share, as to the sales and returns, in which it has been held that they would not be partners in the adventure, but each, in case the consignee should disobey his orders, woutSbe entitled to a separate account and a separate action against him.^ This doctrine is further illustrated by those cases in which co-owners of a chattel divide the earnings of it. A. and B. were entitled in common to a race horse. It was agreed that A. should keep, train, and have the management of the horse, that thirty-five shillings a week should be allowed for the expenses of his keep, that A. should pay the expenses of entering the horse and conveying him to the different races, and that one half of the horse's keep and other expenses and his winnings should be equally divided between A. and B. This agreement was held not to create a partnership. It was no more a partnership than if two tenants in common of a house had agreed that one of them should have Hall V. Leigh, 8 Cranch, 50; Jackson v. Robinson, 3 Mason, 138. 22 CONSTITUTION OF PAKTNBRSHIP. [BOOK I. 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 rent should be divided amongst them equally.^ § 23. It sometimes happens that persons purchase goods which they ship to a foreign country, under an agreement that the pro- ceeds of the sale of the goods shall be invested in a return cargo. Cases of this sort give rise to nice questions whether a partnership exists in the entire transaction, that is to say, in the joint purchase, joint sale, and joint reinvestment, or only in 'parts of the trans- action. But it is clear upon the principles already laid down, that no partnership can .exist either in the entire transaction or in that part of it which relates to the disposal of the return cargo, unless there be an agreement to share in the future sale of the return cargo.^ 1 French v. Styring, 2 Com. B. (n. s.), 357 ; Per Willes J., ib. 366. Part- owners of a chattel employed for their common gain are not always distin- guishable from persons who are partners in profits, and the law as to the earnings of the thing owned in common does not materially differ from the law relating to partnership profits. See Green v. Briggs, 6 Hare, 395. Still the consequences of co-ownership are in many important respects differ- ent from those of partnership. (1) One co-owner cam, without the consent of the others, transfer his interest to a stranger, so as to put him in the same position as regards the other owners as the transferrer himself was before the transfer. See Crawshay v. Maule, 1 Swanst. 505 ; Bentley v. Bates, 4 Y. & C. Exch. 181. (2) One co-owner is not as such the agent of the others. (3) One co-owner has no lien on the thing owned in common for outlays or expenses, or for what may be due from the others as their share of the common debt. Kay v. Johnston, 21 Beavan, 536 ; Ex parte Young, 2 Ves. & B. 242 ; Ex parte Harrison, 2 Rose, 76. (4) But one co-owner is entitled to an account against the other for a share of the profit made by the use of the common property. See as to land, Henderson v. Eason, 17 CJ. B. 701 ; 12 id. 86 ; 15 Sim. 303. As to ships, Moffatt v. Farquharson, 2 Bro. C. C. 338. ' On this important point, the American case of Post v. Kimberley, 9 John. 470, is well worthy of consideration. In that case, A. & B., partners in trade, owning three fourths of a vessel, and C. & D., also partners and owning the other fourth, agreed to fit her out for a voyage from New York to Laguira. A. and B. purchased three fourths of the cargo, and C. & D. purchased the other fourth, and it was agreed that the whole cargo should be sold at Laguira, for the joint account of A. & B. and C. & D., and that the proceeds should be invested in a return cargo. A. went out as super- cargo and agent, and having sold the cargo at Laguira, he invested the pro- ceeds in a return cargo, with which he sailed for New York. He was CH, I.] FORMATION OP THE CONTRACT. 23 § 24. Still it has been iield not to be a necessary ingredient of a partnership, that the parties should contemplate a joint sale of the property of the firm.^ Thus, -where ,two persons agreed to burn lime on shares, one to fill a kiln with stone, and the other to bum the kiln and to furnish the necessary wood for that pur- pose, the lime , to be equally divided between them, it was held obliged, however, by stress of weather to put into Norfolk, where he sold the return cargo, except a small quantity of coffee, and received payment in bills of exchange, which he indoi:sed, and remitted, with the coffee, to P. & Q., who were creditors of his own firm of A. & B., and who had notice of C. & D.'s interest in the cargo. C. & D. having demanded of P. & Q. their proportion of the proceeds of the sale, it was held that they were entitled to receive it, for that there .was no such partnership existing between the two firms of A. & B. and C. & D. as to render the disposition of the return cargo by A. binding as the act of a partner on C. & D. Thompson J., said : " A partnership being matter of contract between parties, they may limit and modify it at pleasure. There is, therefore, no incongruity in admitting a partnership in the outward cargo and not in the return cargo, if such was the agreement of the parties, or the necessary inference of law from the facts proved. It is true, that the proceeds of the outward cargo were to be invested in a return cargo. But there was no agreement to sl^are the profit and loss on the return cargo, nor any provision for a joint sale, on its arrival in New York. It is necessarily, therefore, to be inferred, that each party was to take his share of the coffee, and dispose of it at his pleasure, without any community of interest as to profit and loss. Here, therefore, was the want of one of the most essential requisites of a partnership." And Kent C. J., said there was no partnership in these proceeds, because there was no agreement to be jointly concerned in the final resiilt of the adventure. This and other American cases fully recognize the doctrine established by Hoare V. Dawes and Coope v. Eyre : Holmes v. United Ins. Co. 2 John. Ca. 329 ; Osborne v. Brennan, 2 N. & M'Cord, 427 ; Harding v. Foxcroft, 6 Greenl. 76; 3 Kent Com. 25, 26; Thorndike v. De Wolf, 6 Pick. 124, 125; Jackson v. Robinson, 3 Mason, 138; Hawes «. Tillinghast, 1 Gray, 289; United Ins. Co, v. Scott, 1 John. 106. In Harding v. Foxcroft, two persons, being joint owners of a vessel, agreed to send her on a foreign voyage for their mutual benefit, and part of the outward cargo was purchased by each separately, and part by both jointly ; they were held not to be partners, but tenants in common of the property. In Jackson v. Robinson, four persons were part-owners of a ship in certain proportions, and they purchased a cargo by an agreement on their account in like proportions. The bill of lading purported to be a shipment on account and risk of the owners of the vessel. It was decided that the cargo was owned by them in common, and not in partnership. But see Sims v. Willing, 8 Serg. & R. 103 ; Everitt v. Chapman, 6 Conn. 347 ; Musier u. Trumpbpur, 5 Wendell, 274. ' See Woodward v. Cowing, 41 Maine, 9, 24 CONSTITUTION OF PARTNERSHIP. [BOOK I. that a partnership existed between the parties.^ So in Everittw. Chapman,2 the parties had engaged in the business of tanning hides, under articles stipulating that one party should furnish hides for one half of the stock, and should receive and make mar- ket for one half the leather, and that the other party should fur- nish the other half of the stock and receive and make market for the other half of the leather, and that each should in making pur- chases use his own credit separately ; the court held this a part- nership, notwithstanding the leather was to be so divided.^ The case of Everitt v. Chapman arose out of a claim against the par- ties to the above articles, made by a person who, being ignorant of the partnership, had supphed and charged to one of the par- ties individually a quantity of hides, which had been received at the tannery and manufactured into leather in the joint operations of the parties. The court sustained the claim. § 25. Secondly, in order to constitute a communion of profit between the parties, the interest in the profit must he mutual ; that is, each person must have a specific interest in the profits as a principal trader ; * he is not a partner, if he merely receive out of the profits a compensation for his trouble in the character of an agent or servant of the concern.^ Thus, where A. purchased goods for an adventure on the credit of B., and it was agreed, " that, if any profit should arise from them, B. should have one hali for his trouble, it yfa,B held that this was not a partnership between the parties." ^ § 26. Upon the same principle, factors and brokers receiving ' Musier v. Trumpbour, 5 WendoU, 274. ' 6 Conn. 347. ' See the case of Everitt v. Chapman explained in Loomis v. Marshall, 12 Conn. 85-87. In Buoknam !'. Barnam, 15 Conn. 73, the court say: — "In Loomis v. Marshall, 12 Conn. 70, the court did not intend to impair the authority of Everitt v. Chapman." See Bond v. Pittard, 3 Mees. & W. 357. * To make one a partner he must not only share in the profits, but share in them as a principal. Loomis w. Marshall, 12 Conn. 77, 78; Burckle v. Eckart, 1 Denio, 337 ; Bucknam v. Barnam, 16 Conn. 73. ' See Story Partn. §§ 33, 34. This distinction is approved by Mr. Justice Story, id. §§ 49, 55. See Burckle v. Eckart, 1 Denio, 337 ; Bradley v. White, 10 Metoalf, 303; Judson v. Adams, 8 Cushing, 550. It seems to be rejected in New Hampshire. Bromley v. Elliot, 38 N. Hamp. 287. " Hesketh v. Blanchard, 4 East, 145 ; 3 Kent Com. 25, and note. CH. I.] FORMATION OF THE CONTEACT. 25 m a commission out of the profits of the goods sold by them are not partners with their principals. In Dixon v. Cooper,^ which was an action for goods sold and delivered, the only witness for the plaintiff' was the factor who sold the goods, and who was to receive a shilling in the pound on the price. It was held that he was a competent witness,^ a circumstance inconsistent with the existence of a partnership between the parties. § 27. Again, in the case of Benjamm v. Portus,^ it was held, collaterally, in a question of evidence, that, if a person is em- ployed to sell goods, and is to have for himself whatever money he can procure for them beyond a certain sum, he is not a partner with the owner of the goods. In that case, an action was brought to recover the price of a quantity of indigo, which was sold for Ss. a pound weight, and the broker, who was employed by the plain- tiff, was called as a witness to prove the contract. Upon being examined on the voir dire, he stated, that, by his agreement with the plaintiff, he was to have for his own profit whatever sum he could get for the indigo above half a crown for the poiftid, which price the plaintiff had fixed for himself ; but not an allowance of so much per cent, on the sale, by way of commission, in the usual way. At the trial, Eyre C. J., thought this was an objection to the competency of the witness, on the score of interest, and di- rected a nonsuit. The Court of Common Pleas, however, set aside thfe nonsuit, and grantpd a new trial. Heath J., said he was of opinion that the witness was admissible ; that he must be considered as a broker, and not as a principal : he was only paid for his. trouble in a particular manner. Rooke J., likewise said, that he could see no difference, in point of interest, between a person selling upon a commission, and one who is to have a share of the profit ; nor could he make a distinction' between this wit- ness and a common broker. " He is an agent," added his Lord- ship, " who makes his bargain between two others, and whose evidence is admissible from necessity, which is a necessity created by the parties themselves." § 28. In Smith v. Watson,* it was agreed between A. and B., ' 3 Wils. 40. ' See, to the same effect, Blanchard v. Coolidge, 22 Pick. 151. '2H. Bl. 590. « 2 B. & C. 401 ; 3 D. & R. 751. See Keid v. Hollinshead, 4 B. & C. 867; 7 D. &E. 444. 3 26. CONSTITUTION OP PARTNERSHIP. [bOOK I. • that A. should buy whalebone through B., as his broker, and; that, as a remuneration for his trouble, B. should receive one fourth of the profits arismg from the sale, and hear one eighth proportion of the losses. The parties acted on this agreement, and it was clear, upon the evidence, that A. considered B. only as his agent or broker. The question before the coUrt was, whether B. was interested as a partner in the property the sub- ject-matter of the adventure, — not whether he was a partner in the adventure itself. The court, however, seemed to be of opin- ion, that, though not interested in the property, he was a partner in the profits. § 29. In Blanchard v. Coohdge,^ there was an agreement be- tween a father and his son, under which the father was to carry on business in the name and on account of the son, and as his agent, and the son was to give to the father, as a compensation for his services, one half of the profits ; but the business did not yisld any profits, and no settlement of accounts was ever made between ttem. A former separate creditor of the father having attached certain property purchased by the father in the name of the son, under the above agreement, it- was held that the father had no interest in the property which could be attached by such creditor. The court remark, — "It is not necessary to decide whether Nathaniel Blanchard [the father] is liable as a partner or not. For admitting that he is so liable, it does not follow that he has any interest in the stock, which was attachable by his separate creditors, for the security of debts contracted before his connec- tioii with the plaintiff' [his son] in business. They could only attach his share of the property which might remain to him after winding up the concern, and it appears that he had no such share. No profits had been earned, and consequently he had no right to any part of the stock." " But there is another objection equally conclusive. By the agreement between the plaintiff and his father, the stock was to be the property of the plaintiff, and his father in no event was to have any title to it. He could claim only his share of the profits, and had no right to appropriate to his own use any part of the capital stock. This point was de- cided in the case of Smith v. Watson.^ We see no reason for 1 22 Pick. 151. ' 2 Barn. & Cress. 401. CH. I.] FOEMATION OP THE CONTRACT, 27 doubting .the C9rrectness of this decision. To creditors who deal with partners, it is immaterial whether they own the stock jointly, or one owns the whole. In either case the stock is liable for the debts of the firm." ^ The court in the above case held, that no partnership existed between the father and the son inter sese, and they were also inclined to the opinion that they were not liable, as partners, to third persons. § 30. In reference to the case of Smith v. Watson, above cited, it may be remarked, that an undertaking to share the loss is inconsistent with the notion of an agreement to take a share of the profits by way of remuneration,^ which was probably the ground on which the court formed their opinion. In a recent case, the stipulation to share the loss was held to show conclusively that the agreement was one of partnership, and not mere agency. There A. agreed with B. to convey, by horse and cart, the mail between two places, at £9 per mile per annum, and to pay his proportion of the expense of the cart, &c.,: the money received for the carriage of parcels to be divided between the parties, and the damage occasioned by loss of parcels, &c., to be borne in equal portions ; it was held, that this agreement constituted a part- nership, and not a mere measure of wages ; and, consequently, that A. could not maintain an action against S. for the £9 per mile.^ § ,31. Generally, however, upon the same principles as are ap- plicable to brokers, persons acting merely in the character of servants in an adventure, and receiving a ^certain share of the profits in heu of wages, are not partners in the undertaking. Where, by articles, it was stipulated that the produce of a whal- ing voyage should be divided in certain proportions, viz. a certain proportion to the owners, a certain proportion to the captain, and the rest to th§ other officers and seamen, in lieu of wages, it was held that a seaman under these articles was not a partner with the ' Compare the reasoning in the above case of Blanchard v. Coolidge with the decision in Bradbury v. Smith, 21 Maine, 117, 121, 122, cited and stated under the head of Limited Partnerships, posJ, § 102, See also, Shropshire v. Shepperd, 3 Alabama, 733. ' In Waugh v. Carver, Eyre C. J. says, — "I cannot agree that this was a mere agency, for there was a risk of profit andi loss." ' Green v. Beesley, 2 Bing. N. C. 108 ; 2 Scott, 164. 28 CONSTITUTION .05 PARTNERSHIP. [BOOK I. captain, and miglit maintain an action against tke latter for his share of the profits.^ § 32. A like question arose in Baxter v. Rodman,^ and the court held that the master and crew of a ship engaged in a whal- ing voyage, who are to receive, in lieu of wages, a proportion of the net proceeds of the oil which shall be obtained, are not part- ners with the owners of the ship, and need not be joined in an action brought by the owners to recover of a third perSon a part of such oil. The court say, in giving their decision in the above case, — " The owners of the vessel and projectors of the voyage are the owners of the product of the voyage. The true meaning of the shipping contract is, that the men shall be paid out of the proceeds in a stipulated proportion. It is an agreement as to the mode of compensation, and gives them no property in the oil, but only regulates the amount of compensation." The same court in another case,^ remarking on the same subject, observe, that " the oil in the first instance being the property of the owners of the vessel, it remains theirs until some settlement or adjustment. The right of the seaman is to have the oil sold, and to recover a share of the proceeds, according to the share for which he shipped. But it is understood, that, in practice, if an ofiicer or seaman prefers ,to have his share in oil, specifically, he wiU be allowed to do so ; but even in this case it is clear that he can have no property in the oil until separation and delivery." * § 33. So, the captain of a ship, who, instead of receiving wages, is to share in the profit of the adventure on which he sails, is not a partner with the owner. Mair^ was the owner of a ship and cargo ; Young was the captain, under an agreement that he was to have, in lieu of all wages, primage, &c., one fifth share of the profit or loss of the intended voyage, on ship and cargo, and was to follow Mair's instructions, do all the business himself that he could do, and, for the rest, make the best bargain he could. The ship sailed, and afterwards Mair, being indebted to Sharpe & Co., executed to them a bill of sale of the ship ; but Sharpe & ' Wilkinson v. Frasier, 4 Esp. 182. ' 3 Pick. 435. ' Bishop V. Shepherd, 23 Pick. 495. * See also, Coffin o. Jenkins, 3 Story C. C. 112; Grozier v. Atwood, 4 Pick. 234; Turner w^Bissell, 14 Pick. 195; Rice v. Austin, 17 Mass. 20G. ' Mair v. Glennie, 4 M. & s! 240. CH. I.] FORMATION OF THE CONTRACT. 29 Co. never took actual possession of the ship, though it was argued for them that they had, by means of this transfer and notice thereof to the captain, the virtual possession. Mair, as also Sharpe & Co., afterwards became bankrupts ; and in an action of assumpsit by the assignees of the former against the assignees of the latter, the question was whether, under the circumstances mentioned in the report, Mair, when he became a bankrupt, had the possession, order, and disposition of the ship and cargo, within 21 Jac. 1, c. 19. — In behalf of Sharpe & Co., it was argued, amongst other things, that it was out of their power to take actual possession ; for, by the agreement between Mair and the captain, the latter was interested in ship and cargo to the extent of one fifth, in respect of which Sharpe & Co. could not have divested him of the possession ; sed, per Lord Ellenborough, — " One of the points which has been raised in this case is — Supposing in other respects it was proper for the Sharpes to take possession, whether they were precluded from doing so, in respect of the cap- tain's interest. And, upon this point, it has been contended that the captain was virtually a partner ; but on what ground has it been so contended ? The ground is, because payment of the cap- tain's wages was to depend, as to its amount, upon a reference to the value of the cargo ; but, according to that mode of argument, every seaman in a Greenland voyage would become a partner in the fishing concern. There is no preitence, therefore, fOr saying that the captain was a partner, because his wages were to be regu- lated and paid by reference to a calculation on the profits of the adventure." § 34. So, where the master of a ship had agreed to take her of the owner for the purpose of getting employment in the freighting business, and had engaged to victual and man her and pay half of all "port charges, pilotage, &c., and the owner engaged to pay the other haJf, together with eight dollars per month for one man's wages, and to put the vessel in sufficient ordfer for the business, and all money so stocked in the vessel, whether for freight or for passage or whatever, was to be equally divided between the master and the owner, each party accounting for the above, it was held that the contract did not make the master and owner partners even as to third persons.^ ' Cutler V. Winsor, 6 Pick. 335. See also, Taggard v. Loring, 16 Mass. 3» 30 CONSTITUTION OF PARTNERSHIP. [BOOK I. § 35. Again, though an agreemerit between A., the sole owner of a lighter, and B., a lighterman, that B. shall work the lighter, and that the net profits made by her shall be equally divided between them, will make A. and B. partners in the concern, and therefore B. as well as A. will be liable for the repairs of the lighter; yet an agreement between the same persons, that B., in consideration of working the lighter, shall have half her gross ewrnings, does n6t constitute a partnership between A. and B., being only a mode of paying B. for his labor.^ So, where A. 836; Perry v. Osborne, 5 Pick. 422; Winsor v. Cutts, 7 Greenl. 261; Thompson v. Snow, 4 Greenl. 264 ; Reynolds v. Toppan, 15 Mass. 370. In Cox V. Delano, 3 Dev. 89, there was an agreement between the owner of a vessel and the master, that each should pay certain expenses, and divide the freight, with a power in the master to invest it on joint account, and it was held to constitute a partnership. ' Dry V. Boswell, 1 Camp. 330 ; Pott v. Eyton, 3 Man. Grang. and Scott, 32. See Dwinel v. Stone, 30 Maine, 384; Ambler v. Bradley, 6 Vt. 119, where one person, owning a mill, agreed with another to work it, and to receive a share of the gross earnings ; they were held not to be partners, the share being only a compensation for labor. Bowman v. Bailey, 10 Vt. 170. In Cutler v. Winsor, 6 Pick. 335, cited and stated above, the share of th6 owner was to be taken from the gross earnings. So in Taggard v. Loring, 16 Mass. 336, and in Turner v. Bissell, 14 Pick. 193. But in Thompson v. Snow, 4 Greenl. .264, and in Reynolds v. Toppan, 15 Mass. 370; cases arising on a state of facts in other respects similar to those in Cutler V. Winsor, the owner was to receive a certain share of the net earn- ings, and yet the court held that the owner was not liable to third _f ersons on the contracts of the master. See also, to the same effect, Lowry v. Brooks, 2 M'Cord, 421. In Denny v. Cabot and others, 6 MetcSf, 91, the court, referring to this distinction between sharing the gross and net earnings, re- mark : " Some of them [the eases cited in the decision] may perhaps appear to clash with the distinction laid down by Lord EUenborough in Dry y. BOs- well, 1 Camp. 329, and recognized in other cases, between sharing the gross earnings and sharing the net earnings of a business or adventure. But, however this may be, we think there is no sound distinction between an agreement to pay to a party a certain share of the gross profits and an agree- ment to pay a certain share of the net profits, as explained in the present contract, the clear meaning of the terms of which, is, that Cabot, Appleto'n, & Co. [parties to the agreement under consideration] were to pay Cooper [the other party to said agreement] one third part of the profits, after making certain specified deductions, and Cooper clearly was not to be liable for any losses." In Lobmis v. Marshall, 12 Conn. 69; the agreement was to share the net earnings aitar making certain specified deductions, and yet it was held no partnership. See Stocker v. Brockelbank, 15 Jur. 591 ; s. C. CH. I.] FORMATION OP THE CONTRACT. 31 had purchased some bullocks, and had put them to depasture on the lands of B., and it was agreed " that the profits to be made upon the resale .(after they had been fattened upon B.'s land) above j£20, at which A. had valued them, should be equally divided between him and B.," it was ruled that this agreement did not make A., and B. partners, but merely fixed the mode of paying B. for the pasture. And this opinion 'was confirmed by the Court of King's Bench.^ § 36. The same view of the situation of an agent, as contrasted with an actual partrier, appears to have occurred to the Court of Common Pleas, in Withington v. Herring.^ There Crabtree was appointed, agent for Messrs. H. & Co., for the purpose of entering into contracts for the working of mines in Peru. Before his depart- ure from London, an agreement was signed by him and Messrs. H. & Co., and he was Ukewise furnished with a letter of instruc- tions, a letter of credit, and a power of attorney, with which he proceeded to Lima. At Lima, he drew bills upon Messrs. H. & Co., payable to the plaintiffs' order. An action having been brought by the plaintiffs against H. & Co., on the bills, and for money had and received, one question was, whether the def(?ndants were liable on the ground of Crabtree being a partner with H. & Co. under the agreement, part of which was' as follows : " Mr. Crabtree shall receive from Messrs. H. & Co., for his remunera- tion, the sum of £1,000 ; and if this mission shall occupy Mr. C. more than a twelvemonth from the time of his leaving London, he shall receive at the rate of <£1,000 per annum from the said date. Mr. C. shall further receive one fifth share of the Clear 5 Eng. Eep. in Law and Equity (Little & Brown),, 67. The facts of the cases Denny v. Cabot and others, and Loomis v. Marshall, and the decisions upon them, will be fojind stated more at large, joosi,§, 44, note. But see Story Partn. §§ 34, 44, note (2). It nxay, however, be stated as a general proposition, that a partnership is not the result of an agreement to share gross returns, or earnings. 1 Lindley Partn, 19, 38, 39 ; Gibson v. Lupton, 9 Bingh. 297. The distinction between gross returns and profits, or, as they are sometimes called, gross profits and net profits, was acted upon by Mr. Baron Parke in Heyhoe v. Burge, 9 Com. B. 431, when he told the jury "a person ,who shares gross profits is not a partner; but a person who shares net profits, is prima facie to be considered as a partner.'* ' Wish V. Small, 1 Camp. 331, See Giblipns v. Wilcox, 2 Stark. 43. « 3 Moore & Payne, 80. 32 CONSTITUTION OF PARTNERSHIP. [BOOK I. profits wMch Messrs. H. & Co. may make by such contracts, or by forming the association to be founded on the contracts to be entered into by him." The Court of Common Pleas dechned to determine the case on the point of partnership, holding that the plaintiffs had a clear right to recover, arising from the^ ample powers given to Crabtree by the power of attorney. Two of the judges, however, inchned to the opinion that this was not a part- nership ; and Best C. J., said that, at the trial, he thought it was not a case of partnership, but that it ranged within that class of cases in which a servant or agent receiving a certain percentage upon the profits had been decided not to create a partnership. That it was not necessary then to consider whether or not the view he had taken at the trial was correct, but he inclined to the opinion that it was.^ § 37. Upon the same principles, it seems to have been held that the manager of the Glasgow Glass Work Company, enjoying an annual stipend, and also, by way of further remuneration, a share of the profits, calculated according to a proportion of capital and stock, not advanced by him, but assigned by way of nominal interest, was not a partner as between himself and the members of the company.^ On the other hand, where A., a merchant and insurance broker, -agreed to pay B. a certain salary for superin- tending his mercantile concerns, and also agreed " to allow Mr. B. one half of the profit arising from my account of insurances from the commencement of the said account until the present period, or those that may hereafter be done," the parties, having acted on .this agreement, were held to be partners in the insurance busi- ness.3 And where Thomas, a merchant at Cadiz, and R., a mer- chant in London, were partners in an adventure, and, before the whole of that adventure was disposed of, the parties entered into a fresh arrangement, under the following memorandum : "I do agree to give Thomas half the profits he makes on my goods, in- stead of a commission, after shipping, freight, and every expense paid ; I pay Thomas's passage out. February 29, 1709 ; " Lord Eldon held, that, under this agreement, the parties were part- ' See Rice v. Austin, 17 Mass. 197, 206; Muzzy u. Whitney, 10 John. 226. 2 Geddes v. AVallace, 2 Bligh, 270. ' Knowles v. Haughton, Lib. Reg. 1804, A. 1008. , * Ex parte Rowlandson, 1 Rose, 91. One who stipulates for a share of CH. I.] FORMATION OF THE CONTRACT. 33 § 38. Upon a like ground^ where one person advances funds to carry on a particular trade, and another gives his personal ser- vices, for which he is to receive a portion of the profits, there is a partnership existing between them, both as regards the parties and third persons.^ This is on the principle that he who takes a part of the profits indefinitely shall, by operation of law, be made hable for &e losses, inasmuch as he takes from the creditors a part of that fund which is the security for the payment of their debts.2 § 39. The result of these authorities appears to be, that, when the dear profits of a particular adventure, is, quoad third persons, a partner. Heyhoe v. Burge, 9 Com. B. 431. In this case A. & B., by a memorandum in writing, agreed, " for services performed " to allow C. a fourth share of the clear profits arising from a contract for the construction of a line of rail- way ; and there was evidence to show that C. had acted upon the agreement (though not formally a party to it^, and that he had to some extent interfered in the work ; and it was held that this was sufficient to prove that C. was liable as partner in the transaction, quoad third persons. Id. ' Dob V. Halsey, 16 John. 34. See also, Everitt v. Chapman, 6 Conn. 347 ; Champion'!). Bostwick, 18 Wendell, 175. In this last case, three per- sons ran a line of stage-cOaohes from one place to another, the route being divided between them into three sections, the occupant of each section fur- nishing his own carriages and horses, hiring drivers and paying the expenses of his own section, but the money received as fare of passengers, deducting therefrom only the tolls paid at turnpike-gates, was divided among the par- ties in proportion to the number of miles of the route run by each, and it was held that they were jointly liable as partners to a third person, not a passenger, for an injury received through the negligence of the driver of the coach of one of them. And not only would persons, in such a case, so unit- ing, be liable as partners to third persons, but also as among themselves in respect to a division of the passage money, they have been held to be part- ners. Pattison v. Blanchard, 6 Barbour, S. C. Eep. 537. So in a case where two persons were jointly interested in the profits of a common stage wagon, but by a private agreement between themselves, each undertook the conducting and management of the wagon, with his own driver and horses, for specified distances, they were held, notwithstanding this private agreement, to be jointly responsible to third persons for the negligence of their drivers throughout the whole distance. Waland v. Elkins, 1 Starkie, 272. See also, Cobb V. Abbott, 14 Pick. 289 ; Dwight v. Brewster, 1 Pick. 50 ; Fro- mont V. Coupland, 2 Bing. 171 -9 Moore', 319 ; Whetmore v. Baker, 9 John. 309. . ' Dob i;. Halsey, 16 John. 34; Holt u. Kernodle, 1 Iredell (Law), 199 ; Cox V. Delano, 3 Dev. 89 ; Pott v. Eytoh, 3 Man. Grang. & Scott, 32, 39 ; Barry v. Nesham, id. 641, 655 ; Bromley v. Elliot, 38 N. Hamp. 301-303. 34 CONSTITUTION OF PARTNERSHIP. [BOOK I. two persons agree simply to share the profits of a trade or adven- ture, they will be partners in those profits ; but that, if one be a mere servant or agent of the other, and receive his share of the profits in lieu of wages, then, as there is no mutuality between the parties, they are not partners.^ And the distinction seems not to be unreasonable ; for if, on the one hand, it be said that A. and B. agree to divide the profits, and, on the other, that A. agrees to. give B. one half of the profits as a remuneration for his trouble, these two modes of expression convey very difierent notions of the rights existing between the parties. In the former case, the natu- ral inference is, that A. and B. have equal rights in all that con- cerns the profits, though one only may possess the capital. In the latter case, the inference is, that A. has the sole control over the entire concern, subject to account to B. for his share of the profits. It seems clear that B., in the two situations supposed, will be in- vested with very difierent rights and privileges.^ § 40. But though such may, at first sight, appear to be the result of the majority of decided cases on this subject, the prin- ciple which Lord Eldon apphed to the decision of these nice ques- tions appears to have arisen from a difierent, and certainly a more subtle and refined view of this branch of partnership law. And it must be admitted that his Lordship's dicta on this subject have received the sanction of the most eminent practitioners at the bar. ' But see Taylor v. Terme, 3 Harr. & John. 505. In Bromley v. Elliot, 38 N. Hamp. 287. Bell J., said, in reference to the doctrine in the text : " This principle has not been adopted in New Hampshire ; and, unless re- ceived with the qualification that the true character of the agreements be- tween the parties is made known to those who may have dealings with them, or the apparent relations of the parties are so evidently those of principal and agent, or rather of master and servant, that no person can be misled or defrauded in consequence of the connection, it seems to us it would be of most unsafe and dangerous tendency, and wholly unfit to be adopted." ^ See Bartlett v. Jones, 2 Strobhart, 471 ; Bartlett v. Sevy, id. ; Dwinel V. Stone, 30 Maine, 384 ; Fitch v. Hall, 25 Barbour, 13. " It is always competent to look at the particular cii-cumstances of the case, and ascertain thereby whether the proportion of profits may not be merely a compensation to a party for his labors and services, or for furnishing the raw materials, or a mill privilege, or a factory, from which the other is to earn profits." Dewey, J., in Holmes v. Old Colony Railroad Corp., 5 Gray, 58, 60. See Bradley v. White, 10 Metcalf, 303 ; Denny v. Cabot, 6 Metcalf, 82 ; Judson 'J. Adams, 8 Gushing, 556. CH. I.] FORMATION OP THE CONTRACT. 35 His Lordship seems to consider tlie mere words of the agreement, in reference to the profits, and not the actual situation of the par- ties, to be the criterion of partnership in these cases ; and he rests his opinion on the yarious decisions on the subject. " The cases," he says, " have gone further to this nicety, upon a distinction so thin, that I cannot state it as established upon due consideration, that, if a trader agrees to pay anotMfer person, for his labor, in the concern, a sum of money, even in proportion to the profits, equal to a certain share, that -wiU not make him a partner ; but if he has a specific interest in the profits themselves, as profits, he is a partner."^ And again, — "It is clearly settled, though I re- gret 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 property in the capital, he is, as to third persons, a partner." ^ And ' Ex parte Hamper, 17 Ves. 404. In Chase v. Barrett, 4 Paige, 148, it was held that a person who contracts for a share of the profits of a particular trade or business, as profits, is a partner as to third persons, and is liable for the debts of the partnership. See aleo, Loomis v. Marshall, 12 Conn. 69 ; Champion v. Bostwick, 18 Wendell, 175 ; Denny v. Cabot, 6 Metcalf, 82 ; Turner v. Bissell, 14 Pick. 194 ; Everett v. Coe, 5 Denio, 180 ; Oakley v. Aspinwall, 2 Sandford (S. C), 7. In Pott v. Eyton, 3 Com. B. 32, the de- fendant Eyton was concerned in a colliery, and the defendant Jones kept a shop for supplying the workmen at the colliery. Eyton built the shop ; licenses to sell tea, &c. were taken in his name, and he paid for the goods supplied to the shop. Jones managed the shop business. Eyton received first seven and afterwards five per cent, on the account of all sales to the workmen, and Jones had all the rest of the profits of the shop from whatever source derived. The question was, whether Eyton and Jones were partners or jMasi-partners. The, jury found that there was no agreement to share profit and loss, and the Court of Common Pleas acted on the distinction taken in Ex parte Hamper, and on the distinction between profits and gross returns, and held that no partnership or guasi-partnership existed. ^ Ex parte Hamper; 17 Ves. 412; Stocker v. Brockelbank, 15 Jur. 591 ; 8. c. 5 Eng. Kep. Law and Equity (Little & Brown), 67 ; Pott v. Eyton, 3 Com. B. 32. The distinction here stated and that stated ante, § 25, that " in order to constitute a communion of profits between the parties, the interest in the profits must ie mutual, that is, each person must have a specific inter- est in the profits, as a principjll trader," are said by Mr. Justice Story to " wear the appearance of no small subtilty and refinement, and scarcely meet the mind in a clear and unambiguous form ; for the question must still 36 CONSTITUTIOlir OF PAETNBRSHIP. [BOOK I. again, — " The ground is settled, that, if a man, as a reward for his labor, chooses to stipulate for an interest in the profits of a business, instead of a certain sum proportioned to those profits, he is, as to third persons, a partner." ^ § 41. These dieta of Lord Eldon, although corroborated by the observations of other judges,^ do not seem to have been warranted by any express decision an^ior to his Lordship's own judgments. They are, however, generally admitted to be correct statements of the law on this subject, and are the foundation of some decisions which it is necessary to notice in this place. Thus, in Ex parte Langdale,^ the question was, whether the brewers who had sup- plied the bankrupt with beer were to be considered as partners, in respect of their participation of the profit, under their agreement ; which, according to their representation, was, that they were to pay half his rent, supplying him with beer at £4 5s. per barrel, — recur, When may a p^rty properly be said to ' have an interest in the prof- its, as profits f ' When also may it properly be said, that ' the interest in the profits is mutual,' and that ' each person has a specific interest in the profits as a principal trader ? ' No absolute test is given to distinguish the cases from each other, and it is not easy to grasp it." Story Partn. § 34. Still, however refined and nice the distinction may be between receiving a specific share of the profits, as profits, and a stipulated sum in proportion to a given quantum of the profits, as a compensation for services, it seems to be definitely established by a series of decisions, and is not now to be shaken. 3 Kent Com. 34. Mr. Cary, in his Treatise on the Law of Partnership, p. 11, vin- dicates the principle on which this distinction is founded, and insists that it is perfectly clear and just. It is also said by Mr. Justice Story, that al- though nice and difiicult to be applied to particular cases, "it is by no means cleaT, that there is not a very just and satisfactory foundation, on which it may well rest." Story Partn. § 36. In Champion u. Bostwick, 18 Wendell, 185, Mr. Chancellor Walworth said : " I am inclined t<5 think this distinction is a sound one as regards the rights of third. persons." It is .also stated and regarded as a well-established distinction in Denny v. Cabot, 6 Metcalf, 90, and in Loomis v. Marshall, 12 Conn. 69. See also, Vanderburgh V. Hull, 20 Wendell, 70; Thompson v. Snow, 4 Greenl. 264 ; Chase v. Bar- rett, 4 Paige, 148 ; Turner v. Bissell, 14 Pick. 194,- 195 ; 3 Kent Com. 25, note ; Pott v. Eyton, 3 Man. Grang. & Scott, 32, 39, 40 ; Bradley v. White, 10 Metcalf, 303 ; Holmes v. Old Colony Railroad Corp. 5 Gray, 58. ' Ex parte Rowlandson, 1 Kose, 91 ; and see Ex parte Watson, 19 Ves. 459 ; Bromley v. Elliot, 18 N. Hamp. 287, 304. " See the dicta of Lord EUenborough in Mair v. Glennie, 4 M. & S. 240 ; but that case was decided after Ex parte Hamper. » 18 Ves. 300. CH. I.] FORMATION OP THE CONTRACT. 37 the usual price 'being J 3 8«. The bankrupt's account of the agreement was, that the brewers were to have, out of the profits, 17s. per barrel for the half of the rent, the bankrupt taking the rest, of which 5s. was for drawing the beer, and Is. for collecting the money. Lord Eldon said he could not refuse to let this case go to a jury. The agreement to sell their beer to him at a higher ■price than to others would not make them partners ; but the bank- rupt's representation was very diflerent. If the actual contract gave a claim upon the profits, or the application of them, that was partnership. If there was no claim upon the profits or the appli- cation of the profits, then it was not partnership. Again, in Ex parte Wheeler,^ the facts of which will be stated in a subsequent page, Lord Eldon, in holding a person to be a partner, proceeded on the principle that he received an annuity, not merely with ref- erence to the profits, but out of the profits. * § 42. Again, in Ex parte Digby,2the question was, whether B. was partner with A., under the following circumstances : — It ap- peared that the business was carried on in the sole name of A. ; and that B. had been retained by him as a clerk or agent, at a salary of £100 a year; and that afterwards, by a new arrange- ment between the parties, B. was to have a moiety of the profits of the business, as a compensation for his services. There was, however, no agreement in writing constituting him a partner, nor any entry in the books of the business from which that circum- stance could be implied ; and it did not appear that he brought any capital into the concern, or had any interest in the stock in trade, which was purchased with the separate money of A. ; and, while the alleged partnership was going on, B. carried on a sep- arate trade on his own account, as a dealer in hops. There was. contradictory evidence with respect to B.'s own declarations on-i the subject. He sometimes said he was a partner iuithe business,, and, at other times, that he was only an agent of A. ; but it ap- peared, that, subsequent to the new arrangement made with him. by A., by which he was to have a share in the profits of the busi- ness, he acted as a referee in a matter of controversy between A. and a customer of the house, and received a fee from A. for so acting; Upon these facts, notwithstanding that the case of Smith; ' Post, § 48. " 1 Deac. 341. But see s. C. 2 Mont. & A.. 735. 4 38 CONSTITUTION OF PARTNERSHIP. [bOOK I. V. Watson ^ was cited as an authority the other way, the court of review held that a partnership existed between A. and B. § 43. Where A. and B., carrying on business together as attorneys, agreed that B. should receire annually out of the profits the sum of £300, but he was not in any manner to be liable to the losses of the business, and was to have a lien on the profits for any losses he might sustain, by reason of his liability as a partner, the Court of Exchequer inclined to the opinion, that this was a partnership inter se, but it was unnecessary to decide the point.^ § 44. In reference to this class of cases, it is remarked by Mr. Justice Story, that the question " is first to arrive at the imention of the parties inter sese, and secondly, if between themselves there is no intention to create a partnership, whether there is any stub- born mil of law which will nevertheless, as to third persons, make a mere participation in the profits conclusive that there is a part- nership." " It is said, ' Every man who has a share in the profits of a trade ought also to bear his share of the loss as a partner.' ^ In a just sense, this language is sufiiciently expressive of the gen- eral rule of law, but it is assuming the very point in controversy to assert that it is universally true, or that there are no qualifica- tions, or limitations, or exceptions to it. On the contrary, the very cases alluded to by Lord Eldon in the clearest terms establish that such qualifications, hmitations, and exceptions do exist." * " Admitting, however, that a participation in the profits will ordinarily establish the existence of a 'partnership between the parties in favor of third persons, in the absence of all other op- posing circumstances, the question is, whether the circumstances, under which the participation exists may not quahfy the presump- tion, and satisfactorily prove, that the portion of the profits is taken, not in the character of a partner, but in the character of an agent, as a mere compensation for labor and services. If the latter be the true predicament of the party, and the whole transac- tion admits, nay, requires that very interpretation, where is the rule of the law which forces upon the transaction the opposite » Ante, § 28. » Bond V. Pittard, 3 Mee. & W. 357. » Grace v. Smith, 2 H. Bl. 998, 1000 j Ex parte Hamper, 17 Yes. 404. ' Story Partn. § 36. CH. I.] FORMATION OP THE CONTRACT. 39 interpretation, and requires the court to pronounce an agency to be a partnership, contrary to tlie truth of the facts and the inten- tion of the parties ? Now, it is precisely upon this very ground that no such absolute rule exists, and that it is a mere presumption of law, which prevails in the absence of Controlling circumstances, but is controlled by them, that the doctrine in the authorities alluded to is founded ; " " and there is no hardship upon third persons, since the party does not hold himself out as more than an agent. This qualification of the rule (the rule . itself being built upon an artificial foundation) is, in truth, but carrying into effect the real intention of the parties, and would seem far more conso- nant to. justice and equity, than to enforce an opposite doctrine, which must always carry in its train serious mischiefs or ruinous results never contemplated by the parties." ^ Regarded in con- nection with the above explanations, the distinction taken between an interest in the profits, as profits, and the payment of a stipu- lated sum in proportion to a given quantum of the profits, as a compensation for services, appears to be a sound one, and to stand on reasonable and just grounds.^ ' Story P^rtn.'§ 38. ^ See ante, § 25; Champion v. Bostwick, 18 Wendell, 175, 184, 185; Gary Partn. 11 ; Denny u. Cabot, 6 Metcalf, 82, 90 ; Loomis v. Marshall, 12 Conn. 69 ; Stocker v. Brockelbank, 15 Jur. 591 ; s. 0. 5 Eng. Rep. in Law and Equity (Little & Brown), 67; Bradley v. White, 10 Metcalf, 303; Clement v. Hadloek, 13 N. Hamp. 185. The above remarks of Mr. Justice Story are quoted by Mr. Justice Wilde in Denny v. Cabot and others, 6 Metcalf, 92, 93, with marked approbation. They furnish rules for har- monizing many of the cases decided with reference to this distinction. In this connection, it is important to consider the following cases, particularly Denny v. Cabot and Loomis v. Marshall, in which the distinction above stated is strikingly illustrated and' adopted. The agreement in Denny v. Cabot & others, 6 Metcalf, 82, was, that Cooper, one of the defendants, should manufacture satinets at his mill for Cabot, Appleton & Co., the other defendants, on certain terms therein stip- ulated. The stock was to be supplied by the latter, and the satinets were to be of such a color as they should direct, and when manufactured were to be delivered to them. They were bound to pay Cooper for all satinets made by him, at a certain rate per yard, and, in addition, to pay him one- third part of the net profits of the business, after deducting a charge of commission and guaranty on the gross sales of six pftr cent., and all pre- miums, insurance, transportation, and expenses, witli interest. Cooper ran the mill from January 2d until about the 11th of May, 1841, when he failed. 40 CONSTITUTION OF PAETNBESHIP. [bOOK I. §•45. Where trustees, by virtue of a deed of assignment made to them by tbeir debtor, carry on the trade of their debtor upon During that time, he manufactured no goods except under the above agree- ment with Cabot, Appleton & Co. The articles, for the price of which the suit was brought, were delivered by the plaintiffs at various dates between January 15th and April 14th, 1841, on Cooper's order, at his mill. Most of the articles were such as are used in the manufacture of satinets, and put into the cloth, or used in cleaning and preparing the wool for manufacture. Some of the articles purchased of the plaintiffs remained on hand at the mill when Cooper left it, and he carried them off, and some other of the articles he sold before he left. Before the purchase of the articles of the plaintiffs, Cooper showed them the agreement between himself and Cabot, Appleton & Co. Mr. Justice Wilde, in delivering the opinion of the court in this case, said : " By the terms of this contract it is manifest, we think, that the defendants had no intention to create a partnership in the business referred to in the contract, and that inter sese no such partnership was created. But," he added, " it is contended by the plaintiffs' counsel, that if the defendants were not partners inter sese, they were nevertheless liable, ^s partners, to third persons ; because, if here was no community of interest in the property, there was a comrhunity of interest in the profits, which ren- ders them liable, as partners, to third persons. On this point, the distinction appears to us to be well established, that the party, who participates in the profits of a trade or business, and has no interest in the profits, as profits, is chargeable as a partner with respect to third persons ; but if he is only en- titled to receive a certain sum of money in proportion to a given quantum of the profits, as a compensation for his labor and services, he is not thereby liable to be charged as a partner." See Turner u. Bissell, 14 Pick. 192; Loomis V. Marshall, 12 Conn. 69 ; Hodges v. Dawes, 6 Ala. (n. S.) 215 ; 01m- stead V. Hill, 2 Ark. 346 ; Bice v. Austin, 17 Mass. 197 ; Allen v. Dunn, 15 Maine, 295; Ferine v. Hankinson, 6 Halst. 181; 3 Kent Com. 33; Gow Partn. 14-21; Story Partn. § 30 et seq. "It is true," Mr. Justice Wilde ^continued to remark, " that Lord Eldon has expressed a doubt of the sound- ness of this distinction in Ex parte Hamper, 17 Ves. 404. He admits, how- ever, that the law of partnership is thus settled. Ex parte Watson, 1 9 Ves. 459 ; Ex parte Rowlandson, 1 Rose, 92. And this distinction has been con- firmed by numerous subsequent decisions." " We think there is no sound distinction between an agreement to pay a party a certain share of the ■gross profits and an agreement to pay a certain share of the net profits, as ■explained in the present contract, the clear meaning of the terms of which is, that Cabot, Appleton & Co. were to pay Cooper one third part of the profits, after making certain specified deductions therefrom, and Cooper clearly was not to be liable for any losses. If he had stipulated for a' share in the profits (wHbther gross or net profits), so as to entitle him to an account, and to a specific lien, or a preference in payment over other cred- itors, and also to the full benefit of the profits of the business, without any CH. I.] FORMATION OF THE COilTRACT. 41 trust out of the profits thereof, after paying the expenses of the assignment and of carrying on the business, to retain and pay the corresponding risk, in case of loss, justice to the other creditors ■would seem to require that he should be holden liable to third persons as a partner. But where a party is to receive a compensation for.iis labor, in proportion to the profits of the business, without having any specific lien upon such profits to the exclusion of other creditors, there seems to be no reason for holding him liable as a partner, even to third persons. This distinction is supported by Gary, in his Treatise on Partnership ; and Chancellor Wal- worth considers it a sound one in Champion v. Bostwick, 18 Wendell, 184. And it is adopted with approbation by; Chancellor Kent, in his Commenta- ries 3 Kent Com. 25, note. The remarks- of Judge Story on these dis- tinctions are very forcible, and seem to us to be founded on sound princi- ples. Story Partn. §§ 36, 38." . The court also, in the above case of Denny V. Cabot, notice the fact, , that Cooper, when he applied for the articles charged, showed the plaintiffs the contract in question, and remark, that the plaintiffs " must be presumed to have known that the contract did not create a partnership." In the case of Loomis v. Marshall, 12 Conn. 69, French & Hubbell having a factory, Marshall agreed with them to furnish a full, supply of wool for a .certain period ; they were to manufacture the wool into clothsj and to devote the entire use of the factory to that purpose for the period named, and the net proceeds of the cloths, after deducting incidental expenses and the charges of sale, were to be divided in certain proportions between the par- ties ; the expense of insurance on the wool and cloths was to be borne by the parties in the same ratio as their interest was in, the final division of the avails of the cloths ; and in case of the loss of the wool or cloth by fire, the amount received for insuranpe was to be divided between the parties accord- ing to the. loss sustained by each. An action, was brought by the plaintiff for work done in the factory against French & Hubbell and against Mar- shall, as copartners, but the court held that French & Hubbell had no other interest in the profits than a compensation for their labor and the materials furnished by them, by a percentage on the avails of the cloths,, and conse- quently th>t French & Hubbell and Marshall were not liable as partners. Jt was not expressed in terms in the agreement to be for such compensation, but such the court held was the legal construction of it. It was also held in this case, that the proper test of a partnership is, a community of profit; but to constitute such .community of profit the party must have a specific interest in the profits, as profits, in contradistinction to a stipulated portion of the profits as a compensation for his services. The chief justice (Wil- liams), dissented from the above decision. See Bucknam v. Barnam, 15 Conn. 73. In Loomis v. Marshall will be found an explanation of Everitt u. Chapman, 6 Conn. 347, stated ante, § 24. Heckert v. Fegely, 6 Watts & 8. 139, is a case in principle precisely like Loomis v. Marshall. A like decis- ion was made in Turner v. Bissell and Root, 14 Pick. 192. In this case, by 4* 42 CONSTITUTION OP PARTNERSHIP. [BOOK I. surplus profits to and among themselves, and the other creditors executing the deed, the trustees and creditors executing the deed a written contract between Bissell and Root, Bissell agreed to furnish Root with wool for a certain time, to be worked into satinets, and Root was to deliver to Bissell all the satinets which the wool would make, and was to find and pay for warps for the same. For working the wool, finding the warps, &c., Bissell was to pay Root a certain percentage on the sales of the satinets. Each was to pay one half of the charges. Bissell was to have the whole direction of the sales ; and should he make sales himself, he was to charge Root a percentage on Root's proportion of the sales. In an action against Bissell and Root for the price of the warps furnished by the plaintiff" to Root, it was admitted that Bissell and Root were not partners inter sese ; but it was contended, that, as both of the defendants pai-ticipated in the profits of the business, they were thereby chargeable with respect to third persons ; the court, however, h6ld that Bissell was not a partner with Root, and consequently was not liable to the action. Again, in Vanderburgh v. Hull, 20 Wendell, 70, a person was employed as an agent in conducting the business of a foundery, and at a salary of $300 ; and, in addition thereto, he was to receive one third of the profits of the foundery, if any were made ; and he had nothing to do with the losses. The court held that the agent was not, either as to his employers or third persons, a partner. See 'also, to the same effect, Burckle v. Eckart, 1 Denio, 337. So, an agreement, that one shall receive a salary for his services in a grocery store, and also a commission on the profits, after de- ducting the salary and rent of the store, does not constitute a partnership. Miller- w. Bartlett, 15 Serg. & R. 137; Ross v. Drinkwater, 2 Hall, 215; Petriken v. Collier, 1 Barr (Penn.), 247. There are many other cases where a mere participation in the profits of a concern has been treated as a mode of compensation only, and not as creat- ing a partnership in respect to the concern or adventure from which the iprofits arise. Such was the case ofPerine v. Hankinson, 6 Halst. 181, •where a landlord agreed to receive of his tenant a portion of the profits of -the farm let to him. See Holmes v. Old Colony Railroad Co. 5 Gray, 58. Such, also, was the decision, upon a like analogy, where it was agreed be- .tween two persons that one of them should advance a sum of money with (which the other agreed to procure certain articles and consign them to the former on his account and risk, the person advancing the funds to be repaid ■out of the proceeds and to receive a share of the profits. This was held not to be a partnership. Rice v. Austin, 17 Mass. 197. In this last decis- ion, the cases of shipments on half profits were noticed ; and it was said these were never supposed to create a partnership between the shipper^ and ship- owners ; but the half profits have been treated merely as a mode of com- pensation for freight, charges, &c. For other cases illustrating the same doctrine, the reader may consult Muzzy v. Whitney, 10 John. 226 ; Cutler V. Winsor, 6 Pick. 335 ; Taggard v. Loring, 16 Mass. 336 ; Bradley v. White, CH. I.J FORMATION OP THE CONTRACT. 43 are partners in the businesa carried on for the purposes of such trusts.^ • ' 10 Metcalf, 303 ; Allen v. Dunn, 15 Maine, 294 ; Beecham v. Dodd, 3 Harr. 485 ; Reynolds v. Toppan, 15 Mass. 370; Ambler v. Bradley, 6 Vt. 119 ; Dob V. Halsey, 16 John. 34 ; M' Arthur v. Ladd, 5 Ohio, 514 ; Boyer v. Anderson, 2 Leigh, 560 ; Doak v. Swan, 8 Greenl. 170; Gallop w. Newman, 7 Pick. 282; St. Victor v. Daubert, 9 Louis. (Curry), 314; Bromley v. Elliot, 38 N. Hamp. 287. In Simpson v. Feltz, 1 M'Cord Ch. 219, Nott, J., remarked: "I take it that this is the distinction that runs through all the cases; if a person derives a certain emolument from the trade, then he is not a partner ; if his emolu- ments depend upon the profit and loss, then he is eonsidered a partner." " There is a particular class of cases in which, although a person may receive a share of the profits only, he will not be eonsidered a partner ; as where he is to receive a share of the profits of a mere isolated transaction, such as the case of Muzzy v. Whitney, 10 John. 228, and the cases there cited." The fact of its being a single adventure was also regarded as hav- ing an important bearing against the relation of partnership inter sese in the ease of Ferguson v. Alcorn, 1 B. Monroe, 159, 160. This last was a case of a bill by one, who supplied money to a concern, to settle the affairs of the concern, and subject the other, who had supplied labor, to a share of the loss which had occurred in the business. • Still, the true question in all cases of this character is, as stated above, whether, taking all the circumstances of the case into view, the participa- tion in the profits is mutual between the parties, that is, whether each is interested in the profits as a principal trader, having a right to an account and holding a specific lien or preference in payment over other creditors, or whether the person participating) in the profits is to be regarded merely as an agent or servant of the concern, stripped of all the rights and powers of a partner or principal trader. It has been remarked by Mr. Chancellor Kent, that, " to be a partner, one must have such an interest in the profits as will entitle him to an account, and give him a specific lien or preference in payment over other creditors. There is a difierence between a stipula- tion for a compensation for labor proportioned to the profits, which does not make a person a partner, and a stipulation for an interest in such profits, which entitles the party to an account as a partner." 3 Kent Com. 25, note (b). Observe also in this connection, the remarks of Mr. Chancellor Walworth, in Champion v. Bostwick, 18 Wendell, 184, 185 ; of Mr. Cary, in his Treatise on the Law of Partnership, p. 11 ; and of Mr. Justice Wilde, in ' Owen V. Body, 5 Ad. & Ell. 28; Hickman v. Cox, 18 Com. B. 617; s. C. 3 Com. B. (n. 8.), 523. See Re Stanton Iron Co. 21 Beavan, 164 ; James t;. Whitbread, 11 Com. B. 406; Wightman w. Watson, 1 M. & Selw. 412 ; 1 Lindley Partn. 37, 38. 44 CONSTITDTION OB PAKTNBRSHIP. [BOOK I. § 46. A person receiving interest on an annuity, certain as to amount and duration, for money lent to a firm, enjoys no mutuality Denny v. Cabot, 6 Metcalf, 90, 92. See Holmes v. Old Colony Railroad Corp. 5 Gray, 58. In Burckle v. Eckart, 1 Denio, 337, Bronson C. J., in delivering the opinion of the court, said : " So far as this court is concerned, it_ has been settled that a mere agent or servant, who is to obey orders, and has no in- terest in the capital stock, will not be a partner, even as to third persons, merely because he is to be compensated for his services by receiving a share of the profits which may arise from the business in which he is employed. Vanderburgh v. Hull, 20 Wendell, 70. It is undoubtedly true, as a general rule, that a communion of profits will make men partners, and draw after it a liability for losses.. But it is abundantly settled, that the rule is not, unir versal ; and the exception that will best reconcile the cases, is least liable, to abuse, and is so distinctly marked that it can be easily administered, is tha,t which allows one man to employ another as a subordinate to his business, and agree to pay him out of the profits, if any shall arise, without giving the :party employed, the rights, or subjecting him to the liabilities, of a partner." In this case the court remarked : " There was no community of interest in the capital stogk,, and Eckart [the defendant] did not act as a principal trader, but only, as the agent or servant of Gibbs & Co. [his employers]. He was not clothed with the usual powers, rights, or duties of a partner, but was subject to the orders of his employers." A late writer (Bissett Partn. 12-15), discussing this subject, says : "Lord Eldon, in Ex parte Hamper, 17 Ves. 403, and in Ex parte Rowlandson, 1 Rose, 89, attempting to give a general expression for the precise degree and kind of participation of profits that should constitute partnership liabil- , ityj laid down a distinction, which has appeared to some a distinction with- out a difierence; so subtle and refined (to borrow the epithets which some writers have applied to it), couched in language so obscure and ambiguous, . that it is difficult to meet with any ordinarily clear-headed man who: even professes to understand it. His lordship's dicta, too, though expressed as if they were the result of cases previously decided, do not seem, as_Mr. Coll- yer has justly observed, to have been warranted by any express decision .anterior, to his Lordship's own judgments." Atter quoting -tlie distinctions , made by Lord Eldon in Ex parte Harnper, which have been already noticeid jnthe text, he proceeds: " Some of the writers, and even some of .the judi- ciaLauthorities, on this subject, appear to think that they.have surmounted the difiiculty, by confining the rule of liability to the cases where the party would have a right to an account of the profits ; but to this it may be answered, that in all cases where a person is to be paid for his services by a .sum proportioned, to the profits, he must be entitled to an account of the profits. If not, how is he to ascertain that he has what he stipulated for? (See 7 Jarman Conv. by Sweet, 11, note (a.) In many of the cases, it will be seen, that, notwithstanding a clear right to an account, no partner- OH. I.] FORMATION OF THE CONTRACT. 45 of profit with the firm, and consequently is not a partner. Cases of this kind generally occur either upon the retirement of a part- ner leaving a sum of money in the firm, or upon the decease of a partner who bequeathes an annuity to his widow out of the profits.^ ship was teld to subsist either as between the parties or as to third per- sons. See Holmes v. Old Colony Railroad Corp. 6 Gray, 58. " The distinction between the cases where a participation in the profits has been held to make a man liable as a partner, and those where it has been held not to make him so liable, is certainly, at least as Lord Eldon has given expression to that distinction, so thin, that it does not appear pos- sible, from the most careful consideration of it, to arrive at any clear gen- eral conclusion; nor does Mr. Justice Story's attempts to reconcile the repugnancy of the various decided cases, and to bring them, as he says, into ' harmony with each other, as well as with common sense,' appear to be very successful. If the matter were res Integra, a plain and intelligible rule, and one, too, which would not be at variance with any thing in the cases decided previously to Ex parte Hamper, 17 Ves. 403, would be, that those whose share of the returns of the business or adventure consisted wholly of the profits of stock, or partly of the profits of stock, and partly of the wages of labor, should be held liable as partners ; but that those whose share of the said returns consisted wholly of the wages of labor, or the interest of money lent, or a certain fixed annuity, and who had no con- trol or voice as principals in the management of the business or adventure, should not be held liable as partners. This would provide for all those cases in which agents or servants, for the purpose of stimulating their ex- ertions, are paid, not by a fixed sum, but by a-certain proportion of the profits, or, to speak more accurately, of the returns of the business or ad- venture. Of course it is not meant to apply to those cases where a party, although not interested in the capital slock, or even in the profits, suffers himself to be held out to the world as a partner ; nor to those cases where it is the intention that the party, though not interested in the capital stock, should nevertheless exercise the control of a principal in the business or ad- venture ; and, in short, fill the character of partner to all intents and pui> p03es. Nor would this rule be altogether inconsistent, and irreconcilable with Lord Eldon's dictum cited above. On the contrary, would it not tend to throw light on his expression so much criticized : ' A specific interest in the profits themselves, as profits,' by marking the distinction between that portion of the gross returns or earnings of a business which comes strictly under the head of wages of labor, and that portion which comes under the head of profits of stock strictly and properly so called." ' D. Eyre C. J., in Waugh v. Carver, 2 H. Bl. 235. " This case has been extremely well argued, and the discussion of it has enabled me to make up my mind, and remove the only difficulty I felt, which was, whether, by construing this to be a partnership, we should not determine, that, if there was an annuity granted out of a banking-house to the widow, for in- 46 CONSTITUTION OP PARTNBESHIP. [BOOK I. It has been clearly decided, that, if a person retire from a firm, leav- ing money in the hands of the firm, for which he receives interest at <£5 per cent., and an annuity for a term certain, then (laying aside the question of usury) he is only a lender to the partnership, and not a partner. In Grace v. Smith,^ Smith and Robinson entered into a partnership for seven years. After a few months, their partnership was pubUcly dissolved. The terms of the dissolution were, that all the stock in trade and debts due to the partnership, should be carried to the account of Robinson only ; that Smith was to have back <£4,200, which he brought into the trade, and £1,000 for the profits then accrued since the commencement of the partnership ; that Smith was to lend Robinson £4,000, part of this £5,200, or let it remain in his hands for seven years, at £5 per cent, interest, and an annuity of £300 per annum for the same seven years ; for all which Robinson gave a bond to Smith. Robinson advanced to Smith £600, for two years' pay- ment of the annuity, and other sums by way of interest and gra- tuities, and other large sums, at difierent times, to enable him to pay the partnership debts. Smith having agreed to receive all that was due to the partnership, and to pay its debts, but at the hazard of Robinson. Robinson having become bankrupt, and an action being brought against Smith for goods sold and delivered to the partnership, and the jury having found that the annuity was not payable out of the partnership profits, the question was, whether Smith could be considered as a dormant partner after the dissolu- tion. The Court of Common Pleas held he could not. De Grey C. J. : " If any one advances or lends money to a trader, it is only lent on his general personal security. It is no specific hen upon the profits of the trade, and yet the lender is generally interested in those profits ; he relies on them for repayment ; and there is no difference whether that money be lent de novo, or left behind in trade by one of the partners who retires. I think the true crite- rion is, to inquire whether Smith agreed to share the profits of the trade with Robinson, or whether he only rehed on those profits as a fund of payment. The jury have said this is not payable out of stance, of a deceased partner, it would make her liable to the debts of the house, and involve her in a bankruptcy. But I think this case will not lead to that consequence." ' Sir W. Bl. 99. CH. I.] FOEMATION OF THE CONTRACT. 47 the profits ; and I think there is no foundation for granting a new trial." Blackstone J., concurred, and thought the true question in these cases was, whether the profit or premium was certain and defined, or casual, indefinite, and depending on the accidents of trade. In the former case it was a loan (whether usurious or not was not material to that question) ; in the latter, a partnership^ § 47. In the case of Grace v. Smith, the annuity was payable simply in consideration of the money lent. Nothing was said as to its being payable in consideration of the annuitant's relinquish- ing the profits of the firm. But, even if an annuity were granted expressly " in lieu of the profits," as these words would, of them- selves, negative the presumption that the annuity was paid out of the profits, or that the parties inte,nded to be partners, it seems clear that a person would not be held a partner who receives Sa annuity in lieu of the profits, but which neither varies in its amount with the profits, nor depends, in its duration, on the term of the partnership. And it may be remarked, that, in a case where a person retired upon an annuity, receiving also a percentage on the profits of the trade, this person was held to , be a partner, by reason of the latter stipulation, and not of the former.^ § 48. If, however, a person were to receive an annuity in lieu' of the profits of a trade, and determinable on the event of the trade ceasing, it seems clear that he would be considered a part- ner with the grantor of the annuity .^ So, if a person, in com- pensation for money left with or lent to a firm, receives an annuity varying in its amount with the profits, he is clearly a partner in the concern.* Thus, where, upon his retirement from the busi- ness, A., one of several partners, assigned all his share of the trade to trustees, upon trust to pay an annuity of ^6 50 a year to Mmself for life, and after his death to his wife for life, and, upon the death of the survivor, in trust for their infant children ; and it was stipulated that, if the proceeds of A.'s share should not be • See Oakley v. Aspinwall, 2 Sandford (S. C), 7 ; Story Partn. §§ 66-69 ; Bailey v. Clark, 6 Pick. 372 ; Sheridan v. Medara, 2 Stockton (N. J.), 469 ; Pierson v. Steinmyer, 4 Kich. 309. ^ Young V. Axtell, cited 2 H. Bl. 242. See 1 Lindley Partn. 40. ' See Bloxam v. Pell, 2 W. Bl. 999. * See Oakley v. Aspinwall, 2 Sandford (S. C), 7. 48 CONSTITUTION OF PAKTNEKSHIP. [BOOK I. sufficient to pay the annuity of £50 a year, then that it should abate proportionably ; or, on the other hand, if his share so as- signed should amount in value to £5,000, then that the annuity should be increased to £100 ; Lord Bldon held that A. -was still a partner in the concern ; that he certainly must be tak^n to hare retired from the business, reserving an interest in the profits of the trade ; for the annuity he reserved was not merely an annuity, the amount of -which -was calculated -with reference to the then present profits, but it -was to be paid out of the profits, and to be subject to abatement or enlargement, as the profits might fluc- tuate. His partnership, therefore, -was never determined.^ So, where A. and B., who carried on business as brewers in partner- ship, having borrowed a sum. of money of C, joined -with C. in executing a deed, by the express terms whereof a partnership stock was created, in which they had all a joint property, but it was agreed that C. was not to have any definite aliquot proportion of the profits, but he was to have an account of the profits, so as to get £2,000 or £2,400 a year, as the case might be, out of the clear profits ; it was held that C. was a partner.^ § 49. A contingent interest in the profits will make a man a , partner pro tanto, though he may have parted with every other interest as a partner. Thus, where a retiring partner assigned all his share in the concern, which was still to continue liable to the fluctuations of trade, to two of the remaining partners, in trust for his infant children in such shares as he should appoint, and, in default of appointment, upon trust for the children, to be divided amongst them when the youngest should attain to twenty- one, it was held that the contingent interest which the father had in the share so assigned, depending on the death of any of the children under twenty-one, was such an interest reserved by him in the concern as prevented the determination of ' the partner- ship.^ § 50. Lastly, in order to complete the contract of partnership, it must be formed for the purpose of some lawful trade, business, or adventure. Not only all traders, but other persons who do not come strictly under that denomination, may be partners. One • Ex parte Wheeler, Buck, 48. ' Ex parte Chuct, 8 Bing. 469. ' Ex parte Wilson, Buck, 48. CH. I.J FORMATION OF THE CONTRACT. 49 might suppose, from, the T^ords of Lord Mansfield, that he con- sidered it essential to the constitution of partnership, that the partners should be amenable to the bankrupt laws ; for, in a case in which he decided that a conveyancer was liable as a partner, his words are, — "Incident to conveyancing is the receiving of money to place out upon securities, — receiving it from the lender to advance to the borrower, and acting for both parties respec- tively. From that the profit arises ; not from procuration-money, but from the money lying in their hands before it is placed out ; and, when placed out, from charges and fees for drawing and engrossing the conveyances." ^ § 51. But Ua-bility to the bankrupt laws is not a necessary ingredient in a partnership. Therefore, it has been held that there maybe a partnership between two attorneys,^ between physi- cians,^ and. between,, farmers.* And perhaps it may be laid down generally, that a partnership may exist in any business or transac- tion which is not a mere personal ofiice, and for, the p^formance of which payment may be enforced.^ Thus, wh^re two ship- i^Willett V. Chambers, Cowp. 817. = Marsh u. Gold, 2 Pick. 285 ; Westerlo v. Evertson^ 1 Wendell, 532 ; Warner v. Griswold, 8 Wendell, 665. A partnership between attorneys is governed by the ordinary rules respecting mercantile partnerships. Liv- ingston V. Cox, 6 Barr, 360. ' Allen V. Blanohard, 9 Cowen, 631. * 1 H. Bl. 37. " Potest denique societas contrahi unius rei, veluti si prae dium commiini consensu conductur, et fructus inde qusesiti sint communes.'' A''in. Comm. lib. 3, tit. 26, § 1. Lausdale v. Bradbear, 3 Monroe, 330, So there may be a partnership in a ferry. Bowyer v. Anderson, 2 Leigh 554. . ; . , , , , , ^ It was said by Gibson C. J., in Brady v. Colhoun, 1 Pennsylv. 147, that there may be a partiiership to trade in land; and it may, as in any other case, be limited to purchasing only, the profits or loss being divisible as stock ; but this relation does not necessarily or even naturally arise from the bare circumstance of the parties having purchased jointly. See also, Smith V. Burnham, 3 Sumner, 435 ; Pitts v. Waugh, 4 Mass. 424; Story Partn. §§ 82, 83. In, Dudley v. LittlefieW, 21 Me. 421, 422, Whitman C. J., re- marked : " We do not see why there may not be a copartnership in buying and selling land, as well as in any other vendible property. It is an agree- ment merely to share in the profit and -loss of negotiations. : The rules for transferring land may be different frpm those for the transfer of personal property ; but that can make no difference in the result, as to profit and loss. Copartners in' trade ofiteu connect the purchase and sale of real estate with 5 ' ■-■^'' 50 CONSTITUTION 0¥ PAKTNBESHIP. [BOOK I. agents ^ agreed to share in the commission on all ships coming to their respective ports, after deducting expenses ; and also in the discount on the bills of tradesmen employed in the repairs of the ships ; and also in the warehouse rent taken by each party for the ship's coming into port ; it was held clearly, that a partner- ship might well exist between such persons. "A ship-agent," observod Eyre, C. J., " employs tradesmen to furnish necessaries' for the ship ; he contracts with them, and is liable to them ; he also makes out their bills in such a way as to determine the charge of commission to the ship-owners. With respect to the commission, indeed, he may be considered as a mere agent ; but, as to the agency itself, he is as much a trader as any other man ; and there is as much risk of profit and loss to the person with whom he contracts', in the transactions with him, as with any other trader. It is true, that he will gain nothing but his discount, but that is a profit in the trade ; and there may be losses to him as well as to the owner." § 62. It is observable, that, in the preceding case, the agree- ment was only to share the net profits of the commission, after deducting certain expenses. In a more modern, case,^ it was con- tended that a partnership could not subsist in the gross sum received for commission. An action was brought by the assignees of certain bankrupts for work and labor by them, before their bankruptcy, in drawing and making out policies of insurance, and in and, about causing divers persons to insure ships and goods, and their other negotiations ; and the profit and loss relative thereto goes into the general account thereof." See Smith u. Jones, 3 Fairf. 332; Patterson V. Grace, 10 Ala. 444 ; Rowland v. Boozer, 10 Ala. 690 ; Ante, § 3, in note ; Ludlow V. Cooper, 4 Ohio (n. s.), 1. Still, the general rules applicable to ordinary commercial partnerships have been held not applicable to partner- ships formed for speculations in the purchase and sale of lands. Pitts v. Waugh, 4 Mass. 424 ; Smith v. Burnham, 3 Sumner, 435, 470, 471 ; Story Partn. § 83; Smith v. Jones, 3 Fairf. 337. As, for example, the ordinary doctrine of the liability of dormant partners does not extend to partnerships formed for such speculations. Ibid. But see upon this subject, Ante, § 3, in notes. ' ' Waugh V. Carver, 2 PI. Bl. 235 ; and see Bovill v. Hammond, 9 D. & R. 186; 6 B. & C. 149. ^ Cheap V. Cramond, 4 B. & Aid. 663. See per Curtis J., in Stevens v. Gladding, 2 Curtis C. C. 608, 609; Pomeroy v. Sigerson, 22 Mis, (1 Jones), 177. CH. I.] FORMATION OV THE CONTRACT. 51 for premiums advanced, &c. At the trial, it appeared that the bankrupts, who were merchants in London, recommended the defendant to consign goods to the house of Ruxton & Co., at Rio Janeiro, for 'sale; the latter were to remit the proceeds to the bankrupts, who were to pay over the same to the defendant. The bankrupts, upon receiving advices from Ruxton & Co. that the goods were sold, advanced money to the defendant, on account ; to recover which this action was brought ; Ruxton & ' Co. after^ wards failed without remitting the proceeds. It appeared, how- ever, that the bankrupts and Ruxton & Co. divided equally the commissions on the sale of all goods recommended by the one house to the other. Upon this it was argued, that the bankrupts were partners quoad hoe with Ruxton & Co., and that the receipt of the proceeds of the goods was, therefore, a receipt by the bankrupts, and the advance by them to the defendant was a pay- ment on account, for which they were liable. The judge who tried the action acquiescing in that opinion, the jury found a verdict for the defendant, which the Court of King's Bench refused to disturb ; Lord Tenterden C. J., observing, that the present case could not be distinguished in principle from Waugh v. Carver", and that, although in that case there was a previous deduction of a definite part of the commission before the division took place, yet that was an unimportant fact, and that a division of gross pro- ceeds might very well constitute a partnership. However, an agreement to share the profits of a business means ^rjm(? fade an agreement to share the net profits.^ § ^. It may here be observed, that there ?ire some societies not engaged in trade, but which, not partaking of a corporate character, are dealt with in a court of equity as partnerships ; as private societies for the relief of the members in case of sickness, &c.^ There are likewise certain societies, as clubs, which are not constituted for any purposes of profit, but which are exposed to liabilities similar in many respects to those of a partnership.^ ^ See D. Parke B., Bond v. Pittard, 3 Mee. & W. 360 ; 1 Lindley • Partn. 13. « Beaumont v. Meredith, 3 Ves. & B. 180. ' If a member of a clilb orders goods for the benefit of all, every member •who concurs in the order, or afterwards approves of it, is liable, unless it appears that the creditor, at the time of the sale, gave credit to that member 52 CONSTITUTION OF PARTNEESHIP. [BOOK I. § 54. It seems that there cannot be a partnership in a mere personal office. It has been ruled that the office of a sheriff's bailiff is particular and personal, and there can be no such thing as a partnership between two such officers, so that the act of one shall bind the 'other.^ Perhaps the office of replevin clerk is of the same nature. It is clear, that, if a replevin clerk become a partner with another in the business of attorney, the latter does not thereby become a partner, as replevin elerk.^ On the other hand, it has been ruled that Windsor Herald and Blue Mantle Pursuivant at Arms are in the situation of copartners ; so far, at least, as to maintain a joint action for the profits of any business which is begun while they are jointly on duty.^ § 55. Again as has already appeared from many examples, persons, without being partners generally in trade, may be part- only. Delauny i". Strickland, 2 Stark. 416. But where a club is constituted upon ready-money principles, as the clubs of London generally are, that is to say, by means of subscriptions and ready-money payments for meals and refreshments, &c., then it is considered that a fund is already furnished, to which tradesmen give credit ; and, therefore, the members of such a club individually are not liable for debts incurred by the committee, for work done or goods supplied for the club. Flemyng v. Hector, 2 Mee. & W. 1 72. The decisions in eases of this sort seem to indicate that the liability, if any subsists, arises rather on the ground of agency than on that of partnership. No partnership or guasi-partnership subsists between persons who do not share either profit or loss, and who do not hold themselves out as partners. See Price v. Groom, 2 Exch. 542. It follows from this, that societies and clubs, the object of which is not to share profits, are not partnerships in any sense. It was held in Caldicott v. Grifiiths, 8 Exch. 898, that the mShibers of ' The Midland Counties Guardian Society for the Protection of Trade,' were not partners inter se; and in .Plemyng v. Hector, 2 Mees. & W. 172, it was held that the members of the ' Westminster Reform Club ' were not partners as against third persons. See Todd v. Emly, 8 Mees. & W. 505 ; The St. James' Club, 2 De G. Mac. & G. 383. It is a mere abuse of words to call such associations partnerships ; and if liabilities are to be fastened on any of their members, it must be by reason of the acts of those members themselves, or by reason of the acts of their agents ; and the ageney must be made out by him who relies on it, for none is implied by the mere fact of association. 1 Lindley Partn. 55, 56 ; Cookerell v. Aucompte, 2 Com. B. (N. s.), 440. ' Irons V. Perchard, 2 Esp. 507. ' Brandon v. Hubbard, 4 Moore, 363. See Clarke v. Kichards, 1 You. & C. 351 ; Campbell v. Leiber, 7 Paige, 483. ' Townsend v. Neale, 2 Camp. 190. CH. I.] 3?0RMATI0N OP THE CONTRACT. 53 ners iu a particular, adventure, fhus, .where A. find B. were in partnership under the firm of A. & Co., and C. was not in part- nership,, A. & Co.. -agreed with C. to. purchase coffee on a joint account, A. & Co; to have the management of it, and 0. to have a share in the profits. The coffee hating been purchased, and C. having paid for his share, it was held that A. & Co.. and C. were partners in this particular adventure, and as C. was to share the profits, C. was likewise liable for the loss.^ So, where two per- sons agreed to share the profit and loss of certain goods which were in the hands of a factor for sale, it was held that this agree- ment constituted a -partnership between them, although one guar- antied to. the other the solidity of the factor's house.^ So, a number of persons associating together,' and subscribing sums of money, for the purpose of obtaining a bill in Parliament to make a railway, have been held partners in the undertaking.^ But on this subject it is needless to multiply examples. § 56. It has been observed that the trad,e or adventure must be lawful. By this is intended that it must be consistent with the loLws, of the land. Formerly it was held, that if the foundation of a contract was not mahxm in se, but only malwm prohibitum, an action might be maintained on it, if the malum did not appear on the record. On this principle, the case of Faikney v. Keynous * was decided, in which it was held, that, if a person pay money for another iu consideration of a transaction prohibited by act of Par- liament, but not malum in se,> and take a bond ' for the repayment of the money, he may recover in an action on the bond, notwith- standing the statute. This doctrine was carried still further in the subsequent case of Petrie v. Hannay,^ where, two persons having ^ Ex parte Gellar, 1 Rose, 297 ; Heyhoe v. Burge, 9 Com. B. 431. 2 Salomons w. Nissen, 2 T. R. 675. ' Holmes v. Higgins, 1 Barn. & Cress. 74 ; 2 D. & R. 196.' So, where two solicitors -who are not partners, are jointly, retained to conduct litigation in some particular case, and they agree to share the profits accruing therefrom, they become partners so far as the business of that particular case is con- cerned, but no further.. Robinson'??. Anderson, 20 Beavari, 98 ; 7 De G. & G. 239; M'Gregor u. Bainbridge, 7 Hare, 164. So, a pa;rtiiership maybe limited to the working of some particular patent, or to the working of it in some particular place or district. Lovell u. Hicks, 2 Y. &'C. Ex. 481 j Ridgeway v. Philip, 1 Cr. M. & R. 415. ' * 3 T. R. 418. ' Ibid. Lord Kenyon, diss. 5* 54 CONSTITUTION 0¥ PAKTNERSHIP. [BOOK I. jointly engaged in a stockjobbing ^transaction, and incurred losses, employed a broker to pay the differences,' one of them, who had repaid the broker, with the privity and consent of the other, the whole sum, was allowed to recover a moiety from that other, not-, withstanding the 7 Geo. 2, c. 8. So, also, in one case the Court of Chancery directed an account between two persons who had contracted to be jointly concerned in ship insurances, contrary to the 6 Geo. 1, c. 18, s. 12, Lord Loughborough observing, that, though he would not execute the contract against law, yet he should do great injustice if he did not decree an account of trans- actions which had arisen out of the contract.^ § 67. But the doctrinfe laid down in the cases just .cited has long been exploded ; and it is now clearly settled, that, whether the subject of a contract be malum prohibitum or malum in se, there can be no partnership founded upon it, so as to give the con- tractors a remedy either against each other or against third persons, at law or in equity. Even before the case of Petrie v. Hannay, Lord Kenyon decided that an underwriter of a policy of insurance could not, upon the loss of the vessel, recover a moiety of the loss from a person who had agreed to take half the risk ; because, upon the plaintiff's own showing, there was a partnership in the insurance, contrary to the statute. " This party," said Lord Kenyon, " cannot apply to a court of justice to enforce a contract founded in a breach of the law." ^ So, in the case of Mitchell V. Cockburne,^ where A. and B. had engaged in partner- ship for the insurance of ships, contrary to the statute 6 Geo. 1, c. 18, and A. had paid the whole of the losses incurred, it was held that he could not maintain an action against B. to recover a share of the money that had been so paid. And the case of Mitchell V. Cockburne was fully confirmed by that of Aubert v. Maze.* There, the cause having been referred to an arbitrator, he found that the plaintiff was indebted to the defendant in a cer- tain sum, "being one moiety of divers sums of money paid by the defendant for and on account of losses on policies of insurance, underwritten by agreement between the said plaintiff and the said ' Watts V. Brooks, 3 Ves. 612. ' Sullivan v. Grsaves, Park, Insur. 8. = H. Bl. 379. '2B. &P. 571. CH. I.J FOKMATION OF THE CONTRACT. 55 defendant, at their joint risk, and for their joint benefit." He accordingly awarded that sum to the defendant, subject to the opinion of the Court of Common Pleas as to whether the defend- ant was entitled to recover the money so paid on account of an illegal partnership. The court held that he was not; and set aside the latter part of the award. § 58. It will be observed, that in the preceding cases the ac- tions were all brought in affirmance of the illegal contract; but if a partnership, be contrary to law, no action can be founded on it by the parties implicated, even if it be brought in disaffirmance of the contract. Thus, in Booth v. Hodgson,^ an action was brought by the assignees of Browne, a bankrupt, against the bankrupt's copartners, to recover certain sums received for premiums on policies of insurance, in which the bankrupt and the defendants were jointly interested as partners, though the policies had been effected in the sole name of the bankrupt. J!t .was urged, in behalf of the plaintiffs, that the statute 6 Geo. 1, c. 18, only pro- hibited contracts of insurance made by partners ; but that here the assurances were made by one person only ; and that, although, if the object of the action had been to enforce any contract of insurance made in violation of the statute, the act would have fur- nished a decisive answer to it, yet that objection did not apply here, because the action was brought in disaffirmance of the part- nership insurances. But the Court of King's Bench held that the plaintiffs were not entitled to recover. " It is a maxim in our law," said Lord Kenyon, " that a plaintiff must, show that he stands on a fair ground, when he calls on a court of justice to adininister relief to him. Now is that the case with these plain- tiffs? They avow that they have insured in direct violation of the statute ; all their claim arises out of this transaction, which is contrary to the act of Parliament, and yet they wish the court to give effect to it." Grose, J. : " The plaintiffs wish to consider the case as if the partnership had never existed, and then they say, taking this to be an insurance only by Browne, it is a valid contract, and his assignees may recover the premiums received on his account. But we cannot decide on a part of the case ; and, taking the whole together, an asswmpsit, cannot be raised from one ' 6 T. K. 405. But marine insurances by partnersliips are now lawful, the 6 Geo. 1, being in this respect repealed by 5 Geo. 4, c. 114 ; see § 62. 56 CONSTITUTION OF PARTNERSHIP. [bOOK I.'' part of the case wheu the other parts of it negative an assump- sit." Lawrence, J. : " As between Browne and the assured, it would be unjust that the former should be permitted to set up the secret partnership ; but as between him and his partners, he can- not be suffered to disaffirm the partnership. There seems to be no justice on the part of the plaintiffs, who wish to receive all the premiums without accounting to the other partners, by endeavoring to imply, a promise contrary to the truth of the" case." § 59. Upon the same principles,, where the illegal contract of partnership is not executed, but executory only, none who were parties to it can, by action or otherwise, recover the money ad- vanced for the purpose of establishing the partnership.^ There- fore where money was advanced to S. by B., one of several part- ners, out of the partnership funds, on account of payments to be made on poHcies of assurance underwritten by S. on account of himself and B,, jn pursuance of a previous agreement between them to become sharers in profit and loss on such policies, and S. became bankrupt, it was held that the surviving partners of B. could not prove the money so advanced as a debt under the com- mission against S.^ § 60. It remains to be observed, that courts of equity, follow- ing the principles of these later decisions of courts of law, will dismiss so much of a bill as seeks an account of illegal partner- ship transactions.^ Much doubt has been thrown upon the case ' Per Lord Ellenborousb, 1 M. & S. 755. But although the subscribers to an illegal company have not a right to an account of the dealings and transactions of that company and of the profits made thereby, they have aright to have tlieir subscriptions returned, and even though the moneys subscribed have been laid out in the purchase of land and other things for the purpose of the company, they have a right to have that land and those things recon- verted into money, and to have it applied so far as it will go in payment of the debts and liabilities of the concern, and then in repayment of the sub- scriptions. In such cases, no illegal contract is sought to be enforced, but, on the contrary, the continuance of what is illegal is sought" to be prevented. 1 Lindley Partn. 155 ; Sheppard v. Oxenford, 1 K. & J. 491 ; Butt v. Mon- teaux, id. 98; Brackenbury v. Brackenbury, 2 J. & W. 391; Groves v. Groves, 3 Y. & J. 163. ' Ex parte Bell, id. " Armstrong v. Armstrong, 3 M. & K. 45 ; Harvey v. CoUett, 15 Sim. 332 ; Ewing v. Osbaldiston, 2 M. & Gr. 53 ; Stewart v. Gibson, 7 CI. & Fin. 707.. CH. I.J FOEMATION OF THE CONTRACT. 57 of Watts V. Brookes by the observation of Lord Eldon in Aubert V. Maze. His Lordship saying, that if Watts v. Brookes was to be considered as a case in which it was dryly decided, that, if a master in the course of taking an account, find certain sums paid on account of any of these illegal transactions, he may, on the ground of consent to such payment, view them in the same light as the other items of the account, it did not appear to him, Lord Eldon, that that case proceeded upon a principle sufficiently con- sistent with the act of Parliament to justify the adoption of it. And afterwards, the case of Watts v. Brookes was expressly over- ruled by the decision of Sir William Grant in Knowles v. Haugh- ton.i The object of the bill in that case was to establish a part- nership between the plaintiff and the defendant, in the business of brokers and underwriters, praying an account and payment of a moiety of the profits. The ' plaintiff went into evidence to prove the partnership, which waS denied by the answer ; the defendant insisting that the partnership between the parties, as underwriters, could not legally subsist. The counsel for the plaintiff cited the case of Watts v. Brookes, insisting that the object of the statute was only to avoid the contract as against the assured, ^-nd that the statute was satisfied by the appearance of only one name. Sir Wilham Grant, however, on the authority of Sullivan v. Greaves, and Mitchell v. Cockburne,^ dismissed so much of the bill as sought an account of the profits of the underwriting business, and di- rected an account of the other business upon the footing of part- nership.^ * 11 Ves. 168 ; 2 Hov. Supp. 253. = Ante, § 57. ' In a subsequent case, however, Sir W. Grant seems to have recurred to the old principles. The plaintiffs. Marsh and Ebsworth, were partners in the trade of Spanish wool-brokers in London ; and the defendants were partners in the trade of Blackwell-hall factors. By a parol agreement en- tered into between the plaintiffs and defendants, it was agreed that any parcels of wool offered in the market, on which a profit might be expected, should be purchased on account of the defendants by the plaintiffs ; and that, on the resales thereof, which the plaintiffs were afterwards to make, the profit and loss thereon should be shared between the plaintiffs and defendants in thirds. The plaintiffs made several purchases in consequence of this agreement, and the whole of the money arising from the resales was received by the defendants, the plaintiffs receiving no part of such money. The bill prayed 58 CONSTITUTION OP PARTNBESHIP. [BOOK I. § 61. Upon tie principles on which the latter decisions on' this subject have been founded, it has been held that a»debt arising from notes issued in violation of the statutes passed for the protec- tion of the Bank of England cannot be proved under a commission of bankrupt. And therefore where A., a partner in the Leith Banking Company, which consisted of more than six partners, opened an office at Carlisle, and circulated there promissory notes drawn by the Company's cashier in Scotland, and made payable to the bearer, on demand, at the Company's office in Leith (a proceeding then contrary to the bank acts, which re- stricted partners exceeding the number of six from issuing nbtes payable on demand), it was held, upon the bankruptcy of a debtor of A., thab A.'s proof should be reduced, so far as it was founded on the notes of the Company payable to bearer on demand which were issued to the bankrupt by A.^ § 62. We have endeavored to investigate the doctriiies held by courts of, law and equity regarding illegal partnerships in general, by an examination of cases which occurred under the 6 Geo. I., c. 18 ; which statute, for the purpose of creating a monopoly for two corporations, namely, the Royal Exchange and London Assurance Companies, restrained all other corporations or partnerships from assuring ships or merchandise at sea, and from lending money on bottomry, and declared all pohcies of assurance and bottomry-bonds of such other corporations to be ipso facto void, and all agreements by them for lending money on bottomry usurious. But it seems unnecessary to enter into a particular an account of the partnership transactions, and payment of what should be found due to the plaintiffs, and for a receiver to collect the outstanding debts of the copartnership. The defendants, by their answer, insisted (amongst other things), " That the plaintiffs did and do still carry on the business of wool-brokers in partnership, in the city of London aforesaid, under the style or firm of Marsh & Ebsworth, and that such business of wool-brokers is buying and selUng of wools on account of other persons ; and that those who act as such brokers are restricted by a bond given by them to the Lord Mayor of the city of London, and by an oath which they take on obtaining a license from the mayor and aldermen of the city of London to act as brokers within the same city, from buying and selling wools in their own names and on their own account."' But Sir William Grant, M. R., directed the account as prayed. Marsh v. Blakesly, Rolls, Nov. 30, 1812. 1 Ex parte Randleson, Mont. & M'A. 86. CH. I.] FORMATION OF THE COMTRACT. 59 examination of the cases -which haye been determined upon this branch of the act ; ^ for, under the more enlightened pohcy of modern times, that, injudicious enactment, the utility of which even lawyers have doubted, has been entirely abolished ; and now, by the 5 Geo. IV., c. 114, so much of the 6 Geo. I., c. 18, as re- strains any corporation or body politic, society or partnership, or persons acting in any society or partnership, from granting, sign- ing, and underwriting any pohcy or policies of assurance, or mak- ing any contract for assurance, of or upon any ship or ships, or goods or merchandise, at sea or going to sea, or from lending money by way of bottomry, or as makes any such contract void, or declares that the same shall be adjudged ugurious, or as imposes any forfeiture or penalty in respect of any such policy of assur- ance or contract, is repealed. § 63. It will be proper, however, to mention several cases in which, under existing statutes, a contract of partnership may be void ab initio, so that no right of action or suit arises to the co- contractors in resj)ect of it. It has been held, that a contract originally entered into for the purpose, of evading the usury laws, and not bond fide with the view of partnership, cannot be supr ported as a legal contract of partnership. A. lent B. a sum of money to purchase some goods ; B. gave A. his note of hand for the money, payable on demand ; and it was agreed between them, that A. should have half the net profits of the goods, upon a resale of them, over and above the note of hand. The goods were sold at a profit of £5. Immediately after the sale, A. demanded payment of the note, which, therefore, carried interest from the time of the demand. It was held that A. could not recover the sum of £2 10s. (half the profits) in an action against B. for money had and received. In behalf of A., it was argued that this was not a usurious contract, because there was no certainty, upon the original agreement, of any interest beyond <£5 per cent., but the whole rested in contingency, upon what would be the net profits arising from the resale of the goods ; and if there had been no profit at all, the plaintiff would have had no in- terest whatever. But, per Lord Mansfield : " There is no con- ' See Eeed v. Cole, 3 Buit. 1512 ; Lees v. Smith, 7 T. R. 338 ; Harrison V. Miller, id. 340, n. ; Mitchell v. Cockburne, 2 H. Bl. 379 ; Everthu. Black- burne, 2 Stark. 66 ; Strong v. Harvey, 3 Bing. 304. 60 CONSTITUTION OF PARTNERSHIP. [BOOK I. trivance whatever by which a man can cover usury. Here are two brokers : one who is the defendant, wants to buy goods that were upon sale, and the other agrees to lend him money for that purpose ; but he is to lend it upon the terms of being paid both principal and interest from the time the loan commenced. It is true, no rate of interest is reserved in the note ; but it is made payable on demand. Within two hours after the sale, he demands the money, and then the note begins to carry interest. He was not hound by the agreement to give credit for a moment ; so that there was no sort of risk whatsoever. Both parties, from their situation, knew there would necessarily be a profit. It seems to me, therefore, that the intention of the contract was to get more than principal and legal interest upon the note, which is usury within the meaning of the statute." ^ § 64. In the subsequent case of Morse v. Wilson,^ there was no fraud on the part of the lender of the money, and the court adverted to the usury alone. In that case, A. lent a sum of money to B., a trader, on bond, conditioned for the repayment of the money with legal interest; but, at the time of -executing the bond, it was agreed that B. should pay A., not only the in- terest, but also the surplus profits of his trade (if any), after payment of the interest ; it was held that A. could not recover on this bond, because the intent of the parties was, not that a partnership should subsist between them, but solely that A. should have more than £5 per cent, for his money. Lord Ken- yon : " The simple question is, whether this is not an agree- ment to receive more than the £5 per cent, allowed by law for the forbearance of a loan. Most unquestionably it is ; and it is therefore void. It has been argued, however, that this was not. a usurious contract, because the principal was put in hazard, as it was liable to the partnership creditors ; but it was no further hazarded than in the case of every other loan, namely, by the risk of the borrower's insolvency; for, as between the plaiatifi" and the partners in the business, he was not liable to contribute 1 Jestons V. Brooke, Cowp. 93. Probably, however, this transaction would now be held valid within the Stat. 3 & 4 Will. 4, c. S8, s. 7, that act, according to Valance v. Siddell, 6 Add. & Ell. 932, extending to notes pay- able on demand. H T. R. 353. CH. I.] FORMATION OP THE CONTRACT. 61 to the losses in the trade." The only question, in cases of this kind, will be,' whether or not it was the intention of the parties to enter into an agreement haying the semblance of a partnership agreement, with a view to eyade the usury laws. Mr. Justice Buller, in the foregoing case, seems not to haye adyerted to the intention of the parties ; and, moreoyer, he seems to have thought, that, if A. agree to share in the profits, but not the losses of a trade, and by these means secure his priticipal as between the parties themselyes, that is usurious, although his principal be ha- ble to the demands of third persons.^ § 65. The better opinion, howeyer, is, that an agreement hav- ing the form of a partnership agreement, but in which profits beyond the legal rate of interest are reserved to one of the par- ties, is legal, unless it appear to have been executed by way of shift or contrivance to cover usury ; because, at all events, the principal, for which such profits and interest are taken, is haz- arded to third persons. Lord Mansfield and the other judges seem to have acted on this priuciple in Morisset v. King ; ^ and it may be remarked, that, under the peculiar circumstances of that case, it made no difierence as to the general principle, that the person advancing the money was not the actual partner. An action of debt was brought on a bond conditioned for the due performance of certain articles of partnership. The articles re- cited, that Mary Morisset had lent Daniel King the sum of Xl'OO, to be repaid to her at the end of four years, without inter- est; but the consideration was, that the said Daniel King, his executors, and administrators, should find and provide for Mary Dubois, daughter of the said Mary Morisset (the obligee), meat and drink in the house where he dwelt or should dwell, for four years, if the said Mary Dubois should so long live ; and that she should, during the said term, board with hifa ; and that she should be copartner with Mary King, wife of the said Daniel King, 'm the business of a milliner, and should, all that time, bear one moiety of the losses, charges (except housekeeping), shop- rent, and materials necessa,ry for. carrying on the trade (which the said Daniel King did agree to provide) ; and they should be ' An agreement may, as to the parties, be usurious, yet make them liable, as partners, to third persons. Pierson v. Steinmyer, 4 Kich. 309. = 2 Burr. 891. 6 62 CONSTITUTION OF PARTNERSHIP. [BOOK I. partners, and each do their utmost to carry on the trade, and should equally divide the profits ; and also that the said Daniel King should lodge the said Mary Morisset, she paying him £10 a year ; and at the end of four years, Daniel King was to repay the £100 ; and, in case of the death of the said Mary Dubois, to pay the principal, together with lawful interest for the £100, to the said Mary Morisset. The defendant pleaded the Statute of Usury, but the Court of King's Bench gave judgment for the plaintiff ; Lord Mansfield observing, that it was impossible to say that King might not receive so much advantage by this partner- ship as to be worth the consideration. That the plaintiff's daugh- ter might have been drawn into a bankruptcy/ by means of this agreement, which might have been more, severe to her than the penalty of the statute, Mr. Justice Foster and Mr. Justice Wil- mot concurred with the Chief Justice. § 66. Later decisions have confirmed the doctrine now under discussion. Thus, in Gilpin v. Enderbey,i an action was brought by Enderbey against his copartner, Gilpin, on a covenant con- tained in their deed of partnership. By the indenture it was covenanted that they, the plaintiff and defendant, should become partners in the business of army clothiers for ten years ; that Enderbey should advance £20,000 as part of the capital for car- rying on the business, and that Gilpin should find a Uke sum; that Enderbey, during the continuance of the partnership, should have out of the profits, if sufficient, or, if not, out of the capital, £2,000 yearly, for his share of the profits ; and it was further covenanted, that, on the determination of the partnership by effluxion of time, the said sum of £20,000 should be repaid to the plaintiff Enderbey by six equal instalments, together with interest. The defendant pleaded, that, before the making of the indenture, it was corruptly and against the form of the statute agreed between the plaintiff and defendant, that the plaintiff should lend and advance to the defendant the sum of £20,000 ; and that the plaintiff should forbear and give day of payment thereof to the said defendant for the space of ten years thence next ensuing; and that the defendant, for the loan of the said sum of £20,000, and for the forbearing and giving day of pay- ment thereof, should yearly, during the said term of ten years, 1 (In error), 5 B. & Aid. 954 ; 1 D. & K. 570. CH. I.] FORMATION OF THE CONTRACT. 63 pay to the plaintifif the sum of £2,000, by equal half-yearly por- tions, on the 24th of March and 24th of September in each year ; and that, for securing the repayment of the sum Of £20,000 with such payments half-yearly to the plaintiff, the plaintiff and de- fendant, by way of shift, should execute a certain instrument in the form of a deed of partnership, according to the form and effect of the indenture in the declaration mentioned ; that, in pursuance of the . agreement, the plaintiff advanced the £20,000 on the terms aforesaid, and the deed was executed accordingly. And the defendant averred that the sum of £2,000, so to be paid yearly for the loan of the said £20,000, exceeded the rate of £5 per cent., contrary to the form of the statute, whereby the said indenture was void in law^ In delivering the judgment of the court. Lord Tenterden said: "If the deed discloses the real facts, and the intention of the parties to it, this is not the case of a loan of money by Enderbey to Gilpin, but a contract of part- nership between them, of a peculiar kind. If the deed does not disclose - the real facts and the intention of the parties, but was executed only as a contrivance to cover a loan of £20,000, for ten years, at £10 per cent., the 'deed was undoubtedly void." His Lordship added, that this was a fact that ought to have been found affirmatively by a jury, to enable the court to declare the deed void. No such fact having been found, they were bound to consider the deed as speaking the language of truth ; this con- tract, therefore, though probably an unusual one, was a partner- ship ; and if there was a partnership, there was no loan of money by Enderbey to Gilpin, and no usury. § 67. The case of Fereday v. Hordem^ was decided on the same principles. There, the Feredays and Turton, partners in trade, in consideration of £4,000 paid to them by Horderuj in augmentation of their capital, agreed to admit him into partner- ship with them for a term. It was agreed that Hordem should receive, in Heu of profit, a clear sum of £550 per annum ; and all the property of the concern was charged with the payment of this sum quarterly, and of the £4,000 at the determination of the partnership. The Feredays and. Turton were to pay rent, taxes, wages, and the other outgoings of the trade, which was to be carried on by them, and in their names only ; and Hordern was ' Jac. 144 ; and see Armstrong v. Armstrong, post, § 74. 64 CONSTITTJTIOW OF PARTNERSHIP. [BOOK' I. not to be required to attend to it. Hordern was at liberty to retire on giving twelve months' notice ; and on his retiring, or at the end of the term, the £4,000 and the arrears (if any) of the £550 per annum were to be paid to him by the Feredays and Turton by instalments, to be secured by their bonds, and they were to indemnify him from the debts of the partnership. Lord Eldon, in giving judgment, said, that this was stated to be usury under the device of a partnership agreement. But he thought it impossible to consider it usurious. Hordern became apartner,and though he was not under any liability as between himself and the plaintififs, yet he was liable for all the debts of the concern, as to aU the rest of the world. He thought, therefore, that it could not be made out to be a case of usury ; and the answer did not admit any other circumstances, upon which relief could be given. § 68. The preceding authorities are directly opposed by that of Brophy v. Holmes,^ decided by Sir Anthony Hart, while Lord Chancellor of Ireland, but it is conceived that the last-mentioned case is not of such weight as to be deemed to overrule the well- considered decisions which have been already noticed. In Brophy V. Holmes, the plaintiff, a merchant of Dublin, entered into an agreement with the defendant, Holmes, who was the captain of a vessel trading to the West Indies, to provide him with a cargo to be carried to certaiu ports mentioned in the agreement, and dis-^ posed of to the best advantage ; and with the proceeds Holmes was to purchase other goods, with which he was to return, and to make sale of the return cargo for the joint benefit ; the profit to be equally divided. Brophy alone was to advance all the neces- sary funds, and in consideration of this, and of Holmes having the management of the adventure, Brophy was not to suffer any loss. Holmes proceeded on his voyage, but, previously to his de- parture, transferred to Brophy certain securities in order to bear him harmless in case of necessity. The adventure proved unfor- tunate, and a considerable loss accrued, exceeding the value of the securities. Brophy then, in pursuance of the agreement, ap- plied the securities in exoneration of the loss. Upon the death of Holmes, his administratrix disputed the validity of the agreement, and brought an action against Brophy to recover the amount of the securities ; Brophy, on the other hand, insisted that the whole ' 2 MoUoy, 1. CH. I.J POEMATION OP THE CONTRACT. 65 loss was by the agreement to fall on the intestate ; and it -was not disputed that the amount of the securities feU short of the entire loss upon the shipments. The action having been referred to arbi- tration, and the arbitrators having decided in favor of the admin- istratrix, Brophy filed his bill for an injunction, and for relief on the footing of the agreement. Sir Anthony Hart dismissed the bill with costs, holding that the agreement was void, either as usu- rious, or nudum pactum. His Lordship observed, that it was im- possible to say that there was any thing inequitable in this transac- tion, but that an agreement might be equitable, and yet usurious ; and that if it was usurious, the law would determine against, it, and that he knew that the case of Gilpin v. Enderbey did not please Lord Eldon. His Lordship added, that the agreement was not so much unconscionable as nudum pactum ; that the plaintiff might have had some relief, if he had shaped his case as a part- nership case, submitting to bear half the loss ; but that as he had proceeded solely on the ground of indemnity, he could not now treat the case as one of partnership. Upon this case, we may venture to remark, that it is irreconcilable, not only with the par- ticular case of Gilpin v. Endeirbey, but with that general principle under which it is unnecessary, as between the partners themselves, that they should all be bound to share in the losses of the partner- ship. § 69. Persons exercising particular professions or trades are frequently restricted by statute in their oommon-l'aw right of en- gaging in partnerships. We may, in the first place, mention, that by the .57 Geo. 3, c. 99, s. 3, it is enacted, that, " no spiritual p&rson shall by himself, or by any other for himself, or to his use, engage in or carry on any trade or deahng for gain or profit, or deal in any goods, wares, or merchandises, by buying and selling for hire, gain, or profit, in any market, fair, or other place, upon pain of forfeiting the value of such goods, &c. ; and every bar- gain and contract so made by him, or by any to his use, in any such trade or dealing, contrary to this act, shall be utterly void and of none effect." It is obvious, that under this statute, no contract made by a trading partnership, whereof any of the mem- bers are spiritual persons, can be enforced in a court of law. Acco^jltagly, it was held in Hall v. Franklin,^ that a plea of this • 3 Mee. & W. 259. 6* 66 CONSTITUTION OE PARTNERSHIP. [BOOK I. statute was a good defence to an action brought by the public officer of a joint-stock banking company, in which certain clergy- men were shareholders, against the defendant, as the drawer and indcTrser of a bill of exchange. The effect of this decision has to a Certain extent been remedied by the Stat. 1 & 2 Vict. c. 10, which legalizes all contracts theretofore made, or to be made he- fore the end of the ensuing session (1839), by associations and partnerships in which spiritual persons are engaged, provided that such associations and copartnerships consist of more than six mem- bers or shareholders, and carry on their trade, whether as bankers or otherwise, " by means of boards of directors or managers, com- mittees, or other officers, acting on behalf of all the members or shareholders of, or persons otherwise interested in, such associa- tions or copartnerships." This statute, it will be observed, does not interfere with the case of ordinary partnerships carried on "by spiritual persons,^ nor does it protect joinl^stock companies beyond a certain period. § 70. A partnership between persons as attorneys, where any of them are not duly qualified, is illegal.^ The Stat. 22 Geo. 2, e. 46, s'. 11, recites that " divers persons, who are not examined, sworn, or admitted to act as attorneys or solicitors in any court of law or equity, do, in conjunction with or by the assistance or con- nivance of certain sworn attorneys and solicitors, and by various subtle contrivances, intrude themselves into, and act and prac- tise in the office and business of attorneys and sohcitors, to the great prejudice and loss of many of his Majesty's subjects, and the scandal of the profession of the law ; " and enacts that, " if any sworn attorney or solicitor shall act as agent for any person ' By tlie Stat. 57 Geo. 3, c. 90, spiritual persons may keep schools, and may farm to the extent of eighty acres. " See Matter of Woodward, 4 Johns. 289. An agreement of partnership was made in Scotland between two attorneys. One of them could practise only in a superior, and the other only in an inferior court. They undertook to divide the profits of each business, each to recommend the other to his clients, and to keep the partnership a secret from the world. This agree- ment was held illegal and void. GilfiUan v. Henderson, 2 Clark & Fin. 1. In Canfield v. Hard, 6 Conn. 180, there was an agreement to forn^ part- nership, which was to include the profits to arise from services of ^re of the parties as a deputy-sheriflf. The question of legality was argued by the respective counsel, but the point was not decided by the court. 'CH. I.] FORMATION OP THE CONTRACT. 67 or persons not duly qualified to act as an attorney or solicitor aforesaid, or permit or suffer his name to he anyways made use of, upon the account or for the profit of any unqualified person or persons, or send any process to such unqualified person or per- sons, thereby to enable him or them to appear, act, or practise in any respect as an attorney or solicitor, knoTving him not to be duly qualified as aforesaid,' and complaint shall be made thereof in a summary way to the court from whence any such process did issue, and proof made thereof upon oath, to the satisfaction of the court, that such sworn attorney or solicitor hath offended therein as aforesaid, then and in such case every such attorney or solicitor 9. so offending shall be struck off the roll, and forever after disabled from practising as an attorney or solicitor ; and in that case, and upon such complaint and proof made as aforesaid, it shall and may be lawful to and for the said court to commit such unqualified per- son so acting as aforesaid to the prison of the said court, for any time not exceeding one year." ^ 71. Various cases have been decided upon the construction of this statute. Where A., who had been an attorney for many years, engaged B., who at one time had been clerk to an attor- ney, but for some years had been a certified conveyancer, to conduct his business, and had agreed to allow him a moiety of the profits of the business instead of a fixed salary ; and the names of A. and B. were painted on the door of the office where the business was carried on, and bills were made out in their joint names ; and B. received instructions from the clients, and suits were instituted and carried on in consequence of such instruc- tions ; it was held that this case was clearly within the act, inas- much as the attorney had allowed his name to be used for and on account of an unqualified person ; and the court ordered the attorney to be struck off the roll, and the clerk to ,be committed to prison for a month. ^ So, where A. had, under the cover of the names of B. and C, attorneys, successively practised for his own profit, with their knowledge, as attorney in several causes, and during part of the time B. acted as A.'s clerk, receiving a weekly salary, of which entries were made in his account-book ; and, after B. had quitted his employment, C. took possession of the office which had been previously occupied by the former, and permitted ^ In re Jackson, 1 B. & C. 270. 68 CONSTITUTION OP PARTNERSHIP. [BOOK I. A. to practise in Ms name ; the court upon these facts struck B. and C. off the roll of attorneys, and committed A. to prison for three months.^ And in another case, where an attorney's clerk carried on the business in the name of the attorney, the latter liv- ing at some distance and receiving a proportion of the profits for occasionally superintending the concern, Mr. Justice Richardson said that this constituted a partnership between them, and was consequently an illegal contract.^ § 72. But it seems that the statute does not extend to an allow- ance made to the widow or children of a deceased partner out of the profits of the trade. Henry Candler,^ an attorney and con- veyancer, died, leaving a widow, who was his executrix, and tenn, children. By a decree executed shortly after his death, between Henry Candler, his eldest son, and- Mary Candler, the widow, Henry Candler, in consideration of love and affection towards his mother and family, and in compliance with the wish and hope ex- pressed by his father, &c., covenanted to carry on his father's business so long as any of -the other children of his father and mother should be living, unmarried, and under twenty-one ; and, within two months after the taking of every yearly account, to pay to Mary Candler, her executors, administrators, or assigns, a moiety of the clear net gains and profits ; and also to permit her to have free access to the books of account, to devote the whole of his time and attention to the business, to make out accounts annually, and to dehver to her a balance-sheet of the net gains and profits. Mary Candler convenanted to provide him with such sums as should be wanted by him, in order to carry on the busi- ness; and also to use her utmost endeavors and influence to in- duce her friends and connections to employ him. The business was for some time carried on upon the footing of this deed, until a claim was made by a creditor of Henry Candler upon his estate. In the argument of that claim the question arose collaterally, whether this instrument was legal under the 22 Geo. 2, c. 46, s. 11. Lord Eldon seemed to be clearly of opinion that it was. " If," said he, "-we are to construe the enacting part by the reci- tal, there is no doubt that this lady did not intrude herself into, ' In re Clark, 3 D. & R. 260. ' Hopkins v. Smith, 1 Bing. 13 ; 7 Moore, 242. " Candler v. Candler, Jao. 225. OH. I.] FORMATION OP THE CONTRACT. 69 or act and practise in, the office of an attorney or solicitor ; but the point contended for, I suppose, would be, that her taking the profits would' be evidence that she had done so. The meaning of the clause undoubtedly is this (whether the terms used have gone further is another question), that- qualified persons should not per- mit their names to be used by others, so as to enable them to appear as attorney ; and the question therefore is^ whether the words ' permit or suffer his name to be anyways made use of, upon the account or for the profit of,' &c., are not to be construed in connection with the other words, ' thereby to enable him or them tq appear, act, or practise,' &c., so as to prevent it from going beyond the mischief that it was intended to provide for." His Lordship concluded by observing, that, if the act were con- strued by help of the recitals, he was of opinion that this trans- action was not within its meaning ; that, however, was properly a question for a court of law. In a case which occurred in the Court of King's Bench subsequently to this decision of Lord Eldon, Lord Tenterden gave it as his opinion that the word thereby applies merely to the sending of process to the unqualified person, and not to the whole of the preceding sentence.^ But this, it is apprehended, will not affect any question similar to that of Candler v. Candler, supposing the act, as in this cas.e it clearly ought, to be construed by means of the recitals.^ § 73. Under the provisions of the Stat. 53 Geo. 3, c. 127, s. 8, proctors allowing their names to be used by persons not entitled to act as proctors, are to be struck off the roll ; but in this case there is a saving in fevor of " any allowance or allow- ances, sum or sums of money, that are or shall be agreed to be made to the widows or children of any deceased proctor or proc- tors, by any surviving partner or partners of such deceased proc- tor or proctors." § 74. Various statutes have been passed at different times for the regulation of the trade of a pawnbroker,^ the effect of which is to restrict the right of entering into partnership in that trade. 'IB. &C. 272. ' Co. Litt. 79, a. And see Copeman v. Gallant, 1 P. W. 314, Mr. Cox's note. 'Stat. 1 Jac. 1, c. 21; 30 Geo. 2, c. 24; 25 Geo. 3, c.48; 36 Geo. 3, c. 87. 70 CONSTITUTION OF PARTNERSHIP. [BOOK I. The leading enactments on this subject are contained in the Stat. 39 & 40 Geo. 3, c. 99', which regulates the rates to be taken by pawnbrokers, the form of the tickets to be given by them (which are to contain the name and place of abode of the pawnbroker), and the description of goods which may be pawned. And by the 28d section of that act, it is enacted that all and every per- son or persons, who shall carry on the trade or business of a pawnbroker, shall cause to be painted or written in large legible characters over the door of his or their shop their Christian and surname or names of the person or persons so carrying on the said trade or business, together with the word pawnbroker or pawnbrokers, as the case may be. In the case of Armstrong v. Armstrong,^ Robert Armstrong, who carried on the business of a pawnbroker, joined with one Warner in executing an indenture for carrying on the business of pawnbrokers in copartnership, for the term of fourteen years. The deed was expressed to be made in consideration of £2,000 advanced by Warner, who was to have £50 quarterly out of the profits. There was an express provision that the trade should be carried on by Armstrong, who was to have power to employ such journeymen, servants, and apprentices as he should think proper ; but it was not stated that ., Warner was to be a secret partner, though, upon the whole, the inference was that he was not to appear actively employed in the business. After the execution of the deed, the business was carried on solely by Armstrong, but Warner advanced several further sums by way of capital, on which he received .£10 per cent. These further advances were regularly indorsed upon, the indenture of copartnership, and amounted, together with the origi- nal sum of £2,000, to £4,300. Upon the deaths of Armstrong and Warner, it became a question in certain suits, instituted be- tween the parties interested under their respective wills, whether the representatives of Warner were entitled to the £4,800 in right of their testator as a partner with Warner ; and this de- pended upon the preliminary question, whether the partnership between Armstrong and Warner was legal, within the meaning of the statutes relating to pawnbrokers. Upon the hearing of the causes before Sir John Leach, his Honor directed certain issues ' 3 My. & K. 45 ; Armstrong v. Lewis, 2 Cromp. & M. 274. CH. I.] POEMATION OF THE CONTKACT. 71 to the Court of Exchequer, for the purpose of trying the legality of the partnership ; and the point in issue being ultimately argued before, the Court of Exchequer Chamber ,i that court gave it as their opinion that the deed of partnership taken by itself was vahd ; as there was nothing in it to show that a " secret " or " suppressed " partnership was intended ; but that if there was any collateral agreement or understanding between the parties to carry on the partnership in violation of the acts of Parliament, that agreement" would be void, and would confer no rights on either party as against the other. The case being then remitted into equity, Sir J(5hn Leach declared it to be his opinion, upon the whole evidence in the cause, that there was a collateral agree- ment or understanding tiiat Warner should be a secret partner with Armstrong. His Honor accordingly declared the partner- ship between those parties to be illegal, and dismissed the claim of Warner's representatives. The causes were ultimately heard upon appeal by Lord Brougham, who affirmed the decree of Sir John Leach. His Lordship, in the course of his judgment, not only adverted to the illegality of the partnership with reference to the acts relating to pawnbrokers, but treated the transaction as clearly usurious. " No man," he said, " can so far abstract him- self from his common feelings, so far shut his eyes to the plainest indications of common sense, as to hesitate one instant in what light he shall regard the transaction between Messrs. Armstrong and Warner. To call it a partnership at all is incorrect ; indeed, is an 'abuseof terms. It was a loan transaction much rather than a partnership ; but to escape the usury laws, and obtain relief here, the party must treat it as a partnership. Money is ad- vanced, large. interest is stipulated for, under the name of share of profits, but a share fixed at not under ,£10 per cent., and the party advancing the money treats his partnership deed exactly as a secuEity for the loan." § 75. Again, the principles now under discussion are applicable to partnerships in theatres not duly licensed according to statute. In the case of Ewing v. Osbaldiston,^ it appeared that the Surry Theatre was licgnsed pursuant to the Stat. 25 Geo. 2, c. 36, " for ' Armstrong v. Lewis, 2 Cromp. & M. 274. '' 2 My. & Cr. 153. See De Begnis v. Armistead, 10 Bing. 107. 72 CONSTITUTION, OF PARTNERSHIP. [BOOK I. public music and dancing, and other public entertainments of the like kind; " but that by virtue of the statutes 10 Geo. 2, c. 28, and 28 Geo. 3, c. 30, no person can " act, represent, or perform for hire, gain, or reward, any interlude, tragedy, comedy, opera, play, farce, or other entertainment of the stage," within twenty miles of London, except within the city and liberties of Westminster, and with license from the Lord Chamberlain. It was in evidence, however, that some time previous to the contract between the plaintiff and the defendant, the regular drama had been performed at the Surry Theatre ; and that the plaintiff, with knowledge of that fact, and being fully aware that the performance of ordinary theatrical entertainments at that place was contrary to law, en- tered into an agreement with the defendant for a partnership in acting plays at that theatre. Upon a bill filed by the plaintiff to enforce the agreement, it was held by Sir L. Shadwell, V. C, and afterwards on appeal by Lord Cottenham, C, that such a biU was not sustainable for that the contract was altogether void, as being contrary to statute. § 76. But it must here be remarked, that the preceding decis- ions relative to illegal partnerships arose in cases where the part- ners had, in the formation of their partnership, infringed certain acts of Parliament made with the express view of protecting the pubhc. But the omission to comply with the directions of an act of Parhament, where the consequence is not directly at variance with the intention of the legislature, as concerns the protection of the public, will not, it seems, render the partnership illegal, so as to deprive the partners of the right to recover on a contract made by them with third persons. Thus, in the ease of Brown v. Dun- can,i the plaintiffs, Brown,_ Clark, and others, carried on trade in partnership, as distillers. The name of Clark, however, was not inserted as one of the partners in the distillery in the excise-book or license, as required by 6 Geo. 4, c. 81, s. 7. Moreover, Clark carried on by himself the business of a retail dealer in spirits, within two miles of the distillery, contrary to the 4 Geo. 4, c. 94, §§ 132, 133. One Glennie having apphed to the plaintiffs to appoint him their agent for the sale of their whiskey in London, they agreed to do so, provided he obtained a guaranty. The ' 10 B. & C. 93 ; Lloyd & Welsby, 91. CH. I.] • FORMATION OF THE CONTRACT. 73 defendant, at. Grlennie's request, then entered into a guaranty to the plaintiffs, for the due payment of all sums of money for which Glenriie might become indebted to them as such agent, and for which he should not duly account. An action having been brought on this guaranty, the defence set up was, that the whole trading* of the plaintiffs was, under the circumstances, illegal, and that they could not recover the price of the spirits distilled by them, nor even upon 'the guaranty given to secure the due accounting of 'their agent for money arising out of such sale. But the court decided for the plaintiffs. . lioi:d Tenterden ob- served, that there was no fraud on the part of the plaintiffs on the revenue, although they had not comphed with the regulations which had been adopted for conducting the trade in a way most expedient for the benefit of the revenue ; and that the cases of Hodgson V. Temple, and Johnson v. Hudson,^ were in favor of their right to recover. "These cases," said his Lordship, *' are very different from those where the provisions of acts of Parhar ment have had • for their object the protection of the public, such as the acts against stockjobbing, and the acts against usury. It is different, also, from the cases where a sale of bricks, required by act of 'Parliament to be of a certain size, was held to be void because they were under th-at size. There the act of Parliament operated as a protection to the public as well as to the revenue, securing to them bricks of the particular dimensions. Here, the . clauses of the act of Pariiament had not for their object to protect the public, but the. revenue only. Neither is this one of that class of cases where an attempt is made to recover the price of prohibited goods. On the authority of the Um cases which I have mentioned, we think the plaintiffs are entitled to retaiu their verdict." § 77. It is evident, that, when courts of justice refuse to take ' 5 Taunt. 181 ; 11 East. 180. In the former of these cases a distiller had sold spirits to a rectifier, who was also a retailer, with the knowledge that his vendee filled both characters ; and had delivered the spirits, not at that place in which -the retail trade was carried on, but at the place in which he carried on the business of a rectifier, and to which they were delivered, not in the defendant's name, but in the name of another person. That was certainly a very strong case, because there, as it was contended, that was clearly and knowingly, to a certain degree, violating the law. The Court of Common Pleas, thought the plaintiflTs were entitled to recover. 7 74 CONSTITUTION OF PARTNEKSHIP. [bOOE I. cognizance of illegal contracts of partnership, the consequences must occasionally bear hard' upon one of the parties concerned. But in such cases we must remember the words of Lord Mans- field : " The objection, that a contract is immoral or illegal, sounds, at all times, very ill in the mouth of a defendant. It is not for his sake, howerer, that the objection is ever allowed ; but it is founded in general principles of policy, which the defendant has the advantage of, contrary to the real justice as between him and the plaintiff. ' The principle being e dolo malo Twn oritur actio." ^ ' Per Lord Mansfield, Holmau v. Jackson, Co^vp. 341. But a partner cannot escape his liabilities to creditors by showing that the municipal requirements of the country in which the business is carried on, have not been complied with, so as to render the contract of partnership valid between the parties. Oakley v. Aspinwall, 2 Sandf. (S. C.) 7. See 1 Lindley Partn. 156, 157 ; Brett v. Beckwith, 3 Jur. (n. S.), 31 M. K.'; Hen- derson V. Royal British Bank, 7 E. & B. 356 ; Batty v. M'Cundie, 3 C. & P. 203 ; Longworth's case, 1 John. 465. The most important consequence of 'illegality in a contract of partner- ship, is that the members of the partnership have no remedy against eaeh other for contribution or apportionment, in respect of the partnership deal- ings and transactions. 1 Lindley Partn. 157, ,158; Holman u, Johnson, 1 Cowp. 243; Thomson v. Thomson, 7 Vesey, 470; Cousins v. Smith, 13 Vesey, 544; Evans v. Richardson, 3 Mer. 469 ; Mitchell v. Cockburn, 2 H. Black. 380 ; Booth v. Hodgson, 6 T. R. 405 ; Lees v. Smith, 7 T. R. 338 ; Aubert v. Maze, 2 Bos. & P. 371 ; De Begnis v. Armistead, 10 Bing. 107. In order, however, that illegality may be a defence, it must affect the contract on which the plaintiff is compelled to rely, in order to makfe out his right to what he seeks. Although, therefore, an illegal act may have been performed in carrying pn the business of a legal partnership, still, if gain has accrued to the partnership from such act, and the money repre- senting that gain has been actually paid to one of the partners for the use of himself and copartners, he cannot set up the illegality of the. act from which the gain accrued as an answer to a demand by them for their share of- what he has received. See Tenant v, Elliot, 1 Bos. & P. 3 ; Farmer v- Russell, 1 Bos. & P. 296 ; Bousfield v. Wilson, 16 Mees. & W. 185 ; Nichol- son f. Goooh, 5 E. & B. 999 ; Sharp v. Taylor, 2 Ph. 801 ; Sbeppard v. Oxenford, 1 K. & J. 491 ; Hale v. Hale, 4 Beavan, 369. CH. I.] FOKMATION OF THE CONTRACT. 75 SECTION II. OF THE CONTRACT OP PARTNERSHIP QUOAD THIRD PERSONS. § 78. We have already had occasion to observe that individuals become liable as partners quoad third persons, either by contract- ing the legal relation of partners inter se, or by holding them- selves out to the world as partners. To speak correctly, these are the only means of incurring the liability in question. For, although it appears to be laid down that they who are riot pari> ners inter se may nevertheless, even without holding themselves out in, that character, be partners quoad third persons ;i this, surely must be understood to mean, that they who stipulate not to be partners inter se may nevertheless be liable to third persons. It is certainly clear that a person may stipulate not to be a part- ner, and yet, contrary to his express intention, and by the very same instrument by which he, stipulates,' he may enter into such terms as by law constitute a partnership. He will then unques- tionably be liable to third persons ; but on the sole ground, that he has entered into a legal contract, which, as between himself and the world, controls the stipulation.^ It must be admitted that this doctrine is inconsistent with, the case of Hesketh v. Blan- chard ; but we shall endeavor, in a future page, to show that that decision stands on questionable principles. In the case of Hazard V. Hazard,^ Mr. Justice Story held that a partnership, as to third persons, may arise by mere operation of law, and without the intention of the several parties thereto ; but only the actual in- tention of the parties will constitute a partnership as bet.ween themselves.* The learned judge, in his decision, puts this case : ' Watts Partn. 33 ; GowPartn.lO; Car.Partn. 7; Story Partn. §§«60-63. " Consider Geddes v. Wallace, 2 Bligh, 270 ; Gill v. Kugn, 6 Serg. & K. 338; Jordan u. Wilkins, 3 Wash. C. C. 115; Walden v. Sherburne, 15 Johns. 409 ; Pott v. Eyton, 3 Man. Grang. & Scott, 32, 39 ; Barry v. Nesham, id. 641, G57, per Coltman, J. ; Wood v. Vallette, 7 Ohio (n. s.), 172. - « 1 Story C. C. 371. ' It is undoubtedly true that persons who share profits are liable as if they were partners, and it is also true that persons who are so liable are 76 CONSTITUTION OF PARTNERSHIP. [BOOK I. — " If A. and B. should agree to carry on any business for their joint profit, and to divide the profits equally between them, but B. should bear all the losses, and should agree that there should be no partnership between them ; as to third persons deaUng with the firm, they would be held partners, although inter sese they would be held not to be partners. This distinction is often taken in the authorities." He cites to this point, besides the Enghsh cases which are stated or cited in the following pages. Muzzy V. Whitney,^ and Dob v. Halsey.^ The- question in Hazard v. Hazard was, whether the agreement made the parties partners between themselves.^ But the question whether the parties by their agreement became liable as partners to third persons was left undetermined, and Mr. Justice Story remarked, that, before that question was decided, " it might be necessary to examine a very nice and curious class of cases, standing certainly upon a very thin distinction, if it is a clearly discernible distinction, be- tween cases of partnership, as to third persons, and cases of mere agency, where the remuneration is to be by a portion of the profits. This distinction is alluded to by Lord Eldon in Ex parte Hamper,* and by Lord Chief Justice Abbott in Cheap v. Crar mond.^ It was also acted on in Muzzy v. Whitney," *> and in sev- eral other cases cited by the learned judge.'' prima facie partners inter se, but it cannot be said that persons who share profits are necessarily and inevitably partners in the proper sense of the word. Whether persons are partners or not is a question of intention, to be decided by a consideration of the whole agreement into which they have entered, and ought not to be made to turn on one or two only of the clauses in it. A good instance of this is afforded by the Irish case of Barklie v. Scott, 1 Huds. & Br. 83,. stated ante, § 13. The cases of Kawlingson v. 'Clarke, 15 Mees. & fV. 292, and Stocker v. Brocklebank, 3 M. & G. 250, may also be referred to as illustrating the principle now in question. See also Keid's case, 24 Beavan, 3l8. ^ 10 Johns.' 226. ' 16 Johns: 34. ^ See Everitt v. Chapman, 6 Conn. 351, ^er Daggett J.; Pollard v. Stan- ton, 7 Alabama, 761. * 17 Ves. 404. ' 4B. & Aid. 663,670. » 10 Johns. 226. ' Story C. C. 376. See a minute inquiry into the circumstances which will constitute a partnership as to third persons, in Churchman v. Sniith, 6 Whart. 146. CH. I.] FORMATION OF THE CONTRACT. 77 § 79. It is clear, from wliat appears in the foregoing se«tion, that the main feature in the contract of partnership is the com- munion of profit , between the parties. Without that quality, a partnership cannot exist ; and with it, a case can hardly be stated in which a partnership shall not exist. Persons, therefore, who are knowa to share the profits of a trade, are primd facie liable as partners to all who deal with them in respect of that trade, whatever be the private agreement between them.l. In Hazard v. Hazard,^ Mr. Justice Story remarked, that, " a mere participa- '• A late writer in regard to this point remarks that " in all cases in which there is no limited liability by statute or charter, the law says those persons who share profits shall incur to third persons all the lia'bilities of partners, although no partnership was ever in fact contemplated by those persons themselves. It is urged, and it is certainly a plausible doctrine, that those who share profits should share -losses, and not be allowed without risk to take a part of that fund upon which creditors rely for payment ; but even if this were a sound doctrine, it is inconceivable how it should follow, as by law it does, that one who takes from that fund in the shape of profit, should be liable to do more than restore what he has taken ; it is a most strange conclusion that such a person shall in addition, to this be liable to the last farthing of his property. The doctrines by which a guasj-partnership re- sults from merely sharing profits are to be found for the first time in Grace V. Smith, 2 Wra. Bl. 998." '" The judgment and not the decision in that case,' has always been regarded as the great authority for the proposition that a person who shares profits sha,ll be liable to third parties, as if he were in,fact a partner. The judgment ftself appears to have been based upon a prior case of Bloxham v. Pell, cited in 2 Wm. Bl. 999, before Lord Mans- field, and in substance undistinguishable from Grace v. Smith. ' " The reader will not fail to observe, that Lord Mansfield, in Bloxham v. Pell, stated post, § 80, does not say a word in favor of the' doctrine laid down in Grace v. Smith ; bat seeing a contract, which on the ground of usury was invalid as a contract of loan, nevertheless upheld it as a contract of part- nership, which was the only alternative, if it was to be upheld at all. " It is clear that Lord Mansfield had in his mind the well-known maxim, Quum quod ago non valet ut agam, valeat quantum valere potest, and not any such doctrine as that stated in Grace v. Smith. The principle; however, laid dowp by C. J. De Grey in Grace v. Smith, has served as the foundation of a long line of decisions which cannot now be pverruled by any authority short of that of the legislature. • These decisions it will be necessary to ex- amine with care ; for although, in consequence of modern Acts of Parlia- ment, the operation of the principle in question will probably become less and less frequent, yet in all cases in which there is no incorporation or lim- ited Jiability, the principle laid down in Grace v. Smith must still be re- garded as binding, on the courts." 1 Lindley Partn. 34 to 36. ' 1 Story C. C. 375. ry * 78 CONSTITUTION OF PARTNERSHIP. [BOOK I. tion #11 the profits ■will not make the parties partners inter sese, whatever it-may do as to third persons, unless they so intend it. If A. agrees to give B. one third of the profits of a particular transaction in business, for his labor and services therein, that may make both Uable to third persons as partners, but not as be- tween themselves. This was the very point adjudged in Hesketh V. Blanchard." ^ " The same doctrine was fully recognized in Muzzy V. Whitney." ^ § 80. One of the earfiest cases on this subject is that of Bloxam v. Pell,-^ in which the parties, bi/ their agreement, seem to have intended a dissolution of the partnership ; yet as Pell, the retiring partner, retained an interest in the -profits, and as the legal presumptifta of partnership with Brooke was not rebutted, Lord Mansfield- held that Pell was a dormant partner and liable to third persons. The facts were these : Brooke and Pell had commenced partnership for seven years. At the end of the first year they agreed to dissolve partnership, but no express dissolu- tion was had. The agreement stated, that Brooke,' being desirous to have the profits of the trade to himself, and Pell being desirous to relinquish his right to the trade and profits, it was agreed that Brooke should give Pell a bond for £2,485, which Pell had brought into the trade, with interest at <£5 per cent., which was accordingly done. And it was further agreed that Brooke should pay to Pell £200 per annum for, six years, if Brooke so long lived, as in lieu of the profits of the trade; and Brooke cov- enanted that Pell should have free liberty to inspect his books. Brooke became a bankrupt before any thing was paid to Pell. And this action being brought for a debt incurred by Brooke in the course of trade. Lord Mansfield held that Pell was a secret partner. " This 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 mouth to say, It is usury and not a partnership." § 81. The decision in Bloxam t;. Pell was sqmctioned- by the observations of Lord Chief Justice De Grey, in Grace v. Smith ;* but the foregoing principles were fully discussed and completely ' 4 East, 144. ^ 10 Johns.' 226; and see Kellogg v. Griswold, 12 Vermont, 291-. * 2 Sir W. BI. 999. Seei ante, § 48. * Ante, § 46. CH. I.J FORMATION OP THE CONTRACT. 79 established in the celebrated case of- Waugh v. Carver,^ in which it was decided that persons are answerable to the world as part- ners, if they participate in the profits of a trade, although they may have entered into an express agreement not to be partners inter se.^ ' 2 H. Bl. 235. Thi3 case of Waugli v. Carver will be found among Smith's Selection of Leading Cases, Vol, I. (Eng. ed.), p. 491. The notes of Mr. Smith in this case are well worthy of consideration. '■' Waugh V. Carver was an action of assumpsit for goods sold and deliv- ered, work and labor done, &c., in which a verdict was found for the plaintiff, subject to the opinion of the court on a case which was in sub- stance as follows: "In February, 1790, articles of agreement were exe- cuted between the defendants, Erasmus and William Carver, of Gosport, in the county of Southampton, merchants, of the one part, and Archibald Giesler, of Plymouth, in the county of Devon, merchant, of the other part ; whereby, after recitipg that the respective parties had received appoint- ments from various foreign ship-owners, merchants, and insurers, to act as their agents in the south of England, and that it had been agreed that Giesler should remove from Plymouth, and establish himself at Cowes ; and that the respective parties should allow to the other certain portions of each other's commissions and profits, in manner thereafter, more particularly men- tioned and expressed ; the said Giesler covenanted, promised, and agreed to and with E. and W. Carver, .that the said Giesler would, when required so to do by the said E. and W. Carver, remove from Plymouth, and establish himself at Cowes, for the purpose of carrying on a house there in the agency line, on his own account ; but in conscqufence of the promised assistance and recommendations of the said E. and W. Carver, would well and truly pay to the said E. and W. Carver, one full moiety or half part of the commission agency to be received on all such ships or vessels as might arrive or put into the port of Cowes, or remain in the road to the westward thereof, within the Needles, of which the said Giesler should procure the address, and Eke- wise one full moiety or half part of the discount on the bills of the several tradesmen employed in the repairs of such ships or vessels. And the said E. and W. Carver, for the considerations therein before mentioned, cov- enanted with the said Giesler that they would well and truly pay to the said Giesler, his executors, administrators, or assigns, three fifth parts or shares of the commission or agency to be received by the said E. and W. Carver, on account of all such ships or vessels, the commanders whereof should, in con- sequence of the endeavors, interference, or influence of the said Giesler, proceed from Cowes to Portsmouth, and there put themselves under the direction of the said E. and-W. Carver ; and likewise one and one half per cent, on the amount of the bills of the several tradesmen employed in the repairs of such ships or vessels, together with one fourth part of such sum or sums as should be charged or brought into account for. warehouse rent on the cargoes of such ships or vessels, respectively; and also one sixth part- of 80 CONSTITUTION OF PARTNERSHIP. [bOOK I. § 82. The principles laid down in Waugli v. Carver, have been followed in all subsequent cases on the same subject. Thus, such sum or sums as should be, charged or brought into account for ware- house rent on the cargoes of such ships or vessels as should be landed at Cowes aforesaid. And also that they, the said E. and W. Carver, •would well and truly pay unto the said Giesler one fourth part or share of the commission or agency to be received by the said E. and W. Carver, on account of all such ships or vessels that should arrive or put into the port of Portsmouth, or remain in the limits thereof, under the care and direction of the said E. and TV. Carver, and likewise one half per cent, on the amount of the bills of the several tradesmen employed in the repairs of such ships or vessels. The articles then provided that one fifth part of the commission or agency on each ship should be first retained by the party under whose care such ship or vessel should be, as a full compensation for clerks, boat- hire, and all other incidental charges and expenses in regard of such ships or vessels respectively ; after which deduction the then remaining balance of such commissions or agency should be divided between the said E. and W. Carver and the said Giesler, in the proportion therein before mentioned- The articles then, after providing for the term of the contract, and that neither party should be connected with other houses in ship agency during that terra, contained the following clause : And it- is hereby likewise covenanted, declared, and agreed, by and between the said E. and W. Carver, and the said Archibald Giesler, that each party shall separately run the risk of, and sustain, all such loss and losses as may happen oh the ad- vance of moneys, in respect of any ships or vessels under the immediate care of either of the said parties respectively ; it being the true intent and meaning of these presents, and of the parties hereunto, tliat neither of them, the said E. and E. and W. Carver and A. Giesler, shall at any. time or times during the continuance of this agreement be in anywise injured, prejudiced, or affected,, by any loss or losses that may happen to the other of them, or that either of them shall in any degree be answerable or accountable for the acts, deeds, or receipts of the other of them, but that each of them, the said E. and W. Carver and A. Giesler, shall in his own person, and with his own goods and effects, respectively, be answerable and accountable for his own losses, acts, deeds, and receipts.'' In pursuance of these articles, Giesler removed from Plymouth and settled at Cowes,, where he carried on the business of a ship-agent in his own name, and contracted for the goods, &c., which were the subject of action ; and the question was, whether the de- fendants were partners, on the true construction of the articles. On the part of the plaintiffs it was urged, that, looking to the terms of these articles, it was impossible to express more clearly an agreement to participate in the profits of the business of ship-agents, and_ to establish a joint concern be- tween the houses, and that such a participation in the profits made them partners. That it might be objected, that there was a proviso that neither party should be answerable for the losses of the other ; but this certainly CH. I.] FORMATION OF THE CONTRACT. 81 Eogers entered into the following agreement Tvitli Thomas : — " I do agree to give T. half the profits he makes on my goods, instead of a commission, after shipping, freight, and every ex- pense paid ; I pay T.'s passage out. February 29th, 1809." It was proved that T. had a specific interest in the profits, under the name of commission. It was held, that, although, by the agreement, the parties intended to avoid a partnership, yet Thomas was a partner in the profits, quoad third persons.^ § 83. In the preceding ^ases, although the parties manifested, by their agreement, an intention not to contract the relation of partnership, yet it was held that such intention could not prevail ■would not be binding on the creditors. For the defendants it -was urged, that this was no partnership quoad the world, because, on the authority of Pufendorf, there was no partnership between the parties ; it was merely a purchase of Giesler profits, by giving him a share of Carver's, to prevent a competition between them. The Court of Common Pleas held that the de- fendants were liable as partners ; and Eyre, C. J., coneluded a learned and elaborate judgment with the following observations: "It is plain, upon the construction of the agreement, if it be construed only between the Car- vers and Giesler, that they were not, nor ever meant to be, partners ; they meant each house to carry on trade without risk of each other, and to be at their own loss. Though there was a certain degree of control at one ^ouse, it was without an idea that either was to be involved in the conse- quences of the failure of the other, and without understanding themselves responsible for any circumstances that might happen to the loss of either. That was the agreement between themselves. But the 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 the 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 th^ profits indefinitely shall by operation of law be made liable to loss. I can- not agree that this was a mere agency, in the sense contended for on the part of the defendants, for there was a risk of profit and loss. If, therefore, the principle be true, that he who takes the general profits of a partnership must, of necessity, be made liable to the losses, in order that he may stand in a just situation with regard to the creditors of the house, then this is a case clear of all difficulty. For though, with respect to each other, those persons were not to be considered, as partners, yet they have made them- selves such with respect to their transactions with the rest of the world. I am, therefore, of opinion, that there ought to begudgment for the plaintiff.' • Ex parte Rowlandson, 1 Rose, 89 ; Ex parte Hamper, 17 Ves. 403. 82' CONSTITUTION OF PARTNERSHIP. [BOOK I. against an express stipulation to share the profits, — a stipulation which, as we have already seen, is the primary test of a partner- ship between the parties, and renders them liable to third per- sons.i But the authorities have gone still further, and it has even been held that an agreement to share the profits of an adventure, although not so expressed as to create a partnership between the parties, may, nevertheless, create a partnership as between them and the world.^ In Waugh v. Carver there are several expres- sions of Lord Chief Justice Eyre ^ which lead to this conclusion ; . and on the authority of those expressions, the case of Hesketh V. Blanchard* was decided, in which it was held that the agree- ' See Heyhoe v. Surge, 9 Com. B. 44-6 ; Fox v. Clifton, 9 Bingh. 799 ; Ex parte Langdale, 18 Vesey, 300; 1 Lindley Partn. 13, 14; Sheridan v. Medara, 2 Stockton (N. J.), 469; Wood v. Vallette, 7 Ohio (isr. s.), 172. ^ See Hazard v. Hazard, 1 Story C. C. 373, 374. ^ And see per Sir John Cross, 1 Mont. & Ayr. 48 ; and per Erskine C. J., I Dea. 344. t 4 East, 144. In this case the plaintiff brought his action against the executors of Robertson for goods sold and delivered, and on the common money counts ; and with respect to the count for money paid, &c., the case appeared to be this : — The plaintiff was a draper and tailor, with whom the testator, who had been the captain of a vessel in the African trade, had had dealings for several years. In the spring of 1800, the plaintiff applied to Robertson, who was then about to sail for the coast of Africa, for orders ; who declined giving him any, saying he knew of something else which would answer better; but as he had not sufficient credit for himself, nor ready money, he requested the plaintiff to go with him to one Corfe, abutcher, • and order certain quantities of beef and tripe to take with him on the voyage, pfomising that, if any profit should arise from them, the plaintiff should have one half for his trouble. Corfe accordingly furnished the arti- cles, to the value of £75,' and sent them on board Robertson's ship, by the desire of the plaintiff and Robertson, both of whom he made debtors for the goods ; and, being examined as a witness at the trial, he also swore that he would not have trusted Robertson alone. After the goods were shipped, Robertson desired the plaintiff to make an insiii-anoe. The plaintiff after- wards paid Corfe the whole sum, and Robertson being since dead without having come to any settlement with the plaintiff, he brought this action to recover the money so paid. At the trial, it was objected by the defendant's counsel, that, as the parties were to divide the profits, if any, they must nec- essarily be equally liable to any loss, and therefore, the agreement constitut- ing a partnership, the action was not maintainable by one partner against theother. The point being reserved for the opinion of the Court of King's Bench, they decided that there was no partnership between the parties, and CH. I.] FORMATION OF THE CONTRACT. 83 ment miglit constitute tlie parties partners, quoad third persons, althongli under the circumstances, it did not place them in that situation inter se. § 84. In the case just cited, the claim of the plaintiff was just ; and the court being-desirous, if possible, of giving effect to the action, conceived it to be necessary to adjudge that the plaintiff and Robertson were not partners. Now it is evident that there was a clear cause of action, unconnected with any accounts ; and therefore, according to the modern doctrine, such action was maintainable, even supposing a partnership to have existed be- tween thp parties.^ Perhaps, therefore, if the case were now to be decided, the court would come to the same conclusion upon different grounds ; for, upon a careful examination of the facts, it is difiScult to say that the parties were not partners generally in the adventure, although, under the circumstances, the goods w6re probably intended to be the separate property of Robertson. It can hardly be said, in this case, that the plaintiff was a mere agent, even though he might look to his share of the profits as a compensation for his trouble, and for lending his credit. His trouble and his credit were the effects which he supplied to the partnership. § 85. Upon the whole, notwithstanding the doctrine laid down in Hesketh v. Blanchard and some other cases, the general result of the authorities seems to be, that persons who share the profits of the concern are primd facie liable as partners to third persons, but that they inay repel the presumption of partnership, by show- ing that the legal relation of partnership inter se does not exist.^ With reference to the last of these two positions, it may be ob- served, that in Hoare v. Dawes, the defendants, who were charged as dormant partners, rebutted the presumption of partnership by ■showing that they had no communion of profit with the broker. So, where a person was charged as a dormant partner in the profits that the action was maintainable ; and, per Lord EUenbtfrough, — " The distinction taken in Waugh v. Carver, and other cases, applies to this : quoad third persons, it was a partnership ; for the plaintiff was to share half the profits ; but, as between the parties themselves, it was only an agreement for so much, as a compensation for the plaintiff's trouble, and for lending Rob- ertson his credit." • Post, Book 2, chap. 3, sec. 2. ' See 1 Lindley Partn. 13, 14. B4 CONSTITUTION OF PARTNERSHIP. [BOOK I. of a lighter, but it turned out that he was to have only half the gross earnings as wages, it was held that he was not a partner with the lighterman, and therefore not liable for the repairs. i § 86. If a person suffer his name to be used in a business, or otherwise hold himself out as a partner, he is so to be consider-ed, whatever may be the agreement between him and the other part- ners.^ In such case, he will be equally responsible with the other ' Dry V. Boswell, 1 Camp. 330. ^ Stearns v. Haven, 14 Vermont, 540 ; 3 Kent (5th ed.), 32, 33 ; 1 Lind- ■ ley Partn. 41 et seq.; Young v. Smith, 25 ^lis. (4 Jones), 341.* The- doc- trine that a person holding himself out as a partner and thereby inducing others to act on the faith of his representations, is liable to them as if he were in fact a partner, is nothing more than an illustration of the general principle oi Estoppel by conduct acted on and explained in Pickard v. Sears, 6 iVdol. & Ellis, 4G9, and Freeman v. Cooke, 2 Exch. 654. It is therefore ■wholly immaterial whether the person holding hinaself out as a partner, does or does not share the profits or losses. Ex parte Watson, 19 Vesey, 461. Nay more, even if it be known that he does not share either, still he tnay be liable. For although a person ivho lends his name may stipulate for an indemnity from those who use it, it by no means follows that he ought not to be liable to third parties merely because they are aware of such stipula- . tion. His name does not induce credit the less on account of his right to be indemnified by others against any loss falling in the first instance on him- self; and although, in the case supposed, he cannot be believed to be a part- ner, the lending of his name does justify the belief that he is willing to be responsible to those who may he induced to trust to him for payment. 1 Lindley Partn. ;45, 46. Moreover, if a person has been induced, by the » fraud of others to hold himself out as a partner with them, their fraud does not relieve him from liability to third parties, who have been induced by hfs , conduct to trust him as well as them, and who have had nothing to do with the fraud practised Upon him. See Ellis v. Schmoeck, 5 Bingh. 521 ; Ex parte Broome, 1 Kose, 69. A person who merely holds himself out as, will- ing to become a partner does not incur liability by so doing. Although a person who represents himself to be a partner is properly held liable as a partner to persons who have acted on the faith of .his being so, it would be in the highest degree unjust to confound a representation by a person tha't he intended to become a partner, with a representation that he was one in point of fact, and to hold him as much liable to third parties for the one rep- resentation as for the other. This distinction was recognized and acted on in Bourne v. Freeth, 9 Barn. & Cr. 682, where the defendant who had signed a prospectus containing the terms on which it was proposed to form a com- pany, was held 'not to have held himself out as a shareholder therein. 1 Lindley Partn. 51. See Reynell v. Lewis, 15 Mees. & W. 517 ; Wyld v. Hopkins, id. CH. I.] FORMATION OF THE CONTRACT. 85-. partners, although lie may receive no profits ; for the contract of one is the contract of all.^ This rule of law arises, not upon the ground of the real transaction between the partners, but upon prin- ciples of general policy, to prevent the frauds to which creditors would be liable, if they were to suppose that they lent their money upon the apparent credit of three or four persons, when in fact they lent it only to two of them, to whom, without the others, they would have lent nothing.^ The rule is perhaps most frequently applied in cases where the name of a clerk who receives a salary, but who has no specific interest in the profits, appears in the firm. It is, however, a universal rule. Thus, in Young v. AxteU,^ which was an action to recover £600 and upwards, for coals sold and delivered by the plaintiff, a coal merchant, an agreement be tween the defendants was given in evidence, stating that the de- fendant, Mrs. AxteU, had lately carried on the coal trade, and that the other defendant did the same ; that Mrs. AxteU was to bring what customers she could into the bjisiness, and that the other was to pay her an annuity, and also 2s. for every chaldron that should be sold to those persons who had been her customers, or were of her recommending. The plaintiff also proved that bills were made out for goods sold to her customers, in their joint names ; and the question was, whether Mrs. Axtell w. s liable for the debt. Lord Mansfield said, he should have rather thought, on the agreement only, that Mrs. Axtell would De hable ; not on the account of the annuity,. but the other payment, as that would be increased in proportion as she increased the business. How- ever, as she 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 part- ner, or that her name was used. And the jury accordingly found a verdict for the plaintiff. It appears, from this case, that it is ' Per Lord Ellenborough, Guidon v. Eobson, 2 Camp. 802; Benedict v. DaVis, 2 McLean, 347. ' Per Eyre C. J., Waugh v. Carver, 2 H. Bl. 235. See 3 Kent Com. 32, 33 ; Purviance v. McClintee, 6 Serg. & R. 259 ; Gill v. Kuhn, id. 333 ; Dob V. Halsey, 16 John. 40 ; Shubrick v. Fisher, 2 Desaus. 148 ; Osborn v. Brennan, 2 N. & McCord, 427. But see Ex parte Matthews, 3 Ves. & B. 125. » 2 H. Bl. 242. See ante, § 47, . 8 86 CONSTITUTION OF PARTNERSHIP. [bOOK I. not necessary for a person charging a nominal partner, to have been aware of the partnership at the time of the contract.^ And ' Johnston v. Warden, 3 Watts, 39. In the notes of Mr. Smith to Waugh V. Carver, 1 Smith Lead. Ca, (Eng. ed.), 507, he remarks that the aboye position appears very questionable ; " for," he says, " the rule which imposes on a nominal partner'the responsibilities of a real one is framed in order to prevent those persons from being defrauded or deceived who may deal with the firm, of which he holds himself out as a member, on the faith of his ap- parent responsibility. But where the person dealing with the firm has never heard of hini as a component part of it, that reason no longer applies, and there is not wanting authority opposed to such an extension of the rule respecting a nominal partner's liability. ' If it could be proved,' says Mr. Justice Parke, ' that the defendant held himself out, — not to the world, for that is a loose expression, — but to the plaintiff himself, or under such circum- stances of publicity as to satisfy a jury that the plaintiif knew of it and be- lieved him to be a partner, he would be liable." Dickenson v. Valpy, 10 Barn. & Cress. 140; Benedict v. Davies, 2 M'Lean, 347. So, too, in Shott v. Streatfield, Moody & Rob. 9, where the question was whether one Green was liable with Streatfield, a witness proved that he had been told, in Green's presence, that Green had become a partner. He was then asked whether he had repeated the information, on which Campbell objected that this was not evidence, unless it were shown that the defendants, or one of them, were present when it was repeated. Sed, per Lord Tenterden C. J., — "I think it is ; because, otherwise, it will be said presently that what was said was con- fined to the witness, and that the plaintiff could not have acted on it." It fol- lows from this that a person cannot be liable on a contract, on the ground that he held himself out as a partner, unless, he did so before the contract was entered into. Baird v. Planque, 1 Fos. & Fin. 344. It also follows that no person can be fixed with liability on the ground that he has been held out as partner, unless two things concur, viz. : first, the alleged act of hold- ing out must have been done either by him or by his consent, and sec- ondly, it must have been known to the person seeking to avail himself of it. In the absence of tlie first of these requisites, whatever may have been done cannot be imputed to the person sought to be made liable, and in the ab- sence of the second, the person seeking to make him liable has not in any way been misled. 1 Lindley Partn. 47. See Fox v. Clifton, 6 Bingh. 776 ; Pott V. Eyton, 3 Com. B. 32; Newsome v. Coles, 2 Camp. 617; Young v. Smith, 25 Mis. (4 Jones), 341 ; Shackleford v. Smith, id. 358 ; Stephenson V. Cornell, 10 Indiana, 475. In Alderson v. Pope, 1 Camp. 404, note, it was held that a man could not be charged as a partner by one who, when he contracted, had notice that he was but nominally so. The reason of this must have been, because he could not have been deceived, or induced to deal with the firm, by any reliance on the nominal partner's apparent re- sponsibility. But see 1 Lindley Partn. 46, where it is said that in any point of view, the reputed note of Alderson v. Pppe, is unsatisfactory. See Carter CH. I.] FORMATION OF THE CONTRACT. 87 this doctrine seems satisfactory, when we consider that the object of the rule is to prevent the extension of unsound credit. § 87. Persons bearing the same name, as relations, and each being in trade, though not in partnership, are peculiarly liable to the consequences of this rule, where they are in the habit of transacting busmess with each other. Thus, where James Spen- cer carried on business in Manchester, under the firm of James Spencer & Co., and his brother William carried on business in Cateaton Street, London, under the firm of Spencer and Co., it was rided that William, by accepting bills drawn upon James Spencer & Co., and directed to the house in Cateaton Street, held himself out to the world as a partner with James, and be- came liable accordingly.^ , § 88. Where a person is a partner in a house which also car- ries on a separate business, in which he is not a partner, it seems that he wiU, in some cases, be amenable to the rule. Thus, in Swan'i;. Steele,^ the house of Wood & Payne were partners in the cotton trade, and partners in grocery. Both trades were carried on at the same house and under the same firm. Steele was a dormant partner in the cotton trade, but not in the other ; yet, under the circumstances of the case, he was held to be bound by an indorsement made in the common name of the firm, in relation to the grocery concern. It seems, therefore, to follow, that, if Steele had held himself out to the world as a partner in one firm, he would, d fortiori, have been adjudged a partner in the other, supposing the creditor to have no notice of his limited interest. § 89. Slight circumstances wUl, it seems, be suflScient to satisfy a jury that a person has held himself out to the world as a partner.^ An action for money had and received was brought B./WTialley, 1 Barn. & Adol. 11 ; Wright v. Powell, 8 Alabama, 560 ; Mark- ham V. Jones, 7 B. Monroe, 456. The object of the rule given above by- Mr. CoUyer, that it is to prevent the extension of unsound credit, is not, however, met by the above suggestions. ^ Spencer v. Billing, 3 Camp. 310. •«7East, 210; 3 Smith, 199. ' As the question whether a defendant has or not held himself out to the plaintiff as a partner is in every case a question of fact to be determined by a jury. The consequence is, that there is great apparent conflict in the 88 CONSTITUTION OS PARTNERSHIP. [BOOK I. for the purpose of trying ivlietlier tlie plaintiff had been a trader, within the meaning of the bankrupt laws. At the trial, it ap- peared that the plaintiff resided under the roof of Greenwood, his brother in law, who Jiad long been a trader. Greenwood per- suaded the plaintiff to enter into partnership with him. There was a long negotiation between them, and many conversations 'with creditors were proved, in which the plaintiff sometimes said he had become a partner, — sometimes that he was about to be- come a partner with Greenwood. There was no evidence of any express agreement, nor of any interference in the business by the plaintiff, except that he had gone once in company with Green- wood to a dyer's, and, having inquired about some goods that were left with him to be dyed, spoke of them as the joint property of himself and Greenwood. It appeared, also, that the partner- ship, if any, only lasted from the 22d of March tiU the 9th of May. Upon this evidence, the jury found a verdict for the defendant, thereby establishing that the plaintiff was a partner with Greenwood, and therefore liable to the bankrupt laws ; and the Court of Common Pleas held the verdict to be right.^ § 90. The following facts are stronger to establish a partner- 'ship : — Goode and Bennion, in April, 1818, called upon one Fair, a broker, at Manchester; Goode introduced Bennion to Fair as a friend of his from Liverpool, and said, " We want goods." Fair went with them to Harrison, and introduced them to him as the firm of Goode and Bennion ; and they bought goods of Harrison and others to a large amount. Some of the invoices were made out to the firm of Goode & Bennion, others to John Goode and T. Bennion, and were seen by them. The goods were forwarded to the address of Goode & Bennion ; Goode also, in the hearing of Bennion, said, that if the goods they then bought would answer the purpose, in a very short time they would have five hundred pieces of one sort, and five hundred of another sort. Goode & Bennion had a counting-house in Liverpool ; the name of Goode appeared on the private door ; but the name of Bennion did not appear at all on the counting-house. In cases on this head. See Wood i>. Tlie Duke of Argyll, 6 Man. & Gr. 928'; Lake v. The Duke ot Argyll, 6 Queen B. 477 ; Carlton v. Ludlow, 28 Ver- mont, 504. 'Parkei' "• Barker, 1 Brod. & Bing. 9; 3 iMoore, 226. CH. I.j FORMATION OF THE CONTRACT. 89 January, . 1819, Fair received a letter in the handwriting of (xoode, ordering more goods. The pronoun we was used through- out, and the conclusion was, — " I am, for Gr. & B., very respect- fully yours, John Goode." Eair, in consequence of this letter, bought goods from Harrison, which were forwarded to the direc- tion of Goode & Bennion ; Harrison also drew a bill of exchange, for the amount of these goods, upon Goode & Bennion. Fair did not see Bennion from the time of his being in Manchester, in April, 1818, till the month of February, 1S19 ; at which time Bennion asked Fair for the account current of Goode & Bennion, for goods bought when he and Goode came to Manchester, in AprU, 1818, and said, at the same time, that the transaction in April, 1818, was the only one that he was engaged in with Goode, and that all that account should be paid. But Bennion did not, in 1818, say any thing to show that it was a single ad- venture ; and a letter of his upon the subject was put in, which was in the following terms:, — "Liverpool, 20th April, 1819. Dear sir, We shall be obliged by your purchasing for our account one hundred pieces of the fancied bordered gingham, &c. I re- main, dear sir, for Goode and self, yours, T. Bennion." On the other hand, it was proved by a person who had been in the em- ploy of Goode, and who kept the books till the end of April, 1818, but who then went with the goods first purchased of Har- rison to Barbadoes, that he never knew Bennion's name to be used in the purchase of goods after April, 1818. Upon this evi- dence, the Court of King's Bench held clearly that Bennion was chargeable as a partner with Goode in the second transaction as well as the first. ^ § 91. But the mere fact of persons giving a joint order for goods win not make them jointly liable as partners, if it appear, upon the whole of the transaction, that the seller intended to accept their several responsibility only. In Gibson v. Lupton,^ the two defendants, who were not general partners, gave a joint order to the plaintiff's agent for the purchase of some wheat. The order contained these words, -^ " payment for the same to be drawn upon each of us in the usual manner." In reply to this order, the plaintiffs wrote to the defendants, — "We havp ' Goode V. Harrison, 5 B. & Aid. 147. '9 Bjng. 297.. gee Hopkins u. Smith, 11 John. 161. 8* 90 CONSTITDTION OF PARTNERSHIP. [BOOK I. made a purchase for your joint account." At- the same time, they drew a separate bill upon each defendant for one third of the price ; each bill being for one moiety of the third. They afterwards, on the wheat being shipped, drew like bills for the remainder of the price, having previously written, — " We hold you both harmless for the advance-up to the period of lading and invoice." The bill of lading, on coming into the possession of the defendants, was indorsed by each of them. Under these cir- cumstances, the Court of Common Pleas held that the defendants were only severally liable on the contract, each being responsible for the purchase of a moiety only of the cargo. § 92. Again, if A., a trader, enter into a course of dealings with B. in matters unconnected with his trade, as for instance in discounting bills merely, and in the course of such transactions introduces C. as his partner, it has been held that this evidence is not sufficient to make C. chargeable as a general partner, where he has held himself out to the world as such. Thus, where, in an action of assumpsit, C. was charged as a partner with A., on the authority of B., who informed the plaintiff before he fur- nished the goods that they were in partnership, and at the trial B.'s clerk proved that B. had been in the habit of discounting bills for A., and that, on discounting a bill at one time for A., he had introduced C. to him as his partner, but that the only connec- tion in trade between B. and the defendants was in discounting bills ; Lord Kenyon said that this evidence was not sufficient to charge C. as A.'s partner ; that the introduction C. to B. should be taken secundum subjeotam materiam, that is, as applying to- the transaction in which A. was concerned with B., the discount- ing of bills, to which transaction only it should be confined.^ § 93. The signature of a person's name to the conveyance of a chattel is not necessarily an avowal of his partnership in such chattel. Hence, in M'lver v. Humble,^ it was held that an in^ dorsement of a person's name on the certificate of a ship's registry, in order to aid a previous defective conveyance of his share, was not evidence to show that he was a partner with the other owners up to the time of the indorsement. Lord Ellen- borough, in giving judgment in this case, observed, that, if the ' De Berkom v. Solitli, 1 Esp. 29 ; Livingston v. Roosevelt, 4 John. 266. ' 16 East, 169. CH. I.] FORMATION OF THE CONTRACT. 91 question of partnership had been sent to a jury, it would have appeared that the person who was charged as a partner in this action had, in 1809, ceased to be a partner, and his whole legal interest was intended to be conveyed out of him, but was defec- tively conveyed. " He then," added his Lordship, " ceased in fact to be a partner. Then, did he continue apparently to be a partner so as to induce the plaintiffs to credit him as such? There was no exhibition of partnership ; no appearance of it to which the plaintiffs could have had access, to induce them to credit him for these goods. It is urged, however, that his name now appears as owner on the certificate of registry. It is true, he was prevailed upon to join in the conveyance, of the legal title to the ship, pro majori cauteld, when he had in fact no longer any beneficial interest in it. But this was an ex post facto document, and could not have contributed to the exhibition and appearance of his ownership to the plaintifis,. and therefore does not range under the head of liability, for; their demand." ,, § 94. Mere interference with the management of a partnership, unaccompanied by any circumstances from which a perception of the profits might be inferred, does not constitute a partnership quoad third persons. And, in a recent case, Mr. Justice Jebb observed, that a stipulation that the house shall be governed by a person's advice, does not constitute him a partner, nor give him a legal interest in the firm; it does not hold him out to the world as a partner, nor give him any share in the profits, nor empower him to dissolve, alter, or affect the partnership.!^ - § 95. So the facts, that several persons associated together to run a line of stage-coaches, that they had a general meeting, and that debts were contracted on account of the company, do not prove a partnership as between them.^ In Smith v. Edwards,^ the case was, that one Stansbury assigned his entire stock of goods to Mrs. Edwards, but retained possession of it and cas-ried on the business as usual, and purchased goods from Smith, the ' Barklie v. Scott, 1 Huds. & Bro. 83. Two persons kept a public house together, made bills and purchases in the management of their house, in the name of both. They were held not necessarily to be partners. Banchdr V. Cilley, 38 Maine, 553. ' Chandler v. Brainard, 14 Pick. 285 ; Clark v. Keed, 14 Pick. 446. ' 2 Harr. & Gill, 411. 92 CONSTITUTION OF PARTNERSHIP. [BOOK I. plaintiflf, wMcli were placed amoiig tlie merchandiBe assigned to Mrs. Edwards; after some time, Stansbury failed, and Mrs. Edwards took possession of all the goods in his shop, — among which were some of the articles received from Smith", — sold them, and applied the proceeds to, the payment of a debt due to her from Stansbury. In an action by Smith against her for the goods sold by him to Stansbury, it was held that these facts furnished no evidence from which an inference could be drawn of a partnership between Stansbury and Mrs. Edwards. The fact, that two per- sons sign a note jointly, was held not evidence of a partnership between them, in Hopkins v. Smith.^ But it has been held other- wise, where two persons draw a bill of exchange ; they are con- sidered as partners in respect to the bill, though in every other respect they remain distinct. By appearing on the bill as part- ners, the person to whom it is negotiated is to collect the relation of the parties from the bill itself, and they are not permitted to deny the conclusion.^ It is not easy to perceive a distinction between the above cases.* Where the terms of the agreement and the facts are admitted, it is a question of law whether there was a partnership or not.* § 96. If a person be charged as a nominal partner, it is ob- vious, from the rule of law regarding nominal partners, that evidence of lending his name to the firm cannot be rebutted by showing that he had no interest as a partner ; but where an action is brought by a firm without joining the nominal partner, and during the trial it comes out that there was a nominal partner at the time of the contract, the plaintiffs may rebut the presumption that such nominal partner was a real partner by showing that he had no interest in the concern. Thus, where an action was brought for goods sold and delivered, and the son of the plaintifif proved the contract, and, upon his cross-examination, it appeared ' U John. 161 ; In re Warren, Davies's Rep. 326. " Carriuk v. Vickary, Doug. 653, note ; De Berkom v. Smith, 1 Esp. 29 ; Gow Partn. (3d ed.) 6; 3 Kent (5th ed.), 30, and note; In re Warren, Davies's Kep. 325. = See 3 Kent Com. 30. * See Everitt v. Chapman, 6 Conn. 347 ; Terrill v. Richards, 1 N. & M'Cord, 20; Drake v. Elwyn, 1 Caines, 184; Beecham v. Dodd, 3 Harr, 485 ; Dwinel v. Stone, 30 Maine,. 884 ; Gilpin v. Temple, 4 Harr. 190. CH. I.] POEMATION OP THE CONTRACT. 93 that the father had held out to the world that his son was in part- nership with him, and frequently gave receipts and made out bills in their joint names, it was held to be competent for the plaintiff to prove that the son was not a real partner at the time of the transaction.! However, if there be a partnership as tO' third per- sons, the presumption of law is that there is a partnership between the parties,^ and where a contract is made with persons in the character of partners, this is a contract on which they may bring a joint action, whether an actual partnership exist between them or not.^ § 97. The term "holding one's self out as partner" imports at least the voluntary act of the party so holding himself out ; for else he might incur a painful responsibility through the fraud or the rashness of others. In cases where a person is charged as a partner on grounds of this nature, the circumstances which are usually given in evidence against him, such as the use of his name over the shop door, or in printed invoices, bills of parcels, and advertisements, are strong presumptive evidence of his acquies- cence in the name and character of partner.* Nevertheless, this evidence may be rebutted by showing either that he absolutely disowned, or that hfe was entirely ignorant of these transactions.^ In some cases it will even be necessary for the plaintiff to show that the acts of the defendant which he relies on as acts of part- nership were done with fiill knowledge and deliberation on the part of the latter.® ■ Glogsop V. Colman, 2 Stark. 23. " Per Lord Ellenborough, Peacock v. Peacock, 2 Camp. 25. » Bond u. Pittard, 3 Mee. & W. 357. * 1 Lindley Partn. 91, 92 ; Tredwen v. Bourne, G Mees. & W. 461 ; Peel V. Thomas, 15 Com. B. 714. In order, however, to fix a person with this description of liability, no particular mode of holding himself out is requi* site. If he do acts, no matter of what kind, sufficient to induce others to believe him a partner, he will be liable as such ; although he may not, in fact, have any interest in the firm. Buckingham v. Burgess, 3 McLean, 364, 549. See Spencer v. Billing, 3 Camp. 310 ; Parker v. Barker, 1 Brod. & Bing. 9 ; 3 Moore, 226. ' See Leavitt v. Peck, 3 Conn. 324. A person is not liable as a nominal partner because others, without his consent, use his name as that of a mem- ber of their firm, even although he may have previously belonged to it, pro- vided he has taken the proper steps to notify his retiremeht. Newsome v- Coles, 2. Camp. 617. « See Fox v. Chifton, 6 Bing. 776 ; 4 M. & P. 713. 94 CONSTITUTION OP PARTNERSHIP. [BOOK I. § 98. If there be a stipulation that A. shall appear as a partner, but shall be liable to no loss, A. of. course will not be liable as a partner to those who have absolute knowledge of such stipulation.^ SECTION m. OF LIMITED PARTNEE8HIPS. § 99. Although the common law admits of no partnerships with a restricted responsibility, yet, in many parts of Europe, limited partnerships are admitted, provided they be entered upon a register.^ This species of partnership has been authorized and introduced into many of the United States by statute. Legisla- tive enactments providing for limited or special partnerships exist in Maine, Massachusetts, Rhode Island, Connecticut, Vermont, New York, New Jersey, Pennsylvania, Maryland, Indiana, Michi- gan, South Carolina, Georgia, Mississippi, Alabama, Florida, and Louisiana. In New York the provisions of the act,^ in reference to this kind of partnership, have been taken, in most of the essen- tial points, from the French regulations in the Commercial Code.* The statutory regulations of limited ■ partnerships in the other States are mainly the same as those of New York, being in mosty if not all, subsequent in point of time. A statement of the regu- lations in Massachusetts will present most of the important feat- ures of those in the other States. § 100. It is declared in Massachusetts,^ that limited partner- ' Alderson v. Clay, 1 Camp. 404 ; Minnet w. Whitney, 6 Bro. P. C. 489. But see Brown v. Leonard, 2 Chit 120 ; 1 Lindley Partn. 46. In reference to the efieot of a knowledge by third persons of the agreement under which parties are associated together, and of the extent of their connection, see Denny v. Cabot, 6 Metcalf, 93, 94 ; Livingston u. Roosevelt, 4 Johns. 251 ; Boardman u. Gove, 15 Mass. 839 ; Gram v. Cadwell, 5 Cowen, 489 ; Bailey V. Clark, 6 Pick. 372; post. Book 3, chap. 1, § 386, and notes ; Frost v. Hanford, 1 E. D. Smith (N. Y.), 540 ; Nichols ». Chaairs, 4 Sneed (Tenn.), 229. ' Per Lord Loughborough, 1 H. Bl. 48 ; 3 Kent Com. 84. ' 1 Rev. Stat. N. Y. 763. ' 3 Kent Com. 35, 36 ; Coke de Commerce, b. 1, tit. 3, sect. 1. ' General Stats, ch. 55. CH. I.] FORMATION OF THE CONTRACT. 95 _ ships for the transaction of mercantile, mechanical, or manufac- turing business^ within the State (the business of banking and insurance being expressly excluded) ,2 may consist of one or more persons, who shall be called general partners, and shall be jointly and severally responsible as general partners are by the common law, and of one or more persons, who shall contribute to the com- mon stock a specific sum in actual cash payment as capital, and who shall be called special partners, and shall not be liable per- sonally for any debts of the partnership, except on a failure to comply with other provisions of the act. The parties must sign a certificate containing the name of the firm ; the names and resi- dences of all the general and special partners, distinguishing the one from the other ; the capital contributed by each special part- ner ; the general nature of the business ; and the time of com- mencing and terminating the partnership. Before any such partnership can go into operation this certificate must be ac- knowledged by all the partners before some justice of the peace, and recorded in the registry of deeds for the county in which the principal place of the partnership business is situated. If the partnership has places of business in different counties, pro- vision is made for recording in the registry of deeds for every such county. False statements in any such certificate render all the persons in the partnership liable as general partners. A copy of the above certificate is to be published six successive weeks immediately after the registry thereof, in a newspaper printed in the same county with the principal place of business ; if there is no such paper, then in a newspaper printed in Boston. If this provision for publication is not complied with, the part- nership is to be deemed general. Renewals or continuations of limited partnerships are to be certified, acknowledged, recorded, and published in the manner provided for their formation ; other- wise they will be deemed general. The business must be con- ducted under a firm in which the names of the general partners ' The Pennsylvania act enumerates agricultural and mining business, and that of transporting coal. That of Maryland is general in this respect, for the transaction of business, without enumerating the kinds. ' Banking and insurance are also excepted in New York, New Jersey, Pennsylvania, Maryland, South Carolina, Alabama, Georgia, Florida, Maine, Mississippi, Connecticut, and Vermont. 96 CONSTITUTION OF PAHTNBESHIP. [BOOK I. only shall appear, •without the addition of the word comfany^ or any other general term ; the general partners only shall trans- act the business ; if the name of any special partner is used with his consent, or if he personally makes contracts connected with the partnership with any person except the general partner, he will be deemed a general partner .^ No part of the capital stock is to be withdrawn, nor any division of interest or profits is to be made, if such withdrawal or division shall reduce the capital below the sum named in the certificate, duruig the continuance of the partnership. If, while the partnership continues, or at its ter- mination, the assets thereof are not enough to pay the debts, the special partners shall be held for any sums withdrawn or shared, with interest. All suits must be commenced by and against the general partners only, except when the special partners have be- come liable as general partners, or have become responsible in consequence of having withdrawn funds from the common stock. In all cases not otherwise provided for by the act, the members of limited partnerships are to be subject to all the liabilities and entitled to all the rights of generaV partners. N"o dissolution of such partnership shall take place, except by operation of law, before the time specified in the certificate, unless a notice thereof shall be recorded in the registry in which the original certificate, or the certificate of renewal or continuation of the partnership, was recorded, and in every other registry where a copy of such certificate was recorded, and unless such notice is published in some newspaper in the manner provided for the publication of the certificate above mentioned. Provision is also made for the insol- vency of such partnerships.^ In Louisiana, by the first section of the act passed March 13, 1837, " to authorize limited or anonymous partnerships," partnerships or companies may be formed for the purpose of carrying on manufacturing, farming, or any other branch of industry, or of making roads and canals, ' A disregard of this provision will render the special partner liable as a general partner. Andrews v. Schott, 10 Barr, 47. 2 See Madison County Bank v. Gould, 5 Hill (N. Y.), 309 ; Bradbury u. Smith, 21 Maine, 117. In New York and some other States it is provided that the special partner may examine into the concerns of the partnership from time to time, and advise as to the management. » Stat. Mass. 1838, ch. 163, §§ 21, 22. CH. I.J FORMATION OF THE CONTRACT. 97 or of making insurances of any kind ; and any company, on com- plying with the rules and formalities prescribed in the act, is in- vested with all the rights and privileges attached to chartered companies created, by any law of the State for purposes similar to those for which the company is formed. The fifth section pro- hibits such companies or partnerships from doing any banking, mercantile, or commission business, or any brokerage or stock- jobbing, or the business of factors or exchange, in any form. The remaining sections contain regulations for the formation of these alssociations, and for the management of their business, which partake quite as much of the character of corporate pow- ers and duties as of those which belong to partnerships properly so called. § 101. In the formation of limited partnerships, the require- ments of the statutes must be substantially compUed with, or those who associate under them will be liable as general partners ; but defects in form merely will be disregarded.^ Thus, in the case of Bowen v. Argall,^ under the New York-statute regulating limited partnerships, it was held that a mistake in the names of the partners in the publication of the certificate of the terms of such partnership — as Argale for Argall — wiU not vitiate .the publication. In the same case the court regarded a publication within three days after the registry of the terms of the partner- ship as a sufficient compliance with the statute requiring the pub- lication to be made immediately. And the publication is suffi- cient if made once in each of the ensuing six weeks ; ^ so if made in the first week, immediately after the time of registry, and duly followed up by a repetition for the next five weeks.* In a case where a mistake regarding the time when the partnership was to commence appeared in the notice, which stated that it was to com- ^ Per Beardsley J., in Smith v. Argall, 6 Hill (N. Y.), 481. Where there is an agreement for a special partnership between members of a firm in Pennsylvania, but the statute on the subject has not been substantially complied with, the knowledge, by creditors, of the existence of the special partnership agreement, at the time the contracts were made, does not dis- charge the special partner from his general liability. Andrews v. Schott, 10 Barr, 47. ' 24 Wendell, 496. ' Bowen v. Argall, 24 Wendell, 496. » Ibid. 98 CONSTITUTION OF PARTNERSHIP. [BOOK I. mence on the 16th of November, instead of October, it was de- cided that unless the error was intentional, or the contract upon which the suit was brought was entered into before the time actu- ally named in the pubhshed notice, the special partners were not hable.i But where the terms of a partnership were published in two newspapers, and in one of them the sum contributed by the special partner was stated at five thousand dollars, when in fact it was only two thousand dollars, it was held, that, though this occurred through the mistake of the printer, and the other requi- sites of the statutes had been fully complied with, the associates were hable as general partners ; and the plaintiff seeking to charge them as such need not prove that he was actually misled by the error in publishing the terms of the partnership.^ § 102. A case has arisen in Maine, in which a limited part- nership was attempted to be formed under an agreement which certified that the parties had entered into a limited partnership under the pame of J. P. Bradbury & Co., of which J. P. Brad- bury was the, general partner, and Henry Cofiin the special part- ner, — that the special partner had contributed fifteen hundred dollars as capital to the common stock, for carrying on a general grocery business, — the partnership to commence from the day of the date of the agreement, and to continue two years. The cer- tificate was acknowledged and recorded. Coffin furnished the fifteen hundred dollars, being the whole capital that was employed in the business of the firm. Goods were purchased with this money, sold, and other goods purchased with the proceeds of the sale, and then, within the two years, the partnership stock was attached on a process against Bradbury for a debt due from Brad- bury alone ; and an action of trespass was brought by Bradbury and Coffin against the sheriff for taking and carrying away the partnership goods ; and the court held, that, whether the partner- ship was to be considered as a special one under the statute or as a general one, the goods became partnership property, the part- nership becoming debtor to the partner advancing the capital to the amount advanced.^ The court in their decision said : — "In » Madison County Bank v. Gould, 5 Hill (N. Y.), 309. » Smith V. Argall, 6 Hill (N. Y.), 479. See Bowen v. Argall, 24 Wen- dell, 596. " Bradbury v. Smith, 21 Maine, 117. CH. I.] FOKMATION OF THE CONTRACT. 99 this case the agreement signed by the plaintiffs declares that the special partner has contributed fifteen hundred dollars as capital to the common stock. And there can be no doubt that it was their intention to form a limited partnership, under the provisions of the statute of Maine, 1836, ch. 211. If it be admitted that a general partnership was not created, by a failure to comply with the provisions of the seventh section of the act, which requires that the names of the general partners only shall be inserted, without the addition of the word company or any other general term, the act would still require that the special partner .should contribute a sum in cash, and that it should become a portion ox the capital stock of the partnership. The act provides that the general partners only shall transact the business, and the goods must be purchased by them. The contracts and bills of pur- chase would be between the seller and the partnership as the purchaser, and the goods would become the property of the part- nership. And this would but carry into effect the agreement and intention of the parties, the partnership becoming a debtor to the special partner for the amount of cash by him contributed. A loss of the goods in the shop by fire or otherwise woidd not have fallen exclusively on the special partner as the sole owner, but upon the partnership. Although at the time of the commence- ment of this partnership the capital stock was aU contributed by the special partner, the general partner would afterward be daily contributing to it by his time and attention, to the business." § 103. Keal estate was purchased for the benefit of a Umited partnership firm, and the title taken in the name of all the part- ners, general and special, but without the privity or consent ox the latter, and this was held not to make the special partner liable as a general partner.^ The New York statute provides, that the capital advanced by the special partners must be in cash, and at the time of filing the original certificate, with the evidence of the acknowledgment thereof, an afiidavit of one or mpre of the gen- eral partners must also be filed in the same office, stating, that the sums specified in the certificate to have been contributed by each of the special partners to the common stock have been actually and in good faith paid in cash. This affidavit may be given in evidence in an action against the special partiler, brought 1 Madison County Bank v. Gould, 5 Hill QS. Y.), 309. loo CONSTITUTION OB PARTNERSHIP. [bOOK I. to charge him as a general partner, for the purpose of showing that the requirements of the statute have been comphed with ; if the plaintiff then gives evidence sufficient to show, primd facie, that the amount of capital specified was not actually paid in by the special partner, the affidavit is entitled to no weight as rebut- ting evidence.! The statute of New York also provides, that such partnerships shall not make assignments, or transfers, or create any lien with the intent to give preference to creditors in cases of insolvency, or in contemplation thereof. An assignment by a lim- ited partnership to a trustee for the benefit of creditors, after the firm has become insolvent, or in contemplation of insolvency, is void, as against the creditors of the firm, if any preference in payment is given to one creditor or class of creditors over another.^ Such an assignment is also void as against creditors, if it provides for the payment of a debt due to the special partner, ratably with the other members of the firm, and before all the general creditors are satisfied in full for their debts.^ But a pro- vision in an assignment made by such a partnership, being insol- vent, placing the general partners upon a footing with other cred- itors, will not convert a special partner into a general partner, and render him liable accordingly, whether such a provision be contrary to the statute or not.* § 104. The statute of New York having required the terms of a special partnership, and the time of its continuance to be pub- lished at the commencement of its business, no formal notice of the dissolution of the firm, at the end of the period limited, is necessary to prevent the general partners from charging the part- nership with new debts contracted after that time.° And where the general partners in such a partnership, after the time fixed for its termination, continued to give and take notes in the name of the firm, and some of the notes thus given were transferred to lond fide holders, who were not aware that they had not been given for debts due from the firm, it was decided that the holders of such notes were not entitled to come in with the creditors of ' Ibid. = Mills V. Argall, 6 Paige, 577. " Ibid. See Innes v. Lansing, 7 Paige, 583. * Bowen v. Argall, 24 Wendell, 496. ' Haggerty v. Taylor, 10 Paige, 261. CH. I.] FORMATION OF THE CONTRACT. the firm, and participate ratably in the assets of the limited part- nership ; and that the' creditors of the firm were entitled to a pref- erence in the payment out of such assets.^ It was also held, in the same case, that if the special partners had made themselves personally hable to the holders of the notes, by allowing the gen- eral partners to continue business in the name of the firm, after the time limited for the expiration of the partnership, the remedy of the holders of the notes was by an action at law against the general and special partners, to charge them personally.^ > Ibid. " Ibid. Where a third person enters a firm composed of one general and one special partner, the special partnership is thereby dissolved. Andrews V. Sohott, 10 Barr, 47. CHAPTER II. OF THE DISSOLUTION OF THE CONTRACT. SECTION I. OF THE TIME OF THE DISSOLUTION. * § 105. Except in the case of bankruptcy or felony, the law fixes no absolute period at Trhich the partnership must be dis- solved, but leaves that matter to be regulated or not by the par- ties, as they think proper. Partnerships, therefore, with reference to their duration, may be distinguished by the terms of, 1. Part- nership at will,^ or unhmited ; 2. Partnership for a term, or lim- ited. A partnership at will is presumed to endure so long as the parties are in life, and of capacity to continue it.^ A partnership for a term is presumed to endure for the term, provided the parties be in life and of legal capacity to continue it.^ But in no case will the law presume a partnership to exist beyond the life of the parties ; and therefore, if such is the object, it must be provided for by some express stipulation.* ' The result of a contract of partnership is a partnership at -will, unless some agreement to the contrary can be proved. See per Parke J., in Heath 1-. Sansom, 4 B. & Ad. 175; Frost v. Moulton, 21 Beavan, 596. So of a partnership for a term, continued after the expiration of the term. Feather- stonhaugh v. Fenwick, 17 Vesey, 307; Booth v. Parker, 1 Moll. 465. ' Vinn. Com. lib. 8, tit. 26, s. 5 ; Pothier Contr. de Socidte, Vol. 2, p. 555 ; 1 Greenl. Ev. § 42 ; Story Partn. § 261 ; Irvy v. Brigham, 9 Humph. 750. ' See Thurston v. Perkins, 7 Missouri, 29. ' Crawshay v. Maule, 1 Swanst. 521 ; s. 0. 1 J. Wils. 181 ; Story Partn. §84. CH. II.] DISSOLUTION OF THE CONTRACT. 103 § 106. The tenn is properly to be fixed only by the contract.^ "But," as Lord BIdon observed, "there may undoubtedly be cases in which, though no written contract provides for the dura- tion of the partnership, there may be an implied contract as to the term of its duration.^ For instance, parties may unquestionably so purchase leasehold interests as to imply an agreement to con- tinue the partnership so long as the leases endure." ^ And Mr. Bell suggests, that where a lease so undertaken excludes assignees and sub-tenants, it would possibly be deemed evidence of an inten- tion to continue the partnership during the lease.* § 107. However, the mere circumstance of partners having purchased leasehold interests, is not evidence that they have entered into a contract of partnership commensurate with the duration of the leases. " It might," said Lord Eldon, " with equal reason, be contended that the parties, by purchasing an estate in fee-simple, were to continue partners forever." ^ And even where a testator entitled by leases of unequal duration to iron mines and works, by will gave a pecuniary legacy to C, " as a capital for him to become a partner with my executor, of one fourth share in the trade of all those works, so long as the lease endures ; " and by a codicil he gave to A. " three eighths of the concern at the iron-works, and of the premises at ; so the partnership will stand at my demise ; A. three eighths, B. three eighths, C. two eighths ; " it was held that this did not create a partnership coextensive with the duration of the leases.® If a partnership is formed for a single purpose or adventure, it terminates whenever the business for which it was entered into is accomplished.'^ ' 2 Bell Com. 643. " See Wheeler v. Van Wart, 9 Sim. 193 ; s. c. 2 Jur. 252 ; Keade v. Bent- ley, 4 K. & J. 656 ; 3 K. & J. 271. f Crawshay v. Maule, 1 J. Wih. 181 ; 1 Swanst. 521. * 2 Bell Com. 643. ' 1 J. Wils. 181 ; Featherstonhaugh v. Fenwlck, 17 Ves. 308 ; Alcoek v. Taylor, Taml. 506 ; Gow Partn. (3d ed.), 225. « Crawshay v. Maule, 1 J. Wils. 181 ; 1 Swanst. 495 ; Story Partn. § 277, and note. The formation of a sub-partnership, with a partner in a partner- ship for a term, is no evidence that the sub-partnership is to continue for the whole term of the partnership. Frost v. Moulton, 21 Beavan, 596. ' 3 Kent Com. 52 ; Story Partn. § 38 ; Petrikin v. Collier, 1 Barr (Penn.), 247. 104 CONSTITUTION OF PARTNERSHIP. [BOOK I. SECTION II. OF THE CAUSES OF THE DISSOLUTION. § 108. In investigating the causes of the dissolution of part- nership between the parties, we will consider the subject with reference, first, to a partnership at will ; secondly, to a partner- ship under articles, or for a term. § 109. A partnership at will may be dissolved at the express desire, or by the bankruptcy, outlawry, felony, or death of any of the parties.'' In the first of these cases the partnership is dissolved immediately upon notice given, subject to the proper accounts.^ In the words of Lord Eldon, " A partner, not for a term, has certainly a right to say, I instantly dissolve the partner- ship ; " and where there is no express agreement between the part- ners, a dissolution may be brought about by any one of them, without the decree of a court of equity.^ It was in one case urged before Lord Eldon, that, by analogy to other known rules of law, such as that which relates to notice to the tenant to quit, notice within a definite period of time ought to be given of an intention to dissolve the partnership. But his Lordship observed, that though in the case of a tenancy from year to year, jthe law fixed one positive rule for six months' notice, a rule which might in many cases be very convenient, in others, as that of nursery ' Griswold v. Waddington, 15 John. 82. "Nerot V. Burnand, i Russ. 260; Peacock v. Peacock, 16 Ves. 50. In Article 1865 of the French Civil Code, one of the causes of the dissolution of partnership which are there enumerated is, — " La volenti qu'un seul ou plusieurs expriment de n'etre plus en sooiete." Upon this clause a learned commentator, M. Rogron, observes aS follows : " Cette dissolution de la so- cidte, par la volonte d'un seul des associds, n'a lieu que pour les sooietds dont la durde est illimitee (1689). C'est une exception au principe general con- sacrd par I'art. 1134, portant que les conventions ne peuvent etre revoquees que du consentement mutuel des parties ; cette derogation est fondde sur ce -qu'une societg illimitde, qu'une ou plusieurs parties continueralent malgre elles, deviendrait une source do contestations et desordres : communio lites et jurgia generate solet." « Ex parte Nokes,-Wats. Partn. 380 ; Mont. Partn. 108. CH. II.J DISSOLUTION 05 THE CONTRACT. 105 grounds, most inconvBiuent ; yet, as to trades in general, there ■was no rule of this kind for the determination of partnership.^ Reasonable notice, however, of which the jury will consider, must be given in all cases where the articles are totally silent on the subject, and the partnership is at will ; in others, the proper notice may be inferred from the articles.^ § 110. The assignment of one partner's rights in the profits to his copartner is ipso facto a dissolution, without any express ' 16 Ves. 57. . = Wheeler v. Van Wart, 2 Jur. 252. Mr. Ctancellor Kent, in his Com- mentaries, lays down the rule upon this subject as follows : " It is an estab- lished rule in the law of partnership, that, if it be without any definite period, any partner may withdraw at a moment's notice, when he pleases, and dissolve the partnership. The civil law contains the same rule on the subject. The existence of engagements with third persons does not pre- vent the dissolution by the act of the parties, or either of them, though those engagements will not be effected, and the partnership will still con- tinue as to all antecedent concerns, until they are duly adjusted and settled. A reasonable notice of the dissolution might be very advantageous to the company, but it is not requisite ; and a partner may, if he pleases, in a case free from fraud, choose a very unseasonable moment for the exercise of his right. A sense of common interest is deemed a sufficient security against the abuse of the discretion." 3 Kent Com. 53 See also the remarks of Mr. Gow on this point, Partn. (3d ed.), 223, 224 ; and Featherstonhaugh v. Fen- wick, 17 Ves. 297; Crawshay v. Collins, 15 Sumner's Yesey, 218, and note (2) of Mr. Hovenden; Story Partn. §§ 84, 269, 272, 275 ; Marquand v. N. Y. Manuf. Co. 17 John. 524 ; Heath v. Sansom,' 4 B. & Ad. 172 ; • Griswold v. Waddington, 15, John. 57 ; Miles v. Thomas, 9 Sim. 606, 609 ; Taft v. IBuffum, 14 Pick. 322. Lacy J., in Howell v. Harvey, 5 Ark. 280, remark- ing upon the above passage from Mr. Chancellor Kent, said : " The excep- tion he makes in a case of fraud indicates to our minds that the rule is not so unbending or universal as it is laid down, unless the limitation is intended to include those cases where the renunciation is made in good faith and at a proper time." " In cases in equity we think the true rule to be this : that, to enable one partner to dissolve at will the partnership, twp things must concur; first, the renunciation must be in good faith, and secondly, it must not be made at an unreasonable time." " Renunciatior\ is held not to be made in good faith when one partner renounces in order to appropriate to himself the profits which the partners are entitled to receive. It is said to be made at an improper time when the things are no longpr entire that were of consequence to the partnership, and which should have deferred the dis- solution." See 3 Kefit Com.,61, 62. The above case of Howell u. Harvey contains many valuable remarks upon dissolution of partnership and the causes. 106 CONSTITUTION OF PARTNERSHIP. [BOOK I. notice or agreement to dissolve tte partnership ; for since the partnersMp, as between the parties, results from the agreement to share in profits, it ceases as soon as such right is determined.^ In the case of Heath v. Sansom,^ cited to the above point, the parties had become partners for an indefinite period ; the party who assigned his interest was a dormant partner, and after the assignment he had wholly given up the business and property to the other partner who had purchased his interest. In Marquand v. New York Manuf. Co.,^ where one partner assigned all his in- terest in the partnership stock to a stranger, it was held that such an assignment, bond fide made, ipso facto dissolved the partner- ship, although it appeared in the case that by the articles the part- nership was to continue until two of the contracting parties should demand a dissolution, and the other partners wished the partner- ship to go on notwithstanding the assignment. In this case the assignment was made as collateral security for the payment of debts due from the partner so assigning. It did not appear that he acted in the firm after the sale.* In Cochran v. Perry ,^ a partnership was held to be dissolved when one party sells his share either to a stranger or to one of the firm, unless it is other- wise provided by the partnership agreement. But in Taft v. Buffum,^ one of four members of a firm assigned the whole of his interest in all the personal and real estate of the firm to one of his copartners, but still continued to transact the business of the firm in the same manner as before, until the failure of the com- pany ; a suit was commenced against the remaining three mem- bers of the firm ; they pleaded in abatement the non-joinder of the party who had assigned his share ; and the court held that a conveyance by a partner of his interest in all the real and per- ' Per Denman C. J., Heath v. Sansom, 4 B. & Ad. 1 75. MB. & Ad. 172. ' 17 John. 526. In Whitton v. Smith, 1 Freeman (Miss.), 231, it was held that a sale or assignment by one partner of all his interest in the part- nership property operates a dissolution ipso facto, though the partnership articles provide for a continuamce of the partnership for a definite period. * See Mumford v. McKay, 8 Wendell, 442 ; Ketclmm v. Clark, 6 John. 144; Murray w. Bogert, 14 John. 318; Mason v. Connell, 1 Whart.- 381; Buford V. McNeely, 2 Dev. Eq. 481. » 8 Watts & Serg. 262. 14 Pick. 322. See Buford v. McNeely, 2 Dev. Eq. 481. CH. ir.] DISSOLUTION OF THE CONTRACT. 107 sonal estate of the firm, to one of his copartners, does not, ipso facto, dissolve the copartnership ; it is only evidence tending to show a dissolution. In this case the court say that a person may sfiU be a partner, though he ceases to have any property in the stock of a partnership, on the principle that two persons may become partners, one furnishing money or goods, and the other skill or labor ; or after persons have entered into a partnership, and each has furnished capital, one may, with the consent of his associates, and for good consideration, as of great skill or labor, withdraw his funds or share in the stock, and still continue to be a member of the firm. Putnam J., remarked: "We think that such an arrangement would not necessarily operate as a dissolution of the connection." He adds : " A majority of the- court are of opinion that it [the fact of the sale by one partner] was evi- dence in the case, which might or might not prove a dissolution, as other facts might be proved in the case, all of which should have been left to the jury, to determine the fact whether the part- nership had been dissolved or not. For example ; if, after the sale, the partner assigning his interest had ceased to have any concern in the establishment, had entered into other business on his own separate account, or as it might be, had removed to a foreign country or place, and there carried on business for himself or lived upon his own funds or otherwise ; upon such evidence we should all think that the jury ought to find that the copartnership was dissolved. On the other hand, if (as in the present case it is found) the partner so assigning, after the conveyance, continued to act as a partner, making himself liable as such by drafts and other partnership business, just as he had done before the convey- ance ; then it would seem to a majority of the court, that the jury ought to find that the partnership was not dissolved." ^ 'Mr. Chancellor Kent in his Commentaries says: — "A voluntary and bona fide assignment by a partner of all his interest in the partnership stock has the same effect [as the bankruptcy or insolvency of a partner], and dis- solves the partnership. This is upon the principle that a partnership cannot be compelled by the act of one partner to receive a stranger into the asso- ciation, which is founded on personal confidence." 3 Kent Com. 59. Mr. Justice Story holds it to be the established doctrine, that such an assignment, per se, operates, at once, a dissolution of the partnership, upon due notice thereof by the party making or receiving the assignment. He offers the same reason for it as that above given by Mr. Chancellor Kent. Story 108 CONSTITUTION OF PARTNERSHIP. [bOOK I. § 111. Again, the partnersMp will be dissolved by the bank- ruptcy of any of the partners. In the words of Lord Mansfield, " An act of bankruptcy by one partner is a dissolution of the partnership by virtue of the relation in the statutes, which avoid all the acts of a» bankrupt from the day of his bankruptcy ; and from the necessity of the thing, all his property being vested in the assignees, who cannot carry on a trade." ^ An act of bank- Partn. §§ 307, 308. This reason, however, does not extend to the case where a partner sells out to one of his copartners ; and yet the rule is ap- plied to such, a case as well as to the case of a sale to a stranger. The truth is, the sale of his share in the partnership property by one partner, who thereupon retires from the firm, produces an entire change in the relations of the remaining members of the firm ; and this whether the sale is to a stranger or to one of the copartners ; and partners are neither bound to receive new members into the concern without their consent, nor are they bound to continue the partnership without all the members with whom they ori^nally contracted, and upon whose personal qualities they may have relied as a consideration for forming the connection. Cochran v. Perry, 8 Watts & Serg. 262. In a case where one partner in a firm, by general con- sent, ti-ansferred his interest to a stranger, who took the vendor's place in the firm, the effect was to dissolve the partnership and rescind the partner- ship contract as between the original parties to the copartnership. Conwell V. Sandidge, 5 Dana, 213. Another case is put by Mr. Justice Story, which he supposes would operate as a dissolution of a partnership, if it could legally happen, i. e. where one of the partners assigns the whole partnership property for the payment of the debts due to all the creditors of the part- nership. He very much doubts whether such an assignment could legally be made, but if it could, he says, "it must be admitted that it would, by operation of law, amount to a dissolution of the contract; for the case would then fall within the scope of the doctrine already stated in the cases where the entire thing constituting the foundation and object of the part- nership is extinct." Story Partn. § 310. See also, Hitchcock v. St. John, 1 HofT. Ch. R. 511 ; Simmons v. Curtis, 41 Maine, 373. But an assignment, void for illegality, does not work a dissolution. Simmons v. Curtis, uhi supra. On the question whether one partner can legally make an assign- ment, see Pierpont v. Graham, 4 Wash. C. C. 232; Anderson v. Tomp- kins, 1 Brock. 456 ; Havens v. Hussey, 5 Paige, 30, 31 ; Egbert v. Woods, 3 Paige, 517, 523, 524 ; Dickinson u. Legare, 1 Desaus. 537; Robinson v. Crowder, 4 M'Cord, 519; Harrisons. Sterry, 5 Cranch, 300; M'CuUough V. Sommerville, 8 Leigh, 415; Mills v. Argall, 6 Paige, 577; Kirby u. Inger- sbll, 1 Harr. Ch. (Mich.) 172; Hitchcock u. St. John, 1 Hoflf. Ch. R. 511; Dana v. Lull, 17 Vermont, 390; post, § 395, notes. In Whitton v. Smith, 1 Freeman Ch. (Miss.) 231, it was held that one partner may sell all the partnership property, but such sale would operate a dissolution. ' Fox V. Hanbury, Cowp. 445. See Ex parte Williams, 11 Vesey, 15. CH. II.] DISSOLUTION OP THE CONTRACT. 109 ruptcy, however, does not dissoke the partnership instanter. It must be followed by a fiat and adjudication. " The adjudication that he is a bankrupt," said Lord Loughborough, " is what severs the partnership." ^ Formerly, it was necessary, in order to divest completely, that the commissioners should make an assignment of the bankrupt's efiects, and such assignment related to the commis- sion of the first act of bankruptcy ; ^ but under the 1 & 2 Will. 4, c. 56, s. 25, this proceeding is no longer necessary. § 112. Again, an assignment under the Insolvent Act, or a sale of the partnership effects under a separate execution against one partner, is ipso facto a dissolution of the partnership.^ In "Waters v. Taylor,* Lord Eldon, anxious to ascertain that a disso- lution had taken place, in order to avoid the necessity of decree- ing a dissolution, after alluding to the doctrine of a court of law, that a sheriff can take in execution partnership property, and sell the interest of the debtor partner, asked, " Is not that a dissolu- tion of the partnership ? " It is true that his Lordship, notwith- standing that he asked the (question, resorted to a rule of equity in order to effect the dissolution in that case. It cannot, however, be supposed that he had any real dOubts on the subject, for the termination of the partnership seems to be the necessary conse- quence of the transfer of the property to the vendee of the sheriff, as tenant in common with the solvent partner.^ But the insol- vency of a partnership does not per se dissolve the partnership.® In Arnold v. BrOwn, it was contended by the plaintiffs that the • Ex parte Smith, 5 Ves. 295 ; Arnold v. Brown, 24 Pick. 94, 95 ; 3 Kent Com. 59 ; Story Partn. §§ 313, 314. ' Ex parte Birkett, 2 Kose, 70. ' Eox V. Hanbury, supra ; Skip v. Harwood, 2 Swanst. 58G, n. ' 2 Ves. & B. 300. ' 3 Kent Com. 59. The result is the same, whether the levy and sale under an execution is of the whole, or only of a part, of the partner's interest ; " that is,'' says Mr. Justice Story, " it amounts to a dissolution of the partnership to the extent of the right, Jitle, or interest levied upon and sold under the execution. If the levy is of a part of the partnership prop- erty, there i? a severance pro ianto of the partnership interest therein ; if of the -whole, then there is a severance of the entirety." Story Partn. § 311. See also, id. § 312 ; Johnson v. Evans, 7 Man. & Gr. 240; IJabershon v. Blurton, 1 De G. & Sm. 121 ; Aspinall v. The London & Northwest K. E. Co. 11 Hare, 325; Perens v. Johnson, 3 Sm. & G. 419. " Arnold v. BroVn, 24 Pick. 89. 10 110 CONSTITDTION OF PARTNERSHIP. [BOOK I. partnersHp had been dissolved hj the failure of the firm. But Morton, J., in delivering the opinion of the court, said: "It is further contended for the plaintiffs, that the partnership was dis- solved. There is no pretence that the partners intended to dis- solve the partnership. If it was done at all by them, it was the effect of their acts against their intentions. The insolvency of one or both of the partners, we think, would not produce this effect.^ The insolveilcy of one might furnish to the other sufficient ground for declaring a dissolution. But, in this State, the inability to pay the company or the private debts of the partners would not per se operate as a dissolution. In England, bankruptcy, and in some of our States where insolvent laws exist, legal insolvency may produce a dissolution. Wherever the one or the other oper- ates to vest the bankrupt's or insolvent's property in assignees or other ministers of the law, it would produce that effect." ^ § 113. Again, by the death of one of the partners, the part- nership is ipso facto dissolved.^ The dissolution takes place and operates from the time of the death, however numerous the asso- ciation may be, and this not only as to the deceased pa,rtner, but also as between all the survivors.* The reason is, that the per- sonal qualities of each partner enter into the consideration of the contract between the copartners, and the survivors ought not to be held bound without a new assent, when perhaps the abilities and skill, or character and credit, of the deceased partner were the inducements to the formation of the connection;^ ' Siegel V. Chidsey, 28 Penn. State, 279. ' 24 Pick. 93, 94. See Williamson v. Wilson, 1 Bland, 408 ; Gpwan v. Jeffries, 2 Ashmead, 305 ; Siegel v. Chidsey, 28 Penn. State, 279 ; Crosbie V. Guion, 23 Beavan, 518. ^ Vulliamy v. Noble, 3 Mer. 610; Murray v. Mumford, 6 Cowen, 441; Canfield v. Hard, 6 Conn. 184 ; Burwell v. Mandeville, 2 Howard (U. S.), 660; Knapp v. M'Bride, 7 Alabama, 19. The death of a special partner dissolves the partnership. Ames v. Downing, 1 Bradf. (N. Y.), 321. ' 3 Kent Com. 55, 56 ; Story Partn. §§ 317, 319 ; Scholefidd v. Eichel- berger, 7 Peters, 586, 594; Dyer v. Clark, 5 Metcalf, 575. " 3 Kent Com..55, 56 ; Story Partn. § 317 ; Gow Partn. (3d ed.), 219, 220. Mr. Gow (Partn. 219, 220), remarks, that " cases might easily be put in which considerable inconvenience and hardship may arise from the appli- cation of this rule, but any relaxation of it would produce much greater and more frequent grievances. It has been objected to the doctrine that death CH. II.] DISSOLUTION OF THE CONTRACT. Ill § 114. Again, a partnership may be dissolved by tlie civil death of a partner, as by Ms outlawry, or attainder for treason or felony. The outlaw being dead in law, incapable of entering into any con- tract, bringing any suit, or holding any property, it is clear that a partnership in which he was engaged' is, ipso facto, dissolved, and that he is incapable of the functions of a partner in trade. The effects of his delinquency are extremely severe upon his co- partner, as upon the outlalwry or attainder of one, all the partner- ship effects become vested in the crown. The share of the partner outlawed or attainted is in the first place forfeited to the crown, whereby, if the king were capable of being so, he would become joint tenant or tenant in common of the partnership effects with the other partners ; but as this would be inconsistent with the dig- nity of the monarch, he is strictly entitled to the whole. But this right of the crown is seldom enforced, either against creditors or deserving partners.' § 115. It has been held that the marriage of a feme sole part- ner is a dissolution of the partnership at will ; ^ for, otherwise, by her marriage she would introduce a stranger into the partner- ship, which might be adverse to the interests of the other partner. Where the parties to a partnership are the subjects of two differ- ent governments, the partnership is dissolved by the occurrence ends a partnership, that it is unreasonable ; but, considering what persons might be introduced into a firm unless it worked a dissolution, there is strong reason for saying that its effect should be such as the law ascribes, ta it. The contract of partnership being founded on a delectus personce, it would be destructive and subversive of the very foundation of such a contract were the surviving partner bound and compellable to receive into the partnership, at all hazards, the executor or administrator of the deceased, his next of kin, or possibly a creditor taking administration, or whoever claimed by rep- . resentatlon or assignment from his representative. The reasoning on which this doctrine rests has received a fuller illustration from the civilians than from any authorities in our domestic jurisprudence." ' > Watts Partn. 377; 2 Bl. Com. 409; 3 Chit. Laws of Commerce, 252 ; Story Partn. § 304. The absconding of a partner does not per se operate as a dissolution of the firm. Arnold v. Brown, 24 Pick. 89. See the remarks of Morton J., in this case. See also. Whitman v. Leonard, 3 Pick. 179, and 3 Kent Com. 62. " Nerot V. Burnand, 4 Euss. 260 ; 3 Kent Com. 55 ; Story Partn. § 306 ; Griswold v. Waddlngton, IS John. 82; Bray V. Fromont, 6 Mad. 5; and see Wats. Partn. 384 ; Wrexham v. Huddleston, 1 Swan^. 517, n. 1 12 COSTSTITUTION' 0* PAETNBRSHIP. [BOOK I. of a war between the two governments of wliicli they are re- spectively subjects.^ A partnership may also be dissolved by the extinction of the subject-matter of the joint business or undertak- ing.2 In Griswold v. Waddington,^ Mr. Chancellor Kent, refer- ring to this cause of dissolving a jm,rtnership, remarks as fol- lows : " Pothier, in his treatise on partnership says, that every partnership is dissolved by the extinction of the business for which it was formed. This he illustrates in his usual manner, by a num- ber of easy and familiar examples. Thus, if a partnership be formed between two or more persons for bringing together .and selling on joint account the produce of their farms, or of their live stock, and the produce or the stock of one of them should fail, or be destroyed, the partnership ceases of course, for there can be no longer any partnership when one has nothing to con- tribute.* Extiheto suhjecto tolUtur adjectum, is the observation of ' Griswold u. Waddington, 16 John. 438; 3 Kent Com. 62; Story Partn. §§ 315, 316, and note; Cape Sable Co.'s case, 3 Bland, 674. Another cause of dissolution was suggested in Cape Sable Co.'s case, 3 Bland, 666, where it was held that a partnership is absolutely dissolved by' some of its members becoming, as to the same purposes as the partnership, a body politic under an act of incorporation. Although the conduct of those mem- bers of the firm who had united with the corporation, and the other facts of the case, would doubtless have justified a dissolution in the above case, yet it does not seem to be settled that it would necessarily follow that a partner- ship is dissolved, even if all of its members should become a body politic under an act of incorporation for the same purposes as the partnership, and should transfer all their partnership property to the corporation. TGoddard V. Pratt, 16 Pick. 412. It may perhaps be more properly considered a ques- tion of fact, depending on the circumstances of each case. In Goddard v. Pratt, the court said : " The fact of forming a corporation under an act obtained for that purpose, and transferring the whole real estate and part- nership stock and property to such corporation, standing alone, would be strong evidence of an intention of the partners, as between themselves, to dissolve the partnership and form an association of a different legal charac- ter." But the members of the partnership would be liable as copartners for all the debts of the company contracted previously to the act of incorpora- tion. Haslett V. Wotherspoon, 2 Rich. Eq. 395. See Whitwell v. Warner, 20 "Vermont, 425. 2 Griswold v. Waddingtoii, 16 John. 491, 492; Pothier, Traite du Cont. de Soc. No. 140-143 ; Perley C. J., in Fellows v. Wyman, 33 N. Hamp. S56, 357., = 16 John. 491, 4Sf2. * Pothier Traite'du Cont. de Soc. 140-143. CH. II.] DISSOLUTION OF THE CONTEACT. 113 Huberus, ■when speaking on this very point." In such cases a dissolution of the partnership would be presumed to have been in the contemplation of the parties on the occurrence of such events.^ § 116. We have spoken of the acts of a single partner as the cause of the dissolution of the whole society, and not merely of the cessation of that particular partner's interest. This seems to be the correct principle in cases where those events are not ex- pressly provided for. The words of the institute are, cum ali- quis renunciaverit societati, solvitur societm? Lord Eldon like- wise has assumed the existence of this principle in several of his judgments. His Lordship's reasoning in Peacock v. Peacock,^ where the partnership was dissolved at the will of one of two partners, warrants the inference -that a society of many similarly constituted would be dissolvable at the will of one of its members. Agam, in Crawshay v. Collins, Lord Eldon, with reference to the bankruptcy or death of one of many partners, observed, that the persons who had been in the partnership and remained sol- vent, or survived, " were not properly to be termed remaining or surviving partners; the destruction of one being, unless it was .otherwise provided for, a dissolution of the whole partnership." * •' See Story Partn. § 280, and Mumford v. M'Kay, 8 Wendell, 442. ^ In Howe V. Thayer, 17 Pick. 96, Shaw C. J. remarked: "When a business is carried on by three or more as partners, and one withdraws, or one is added, or both, and nqtice thereof is given, and the business is car- ried on as before, those, as to whom no notice is given, must be presumed to hold the same relation to the concern that they did before, and such change furnishes no presumption that the others have ceased to be partners. If the plaintiff knew that Colton had withdrawn and ceased to be a partner, it was not in law a notice to the plaintiff of the dissolution of the partnership, as to all its members, to the effect contended for, and to the purpose for which that proposition was advanced, namely, to exempt the other members from liability for after-made contracts ; or, if it was, in a certain sense, evi- dence and notice of the dissolution of the same identical partnership that existed before, it was at the same time evidence and notice of the formation of a new partnership among all the remaining members of the firm, to carry on the same business, holding the same relation to its customers and the public with the single exception implied by the fact that the retiring partner will no longer be liable for new contracts, and that the acceding partner will thenceforward become liable." ' 16 Ves. 49. And see D. Sir J. Copley, 3 Russ. 167. * 15 Ves. 228. "In Crawshay v. Collins, in Chancery, 25th July, 1808, L. C. said, ' The bankruptcy of one partner dissolved the partnership as to all, 10* 114 CONSTITUTIOlSr OF PARTNERSHIP. [BOOK I. And, consistently with this opinion, Lord Eldon on, another occa- sion decided, that where any number of persons exceeding two are united as partners, the death of one of them operates as a dissolution of the whole society, ■ unless provision is expressly made to the contrary.^ § 117. The Roman lawyers lay great stress on the doctrine just adverted to. The Digests abound in clauses showing that the death of one partner is the dissolution of the whole society.^ And the reason given by Pothier for this rule, arising as it does from the deleetm personce, by which each partner is supposed to be actuated on entering into the contract, is applicable not only to dissolution by death, but every species of dissolution. " La rai- son est que les qualites personnelles de chacun des assoeies entrent en considSration dans le contrat de societS ; je ne dois done pas eire oblige lorsqus I'un des mes associSs est mort, a demeurer en societe avec les autres, parce qu'il se pent faire que ce ne soit que par la considiration des qualitSs personnelles de celui qui est mort, que fai voulu contracter la societe." ^ § 118. The principle which has just been set forth, and which in general terms is no other than this, — that the dissolution of the society as to one partner is the dissolution as to all, — is one of considerable importance. It helps to mark out clearly the basis and boundary of all accounts which are to be taken between the partners. And although, for the purpose of winding up the concern, and fulfilling engagements which could not be fulfilled during its existence,* the partnership certainly subsists even after a dissolution, yet legally and strictly speaking, it subsists for those purposes alone.^ unless the solvent ones came to a new agreement ; ' but this was not the point of the cause." Cooke's MSS. ' Kinder v. Taylor, Gow Partn. 240; Story Eartn. § 317 ; ante, § 113. " Where several are partners, and one dies, Lord Eldon seems to treat the death of one as a dissolution of partnership as to the survivors. Crawshay V. Collins, 15 Ves. 228. The same in the case of the bankruptcy of one." Cooke's MSS. ° See them collected in Mr. Swanston's valuable note to Crawshay v. Maule, 1 Swanst. 509. ' Pothier Traite du Contrat de Socidtd, c. 8, s. 3, p. 141. And see Vinn. Comm. 634. * 15 Ves. 227. ' See Washburn w. Goodman, 17 Pick. 519, both as to the relations of CH. n.] DISSOLUTION OF THE CONTRACT. 115 § 119. A partnership for a term may be dissolved before the ■ expiration of the term, by the mutual consent of the parties ; ^ by the decree of a court of equity ; or by the bankruptcy, out- lawry, felony ,2 or death ^ of one or more of the partners.* It •will likewise be dissolved by the expiration of the term, or, in other words, by effluxion of time.^ But as the law has permitted survivors of a firm, and as to the mode of winding up the concern. So long as the objects named in the text remain to be accomplished, the part- nership may be considered as having a limited continua,nce. 3 Kent Com. 57. See also post, §§ 121, 546 ; jturray v. Mumford, 6 Cowen#441 ; Brews- ter V. Hardeman, I)udley (Geo.), 138; Parker v. Philips, 2 Gushing, 178, cited jiost, § 121, note. ' Story Partn. § 268 ; 3 Kent Com. 54. 2 See ante, § 114. ' Gow Partn. (3d ed.), 221 ; Crawford v. Hamilton, 3 Madd. 254 ; Schole- field V. Eichelberger, 7 Peters, 594 ; Washburn u. Goodman, 17 Pick. 519 ; Goodburn v. Stevens, 5 Gill, 1. * Williamson v. Wilson, 1 Bland, 414; Cape Sable Co.'s case, 3 Bland, 674. ° A question not alluded to in the text, but which has elicited considera- ble discussion in America, is whether one of the partners may by his mere act or will dissolve a partnership, formed for a stipulated period, before that period arrives. On this point, Mr. Justice Story remarks : " In cases where the partnership is by the agreement to endure for a limited period of time, the question, whether it may, within the period, be dis'solved by the mere act or will of one of the partners, without the consent of all the others, does not seem to be absolutely and definitively settled in our jurisprudence, although it would not seem upon principle to admit of any real doubt or difficulty." Story Partn. § 275. The learned judge then proceeds with a very forcible argument to show, that it would be inequitable and unjust to allow any partner, at his mere pleasure, to violate his engagement, and thereby jeopard, if not sacrifice, the whole objects of- the partnership. Ibid. In Pierpont u. Graham, 4 Wash. C. C. 234, it is remarked by Mr. Justice Washington : " Now it is perfectly clear, that one partner cannot, by with- drawing himself from the association before the period stipulated between the partners for its continuance, either dissolve the partnership, or extricate himself from the responsibilities of a partner, either in regard to his associ- ates or to third persons ; and if this be so, it would seem that he could not produce the same consequences by any other voluntary act of his own. This is not like those cases where, by the act of God, or by the operation of law, the partnership is dissolved, as by the death or bankruptcy of a part- ner." On the other hand, in Bishop v. Breckles, 1 Hoff'. Ch. R. 534, it was said that, " even where a period is prescribed for the duration of a partner- ship, it seems doubtful whether either party may not dissolve it upon due 116 CONSTITUTION OS PARTNERSHIP. [BOOK I tte partners to limit the duration of the contract, so it has allowed them, except in cases of bankruptcy^ or felony, to qualify the- notice. At any rate, very little can be required to justify the court in interfering; violent disputes and dissensions, which entirely prevent the beneficial effects of a connection, are sufficient." And in the case of Mar- quand v. New York Manuf. Co. 17 John. 525, it was held that the volun- tary assignment by one partner of all his interest in the concern dissolved the partnership, though it was stipulated in the articles that the partnership was to continue until two of the partners should demand a dissolution, and the other partners wished the business to be continued, notwithstanding the assignment.* In Skinner v. Dayton, 19 John. 538, it was maintained by Mr. Justice Piatt, that there was no such thing as -an indissoluble partnership. It was revocable in its own nature, and each party might, by giving due notice, dissolve the partnership as to all future capacity of the fii'm to bind him l)y contract ; and he had the same legal power, even though the parties had covenanted with each other that the partnership should continue for a certain period of time. The only consequence of such a revocation of the partnership power in the mean time would be, that the partner would sub- ject himself to a claim of damages for a breach of the covenant. See Cape Sable Co.'s case, 3 Bland, 674. Mr. Chancellor Kent says, in reference to this : " Such a power would seem to be implied in the capacity of a partner to interfere and dissent from a purchase or contract about to be made by his associates ; and the commentators on the Institutes lay down the princi- ple, as drawn from the civil law, that each partner has a power to dissolve the connection at any time, notwithstanding any convention to the contrary, and that the power results from the nature of the association. They hold every such convention null, and that it is for the public interest that no partner should be obliged to continue in such a partnership against his will, inasmuch as the community of goods in such a case engenders discord and litigation." 3 Kent Com. 55; Monroe v. Conner, 15 Maine, 180. See also Story Partn. § 270. Mr. Justice Story, however, says, that neither the Roman law, nor the foreign law founded upon it, in cases of a partnership for a limited period of time, properly considered, justifies or allows one partner to dissolve it at his mere pleasure within that period. On the con- trary, it annexes to the exercise of the right a positive condition, that it shall be for a just cause and under reasonable circumstances. " Moreover," he says, " this important qualification is annexed by the Koman law to the right of renunciation : that it is limited to cases where it is for the benefit, not of the particular partner, but of the partnership itself,, that it should be dissolved; otherwise it is deemed unseasonable." Story Partn. § 276. See • However it seems open to argument, that an agreement, " that, if any of the partners shall become bankrupt, the partnership shall nevertheless be continued, after allowance of his certificate,'' would be gopd. An agree- ment of this kind, though extk-aordinary, has been known. CH. n.] DISSOLUTION OF THE CONTRACT. 117 causes of its dissolution. For instance, in the case of the death of a partner, the partnership may nevertheless be continued be- yond the legal period of dissolution, in the hands of his children or representatives.! § 120. The partnership quoad third persolis, or in other words the liability of partners quoad third persons, cannot be dissolved without express notice to them, and to the world in general, that the partnership no longer exists.^ There is an exception to this rule in the case of a dormant partner. If the fact of his being in partnership be unknown to all the creditors of the firm, notice of his retirement is unnecessary ; if it be known to a few, notice to those few is sufficient.^ It may also be laid down, that, upon the death of a partner, notice of the dissolution to third persons is not necessary.* But in all other cases, they who are anxious to also, upon this point, Gow Partn. (3d ed.), 218, 219, 225, 226 ; 3 Kent Com. 61 ; Crawsh'ay v. Maule, 1 Swanst. 495 ; Peacock v. Peacock, 16 Ves. .56 ; Chavary v. Van Sommer, 3 Wooddes. Lect. 416; 1 Swanst. 512, note. So in Howell v. Harvey, 5 Ark. 281, it was said by the court, that " a partner- ship for a limited period of time cannot be dissolved at the mere pleasure of one of the parties wilhin the time prescribed. On the contrary, it can only be dissolved from just motives or for a reasonable cause.'' ' Ante, § 9, and cases in note at the end ; Story Partn. §§ 5, 196 ; 3 Kent Com. 56, 57, and note (e) ; Scholefield v. Eichelberger, 7 Peters, 594; Wil- liamson V. Wilson, 1 Bland, 424 ; Burwell v. Mandeville, 2 Howard (U. S.), 560. ' Lucas V. Bank of Darien, 2 Stewart, 280. A partnership once entered into is presumed to continue as to third persons until notice is given. Thurston u. Perkins, 7 Missouri, 29; Princeton & Kingston Turnp. Co. v. ^'Gulick, 1 Harr. 161. , ' Evans v. Drummond, 4 Esp. 89 ; Farran v. Defflinne, 1 Carr. & Kirwan, 580; Kell^y v. Hurlburt, 5 Cowen,.334; Grosvepor v. Lloyd, 1 Metcalf, 19 ; Heath V. Sansom, 4 Barn. & Adol. 177 ; Magill v. Merrie, 5 B. Monroe, 170. BuJ^ in the case of Kay v. Pollock, the Court of Session held that publica- tion of the dissolution of an anonymous partnership is necessary, if the part- nership be known to any one creditor. See 2 Bell Com. 652 ; 5 Cowen, 334. Eor more on this subject, see post, Book 3, chapter 3, sect. 3. * Story Partn. §§ 162, 336, 343 ; 3 Kent Com, 63 ; D. Lord Eldon, Vul- liamy u. Noble, 3 Mer. 614 : "I conceive that the death of a partner, of itself, works a dissolution of the partnership ; and 1 am not prepared to say, notwithstanding all I have read on the subject, that a deceased part- ner's estate becomes liable to the debts of the continuing partners, for want of notice of such a dissolution." D. Lord Thuriow, Webster f. Webster, 3 ' Swanst. 490, n. : " It is impossible that using the testator's name in the 118 CONSTITOTION OF PARTNERSHIP. [BOOK I. avoid fresh- liability in respect of the late copartnership must give notice of its dissolution. Even where one partner has committed an act of bankruptcy, although it will be injurious to the credit of the firm for the solvent partners to give notice of such an act, yet, if there be reason to apprehend that a fiat will be issued against him, it may be prudent to restrict his powers of nego- tiating the partnership securities, and to give notice to the world of such arrangement.^ What constitutes a valid notice is a point which will be considered in discussing the liabilities of a retiring partner.^ SECTION IIL THE EFFECT OF THE DISSOLUTION. § 121. The effect of a dissolution of partnership as between the partners themselves is to put an end to all transactions be- tween them as partners, except for the purpose of taking a general account and winding up the concern.^ It follows, that all leases held of an individual partner, during the continuance of the part- nership, by the members of the firm, as partners, are determined by the dissolution of the partnership ; and the lessor may enter without giving notice to quit.* As to third persons, the effect of a dissolution of partnership is to absolve the partners from all lia- trade can subject his name to the trade debts.'' See Washburn v. Good- man, 17 Pick. 519. ' See and consider Lacy v. Woolcott, 2 D. & R. 458 ; see Story Partn. § 336, note. But in cases of banltruptcy, duly declared by legal proceedings, no notice whatever is, necessary to be given to third persons, since the part- nership is thereby dissolved by operation of law. The bankrupt becomes incapable of acting for or binding the partnership by his acts from the time of the bankruptcy. Story, Partn. §§ 336, 337, 339 ; Gow Partn. (3d ed.), 304, 305, 306. 2 Post, Book 3, chap. 3, sect. 3. " Petriken v. Collier, 1 Barr (Penn.), 274. See 3 Kent Com. 62 et seq.; Story Partn. ch. 14. One partner after the dissolution of the partnership has no exclusive right to any part of the partnership funds, until the part- nership account has been adjusted, and a balance in his favor ascertained. Canfield v. Hard, 6'Conn. 180. * Doe V. Miles, 1 Stark. 181 ; Doe v. Bluck, 8 C. & P. 464, CH. n.] DISSOLUTION OF THE CONTRACT. 119 bility for future transactions, but not for the transactions of the partnership that is past.^ Therefore, a general dissolution of part- nership made between A. and B. does not operate to discharge A. from his responsibility for the subsequent conduct of B. in respect of the engagements of the partnership with third persons, made prior to the dissolution.^ ' Story Partn. ch. 15 ; 3 Kent Com, 62 et seq. In Parker v. Phillips, 2 Gushing, 1 75, the court were inclined to the opinion that after a formal dis- solution of a partnership, if there are partnership assets to be administered, and partnership debts remaining unpaid, the creditors of the partnership may institute proceedings in insolvency, in the cases and manner provided by law in Massachusetts, as if the partnership had not been dissolved. The effects of the dissolution are treated of more fully in the subsequent parts of this work. ' Ault V. Goodrich, 4 Kuss. 430 ; Story Partn. § 334. In a case where a vendor agreed to deliver the articles sold at a common warehouse of the purchasers who were partners, but they afterwards dissolved their partner- ship and ceased to have any common warehouse, and the vendor delivered the article at the private warehouse of one of them, who there accepted it, it was held, in an action against the purchasers for the price, that under such circumstances the place of delivery was immaterial. Cady v. Shep- herd, H Pick. 400. BOOK THE SECOND. OF THE MUTUAL EIGHTS OF PAETNEES. CHAPTER I. OF THE INTEKBST OE THE PARTNERS IN THE PARTNERSHIP STOCK. § 122. We shall direct our consideration, in the present chap- ter, to the interest of the partners as well in the real as in the movable property of the firm ; and we shall endeavor to examine first, the nature of the interest ; secondly, the distribution of the interest. SECTION I. OF THE UTATUKB OF THE INTEEEST. § 123. > In the words of Lord Hardwicke, " The partner^ them- selves are clearly joint tenants in the stock and all effects. , They are seized ^er my et per tout." ^ However, though they are joint tenants of all the partnership stock during their lives, yet, at least ' 1 Vez. 242. Dwinel v. Stone, 30 Maine, 386, per Shepley C. J., " One essential element of a partnership is a community of interest in the subject- matter of it. Tenet totum in communi et nihil separatim per se has been the keystone of the arch since the days of Bracton. From this arises the right of each partner to make contracts, incur liabilities, manage the whole busi- ness, and dispose' of the whole property of the partnership, for its purposes, in the same manner and with the same power, as all the partners could when acting together." CH. I.] PABTNBES' INTEREST IN THE STOCK. 121 in such part of it as is movable, there is no survivorship either at law or in equity.^ Lord Coke,^ in commenting upon a passage of Littleton, in which it is said that the right of survivorship shall hold between joint tenants of things personal as well as of things real, observes, that " an exception is to be made of two joint mer- chants ; for the wares, merchandises, debts, or duties that they have as joint merchants or partners, shall not survive, but shall go to the executors of him that deceaseth : and this fer legem mercatoriain, which is part of the laws of this realm, for the ad- vancement and continuance of commerce and trade, which is pro bono publico ; for the rule is, that jus accrescendi inter mercatores pro beneficio commercii locum non habet." § 124. It seems clear, that, at the time Lord Coke wrote, the distinction between merchants and traders in general had been fully established. It is probable, therefore, that in this passage he only referred to merchants properly so called, namely, those who export the native products and manufactures of the kingdom or her colonies to foreign climes, or import the commodities of different countries into this kingdom.^ But however this may be, Lord Keeper Harcourt observ.ed, that, in his time, the custom of merchants was extended to all traders, to exclude survivorship ; * and the custom so extended has ever since been contravened.^ ' 3 Kent Com. 36, 37; Story Partn. § 90. It was held in Lovejoy v. Bowers, 11 N. Hamp. 404, that one partner cannot sell or mortgage his undivided interest in a specific part of the property belonging to the part- nership. 2 Co. Litt. 182, a. See likewise, 1 Roll. Abr. C. ; Com. Dig. tit. Mer- chant, (D.) ' Beawes, 31. * Jeffereys ;;. Small, iVern. 217. There must be some mistake in the report of Newell v. Townsend, 6 Sim. 420. See Jackson v. Jackson, 9 Ves, (Sumner's ed.), 596, 597 ; Story Partn. § 90 ; 3 Kent Com. 36, 37. ' Buckley v. Barber, 15 Jur. 63 ; s. c. 6 Exch. 164. The rule y«s accre- scendi inter mercatores locum non habet, applies to prevent a right of survi- vorship in partnership chattels, id. The rule extends to manufacturers, and likewise to trade fixtures. Id. Surviving partners have no jus disponendi in the partnership property, so as to enable them to mortgage the share of the deceased partner, together with their own, as a security for a debt prin- cipally due from the surviving partners, and in part only from the deceased, and in order to enable them to continue their trade. Id. See Year-Books, 38 Edw. 3, 7, tit. " Accompt." 11 122 MUTUAL RIGHTS OF PARTNERS. [BOOK II. § 126. It may be laid down as a general principle, that each of the partners has a specific lien on the partnership stock,^ not only for the amount of his share, but for moneys advanced by him beyond that amount for the use of the copartnership, as also for moneys abstracted by his copartner beyond the amount of his share.^ In the words of Lord Hardwicke, — "When an account is to be taken, each is entitled to be allowed against the other ' This lien only extends to the property of the firm, and to the separate interest of each partner in such property. In those cases, therefore, where there is a partnership in profits only, but that which produces those profits belongs exclusively to one of the partners, the lien of the others is confined to the profits and does not extend to that which produces them. Sue Kay V. Johnston, 21 Beavan, 536 ; Green v. Briggs, 6 Hare, 395 ; Alexander v. Simms, 18 Beavan, 80 ; 5 De G. M. & G. 57 ; Lindsay v. Gibbs, 22 Beavan, 522 ; Ex parte Gemmel, 3 M. D. & D. 198. "' Westw. Skip, 1 Vez. 142; Ex parte RufBn, 6 Ves. 119, Sumner's ed. note, a.; Story Partn. §§ 97, 326, 441; 3 Kent Com. 65; Conwell v. Sandidge, 8 Dana, 278 ; Ex parte Williams, 11 Ves. 5 ; Holderness v. Shackles, 8 Barn. & Cress. 612; Hodges v. Holman, 1 Dana, 53; Pierce V. Tiernan, 10 Gill & Johns. 253 ; Hoxie v. Carr, 1 Sumner, 181 ; 1 Story Eq. Jurisp. § 675 ; Commercial Bank v. Wilkins, 9 Greenl. 28 ; Murray v. Murray, 5 Johns. Ch. 60; Woodrop w. Ward, 3 Desaus. 203; Sumner v. Hampson, 8 Ohio, 328 ; Bradford v. Kimberley, 3 John. Ch. 431 ; Ridgely V. Carey, 4 Harr. & M'Hen. 167 ; Payne v. Matthews, 6 Paige, 19 ; Pearson V. Keedy, 6 B. Monroe, 128 ; Black v. Bush, 7 B. Monroe, 210; Donelson v. Posey, 13 Alabama, 752. This lien attaches upon real estate held for part- nership purposes, as well as upon personal estate. Dyer v. Clark, 5 Metcalf, 562, 577-579; Howard u. Priest, 5 Metcalf, 585; and is coextensive with the transactions on joint account. Hodges v. Holman, 1 Dana, 58. See Houston!). Stanton, 11 Alabama, 412; Boyers v. Elliott, 7 Humph. 204; Talbot V. Pierce, 14 B. Monroe, 195. The right of partnership creditors to claim a preference over the creditors of the individual members of the firm, in the distribution of the partnership property, is wholly dependent upon the right of the individual partners to enforce a lien upon the partnership funds for the payment of the partnership liabilities, before individual debts. Rice V. Barnard, 20 Vermont, 479. See Tillinghast v. Champlin, 4 Rhode I. 173 ; Bigelow J., in Howe v. Lawrence, 9 Cushing, 558. But where one of two partners sells out his interest in the partnership to his copartner, his lien upon the partnership property to have the partnership debts paid out of it, is gone, and there is no partnership property left. Ladd v. Griswold, 4 Gilman, 25; Reese v. Bradford, 13 Alabama, 837; 1 Lindley Partn. 580; Stuart V. Ferguson, Hayes, Irish Ex. 452 ; Lingen u. Simpson, 1 Sim. & Stu. 600 ; Re Langmead's Trusts, 7 De G. M. & G. 253 ; Holroyd v. Griffiths, 3 Drew. 428. CH. I.] PAKTNBKS' INTEREST IN THE STOCK. 123 every thing he has advanced or brought in as a partnership trans- action, and to charge the other in the account with what the other has not brought in, or has taken out more than he ought ; and nothing is to be considered his share hut the proportion of the resi- due on the balance of the account." ^ § 126. It follows from this principle, that, if a partner take the whole or any part of his share out of the partnership stock, the stock so taken, if identified, is applicable to the payment of what, upon an account taken, shall be found to be due from him to the partnership before it can be applied to the payment of his separate creditors, even though they be creditors by specialty .^ § 127. So, also, the partners' lien upon the partnership stock is not considered as appropriated to the stock brought in, but to every thing coming in heu during the continuance or after the de- termination of the partnership?^ To illustrate the latter part of this position : if the partnership between two partners be deter- mined as to certain of their goods, by an execution levied on those goods by the separate creditors of one partner, and the creditors ' See 3 Kent Com. 37 ; Dyer v. Clark, 5 Metealf, 575 ; NichoU v. Mumford, 4 Johns. Ch. 525 ; Taylor v. Fields, 4 Ves. (Sumner's ed.), 396, note ; Kodriquez v. Heffernan, 5 John. Ch. 428 ; Greene v. Greene, 1 Ohio, 535 ; Smith v. Edwards, 7 Humph. 106 ; Matlock v. Matlock, 5 Ind. (Por- ter), 404 ; Howe v. Lawrence, 9 Cashing, 558. While the purchaser of a share of a partner takes that share subject to the liens of the other partners, a person who honajide purchases specific chattels belonging to the firm from one partner, acquires a good title to such chattels, whatever liens the other partners may have had on them prior to their sale. See Re Langmead's Trusts, 20 Beavan, 20 ; 7 De G., M. & G. 253 ; 1 Lindley Partn. 578, 579. ' Croft V. Pyke, 3 P. W. 180. ' Per Lord Hardwicke, West v. Skip, 1 Vez. 244 ; Stocken v. Dawson, 9 Beavan, 239; 1 Lindley Partn. 576,577. See Bucknal v. Eoiston, Pree. Cha. 285. The lien of a partner on the partnership efiects arises on a bal- ance due him on the partnership accounts occurring after as well as before a dissolution. Hodges v. Holnian, 1 Dana, 50. But after a partnership has been dissolved, the lien is confined to what was partnership property at the time of the dissolution, and does not extend to what may have been subse- quently acquired by the persons who continue to carry on the business. In this respect the lien in question differs from the lien of a mortgagee on a varying stock-in-trade assigned to him as a security for his loan. Payne v. Hornby, 25 Beavan, 280; Nerot v. Burnard, 4 Russ. 247 ; 2 Bli. N. s. 215. But see Skipp v. Harwood, 2 Swanst. 588, note, contra. See 1 Lindley Partn. 578. 124 MUTUAL RIGHTS OF PAKTIfBRS. [bOOK II. trade witli these goods, and out of the proceeds thereof purchase other goods for the purposes of their trade, the lien of the solvent partner attaches on the newly-purchased goods. In the case of Skipp V. Harwood,^ Messrs. Harwood & Skipp were partners in the trade of a brewer ; and Harwood, being justly indebted to his sisters, gave them a warra-nt of attorney to confess judgment, for securing the debt. The sisters enter up judgment, and by execu- tion sued out thereon the sheriff takes the separate effects of Har- wood, and also one moiety of the partnership goods which (at the time of the seizure) were in Harwood's custody, and delivers back a moiety thereof to the other partner ; and the sisters suffer Har- wood still to keep the goods taken in execution, and to trade with them ; the judgment being given by him to his sisters, to protect his goods against other creditors. The solvent partner having filed his bill for an account. Lord Hardwicke, in giving judgment, said : " I shall consider the sisters as partners with Skipp, and Harwood as their agent, and shall make them parties to the ac- count. It is no objection that the goods taken in execution have been since frequently changed, for the specific lien which the other partner had on those goods devolves on those which have been taken in the place thereof, and always continues. And so it is in the case of a mortgage of stock and goods in trade ; for in such case, if the lien was to faU on the goods in trade when the mortgage was made, and not on those taken afterwards, the trade must stop." § 128. The same principles are well illustrated by the American case of Ridgley v. Carey.^ Two persons entered into partnership in a trading voyage to the West Indies ; the return cargo was sold, and notes were taken from the purchasers in the name of one of the partners, who afterwards died. Upon a bill filed by the surviving partner, it was decreed that the executor of the de- ceased partner should pay to the surviving partner his proportion of the money received or to be received on the notes, notwith- standing the deceased might not have left assets sufficient to pay his own private debts. § 129. From what has been already observed as to the want of • 2 Swanst. 586 . See the observations on this case in Cory on Mercan- tile Accounts, chap. 5. " Harr. & M'Hen. 167. CH. I.] PAETNBRS' INTEREST IN THE STOCK. 125 suryivorsMp among partners, it follows, that, upon the decease of one of several partners, his share of the movable stock and effects of the partnership, subject to the partnership debts, devolves to his personal representatives, who thereupon become, both at law and in equity, tenants in common with the surviving partners.^ Although, for the purpose of encouraging trade, it is held that the harsh doctrine of the jus accrescendi, which is an incident of joint tenancy at the common law, does not apply to the partnership property, yet on the decease of one of the partners, as the sur- viving partner stands chargeable with the whole of the partnership debts, the interest of the partners in the partnership property shall be deemed so far a joint tenancy as to enable the surviving partner to take the property by survivorship, for all purposes of holding and administering the estate, until the effects are reduced to money and the debts are paid.^ When the debts are all paid, ' 3 Kent Com. 37 ; Story Partn. § 346 ; Gow Partn. (3d ed.), 351 ; Shad V,. Puller, K. M. Charlt. 501 ; Buckley v. Barber, 15 Jur. 63 ; s. c. 6 Exck 164, cited ante, § 124, note ; Year-Books, 38 Edw- 3, 7, tit. " Accompt," "^ Dyer w. Clark, 5 Metcalf, 576; Burnside v. Merrick, 4 Metcalf, 540; Howard v. Priest, 5 Metcalf, 585 ; Egbert v. Woods, 3 Paige, 517 ; Barney K.Smith, 4 Harr. & John. 485 ; Jones t;. Hardesty, 10 Gill & John. 404; Murray v. Mumford, 6 Cowen, 541 ; Knox v. Schepler, 2 Hill (S. C), 595 ; 3 Kent Com. 63, 64 ; Story Partn. § 346 ; Shad v. Fuller, R. M. Charlt. 501; Case v. Abeel, 1 Paige, 393; Connor v. Allen, 1 Harrington, Ch., (Mich.), 376 ; Alexander v. Coulter, 2 Serg. & E. 494 ; Deveau v. Fowler, 2 Paige, 400; Waddington u. Bredenburg, 2 John. Cas. 227; Florida Terri- tory V. Redding, 1 Branch, 242 ; Dwinel v. Stone, 30 Maine, 386 ; Andrews V. Brown, 21 Alabama, 437. The debts must be collected in the name of the surviving partner. The right of action in reference to all partnership demands vests exclusively in him. Murray v. Mumford, 6 Cowen, 441 ; Story Partn. § 346 ; 3 Kent Com. 37 ; Burnside v. Merrick, 4 Metcalf, 540. If, after dissolution inter vivos, the ehoses in action are left with one partner for collection, and he dies, the title does not vest in his administrator, but in the surviving partner. Kinsler v. McCants, 4 Rich. 46. In Louisiana, the surviving partner does not possess the right, until he is authorized by the Court of Probates, to sue alone for or receive partnership debts. Flower v. O'Connor, 7 Louisiana R 194; Connelly v. Cheevers, 16 Curry (Louis.), 30. Whether a dormant partner would have the right to take possession of the partnership effects and settle the partnership concern, upon the death of the active partner, qucere Johnson v. Ames, 6 Pick. 330. See Beach v. Hayward, 10 Ohio, 455, cited post, § 666, note. The power of a surviving partner to hold and dispose of the partnership property, has been discussed 11* 126 M0TUAL EIGHTS OE PARTNEES. [bOOK II. * the effects of the partnership reduced to money, and the purposes of the partnership accomplished, the surviving partner shall be held to account with the representatives of the deceased for his just share of the partnership funds. ^ § 130. From the change that takes place in the nature of the interest of the several parties concerned, it is obvious that upon^ by Parke B., in the late case of Buckley v. Barber, 15 Jur. 63 ; s. c. 6 Exeh. 164, at considerable length, and he remarked, that "there is no clear, satisfactory authority, that the surviving partner has a power, by virtue of the partnership relation- only, to transfer the legal title to the share, belong- ing to the executors of the deceased, to a third person, leaving the execu- tors to pursue their remedy against the survivor, if the authority is improp- erly exercised." " We doubt," he adds, " whether surviving partners have a power to sell, and give a good legal title to the share belonging to the executors of the deceased partner, when they sell in order to pay the debts of the deceased and of themselves, but, be that as it may, we think it clear, that the survivors could have no power to dispose of it otherwise than to pay such debts, certainly not to mortgage that share together with their own as a security for a debt principally due from the surviving partners, *and in part only from the deceased, and in order to enable them to continue their trade.'' See Anderson v. Tompkins, 1 Brock. 456 ; 1 Lindley Partn. 564, 566. > Murray v. Mumford, 6 Cowen, 441 ; Dyer v. Clark, 5 Metoalf, 576 ; -3 Kent Com. 37 ; Story Partn. § 346 ; Daniel J., in Proctor v. Poole, 4 Dev. (N. C), 369 ; Case v. Abeel, 1 Paige, 393. And the representatives of the de- ceased partner are, under ordinary circumstances, the only persons entitled to require an account from the surviving partners ; and of this right they do not divest themselves by a sale and assignment of the share of the deceased ;, for the effect of such sale and assignment is only to make the representa- tives trustees for the purchaser. Clegg v. Pishwick, 1 Mac. & G. 294 ; Stainton v. The Carron Company, 18 Beavan, 146 ; 1 Lindley Partn. 887. See Alsager v. Rowley, 6 Vesoy, 748; Saunders w. Druco, 3 Drew. 140. In a suit for such an account, it is the common course to direct an inquiry what is due to the estate of the deceased, in respect of such share.. As in McDonald v. Richardson, 1 Giff. 81. In a suit of this character, however, the surviving partners can only be treated as witnesses. 2 Lindley Partn. 888. If there be any mismanagement or improper conduct on the part of the surviving partner in reference to the partnership funds, a court of equity will interpose and restrain it by injunction, and will even appoint a receiver upon the application of the representatives of the deceased. Uig- ginson v. Air, 1 Desaus. 429 ; Madgwick v. Wimble, 6 Beavan, 495; Gbw Partn; (3d ed.), 231, 232_; Story Partn. § 344; Connor v. Allen, 1 Walk. Ch. (Mich.), 371 ; Hartz v. Schrader, 8 Ves. 317 ; Evans v. Evans, 9 Paige, 178 ; 3 Kent Com. 63. See Shad v. Fuller, R. M. Charlt, 501. CH. I.] partners' interest in the stock, 127 the death of a partner, the law contemplates an entire cessation of the partnership trade.^ As to the surviving partner, "he only," as Sir Anthony Hart observed, " deals with the effects finally, ex necessitate, and. rather in the charapter of a trustee. If he continues the trade, it is at his own risk, liable to the option of accounting for profits, or being charged with interest on the deceased partner's share of the surplus." ^ On the other hand, it is equally evident, not only from the consideration just ad- verted to, but from the principles which have been elsewhere dis- cussed,^ that the executors of the deceased partner cannot insist upon carrying on the business in partnership with the surviving partners. § 131. ; These operations of law are, generally speaking, guarded against by the partnership articles; but on all points on which the articles are silent or imperfect in their provisions, it is absolutely necessary for the executoirs and surviving partners, unless the parties interested are all sui juris, to adhere in their arrangements to the general rules of law ; and, where it is imprac- ticable for them to do so, they must resort to the assistance of a court of equity. Where the surviving partners are themselves the executors of the deceased partner, it is obvious that no acts performed by them in those inconsistent characters, unless ex- pressly warranted by the partnership articles, can be binding on persons not sui juris. ^ § 132. Where persons take personal property for the purposes of trade, under a will, which constitutes them joint tenants, and they enter into possession of such property, and continue for a length of time to trade with it in copartnership, a court of equity will, upon the death of one of them, presume a severance of the joint tenancy. In such case, therefore, not only the deceased partner's share of the profits, but such proportion of the bulk of the partnership property as produced h^s share of the profits, will descend to tis personal representatives. In Jackson v. Jackson,^ a ' See Bank of Port Gibson v. Baugh, 9 Smedes & Marsh. 290. '^See Booth v. Parks, 1 Mulloy, 465 ; Story Partn. § 343 ; 's Kent Com. 64; Sigourney v. Munn, 7 Conn. 11. * Ante, §§ 8-10. * Wedderburn v. Wedderbum, 4 Myl. & Cr. 45 ; Townend v. Townend, 1 Giflf. 201. See McDonald v. Richardson, 1 Giff. 81. 5 7 Ves. 535 ; 9 Ves. 591 ; 2 Hov. Supp. 66. 128 MUTUAL RIGHTS OF PARTNERS. [BOOK II. testator gave and devised all his residuary estate, consisting both of real and personal property, used for the purposes of trade, to trustees, upon trust to pay an annuity to his wife and certain legar cies to his daughters ; and, after payment of the legacies, he directed all the residue and remainder of the said trust estates to go and to be unto and for the only use and behoof of his said two sons, and the survivor of them, their or his heirs, executors, ad- ministrators, and assigns forever, according to the several and respective natures and tenures of such estates, and to and for no other use, intent, and purpose whatsoever ; to take and hold his said real estates, and every part thereof, in case his said two sons should both survive him, as tenants in common, and not as joint tenants ; and he appointed the trustees his executors. There was nothing in the will of the testator showing any intention that the joint tenancy in the personalty should be continued. Upon his death the, sons carried on the business as partners, on the premises, until the death of one of them, which happened twelve years after the death of the testator. The survivor of the sons then insisted that he was entitled to the residue of the personal estate of the testator, as nothing had been done to sever the joint tenancy ; and Sir William Grant allowed his claim. But, upon appeal to Lord Bldon, Sir William Grant's decree, so far as it related to this point, was reversed. " Supposing,"^said his Lordship, " there was no special words in this residuary clause, it is clear that where a residue of personal estate, consisting of a great variety of particulars, and especially if none of them are property in trade, is left to two persons, their executors, administrators, and assigns, the effect is a joint tenancy. But it is to be considered what would be the case of a bequest, acted upon ; the subject simply property in trade. Now, in Hall v. Digby,i it was agreed that actual dealing in partnership with effects left to two jointly, with intent that it should be • dealing in partnership, though they had taken under the will as joint tenants, yet, having once begun to act with the property as merchants, would sever the joint ten- ancy, unless the will contained something that would clothe the property, though engaged in trade, with the quality of joint ten- ancy. In this case, it is extremely clear, that, unless there are specialties in his wiU, the residuary clause passed the property to • 4 Bro. P. C. 224. ' CH. I.] PARTNERS' INTEREST IN THE STOCK. 129 these brothers as joint tenants ; and, attending both to the words of the residuary clause, and all the passages in the -will having relation to equal divisions or survivorship in the various events, I am not satisfied that I can hold upon the will itself, and indepen- dent of the nature of the property and the' dealings of the parties, that this was a tenancy in common. The question, then, is, whether there is any purpose or scheme in the will, which shotild, as between themselves, not with reference to third persons, deprive them of the power of severing that which they had taken as joint tenants. Now, I am of opinion that the testator did not intend to determine, ultra the necessity of holding the property hable to the annuity and the legacies, in what nature and quahty they should hold* as between themselves, or to shut out the possibility of their deahng with that property, as other persons might, for their own benefit, taking originally as joint tenants. Salvis the annuitant and the legatees, there is no trust which it was not com- petent to these two persons, affecting only their own interests, to alter as they thought proper, with reference to the nature and quality of their own interests. Entering into partnership, dealing without the superintendence of the trustees, their various transac- tions afford decisive evidence, which it would be too dangerous to permit one to contradict after the death of the other, that they meant to be considered tenants in common of the interest they took in the trading part of their father's concern. My opinion, therefore, is, that, under .all the circumstances of this case, the two sons of the testator are to be considered as tenants in common of his property, embarked in trade from the time they were let into possession, including as well the capital as the profits ; for, though there may be cases of distinction between them, the course of dealing for so many years ought to be taken as evidence that they meant to sever the joint tenancy as to both. The decree must therefore be altered accordingly."^ Although, upon the death of one partner, his interest in the stock does not survive to the other, yet his right of action survives, as will appear more fully in a subsequent book.^ ' Story Partn. § 90. ' Martin v. Crompe, 1 Ld. Eaym. 340. The right of a partner to com- mence suits for the purpose of collecting debts due to the partnership, is an incident to that relation, which survives the dissolution, and is inherent in either partner. "Ward v. Barber, 1 E. D. Smith (N. Y.), 423. 130 MUTUAL KlfiHTS OF PARTNERS. [bOOK II. § 133. Where partners purbhase real estate for the purposes of the partnership, it is usually conveyed to them as tenants in com- mon. Therefore, upon the decease of one of several partners, to whom land has been so conveyed, the legal estate in such partner's share will descend to his heir, who will be tenant in common with the surviving partners. In this case, if, under all circumstances, it appear that the heir is to have a beneficial interest, the widow of the deceased partner will be entitled to dower.^ § 134. Where lands are conveyed to certain persons, as J&int tenants, for the purposes of a trade or an adventure, in equity there will be no survivorship in such property, notwithstanding the form of the conveyance. Where, therefore. A., B., C, D., and E., had undertaken to drain certain overflowed lands, %nd accord- ingly the same were conveyed, by direction of the commissioners of sewers, to them and their heirs, it was held that in equity they were tenants in common of these lands ; and further, that, four out of the five having purchased additional lands for the same purposes, and the fifth having died, the son of the latter was a ten- ant in common in equity of those after-purchased lands upon pay- ment of his share of the purchase-money, with interest from the time the money ought to have been paid.^ In the case of Morris V. Barrett,^ in the Exchequer, the principles of this decision were ' Bell V. Phyn, 7 Ves. 453. The report omits to state, as was the fact, that Shand conveyed two thirds of the estate to Phyn, Ellis, and Inglis, their heirs, &o. To hold to them, their heirs, &c., as tenants in common. Lib. Reg. 1801, A. fol. 955. As to the right of the widow to dower in the real estate belonging to a partnership, see Dyer v. Clark, 5 Metcalf, 578, 579; Richardson v. Wyatt, 2Desaus. 471 ; Pierce v. Trigg, 10 Leigh, 406 ; Sumner v. Hampson, 8 Ohio, 328 ; all of which cases are cited and the points stated, post, § 156, and notes. " Lake v. Craddock, 3 P. W. 158 ; Sug. V. & P. 619; s. c. nom. Lake v. Gibson, 1 Eq. Ca. Abr. 291 ; where the Master of the Rolls says : " When the proportions of the money are not equal, and this appears in the deed itself, this makes them (i. e. the joint purchasers) in the nature of partners ; and however the legal estate may survive, yet the survivor shall be consid- ered but as a trustee for the other, in proportion to the sums advanced by each of them.'' ' 3 y. & J. 384. It is to be regretted that the grounds of the Lord Chief Baron's judgment do not appear in the report. It is said, arguendo, by the counsel for the surviving brother, that no case can be cited in which real estate devised has been converted from an estate in joint tenancy to a ten- ancy in common. This may be correct, but qucere as to the observations which follow, relating to the case of Jeffereys v. Small. CH. I.] partners' intbeest in the stock. 131 fully admitted ; but the peculiar circumstances of the case seem to have prevented their being acted upon to the utmost extent. A testator devised the residue of his real and personal estates to his two sons as joint tenants. The two sons, after their father's death, and during the period of twenty years, carried on the busi- ness of farmers with such estate, and kept the moneys- arising therefrom in one common stock, and with part of such moneys purchased other estates in the name of one of them, but never in any manner entered into any agreement respecting the farming business, nor even accounted with each other. Alexander C. B., held that, at the death of one of them, they were joint tenants of all the property that passed by the will of their father, but were tenants in common of the after-purchased lands. § 135. The rules and principles by which partners hold real estate, purchased by them with partnership funds and for partner- ship purposes, have been considerably discussed in America, and various decisions have been made upon the subject. Several late decisions in Massachusetts have established the doctrine for that State, that when real estate is purchased by partners, with the partnership funds, for partnership use and convenience, al- though it is conveyed to them in such a manner as to make them tenants in common, yet, in the absence of an express agreement, or of circumstances, showing an intent that such estate shall be held for their separate use, it will be considered and treated, in equity, as vesting in them in their partnership capacity, clothed with an implied trust that they shall hold it until the purposes for which it was so purchased shall be accomplished, and that it shall be applied, if necessary, to the payment of the partnership debts. Upon the dissolution of the partnership, by the death of one of the partners, the survivor has an equitable lien on such real estate for his indemnity against the debts of the firm, and for securing the balance that may be due to him from the deceased partner, on settlement of the partnership accounts between them ; and the widow and heirs of such deceased partner have no beneificial interest in such real estates, nor in the rent received therefrom after his death, until the surviving partner is so indem- nified. Such was the decision in Dyer v. Clark.^ In Howard V. Priest,^ Shaw C. J., in giving the opinion of the court, said: ' 5 Metcalf, 562. 5 Metcalf, 582, 585. 132 MDTUAL EIGHTS OE PARTNERS. [BOOK II. " We are of opinion, that the conclusion to which the authorities lead is,, that real estate purchased out of partnership funds, to be used and applied to partnership purposes, and considered and treated by the partners as part of the partnership stock, is to be deemed and considered, so far as the legal title is in question, as estate held in common, and not in joint tenancy ; but as to the beneficial interest, it is held in trust, each holding his property in trust for the partnership, until the partnership account is settled and the partnership debts are paid. It is a trust arising from the actual or imphed agreement of the parties, and from the mutual relation in which they stand to each other. It shall not be con- sidered a joint tenancy at law, because it would be contrary to the pohcy of the law, by giving a jus aecrescendi at common law, in case of survivorship, when no such intent or purpose can be presumed. The rule of holding it a trust estate, in regard to partners, is founded on the .equity of the surviving partner, who, being made chargeable with all the debts of the firm, ought to have the control of all the partnership property, as assets, first, for the payment of the debts of the firm ; and, secondly, for the restoration tO himself, on settlement of the partnership ac- count, of that part of the capital which has been contributed by him to the common stock. The true and actual interest of each partner in the common stock is the balance found due to him after the payment of the debts and the adjustment of the partner- ship account. There seems to be no reason in equity, why this first distribution of the common stock should be defeated, be- cause, by mutual agreement, the partners, for their own use and convenience, have invested a part of that common stock in real estate. And as the widow and heirs can claim only in right of the husband and father, such derivative right, in equity, will extend no further in behalf of the wife and children than that of the partner from whom it was derived." The same subject was discussed in Bumside v. Merrick,^ and the same doctrines were there maintained. In Hoxie v. Carr,^ Mr. Justice Story remarked: "A question often arises, whether real estate, .pur- chased for a partnership, is to be deemed for all purposes per- ' 4 Metcalf, 527; and see also, Fall River Whaling Co. v. Borden, 10 Gushing, 458. 2 1 Sumner, 173, 182, 183. CH. I.] partners' interest in the stock. 133 sonal estate like other effects. That it is so, as to the payment of partnership debts, and the adjustment of partnership rights, and -winding up the partnership concerns, is clear, at least in the view of a court of equity." " In cases where the real estate is purchased for partnership purposes, and on partnership account, it is wholly immaterial, in the view of a court of equity, in whose name or names the purchase is made, whether of one partner or all ; whether in the name of a stranger, or of one of the firm. In either case, let the legal title be vested in whom it may, it is in equity deemed partnership property, and the partners are the cestuis que trust?- A court of law may, nay, must, view it, in general, only according to the legal title." ^ The doctrine, that real estate acquired with partnership funds, for partnership pur- poses, will be regarded in equity as partnership stock, was fully asserted in Connecticut, in Sigoumey v. Munn.^ The same was held in Virginia, in Pierce v. Trigg.* The principles declared in the above American cases are founded in sound policy and obvious justice, and the correctness of them appears to be iacontestable.^ ^ See Storj' Partn. §§ 92, 93 ; McGuii-e v. Eamsay, 4 Eng. 518. In Bea- man v. Whitney, 20 Maine, 413, a conveyance of real estate was made to a company, and the grantees named in the deed were " Whitney, Watson & Co.," the name under which they conducted their business. Whitney and Watson were persons well known, and members of the company. The court held, that if the other persons, embraced under the general term com- pany, could not take as grantees, Whitney and Watson could, and they would hold for themselves and those associated with them. " And, therefore, it is to be considered at law as the several property of the individual partners and liable to be levied on for their separate debts ; but if so taken, it will be held by the creditor in trust, to be applied, so far as may be necessary, to the payment of the partnership debts. Peck o. Fisher, 7 Gushing, 386. * 7 Conn. 11. See Donaldson v. Cape Fear Bank, 1 Dev. Eq. 103. * 10 Leigh, 406. * There are many other American cases in which decisions have been made upon this subject". But, with very few exceptions, they do not essen- tially vary from the doctrines asserted in the text. In Winslow v. Chiffelle, 1 Harper (S. C), Eq. 25, it was decided, that lands held and used by part- ners in the business of a mill were partnership property, and subject to be applied, like other partnership property, to the payment of partnership debts, in preference to the claims of separate creditors. So in Divine v. Mitchum, 4 B. Monroe, 489. See Hewett v. Sturdevant, id. 459. So also in Martin v. Trumbull, 1 Wright (Ohio), 386, real estate, purchased and 12 134 MUTUAL EIGHTS OF PARTNERS. [bOOK II. The cases are by no means inconsistent Tvith ttese principles, when they admit, upon grounds of reason and policy, that real held as partnership property, was held to be subject to the debts of the firm, in preference to the debt of an individual member of it, the creditor having notice. In Thayer v. Lane, 1 Walker (Mich.), 203, this subject was con- sidered, and the Chancellor (Manning) there said : " I think there can be no doubt, that, as between the partners themselves, real estate, purchased by them 'with partnership effects is partnership property, and, on the disso- lution of the firm, should be divided as such, each taking that interest in it which he has in the personal property of the partnership ; unless, at the time of making the purchase, it was understood to be an individual, and not a partnership transaction.'' This was the case of a bill for partition of the land. See also Pugh v. Currie, 5 Ala. (n. s.), 446. This subject was very fully discussed by Tucker, President of the Court of Appeals in Virginia, in Pierce v. Trigg, 10 Leigh, 406, cited and stated post, § 156, in note. In Bdrd v. Baird, 1 Dev. & Bat. Eq. 524, it was held that a bill for par- tition of lands purchased with partnership funds, upon the ground of their being held in common, or in joint tenancy simply, could not be sustained, upon the principle, that there can be no division of the partnership property until the accounts of the partnership have been taken, and the clear inter- est of each partner ascertained. But see Collins v. Dickinson, 1 Hayw. 240. Mr. Justice Story, in his work on Partnership, § 93, states the doctrine thus : " So far as the partners and their creditors are concerned, real estate belonging to the partnership is in equity treated as mere personalty, and governed by the general doctrines of the latter." So held, also, in Del- monico v. Guillaume,, 2 Sandford, Ch. 366. But in Smith v.- Jackson, 2 Edw. 28, the Vice-Chancellor of New York reviewed all the decisions on this subject, and he held, that, though partners purchase real estate with joint funds, there is no survivorship as to the real estate, and the share of a deceased partner, as a tenant in common, descends to his heir, unless it is agreed by the partners themselves to consider it as personalty, and then the agreement works to the change. If a purchase of real estate is made, and a conveyance taken to partners as tenants in common, without any agree- ment to consider it as stock, though it be paid for out of their joint funds and used for their partnership purposes, it will be deemed real estate ; it will not be considered partnership property, liable to partnership debts, by the mere taking the deed in the joint name of the partners. It must be done by some express act or understanding ; and he'even held the wife of a deceased partner entitled to dower in the partnership share of her deceased husband. Mr. Chancellor Kent (3 Kent Com. 39, note), observed upon this: "The decisions on this side of the question appear to me to be a sacrifice of a principle of policy, and, above all, a principle of justice, to a technical rule of doubtful authority. There is no need of any other agree- ment than that the law will necessarily imply from the fact of the invest- ment of parljiership funds, by the firm, in real estate, for partnership pur- CH. I.] partners' interest in the stock. 135 estate acquired -with partnership ftends and held by partners in common may be conveyed or charged by one partner, on his poses. If the partners mean to deal honestly, they cannot have any other intention than the appropriation of the investment if wanted to pay the partnership debts." In Blake v. Nutter, 19 Mainej 16, the rule at law in reference to real estate pilrchased with partnership funds for partnership purposes, and so used and enjoyed, was held to render the members of the firm tenants in eotnmort. And it was further held, that the superior rights of the partner- ship crfedittirs over the creditors of the individual partners does hot apply at common law to real estate thus purchased. As to the rule in equity in such case, no opinion was expressed. See Smith v. Jones, 3 Fairf 337. In Coles V. Coles, 15 John. 161, the Supreme Court of New York declared that the principles and rules of law applicable to partnerships, and which govern and regulate the dispoation of partnership property, did not apply to real estate, and that in the absence of special covenants between the parties, real estate owned by partners was to be considered and treated as such, without any reference to the partnership. Buchan v. Sumner, 2 Barbour, Ch. 165. The case of Goodwin v. Richardson, 11 Mass. 469, has been much relied upon as maintaining substantially the same doctrine. But Shaw C. J., in Dyer v. Clarke, 5 MetCalf, 580, remarking upoii this case, said : " The court," in Goodwin v. Richardson, "were dealing solely with a question of law in determining a legal estate, and intimate that a court of equity might make joint real estate applicable, as personal, to the -payment of partner- ship debts. We consider, therefore, that that decision is not opposed to the decision, upon equitable principles, to which we now propose to come." See Peck V. Fisher, 7 Gushing, 386. Mr. Justice Story, in Hoxie v. Carr, 1 Sumner, 185, remarking on the same case, observed that it " was a decision upon a mere question at law upon the legal title." Mr. Chancellor Kent (3 Rent Com. 39), says, that the case of Coles v. Coles goes to the entire subversion of the equity doctrine now prevalent in England. In the case of Thayer v. Lane, 1 Walkei' Ch. (Mich.), 203, it was said that at law part- ners hold real estate as tenants in common, and the cases of Coles u. Coles and Goodwin v. Richardson were referred to, and the court remarked that these decisions must be understood as having reference to the legal estaite, and not to equitable interests as partners. The case of Yateman v. Woods, 6 Yerger, 20, tends to support the doctrine of Coles v. Coles, but in the case of Hunt v. Benson, 2 Humph. 459, the Supreme Court of Tennessee expressly recognized a contrary doctrine. Upon a full view of all the cases, then, there can be no doubt that the principles declared in the American cases stated in the text are fully sus- tained by the strong current of authority, and by obvious justice. See fur- ther, upon this subject,' Savage v. Carter, 9 Dana, 410 ; Richardson v. Pack- wood, 13 Martin, 290; FSrde v. Heron, 4 Munf. 316 ; Ri&hardson v. Wyatt, 2 Desaus. 471; Phillips v. Crammond, 2 Wash. C. C. 441 ; Wooldridge v. 136 MUTUAL RIGHTS OF PARTNERS. [bOOK II. private account, to the extent of his legal title, ■whether that legal title covers the whole or a part of the estate ; provided the pur- chaser or the mortgagee dealt with him bond fide and without notice of the partnership rights, and there was nothing in the Wilkins, 3 V. E, Howard, 360 ; Hougtton v. Houghton, 9 Sim. 491 ; Ander- son V. Tompkins, 1 Brook. 456 ; Edgar v. Donnally, 2 Muuf. 387 ; Gow Partn. (3d ed.), 32-35, and notes; Gaines v. Catron, 1 Humph. 514; Piatt V. Oliver, 3 McLean, 27 ; Hunter v. Martin, 2 Richardson, 541 ; Buchan v. Sumner, 2 Barbour Ch. Eep. 167; Smith v. Tarlton, id. 336; Averill v. Loucks, 6 Barbour (S. C), Kep. 19; Tillinghast i\ Champlin, 4 Rhode Is. 173; Roberts v. McCarty, 9 Indiana, 16; Eakin v. Shumaker, 12 Texas, 51. In reference to the presumption arising from the fact of a purchase of real estate being made with the partnership funds, Mr. Justice Story, in Hoxie V. Carr, 1 Sumner, 180, 181, observed, that, "property purchased with part- nership funds does not of necessity become partnership property, if that is not the intention of the parties; at least in all cases steering wide of fraud and breach of trust. One partner may certainly withdraw a part of the partnership funds for a separate purchase on his own account, and all may join in a purchase of real estate for purposes wholly independent of the part- •nership, intending to hold their shares severally on their individual account. And the fact, under such circumstances, that the payment is made from part- nership funds, will not change the nature or operation of the purchase. It will take effect as the parties intend. But the circumstance, that the pay- ment has been made out of the partnership funds, especially if the property purchased be necessary for the ordinary operations of the partnership busi- ness, and be actually so employed, will afford a very cogent presumption, that it was intended to be held as partnership property ; and, in the absence of all countervailing circumstances, it will be absolutely decisive." In Dyer V. Clark, 5 Metcalf, 579, Shaw C. J., remarked, that " it might happen that real estate may be so purchased by partners, and out of partnership funds, in such manner as to indicate that the parties intended to purchase property to be held by them separately for their separate use ; as where there was such an express agreement at the time of the purchase, or a provision in the articles of partnership, or where the price of such purchase should be charged to the partners respectively in their several accounts with the firm. This would operate as a division and distribution of so much of the funds, and each would take his share divested of any implied trust. If, in the con- veyance, the grantees should be described as tenants in common, it would be a circumstance bearing on the question of intent, though perhaps it might be considered a slight one ; because those words would merely make them tenants in common of the legal estate, which, by operation of law, they would be without them. But such legal estate is not at all incompatible with an implied trust for the partnership." See also, to the same effect, Hoxie v. Carr, 1 Sumner, 186, 187. OH. I.] partners' INTteRlilST IN THE STOCK. 137 transaction from which notice might reasonably be inferred.^ The principle of the validity of such a conveyance under such circum- stances is admitted in Hokie v. Carr,^ and in Dyer v. Clark.^ In Tennessee it has been decided that an estate, so held in joint ten- ancy by the partners for the purposes of trade, may be sold by the survivor in whom is the legal title ; but he will be subject to account to the representatives of the deceasied partner for their proportion of the proceeds.* § 136. Taking it as an established general rule, that there is no survivorship in equity in lands held for the purposes of trade, and that, so far as the partners and their creditors are concerned, rea,l estate belonging to the partnership is in equity treated as person- alty, the next question is, whether, upon the death of a joint trader, his share shall descend for the benefit of his heir or his next of kin. It may be premised that a lease granted to partners for partnership purposes has long been considered in equity as accessory to the trade, and therefore, upon the death of one, is distributable between the survivor and the representatives of the deceased', in like manner as the movables of the partnership.^ But we shall now advert to the important' question, whether or not freehold property, held by partners for the purposes of trade, is in equity converted into personalty ; whether or not, therefore, in the absence of a stipulation to the contrary, the share of a de- ceased partner is in equity descendible to his executor, for the benefit of his next of kin, rather than to his heir at law. § 137. It was thought' by the author, when the first edition of this treatise was published, that, upon the whole, where the heir was not expressly noticed, courts of equity were in favor of the ' Forde v. Heron, 4 Munf. 316; M'Dermot v. Lawrence, 7 Serg. & R. 438 ; 3 Kent Com. 38; Pierce v. Trigg, 10 Leigh, 423, 425. " 1 Sumner, 182, 183. = 5 Metcalf, 580. ' M'AUister v. Montgomery, 3 Hayw. 96. See Robinson v. Crowder, 4 M'Cord, 519. In Edgar v. Donnally, 2 Munf. 387, a right to land had been acquired with partnership stock, and a title taken in the name of the sur- viving partner, and a claimant under the de'ceased partner was held entitled in equity to a moiety of the land, against a purchaser from the survivor, with notice of the partnership right. " Elliott u.'Browii, 9 Ves. 597, 3 Swanst. 490, n.; Lyster v. DoUand 1 Ves.431. But see Jeflfereys J). Small, 1 Vern. 217. 12* 1^8 MUTUAL BIGHTS OF PARTNERS. [BOOK H. executor. But as the law upon this point, more especially since the recent decision of Gookson v. Cookson,-' cannot bfe considered as settled, it will be necessary to take a yiew at some length of all the leading cases on the subject. § 138. The earliest cases which can be called decisions, on this subject, are those of Thornton v. DLxon,^ and Bell v. Phyn.^ These are in favor of the heir. In Thornton v. Dixon, the court recognized the rule that partnership property must be considered as personal estate ; but held that the lands which were then in question could not be so considered, as they had been conveyed to all the partners in common, and there was no agreement for a sale. § 139. In Bell v. Phyn,* A., B., and C, carrying on business in partnership together, purchased an estate in fee with the part- nership funds, and kept the accounts of this estate in the partner- ship books ; and it was held upon the authority of the last case, that assuming the land to have become partnership property, it ought not to be regarded as personal estate. § 140. These cases go to the full length of deciding that real estate, although hefi for partnership purposes and purchased with the partnership funds, is primd facie to be deemed real as be- tween the heir and executor of the deceased partner, and that in case of a sale after the partner's death, a resulting trust arises for the heir at law, unless there be an express agreement a priori that the property shall be sold, or unless a sale of 'the whole be neces- sary for the payment of the partnership debts. But the cases of Thornton v. Dixon, and Bell v. Phyn, were followed by a series of authorities of a very different complexion, and until the decisr ion in'Cookson v. Gookson,^ it was thought that the above-men- tioned cases had been overruled.^ 1 Post,^ 150. ^ 3 Bro. C. C. 199, Perkins's ed. 199, 200, notes. In Lake v. Craddock, see ante, § 134, note, it was not necessary to argue the point. The partner- ship was not one of trade, the same person was both heir and executor ; and t does not appear that there was any other next of kin. ' 7 Ves. 453, Sumner's ed. note (a) ; 2 Hov. Supp. 61. * 7 Ves. 453. ' Post, § 150. " See the arguments in Bligh v. Brent, 2 You. & Coll. 287 ; Trappes v. Harter, 2 Crom. & Mees. 174. Mr. Justice Story, in commenting on this CH. I.] partners' interest in the stock. 139 § 141. Thus, in Jackson v. Jackson,^ although no discussion seems to have arisen relative to the disposal of the freehold prop- erty of the partnership, it is remarkable that Lord Eldon in his judgment makes no distinction between that and the personalty, but, on the contrary, leaves the reader to infer, first, that, in determining whether property is to be deemed partnership prop- erty, the same rules are applicable to freehold* as to leasehold and movable property, and, consequently, that for this purpose the mode of user may be taken into consideration; and, secondly, that the consequence of holding any species of property to be partnership property is the same, as between the real and personal representatives of a deceased partner. And in other judgments of his Lordship, many dicta are interspersed, which, although perhaps of no great weight in themselves, may be considered as showing his general opinion upon the subject, and as corroborat- ing his judgments in those cases which may fairly be considered as decisions.^ § 142. The leading decision of Lord Eldon on this subject is that of Ripley v. Waterworth,^ in which judgment was given on the same day as in Bell v. Phyn. In this case partnership land was conveyed to trustees upon trust, upon a dissolution of the partnership, to sell and pay the partnership debts and divide the residue of the money arising from the sale amongst the partners ; and it was held, upon the death of one of them, that Ms share in the land was personal estate, although the land was not in fact sold, and the deceased's share in it was purchased by the sur^ viving partners under a clause enabling them so to do, and con- tained in the conveyance to the trustees. The effect of Lord Eldon's decision is, that, if an intention to convert the real prop- erty of the partnership can be gathered from the general tenor of the partnership deed, coupled with the nature of the partnership subject, comes to the conclusion " tlat real estate, held in fee for the part- nei-ship and as a part of its funds, will upon the death of the partner belong in equity, not to the heirs at law, but to the personal representatives and distributees of the deceased ; unless, perhaps, there be a clear and deter- minate expression of the deceased pai-tner, that it shall go to his heir at law beneficially." Commentaries on Equity, chap. 15, § 674. • 9 Ves. 591. ' See Crawshay v. Maule, 1 Swanst; 521 ; Selkrig v. Davies, 2 Dow, 242. ' 7 Ves. 425 ; 2 Hov. Supp. 57. 140 MUTUAL EIGHTS OF PARTNERS. [BOOK 11. dealings, that intention must prevail to the full extent of convert- ing the real property, as between the real and personal represent- atives of the dfeceased partner; although the property might not have' been purchased with the partnership funds, and no conver- sion might be necessary for the payment of the partnership debts. The decidon arose upon a question, whether the purchase-money, which had been given for a testator's shares in real property held for partnership purposes, should be paid to his coheirs at law or his personal representatives ; and it was held under the circumstances, that it should be paid to the latter. § 143. It seems evident, from Lord Eldon's judgment in the foregoing case, that he considered the doctrine of conversion, when applied to partnership properly, to be founded on princi- ples peculiar to the contract of partnership, and that the reasons which have induced courts of equity, in deciding upon the con- struction of wills, to uphold only a partial conversion, do not apply where freehold property becomes by contract, either ex- press or implied, part of the trading stock of a partnership. If this view of Lord Bldon's' opinion be correct, there seems no reason to doubt the correctness of the report of the case of To^rnsend w. Devaynes,^ by which this important question seems to be settled, so far as Lord Bldon's opinion is concerned. In this latter case, two persons in partnership as paper-makers, pur- chased paper-mills for the use of the firm, and paid for them out of its funds. It was agreed that on the death of either, the sur- vivor should have the option of purchasing his share. One of the partners died, and his share was purchased by the survivor. It was held that the whole of the purchase-money formed part of the personal esta;te of the deceased, although most of the money was paid in respect of the interest of the deceased in the mills. § 144. These decisions of Lord Eldon, as well as the earlier decisions of Lord Thurlow and Sir W. Grant were elaborately discussed before Sir John Leach, in the case of Phillips v. Phil- lips.^ In that case it appeared that a testator of the name of- Phillips, who by his will had directed his^ real estates to be sold,' ' 1 Mont. Partn., App. 96. But see 1 Roper, Husband and Wife, ed. Jacob, p. 346, n. ' 1 Myl. & K. 649. The observations contained in the first edition of this treatise are embodied in the speeches of counsel in that case. CH. I.] partners' interest in the stock. 141 and the produce considered as personal estate, had carried on the business of a brewer in partnership ■s^th a relation ; that no articles of partnership had been entered into or drawn up between them, and that in the course of their business, after the date of the will, they had purchased with partnership moneys, and for the purposes of their trade, certain freehold and copyhold pub- lic-houses, which were conveyed and surrendered to the two part- ners and their heirs. The bill was filed by the coheiresses of the testator, who were also two of his next of kin, agamst the execu- trix and surviving residuary legatees, who were also next of kin ; and one question in the cause was, whether the interest of the testator in these public-houses was to be considered as a part of his general personal estate, or only personal estate so far as it was required for the discharge of the debts and engagements of the trade. On behalf of the, coheiresses, the cases of Thornton v. Dixon and BeU v. Phyn were cited, and it was urged, on the authority of the judgment of Sir John Leach himself, in Fereday V. Wightwick,^ that when all the demands of the partnership were satisfied, the partnership property would become subject, according to its nature, to all the incidents which belong respec- tively to personal or real estate. But Sir John Leach decided against the coheiresses. His Honor said: "With respect to the second question, whether the freehold and copyhold property purchased with the partnership capital, and conveyed to the two partners and their heirs for the purposes of the partnership trade, is to be considered as personal estate only for the payment of the partnership debts, or is generally to be considered, to the extent of a moiety, as personal estate of a deceased partner, I confess I have for some years, notwithstanding older authorities, con- sidered it to be settled that all property, whatever might be its nature, purchased with partnership capital for the purposes of the partnership trade, continued to be partnership capital, and to have to every intent the quality of personal estate ; and in the case of Fereday v. Wightwick, I had no intention to confine the principle to the payment of the partnership demands. Lord Eldon has certainly upon several occasions expressed such an opinion ; the case of Townsend v. Devaynes ^ is a clear decision to that effect, 1 Euss. & Myl. 45. ' Ante, § 143. 142 MUTUAL EIGHTS OP PARTNERS. [bOOK It and general convenience requires ttat this principle should be adhered to." § 145. A late writer/ who has treated this subject of real estate held by partners with great clearness and abihty, has fur- tiished some valuable statements in reference to further points which were determined in Phillips v. Phillips, above cited. " In the published report of this case of Phillips v. Phillips," ^ he ob- serves, " the only point that appears as determined is, that real estate putehased with partnership capital for partnership purposes is personal estate, and as such goes to the personal representatives of a deceased partner. But it appears from the manuscript notes of Mr. Williamson, one of the counsel for the plaintiffs in the case, which are now before me, that the following important points were also determined : (1.) Public houses devised by the uncte, who was a brewer, to the two nephews, who carried on the brewery as partners, were held not to be partnership property, though they were used exactly as the former.^ The defendants, in attempting to argue this, were stopped by the Master of the Rolls. (2.) So, where the uncle had mortgages of pubhc-houses, whether in fee or for years, which he devised to his nephews, and the nephews pur- chased the equity of redemption out of partnership funds, the equity of redemption was held to follow the mortgage, and not to become partnership property." * " It appears, then, from the report given above of the decision in the case of PhiUips v. Phil- ' Mr. Bissett Partn. 50. = 1 Myl. & K. 649. ^ The words of the decree are, — " That the real estate devised by the said John Phillips, the uncle, to the said testator, J. Phillips, and the said partner, J. Phillips, in fee as tenants in common, were not converted into partnership property, and did not form, and are not to be considered part of the capital and effects of the said partnership carried on between them." Reg. Lib. B. 1833, fbl. 2140 ; Bissett Partn. 50, note. ' The words of the decree are, — " That the freehold estate at, &c., and the copyhold estate at, &c., appearing by the Mastei-'s report to have been iliortgaged to the said J. Phillips, the uncle, and to have been conveyed to the said testator and his said partner, J. Phillips, upon purchase of the equities of redemption therein respectively, did not form and are not to be considered as part of the capital and effects of the said pa;rtnership." Reg. Lib. B. 1832, fol. 214:0. These mortgages were also devised to the nephews, who purchased the equity of redemption out of the funds of the partner- ship. See Master's General Report ; Bissett Partn. 50, note. CH. I.] PAETNERS' INTEREST IN THE STOCK. 143 lips, ttat the conclusion whicli has been drawn therefrom, to the effect ' that freehold property, used for the purposes of a trading partnership, whether originally purchased -with the partnership funds or not, is in equity to be considered as converted into per- sonalty, not only for the purposes of the partnership, but for all other purposes,' ^ is unfounded. A consequence of which is, that the decisions in Townsend v. Devaynes, in Selkrig v. Davies, in Phillips V. Phillips, in Broom v. Broom, and in Morris v. Kearsley, are perfectly consistent with the doctrines laid down by Sir L. Shadwell in Eandall v. Randall and in Cookson v. Cookson." ^ § 146. The case of Phillips v. Phillips was followed by those of Broom v. Broom ^ and Morris v. Kearsley.* In the former of these cases, it appeared that real estates had been purchased by John Broom and Herbert Broom, who carried on business in co- partnership, out of partnership capital, and for partnership pur- poses ; and that, upon the decease of Herbert Broom intestate, his widow and administratrix sold her interest in the estate so pur- chased to the surviving partner, who afterwards became bankrupt without having paid the purchase-money. The bill being filed by the administratrix against the assignees of the bankrupt and the infant, to confirm the sale, and to have it declared that the share of Herbert Broom in the estates in question became, on his decease, personal estate to be administered by his administratrix, Sir John Leach, following his former decision in Phillips v. Phil- lips, decreed according to the prayer of the bill, and directed the infant heir, as trustee for the administratrix, to convey the estate pursuant to the provisions of the stat. 11 Geo. 4 and 1 Will. 4, c. 60. § 147. In Morris v. Kearsley, one of two partners in a brewery ' This is a quotation from Mr. Collyer, post, § 148 ; and the same view as that expressed in the above quotation has been taken in other valuable trea- tises on this subject. See 7 Jarman, Conv. by Sweet, 80 ; Gow Partn. (3d ed.) Supp. 13 ; Story Partn. § 93, and note ; and it has been thence in- ferred that the decision of Sir L. Shadwell in Cookson v. Cookson, 8 Sim. 529, conflicts with the principle recognized in the more modern cases which preceded it. It becomes, therefore of some importance to endeavor to ascertain the real state of the law on the subject. ' Bissett Partn. 51. > 3 Myl, & K. 443. ♦ 2 You. & Coll. 139. 144 MUTUAL KIGHTS OF PAHTNBBS. [bOOK II. died intestate, and the surviying partner agreed to purchase his copartner's moiety in the business. As the partnership property consisted, to a very great extent, of freehold estate, the suit -was instituted for the purpose of determining, as between the real and personal representatives of the deceased partner, whether the real estates in the partaership were to be considered as realty or per- sonalty ; it beuig agreed between the personal representative and the surviving partner, that, in the event of the court deciding in favor of the heir, who was a lunatic, a proportional abatement should be made in the purchase-money. In the course of the argument at the hearing of the cause, the cases of Phillips v. Phillips and Broom v. Broom were cited and commented upon, and Mr. Baron Alderson, upon the authority of those cases, decreed in favor of the personal representative.^ § 148. Upon the authority of the foregoing decisions of Lord Eldon, Sir John Leach, and Mr. Baron Alderson, it seems not too much to state, as a general proposition, that freehold property, used for the pui-poses of a trading partnership, whether originally purchased with the partnership funds or not, is in equity to be con- sidered as converted into personalty, not only for the purposes of the partnership, but for all other purposes ; ^ and that, upon the death of the partner, the person who is seized of the legal estate in such freehold estates is a trustee for the personal representatives of the deceased partner. § 149. But it must be admitted that the foregoing proposition cannot be supported in its fullest extent consistently with the doc- trine laid down by the present Vice-Chancellor, in the late case of Kandall v. Randall,^ and his decision in the stiU more recent case of Cookson 'V. Cookson.* In the former of these cases, his Honor was of opinion that the property which was the subject of the suit ' The argument at the hearing was not reported, the reporter conceiving that the question of conversion was settled. ' This proposition, stated as a conclusion from the judgment of Sir John Leach in Phillips v. Phillips, is not properly deducible from the real and full decision in that case, as reported by Mr. Bissett Partn. 50, 51, quoted anie,% 145. ' 7 Sim, 271. * 8 Sim. 529. As explained by Mr. BIssott Partn. 50-54, there appears to be no necessary conflict between these two cases and the more modern cases which preceded them. OH. I.] partners' interest in the stock. 145 was not, under all the circumstances of tlie case, to be considered as having been used for the purposes of a trading partnership ; and on that ground he appears to have decided that it was not converted into personalty. His Honor's decision, therefore, in that case was not inconsistent with any of the previous authorities ; but it is clear, from the tenor of his judgment, that he was dis- posed to hold, that, in the absence of any express agreement to the contrary, the real property of a partnership is not to be deemed converted into personalty, except so far as may be neces- sary for partnership purposes. § 150. In the subsequent case of Cookson v. Cookson, a father who was seised in fee of land on which he carried on business as a bottle manufacturer, took his son into partnership, and conveyed a share in the land to him. The land was declared by the arti- cles of partnership to be partnership property. But on the death of the father, it was held that his share in the land was to be treated as real estate, no sale being required for the payment of debts or for any other purpose. § 151. Supposing the case of Cookson d, Cookson to contain the received law on this subject, the result of the authorities is, that real property, used for the purposes of a partnership, unless it has been purchased with the partnership fund, or unless it be the subject of conversion by express agreement, is not to be deemed as converted into personalty, as between the heir and executor of a deceased partner, or for any purposes whatsoever, except for payment of the partnership debts. It is conceived, however, notwithstanding the ability and experience of the learned judge by whom the case of Cookson v. Cookson was decided, that the question cannot be considered as settled by that decision, but that it must, on some future occasion, be determined before a higher tribunal.^ ' ".What may Jiave led," says Mr. Bisset (Partn. 53), "to some misap- piielien^ion as to the character of the decision in this case [Cookson v. Cookson], was his Honor's appearing to consider that an analogy existed be- tween this case and that of Bell v. Phyn," 7 Ves. 453. " But though there certainly is an analogy between the two cases in the circumstance of there being no necessity for a sale, there was this essential distinction between them, that in Bell v. Phyn the real estate was purchased with partnership funds for partnership purposes, while here, on the contrary, there was,, in 13 146 MUTUAL EIGHTS OF PARTNBES. [BOOK II. § 152. This subject came up again for discussion in Houghton V. Houghton.^ This was a case in which two brothers, A. and B., had entered into a partnership*, without articles, and purchased land for the purposes of their trade with money borrowed from C, and had the land conveyed to themselves in moieties to uses to bar dower. Shortly afterwards they mortgaged the land to 0. in fee to secure the money borrowed. A. died intestate, leaving B. his heir ; B. took D. into partnership. Each of the firms erected trade buildings on the land, and paid for them and for the insurance on them, and also paid the interest on the mortgage money out of their partnership funds. Ultimately, B. and D. paid off the mortgage out of their partnership property, and took a re- conveyance of the land to themselves as joint tenants in fee. B. died, and his heir, who was also the heir of A., claimed the land; but the Vice-Chancellor of England (Sir L. Shadwell), held that it was converted into personalty, and dismissed the bill. The Vice-Chancellor said he did not think the case stood on the prop- . osition which was stated so plainly and broadly by Sir John Leach in the case of Phillips v. Phillips. § 153. In the recent case of Kowley v. Adams,^ where a father and his son H. carried on a partnership business in a freehold house, purchased out of partnership funds for partnership pur- poses, in which, when another son, Gr., was admitted into the firm it was agreed the partnership business should still be carried on the partnership paying a rent for it to the father and his son H. who were entitled to aliquot shares in it ; LOrd Langdale M. R. held, that, though previously to the admission of G. into the firm the house, which formed part of the partnership capital, was to be considered as personalty, yet by the above arrangement it became real estate. In the still more recent case of Custance v. Brad- shaw,^ in which Vice-Chancellor Wigram decided that the share of a deceased partner in freehold and copyhold estates, purchased with partnership funds for partnership purposes, is not personal estate for the purposes of being included in the value or amount the words of the Vice-Chancellor, ' no purchase of the land out of the part- nership assets for partnership purposes.' " 1 11 Sim. 491. 2 8 Jurist, 994. ' 4 Hare, 315. OH. I.] partners' interest in the stock. 147 m. respect of -wMcli probate duty is payable, tbe decision does not at aU conflict witb Phillips v. Phillips, and that line of cases. His Honor said : " The case of the crown rests wholly upon the propo- sition that the real estate of a partnership, purchased with partner- ship assets and used for partnership purposes, is in equity, though not in fact, personal estate. And the case of Phillips v. PhiUips was referred to as having carried out that principle, and .deter- mined that the real estate of a partnership is in equity personal estate for all intents and purposes. It does not appear to me that a decision in this case against the claim of the crown will conflict with that or any other case upon the same subject ; and conse- quently that, in deciding against the claim of the crown in this case, I am not called upon to express any opinion upon the judg- ment in Phillips v. Phillips. All that is necessarily involved in the cases referred to (including Phillips v. Phillips) is, that those in whom property directed to be converted is vested are trustees for the persons to whom the personal estate of the owner may belong." In Darby v. Darby ,i two brothers embarked in joint speculations in land. Their scheme was to buy land, convert it into building sites, and then sell it at a profit. This was done on several occasions, the land being generally conveyed to one of them only. On the death of that one, it was held that his interest in all the land bought by both, and still unsold, was personal and not real estate. In Essex v. Essex,^ two brothers were, under the will of their father, seised of freehold lands. They agreed to become partners as curriers and tanners, for fourteen years, and to carry on their business on those lands. It was stipulated, that if either died during the copartnership term, the other should take his share in the freehold, and that the entirety thereof, including the plant and tanpits, should be valued at 5,000Z. The fourteen years expired, but the partnership was continued as before. On the death of one of the partners, it was held that his share in the freehold was to be regarded as personal estate. There are also various dicta of Lord Eldon in favor of the broad principle that partnership property is to be regarded as personal and not as real estate. ' 3 Drew. 495. See Allison v. Wilson, 13 Serg. & K. 330 ; Morrow v. Breniser, 2 Rawie, 188 ; Kramer v. Artturs, 7 Barr, 165 ; Holroyd v. Hol- ro^7 W. R. 426. ^0 Beavan, 442. 148 MUTUAL EIGHTS OF PARTNERS. [bOOK II. § 154. " The result of all the cases, then," says Mr. Bissett,i " is clearly this : (1.) That in the absence of a specific agree- ment to the contrary, real estate purchased with partnership funds for partnership purposes is converted out and out into personal estate, and therefore goes to the personal representative, and not to the heir, of a deceased partner.^ (2.) That real estate pur- chased with partnership property, but not for partnership purposes, is not converted into personalty.^ (3.) That real estate, brought into partnership by a partner under an agreement, that during the partnership, and, if necessary for partnership purposes, after the expiration of the partnership, it should be considered as personal estate, but not purchased with partnership funds and not required to be sold for payment of debts, or for any of the other purposes of the partnership, is not converted into personal estate, as be- tween heirs and personal representatives.* (4.) That real estate devised to partners is not partnership property, though used for partnership purposes.^ (5.) That though partners purchase with partnership funds the equity of redemption of mortgages devised to them, the equity of redemption follows the mortgage, and does not become partnership property." ^ ' Partn. 55, 56. " Townsend v. Devaynes, 1 Mont. Partn. notes, 97, and 1 Eoper, Husb. & W., Jac. ed. 346, note ; Phillips v. Phillips, 1 Myl. & K. 649 ; Broom v. Broom, 3 Myl. & K. 443 ; Morris v. Kearsley, 2 You. & Coll. 139 ; Kice v. Barnard, 20 Vermont, 479. " Randall v. Randall, 7 Sim. 271. ^ Cookson V. Cookson, 8 Sim. 529. ' Phillips V. Phillips, MS. and Reg. Lib. B. 1832, fol. 2140. See ante, §145. " Ibid. See ante, § 145. Another still later writer, Mr. Lindley (Partn. 565, 569), has submitted that what is meant by the share of a partner 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, and hence he remarks that it necessarily follows that in equity, a share in a partnership, whether its property consists of land or not, must as between the real and personal representatives of a deceased partner, be deemed to be personal and not real estate. And although the decisions upon this point are conflicting, the authorities which are in favor of the above conclusion certainly preponderate over the others. " Upon the whole, therefore," this writer adds, " it is submitted : " 1. That notwithstanding Thornton v. Dixon, Bell v. Phyn, and RaniMl v. Randall, the true rule is, as stated by the Vice-Chancellor KindersleP^ in CH. I.] partners' interest in the stock. 149 § 155. This subject was alluded, to and somewhat discussed by Mr. Justice Story in the progress of his decision in the case of Hoxie V. Carr,^ and he there remarks, that " the whole doctrine in reference to the question whether real estate purchased for a part- nership becomes personal estate, as between the executor or. ad- ministrator of a deceased partner and his heir or devisee, must turn on the presumed intention of the deceased partner ; whether Darby v. Darby, 3 Drew. 506, that whenever a partnership purchases real estate for the partnership purposes, and with the partnership funds, it is, as between the real and personal representatives of the partner, personal estate." Holroyd v. Ilolroyd, 7 W. R. 426. " 2. That, notwithstanding Cookson v. Cookson, no satisfactory distinction with reference to the question of conversion, can be drawn between land purchased with partnership moneys, and land acquired in any other way. See per Lord Eldon, in Jackson v. Jackson, 9 Vesey, 593 ; and that the question of conversion, like the question of survivorship, turns only on whether the land is or is not to be deemed property of the firm, in the true sense of that expression. " If, indeed, the property is not partnership property in the true sense of the phrase (i. e., the property of the firm, or in other words, of all the part- ners as such), the rule has no application. Therefore, in a case where two out of three partners were owners of land occupied by the firm, and for - which the firm paid a rent, and the land was in fact kept distinct from the joint property of the three partners, it was properly held, on the death of one of the two partners to whom the rent was paid, that his interest in the land was not to be considered as personal, but as real estate. Kowley v. Adams, 7 Beavan, 548 ; Balmain v. Shore, 9 Vesey, 500. So, if land be- longs to all the partners as tenants in common, but not as partners, and that land is used by them for partnership purposes, but is nevertheless intended to remain in them as tenants in common, and not to form part of the assets of the firm, the share of each partner will be real, and not personal estate. In the case now supposed, co-owners of land are partners, but the co-own- ership continues unaffected by the partnership. But it is not possible on this ground to uphold Thornton v. Dixon, Bell v. Phyn, Randall v. Randall, and Cookson v. Cookson. In each of these four cases, the land had become part of the assets of the firm, or it had not ; if it had, these four cases are in direct conflict with those that have just been alluded to; whilst, if it had not, they are in no less direct conflict with other cases which are au- thorities on the question what is and what is not property of the firm." The doctrine of conversion which has just been considered, merely amounts to this, that on the death of a partner, his share in the partnership is, as between his real and personal representatives, to be treated in equity as money and not as land. ' 1 Sumner, 183. See Delmonico v. Guillaume, 2 Sandford Ch. 366. 13* 150 MUTUAL EIGHTS OP PARTNERS. [BOOK II. by leaving it in the state of being real property, he meant, as between his personal representatives and his heirs and devisees, that it should retain its true and original character ; or whether^ having appropriated it as partnership property, it should assume the artificial character belonging to the other personal funds of the firm." The learned Judge then i-eviews some of the decisions on this point, but as the question did not arise in the case before him, -we have not the benefit of a full discussion of the subject by one so able to treat it. In his work on Partnership,^ Mr. Justice Story remarks, that real estate belonging to the partnership will be treated as mere personalty to all intents and purposes, if the partners themselves have, by their agreement or otherwise, pur- posely impressed upon it the character of personalty. "But," he adds, " a question has been made, whether, in the absence of any such agreement, or other act affecting its general character, real estate, held as part of the partnership funds or stock, ought to de- volve upon or descend as real estate to the heir or devisee, or ought to belong as personalty to the executor or administrator, upon the death of the partner. Upon this point there has been a diversity of judicial opinion, as well as of judicial decision, and the doctrine [may be considered as open to many distressing doubts." Mr. Chancellor Kent^ observes, that " the better opin- ion would seem to be, that equity will consider the person in whom the legal estate is vested as trustee for the whole con- cern, and the property will be entitled to be distributed as per- sonal estate." ^ § 156. But in Dyer v. Clark,* Shaw C. J., remarked, that where real estate is purchased in the name of the partners, out of partnership funds and for partnership use, the legal estate, upon the death of one of the partners, " will go to those who are enti- tled to it, subject only to a trust and equitable lien to the surviv- ing partner, by which so much of it shall stand charged as may be necessary to accomplish the purposes for which the partners purchased it. To this extent, and no further, will it be bound, .and subject to this all those wiU take who are entitled to the prop- 1 Story Partn. § 93. ■^ 3 Kent Com. 37. See also note (e), p. 39. ' See Gow Partn. (3d ed.), 34, 35 ; Rice v. Barnard, 20 Vermont, 479. * 5 Metcalf, 577-579. .See Piatt v. Oliver, 3 McLean, 27. CH. I.] partners' interest in the stock. 151 erty ; namely, the creditors, widow, heirs, and all others standing on the rights of the deceased partner." ^ The partners in this case had entered into articles as distillers ; the business required a large building and fixtures, which they purchased and paid for in part out of the joint funds, and gave notes in the partnership name for the remainder of the price, and the estate was regarded by them as partnership effects. The repairs and improvements were also charged to joint account. These were all held to be decisive indications of joint property. The plaintiff was the sur- viving partner of the firm of Burleigh & Dyer, and the defend- ants were the administrator, the widow, and the minor children of the deceased partner, Burleigh, whose estate was insolvent. The plaintiff had received a certain sum, in rents and profits of the real estate, that had accrued after his partner's death. The defendant, Clark, as administrator of Burleigh, the deceased part- ner, had sold an undivided half of the real estate, as belonging to the estate of the deceased partner, under a license from the pro- bate court, and with the assent of the surviving partner, who, however, gave notice that he did not waive his claim to the estate or the proceeds thereof as partnership property. The widow joined the administrator to release her dower for a nominal sum. The court said : " We cannot perceive that the right of the widow is distinguishable from that of the creditors and heirs of the de- ceased partner. As far as this estate was held in trust by her deceased husband, she was not entitled to dower. For all beyond that, she will be entitled, because he held it as legal estate, unless she is barred by her release, of which we give no opinion." On the settlement of the partnership accounts, the deceased partner, Burleigh, was found indebted to the surviving partner, the plain- tiff, in the sum of $732, after aU the partnership matters were closed. The court held that the surviving partner was entitled to a decree, charging the amount of rents and profits in his hands, and so much of the proceeds of the sale made by the administra- tor, Clark, one of the defendants, as would be sufficient to dis- charge the balance of the partnership account ; the rest of the proceeds to remain in the hands of the administrator of the de- ceased partner, to be distributed according to law.^ ' See Buehan v. Sumner, S Barbour Ch. 165. ^ See Ripley v. Waterworth, 7 Ves. (Sumner's ed.), 453, note (1). This 152 MUTUAL EIGHTS OF PARTNERS. [BOOK II. § 157. So, also, in tke case of Bumside v. Merrick,^ it was decided that the assignees, under the insolvent laws of Massa- subjeot has been very fully considered in a late case in Virginia, by Tucker, President of the Court of Appeals, Pierce v. Trigg, 10 Leigh, 406. He there arrives at the conclusion, that land purchased by two partners with partnership funds, for partnership purposes, and used as a part of the stock in trade, is to be regarded in equity as partnership property ; and though, if the conveyance has been made to both partners, there will, upon the death of one, pass to his heirs a legal title, yet the whole beneficial interest de- volves upon the survivor, and he may sue the heirs, compel a sale, and dis- pose of the proceeds as he would of the personal estate of the firm. After having adverted to several of the English cases noticed in the text, the learned President remarked : " It has been a vexed question in England, whether the interest of the deceased partner in the real estate belonging to the firm, and the proceeds of the sale of that interest, belong to the personal representative or to the heir. The better opinion gives the fund to the former ; and with reason ; since, upon familiar principles, as the land was purchased with the personalty, and was brought into the firm as stock, it ought, as between the executor and the heir, to replace the fund withdrawn from the personal estate. By placing it as stock in the partnership fund, the deceased evinced a design to treat it as personalty, and it ought to go accord- ingly. The representatives of the deceased can claim it only as stock, and as stock in trade it is ex vi termini, personal." Adverting to the subject of dower in lands so held by partners, the President referred to the case of Smith V. Smith, 5 Ves. 189, and said : " In that case, the conveyance was made to one of the partners, and the question was whether his wife had a right of dower. The court decided that she had, but upon the specific pro- visions of the deed, which proved that the purchase was made with the ex- press agreement that her husband, to whom the deed was executed, should not hold for the firm, but in his own right, and be held debtor to the firm for the money advanced. The Chancellor held, that but for this specific agree- ment, ' although the deed was taken to one of the partners, the estate would have been regarded as partnership property,' and so the wife would not have been entitled to dower. See also, Sir S. Romilly's argument, in Bell v. Phyn, 7 Ves. 456. A case has been mentioned by my brother Parker, of Taylor v. Thompson, not reported, in which this court allowed dower to the widow of a partner, who had purchased property with the partnership funds. It was not bought for partnership purposes, nor so held, although it was paid for, I think, out of partnership funds. It resembles; therefore, the case of Smith w. Smith, 5 Ves. 189, and it is probable the court considered the defendant as having a mere equity to charge the estate, which could not prevail against the widow's legal right of dower. Be that as it may, the facts of that case are too obscurely recollected to enable me to follow it as a ' 4 Metcalf, 537. CH. I.] partners' interest in the stock. 153 chusetts, of an insolvent debtor, who is the surviving partner of a firm, are entitled to all the real estate of the partners which was purchased with the partnership funds, for the partnership busi- ness, and may maintain a bill in equity against the administrator, widow, and heirs, of the deceased partner to compel a transfer to such assignees of his moiety of real estate, that it may be guide. Upon the whole I am of opinion, that the late English cases pro- pound the true rule, and that real estate purchased with partnership funds, and for partnership purposes, must be regarded as partnership stock, and treated as personalty." It appeared in the above cases that the firm was not indebted, nor was the deceased partner indebted to the firm. The de- ceased partner left a widow, who after his death married the surviving part- ner. The court held, that she had no title to dower. No English case later than that of Phillips v. Phillips, 1 Myl. & K. 647, was cited in support of the above decision, and the court were not unanimous in their opinion. Two of the five members composing the court were absent, and one of those present dissented from the decision. It would seem from the case of Richardson v. Wyatt, 2 Desaus. 471, that the widow of a deceased partner in South Carolina was denied her dower in lands purchased with partnership funds, and held in the names of all the partners. But this case is reported in so loose and confused a manner, that it IS impossible tu ascertain satisfactorily tlie grounds of tho decision. See Tevis V. Steele, 4 Monroe, 341. In Sumner v. Hampson, 8 Ohio, 358, it was held, that where a partnership is entered into, " as builders, master-carpen- ters, and general speculators," and the partners manifest an intention to hold their lands as partnership stock, and buy and sell them as such, dower cannot be claimed in such lands, to the prejudice of partnership creditors. See also, Greene v. Greene, 1 Ohio, 535, and Smith v. Jackson, 2 Edw. 28, stated ante, § 135, note; Matlock v. Matlock, 5 Ind. (Porter), 404. In Woodbridge v. Wilkins, 3 How. (Miss.), 360, it was maintained, that, if it appears that lands were purchased to be dealt with as partnership stock, they will be so regarded ; but where there is no such agreement, nor such application of the lands as evinces ihe original understanding to have been that they were to be considered as partnership stock, the wife of a de- ceased partner is entitled to dower. See also, Markham v. Merrett, 7 How. (Miss.), 437. In Green v. Graham, 5 Ohio, 160, where land was bought with partner- ship funds and conveyed to the partners, it was considered that they took as tenants in common, and that if one partner died his share would descend to his heirs, and, if sold by his administrator, the purchaser might demand partition. The court said : " The purchaser appears to have a legal estate. It is not for the respondent to avoid a partition by setting up a possible claim in the creditors of the copartners. We do not decide upon their claims, if they have any ; but we leave them, if there are any, to assert their own rights." 154 MUTUAL RIGHTS OP PAETNERS. [BOOK H. disposed of by them, for the benefit of tbe creditors of the firm, who maj prove their demands against the surviving insolvent partner. § 158. Where lands are conveyed in fee to partners, and they covenant not to convey away their respective shares during the continuance of the partnership, the fair presumption is, that the partners took the property as freehold property, subject to the covenants. Thus, A., B., and C, being partners for a term of years, lands were conveyed to them in fee as tenants in common, with a proviso that they should continue to be used in the copart- nership trade during the continuance of such copartnership ; and, to that intent, each of the partners covenanted that neither of them, nor their respective heirs, would, during the continuance of the partnership, grant, bargain, sell, demise, assign, transfer, or set over his respective share or interest in the said premises ; or sue out a writ, or file a bill of partition. Sir WiUiam Grant held, that, upon the death of one of the partners during the term, his estate in the real property so purchased descended to his heir, subject to the stipulations contained in the covenants. After re- ferring to the case of Thornton v. Dixon, in which he observed that the land was purchased generally, applied to the uses of the partnership, and apparently was purchased for no other end, he said that here the parties had hmited and defined the extent of the interest the partnership was to have in the real property. Considering themselves as owners of the real estate, as tenants in common, they stipulated that the partnership should have a cer- tain ownership, notwithstanding that interest in them as tenants in fee. The premises were to continue to be used in the trade as long as the partnership lasted. They could claim nothing as partners, - except through the covenants. Subject to the cove- nants it went as real estate. ^ § 159. And where real estate is purchased with the partner- ship funds, but is conveyed to one of the partners under a specific agreement that the estate shall be his, but that he shall be debtor to the partnership for the purchase-money, the estate is his sepa- rate property, and consequently subject to all the incidents of " Balmain v. Shore, 9 Ves. 500, Sumner's ed., notes ; Kipley v. Water- worth, 7 Ves. (Sumner's ed.), 425, 453, notes. CH. I.J partners' interest in the stock. 155 real property. In the case of Smith v. Smith,^ it appeared that Kobert Smith, a brewer, took his brother, Charles Smith, into partnership with him, and in the course of that partnership, at several times, Robert Smith purchased freehold and copyhold estates at Croydon, Merton, and Wodden, in Surrey, and was seized of the legal estate of the freehold premises in fee, except one which was conveyed to him and a trustee, to bar dower, and of the copyhold premises according to the custom of the manor. He was also seize'd of other freehold estates by inheritance, or by purchases previous to the partnership. The estates purchased consisted of a brew-house and premises, and some public-houses, for the purposes of the trade. When the partnership was formed, it was agreed that the freehold and copyhold estates of which he was then seized should continue his separate property ; but the rents of those estates, and also of the estates purchased in his name, and to be considered as his separate property, were carried to the partnership account ; and the partnership allowed him interest upon the estimated value of the estates of which he was seized before the partnership, and upon the purchase-money of those which were purchased. As these purchases were made, Robert Smith drew the money from the partnership ; and his account was debited with the amount and interest. A joint com- mission of bankrupt having issued against the Smiths, under which they were declared bankrupts, the real property before mentioned was sold by the assignees, they at the same time enter- ing into an agreement to allow compensation to the wife of Robert Smith, in respect of her dower in the estates, on condition of her joining in a fine. Robert Smith and his wife having filed a bill for the specific performance of this agreement, it was contended for the defendants, that these estates were partnership stock, and not Hable to dower ; but Lord Loughborough held that they were the separate property of Robert Smith, and that he was debtor to the partnership for so much money ; consequently, that his wife was entitled to dower. § 160. If a partner take a lease of lands in his own name for the purposes of the partnership, he will be considered in equity as a trustee of such lease for himself and his copartners, the lease 1 5 Yes. 189 ; Sumner's ed. 193, 194, notes. 156 MUTUAL EIGHTS OF PARTNERS. [BOOK H. being deemed to be an incident of tbe partnership. In 1790,^ Forster, Eankin, Kent, and Burden, carried on tbe business of bankers, under the title of the Commercial Bank, at Newcastle. In June, 1791, a lease of a colliery, called Hebbum, was granted by EUison to Burdon and three other persons of the names of Peareth, Wade, and Wren, for a term of thirty-one years, as tenants in common, in equal fourth parts. Mr. Burdon died in December, 1792. The bill was filed by Forster and Rankin against the executors of Burdon, praying that it might be de- clared that Burdon took and held the said fourth part of the coUiery on account of himself, and the plaintiffs, and the defend- ant Kent, respectively, in equal shares ; and that the defendants might be decreed to assign the same accordingly. In order to raise a declaration of trust for the partnership in writing, as re- quired by the 17th section of the Statute of Frauds, the plaintiffs produced various letters written by Burdon, in which he treated them as persons interested with himself in the colliery. It was also proved that Burdon had ordered a draft to be prepared, which should declare that the lease was .taken (subject to certain previous trusts in favor of Burdon) in trust for Burdon, the plain- tiffs, and Kent, in equal shares. To prove the consideration given by the plaintiffs and Kent for their share of the lease, cer- tain entries were read from the partnership books. Upon this evidence. Lord Alvanley held, that the trust was legally raised within the meaning of the Statute of Frauds, and he declared that Burdon was a trustee as to one fourth part of the Hebburn colliery, for himself and the other partners in the bank. Upon appeal. Lord Alvanley's decree was affirmed by Lord Lough- borough. But he proceeded on different grounds. He consid- ered that the same evidence which had been adduced to raise a trust in Burdon for himself, the plaintiffs, and Kent, was con- clusive of a partnership existing between the same parties ia the colliery. That partnership being established, he held, as a neces- sary consequence, that Burdon, having taken lie lease of the one fourth part for the purposes of the colliery, took it as trustee for himself and his copartners in that colliery, by operation of law, uncontrolled in any manner by the statute. 1 Forster v. Hale, 5 Ves. 308 ; 1 Hov. Supp. 418. CH. I.] partners' interest in the stock. 157 ^ 161. It will be useful, in this place, to make a few remarks on the interest of partners in the good will. The term " good -will" is used in two distinct ' senses. It is apphed either to an advantage arising from the fact of sole ownership simply, without reference to other persons ; or as an advantage arising from the fact of sole ownership, to the exclusion of other persons. The latter species of good will is founded on special contract, and is a commodity upon which a valuation may be fixed. Therefore, the interest of an outgoing partner in such good wiU may be valued and assigned with the rest of the effects to the remaining partner.^ A good wiU of this kind, being a valuable addition to a trade, and arising, as it does, in contract, must be created by some appropriate words. It cannot be implied from the general words, stock, effects, &c. Therefore, where one partner had agreed to sell to his copartner " his inheritance in their nursery for .£1,000," and the other partner in answer to the proposal wrote as follows : — "I agree to give you £10,000, as you men- tion, for your moiety of all your partnership premises, stock, busi- ness, and concern;" — Lord Eldon held that the purchaser had no right according to his contract, to claim any good will in the trade, in addition to the partnership property which was the sub- ject of it, except what was the necessary effect of his a'cquiring the sole ownership in the property ; certainly not such as to pre- clude the seller from carrying on the same trade, where, and when, and with whom he pleased.^ § 162. The former species of good will is clearly not founded in special contract, but in a combination of accidental circum- stances ; as the existence and celebrity of the house, the skill and affluence of the trader, or the prejudices or necessities of the customer.^ This, therefore, is not a tangible interest. It is not ' Kennedy v. Lee, 3 Mer. 441 ; Story Partn. § 99 ; Bryson v. Whitehead, 1 Sim. & Stu. 74; Harrison v. Gardner, 2 Madd. 198 ; Butler v. Burleston, 16 Vermont, 176. See 1 Lindley Partn. 769 et seq. A person, forming a partnership with another, having agreed to leave at the end of the term, cannot, on retiring, claim an interest in the good will of the business, and in accounting with hig partner, who continues at the same place, have an allow- ance for such good will. Van Dyke v. Jackson, 1 E. D. Smith (N. Y.), 419. ^ Kennedy u. Lee, 3 Mer. 441 ; and see Farr v. Pearce, 3 Madd. 47. ^ Mr. Justice Story (Partn. § 99), says : " This good will may be properly 14 158 MUTUAL EIGHTS OF PAETNERS. [BOOK II. a commodity on 'vrhicli a specific value can be placed, or for wHch a definite allowance can be made.^ Therefore, upon the death of one partner, it is not stock of which the executor of a deceased partner can compel a division, unless he can also compel a sale of the whole premises and stock, as in the case of a partnership at wiU.2 Under these latter circumstances, however, the good will would accompany the rest of the stock, and might create some additional speculative value in the mind of a purchaser.^ enougli described to be the advantage or benefit wliich is acquired by an establishment beyond the mere value of the capital, stock, funds, or property employed therein, in consequence of the general public patronage and en- couragement which it receives from constant or habitual customers, on ac- count of its local position, or common celebrity, or reputation for skill, or afiluence or punctuality, or from other accidental circumstances or necessi- ties, or even from ancient partialities or prejudices." " The good will of a trade is," said Lord Eldon, " nothing more than the probability that the old customers will resort to the old place." CrutweU v. Lye, 17 Ves. 336, 346. The good will of a business has been recognized as a valuable interest. Kennedy v. Lee, 3 Mer. 452, 455. By the conveyance of a shop the good will passes, though not specifically mentioned. Chissum v. Dawes, 5 Euss. 29. Courts of equity will often interpose to prevent a person from using the name of another in a business or concern, for the fraudulent purpose of im- posing on the public, and supplanting that other in the good will of his con- cern. Story Partn. § 100 ; 3 Kent Com. 64, note ; Perry v. Nulfit, 6 Beavan, 72; Motley v. Dowmau, 3 Myl. & Cr. 14; Knott v. Morgan, 2 Keene, 213, 219 ; Hogg V. Kirby, 8 Ves. 216 ; Bell v. Locke, 8 Paige, 75 ; 3 Daniell Ch. Pr. (Perkins's ed.), 1869, 1870; 2 Story Eq. Jur. § 951. So even though there be no intentional deception. 3 Daniell Ch. Pr. 1870; Nullington v. Fox, 3 Myl. & Cr. 338. ' In Crutwell i'. Lye, 1 Kose, 123, it was held that the circumstance of the assignees having sold the good will and interest of the bankrupt's trade of a carrier did not preclude him from setting up the trade again, provided he did not hold himself out as carrying on the same trade as had been pur- chased. ^ Therefore, unless an executor can compel a sale, as stated in the text, the surviving partner will be entitled to use the name of the old firm ; and if the executor attempt to do so, he will be restrained by injunction. Lewis V. Langdon, 7 Sim. 421. See Staats v. Howlett, 4 Denio, 559. ' See note,' post, § 322. Li Hammond v. Douglas, 5 Ves. 539, Lord Loughborough is reported to have said, that, upon a partnership without articles, the good will survives, and the sale of it cannot be compelled by the representative of a deceased pai'tner. Mr. Chancellor Kent (3 Kent Com. 64) says, that " the good will of a trade is not partnership stock." In Lewis V. Langdon, 7 Sim. 421, the Vice-Chancellor (Sir L. Shadwell) said, "I CH. I.] partners' interest in the stock. 159 Accordingly, a coiirt of equity, in this and similar cases, would so treat it that its value should he felt and appreciated by all par- ties interested in the concern ; and therefore, in decreeing a sale of the entire partnership, would order the sale to be so adjusted as to give full effect to the value of the good will.-' This will be shown more minutely in a future chapter.^ § 163. The remarks which have just been made are solely ap- plicable to the good will of a mercantile business. In a business of a professional nature, as that of an attorney or apothecary, the good will attaches to the person, rather than to any other subject. Such part of it as is not personal is so small, that equity will not regard it as matter of sale, even where the partnership is without articles. It seems clear, therefore, that, upon the death of one partner, the good will in these cases will survive to the survivor. Sir John Leach was of this opinion in the case of Farr v. Pearce.^ There it was unnecessary to determine the general question, whether the good wiU of a professional partnership, without arti- cles, survives. But his Honor said, that, if the general question had arisen, he thought it would have been difficult to maintain, that, where a partnership is formed between professional persons, as surgeons, and one dies, the other is obliged to give up his busi- ness, and sell the connection for the joint benefit of himself and the estate of his deceased partner. That when such partnerships determine, unless there be stipulations to the contrary, each must be at liberty to continue his own exertions ; and where the deter- cannot but think, when two partners carry on a business in partnership to- gether under a given name, that, during the partnership, it is the joint right of them both to carry on the business under that name, and that, upon the death of one of them, the right, which they before had jointly, becomes the separate right of the survivor. See Story Partn. § 100, note. But in Dougherty v. Van Nostrand, 1 Hoflf. Ch. R. 68, it was declared that the good will of a trade is partnership property, and does not survive; and if not disposed of by consent, it will be sold by other partnership effects. See 15 Ves. 224. ' Story Partn. § 99 (1st ed.), p. 140, note (4), and cases cited. In New York a receiver, appointed upon a bill filed by one of the partners to wind up the partnership concern, where it is necessary to preserve the good will of the business, may be directed to carry it on, under the direction of the court, until a sale can be effected. Marten v. Van Shaick, 4 Paige, 479. ' See^osf, chap. 3, sec. 4. ' 3 Madd. 78. 160 MUTUAL RIGHTS OF PAKTNBES. [BOOK II. mination is by the death of one, the right of the survivor cannot be affected. " Such partnerships," he said, "were very different from commercial partnerships." § 164. Upon the same principles. Sir John Leach held, in a recent case, that the good will in a business of a personal nature is not assets in the hands of an administrator. A., a country at- torney, having died intestate, B., a London attorney, and a friend of the family, with the consent of A.'s widow, took out letters of administration to A.'s estate. It was then agreed between B. and the widow, that B. should carry on A.'s business of attorney until A.'s son should come of age ; at which period the latter was to take it upon himself. B. accordingly conducted the business for the time agreed upon at his own expense, paying the widow half the profits. Upon A.'s son coming of age, B. left the con-, cern. A.'s son afterwards becoming insolvent, one of his credi- tors filed a bill against B. for an account of the profits of the con- cern during the time it was in his hands ; insisting that the sum of money was due from B. to A.'s estate in respect of the good will of A.'s business, and charging male administration on the part of B. But Sir J. Leach, M. R., dismissed the bill on the ground that the good will of a trade of a personal nature, as that of attorney, was not a subject of administration.^ § 165. A trade mark has been held to be partnership property .^ Mines, also, are for many purposes partnership property.^ And a lease, a renewal of which has been obtained clandestinely by a partner, is partnership property.* But property which may be- long to one or more members of a firm, but not to all, or, in other words, the ownership of which is not coextensive with the partner- ship, is not partnership property. Thus, if a partnership consist- ing of three persons were to sustain an accidental loss, as by fire, and a gift were to be made to two of the partners in compensa- tion of their loss, such gift would not be partnership property.^ * Spicer v. James, Rolls, M. T. 1830. 2 Hine v. Lart, 10 Jurist, 106. ' Fereday v. Wightwick, 1 Taml. 250 ; Jeffreys v. Smith, 1 Jac. & W. 298. *Foatherstonhaugli v. Fenwiok, 17 Ves. 298. * 2 Swanst. 571, 572. See also, Campbell v. Mullett, 2 Swanst. 551; Rowley v. Adams, 8 Jurist, 994; Clarke v. Richards, 1 You. & Coll. 351. CH. I.J partners' interest in the stock. 161 § 166. We hare seen, that, upon the death of one of several partners, his share devolves on his personal representatives, as tenants in common -with the surviving partners. So, in other cases, where the pai'tnership becomes. dissolved by the extermi- nation of any one of the partners, his assignees or representar tives wiU become tenants in common with the remaining partners, liable, however, to all the equities of the partner in whose place they stand. When, therefore, under an execution against one partner, the sheriflf seizes and sells that partner's undivided moi- ety of the partnership goods, the vendee wiU be tenant in com- mon with the solvent partner, but will, in equity, receive no fruit from the execution, except what shall be found due to him on the balance of the partnership accounts.^ In the same manner, if one partner buy goods for the partnership, and become a bankrupt, and his vendor stop the goods, in transitu, the vendor becomes tenant in common of the goods with the solvent partner, subject to the partnership accounts.^ So, also, where one partner be- comes bankrupt, his assignees are tenants in common with the solvent partner of an undivided moiety of the partnership effects, subject to the partnership accounts ; and they can retain nothing but what shall be found due on the balance of those accounts.^ ^ Heydon v. Heydon, 1 Salk. 392 ; Chapman v. Koops, 3 B. & P. 289 ; West V. Skip, 1 Vez. 242; Story Partn. § 261 ; 1 Story Eq. Jur. § 677; Moody u. Payne, 2 John. Ch. 548; Keed v. Howard, 2 Metcalf, 36, 39; Church V. Knox, 2 Conn. 514; Witter v. Kichards, 10 Conn. 37; 3 Kent Com. 65, in note ; Phillips v. Cook, 24 Wendell, 359 ; Birdseye v. Ray, 4 Hill (N. y.), 161; Allen v. Wells, 22 Pick. 450; Acker v. Burrall, 23 Wendell, 606 -; Morrison v. Blodgett, 8 N. Hamp. 238; Douglass w. Wins- low, 20 Maine, 89. See Eeed v. Shepardson, 2 Vermont, 120; Clark v. Lyman, 8 Vermont, 20; Ex parte Stebbins, E. M. Charlt. 77. Many diffi- cult and embarrassing questions have arisen on the subject of attaching and levying upon the interest of a separate partner in the partnership effects. This matter will be found treated more at large in a subsequent part of this work. " Salomans v. Nissen, 2 T. K. 674. ' West V. Skip, supra. See 3 Kent Com. 65 note, and cases cited ; Stocken V. Dawson, 9 Beavan, 239. 14* 162 MUTUAL EIGHTS OP PARTNEES. [BOOK II. SECTION 11. OP THE DISTKIBUTION OP INTEREST. § 167. When the respective shares of the partners in the stock and capital are to be ascertained, a necessity usually aris- ing on a dissolution, it will be essential, in the first place, to know in what manner the respective interests of the partners are dis- tributed, either by virtue of their own agreement, or by operation of law. This will not be difficult where one partner has brought to the joint concern real property, the other, personal property ; or where both have provided stock of the same nature in certain shares ; or where one has provided stock in specie, the other, capital. And in all these cases, where it does not appear what is the precise amount of the respective shares of the partners, the presumption is that they are entitled equally.' But suppose ' Farrir v. Beswiok, 1 M. & Eob. 527 ; Robinson v. Anderson, 20 Bea- van, 98 ; 7 De G. Mac. & G. 239 ; Webster v. Bray, 7 Hare, 150; Copland V. Toulmin, 7 CI. & Fin. 349 ; Steward p. Forbes, 1 Mac. & G. 137 ; 1 Lind- ley Partn. 573 ; Tiiompson v. Williamson, 7 Bli. (n. s.), 432; 3 Ross. L. C. on Com. Law, 381 ; Robley v. Brooke, 7 Bli. (n. s.), 90. So held in Gould v. Gould, 6 Wendell, 263; Turnipseed v. Goodwin, 9 Alabama, 372; Taylor V. Taylor, 2 Murphy, 70 ; Donelson v. Posey, 13 Alabama, 762. Mr. Chan- cellor Kent (3 Kent Com. 28), observes, that " though the shares need not be equal, yet, as a general rule, all must partake of the profit in some rata- ble proportion ; and. that proportion, as well as the mode of conducting the business, may be modified and regulated by private agreement, at the pleas- ure of the parties. If there be no such agreement on the subject, and no evidence to the contrary, the general conclusion of law is, that the partner- ship losses are to be borne equally, and the profits equally divided." So held in Lee v. Lashbrooke, 8 Dana, 214 ; Jones v. Jones, 1 Ired. Eq. 332 ; Honore v. Colmesnil, 1 J. J. Marsh. 506 ; Conwell v. Sandidge, 5 Dana, 211. And this would be the rule, even though the contribution between the parties consisted entirely of money by one, and entirely of labor by the other. 3 Kent Com. 28, 29. And the circumstance, that each has brought an unequal amount of capital into the common stock, would not seem to -furnish any substantial or decisive ground of difference, as to the distribu- tion. Story Partn. § 24. This point is fully examined by Mr. Justice Story in his work on Partnership, §§ 24--26, and notes. This presumption CH. I.] partners' interest in the stock. 163 one partner to have contributed labor only, sharing tbe profits ; would he, in default of partnership articles, be adjudged a partner in the original capital ? In all doubtful cases, this question must be answered by a jury ; and their verdict must depend upon whether they think with the civilians, Ault V. Goodrich, 4 Kuss. 430. 2 1 Jac. & W. 592 ; Wray v. Hutchinson, 2 Myl. and K. 235. CH. II.] PERSONAL OBLIGATIONS. 199 such contract shall be completed by. subsequent acts, or by arti- cles of partnership.^ It should be noticed, therefore, before we examine the different clauses of the articles themselves, that a court of equity will, under certain circumstances, compel the specific performance of an agreement to enter into partnership.^ This point seems to have been clearly settled by Lord Hardwicke in the case of Buxton v. Lister.^ There A. and B. agreed to purchase certain trees at a price payable by instalments, the pur- chasers to have eight years for disposing of the same, and articl'es of agreement to be drawn and perfected as soon as could con- veniently be, &c. Lord Hardwicke held that specific perform- ance of this agreement might be decreed. He added : " Sup- pose two partners should enter into an agreement, by such a memorandum as in the present case, to carry on a trade together, and that it should be specified in the memorandum that articles should be drawn pursuant to it, and before they are drawn one partner flies ofi^, I should be of opinion, upon a bill brought by the other in this court for a specific performance, that, notwithstand- ing it is in relation to a chattel interest, yet a specific performance ought to be decreed." In the case just cited. Lord Hardwicke observed, that, although specific performance was generally de- creed in matters concerning the realty only, yet there were cases where such relief might be had in personal matters. His Lord- ship then noticed a case of Taylor v. Neville, which was fpr per- formance of articles of sale of eight hundred tons of iron, to be paid for in a certain number of years, and by instalments, and the relief sought was decreed ; and he added, that such sort of contracts difier from those that are immediately to be executed. § 203. In a case before Sir John Leach, his Honor very clearly explained the doctrine laid down by Lord Hardwicke. » Wats. Partn. GO. ^ 2 Story Eq. Jur. § 722 ; Birchett v. Boiling, 5 Munf. 442. And the execution of a proper partnership deed may be compelled. England v. Curling, 8 Beavan, 129. But as a general rule Courts of Equity will not decree specific performance of an agreement for a partnership. Hercy v. Birch, 9 Vesey, 357; Sheffield Gas &c. Co. v. Harrison, 17 Beavan, 294; Downs w. Collins, 6 Hare, 418; Maxwell v. The Port Tenant Co. 24 Bea- van, 495 ; Stocker v. Wedderburn, 3 K. & J. 393. ' 3 Atk. 383 ; 1 Lindley Partn. 796, 797. 200 MDTUAL EIGHTS OP PARTNERS. [bOOK II. " Courts of equity," lie said, " decree the specific performance of contracts, not upon any distinction between realty and person- alty, but because damages at law may not in the particular case afford a complete remedy.^ Lord Hardwicke observed, that such sort of contracts as that in Taylor v. Neville differ from those that are immediately to be executed ; and they do differ in this respect, that the profit upon the contract, being to depend upon future events, cannot be correctly estimated in damages where the calculation must proceed upon conjecture. In such a case, to compel a party to accept 'damages for the non-performance of his contract is to compel him to sell the actual profit which may arise from it at a conjectural price." ^ These observations of Sir John Leach are pecuUarly applicable to the case of a partnership, which is a continuing contract, and of which the profits are un- certain, and cannot possibly be estimated at any fixed amount. It is clear, therefore, upon principle, that a bill for the specific performance of such a contract wiU be sustainable, and it seems singular that no express decision on the subject should have ap- peared in the reports. A case, however, of this nature, was decided by Sir W. Grant. Upon a bill filed by a partner against his copartners, some time after the business of the partnership had commenced, praying for a specific performance of the partr ' In Clark v. Flint, 22 Pick. 239, Wilde J. said in reference to this point : "It is objected that the court ought not to exercise jurisdiction in equity for a specific performance of agreements relating to personal property. And generally that rule has been observed in the English courts, but has been, subject to numerous exceptions, and has been uniformly limited to cases where a compensation in damages furnishes a clear and adequate remedy. If the party complaining has no such remedy, it is quite immaterial whether the contract relates to real or personal estate. 2 Story Eq. Jur. § 718. The exercise of equity jurisdiction does not proceed upon any distinction between real estate and personal estate, but because damages at law may not in the particular case afford a complete remedy.'' " The reasons given for a distinction between real estate and personal estate are not very satis- factory. All, as it seems to me, that can be fairly inferred from the cases on this point is, that in contracts respecting personal estate a compensation in damages is much oftener a complete and satisfactory remedy than it is in those which relate to real estate. But in all cases, if the party has not such a remedy, a court of equity will entertain jurisdiction, and grant relief as justice may require.'' ' Adderley v. Dixon, 1 Sim. & Stu. 611. CH. II.J PERSONAL OBLIGATIONS. 201 nership agreement by a due execution of the articles in pursuance thereof, it was referred to the master to settle proper articles of partnership upon the footing of the agreement ; and it was ordered that the parties should execute the same. And an ac- count was decreed of all dealings and transactions between the parties.^ § 204. Where the plaintiff is contented to take, damages, and to rehnquish the intention of becoming a partner, he may bring his action of assumpsit for breach of the agreement ; but in that case he must prove, with some degree of particularity, the terms of the intended partnership.^ In a case, however, in which it appeared that the defendant had induced the plaintiff to relin- quish the command of an East India ship, by promising to admit him at the ensuing Christmas into a partnership, in which the defendant was engaged, in the room of M., who had retired, and the plaintiff was to have one fourth of the business, undertaking, in the mean time, to procure, as many orders as he could ; it was held that this agreement was sufficiently specific to enable the plaintiff to recover damages, although a court of equity might have declined to compel the specific performance of it, on the ground that the partnership, when entered into, might have been instantly dissolved.* § 205. This brings us to observe, that a court of equity has refused to compel the specific performance of an agreement of this nature, in a case where either party might immediately after- wards have dissolved the partnership. Thus, by indentures be- tween Hercy, Birch, and Chambers, reciting that they had on the 25th x)f March last commenced copartners in the business of a banker, it was agreed that they should continue to^ carry on the said business for the term of seven years ; and that in case any or either of them should, after the expiration of that partnership, continue to carry on the business of a banker, either alone or in partnership with any other person, until any one or more of the parties to the indenture should have a legitimate or illegitimate son, whom the father should, by writing or by his wiU, desire to > Hibbert v. Hibbert, Rolls Trin. 1807. ^ Figes V. Cutler, 3 Stark. 139 ; Byrd v. Fox, 8 Missouri, 674; Vance v. Blair, 18 Ohio, 532. » M'Neil V. Reid, 9 Bing. 68 ; 2 Moore & Scott, 89. 202 MUTUAL EIGHTS OP PARTNERS. [BOOK 11. have introduced to the said business, and who should hve to attain the age of sixteen, the party or parties to the indenture, who should so carry on the said business of a banker, should take such son, whether legitimate or illegitimate, apprentice for five years ; and after the expiration of such apprenticeship should receive him into the partnership then carried on by any of the parties, and admit him to an equal share with the then partners. The business was carried on tiU the death of Hercy, and afterwards by the survivors. By his will, in pursuance of the power under the articles of partnership, he appouited an illegitimate son to be bound apprentice in 1802, when he would attain sixteen, and afterwards to be admitted into the partnership, according to the articles ; and he provided by his will the qualification for that purpose required by the deed. The bill was filed by that illegiti- mate son, having attained sixteen years of age, against the part- ners, praying that the defendants maybe decreed specifically to perform the agreement in the said indenture, and take the plain- tiff apprentice, and, at the expiration of the apprenticeship, admit him to an equal share of such business, &c. Lord Eldon dis- missed the bill, observing, that, even supposing the plaintiff could recover damages at law for the partner's refusal to take him ap- prentice, yet he was of opinion that this was such a covenant as a court of equity could not specifically execute. " No one," he said, " ever heard of this court executing an agreement for a partnership, when the parties might dissolve it immediately after- wards." ^ § 206. It is said that Lord Eldon was not quite satisfied with his decision in Hercy v. Birch ; ^ and certainly there are cases where the court will by injunction inhibit the dissolution of a part- nership." Where there has been a partnership under articles for a term, and the term has expired, the court would probably decree ' Hercy v. Birch, 9 Ves. 357; 2 Hov. Supp. 174. But a court of equity- may decree a specific performance of a contract to enter into a partnership for a specific term of time, and to furnish a share of the capital stock. 1 Story Eq. Jur. § 666, and cases in note ; Birchett v. Boiling, 5 Munf. 442 ; Story Partn. § 189, and notes. " 1 Madd. Chan. 411, note (x). ' Ibid, and see Chavany v. Van Sommer, 3 Wooddes. Lect. 416, n. ; Rams- bottom w. Parker, Madd. & Geld. 5; Story Partn. § 275; 3 Kent Com. 61, 62, in notes. OH. II.] PERSONAL OBLIGATIONS. 203 the specific execution of the articles ; not, however, with a view of continuing the partnership, but of investing the party applying with certain legal rights under the articles.^ But this can seldom be the object of the suit, where, as in the case before Lord Eldon, no partnership was commenced ; and therefore it may perhaps be laid down as a general rule, that a court of equity will not decree the specific performance of an agreement to enter into partner- ship, unless such agreement relate to a partnership for a term.^ And even though a court of equity will, under such circumstances, make the decree, yet, according to an old case, it wUl not direct an account of the profits from the time the plaintiff' ought to have been admitted, as the amount of such profits might have been recovered at law.* When a decree is sought for the specific per- formance of a partnership agreement not under seal, this being but a parol agreement, evidence may, of course, be given on the other side, that the agreement has been vacated by parol. § 207. Where the agreement to enter into articles is itself a deed containing covenants on both sides, an action will lie on any of these covenants ; but the success of such action will depend on the question, whether the covenant on which it is brought was the first to be performed, and has been broken before the cove- nants on the other side were to be executed.* In the case of Walker v. Harris,^ an action of covenant on an agreement for a ' Ibid, and see Gow Partn. 110; Story Partn. § 189, and notes. As to specific performance after term expired, see Mortimer v. Capper, 1 Bro. C. C. 156 ; Wilkinson v. Torkington, 2 You. & CoU. 726. The principle upon which courts of equity proceed in cases of this description is the same as that which induces it to decree execution of a lease under seal, notwithstanding the term for which the lease was to continue has already expired. See Wilkinson v. Torkington, 2 Y. & C. Exch. 720 ; 1 Lindley Partn. 797. ^ In the anonymous case in the Exchequer, mentioned in 1 Madd. Chan. 411, it does not appear that the partnership was for a term; but, from the particularity of the provisions there stated, we may conjecture that it was. There was an agreement amongst the partners, that, in case of the death gf either of them, they would execute a deed in favor of the executor of the person so dying, so as to constitute him a partner, upon giving his bond to perform the articles of partnership. Upon a bill for the specific perform- ance of this agreement it was decreed as prayed. ' Anon. 2 Vez. 630. Sed qu. ' See 1 Wms. Saund. 320, n. (4). ' 1 Anstr. 245. Where there is no previous covenant, so that the plain- 204 MUTUAL EIGHTS OF PARTNERS. [bOOK II. copartnership between the plaintiff and defendant was held main- tainable under the following circumstances. The plaintiff being in trade, and possessed of the lease of a house, agreed to take the defendant into partnership, and also to assign over to him a moiety of the interest in the house, " to commence from and after the 29th day of September then next, on the terms and conditions following : that is to say, the said Joseph Harris shall pay to the said Elizabeth Walker, on or before the 29th day of September next, the sum of £300, as a premium or fee to be admitted into the said partnership ; " it then provided, that the stock should be valued by two persons, one chosen by each of the parties ; and that the defendant should advance a sum equal to the value of the stock ; and after some other covenants, that proper articles of copartnership should, as soon as convenient, be made out. The first breach of this covenant assigned in the declaration was, that the defendant had not paid the sum of £300 on the day limited, although the plaintiff was willing to take him into partnership. The defendant pleaded, first, that no articles of copartnership had ever been made ; second, that the half in- terest in the premises had not been conveyed to him. To both these pleas the plaintiff demurred, and the court allowed the de- murrer, being of opinion that the covenant of the defendant was precedent to the other, and was broken before the other was to be executed. § 208. To proceed to the consideration of the partnership arti- cles : In doing which it may be observed, in the first place, that they are subject to that general rule of law by which, where the purpose of the parties is distinctly recited or mentioned in the instrument, the words which seem of general extent are confined to the declared intention of the parties.^ Thus, in the case of Gains- borough V. Stork,^ it was provided by the articles, " that, if either tiff can only bring his action on the articles themselves, of which he has not the possession, he may move for leave to inspect the partnership deedj stat- ing, by his affidavit, that he has 'brought his action against the defendant for damages for not taking him into partnership, pursuant to a deed in the pos- session of the defendant ; and likewise that he, the deponent, has neither copy nor counterpart. Morrow v. Saunders, 1 Brod. & Bing. 318. ' See 1 Fonbl. Treat Eq. 440 ; Ognel's case, 4 Rep. 48 ; Copeman v. Gal- lant, 1 P. W. 315, notes. ' Barnard, 312. ,CH. II.] PERSONAL OBLIGATIONS. 205 of the parties shovild die during the fourteen years intended for the partnership, and after an account passed between them, then the surviving partner should take to his o-vvn use all the goods, ready money, and things, which, on the last casting up before such death, should happen to be La stock between them, and should pay or satisfy to the executors or administrators of the deceased part- ner so much money as the share of such deceased partner amounted to at the time of such last account made." Afterwards, they made an indorsement on the articles to the following effect: — The preceding clause of the articles was in the first place recited ; it was recited likewise, that, in case of the death of either of the parties, there would be in all probabiHty, debts outstanding due to the partnership at New England and other parts beyond seas, and that by reason of such debts proving bad, and the variation of the exchange in New England, and other parts, the surviving partner might be much damaged by accepting such debts according to the making up of such last account on the foot of the articles ; there- fore, for preventing such loss to the surviving partner, in case of the death of either of the parties before the end of the copartner- ship, it was agreed between them, that, in case either of them should die before the expiration of the partnership, the surviving partner should not be accountable or liable to pay the executors of the deceased partner for any outstanding debts in New England, or any other parts beyond sea, which at such death were due to the joint trade, otherwise than as the joint effects should from time to time be gotten in and received by the surviving partner, and then only for the share thereof of the partner so dying. After this indorsement had been executed, two successive accounts were settled, and nine months after the latter settlement, Gainsborough, one of the partners, died. A bill was then filed by his executor against Stork, the surviving partner, for an account of the part- nership dealings, to which the defendant submitted ; insisting, however, that in taking the accoimt he ought not to be bound to take the foreign outstanding debts which accrued since the time of the last account to the time of the testator's death, and at most not till those debts should happen to be got in. But Lord Hard- wicke was not of that opinion. After observing, that it was very manifest that the intention of the parties was that their represent- atives should not be entangled in their accounts after their de- . cease, his Lordship stated it to be his opinion, that, by the plain 18 206 MUTUAL EIGtHTS OF PARTNERS. [BOOK II. construction of this indorsement, it only extended to such foreign debts as- should be contained in the last stated account before the death of one of the partners. The indorsement recited the articles, and by those articles only such foreign debts were included as did exist before the last stated accounts previous to the death of one of the partners. The words relied upon by the coimsel for the defendant were, which at such death were due ; and from thence it was inferred, that aU foreign debts were included which were outstanding at the time of such death. It was indeed true, that, if these words had stood by themselves, they would have included all the foreign debts which were outstanding at the time of such death ; but as the indorsement had a reference to the articles, wherein only such foreign debts were included which were out- standing at the time of the last stated account previous to the death of the partners, these words in it must be construed secun- dum suhjectam materiam. § 209. But, secondly, in the construction of partnership arti- cles, it will be necessary to bear in mind three important observa- tions made at different times by Lord Eldon ; they are these : (1.) Partnerships are regulated either by the express contract, or by the contract implied by law from the relation of the parties. The duties and obligations arising from that relation are regulated, as far as they are touched, by the express contract ; if it does not reach all those duties and obligations, they are implied and en- forced by the law.^ (2.) Partnership articles are read in a court of equity as not containing the clauses on which the parties have not acted.^ (3.) The transactions of partners are always to be looked at in order that you may determine between them, even against the written articles, what clauses in those articles will not bind them, provided those transactions afford a higher probability, amounting almost to demonstration.^ § 210. And again, in ordinary partnerships, nothing is more clear than this, — that although partners enter into a written • Crawshay v. Collins, 15 Ves. 226 ; Jackson v. Sedg-wick, 1 Swanst. 469 ; Petty V. Janeson, 6 Madd. 146; Story Partn. § 191; Smith v. Jeyes, 5 Beavan, 505 ; 1 Lindley Partn. 673 ; Blisset v. Daniel, 10 Hare, 522. ' Jackson v. Sedgwick, 1 Swanst. 469. ' Geddes v. Wallace, 2 Bligh, 297. But see Smith v. Duke of Chandos, Barnard, 419. CH. II.] PERSONAL OBLIGATIONS. 207 agreement, stating the terms on ■wMch the joint concern is to be carried on, yet, if there be a long course of dealing, or a course of dealing not long, but still so long as to demonstrate that they have all agreed to change the terms of the original written agree- ment, they may be held to have changed those terms by conduct. For instance, if, in a common partnership, the parties agree that no one of them shall draw or accept a biU of exchange in his own name, without the concurrence of all the others, yet, if they after- wards slide into a habit of permitting one of them to draw or ac- cept bills, without the concurrence of the others, a court of equity will hold that they have varied the terms of the original agreement in that respect.^ § 211. The words of covenant at the commencement of a part- nership deed, which are usually several as well as joint, and usu- ally extend to aU the succeeding stipulations, will be considered in a future, section. The more important stipulations have gener- ally reference to the — § 212. Nature of the husiness. — In order to warrant the ex^ tension of a partnership to a business or branch of business not originally contemplated by the parties, the unanimous consent of all the partners is requisite ; for it is competent to any individual member of a firm to insist that the business of the partnership shall be confined to the objects for which it was constituted. And therefore Lord Eldon decided that a joint stock company formed for the purpose of effecting fire and life insurances, could not, without the consent of all the shareholders (of whom the plain- tiff' was one), be extended to marine insurances ; his Lordship remarking, that "the court will restrain particular members from engaging other members in projects in which they have not con- sented to be engaged, or the engaging in which they have not encouraged, assented to, empowered, or acquiesced in, expressly or tacitly, so as to make it not equitable that they should seek to constrain them." ^ ' Const V. Harris, Turn. & Kuss. 523. Partners may make constant alter- ations in tlie terms of their partnership agreement, which may be evidenced not only by writing, but afeo by their conduct. England v. Curling, 8 Bea- van, 129. See M'Graw v. Pulling, 1 Freeman Ch. (Miss.), 357 ; Solomon v. Solomon, 2 Kelly, 18. ' Natusch V. Irving, Gow Partn. Appen. 407. See ante, §§ 196-198, and 208 MUTUAL EIGHTS OF PARTNERS. [BOOK 11. § 213, Time of commencement. — Where no time is mentioned for the commencement of a partnership, it will begin from the date of the articles ; and, at law, parol evidence cannot be received to show that it was intended to commence at a future period. In a late case this rule was adhered to, although the consequence was to defeat the deed by rendering the partnership illegal.-' § 214. Term of partnership. — Although a precise term be fixed, the partnership will be dissolved, unless there be a stipula- tion to the contrary, by the death of any of the parties.^ The mode of providing for the continuation of the partnership, not- withstanding the death of any of the parties, wiU be considered- hereafter.^ Where a partnership for a term is dissolved by efflux- ion of time, and afterwards the partners continue the business as usual without any new agreement, the latter partnership is a partnership at will. Where, therefore, A. and B. had been in partnership under articles requiring twelve months' notice of dis- solution, and the partnership expired by effluxion of time, and the parties continued to trade as before, this latter partnership was held to be dissoluble instanter at the will of either party.* But where a partnership is prolonged under the circumstances just mentioned, all the covenants of the old partnership, with the exception of that for duration, are infused into the transactions of the new partnership,^ and even a covenant for duration for the notes; 1 Lindley Partn. 511 et seq.; Morgan's case, 1 Mac. & G. 225; Davidson's case, 4 K. & J. 688 ; Smith v. Goldsworthy, 4 Queen B. 430 ; Davies v. Hawkins, 3 M. & S. 488 ; Bagshaw v. Eastern Union Rail. Co. 7 Hare, 114 ; 2 Mac. & G. 389 ; Simpson v. Denison, 10 Hare, 51 ; York & North-Midland Bail. v. Hudson, 16 Beavan, 485 ; Winch v. Birkenhead, &c. Kail. Co. 5 De G. & S. 562 ; Salomons v. Laing, 12 Beavan, 377; Clay w. Kufford, 5 De G. & S. 768 ; 1 Lindley Partn. 515. ' Williams v. Jones, 5 B. & C. 108. " This," says Mr. Justice Story, "is certainly pressing the law of implied construction to a great, but perhaps not to an undue extent." Story Partn. § 194. " Ante, § 119 ; Scholefield v. Eichelberger, 7 Peters, 594 ; Gratz v. Bay- ard, 11 Serg. & R. 41 ; Washburn v. Goodman, 17 Pick. 519 ; Story Partn. §195. = Post, § 228 et seq. ' Featherstonhaugh v. Fenwick, 1 7 Ves. 298. ' Per Sir A. Hart, 1 MoUoy, 466. The same doctrine was held in Brad- ley V. Chamberlin, 16 Vermont, 613 ; Mifflin v. Smith, 17 Serg. & E. 165 ; United States Bank v. Binney, 5 Mason, 185 ; Story Partn. §§ 197, 198, OH. n.] ' PERSONAL OBLISATIONS. 209 same length as the former partnership, may be implied from cir- cumstances. Thus, in a case where the term limited by the arti- .cles for the continuance of a partnership expired, and one of the partners resident in America, being desirous of renewing the con- nection, transmitted to his copartner in London the articles, with an indorsement of the renewal of them for a similar term, and the copartner continued to discharge his former duties as a copartner without any charges for commission, but never sent any formal renewal of the articles ; it was held, in America, that the partner- ship continued for the term stated in the indorsement, and was not determinable at any time at the will of either of the parties.^ § 215. Style of firm. "^ — Where the members of a partnership contract, by covenant, that the firm shall be A., B., C, and D., it is a breach of that covenant for A. to sign those instruments to which the covenant refers in the name of A. & Co. So, also, strictly speaking, it is no less a breach of that covenant for D. to sign his own name, adding " for self and partners."^ 278, 279. As where the active partner in a partnership for a limited period was, by the articles, to have nothing for his services unless profits were made in the business, and the partnership was continued after the period named, it was held that it would be presumed to have been continued on the same terms as to the services of the active partner. But it was also held, that, as it appeared he had continued to manage the concern after a dissolu- tion had actually taken place, in settling and winding up its affairs, he would be entitled to claim for these last-named services, inasmuch as the stipulation respecting his services would relate only to the business done during the actual existence of the partnership, and not to that done after the dissolution. Bradley v. Chamberlin, 16 Vermont, 613. ■ Dickinson v. Bold, 3 Desaus. 501. See Story Partn. § 198. ^ When partners agree that their business shall be done in the name of one person, whether himself interested in the partnership business or not, that is the partnership name, and the partners are bound by it. Rogers v. Coit, 6 Hill, 322 ; Bank of Rochester v. Menteath, 1 Denio, 405 ; Palmer V. Stephens, 1 Denio, 471, 481. ' Marshall u. Coleman, 2 Jac. & W. 268. See Faith v. Richmond, 11 Adol. & Ellis, 339 ; Story Partn. § 202 and notes. As to the right of the surviving partner to use the name of the firm, see Lewis v. Langdon, 7 Sim. 127; ante, §§ 161, 162, and notes. It is not indispensably necessary that the partnership name should be stated in the articles of partnership, but the name in which the books are kept, and the bills and accounts are made out, and by which the firm is generally known, becomes the legitimate name of the firm. Le Roy v. Johnson, 2 Peters, 198. In New York, by an iaet 18* 210 MUTUAL RIGHTS OP PARTNERS. " [BOOK II. § 216. Shares to he advanced. — If any share is to be ad- vanced by instaJments, this is deUtum in prcesenti solvendum in futuro; and therefore the partner admitted upon these terms is a. debtor to the partnership for the unpaid instahnents. In a case wherfi a sole trader agreed, in consideration of a sum payable by instalments, to take two persons into partnership mth him for a term of eighteen years, and became bankrupt five months after the commencement of the partnership, when only one instalment was due ; it was nevertheless held^ that, the two persons having bought the right of becoming partners, and having received the consideration for their money, -the bankrupt's assignees were en- titled, at the respective periods, to receive the whole of the remain- ing instalments.! § 217. Several rights in real property, ^c. — Where there is real property, fixtures, &c., it is sometimes covenanted that each party shall have a several right therein. It may be observed, that, upon the bankruptcy of the firm, the several interests in the real property so circumstanced will be distributable to the sepa- rate creditors of each partner respectively.^ § 218. Profits to be distributed. — The profits are usually pro- portioned to the shares.^ But where an agreement constituting a passed April 29, 1833 (Laws of 1833, p. 404), it is made a misdemeanor for- any person to transact business under fictitious names ; and where the desig- nation " and Company," or " and Co.," is used, it shall represent an actual partner or partners. ' Akhurst v. Jackson, 1 Swanst. 89. A partner, by failing to contribute his share of the partnership fund, does not, in ordinary cases, forfeit the in- terest which he already has in the firm, especially where no extraordmary emergency exists requiring it. Piatt v. Oliver, 3 M'Lean, 27. Where the amounts advanced by partners in the capital of a firm are unequal, a clause in the partnership agreement to share losses equally will cover the case of an entire loss of capital, which must be apportioned accordingly; and, in such case, although all the property of the firm be destroyed, yet each part- ner has a right to demand an account, and to have the loss equalized. Tay- lor w. Coffing, 18 111. 422. ' See post, Book 4, chap. 2, sec. 1 ; Smith v. Smith, 5 Yes. 189 ; Ex parte Smith, 3 Madd. 63. ' If a partnership adopt a project within the principles of their agreement for the purpose of profit, it must be for the benefit of all the partners, in proportion to their respective interests in the concern ; and if a majority of the partners should withhold from one of its members a share of such profit, CH. II.J PERSONAL OBLIGATIONS. 211 partnership is silent as to the amount of the shares of the respec- tive parties, it seems to be the rule in England to consider them as entitled to the profits equally.^ § 219. Personal duties of partners. — Under this head may- be classed the various duties of partners, which are usuaRy con- tained in the articles, but which necessarily arise from their con- nection ; such as the employing themselves diligently, being faith- ful to each other, the not borrowing money on the partnership account, &c. And here it may be remarked, that courts of equity cannot in general, from the nature of the subject, compel the performance of such of these duties as are of a positive na- ture, and must, therefore, in case of the breach of any of them, leave the parties to their remedy at law. But courts of equity will interfere by injunction to restrain the breach of negative duties between partners, even in cases where, if the relation of partners did not exist, they might refuse to interfere on the prin- ciple of not giving partial rehef.^ It seems scarcely necessary to remark, that the imphed obhgations between partners are so strong, that no inference can be raised in favor of payment of a salary to any partner for the discharge of his duties.^ § 220. Keeping of proper books, ^c. — It is usually not only provided that proper books of account shaR be kept, but that they shaU be open to the inspection of aU the partners. This, Uke many other of the rights declared by the articles, is no more than the legal right of a partner in aR cases. If a partner receives moneys, and does not enter the receipts in the books, or if he does not have them open to the inspection of the partners, it is a ground of serious complaint.* § 221. Not exercising the same trade on separate account. — In partnership engagements, a covenant, that the partners shall not carry on for their private benefit that particular commercial he may sustain an action against his copartners for the injury. Gray v. Eort- land Bank, 3 Mass. 366. ' ^n(e, §§ 167, 168. ° Kemble v. Kean, 6 Sim. 335 ; Kimberley v. Jennings, id. 340 ; 2 Story Eq. Jur. § 722, a ; Story Partn. § 224 ; Clarke v. Price, 2 Wilson, Ch. 157 ; Miles V. Thomas, 9 Sim. 606 ; 3 Kent Com. 60, 61. " Franklin v. Robinson, 1 John. Ch. 157. See ante, §§ 183, 199, and notes; 3 Kent Com. 37, note; Story Partn. §§ 182, 185. * Per Lord Eldon, 1 Jac. & W. 693 ; Story Partn. § 181. 212 MUTUAL EIGHTS OF PARTNERS. [BOOK H. concern in which they are jointly engaged, is not only permitted, but is the constant course.^ But a covenant not to practise on the partner's separate account does not extend to prevent him from canvassing for future business.^ If several persons enter into partnership, under a stipulation that the copartners or any of them shall not, duriag the continuance of the copartnership, en- gage ia any business otherwise than upon the account and for the benefit of the same copartnership ; and, after the execution of the articles, one of the partners, with the consent of the others, be- comes a partner in a separate firm, the articles of partnership, coupled with such consent, will not operate to make the other partners of the original firm partners also in the separate firm.* But a person may, by the decree of a court of equity, become a partner in the separate business of his copartner, entered into without his consent, in violation of the articles.* § 222. It has been observed by a learned writer,^ that the rule expressio unius est exdusio alterius applies to these covenants ; and therefore, if a party covenant not to be engaged in a particu- lar business, it is to be presumed that all others were intended to be left open to him. Upon this principle, where the proprietors of a morning paper had bound themselves by a covenant not to engage in any other morning paper, Sir John Leach held that this afibrded a conclusion that it was the intention of the parties that they might engage in an evening paper. He held, neverthe- less, that it was not competent for such as did engage in an evening paper to publish in it information obtained at the expense of the morning paper, until after it had been published in the morning paper ; this being inconsistent with their duties as part- ners in the latter.® Where, by articles of partnership, it was covenanted that the trade (which was of a brewer), should con- tinue for eleven years, with a proviso that, if either of the parties should be so minded, on giving six months' notice to the other, he ^ Morris v. Coleman, 18 Ves. 438 ; Universities of Oxford and Cambridge , Richardson, 6 Ves. 706. " Coates V. Coates, Madd. & Geld. 287. " Bosanquetw. Wray, 6 Taunt. 597; 2 Marsh. 319. • Somerville v. Mackay, 16 Ves. 382 ; 2 Hov. Supp. 450. ' Jarman's Conveyancing, Vol. 7, p. 98. « Glassington v. Thwaites, 1 S. & S. 132. C!H. II.] PBKSONAL OBLIGATIONS. 213 should be at liberty to quit the trade and mystery of a brewer, and the other party should be at liberty to continue the trade on his own account ; it was held, that the party giving notice could not carry on the trade elsewhere on his own account ; that he must elect either to continue the partnership, or entirely to give up such trade. 1 § 223. Decision of differences ly the majority. — Sometimes a clause is contained, for the purpose of deciding differences in this manner ; and where the parties are numerous, as in banks, news- paper offices, &c., such a provision may be highly useful. But if it be intended that, in case of difficulties, the majority shall have power to sell the whole concern, that intention should be clearly expressed ; otherwise it may be annulled by some other part of the instrument. In the case of Chappie v. Cadell,^ it was agreed that a partnership in the pubhcation of certain newspapers, con- sisting of a number of persons, should be managed by a committee of five, and by general meetings, at which the vote of the ma- jority was to be binding ; with a provision, that any one wishing to retire should first offer his share to the committee at a certain price, and, if they declined to buy, he might then sell it to any other person ; it was held, that the majority were not able to sell the whole concern without the consent of all ; but that, where aU but two were desirous of retiring, they might sell their own shares without making an offer of them to the committee. In a case,^ in which "the wishes of the majority were to be ascertained under a particular mode of notice prescribed by the articles, and that mode had been in two instances deviated from. Sir J. Leach held that it was much too late for any of the partners who had ac- quiesced in the alteration to complain ; and his Honor observed, in conformity with Lord Eldon's doctrine, thart though the parties would at law be bound exactly and in all points by the articles, yet in the consideration of a court of equity it was otherwise. § 224. Annual account. — The articles generally direct an annual account, valuation, and balance of the moneys, stock in trade, and credits of the partnership; and likewise an annual » Cooper V. Wattlington, 2 Chit. 451 ; s. c. 3 Doug. 413. " Jac. 537. On the powers of the majority in general, see ante, §§ 197, 198, and notes. » Glassi^gton v. Thwaites, KoUs, Mch. T. 1831. 214 MUTUAL RIGHTS OF PARTNERS. [BOOK n. account of tke debts due to the partnership. In a case, where partnership articles directed that a yearly settlement should he made on the 25th of March, and if a partner died his estate should share in no profits subsequent to the last yearly settlement ; and the last settlement was on the 5th of November, 1811, and a partner died in February, 1813, it was held that his estate should share profits up to the 5th of November, 1812.1 Here we may again advert to the second general rule, which we have abeady stated, respecting the construction of partnership articles. Upon the principle laid down in a former page,^ it was held, in the case of Jackson v. Sedgwick,^ that stipulations in articles of partner- ship for an annual settlement of accounts, and for payment to the representatives of a deceased partner of an allowance in lieu of profits since the last annual account, proportioned to the amount of his share of profits during two years preceding, are waived in equity by omission through several years to settle annual accounts, and by engaging in business to which the stipulations cannot be applied without injustice ; accordingly, in the same case, an in- junction was granted to restrain the representatives of a deceased partner from proceediug on a bond given by the surviving part- ners, for repayment of his share accordipg to the articles, before the settlement of accounts of transactions pending at his decease, on which a loss was subsequently sustained. § 225. Partners may agree, that, after an account is settled during their lives, it shall, notwithstanding any error, be conclu- sive after their deaths.* But clauses of this nature will not be binding in cases where the error has arisen from the fraud of any of the partners. Where, by articles of partnership, it was agreed that just and true accounts should be made out half-yearly, and signed by the partners, and that such accounts should not be afterwards called in question, except for errors discovered in the lifetime of all the partners, and the accounts were made out by one of the partners, and, after the death of two of the other partners, it was discovered that the accounts were fraudulent ; it was held, ' Pettyt V. Janeson, Madd, & Geld. 146 ; Story Partn. § 206. " Anle, § 209. » 1 Swanst. 460. * Gainsborough v. Stork, Barnard, 312. See Heath v. Corning, 3 Paige, 566 ; Stoughton v. Lynch, 2 John. Ch. 218. CH. II.] PERSONAL OBLIGATIONS. 215 by Sir Lancelot Shadwell, that the fourth partner was entitled to have the accounts of the partnership taken from the date of the articles, the estates of the deceased partners heing liable to bear a due proportion of the losses occasioned by the fraud. ^ § 226. Q-eneral account upon the dissolution or expiration of the partnership. — This constant clause is usually followed by another, pointing out the mode of winding up the concern, and distributing the partnership property. Mr. Jarman observes,^ that, " on the dissolution of a partnership, there are two ordinary modes of winding up the affairs of the concern ; one is by a gen- eral conversion of the partnership assets, and dividing the pro- duce, after providing for debts, among the partners, in proportion to their respective interests. The other is, for one partner to pur- chase the share of the other, usually at a valuation. The former is the mode in which the property is dealt with by a court of equity in the absence of express stipulation, and indeed in every case is necessarily the rule where there is no positive agreement ; without which, of course, neither partner can claim to take the share of the other at a valuation, then- rights being equal.^ The latter mode of arrangement is generally stipulated for in articles, in the event of the dissolution of the partnership by the death, expulsion, or voluntary retirement of either of the partners, espe^ cially where the property consists of an interest in land, stock, or machinery, which is essential to carrying on the trade." § 227. A clause, that his share shall be taken at a valuation, has sometimes been applied to the case of the bankruptcy of a partner. It is very doubtful, however, whether a provision in the articles, that, on the bankruptcy of a partner, his share shall be taken by the solvent partners at a sum to be fixed by valuation, and payable by instalments in a course of years, is not void by the law of bankrupts. For, if such a provision were permitted, the effect would be, that a partner could by contract control the disposition of his property in the event of his own bankruptcy. In the case of Wilson v. Greenwood,* a clause of this nature was ' Oldaker v. Lavender, 7 Sim. 239. ' See 7 Jarm. Con v. 31. ' See Featheirstonhaugli v. Fenwick, 17 Ves. 298. ' 1 Swanst. 481, and the Keporter's note (a), -where many cases to this 216 MUTUAL RIGHTS OF PARTNERS. [bOOK II. . contained, not in the original articles, but in a subsequent deed, ■wbicli was executed in order to exten.d to bankruptcy a provision in the articles applicable to death alone, and evidently made in contemplation of that event ; on which ground Lord Eldon held it to be clearly void, without deciding the general question as to the validity of such provisions in the articles themselves. It may here be remarked, that, where articles stipulate for a division of the partnership stock at the end of the partnership, a sale, and not a specific division of the articles, is intended.^ § 228. EsDecutors or legatees carrying on the trade of their de- ceased partner. — Where a partnership is constituted for a long term of years, a clause is generally introduced, empowering the representatives of the deceased partner to carry on the trade in conjunction with the survivors, for the benefit of the widow and children of the deceased partner ; ^ for otherwise, notwithstanding the length of term, the partnership would expire.^ In cases of this nature, if it be clearly the primary object of the articles to perpetuate the partnership, courts of equity wiU assist in the at- tainment of that object; and therefore, although the articles may likewise partake of the nature of a settlement, yet the interests of the persons taking under the settlement will be made subservient to the primary object of the parties, — the continuance of the partnership. In Balmain v. Shore,^ by certain articles of part- nership it was covenanted, that, in case of the decease of any of the copartners, no benefit or advantage of .survivorship should be had or taken by the others of them in anywise ; but that, upon the death of any of the said copartners, the share of him or them so dying should go and of right belong to his or their widow or widows, during her or their life or respective lives. And, after the decease of such widow or widows, her or their share or shares in the said joint trade should go and of right belong and appertain unto, and be equally divided among, their respective children (if point are cited. See 7 Jarm. Conv. 32. But see D'. Sir W. Grant, 1 Swanst. 89. > Rigden v. Pierce, Madd. & Geld. 353 ; s. c. 6 Madd. 353. But see Cookson V. Cookson, ante, § 150. " Pemberton v. Oakes, 4 Euss. 154. = Crawford v. Hamilton, 3 Madd. 254. See ante, § 119. * 9 Ves. 500; 2 Hot. Supp. 187. CH. 11.] PEESONAL OBLIGATIONS. 217 more than one), share and share ahke. It was also provided, that if any of the parties should be disposed to sell his share of the trade, he should offer It, In the first instance, to the others. The question was, whether, under this Instrument, all the children took vested interests in the partnership shares, as they were born, so that, though some died before their mothers, yet their shares were transmissible ; or whether such children only were entitled as were living at the deaths of their respective mothers. Sir William Grrant held clearly, that those children only were entitled who were living at the deaths of their respective mothers. He said, it must be admitted, that, if this were a settlement of a sum of money or other property, the children would take vested in- terests ; and the words " after the decease of such widow," &c., would postpone, not the commencement of the interest, but only the commencement of the possession. But he thought that the words must receive their construction from the consideration of the particular instrument. The primary object was to constitute a partnership, and to ascertain the manner in which the shares were to be enjoyed in succession. It was but a secondary object (and through that medium) to give a benefit to the families ; and it appeared to him that the object of this clause was to designate and ascertain who were to supply the vacancies as they should happen ; that no interest was intended in anticipation to any one ; but that the object was to provide for the filling up of that va- cancy which might happen by the death of any party interested in the partnership. That this was the more evident, from the provision as to the sale of a share, which was perfectly incom- patible with the supposition that the children, as they were bom, should take vested interests in the partnership shares of their parents. § 229. As the leading object of a deed of partnership is to limit and settle the respective interests of the 'partners inter se, and not to make a settlement for persons claiming under the part- ners individually, it follows that a power of appointment by will, given to one of the partners by the deed of partnership, need not be executed strictly, in order to be effectual. In the case of Pon- ton V. Dunn,i it was stipulated by a partnership deed that the > 1 Russ. & Myl. 402. 19 218 MUTUAL EIGHTS OF PARTNERS. [bOOK II. testator's interest in the partnership concern, after his death, and during the term of his partnership, should go to such persons as he should, by will, name or appoint, and, in default of appoint- ment, that it should devolve to his "wife ; in case, of her death, to his children, in equal shares ; and, in case of the death of all his children, to his executors or administrators. The testator made a wiU, not containing any allusion to the power, by which he gave aU his estate and effects to one of his children. It was held, that, according to the true construction of the partnership deed, it was not intended to create a technical power of appointment, but to reserve to the testator an absolute power of disposition by will ; and, consequently, that the testator's interest in the partnership passed by this bequest.^ § 230. Clauses providing for the admission into the firm of a deceased partner's representatives will, in general, be construed as giving to them an option to become partners, and not as con- stituting them partners absolutely ; for, to produce the latter effect (assuming that such effect can be produced), the intention should be unequivocally expressed.^ Thus, where, in a deed of partnership, the term of which was to be nineteen years, it was provided, that, if either of the partners should die during that term, " the widow or other legal personal representative of the partner so dying should be let into the said partnersTiip concern, and be and become a partner therein, in the same manner, and upon the same stipulations," &c., " as the partner so dying stood at the time of his decease ; " but so that any future husband of any such widow should not interfere in the management of the concern ; it was contended, that this clause, though giving an option to the widow, was absolute, if she decUned, as to the personal representatives. Alexander C. B., however, was of opinion that it was a covenant only to permit them to become partners if they thought proper, and that they were entitled to a reasonable time for declaring their election after their testator's ' It seems that the bequest of a sliare in a joint stock concern will not pass profits accruing after the making of the will, but that a bequest of the whole of a man's interest in a partnership will pass such profits. See D. Sir S. Komilly arguendo, Norris v. Harrison, 2 Mad. 277. ^ 7 Jarm. Conv. S3; Kirkman v. Booth, H Beavan, 273; 1 Lindley Partn. 890, 891. CH. II.] PERSONAL OBLIGATIONS. 219 decease ; for -wMch purpose an opportunity should be given them of inspecting the parimership accounts.^ In the case of Wain- wright V. Waterman,^ by a power under the articles, one of two partners appointed his executors to carry on the trade in his room, and desired them to nominate J. a partner, and give J. a legacy of £4,000 when he should become a partner, but directed it to sink into the estate if he should die before twenty-one, or decline to be a partner, and give the rest among his grandchildren. Afterwards, the testator by a codicil expressed himself thus : " It shall be entirely in the discretion of my executors whether to appoint J. to be a partner or not, any direction in my will to the contrary notwithstanding ; and if they do not think proper to appoint him, the legacy given to him to be void." The testator died before J. attained his age of twenty-one. J. afterwards filed his bill against the executors,^ praying to be admitted a part- ner from the time of his attaining the agg of twenty-one ; for an account of the profits from that time ; and to have his legacy paid him. Lord Thurlow decreed according to the prayer of the bill, being of opinion, that though, by the terms of the codicil, the executors had the right to exclude the plaintiff from the part- nership, yet, under the circumstances Of the case, -they could not avail themselves of that right. The only question was, whether, as they differed in opinion about admitting the plaintiff, some be- ing for it and some against it, it was possible to exclude the plain- tiff, under all the circumstances. He thought not. If the execu- tors had united in declaring that he was unfit to be admitted, they had a right to exclude him ; and the consequence must have been, unfortunately, that he must have lost the £4,000 and all the rest ; but, as the circumstances were, and as they made no such declara- tion, either before he was twenty-one or at that time, the plaintiff was entitled. § 231. It seems reasonable, that, when a continuation of the partnership is clearly intended by the articles, a representative or legatee, who is appointed partner by a will made in pursuance of the articles, should abide by the terms of the will, by becoming a partner, if he elect to take the benefit of the will. In the case of • Pigott V. Bagley, M'Clel. & Y. 569. 2 1 Ves. 311. ' This was held sufficient, without joining the grandchildren. 220 MUTUAL EIGHTS OF PARTHERS. [eOOK II. Crawshay v. Maule/ the testator Crawshay was, it is true, a sole trader; yet 'the language there used by Lord Eldon seems to warrant the observation which has just been made. Crawshay, being possessed of certain mines and iron works held under leases, bequeathed them in shares to his executors. A., B., and C. as partners. A., B., and C. carried on the concern for some time in partnership, but without articles. B. assigned his share to A. ; C. died. Although it was held, on general principles, that at C.'s death the partnership between him and A. was dis- solved, and that C.'s executor could not compel A. to continue the partnership with him for the benefit of C.'s children, yet Lord Eldon said : " If Mr. Crawshay, the testator, had thought proper by his will to declare that his legatees should continue the partnership as long as the longest of the leases should endure, no person claiming under that will could enjoy the benefit conferred by it, without submitting to the inconvenience which it imposed." But where a person is appointed a partner by will, the articles not expressly intending a continuation of the partnership, the appointee may elect either to become a partner, or, if necessary, to hav« the whole partnership concern wound up for his benefit. Thus, in Kershaw v. Matthews,^ the residuary legatee of a de- ceased partner claimed, under some clauses of the partnership deed, to be admitted a partner, or to have it declared that the partnership was dissolved. Lord Eldon : " If there is a partner- ship carried on under the articles which stipulate, that, upon the death of- a partner, he shall be succeeded in the business either by some person whom he shall appoint, or by his executors, it may happen that his appointees or his executors do not think proper to come into his place on the same terms on which he was a partner in the concern. In that case, the death of the party puts an end to the partnership. The stipulation may be, that the appointee or executor of the deceased partner is to be a partner only if he does this or that particular thing. If the executor or appointee refuses to comply with the proviso, the whole concern must be wound up." § 232. Where, by articles of partnership, it is agreed that the ' 1 Swanst. 512. " 2 liuss. ()2 ; 1 Russ. 361 ; the author has searched for this case in the Kegistrar's book in vain. CH. II.] PERSONAL OBLIGATIONS. 221 executors or administrators of a partner dying shall continue the partnership if they think jit, they will be considered partners unless they give notice, within a reasonable time, to the con- trary.i Where the children succeed to the share of their parent, the surviving partner is not entitled to an allowance for his man- agement, time, or labor in carrying on the trade. In such case, although he may be the sole conductor, he is considered as carry- ing on the trade for the benefit of himself and his copartners, and therefore, to entitle him to an allowance, there should be a stipulation to that effect.^ We have already had occasion to re- mark on the disadvantages attending the appointment of a surviT- ing partner as executor to his deceased copartner.^ § 233. Clause of expulsion. — This, though a usual clause in articles of partnership, is generally confined to such acts as are most strongly in contravention of the partnership agreement, as bankruptcy, insolvency, &c. It has been held that the word " in- solvency," in clauses of this nature, means an inabiUty to pay the partner's just debts, and does not merely import that he should have been discharged under the Insolvent Debtors Act.* Where it was provided, by articles of partnership, that it should be law- ful for the partners to dissolve the partnership, as to any partner who should make any mortgage, pledge, sole assignment, or other disposition of his share of the partnership stock and effects, or who should become bankrupt or insolvent, or should permit any part of the partnership property to be taken in execution for his separate debt ; it was held, that a partner was not under this pro- vision debarred from giving a warrant of attorney, but only that, in case it produced a certain efiect, his copartners were empow- ered to determine the partnership.^ § 234. Arbitration. — A stipulation, that disputes arising be-' tween the partners shall be referred to arbitrators to be named by the respective partners, is almost invariably inserted in deeds of » Morris- u. Harrison, Colles P. C. 157. " Burden v. Burden, 1 Ves. & B. 170; Stockton v. Dawson, 6 Beavan, 371. See ante, §§183, 199, note. ' Ante, §§ 131, 187, 188. • Parker «. Gossage, C. M. & R. 617 ; 1 Tyr. & Grang. 105 ; Biddlecombe V. Bond, 4 Ad. & Ell. 332 ; 5 Nev. & Man. 621. ' Mills V. Osborne, 7 Sim. 37. 19* 222 MTJTUAL EIGHTS OF PAKTNEES. [bOOK II. partnership.^ How far an arbitration may be enforced on tbe footing of this clause is a point which will be considered here- after.2 With regard to the power of the arbitrator, when named and in the performance of his duty, it may be remarked, that, when the reference is of all matters in difference between the parties, he may clearly direct the partnership between them to be dissolved.^ And where the terms of the dissolution are left to his discretion, he may impose upon the parties any of the ordi- nary terms of dissolution. Thus, it is a very usual condition accompanying a dissolution of partnership, that one of the part- ners shall not carry on business within a certain distance of the other ; and where it was agreed by two partners, A. and B., by submission to arbitration, to dissolve the partnership, and that all matters in difference between them, and the terms and conditions on which the copartnership should be dissolved, should be referred to an arbitrator, it was held that the arbitrator had not exceeded his authority in determining that it should not be lawful for B., during the lifetime of A., to carry on the partnership business within thirteen miles of A.* However, in a case where by arti- cles it was declared that the partnership should be bound by all usual and customary conditions of partnership concerns, as fully as though the usual covenants, clauses, and provisos were inserted, and that either party should have power to dissolve the partner- ship, upon notice ; all disputes to he referred to arbitration ; and the arbitrators to have a power of dissolving the partnership, if they should think proper ; Lord Eldon held it questionable whether the covenant to refer extended to the settlement of all accounts posterior to the dissolution.^ § 235. When the arbitrator directs that one of the partners shall receive all the outstanding debts, the award ought to make provision for whatever that partner may receive in respect of ' Where one partner gave his son a power of attorney, " to act on his behalf in dissolving the partnership, with authority to appoint any other per- son as he might see fit ; " it was held that this gave the son power to submit the accounts to arbitration. Henley v. Soper, 8 B. & C. 16. ^ Post, chap. 3, sec. 1. 2 Green v. Waring, 1 W. B1.475. * Morley v. Newsome, 5 Dowl. & Ryl. 317. ' Street V. Kigby, 6 Yes. (Sumner's ed.) 815 and note (a). OH. II.] PERSONAL OBLIGATIONS. 223 dubious debts ; and any over-receipt in respect of good debts will come within the same principle as a receipt on account of the dubious debts. ^ Where houses or other real property belonging to the partnership are made the subject of division by arbitrators, it should seem that, in ordir to avoid a capricious mode of division, the arbitrators ought to act upon the same principles as are appli- cable to a partition by commissioners, under a decree of partition.^ "Where an award was made in pursuance of an agreement under which the arbitrators had power to direct a division of the mes- suages of the partnership between two partners, and the arbi- trators awarded that one partner should pay a certain sum to the other, and that the latter should convey all the messuages to the former, it seemed to be the clear opinion of the Court of Ex- chequer, that, unless there was a previous arrangement between the partners to that effect, the arbitrators had exceeded their au- thority in awarding the messuages to one of the partners, rather than dividing them between both.^ But, generally, upon a sub- mission by partners of aU acj^ons, notes, accounts, deaUngs, con- troversies, demands, &c., relating to the partnership, an award giving to one partner all the joint property, and directing him to pay to the other partner a sum in gross, and to discharge all the debts of the firm, seems to be unobjectionable.* § 236. Liquidated damages. — Articles of partnership fre- quently conclude with a stipulation, that, on the breach of any of the covenants, the offending party shall pay to the other a specific sum of money, by way of liquidated damages. Such a provision is particularly useful in regard to some species of covenants, the non-performance of which is likely to be attended with an extent of injury not easily ascertainable ; but it is useless where the non- performance of the covenants would be attended with an ascer- tained damage of a different r.mount.^ § 237. It remains to make a few remarks on deeds of dissolu- tion. At law, a partnership under deed, when dissolved by con- ' Spencer v. Spencer, 2 You. & Jerv. 256. " See Story v. Johnson, 2 You. & Coll. 586. ' Wood V. Wilson, 2 C. M & R. 241 ; 5 Tyr. 813. * Byers v. Van Deusen, 5 Wendell, 268. ' For more on this subject, see section 1 of the next chapter. And see 7 Jarm. Conv. 83 ; Chitty Cont. (6th Am. ed.), 973 et seq. 224 MUTUAL RIGHTS OF PARTNERS. [BOOK IL ■ sent, must be dissolved by deed ; according to the general rule, tbat a covenant under hand and seal can only be discharged or qualified by an instrument of equal solemnity.^ But where, from the circumstance of the partnership having been constituted by deed, or of there being an express covenant to that effect, it is necessary, in order to effect a legal dissolution, that it should be by deed ; it is sufficient compliance with the legal requisition, if a submission to arbitration and an award directing a dissolution are made under seal.^ And in a court of equity, it is appre- hended that, upon a bill filed for a dissolution and account of such a partnership, it would be competent for the defendant to show that the partnership had been dissolved by parol, and that an ac- count had been already settled. When partners enter into a deed of dissolution, such deed, in order to have immediate operation, ought to contain express words to that effect. For it has been held that a covenant by two of several partners, to convey to the other partners, on or before a day named, all their interest in the partnership concern, is not £t dissolulipn, even as between the par- ties, but amounts only to an agreement for a future dissolution.^ The deed of dissolution usually contains a declaration that the partnership is dissolved, — an assignment of the retiring partner's share of the stock, credits,* and good-wiU ® to the remaining part- ' Doe V. Miles, 1 Stark. 181 ; Rackstraw v. Imber, 1 Holt, 368 ; Countess of Rutland's case, 5 Rep. 26 ; Blake's case, 6 Rep. 44 ; Story Partn. § 268 ; Gow Partn. (3d ed.), 224. ^ Hutchinson v. Whitfield, Ir. Exoheq. Rep. 78. * Emmet v. Butler, 7 Taunt. 599. ' Where two partners dissolve partnership, and one of them assigns to the other his share of the partnership credits, in consideration of a sum of money paid by the latter, the deed is not liable to the ad valorem duty on purchases. Belcher v. Sikes, 6 B. & C. 234. " It is observable," says Mr. Jarman, " that in this case the assignment was not confined to the assignor's share in the partnership credits, but extended to his share in the other joint effects. It is understood, however, that there were no other effects, and the reasoning of the court evidently applies only to such a case, being founded solely on the nature of the subject, as consisting of cJioses en action, and not on the nature of the transaction as between partners on a dissolution. It would be unsafe, therefore, to consider the case as an authority for the ex- = Ante, § 161. CH. II.] PERSONAL OBLIGATIONS, 225 ner, in eonsideration of a repayment of the retiring partner's capi- tal, — a covenant of indemnity to the retiring partner against the debts of the old firm, — and a mutual release of all actions, &c., on the partnership account. § 238. If the retiring partner leave his share of the capital in the firm, we have seen, that, under a particular mode of receiv- ing the produce of such capital, he may still be exposed to the liabilities of a partner ; ^ care, therefore, should be taken to avoid such consequences. It seems clear that an agreement by a retir- ing partner to receive an annuity out of the firm, so long as the continuing partner remains in possession of the partnership prem- ises, would not constitute the annuitant a partner. And the de- cision in Holyland v. De Mendez^ seems to sanction this remark. There it was agreed, on the dissolution of a partnership, that the continuing partner should, in consideration of an assignment to him of the partnership property, including a lease of the premises on which the business was carried on, secure to the retiring partner the payment of an annuity, by bond, conditioned to be void on payment of the annuity, " or in case he should at any time after the expiration of the then existing lease be dispossessed of and compelled to quit the premises, without any collusion, con- trivance, act, or default of his own." The continuing partner ob- tained a renewal of the lease, and afterwards became bankrupt, and the renewed lease passed under the assignment of his estate. It was held, that this was not such an eviction or dispossession as was contemplated by the agreement in the event of which the annuity was to cease. Under the same circumstances, namely, of a partner retiring, and leaving his capital in the firm, it will be necessarily unsafe to reserve a usurious rate of interest for the capital left in the firm ; though this observation, perhaps, only applies to a usurious agreement in the deed of dissolution itself. emption, when the assignment operates upon the other property transferred jointly with the credits for one entire consideration ; in which case it is clear that the ad valorem duty, if payable in respect of any part of the con- sideration-money, must apply to the whole. In order to exempt the assign- ments of credits, the consideration-money should be apportioned." 7 Jarm. Conv. 309. > » An(e, § 48. 2 3 Mer. 184. 226 MDTUAL EIGHTS OF PARTNERS. [BOOK II. For where, by a deed of dissolution between A., B., and C, A. and B. covenanted to replace C.'s share of the capital by instal- ments, and afterwards a new agreement was entered into by parol, which secured a usurious rate of interest to C, it was held that the effect of considering the latter agreement void was, not to invalidate, but to set up the original agreement and make that binding on the parties, for that the second agreement was not a performance of, but a substitution for, the former transaction.^ § 239. If there be incoming partners, and they undertake to pay the debts of the old partnership, they should enter into an express covenant for that purpose. Where, however, from inac- curacy in the penning of the instrument, there is no express cov- enant to that effect, a court of law will imply one from the general tenor of the deed. Thus, in Saltoun v. Houston,^ upon the re- tirement of Simon Frazer the elder from the firm, an indenture was executed by him and the new partner, Simon Fraser the younger, and Houston. The deed reciting, that whereas it had been agreed by and between the parties, that the whole of -the debts and credits of S. Fraser senior should be received and paid by S. Fraser junior and Houston, and that the balance due to Fraser senior, amounting to £38,033, should be accounted for and paid by them in manner thereinafter mentioned, and reciting that S. Fraser senior had assigned the debts and credits to them, witnessed that it was agreed, that, in consideration of £12,000 paid to Fraser senior by Houston, and for raising £24,000 as Fraser junior's share of the capital, the sum of £36,000, part of the £38,033, was to be retained by Frazer junior and Houston, and the remaining £2,033 paid to Fraser senior by instalments ; and if any of the debts should prove bad, the loss should be borne by Fraser junior and Houston. The Court of Common Pleas held clearly, that, although the agreement to pay the debts of the old firm was contained in a recital, yet the deed, taken altogether, amounted to a covenant for that purpose. § 240. When one partner is indebted to his copartner on a sep- arate account, it may be necessary, either during the partnership or by the deed of dissolution, to make some arrangement by which ' Parker v. Ramsbottom, 3 B. & C. 257. » 1 Bing. 433 ; 8 Moore, 546. CH. II.] PEUiSONAL OBLIGATIONS. 227 the debtor-partner shall be expressly exempt from an action on that account by his copartner. An arrangement, without some provision to this effect, will not save the debtor-partner from the consequences of an action. Thus, in the case of Simpson v. Kackham,! the plaintiff and the defendant were partners, and, the defendant being- indebted to the plaintiff on a separate account, it was agreed between them that the plaintiff should take ,£2i per cent, interest on his separate account for six months, from March 1st, 1827, and £5 per cent, afterwards ; that the partnership ac- counts shall be made up, and the defendant's share of the proceeds go towards the hquidation of his separate debt ; that the plaintiff should receive sums due to the firm, discharge the partnership debts, and apply the balance towards discharging the defendant's separate debt ; that the partnership might be dissolved any Ist of January, on six months' notice being given, but that, in conse- quence of the plaintiff's concession as to interest, it was expected there should be no dissolution on the 1st of January next en- suing. It was held, that this agreement did not suspend the plaintiff's right to sue the defendant for the separate debt due from him to the plaintiff. In delivering the judgment of the court, Park J., observed, that although, by the stipulation of interest at £2i per cent, for six months, it seemed probable that it was in the contemplation of the contracting parties to suspend any pro- ceedings at law for that period at least, yet it was certainly quite clear that there was no precise stipulation for a suspension ; and, therefore, how could the court say to what period that stipulation should extend ? He added, that the stipulation, also, that the de- fendant's share of the partnership assets, when received by the plaintiff, should go in discharge of the prirate debt, was an advaji- tage to the defendant, for it gave him a legal set-off to that extent ; whereas, without such stipulation, the plaintiff might have sued for the whole private debt, and left the defendant to a suit in equity to recover his share. This seemed another reason for not considering any thing in the agreement as amounting to a sus- pension. § 241. Where, by a deed of trust executed by A., one of sev- eral partners, the trustees were to stand possessed of that partner's • 7 Bing. 217 ; 5 Moore & Payne, 612. 228 MUTUAL BIGHTS OF PARTNERS. [BOOK 11. share upon trust, " thereout to pay the just proportion or share of him the said A., of all such debts as were or should thereafter appear to be owing from him jointly and as a copartner ; " it was held, that this provision referred, not to what, as among the part- ners, A. might be bound to contribute, but to what, with reference to the state of the partnership funds, and the ability of the other partners, he might eventually be called on to contribute to the joint debts ; so as they might be fully paid.^ It may here be remarked, that, although different classes of creditors are specified by a deed of this nature, yet the court always leans in favor of an equal payment ; and a declaration, that one class, as, for instance, separate and scheduled creditors, are to be paid ratably and in proportion to each other, is not of itself sufficient to prove that they are not also to take ratably and in proportion with the other creditors, as, for instance, the joint creditors.^ § 242. A deed of dissolution, which on the face of it purports to settle all past transactions, and to prevent all future reckonings between the parties, will extend, under certain circumstances, to contracts which were not originally partnership contracts. In Belcher v. Sikes,^ an indenture of dissolution, after reciting that A. and B., in May, 1813, had entered into a contract with the commissioners for victualling the navy, to supply his Majesty's ships with sea provisions and victualling stores, and that the said A. and B., in September, 1813, had mutually agreed to dissolve the copartnership entered into by them as aforesaid, for carrying on the business of the said contract, and all other contracts en- tered into with the commissioners by B. or A., and in which they or either of them were in anywise interested, &c., witnessed that A. and B., by mutual consent, dissolved the said copartnership so entered into, and then or lately subsisting between them, under or by virtue of the said recited contract, and of all other contracts in which B. and A., or either of them, had any interest or concern as aforesaid. The deed then contained a mutual release of all actions, accounts, reckonings, &c., for or by reason of the said copartnership or copartnerships so thereby dissolved as aforesaid, ' Wadeson v. Bichardson, 1 Ves. & B. 103. ^ Ibid. See Pearce v. Slocombe, 3 You. & Coll. 84. '8 B. & C. 185; 9 D. &R. 231. CH. II.J PERSONAL OBLIGATIONS. 229 or for or by reason of any of the acts, matters, and things what- ever in anywise relating to the said recited contract, and all other contracts in which B. and A., or either of them, had any interest whatsoever. B. then assigned to A. all the share and interest of him (B.), of and in aU the debts and sums of money whatsoever then due and owing to them (A. and B.), under or by virtue of the same several contracts or otherwise, and all bonds, bills, &c., relatiog to the said contract, debts, and sums of money, or any part thereof, and all the goods, stock, and effects whatsoever then belonging to them, the said A. and B., as such copartners respec- tively, and all the right, title, and interest of him (B.) of, in, to, from, out, or in respect of the premises ; and a power was then given to A. to recover and give discharges for the said debts. At the time when this deed was executed, B. and A. had been con- cerned in conducting business together as contractors for the navy. In some contracts, B. was solely interested as contractor ; in others, A. was solely interested as contractor ; and in some, they were jointly interested as partners and contractors. They had, however, both been concerned in aU the contracts ; A. hav- ing been agent in managing those contracts in which B. was solely interested, and B. having been agent in managing those contracts in which A. was solely interested ; and there was money due from the commissioners of the navy in respect of each of these classes of contracts. The Court of King's Bench held, that by this deed the contracts in which B. had been originally separately interested were constituted as between A. and B. partnership contracts, and, consequently, that A. was entitled by the deed to receive all sums due to B. in respect of those contracts, at the time of the execu- tion of the deed. § 243. Where, upon the dissolution of a partnership, it is agreed that certain specific articles shall become the exclusive and separate property of one of the partners, that agreement is final, and the other partners have no lien upon that property in case of a deficiency of assets. Thus, upon the dissolution of a partner- ship between A. and B., coach-founders, it was agreed that B. should have a certain book used in their trade, containing plates of the articles they sold ; that until a copy thereof was made for A., the latter should have the use of the original ; and that a fund should be appropriated to the payment of the partnership debts. The partnership was dissolved upon these terms, and B. entered 20 230 MUTUAL EIGHTS OF PARTNERS. [BOOK II. into a fresh partnership with the plaintiff. B. having become bankrupt, and the fund having proved insufficient, A., who had got the book into his possession, refused to dehver it up until B.'s estate should have been applied to make up one moiety of the deficiency. Upon a bill filed by B.'s partner to enforce his right to have a copy of the book made and delivered to him, it was de- creed according to the prayer of the bill, with costs.^ Sir J. Leach, in dehvering judgment, observed, that, if this reference- book remained partnership property, it would be unquestionable that the plaintiff could not be entitled to relief without a general arrangement of the partnership concerns ; for, until such general arrangement, no partner could claim an exclusive right in any article of the partnership property. But, upon a dissolution, any part of the partnership property might, by contract of the part- ners, be converted into the separate individual property of either ; and it was clear here that, upon the dissolution, the book became the separate property of B., subject to the delivery of the copy to the defendant, and the interim inspection. The plaintiff's claim, therefore, did not refer to any article of partnership prop- erty. Where a retiring partner takes from the continuing partner a covenant or bond of indemnity against the partnership debts, that bond or covenant may be enforced by a decree for specific performance.^ ' Lingen v. Simpson, 1 S. & S. 600. Agreements made upon or with a view to a dissolution, not to carry on business within a certain dis- tance or for a certain space of time, may be enforced. Whitaker v. Howe, 3 Beavan, 383. So agreements that a third party, and he only, shall get in debt. Davis v. Amer, 3 Drew, 64. So agreements that the value of the share of an outgoing or a deceased partner shall be ascertained in a specified way, and taken accordingly. Morris v. Kearsley, 2 Y. & C. Ex. 139 ; Es- sex V. Essex, 20 Beavan, 442 ; King v. Clark, 17 Beavan, 325 ; Featherston- haugh V. Turner, 25 Beavan, 382. See Gibson v. Goldsmid, 5 De G. Mac. & G. 757; Cooper K. Hood, 7 W. E. 83. So agreements to grant an an- nuity to a retiring partner and his widow. Aubin v. Holt, 2 K. & J. 66. So agreements not to divulge or make use of a trade secret. Morison v. Moat, 9 Hare, 241 -, 1 Lindley Partn. 800. ' Warren v. Taylor, 8 Sim. 599. Where, on the dissolution of a partner- ship existing between D. & F., D. agreed that F. should take all the stock and effects, and pay all the debts due by the firm, and afterwards F. became insolvent, and threatened to dispose of all the partnership property, and leave the debts unpaid, an injunction was granted, restraining F. from dis- CH. II.] PERSONAL OBLIGATIONS. 231 § 244. THs section may be concluded witli the observation, that, in cases of extensive partnerships acting by means of direc- tors and other officers, and regulated by a deed containing a great variety of laws and stipulations, a court of equity will frequently decline to interfere to relieve those parties who have not in the first instance endeavored to avail themselves of the provisions of their deed.^ posing of the partnership property in a different manner from that stipulated in his agreement with D. Deveau v. Fowler, 2 Paige, 400. The property of a partnership was assigned to one of the partners, who agreed to pay all debts due from the partnership ; he was held liable for a debt due from the partnership to one of the other partners. Hobart v. Howard, 9 Mass. 304. ' Ellison V. Bignold, 2 Jac. & W. 503 ; Waters v. Taylor, 15 Ves. 10. CHAPTER III. OF THE LEGAL AND EQXnTABLE REMEDIES BETWEEN PAETNEKS. SECTION I. OP THE ENFORCEMENT OE COVENANTS BETWEEN PARTNERS. § 245. One partner may maintain an action of covenant against his copartner, whether the covenant be to pay any sum or do any act for the purpose of only launching the partnership,^ or whether it be to perform any of the articles after the partnership has act- ually commenced.^ It seems, however, that this proposition must not be extended to the case where the damages to be recovered are, of necessity, payable out of, or, when recovered, payable into the partnership fund ; because, in this case, the party bringing the action is liable to contribute to the fund out of which he seeks payment.^ ' Walker v. Harris, ante, § 207 ; Ex parte Notley, 1 Mont. & A. 48. So held in Glover v. Tuck, 24 Wendell, 153. A. and B. entered into a cove- nant by -whicli A. was to advance a sum of money to B., to be laid out by him in the purchase of lands for their joint account, and all losses and gains to be equally shared ; it was held, that, although they were partners, yet, if A. failed to advance the money according to contract, B. might maintain an action of covenant against him. Terrill v. Richards, 1 Nott & M'Cord, 20 ; Per Morton J., in Williams v. Henshaw, 11 Pick. 83, 84; 1 Story Eq. Jur. § 665. ' Want V. Eeece, 1 Bing. 18; Hatcher v. Seaton, 2 M. Se W. 47. See Paine v. Thatcher, 25 Wendell, 450. ' 1 Bing. N. C. 407. But see post, Book 5, chap. 1, sect. 3, art. V. 2 ; and Andrews v. Ellison, 6 B. Moore, 199. Covenant does not lie on an CH. III.] LEGAL AND EQUITABLE REMEDIES. 233 § 246. An action of covenant will lie, althougli there may be accounts between the parties which -require unravelling in equity .1 And where partnership covenants have not been infringed for any length of time, the action of covenant is the proper remedy ; a court of equity in such case not interfering to restrain the breach of covenant, unless the bill pray and there are just grounds for a dissolution. In the case of Marshall «. Colman,^ articles of partnership were entered into between the plaintiff Marshall, and the defendants Colman and others, by which it was agreed (amongst other things), that their business, that of wholesale hnen-drapers, should be carried on in the name of the firm of Col- man, Willett, Oxley, and Marshall, and that all contracts and engagements entered into by any of the parties on account of the said trade, and all checks and drafts drawn by them, and all receipts for money paid, on account of the said trade, should be in the joint names of the said John Morris Colman, Henry Willett, James Oxley, and John Marshall. The bill, filed in July, 1820, alleged that the defendants, Colman and Willett, had entered intp numerous contracts and engagements, and written numerous let- ters (under some of which goods had been supplied and deliv- ered), in the name of Colman, Willett & Co., and had refused to add the name of the plaintiff, or to comply with the above-men- tioned covenants ; thus preventing him from being known as a partner, and from receivmg partnership debts ; and that Oxley consented thereto : and it prayed that the two first-named defend- ants might be restrained, by injunction, from carrying on the trade or entering into any contracts, &c. (pursuing the words of the covenant in the partnership articles), except in the joint names of J. M. Colman, H. Willett, J. Oxley, and the plaintiff. The agreement of partnership, to compel the payment of a balance due to the partnership from one of the partners. Niven w. Spickerman, 12 John. 401. ' Venning v.. Leekie, 13 East, 7. So held in Glover v. Tuck, 24 Wen- dell, 153. See Duncan v. Lynch, 3 Johns. Ch. 362; McArthur v. Ladd, 5 Ohio, 514. An action of covenant lies at law by one partner against another, where by the contract there is a covenant to account. Duncan v. Lynch, 3 John. Ch. 362. See Niven v. Spickerman, 12 John. 401. In Wilby V. Phinney, 15 Mass. 120, Mr. Justice Wilde remarks: "We have no doubt, that here an action of assumpsit will lie between partners on a promise to account." " 2 Jac. & Walk. 266. 20* 234 MUTUAL RIGfHTS OP PARTNERS. [BOOK II. defendants by their answer admitted the principal facts stated in the bill, but insisted that it was well known to all persons dealing with the partnership that the plaintiff was a partner. It appeared that the first application made by the plaintiff to have his name used in the business of the firm, was in April, 1820, three months only before the filing of the bill. Lord Eldon refused the motion for an injunction, but without costs. "Although this court," said his Lordship, " wUl interfere where there is a breach of covenant in articles of partnership, so important in its consequences as to authorize the party complaining to call for a dissolution of the partnership, it is a matter of great consideration whether it will entertain the jurisdiction of pronouncing a decree for a perpetual injunction als to a particular covenant, the partnership not being dissolved by the court. There is one case which is constantly occurring, that of a partner raising money for his private use on the credit of the partnership firm ; and the court interferes then, because there is a ground for dissolving the partnership : but then the danger must be such, there must be that abuse of good faith between the members of the partnership, that the court will try the question, whether the partnership should not be dissolved in consequence. But it is quite a different thing, and it would be quite a new head of equity for the court to interfere where one party violates a particular covenant, and the other party does not choose to put an end to the partnership : in that way there may be a separate suit, and a perpetual injunction in respect of each covenant ; thatj.s a jurisdiction that we have never decidfedly en- tertained." § 247. But it seems that the specific performance of a cove- nant, or an injunction against a breach of covenant, will be en- forced between partners by a court of equity, where the breach has been of long continuance and wilfully persisted in, although the party seekuig relief, against the breach of covenant, does not pray for a dissolution of the partnership.^ Thus, in the above ■case of Marshall v. Colman, Lord Eldon seemed to be clearly of vopinion, that the breach of covenant might have been relieved against without a dissolution by the court, had there been " a ' 3 Kent Com. 61. As to bills praying an account without praying a dis- solution, see post, sec. 4, art. 1. CH. III.] LEGAL AND EQUITABLE REMEDIES. 235 Studied, intentional, prolonged, and continued inattention to the application of one party calling upon the other to observe that contract." And, with reference to the future conduct of the defendants, he said, — " These gentlemen will do well (if they mean to protect theinselves from the interference of this court), to use all the names in the concern ; they must do that or the court will be xmder the necessity of awarding an injunction, or dis- solving the partnership." ^ § 248. A court of equity will enforce the specific performance of partnership covenants, in cases where adequate compensation for the breach cannot be had at law. Thus, a court of equity has enforced an agreement, made upon a dissolution of partner- ship, that a particular book used in the trade should become the exclusive property of one of the partners, and that a copy of it should be delivered to the other.^ § 249. We have seen that, in partnership articles, there is fre- quently a covenant not to engage in any business, except on ac- count aud for the benefit of the copartnership.^ In case of a breach of this covenant, the aggrieved party may of course bring his action ; but he may also file a bill for an account of the profits maide in such separate trade, and for payment of a proportion of those pi-ofits. Thus, in Somerville v. Mackay,* the bill stated that the plaintiflF had entered into a treaty ,with the defendant, who lived in London, for shipping goods and executing orders to Rus- sia upon their joint account, and that upon the, treaty it was expressly agreed that neither of them should send any goods upon their separate accounts to A. & Co., or to any other per- son in Russia. The bill then stated the separate transactions which had taken place between the defendant and A. & Co., and prayed that the plaintifi" might be declared entitled to a moiety of the profits of all goods sent by the plaintiflF and the defendant, or by the defendant separately, to Russia, consigned to A. & Co., or to any other piei-son; and that an account might be taken accordingly of all goods sent upon the joint account, or by the ^ And see Musgrave v. Medex, 3 Ves. & B. 167. " Lingen v. Simpson, 1 Sim. & Stu. 600 ; ante, § 243 ; Sangar v. Gardner, C. P. Coop. 119. ' Ante, § 221. * 16 Ves. 382 ; 2 Hov. Supp. 450. 236 MUTUAL EIGHTS OP PARTNERS. [BOOK II. defendant upon Ms private account, to A. & Co., or Ms other agents in Russia, and of the produce of the sales. The court entertained no doubt that this bill was maintainable. But -when the plaintiff in a case of this nature is decreed to be entitled to a share in the profits of the separate business, he also becomes liable for all losses, from the period from which Ms profits com- mence. . § 250. It is very doubtful whether an action will lie for breach of a covenant to refer partnership disputes to arbitration; by- reason, it is said, of the tendency of such actions to oust the jurisdiction of the courts of law,^ and likewise of the difficulty of directing a jury how to assess damages in such an action ; for, •mn constat that the plaintiff would have succeeded in the arbi- tration.^ The latter objection, at least, is well founded ; for it is difficult to conceive an action of this Mnd where more than nominal damages could be obtained ; ^ though, as we shall see presently, the deed may be so framed as to avoid tMs result. If the breach assigned be a refusal to submit to arbitration a dispute concerning the premium paid by one of the partners, and such premium be expressed to be one of the considerations of the partnership deed, in such case an action on the covenant will not lie, because the covenant itself is, in point of consideration, sus- tained- by the disputed premium.* § 261. It has long been settled that a court of equity will not decree a specific performance of a covenant to refer to arbitrar tion.^ The reasons seem to be, first, that if it be not part of the agreement, a court of equity cannot give arbitrators authority ' Kill w. Hollister, 1 Wils. 129. No mere agre"ement to refer a contro- versy to arbitration can oust the proper courts of justice of their jurisdiction of the case. Contee i>. Dawson, 2 Bland, 264. See also, Allegre v. Mary- land Ins. Co. 6 Harr. & Johns. 408; Randall w. Chesapeake, &c. Canal Co. 1 Harring. 234 ; Gray v. Wilson, 4 Watts, 39 ; Miles v. Stanley, 1 Miles, 418 ; Stone V. Dennis, 3 Porter, 231 ; Story Partn. § 215, and notes ; 1 Story Eq. Jur. § 670.- " 2 Bos. & Pull. 136. This objection seems equally applicable, whether the arbitrators be named or not. But see 7 Jarm. Conv. 352, n. (i). ' 6 Ves. 818 ; and see Mitchell v. Harris, 2 Ves. 134. * Tattersall v. Groote, 2 Bos. & Pull. 131. ' Price V. Williams, cited 6 Ves. 818. And see Street v. Rigby, id.; Wilka w.^Davis, 3 Mer. 507. CH. III.] LEGAL AND EQUITABLE KBMEDIES, 237 to examine upon oath, and the agreement itself cannot authorize any person to administer an oath ; and, secondly, that the court, following the suggestions of courts of law in that respect, will not be accessory to ousting its own jurisdiction. In Lord Eldon's words, " The court has given credit to itself, as likely to decide as well as arbitrators ; and it requires a strong case to deprive a person of the right to a decision here." ^ And upon the same principle it seems clear, that an agreement to refer to arbitration is no plea to a bill filed either for discovery only, or for both dis- covery and rehef, of matters which, by the deed, would be the subject of arbitration.^ It should, however, here be noticed, that in one particular case, that of The Opera House, where the par- ties had made special provisions for the reference to arbitration of certain matters pecuharly connected with that concern, Lord Eldon refused to appoint a manager and receiver upon an inter- locutory motion, until the parties had endeavored to avail them- selves of their argreement for arbitration ; holding this course of proceeding the more beneficial to them all.^ § 252. As, generally, a court of equity will not assist an arbi- tration by decreeing a specific performance, so, on the other hand, it win not interfere with the intention of the parties by tampering with the agreement which they have made. Hence, Sir John Leach decided, not only that a court of equity would not entertain a bill for the specific performance of an agreement to refer to arbitration, but that it would not substitute the master for the arbitrators. " This," said that learned judge, " would be to bind the parties contrary to their agreement."* § 253. From the foregoing observations it appears that a gen- eral covenant in partnership articles to refer disputes to arbitra- tion is but an unprofitable covenant, afibrding only the shadow of relief at law, and neither substance nor shadow in equity. Yet » See Street ». Kigby, 6 Ves. 815 ; Mitchell v. Harris, 2 Ves. 136. ' Wats. Arbit. 6 ; Wellington v. Mackintosh, 2 Atk. 569 ; contra. Half- hide V. Penning, 2 Bro. 336, overruled by Lord Loughborough and Lord Eldon. See thie notes to Half hide v. Penning, 2 Bro. C. C. (Perkins's ed.)j 336-338 ; 2 Daniell Ch. Pr. (Perkins's ed.), 768 and notes. » Waters v. Taylor, 15 Ves. 10 ; 2 Hov. Supp. 389. See Gourky v. Duke of Somerset, 19 Ves. 431. * Agar V. Macklew, 2 Sim. & Stu. 418. 238 MUTUAL EIGHTS OF PARTNERS. [BOOK 11. covenants of this kind may be made available. " There axe," says Lord Eldon, " prudential ways of drawing them ; as, for instance, there may be an agreement for liquidated damages, to enforce a specific performance, if an action cannot produce suffi- cient damages, or equity mU. not entertain a bill for a specific performance." ^ It seems advisable, therefore, if parties are par- ticularly anxious for a reference of their disputes to arbitration, to add after the arbitration covenant a clause, that if either of the parties shall neglect or refiise to fulfil such covenant, he shall pay to the other a certain sum as liquidated damages, not in the na- ture of a penalty. § 254. This leads us to a more general consideration of clauses of this nature. There are many covenants to which such clauses may be added with effect ; but there are others, the breach of which does not admit of compensation by liquidated damages, and to which, therefore, they cannot properly be applied. Thus, on the one hand, if the covenant be such that the breach of it must of necessity be uncertain in its nature and amount, then, if liquidated damages be reserved, they will be deemed the real damages, and a verdict in an action on the covenant will be found for the amount of the hquidated damages.^ On the other hand, if the breach of covenant be attended with certain damage, as, for instance, if it consist in the omission to pay a certain sum of money, in such case, although hquidated damages be reserved eo nomine, they will be considered by a jury only in the nature of a penalty, and the real damages will be measured by the sum omitted to be paid.^ § 255. In a late case, even where the real damage was uncer- tain, yet, as it was evidently far less than the amount of the liqui- ' 6 Ves. 818. And see Astley v. "Weldon, 2 Bos. & Pull. 346. " Lowe V. Peers, 4 Burr. 2225 ; Parrant v. Olmius, 3 B. & Aid. 692 ; Leighton v. Wales, 3 M. & W. 545 ; Dakin v. Williams, 17 Wendell, 447 ; Williams v. Dakin, 22 Wendell, 201 ; Pearson v. Williams, 26 Wendell, 630. And where liquidated damages are legally due, courts of equity will not relieve against them. East India Company v. Blake, Finch, 117 ; Small v. Lord FitzwilUam, Prec. Cha. 102 ; Kolfe v. Peterson, 2 Bro. P. C. 436. And hence they will not restrain the covenantor, under such circumstances, from violating his covenant. Woodward v. Gyles, 2 Vern. 119. ' Kemble v. Farren, 6 Blng. 141 ; 3 Moore v. Payne, 425 ; Shute v. Tay- lor, 5 Metcalf, 61 ; Heard v. Bowers, 23 Pick. 455. CH. III.] LEGAL AND EQUITABLE REMEDIES. 239 dated damages, the Court of Common Pleas, although the Ian-' guage in -which the liquidated damages were agreed to be paid was the strongest that could be employed, referred it to the pro- thonotary, to ascertain what damages, if any, the plaintiff had sustained, and how much, if any thing, ought to be paid to the plaintiff.! Mr. Jarman, in commenting upon this case, observes, that, upon the reasoning there adopted by the court, it is obvious that a covenant to pay a sum of money as liquidated damages, on the breach of any one of a series of stipulations, must in all cases be nugatory, as the covenant necessarily embraces acts of various degrees of importance, all which cannot with equal justice be compensated for by the payment of the same sum ; if it were suf- ficient in regard to some, it must be excessive as to others ; the consequence is, that, in order to ^ve an effectual remedy for the recovery of a sum of money as stipulated damages in such a case, a distinct and separate amount should be assessed as the measure of compensation on the breach of each several contract.^ "^ Charrington v. Laing, 6 Bing. 242 ; 3 Moore & Payne, 587. In Shute V. Taylor, 5 Metcalf, 67, Shaw C. J. observed, that "the question, what is liquidated damages, and what a penalty, is often a difficult one. It is not always the calling of a sum, to be paid for breach of contract, liquidated damages, which makes it so. In general, it is the tendency and preference of the law to regard a sum stated to be payable, if a contract is not fulfilled, as a penalty, and not as liquidated damages ; because then it may be appor- tioned to the loss actually sustained." See also, Chitty Cont. (ed. 1860), 973 et seq. and cases cited in notes ; Heard v. Bowers, 23 Pick. 455. In Ran- dall V. Everest, 1 Mood. & Malk. 41, Lord Tenterden seemed to consider that liquidated damages are out of the question in all cases where the agree- ment is not under seal. But see 7 Jarm. Conv. 85 ; Crisdee v. Bolton, 3 Ca,r. & Payne, 243. " 7 Jarm. Conv. p. 87 ; Shute v. Taylor, 5 Metcalf, 67 ; Hoag v. McGin- nis, 22 Wendell, 163. In Shute v. Taylor there had been a part perform- ance of the thing agreed to be done, and the court said : — " One considera- tion, we think, is decisive against recovering the sum in question as liqui- dated damages, namely, that here there has been a part performance and an acceptance of such part performance. If the parties intended the sum named to be liquidated damages for the breach of the contract therein ex- pressed, it was for an etitire breach. Whether divisible in its nature or not, it was in fact divided by an ofier and acceptance of part performance. It is like the case of an obligation to perform two or more independent acts, with a provision for single liquidated damages for non-performance; if one is performed, and not the other, it is not a case for the recovery of the liqui- 240 MUTUAL EIGHTS OP PARTNERS. [bOOK II. § 256. "Where joint covenants are entered into amongst part- ners, for purposes concurrent witb. their original rights and duties as partners, it seems clear that a court of equity would construe such covenants several as well as joint.^ But where joint cove- nants are entered into for the purpose of waiving those original rights, the court will not interfere to alter the nature of such cov- enants, unless under circumstances of fraud or mistake. For in- stance, when a partner in a firm retires or dies, it is the pripaary duty of the parties interested to wind up the concern, and divide what remains after satisfying all claims upon it. Where, there- fore, upon the death of a partner,^ the usual accounts were not taken, but his executors, for a certain consideration, released all claim on the partnership estate, and the surviving partners entered into a joint covenant to indemnify him against all demands upon the partnership ; it was held that no other effect could be given to such a covenant in equity than at law ; and, therefore, that the estate of a deceased covenantor was not bound by it. Sir Wil- liam Grant : " Where a joint bond has, in equity, been considered as several, there has been a credit previously given to the different persons who have entered into the obligation. It was not the bond that created the liability to pay. But in this case the cove- nant is purely matter of arbitrary convention, growing out of no antecedent liabihty in all or any of the covenantors to do what they have thereby undertaken. Instead of winding up the part- nership concern, and dividing what might remain after satisfying all claims upon it, the parties make an arrangement, by which the plaintiff was immediately to receive what was estimated to be his testator's share of the joint estate, he releasing to the other part- ners all interest in the residue. Why was the testator's share of the partnership estate to remaiA unaffected by any claims by which that estate might afterwards be diminished ? There was no dated damages." And see D. Bayley J., Davies v, Penton, 6 Barn. & Ores. 216. ' If three or mpre partners contribute severally and in diflferent propor- tions to the joint stock, and one of them withdraws his part from the part- nership in violation of the covenants of the articles of partnei-ship, each of the othpr partners has his several action of covenant for the breach. Dun? ham V. Gillis, 8 Mass. 462 ; Tippet v. Hawkey, 3 Mod. 263. See Thomas v. Fyke, 4 Bibb, 418. ^ Sumner u. Powell, 2 Mer. 30. See Kawstone v. Parr, 8 Rusa. 539. CH. III.] LEGAL AND EQUITABLE REMEDIES. 241 equity tifat entitled him to demand from the other partners an engagement to that effect. But they are contented to give him a covenant of indemnity. As it is only a joint covenant that is given, how can I say that it is any thing more than a joint cove- nant that was meant to be given? It is not attempted to be shown that there was any mistake in drawing the deed, or 'that there was any agreement for a covenant of a different Sort. There is nothing but the covenant itself, by .which its intended extent can be ascertained. There is no ground, therefore, on which a court of equity can give it any other than its legal opera- tion and effect." ^ § 257. We have seen that partnership articles are read in a court of equity as not containing the clauses on which the parties have not acted.^ Now, the not acting on articles of a particular nature will be good evidence of an intention to abandon them ; and upon this evidence of abandonment the court will refuse to enforce them. In the case of Jackson v. Sedgwick,^ A., B., and C, entered into partnership articles as ship-agents, ship-brokers, and insurance-brokers. By the articles, it was agreed that there should be annual rests in the partnership account, and that, on the death of any of the partners, the amount of his capital, calculated by reference to the last annual rest, should be repaid by the sur- vivors by instalments, and that a bond should be executed by the survivors for securing the amount with interest. A. died. For some years previous to his death, the partnership . had engaged in business unconnected with that specified in the partnership arti- cles, namely, by shipment of goods, and otherwise. Adventures of this nature were depending at A.'s death, and the result of profit unascertained ; and since his death, a loss in respect of such adventure had occurred. Moreover, the partnership had for sev- eral years omitted to settle annual accounts in pursuance of. the ' Where the administrator of a deceased partner assigned all his interest in the partnership effects to the survivor, under an agreement that the latter should discharge all the debts of the firm, it was held that this assignment and agreement did not destroy the lien or equity which existed in favor of each partner, on the dissolution, to have the partnership property applied to the payment of the partnership debts. Deveau v. Fowler, 2 Paige, 400. ' Ante, § 209. ' 1 Swanst. 460 ; 1 J. Wils. 297. 21 242 MUTUAL RIGHTS OF PAKTNERS. [BOOK II. articles. Upon the death of A., the surviving partners executed a bond to the executors of A., conditioned to be void upon pay- ment of the instalments. They also paid to the executors, on account of this bond, sums amounting to £3,400. The executors having afterwards commenced an action on the bond, a bill was filed by the surviving partners and their co-obligor, insisting that the balance of profit and loss up to the last annual rest preceding A.'s death ought to be ascertained, by consulting the result of all engagements in which the firm was then embarked, and for which it was responsible ; that the losses sustained in consequence of such engagements, should be brought into the account between them and the executors ; and alleging that, after the just deduc- tion in respect of such losses, A.'s share in the business would not exceed £3,000, being less than the sum already paid by the plaintiffs on account of the bond. The bill prayed that the share of A., at his death, might be ascertained ; an account of all sums paid by the plaintiffs in respect of his share ; that the defendants might repay what should appear to have been overpaid to them, and might deliver the bond upon being paid what, if any thing, remained due ; and in the mean time be restrained from proceed- ing at law. Lord Eldon granted the injunction. " The articles of partnership," he said, " seem to refer only to the trade of ship- agents and brokers ; and it is difficult to apply them to trade of another description. The question will be, whether the proceed- ing de anno in annum without setthng the accounts, and the en- gaging in business not contemplated by the articles are not evi- dence of the intention of the parties to waive the agreement. There would be no difficulty in applying the articles to the par- ticular business with reference to which they were framed ; but if the parties engaged in business in which their apphcation would work injustice, as in importation or exportation, where the returns could not be ascertained at the period Hmited, then I say that these articles, though they contain a general reference to other business, are not such aswould have been prepared with relation to that specific business ; and that engaging in that business affords a reason for not performing the stipulations." § 258. We ought not to conclude this section without making some observations on the pleadings in actions of covenant between partners. It is a general rule, that though a covenant be joint and several in the terms of it, yet if the interest and cause of CH. III.] LEGAL AND EQUITABLE REMEDIES. 243 action be joint the action must be brougbt by all the covenantors.^ It follows from this doctrine, that, although the covenants in the partnership articles be several as ■well as joint, which, indeed, is usually the case, yet, the interest of the partners in the concern being joint, all the covenantees must join in an action against the covenantor for a breach of his covenant. In Eccleston v. Chps- ham,^ it appeared by an indenture entered into between certain partners, that " each of them respectively for himself, his execu- tors and administrators, and for his own proper act or acts, for so much as belonged to his own proper duty, but not for the act or duty of the other, covenanted and agreed to and with the other and others of them respectively, and his and their respective executors, administrators, and assigns, by the same indenture, in manner and form following; that is to say;" — then followed a string of covenants regulating the partnership concern, and the duties of the partners. One of the partners having committed a breach of these covenants, it was held that the rest ought to have sued him jointly. § 259. JSTevertheless, by making the operative words of the covenants several as well as joint, they may include matters in which a several action may be maintainable. Thus, in the fore- going case, in which an action was brought by the executors of a deceased partner against one of the surviving partners, one of the covenants was, that there should be given to the executor of any deceased partner an account of the partnership goods and debts due from them, within twenty days ; and one of the breaches assigned was, that the defendant had not given any account to the executors of the deceased partner within twenty days after his death. It was held, that the plaintifis had a several interest in this matter, and that the action upon it was maintainable by them alone, without joining the other surviving partner as a co- plaintiff. § 260. In a case of partnership of a ship, where the part- owners agreed " each and every of them with the others and each and every of them," that the ship should be under the manage- ment of one of them as husband, who was to make a full account, ' 1 Saund. 153. See Lane u. Drinkwater, 1 C. M. & K. 599. ^. ' 1 Saund. 153. 244 MUTUAL RIGHTS OF PARTNERS. [BOOK II. &c., the Court of King's Bench was of opinion that the interest of each part-owner was several, and, consequently, that each might bring his several action on the covenant against the ship's husband for not makiag out an account.^ § 261. But, although the general rule regarding the joinder of covenantees as plaintiffs is as above stated, yet persons entering into partnership may by agreement limit the number of plaintiffs in actions to be brought inter se in the course of the partnership transactions. Therefore, where, by the terms of the partnership agreement, a penalty was inflicted for default in performance of any of the rules, and it was agreed that one only of the partners should sue the defaulter for such penalty, it was held that the party so appointed might sue alone, and that the others need not join in the action. " Such an agreement," said Best, C. J., "is in effect an undertaking on the part of the defendant not to object on account of all who ought otherwise to have been joined in the action not being joined." ^ It is obvious that this power of limit- ing the number of plaintiffs only appUes to actions between the partners themselves. § 262. If any of the covenautees have not sealed the deed, they may nevertheless join in the action.^ If they have refused to seal the deed, it seems doubtful whether a declaration by those who have sealed, with an averment that the others have refused to seal, would be sufficient ; but such a declaration, with a mere averment that the others have not sealed, is insufficient ; * for, as Holroyd, J., observed, " if a covenant be made with three per- sons, although two of them do not seal the deed, yet it is not in law converted into a covenant with one." When one of several partners, covenantees, dies, his right of action survives to his co-covenantees, although the covenant may have been made with each of the covenantees respectively, and their respective execu- tors, administrators, and assigns.^ If there be other covenantees, obligees, or parties to the contract, who ought to be, but are not. ' Owston V. Ogle, 13 East, 538. See Seryante v. James, 10 B. & C. 410. " Kadenhurst v. Bates, 3 Bing. 463 ; 11 Moore, 421. See Davis v. Haw- kins, 3 M. & S. 488. = Clement v. Henley, 2 Roll. Abr. Fait (F.), pi. 2. * Petrie v. Bury, 3 Barn. & Cress. 353 ; 4 Dowl. & Eyl. 152. * Eceleston v. Clipsham, 1 Saund. 153. CH. III.J LEGAL ANB EQUITABLE REMEDIES. 245 joined as plaintiffs in the action, advantage may be taken of tMs defect on demurrer, motion in arrest of judgment, or writ of error, and it will be fatal to the suit.^ § 263. If the defect of plaintiffs do not appear upon the face of the pleadings, which may be the case where the deed is not set out in hcec verba, or if there be any omission or variance in the deed as stated in the declaration, the defendant may crave oyer, and set out the deed and demur ^ or plead specially in bar of the action. Hence, if an action be brought on a legal covenant, contained in a deed creating an illegal partnership, the defendant having craved oyer of the whole deed, may plead the illegality of the contract in bar of the action.^ The plea of non est factum operates, since the Rules of Hilary Term, 1834, only as a denial of the execution of the deed in point of fact. All other defences, including those which make the deed absolutely void, as well as those which make it voidable, must be specially pleaded. But it has been said, that, under this plea, the defendant may show an alteration in the deed in a material respect.* Where covenants between partners are several as well as joint, the circumstance of the seal of one of them being erased will not prevent an action being maintained between the others.^ SECTION n. or THE ENFORCEMENT OF SIMPLE CONTRACTS BETWEEN PARTNERS. § 264. Where money has been lent by one partner to another, for the purpose of launching the partnership, the sum so lent is recoverable by action, if it be not introduced into the partnership accounts, and it does not depend on the taking the accounts ^ Anderson v. Martindale, 1 East, 497; Scott v. Godwin, 1 B. &P. 67; Eccleston v. Clipsham, 1 Saund. 153 ; Slingsby's case, 6 Rep. 18 b. And see 1 Chit. Plead. 6 ; Saund. jun. Plead. 389. ^ Com. Dig. Pleader (2 V.), 3, 4. . = Morse v. Wilson, 4 T. R. 353 ; Lees v. Smith, 7 T. R. 338. * Per Gurney B., 2 C, M. & R. 291. Per Parke B., 1 Archb. Pr. 192. 5 Matthewson v. Lydiate, Cro. Eliz. 408 ; Collins v. Prosser, 1 Barn. & Ores. 682. 21* 246 MUTUAL EIGHTS OF PARTNERS. [BOOK II. whether the sum be due or not.^ But where money is due from one partner to another by simple contract, on the partnership account, payment, except in a few special cases, can only be enforced by application to a court of equity, upon a bill filed for an account and dissolution of the partnership.^ Courts of law will not entertain suits of this nature, because it would be useless for one partner to recover what, upon taking a general account amongst all the partners, he might be hable to refund : frustrd peteret quod mox restiturus esset.^ It has been accordingly laid down by a high authority as a perfectly clear maxim, " that one partner cannot maintain an action against his copartner for work and labor performed, or money expended on account of the part- nership." * ' Ex parte Notley, 1 Mont. & Ayr. 46 ; Elgie v. Webster, 5 Mee. & W. 518. See Sawyer v. Proctor, 2 Vermont, 580. ^ But see respecting tlie action of account in note, post, sec. 4; 1 Story Eq. Jur. § 664, note. And in reference to the necessity for praying a disso- lution in a bill between partners for an account, see post, sec. 4, and note ; § 1128 e( seq. ' 1 Story Eq. Jur. 664 ; Lawrence v. Clark, 9 Dana, 257. * Per Lord Tenterden, 1 B. & C. 76 ; Causten v. Burke, 2 Gill & Johns. 295. Mr. Justice Story remarks, in note to 1 Story Eq. Jur. § 664, that " there is no case in the English courts (although there may be cases in some of the American courts) where an action at law, except an account, has been held to lie generally to settle partnership accounts, or for a contribution by one partner against the others, for money paid by him for the use of the partnership." But in Paine v. Thatcher, 25 Wendell, 450, it was held that if one partner promises another partner to pay him a compensation for the personal attention of the latter to the business of the concern, this promise may be enforced by an action of assumpsit, notwithstanding the existence of the partnership, and that there are articles under seal providing for sucl^ payment. It is not necessary to bring covenant In this case the item for services had been adjusted, and there was an express promise to pay it. The court said the compensation was to be contributed as part of the capital to be furnished by the defendant in lieu of personal attention. A formal set- tlement would not be necessary. The case was held to fall within the prin- c^Ie of those cases where the suit is brought to recover capital advanced by one partner for another in the course of their business. One who is clerk .and also in partnership in a particular business with his employer may, where his duties as clerk and partner are distinct, sue for his salary due to him in his former capacity, without resorting to a suit for the settlement of the partnership transactions. Alexander v. Alexander, 12 La. An. 588. See, however, Harvey v. Crickett, 5 M. & S. 336, and the following citation CH. III.] LEGAL AND EQUITABLE REMEDIES. 247 § 265. Attempts, however, have been made, by means of nice distinctions, to break in upon this broad general rule. Thus, in Holmes v. Higgins,^ it was contended that the cause of action be- tween the parties accrued before the commencement of the part- nership, and therefore, that, under the circumstances of that case, an action would lie by one partner against his copartner. It ap- peared that a joint-stock company was in contemplation. The plaintiff was a shareholder, and was likewise agent for and assist- ant to the solicitor of the company. The defendant was also a shareholder, and chairman of the meetings. Meetings were held, subscriptions raised, and other steps were taken to obtain a bill in furtherance of the designs of the company ; but the bill was ulti- mately withdrawn, and the scheme failed. An action was then brought by the plaintiff against the defendant, to recover a sum of money for business done and money paid by the plaintiff, as agent to the company ; and it was contended for the plaintiff, that the parties were not partners until a bill was obtained ; that the action was not brought for work done in the course of the partnership, but previously to its commencement ; and, therefore, that it was maintainable. But the Court of King's Bench held that the members of this association were partners, and that the action could not be supported, either against the defendant as chairman, or against the body of subscribers at large.^ from Malynes, Lex Mercat. p. 310: "Partners cannot sue each other by the law. If two men have a wood jointly, and the one selleth the wood and keepeth all the money wholly to himself, in this case his fellow shall have no remedy against him by the common law ; for as they, when they took the wood jointly, put each other in trust, and were contented to occupy and deal together, so the law suflfereth them to order the profits thereof." See Jlstes V. Whipple, 12 Vermont, 373 ; Cheney v. Clarke, 3 Vermont, 431. '■ 1 Barn. & Ores. 74 ; 2 Dawl. & Kyi. 196. In this case the plaintiiF and defendant were aclwe shareholders ; otherwise it may be doubted whether this decision could now be supported, on the ground of their being partners. See Poxu. Clifton, 6 Bing. 776 ; Howell v. Brodie, 6 Bing. N. C. 44. ^ See Goddard v. Hodges, 3 Tyrw. 209. But where the plaintiff entered into an express contract with a committee of individuals, associated together for the purpose of obtaining an act of parliament for making a turnpike- road, to do certain work for a specified sum, and he afterwards caused his name to be inserted in the list of subscribers for two shares, it was held that this did not prevent his recovering for the work he had done previously to his becoming a member of the association. Lucas a. Beach, 1 Man. & Grang. 417. ' 248 MUTUAL RIGHTS OF PAKTNBES. [BOOK 11. § 266. Again, in Milburn v. Codd,i it -was contended that the cause of action accrued after the determination of the partner- ship, and therefore that, imder the circumstances of that case, the action was maintainable. The plaintifif and defendants had been members of a company which was dissolved. After the dissolution, the defendants were sued by several of the creditors of the company, and they employed the plaintiff, who was an attorney, to defend the actions. The plaintiff then brought his action against the defendants, to recover the amount of his bill of costs. But it was held that such an action could not be sup- ported ; for that the plaintiff, as a partner with the defendants, was bound to contribute to the expenses of the actions against them ; and, in the event of his succeeding in this action, he would have to refund a part of the damages, for the purposes of such contribution. § 267. Another case^ may be mentioned, which, it was con- tended, was not within the general rule, because there was no necessity for an account, and one item only in the whole transac- tion was disputed by any of the parties. An action was brought by the assignees of certain bankrupts against Hammond, to re- cover the sum of £30, under the following circumstances : The bankrupts, before their bankruptcy, and Hammond, undertook to procure a full cargo for a vessel, for certain commissions to be paid to them, of which the bankrupts were to receive one moiety, and the defendant the other. The owners of the vessel acceded to the proposal, and the cargo was procured. The defendant made all disbursements, and received all the moneys that were paid, for the use of the owners. The vessel sailed in May, 1820, and the defendant afterwards rendered an account to the owners, contain- ing a statement of his disbursements, and a claim of £65 for commission. The owners admitted that the account of disburse- ment was correct, but refused to settle the account, because they said the defendant had claimed £5 too much for commission. The defendant had received and retained in his hands sufficient to pay all the disbursements made by him, and the £65 claimed for commission. It was contended for the plaintiffs, that this did ^ 7 Barn. & Ores. 419 ; 1 Mann. & Ryl. 238. See Brown v. Agnew, 6 Watts & S. 235 ; Bracken v. Kennedy, 8 Scammon, 564. ' Bovill V. Hammond, 6 Barn. & Cres. 149. CH. III.] LEGAL AND EQUITABLE EEMBDIES. 249 not fall within the general rule as to partnership transactions, and that they were entitled to recover a moiety erf the undisputed part of the commission, namely, £30. But the contrary was held by two judges of the Court of King's Bench against Bayley J. " It is a general rule," said Abbott C. J., "that, between partners, whether they are so in general or for a particular transaction only, no account can be taken at law.^ These parties have never set- tled any account between themselves; and the only ground on which tills case is distinguishable from former decisions is, that all moneys have been received and paid by one partner. That cer- tainly makes an account between them less necessary ; but if we, therefore, held this action to be maintainable, I think we should be breaking down a general rule, and introducing nice distinctions, which it is much better to avoid." And Littledale J., observed, that neither the bankrupts nor the assignees ever assented to the account rendered by the defendant to the owners of the ship, nor was it finally settled even by them. It appeared to him, therefore, that the case fell within the general rule. § 268. The two positions, first, that a partner cannot, in an action against his copartner, recover a sum of money due to him on the partnership account ; and, secondly, that he can recover a sum due to him on his own account, but carried wrongfully to that of the partnership, are well illustrated by th.e case of Smith v. Barrow.^ The plaintiff and Robert Smith, his father, had been in partnership together ; during which time one Keate became in- debted to them in £531. Robert Smith died, leaving the plaintiff his sole executor. After the death of his father, the plaintiff took the defendant into partnership, and Keate became indebted to these two in the further sum of £30. K-eate afterwards becoming much involved, his effects were transferred to certain trustees, for tiie benefit of his creditors ; and two payments were made in the course of distribution, at different times. The first which was made to these parties (the plaintiff and defendant) was divided between them according to their several proportions; that is, a proportion of the former debt of £531 was allotted to the plain- ' So held in Rogers v. Rogers, 1 Hall (N. Y.), 391. See also, Judd v. Wilson, 6 Vermont, 185; Casey «. BrusL, 2 Gaines, 293; Townsend v. Goewey, 19 Wendell, 424. = 2 T. K. 476. 250 MUTUAL EIGHTS OP PARTNEKS. [BOOK II. tiff's separate use, and a proportion of tte £30 in moieties be- tween them. After this, the trustees transmitted a bill of exchange to the plaintiff and defendant, in their joint names, and the de- fendant alone received the money, under the title of Smith & Barrow. The plaintiff's proportion of this second dividend, so far as related to his original debt, was £79 14s. 6c?., for which this action for money had and received was brought. The question was, whether the plaintiff could recover this sum from the defend- ant in an action for money had and received to the use of the plaintiff, it being contended, on behalf of the defendant, that it was money received on account of a partnership transaction, and therefore that the action would not lie. The Court of King's Bench held that the action was maintainable. Ashurst J. : " The two sums, belonging respectively to the plaintiff and to the part- nership account, were consolidated merely for the convenience of the party making the remittance ; but the sum now claimed by the plaintiff did not belong to the partnership account ; and as the defendant has received a sum of money belonging to the plaintiff alone, which he has wrongfully carried on the partnership account, he is liable to refund it in this action." BuUer J. : "I am of opinion that the action is properly brought. The former dividend was received and divided according to the proportions of the re- spective debts of the plaintiff, and of the plaintiff and defendant as partners ; then, on the receipt of the second dividend by the defendant, it should have been divided into two parts, bearing the same proportion to each other as the separate demand of the plaintiff on Keate's estate, and the joint demand of the plaintiff and defendant. The plaintiff would have been solely entitled to the first part, and must have shared the other part with the de- fendant, as due to the partnership account ; so that the first part of this sum was money specifically received by the defendant tb the plaintiff's use. "With regard to the sum of £30 due to this partnership, I agree that this' action cannot be maintained. One partner cannot recover a sum of money received by the other, unless, on a balance struck, that sum be found due to him alone. But this objection does not apply to the larger sum in this case, which is the one in dispute." § 269. It is not, however, to be denied, that there are some particular cases in which one partner may, even in an action at law, recover money due to him from his copartner, for a matter CH. III.] LEGAL AND EQUITABLE REMEDIES. 251 connected -with tlie partnership. Thus, if one partner give the _ other his promissory note, or his separate acceptance for yalue re- ceived on the partnership account, an action ■will lie on such note or bill.i So, if one partner draw upon all the others by name, and they individually accept, he may recover against them ; be- cause, by such an acceptance, a separate right is acknowledged to exist.2 And in some cases, which will be noticed presently, an action has been held to be maintainable between partners for con- tribution in respect of damages recovered against one of them. But, with these few exceptions, it may perhaps be laid down gen- erally, that in no case can money be so recovered, which, when the cause of action accrued, might be placed as an item in the partnership account. It must either have been the basis of the account when the partnership commenced, a sum separated from the account while the partnership continued, or the balance of the account when the partnership ceased, or when a general adjust- ment of its affairs took place.^ In these cases, however, an action between the partners may be supported, as will appear from the following decisions. § 270. First, then, in Venning v. Leckie,* an action was brought to recover money laid out in goods which were to form the stock of a future partnership, and such action was held to be maintamable. The following was the contract in writing, for the breach of which the action was brought : — " London, 1st of ' Preston v. Strutton, 1 Anstr. 50 ; Bonnaffe v. Fenner, 6 Smedes & Marsh. 212. A promissory note, given by one partner to another, for the use of the partnership, will sustain an action by the promisee in his own name against the maker, notwithstanding their connection in the partner- ship, and the money, when recovered, would belong to the partnership. Van Ness u. Forrest, 8 Cranch, 30. See Morrison v. Stoekwell, 9 Dana, 172. So, where it is ascertained by partners who are about closing their partnership concerns, that a balance will be due to one of them on a final settlement, although the exact amount of such balance cannot be ascertained, yet if the debtor partner gives the creditor partner a promissory note for a sum not exceeding the amount of the balance, which will be due on a final settlement, such note is given on a good and sufficient consideration, and payment thereof may be enforced by an action at law, though the balance is not struck between the parties. Rockwell v. Wilder, 4 Metcalf, 566. " 4 Bing. 151. ' 1 Story Eq. Jur. § 664 and note, § 665. * 13 Jlast, 7. 252 MUTUAL RlfiHTS OF PARTNERS. [BOOK III Dec, 1808, Messrs. "W. Venning & Co., I agree to take one half share of the flax under-mentioned, bought by you on our joint account, say half in the profits or loss, and to furnish you with half the amount in time for the payment thereof, in case you re- quire it." (Signed by the defendant.) Under which contract was written, — " Dec. 1st, 1-15 of H. & Co. 20 tons, six months ; 2d, 2-16 of A. B. &c., 10 tons, six months ;" together with other like memoranda. It was objected that no action lay in this case, but that the plaintifls should have pro- ceeded by bUl in equity ; for the defendant had no account of the produce, and would be compelled to seek his relief there. But Lord EUenborough said there were many deeds of copartner- ship in which the partners covenant each to advance a certain sum at first ; and could it be said that no action would lie by one to enforce that covenant against another, because there were ac- counts between them afterwards which would require unravelling in a court of equity ? The purchase of the goods was to launch the partnership ; for which, between themselves, each was to con- tribute his share. Le Blanc J. concurred, and observed, that the respective sums were to be paid by each, before there could be any account of profit or loss between them, as partners, upon the goods.^ We may here notice the case of Gale v. Leckie,^ which ' See Duncan v. Lyon, 3 John. Ch. 362 ; Williams v. Henshaw, 11 Pick. 83, 84. " 2 Starlc. 107. See 1 Story Eq. Jur. § 665 ; Kockwell v. Wilder, 4 Met- calf, 561 ; Williams v. Hensliaw, 11 Pick. 79. Where the plaintiff is con- tented to take damages and relinquish the intention of becoming a partner) he may bring his action of assumpsit for breach of the agreement to become partners ; but in such case it will be necessary to prove with particularity the specific terms of the intended partnership. Figes v. Cutler, 3 Stark. N. P. 139. And it is said by Mr. Gow, that " where the contract of part- nership is verbal, or, being reduced into writing, is not under seal, the vari- ous stipulations it embraces, the conditions and engagements it contains, and the duties it imposes, can be enforced only in assumpsit ; the remedy by ac- tion of covenant being confined exclusively to those cases in which the original formation of the partnership is by articles under seal. It may, therefore, be advanced as an indisputable proposition, that, in whatever in- stances an action of covenant is maintainable for the breach of a covenant comprised in a deed of copartnership, in the same instances an action of CH. III.] LEGAL AND EQUITABLE KEMEDIES. 253 in one point was the reverse of that just cited, as it arose from a breach of contract to supply stock in order to launch the partner- ship. There A. agreed to supply B. with the manuscript of a work to be printed by the latter, the profits of which were to be equally divided between them. It was held that B. might main- tain assumpsit against A. for refusing to supply manuscript after part of the work had been printed. § 271. If A. and B. commence business as partners, and A. advance the whole capital, he may maintain an action against B. for a moiety, because, quoad B.'s share, the partnership may be considered as having not yet commenced.^ But if A. and B. commence partnership, each advancing their respective shares, and the business is afterwards abandoned, neither can maintaiu an action against the other for his share, because both shares are in partnership, and liable to an account. In the course of the argu- ment ia Nockles v. Crosby ,2 Holroyd J. said : " Suppose five per- sons enter into partnership, and contribute £1,000 each, and they afterwards find the concern a losing one, and put an end to it, can any one maintain an action against the others for his share ? "' It appears clearly, from the judgment of the same learned judge in that case, "that he was of opinion that such an action would not be maintainable. § 272. Secondly, an action of assumpsit by one partner against another may be sustained, the money sought to be recovered be- ing deemed to be separated from the partnership account. In assumpsit can be sustained, if the partnership, instead of being constituted by deed, were contracted verbally or by writing only." Gow Partn. (3d Am. ed.), 72, 73. See Townsend v. Goewey, 19 Wendell, 484. ^ D. Le Blanc J. supra. D. Parke J. 7 Bing. 714. See Paine v. Thatcher, 25 Wendell, 430. But in Williams v. Henshaw, 11 Pick. 84, it was held, that, in a case where two agreed to share equally the profit and loss on the sale of goods to be purchased, the fact that one of them alone purchased and paid for the goods did not of itself imply a promise on the part of the other to repay him half of the money advanced before the final settlement of the transaction. If there be three intended partners, and one of them fail to bring in his share, it seems that the two may sue the third jointly, without encroaching on the principle laid down in Brand v. Boulcott, 3 Bos. & Pull. 235. See per Morton J. in WilUams v. Henshaw, 11 Pick. 84. ' 3 Barn. & Cress. 815. And see the judgment of Littledale J. in the same case. 22 254 MUTUAL BlfiHTS OF PARTNERS. [BOOK II. the case of Coffey v. Brian,^ Thomas Coffey, John Coffey, and Brian were jointly concerned in the butter trade. John Coffey consigned the butters to Brian, in London, who sold them, and Thomas Coffey accepted bills drawn by John to the amount of the butter sent. Brian having received the proceeds of certain of the butters, engaged to provide for the bills drawn on Thomas Coffey, by a letter in the following terms : " Sir, Your brother, John Coffey, junior, having drawn two bills on you, viz. one for £238, due on, &c., and another for £300, due on, &c., on account of butters sold here for our joint account, the proceeds of which are now in my hands, if you will accept the bills, I hereby formally engage to provide for them when at maturity." Thomas Coffey, having been obliged to pay the bills, brought an action against Brian for money had and received, and it was held that he could recover. Best C. J. : " It has been objected that this is a partnership transaction, and no doubt the money came to the defendant as the money of all three of the partners, but that has happened which divests them of the joint property in it, and vests, it in the plaintiff. When the plaintiff paid his acceptances, the money the defendant held as the proceeds of the butters be- came separated from the partnership account, and was money had and received by him to the plaintiff's use. When a contract has been executed, a party is entitled to recover on the common counts. Here the contract was executed when the plaintiff toOk up the bills." § 273. It is difficult to reconcile the foregoing case with that of Robson V. Curtis,^ decided by Lord EUenborough. Robson and Curtis were in the habit of purchasing jointly lots of cattle from the breeders, and selling them in smaller parcels. Cole ^ 10 Moore, 341 ; 3 Bing. 54. In Gibson v. Moore, 6 N. Hamp. 547, it ■was held that partners may separate any portion of the partnership affairs from the rest, and adjust that portion, and if, upon an accounting and ad- justment of such part, a sum is fouiid due from one to the other, a promise to pay that sum is binding, and an action may be sustained upon it, although the balance so found is not the final balance upon the settlement of the whole concerns of the partnership. See also. Sawyer v. Proctor, 2 Ver- mont, 480 ; VaiP Ness v. Forrest, 8 Cranch, 30 ; Musier v. Trumpbour, 5 Wendell, 276; W^sterlo v. Evertson, 1 Wendell, 532; Lawrence v. Clark, . 9 Dana, 257. ^ 1 Stark. 78. CH. III.] LEGAL AND EQUITABLE EEMEDIES. 255 purchased some of the cattle, and paid for them by a bill drawn by Cole and Bruce payable to Robson. Robson indorsed this bill to Curtis. Curtis indorsed it over, and, the bill being dishon- ored, he promised that, if Robson would take it up, he, Curtis, would pay Robson one half the amount. Curtis, having failed in his payment was sued by Robson in an action for money paid ; but the plaintiff was nonsuited. At the trial, it was submitted for the plaintiff, that all partnership had ceased with respect to the transactions on this bill, and that, since it was to be presumed that Curtis had received the whole amount, the plaintiff was en- titled to recover as upon a transaction entirely insulated. But, ^er Lord EUenborough, — "If there had been partnership deal- ings, and only one item remained unadjusted, the difficulty as to partnership would disappear ;^ but that is not the case here, since some of the beasts remained after the sale to Cole." Lord Ellen- borough seems to have thought, that, as some of the beasts re- mained yet to be accounted for as between the plaintiff and defendant, the transaction as to the bill alone could not be con- sidered as taken out of the partnership account. For a similar reason, the plaintiff might have been nonsuited in Coffey v. Brian, where some of the butters remained undisposed of, and conse- quently subject to an account. In a suit founded in substantial justice, this reason for nonsuiting a plaintiff appears unsatisfac- tory ; but it seems to indicate an opinion on the part of Lord EUenborough that actions of this nature are contrary to the gen- eral course of the common law. § 274. It is clear, however, that particular transactions may be abstracted from the partnership account, and give rise to ac- tions between the partners ; and upon this principle the case of Jackson v. Stopherd ^ was decided. That was an action of as- sumpsit for goods sold and dehvered, brought by one joint lessee of a' coal-mine against the other. The parties had jointly carried on the working of the mine for some years prior to December, 1831, when, the coal having been all gotten, and the pit filled up, one Whitehead, at the request of the plaintiff and defendant, balanced the profit and loss of the concern, with the exception of ' See Brinley v. Kupfer, 6 Pick. 179 ; Clark v. Dibble, 16 Wendell, 601 ; Byrd v. Fox, 8 Missouri, 574. ^ 2 Crom. & M. 361 ; 4 Tyrw. 330. 256 MUTUAL EIGHTS OF PARTNERS. [bOOK II. some small, coal on the coal-pit hill, and some debts due to the firm, and accounts to a small amount, which were not come in. The plaintiff said he would join in no more coal-pits. The defend- ant said he would open another, whether the plaintiff joined in it or not. It was agreed that Whitehead should value the materials and utensils used for working the coal-mine, and that they should take each an article successively, article by article, until the whole had been divided. Whitehead made an inventory and a valua- tion ;_ and a few days afterwards he met them by appointment, in order to arrange about the division of the utensils valued, and told them that £171 19s. 9d. was the amount of the valuation. It was ultimately agreed that the defendant should take the whole of the utensils at the valuation, which he accordingly did. The jury having found a verdict for £85 19s. 10c?., being one half the amount of the valuation, the Court of Exchequer, on the authority of Coffey V. Brian and other cases, was of opinion that the verdict ought to stand ; this transaction being the subject of a distinct settlement, and unconnected with the general winding up of the partnership concern. And Bayley, B., said, that, independently of the general law of partnership, it seemed to him that the nature of the bargain, as to the division of the property, raised an im- plied obligation on the defendant to pay in money before the final settlement of the account. § 276. So, where, upon settling for a voyage between A. and B., part-owners, A. gives B. a sum of money for the specific pur- pose of paying the broker's bill, that is, a sum of money separate from any matter of account between A. and B. as partners in the proceeds of the voyage ; and if B. fails in payment, the money is recoverable in action by A. against B. This, at least, may. be inferred from the case of Wilson v. Cutting,^ though the 'facts of that case do not, to the fullest extent, warrant the position here laid down. In that case, there was a settlement of accounts be- tween two partners after a voyage, and one of the partners agreed to pay the broker's bUl, in consideration of being allowed a larger share of the profits ; and, upon his omission to pay the broker, it was held that the other part-owner might sue him for the amount. The action, therefore, was brought to recover the final balance of 10 Bing. 436. And see per Alderson J., p. 438. CH. III.J LEGAL AND EQUITABLE EEMBDIES. 257 an account, -whicli, as we stall see presently, it is competent for any partner to do. The case of Sharp v. Warren,^ although not a case of trading partnership, is in some degree illustrative of the point under discussion. There the auditor of a benefit club, who was himself a member, was intrusted with the funds of the society for safe custody, which funds he applied to his own use and refused to pay oyer, and he ran away with the box. It was held that the steward of the club might maintain an action of indebitatus assumpsit against him for the amount, upon the ground that his carrying away the money, and leaving the society, made him hable to them, as if he were not himself a member of the society ; and he had in fact placed himself out of the protection of his situation in the society by his conduct in withdrawing under the circumstances.^ § 276. Thirdly, it appears, from a variety of cases, that one partner may maintain an action against his copartner, to recover the whole or an aliquot part of the general balance of a partner- ship account. Even where partners have covenanted to account at certain times, if in pursuance of the covenant an account is en- tered into and a balance struck, and the debtor partner expressly promise to pay, the creditor partner may maintain an action of ' 6 Price, 132. See Simpson v. Eackham, ante, § 240. ^ Tliis was a decision on the peculiar circumstances of that case, and it would be hardly safe to deduce any general principle from it independent of those circumstances. By statute July 5, 1834, in New Hampshire, it is enacted, that whenever any copartner shall have or receive into his custody any goods, chattels, wares, merchandise, choses in action, book-accounts, or any personal property, or the proceeds thereof, in which any other copartner may have a joint interest, and shall refuse to account for or liquidate the same on demand, the person injured by the refusal may have an action of assumpsit to recover the share due to him ; and that action may be for money had and received, or otherwise. 2 N. Hamp. Laws, 150. In Perley u. Brown, 12 N. Hamp. 497, the court, in reference to the scope and effect of this stat- ute, say : " We are of opinion, that, in order to bring a case within this statute, there must be a refusal to account for some specific property belong-- ing to the partnership. A demand to settle the partnership business, and a refusal, may furnish ground for sustaining a bill in equity ; but this statute seems to have contemplated something more specific than that, as the foun- datwn of an action at law. The defendant must have recovered some prop- erty belonging to the partnership, and have refused to account for that spe- cific property or the proceeds of it." 22* 258 MUTUAL EIGHTS OF PARTNERS. [BOOK II. assumpsit against his copartner on sucli express promise, notwith- standing the cpyeiiant.i So, on the other hand, where no ac- count has been settled, but there has been an agreement by "the retiring partner or his representative to take a certain sum of money in consideration of relinquishing the account, this is a valid consideration to support an action of assumpsit for the recovery of the sum agreed upon.^ § 277. Provided the balance be complete, it is immaterial whether it was settled at the dissolution, or during the continu- ance of the partnership.-^ Therefore, where two proprietors of a stage-coach, A. and B., dissolved their partnership in November, and it appeared that during their partnership monthly accounts were made up, on each of which a balance was struck in favor of A., and the balances were never carried forward from one ac- count to another, and B. had paid A. the balance on the Novem- ber account, which was made up to the time of the dissolution, it was ruled that A. might maintain an action for the balances in his favor on the September and October accounts ; and, it being objected that the plaintiff could only maintain an action for the final balance, and not on the monthly balances, Tindal C. J., who tried the cause, said, that each of the monthly accounts was final, no balance being .carried forward from any of them.* And if the balance on the partnership account be included as an item in a larger account, on which latter account a balance covering the item is due to one of the partners, the creditor partner may main- tain an action to recover the amount of the item. Thus, where A. and B. had been partners in certain transactions for the pur- chase and sale of wool, and had also had other dealings together, and they settled a general account in which was an item to B.'s debit, " to loss on wool," and the general account showed a bal- ance of £15 against B., it was held that A. might maintain an action to recover the amount of the item for the loss on the wool.^ ' Moravia v. Levi, 2 T. R. 483, n.; Fosters. AUanson, 2 T. R. 479. But, in the latter case, other matters, not relating to the partnership, were intro- duced into the account, and the court seemed to rely in some measure on this circumstance. ' Wells V. Wells, Ventr. 40. ' Preston v. Strutton, 1 Anstr. 50. ' Brlerly v. Cripps, 7 C. & P. 709. • ' Wray v. Milestone, 5 Mee. & W. 21. CH. III.] LEGAL AND EQUITABLE EBMBDIBS. 259 But in a case where the balance was only the aggregate of a num- ber of sums due upon a series of weekly accounts, it was holden that an action would not lie by one partner against his copartner to recover this balance.^ § 278. It makes no difference whether the balance is settled by a couft of judicature, or by the parties themselves out of court. Therefore it has been held that debt hes on the decree of a colo- nial court made for payment of a balance due on a partnership account ; and there seems no doubt, that a decree of a court of equity fixing the balance due on a partnership account might, if necessary, be enforced in a court of law, though the items of the account cannot be sued for.^ § 279. If several partners submit all differences between them to arbitration, and the arbitrator award that a sum of money shall be paid by A., one of the partners, to B., another partner, B. may sue A. in an action of debt on the award ; for in such case the sum awarded is virtually the final balance of the partnership account. In the case of Winter v. White,^ such an action was held to be maintainable, although, under the circumstances, B. could not have sued A. upon the bond of submission. Six part- ners entered into two bonds of submission to arbitration ; in the one, three gave a joint and several bond to the other three, con- ditioned for the due performance of the award, and the three lat- ter gave a similar bond to the three former. The arbitrator awarded that one of the three should pay a certain sum to one of his co-obligors. The Court of Common Pleas held (dissentiente Mr. Justice Richardson), that the partner to whom the money was decreed to be paid could maintain an action of debt on the award against his copartner, although, there being no contract be- tween them, he could not sue him on either of the bonds. Bur- rough J., said : " The action is not founded on a contract, for the sum, when it has been awarded, becomes in the nature of a judgment or decree, and has therefore nothing to do with a prom- ise on which the action on contract is founded. Debt lies on ' Fromont v. Coupland, 2 Bing. 170 ; 9 Moore, 319. ' Henley v. Soper, 8 Barn. & Cress. 16 ; 2 Man. & Ryl. 153. See Gibson V. Moore, 6 N. H. 547. ' 3 Moore, 674 ; 1 Bred. & Bing. 350. See Brooke v. Enderby, 4 Moore, 601 ; Gibson v. Moore, 6 N. Hamp. 547. 260 MUTUAL RIGHTS OP PARTNERS. [BOOK II. f the award because the subject-matter of reference by the award transit in rem judicatam. It is not essential to an action on an award, where the submission is by bond, that the plaintiff should be enabled to recover the same sum by an action on the bond. ■ The bonds and their conditions are only to be looked to, in order to see whether the matter awarded be authorized by an agreement to submit." § 280. It seems to have been held by some judges, that, in order to sustain an action of assumpsit between partners, there must have been in all cases an exjpress promise by the defendant to pay the balance for which the action is brought.^ But it is clear that an express promise, either by word of mouth or by writing cannot be necessary where an action is brought upon an account stated, which is meant to be final.^ In Foster v. Allan- son,^ Buller J., said, — " If it be a question, whether a previous partnership being dissolved, and an account settled, is or is not, in point of law, a suflScient consideration for a promise ? I have no difficulty in saying that it is ; " which words are equally appli- cable to an implied as to an express promise. And in Rackstraw V. Imber,* Gibbs C. J., held clearly, that, to sustain an action of this kind after a dissolution of partnership, an implied promise is sufficient. In the case just mentioned, it appeared, that, after the dissolution of the partnership, the partners met together to adjust their accounts ; and at this meeting the books were produced, and the plaintiff claimed of the defendant, his partner, a balance in his favor of £200, and the defendant admitted the sum to be due. Gibbs C. J., said : " The plaintiff is entitled to recover. It is a mistake to' suppose that it is necessary there should be an express promise. The action is not brought upon any express promise at the meeting, but upon the implied undertaking. This I consider to be sufficient. The dissolution of a preexisting partnership, and the mutual settlement of an account, are a sufficient consideration in law for an implied promise to pay a balance on the side of the partner from, whom such balance is due." § 281. The true principles upon this subject appear from the * Fromont v. Coupland, 2 Bing. 170 ; Moravia v. Levi, 2 T. R. 486. ^ See D. Parke J., 5 Mee. & W. 24. 5 2 T. R. 479. « Plolt N. P. C. 368. CH. III.] LEGAL AND EQUITABLE KBMBDIES. 261 decisions in some recent cases. Thus, in Jackson v. Stopherd, the facts of which have been already stated,^ the court held, that the nature of the bargain as to the division of the property, and the actual taking and using by the defendant of the materials and utensils, raised an implied promise on his part to pay the value of one moiety of them ; and that, although there had been no final settlement of accounts. Again, in Wray v. Milestone,^ it ap- peared that the plaintiff and the defendant, having been partners in the purchase and sale of wool, and having had other trans- actions together, came to a general account, in which the balance due on the wool account formed one item. The amount showed a general balance of £15 in favor of the plaintiff, and opposite that sum the defendant wrote " Due from me to Mr. Wray," — to which he signed his name. The plamtiff having in an action of debt for goods sold, and on an account stated, recovered the amount of the item for wool, one question on a motion for a new trial was, whether there was a sufficient promise to support the action, and the Court of Exchequer held in the affirmative. Lord Abinger C. B. : " I think there is no ground for the motion, and that there is quite sufficient evidence of this being a final account. This was not the case of a general continuous partnership, but only in a particular adventure ; and it was quite natural that the parties should take a settlement on the conclusion of each ad- venture, as ship-owners settle on the conclusion of each voyage. Then, the account being settled, there is an unquaUfied acknowl- edgment, signed by the defendant, that £lb is due from him to the plaintiff on the general balance of accounts between them. If ■ the item forms part of a settled account, with a promise to pay the balance, I think there is no need of an express promise to pay the particular item." Parke B. : " If there be any case which lays it down that an express promise is necessary after an account stated, which was meant to be a final account, I dissent from that doctrine. Here the partnership item is introduced as an item in the general account, and the defendant acknowledges the balance, and thereby becomes liable to pay; there is no occasion after- wards 'to go through the form of words that he promises ; the transaction speaks for itself." Maule B. : "I know of no rule of law which requires, in this or in any other case, an express ^ Ante, § 274. » 5 Mee. & W..21. 262 MUTUAL RIGHTS OB PARTNERS. [bOOK II. promise. The laiv requires a promise ; whicli may be collected, sometimes' from an expression in words, sometimes from other mat- ters. Sometimes an account is so stated as in itself to import no promise ; then a subsequent promise in words supplies the legal promise stated in the declaration. Here it is clear that the state- ment of the account itself imported a promise to pay the items included in it." Upon these authorities, therefore, it is clear that, upon the dissolution of a partnership, and a final account between the partners, and also on an accoimt taken of a matter abstracted from the partnership, an action will lie for the recov- ery of the balance of the account without an express promise to pay.i ' In Williams v. Hensliaw, 11 Pick. 81, Morton J., remarked: " Assump- sit will lie, in some cases, by one partner against another, to recover a bal- ance of a partnership account. And although different rules have been adopted in different States upon this subject, yet they all concur in this, that it is & final balance only which can be recovered in this form of action." "In Massachusetts neither the settlement of the accounts by the partners, nor an express promise to pay, is necessary. It has been held too often now to be questioned, that assumpsit will lie to recover a final balance of a part- nership account, and that this rule extends to all cases in which the rendi- tion of the judgment will be an entire termination of the partnership transac- tions, so that no further cause of action can grow out of them." " This rule is not only founded on authority, but is reasonable in principle and con- venient in practice." See Dickinson v. Granger, 18 Pick. 315 ; Kockwell V. Wilder, 4 Metoalf, 556, 561 ; Jones v. Harraden, 9 Mass. 540 ; Brigham- V. Eveleth, 9 Mass. 538 ; Bond v. Hays, 12 Mass. 34 ; Wilby v. Phinney, 15 Mass. 116 ; Williams v. Heushaw, 12 Pick. 378 ; Chandler v. Chandler, 4 Pick. 78 ; Robinson v. Williams, 8 Metcalf, 454 ; White v. Harlow, 5 Gray, 463. In Panning v. Chadwick, 3 Pick. 420, the plaintiff and defendant were pfirt-owners of a vessel, of which the defendant was master, and, being jointly interested in a whaling voyage undertaken by such vessel,- the de- fendant in the course of the voyage landed some prisoners from a privateer, and also saved some articles from a wreck, for each of which services he received a compensation. On his return he settled up the voyage, but with- out rendering any account of these two items of compensation ; and it was held that the plaintiff might recover his proportion of the same in an action of assumpsit. In the above action of Williams v. Henshaw, 11 Pick. 81, it was decided, that one partner may sustain an action of assumpsit against his copartner to recover a final balance, where there are no demands outstanding against the partnership, by showing that no part of the outstanding debts due to the CH. in.J LEGAL AND EQUITABLE REMEDIES. 263 § 282. We have thus seen in -what particular cases actions may- be maintained between partners, in respect of partnership con- partnership can be collected, and thus that the judgment to he rendered will make a final settlement between the partners ; and this is more especially- true, if an assignment of all such outstanding debts shall have been made or tendered to [the defendant before the action was commenced. See s. c 12 Pick. 380. But the action cannot be sustained where there has been no settlement of the partnership afiairs between the partners, and the partner- ship is still in debt. Haskell v. Adams, 7 Pick. 59. Still, where the plaintiff, one of the members of a firm, had recovered a verdict against his copartner, in an action brought to recover the balance due from the defendant upon a dissolution of the firm, but it appeared at the trial that there was one out- standing debt against the firm, the plaintiff was allowed to take judgment upon entering a remittitur for so much from his verdict as would be equal to this outstanding debt. Brinley v. Kufner, 6 Pick: 179. So in New York it was held, that where there is a settlement between partners, and a promise by one to pay to the other a balance struck, an action may be' sustained at law, although by accident or otherwise some trifling debts owing by the firm remain unadjusted. Clark v. Dibble, 16 Wendell, 601. See Byrd v. Fox, 8 Missouri, 574. Where there are outstanding good debts due to the part- nership, one partner cannot, after the expiration of the joint concern, or after a dissolution, at any time, without any settlement or agreement with or notice to his copartner, by assuming those debts as a part of his share, sus- tain an action against his copartner for any balance that may be found due. Williams v. Hensha-w, 1-2 Pick. 378. See Rockwell v. Wilder, 4 Metcalf, 556, cited ante, § 269, note. In Maine an action of assumpsit lies to recover a balance found due from one partner to another after the company has been dissolved, and its con- cerns adjusted. Chase v. Garvin, 19 Maine, 211. So where the accounts have been settled, and one partner has by -mistake paid to another more than is due. Ibid. See Bond v. Hays, 1 2 Mass. 34. In Connecticut an action of assumpsit will not lie between partners for a balance due upon their partnership account, unless the account has been pre- viously liquidated and a balance struck. Beach v. Hotchkiss, 2 Conn. 425. In this case A., B., C, and D. were jointly engaged in equal proportions in a mercantile adventure, of which A. had the sole management ; and A. afterwards paid to B. a certain sum as his share. C. the'n brought an ac- tion of assumpsit for his share, and it was held that this payment to B. was not equivalent to a liquidation of the partnership account, nor did it prove that the same sum had been ascertained as the balance due to each of the parties concerned. See Killam v. Preston, 4 Watts & Serg. 14 ; La,malere i;. Caze, 1 Wash. C. C. 436. In Vermont it seems that assumpsit lies, after a dissolution, to recover a balance which has been struck and agreed upon between the parties. Per 264 MUTUAL EIGHTS OF PARTNERS. [bOOK II. tracts. After wliat has been said, it seems difficult, upon princi- ple, to state that contribution may be had between partners at law.^ It has been usual, however, to lay it down as a general rule, that contribution may be obtained in an action of assumpsit by one partner against another, for money laid out to the defend- Collamer J., in Spear v. Newell, 13 Vermont, 288. So in North Carolina. The settlement of accounts must, however, be complete. Graham v. Holt, 3 Ired. (Law), 300. In New York, South Carolina, and Illinois, assumpsit will not lie between partners for a final balance, except upon an express promise to pay it. Casey u. Brush, 2 Caines, 293; Halsted v. Sohmelzel, 17 John. 80; Wes- terlo V. Evertson, 1 Wendell, 532; Townsend v. Goewey, 19 Wendell, 424; Murray u. Bogert, 14 John. 318; Pattison v. Blanchard, 6 Barbour S. C. 537.; Course v. Prince, 1 Rep. Const. Ct. 416 ; Davenport v. Gear,. 2 Scam. 498 ; Frink v. Eyan, 3 Scam. 325. There must be a settlement of the partnership affairs and a balance struck, although there may have been a complete termination of the partnership. Atwater v. Fowler, 1 Hall (N. Y.), 180. Whether an express promise is necessary in New Jersey, see Jaques v. Hulit, 1 Harrison, 36 ; Gulicku. Gulick, 2 Green, 578, 581. In Maryland, the remedy of one partner against another, where no bal- ance has been struck, is in equity, and not at law. Kennedy v. M'Fadon, 3 Harr. & John. 194. In Pennsylvania, in the case of Killam v. Preston, 4 Watts & Serg. 14, it was strongly intimated that assumpsit by one partner to recover a balance due upon settlement of their partnership account, without proof of an ex- press promise, would not be sustained. Kennedy J., however, to sustain this suggestion cites nothing but some of the earlier English cases. But, as it appears by the text, the current of authority and all the later cases in England are against the necessity of an express promise in such case. In some earlier cases in Pennsylvania it has been supposed to be settled that an express promise was not necessary in that State. See Ozeas v. Thompson, 4 Dall. 434 ; s. c. 1 Binn. 191 ; Lamalere v. Caze, 1 Wash. C. C. 435 ; Gill V. Kuhn, 7 Serg. & K. 333; Morton J., in Williams v. Henshaw, 11 Pick. 81, 82. But there must be a settlement of accounts agreed to by both parties ; — all must be bound by the settlement, or none. Lamalere v. Caze, 1 Wash. C. C. 436. See further, in reference to this point. Walker v. Long, 2 P. A. Brown, 125 ; Young v. Brick, 2 Penn. 663 ; Burger v. Collins, 7 Harr. & John. 213 ; Roache v. Pendergrast, 3 Harr. & John. 33 ; Sally «. Capps, 1 Alabama (n. s.), 121 ; Calvert v. Marlow, 6 Alabama (n. 8.), 338; Burley v. Harris, 8 N. Hamp. 236, 237 ; Hourquebie v. Girard, 2 Wash. C. C. 212. ^ See Lawrence u. Clark, 9 Dana, 257. CH. III.] LEGAL AND EQUITABLK REMEDIES. 265 ant's use.^ This position was questioned by one learned writerj^ and has since been entirely abandoned by another, -who, in the last edition of his book, has confined it to cases of partnership in particular transactions.^ To be sure, there is a dictum of De Grey C. J.,* which seems to warrant the opinion which has generally been given on this subject. He says : " Where the suit is only brought against one partner, the law, perhaps, cannot do complete justice in the same suit. I know of no writ of contribution. But, in another suit for money laid out for the other's use, contribution may in effect be obtained." But in the same case the same very learned judge observed, that " equity must be called in to make the rest contribute." With regard to the dictum of Lord Ken- yon,^ which is usually cited in support of the same position, it is to be observed that he only speaks generally of a case where damages have been levied against one of several defendants in an action of asswnpsit; his Lordship not particularly alluding to de- fendants who are partners in trade. In the case In re Webb,^ it was unnecessary to discuss the question, whether or not contribu- tion could be had at law ; because it was there settled, that the partner, having paid money from a misapprehension that it was a partnership debt, paid it in his own wrong, and was not, under any circumstances, entitled to contribution. § 283. The case, which seems most to favor the doctrine of contribution at law amongst partners in trade, is that of Wooley 1 1 Car. Partn. 65 ; Mont. Partn. vol. 1, p. 50; Gojy Partn. 90, 2d ed., citing Aibbott v. Smith, 2 W. BI. 947 ; Wright v. Hunter, 5 Ves. 792 ; Mer- ryweather v. Nixan, 8 T. K. 186. - 7 Jarm. Conv. 1 7. ' Gow Partn. 79, 3d ed. Mr. Gow, at the page here referred to and in several subsequent pages, has gone fully into this subject, and has cited numerous cases to the point, that, where persons are partners in a single transaction, one of them may, in an action of assumpsit for money paid to his use, enforce from the other contribution towards a debt, which he may have discharged, but for which they were jointly liable. See Campbell v. Mesier, 4 John. Oh. 334 ; Noel v. Bowman, 2 Litt. 46 ; Wright v. Hunter, 5 Ves. 792. * In Abbott V. Smith, 2 W. Bl. 947. See also, Holmes v. Williamson, 6 M. & S. 158 ; D. Holroyd J., Blackett v. Weir, 5 Barn. & Cress. 388. But see D. Bayley J., ibid. * Merryweather v. Nixan, 8 T. K. 186. « 2 Moore, 500. 23 266 MUTUAL EIGHTS OP PARTNERS. [BOOK II. V. Batte.i There it was ruled, that, if a party recover damages in ease, against one of two joint coach proprietors, for any injury sustained by the negligence of their servants, such proprietor may maintain an action against his copartner for contribution, if he prove at the trial that he was not personally present when the accident happened. It was argued for the plaintiff, that the declaration against him for the injury might have been in assump- sit ; in which case he might clearly have recovered contribution ; and, therefore, that he ought not to be deprived of his contribu- tion, under the existing circumstances ; and the court apparently assenting to this argument, directed a verdict for the plaintiff. If that decision,'however, depended on the argument which has been adverted to, it seems now to be overruled by the case of Pearson V. Skelton,^ in which several persons being interested in a stage- coach, and there being a partnership fund, out of which expenses were first to be paid, and the residue divided amongst them, it was held that one of them, against whom damages and costs had been recovered for negligently driving the coach, could not re- cover against another proprietor his proportion of such damages and costs. , \ 284. Upon the whole, it may now be considered to be the better opinion, that, in cases of general trading partnership, one partner cannot, at law, enforce contribution from his copartner for moneys laid out on the partnership account.^ In Sadler v. 1 2 Car. & Payne, 417. •^ 1 M. & W. 504. ^ Mr. Justice Story, in 1 Story Eq. Jur. § 664, in reference to this point, remarks : " There has been a struggle, in cases where one partner has been compelled to advance or pay money on the partnership account out of his own private funds, to give him a remedy at law for a contribution from the other partners. But it is difficult to perceive how, except under very pecul- iar circumstances, such a remedy will lie ; " and he adds, in note, that " there is no case in the English courts where an action at law, except an account, has been held to lie generally to settle partnership accounts, or for a contribution by one partner against the others, for money paid by him for the use of the partnership." Ibid. § 664, note ; Lawrence v. Clark, 9 Dana, 257; Bracken v. Kennedy, 3 Scammon, 564. A partner, who pays a joint and several note made by himself and copartners individually to a retiring partner in payment for his share in the business, cannot maintain an action against one of his copartners for his proportion of the amount so paid, with- CH. III.] LEGAL AND EQUITABLE REMEDIES. 267 Nixon,^ three persons, A., B., and C, Ijeing copartners in trade, employed a builder to repair a building, wMcb was their joint property, and in which they carried on their trade. The builder "brought an action against the three copartners for the repairs, and obtauied judgment, but took A. only in execution, who, in order to regain his liberty, paid the whole debt. A. then brought this action against B., to recover one third of the money so paid. At the trial it was contended for the plaintiff that the action was maintainable; on the ground of the plaintiff having been compelled to pay the money, such compulsion taking the case out of the general rule by which partners are prevented from bringing ac- tions against each other to recover money paid on the partnership account ; but Lord Denman C. J. was of opinion that the general rule was applicable to this case, and the action was not maintain- able ; and his Lordship's opinion was confirmed by the Court of King's Bench, who thought there was no ground for the distinc- tion which had been taken on the part of the plaintiff.^ § 285. But in insulated transactions, where there is no general partnership, it is evident that a clear cause of action may arise between the partners, unshackled by any accounts.^ Thus, in out showing that the business of the partnership is settled. White v. Har- low, 5 Gray, 463. ' 5 B. & Ad. 936. And see D. Tindal C. J., 7 Bing. 709. " In Westerlo v. Evertson, 1 Wendell, 532, it was held that one partner could not sustain an action of assumpsit against his copartner to recover contribution in a case where a judgment obtained against the firm had been paid by the former, unless there has been a settlement, a balance struck, and an express promise to pay ; and this principle applies as well to law partnerships between practising attorneys as to other partnerships. See, to same effect, Lawrence v. Clark, 9 Dana, 257. ' In the ease of Brown v. Agnew, 6 Watts & Serg. 235, one partner was held entitled to sustain an action of assumpsit against his copartner for con- tribution where it appeared that the plaintiff had paid a partnership debt, more than six years after a general assignment by the firm in trust for cred- itors, and the defendant gave no evidence that the partnership accounts were open and unsettled. In this case it was admitted, that, where there is a general partnership, and one partner pays a sum during its existence, he is not enabled to sustain an action against his copartner for contribution. But the court say, if, after a dissolution and settlement of the partnership ac- counts, one partner is obliged to pay an outstanding claim not provided for in the settlement, assumpsit would seem to be the proper form of remedy to 268 MUTUAL RIGHTS OF PARTNERS. [bOOK II. Graham v. Eobertson,^ tlje plaintiffs were joint o-wners of a pri- vateer, and had cruised in company with the defendant, the owner of another privateer, under an agreement to share all prizes equally. They took a prize in the Mediterranean, which' was ' condemned in the Vice-Admiralty Court of Morocco. Upon this, half the money arising from the sale was paid to the defend- ant. Sentence of condemnation was afterwards reversed, and the money decreed to be refunded to the appellants, with costs, which was paid by the plaintiffs, who then brought their action against the defendant, to recover a moiety of the sum so paid. The Court of King's Bench expressed no doubt that the action was maintainable.^ § 286. In cases of this nature, if the whole damages in as- sumpsit be levied on one of several defendants, he may sue the others for their contributions.^ So, also, where the whole dam- ages awarded by an arbitrator have been levied upon one of two joint contractors, he has been held to be entitled to contribution at law. In Bumell v. Minot,* A. and B., who were not partners in trade, entered into a joint undertaking with C. They failed to perform their contract. C. then applied to A. for compensa- tion, and, in default thereof, threatened him with an action. A., not choosing to defend an action without the privity of B., agreed to refer the amount of the damages to an arbitrator. The arbi- trator awarded a certain sum to be due, which A. paid, and of which he brought his action against B. to recover a moiety. It was held, that such an action was maintainable. § 287. However, even in cases of this nature, the aggrieved partner may proceed, if he pleases, in a court of equity. In a recover contribution. The transaction would then come within the class, which are regarded as insulated or out off from the general partnership con- cerns. Par Sergeant J., 6 Watts & Serg. 238. ' 2 T. R. 282. And see French v. Fenn, 1 Co. B. L. 536 ; M'llreath v. Margetson, 4 Doug. 278. * The plaintiffs were nonsuited because the assignees of such of them as had become bankrupts were not joined with them as plaintiffs. ' Per Bayley J., Ansell v. Waterhouse, 6 M. & S. 390. And see Herries v. Jameson, 5 T. E. 556 ; Holmes v. Williamson, 6 M. & S. 158 ; Merry- weather V. Nixan, 8 T. R. 186 ; Forbes v. Wetster, 2 Vermont, 58; Dupuy V. Johnson, 1 Bibb, 562. * 4 Moore, 840. CH. III.] LEGAL AND EQUITABLE REMEDIES. 269 case where five persons, in partnership as coach proprietors, had incurred a partnership debt, which the creditor, after the death of one of the partners, recovered in an action against the survivors, on, a bill filed for that purpose by the partner who had paid the damages and costs of the action, against the representatives of the deceased partner,. Sir John Leach decreed contribution, not only for the damages, but also for the costs .^ § 288. The rule that actions of contract are not maintainable between partners on the partnership account, evidently arises from their situation inter se, and not from their situation quoad third persons. When, therefore, the partnership is actually at an end, as the partnership account is also at an end for all future pur- poses, it follows that the way is clear for any action between the parties, arising from causes subsequent to the dissolution, although these causes may originate in their situation of partners quoad third persons. Thus, A., B., and C, having dissolved partner- ship, C, after such dissolution, drew bills in the partnership firm in favor of D., the latter not knowing of such dissolution. D. brought this action on the bills against A., B., and C. C. having pleaded his bankruptcy, judgment was recovered against A. and B., who satisfied it from their joint fund. It was held, that A. and B. might recover the money so paid in an action brought by them jointly against C.^ Again, A. and D. were partners. D. became a bankrupt. After D.'s bankruptcy, A. paid two partner- ship debts, for which he had contributed his share before the bankruptcy. One of these debts was provable under the commis- sion ; the other, under the existing law, was not provable. It was held, that, upon D.'s receiving his certificate, A. might maintain an action against him for the debt not provable under the commis- sion.^ Again, the partnership of A. and B. having been privately dissolved, B. after that period and before the public dissolution, .contracted debts in the name of the firm. A. having paid these debts, it was held that he could recover the amount in an action against B. for money paid to B.'s use.* 1 Thomas v. Lichfield, EoUs, H. T. 1831. See Browne v. Gibbins, 5 Bro. P. C. 491. 2 Osborne v. Harper, 5 East, 225 ; 1 Smith, 411. ' Wright V. Hunter, 1 East, 20 ; see Butcher v. Forman, 6 Hill, N. Y. 583. * Hutton V. Eyre, 1 Marsh. 603. The same result would follow, wherever 23* 270 MUTUAL EIGHTS OF PAKTNEKS. . [bOOK II. § 289. From all that precedes, it is evident, that, where one partner has a claim upon his copartner for a sum of money due on account of the partnership, but not constituting the balance of a separate account, or a general balance of all accounts, his only mode of recovering the amount is by bill filed in a court of equity, praying for an account, and usually^ also for a dissolution.' SECTION III. OP THE EIGHT TO A DISSOLUTION. § 290. We have already had occasion to notice, that a partner- ship for a term may be dissolved before the expiration of the term, by the decree of a court of equity .^ This must be upon a bill filed by one or more of the partners against the others, showing a sufficient cause of complaint ; and the cause of complaint may consist in the impracticability of the undertaking, or the inca- pacity or misconduct of the copartners. § 291. (1.) The impracticahility of the undertaking.^ — In Baring v. Dix,* one partner filed his bill against the other for a one not in fact a partner, by permitting his name to be used in a firm, has been compelled to pay the debts of the firm ; he may recover the whole sum paid, in a suit against those really interested in the firm. Latham v. Kenniston, 13 N. Hamp. 213. » Story Partn. §§ 219, 221, 222; 1 Story Eq. Jur. §§ 664, 665 ; Spear v. Newell, 13 Vermont, 288 ; Judd v. Wilson, 6 Vermont, 185 ; Beach v. Hotchkiss, 2 Conn. 425. ' ^ Ante, ^11^. ' Griswold u. Waddington, 16 John. 491. It was said in Howell v. Har- vey, 5 Ark. 278, that a good cause for dissolution is furnished, when the con- ditions of a partnership are incapable of being fulfilled, or the fruits arising from it cannot be enjoyed. See 3 Kent Com. 60; Story Partn. §290; Gow Partn. (3d ed.) 226, 227; Griswold v. Waddington, 16 John. 491. The partnership may be dissolved when the whole scheme of the association is found to be visionary, or founded upon erroneous principles. Buckley v. Cater, Pearce v. Piper, cited in Beamontu. Meredith, 3 Ves. & B. 181 ; 17 Ves. 11, 15, 16 ; 3 Kent Com. 60 ; Keeve v. Parkins, 2 Jac. & Walk. 390 ; Gow Partn. (8d ed.), 227 ; Story Partn. § 290. See Harrison v. Tennant, 21 Beavan, 482 ; Electric Telegraph Co. of Ireland, 22 Beavan, 471. < 1 Cox, 212. CH. III.j LEGAL AND EQUITABLE REMEDIES. 271 dissolution of the partnership, and sale of the partnership prem- ises. The partnership was for spinning cotton by a new inven- tion under a patent, which the plaintiff alleged had been found on many trials impracticable. The defendant refused to consent to a dissolution of the partnership ; and Lord Kenyon referred it to the master to inquire, whether the partnership could be carried on according to the intent of the articles of copartnership, and said, that, if the master should declare that it could not be carried on, he would decree a dissolution of. the partnership, and a sale of the premises. The defendant soon afterwards consented to the part- nership being dissolved. So, in a very important case, a court of equity declared the partnership in the Opera House to be dis- solved ; the conduct of the parties making it impossible to carry it on upon the terms stipulated. Accordingly, the decree was for a sale of the whole concern.^ In a Scotch case noticed by Mr. Bell in his Commentaries, a partnership was agreed upon by three per- sons for three years, and buildings were erected in prosecution of the design. Two of the three partners finding that still larger advances were necessary, and the event problematical, they were held entitled to dissolve.^ § 292. (2.) The incapacity of the copartners. Where a part ner is of unsound mind, and there is every probability of a con- tinuance of the malady, a court of equity will relieve the copart- ner, by dissolving the contract of partnership.^ "If a case arose," says Lord Eldon, " in which it was clearly established, as far as human testimony can establish, that the party is what is ' Waters v. Taylor, 2 Ves. & B. 299 ; 3 Kent Com. 60 ; Story Partn. § 290 and note (4) ; Griswold v. Waddington, 16 John. 491 ; Gow Partn. (3d ed.) 226, 227 ; Howell v. Harvey, 5 Ark. 278. ' Barr v. Spiers, 2 Bell Com. 642. See Jenning v. Baddelay, 3 K. & J. 78 ; Bailey v. Ford, 13 Sim. 495. In Birchett v. Boiling, 5 Munf. 442, an agreement to build a tavern in partnership, to be held by the parties in fee- simple, was decreed to be specifically performed, at the instance of the pa-rt- ner who famished the ground for the purpose, and had fully performed the contract on his part, notwithstanding many of the partners were unwilling to carry it into effect, because, in. their opinion, a change of circumstances had rendered the scheme likely to be unprofitable. ' Jones u. Noy, 2 Myl. & K. 125; Wrexham v. Huddlestone, 1 Swanst. 504, n.; 3 Kent Com. 58 ; Sadler v. Lee, 6 Beavan, 324 ; Leal v. Coles, 1 De G. M. & G. 171 ; Anon. 2 K. & J. 441. 272 MUTUAL EIGHTS OP PAETNERS. [bOOK II. called, an incurable lunatic, and he tad, by the articles, contracted to be always actively engaged in the partnership, and it was there- fore as clear as human testimony can make it that he could not perform his contract, there could be no damages' for the breach, in consequence of the act of God. But it would be very difficult for a court of equity to hold one man to his contract, when it was perfectly clear that the other could not execute his part of it." ^ In Sayer v. Bennet,^ where a bill was brought to dissolve a part- nership, on the ground of the insanity of the defendant, Lord Kenyon said, — "Where there are two partners, both of whom are to contribute their skill and industry in carrying on the trade, the insanity of one of them, by which he is rendered incapable to contribute that skill and industry on his part, is a good ground to put an end to the partnership, not by the authority of either of the partners, but by application to a court of justice, and this for the sake of the partner who is rendered incapable, as well as of the other ; for it would be a great hardship upon a person so dis- ordered, if his property might be continued in a business which he could not control or inspect, and be subject to the imprudence of another." In accordance with the opinion so expressed, his Lord- ship in that case laid the foundation of a practice which has smce been uniformly followed ; namely, of referring the question of insanity to the master, in cases in which the fact of insanity is not sufficiently estabhshed at the hearing of the cause. In the par- ticular case before Lord Kenyon, the master's report appears to have been unsatisfactory, and an issue was ultimately directed, the result of which is not known ; but in the recent case of Kirby v. Carr,^ a partnership was dissolved by a decree of the Court of Exchequer, on the authority of the practice as estabhshed by Lord Kenyon.* ' Waters v. Taylor, supra. 2 Mont. Partn. vol. 1, Append. 18 ; Wats. Partn. 382 ; 1 Cox, 107. * 3 You. & Coll. 184. * Insanity does not per se dissolve the partnership. 3 Kent Com. 58 ; Story Partn. § 295; Jones v. Noy, 2 Myl. & K. 125; Gow Partn. (3d ed.) 221,222. It only makes out a good and suiEcient cause for a dissolution, under the discretion of a court of chancery. Ibid. See Griswold v. Wad- dington, 15 John. 57. Mr. Justice Story, however, intimates an opinion, that, in a case where the insanity has been positively ascertained, under a commission of lunacy or by the regular judicial appointment of a guardian CH. III.] LEGAL AND EQUITABLE EBMEDIBS. 273 § 293. In cases of this nature, it is usual to produce evidence of the defendant's insanity at the hearing of the cause, and it should seem that proof of his having been found a lunatic under a commission of lunacy is conclusive evidence on which to found a decree for a dissolution.^ But if no commission of lunacy has to the lunatic, it would ipso facto amount to a dissolution of the partnership by operation of law ; because the whole functions of the party to act per- sonally would be suspended, and the agency or authority of his copartners to act for him, may be deemed suspended or revoked. He admits, however, that the common law does not follow out the theoretical principle respecting the agency. Story Partn. § 295 and notes. See also, to the same effect, Isler 17. Baker, 6 Humph. 85. In Jones v. Noy, 2 Myl. & K. 125, Sir John Leach, Master of the Eolls, said: " The insanity of a partner is a ground for the dissolution of the partnership, because it is immediate incapacity, but it may not in the result prove to be a ground of dissolution, because the partner may recover from his malady. When a partner, therefore, is af- fected with insanity, the continuing partner may, if he think fit, make it a ground of dissolution ; but in that case I consider, with Lord Kenyon, that, in order to make it a ground of dissolution, he must obtain a decree of the court." See Gow Partn. (3d ed.) 221, 222, where Mr. Gow says : " What- ever may be the nature of the disorder, one partner cannot, in consequence of such an affliction, put an end to the partnership by his own act ; that ob- ject can be attained only through the medium of the decree of a court of equity." Parker C. J., remarking on this subject in Davis v. Lane, 10 N. Hamp. 161, said: " It has been held in England, that the insanity of one partner does not operate as a dissolution of the partnership, but that object must be attained through a court of equity. But the soundness of the prin- ciple may perhaps be doubted. Griswold v. Waddington, 15 John. 57, 82. It certainly could not have been applied here prior to 1832, as we had be- fore that time no court through whose decree in equity a dissolution could have been effected. Admitting it to be correct in its fullest extent, how- ever, it would not affect this case [a case of agency not coupled with an interest, the principal having become senseless] ; for each partner has an interest by the partnership contract, and the interest of one partner would not be terminated by the insanity of another. In making a sale or con- tract, he does not act as agent, but in his own right ; and the partnership name may be used by one, without any supposition that another acts, indi- vidually, or has any knowledge or volition in relation to the matter. But so long as the partnership continues, the act of one binds the others ; and as it is, in its effect, the act of all the partners, it may deserve great consid- eration whether the insanity of one, in the absence of any stipulation to the contrary, does not operate ipso facto as a dissolution of the partner- ship itself." ' Milne v. Bartlett, 3 Jurist, 358. In reference to this case and^the ob- 274 MUTUAL EIGHTS OF PARTNERS. [bOOK II. issued, strict evidence of the defendant's permanent and incurable lunacy must be given at the hearing, if a decree be sought with- out a reference to the master ; for, as Lord Abinger justly ob- served in the case of Kirby v. Carr, the bill in these cases pro- ceeds on the ground that the defendant, being insane, is unable to accept notice of dissolution.^ He must, therefore, be proved to be insane, in the strict sense of the word, and not merely inca- pable of conducting the affairs of the partnership.^ § 294. On a bill to dissolve a partnership on the ground of the lunacy of a partner, the court will not, where the other partner has still continued the business of the firm, make its decree retro- spective even to the time of filing the bill, still less to the time when the lunatic partner first became incapable of attending to servations in the toxt, Mr. Justice Story remarks : " I confess myself to have difficulty in comprehending how a partnership can still exist, after one part- ner has been put under guardianship by reason of insg,nity." Story Partn. § ^95, note. ^ But in a very recent case, Robertson v. Lookie, 15 Sim. 285, 10 Jurist, 533, the Vice-Chancellor of England held, that where partners agreed that their partnership should be dissolved on notice, the notice was good, though the partner on whom it was served was lunatic at the time. His Honor said : " I think this is a new point. It really appears to me, that if the par- ties have contracted, in the words they have used, that notice shall be deliv- ered, then, if the fact is that notice is given b}' the parties, all is given which the parties have agreed to be done." " See Story Partn. § 297 ; Wats. Partn. (2d ed.), 382; Jones v. Noy, 2 Myl. & K. 125 ; Gow Partn. (3d ed.) 221, 222. Mr. Gow, at the place here referred to, remarks in reference to this point: " But, as the duration of the disorder may be protracted or circumscribed, and the degree may admit of variety, it is impossible speculatively to lay down any general rule on the subject; since such a rule, in its application, must vary accordingly as the malady is either confirmed insanity, or mere temporary illness, or de- jection of mind, and according as the prospect of recovery is speedy or remote. Each case must be governed and decided by its own peculiar cir- cumstances." In Sadler v. Lee, 6 Beavan, 331, Lord Langdale, Master of the KoUs, remarked, that " confirmed and incurable insanity is a ground for dissolving a partnership ; but I apprehend, that, before a decree can be made ihat a partnership shall be dissolved on this ground, it must be shown, not merely that the partner alleged'to be insane is not, for the time, so capable as he may previously have been of attending to or conducting the business, but that he is really insane. If not, the partnership cannot be dissolved on that ground, and the partnership continues." CH. III. J LE(iAL AND EQUITABLE REMEDIES. 275 the business. In a recent case,^ one of two partners became of unsound mind, and was so found under a commission of lunacy, and the other partner then filed a bill praying a dissolution of the partnership from the time when the lunatic partner became inca- pacitated from attending to the partnership business. In this case the plaintifif, who had remained active in the business, had continued for a long period after the alleged incapacity to enjoy the lunatic partner's share of the capital and of the good will, although, of course, he was deprived of the assistance of his ser- vices in carrying on the business ; but the lunatic partner was all the while liable for the debts ; and under these circumstances the Lord Chancellor (Lyndhurst) held that it would be unjust to give the decree a retrospective operation. It was the plaintiff's own fault, that he had not apphed for a dissolution before. The Lord Chancellor said : " There are three considerations between the partners ; the share of each in the capital, the share of each in the good will, and the labor which each undertakes to devote to the business." " It was competent to the plaintiff to come for- ward at any time since his partner became incompetent to assist in the business to dissolve the partnership ; but if he chose to lie by and make use of his partner's share of the capital and good will, he cannot ask to dissolve the partnership from the commence- ment of his partner's insanity, on the ground that he has ever since been deprived of the assistance of his services in carrying on the business. His capital has all along been employed in the partnership concern, and the plaintiff would take the profits of the capital, while the lunatic would continue liable to the partnership debts. The only question is, as to the period from which the court ought to decree the dissolution. I do not see why the court should not say that the partnership should be dissolved at the date of the filing of the bill, except as to the intermediate debts, to which the lunatic would nevertheless continue liable. On that ground I think it ought to be at the date of the decree of the court below, because a retrospective decree would be only binding between the partners, and not as to the rest of the world." ^ § 295. Besides insanity, there are other cases of incapacity, which afford grounds for the dissolution of a partnership. Pothier ' Beach v. Frolick, 1 Phil. Ch. 172; s. c. 7 Jurist, 73. See 1 Lindley Partn. 183. ^ See Sadler v. Lee, 6 Beavan, 331 ; s. c. 7 Jurist, 476. 276 MUTUAL EIGHTS OE PAKTNBRS. [bOOK II. puts a case, -where a partnersliip has been contracted between two persons, by the terms of wbicb one partner is to flirnish the capi- tal stock, and the other his personal labor and skill, and the latter becomes disabled by the palsy to afford either the labor or skill, and he holds that this would afford proper ground for the dissolu- tion of the contract.^ Mr. Chancellor Kent says this conclusion would be extremely reasonable, for the case would be analogous in principle to that of insanity, and equally proper for equitable relief.^ § 296. (3.) The miscojiduot of the copartners. — Lord Thur- low once said, that, as to misbehavior in one of the partners, he did not see what line could possibly be drawn, and what degree of misconduct was to be held a sufficient ground for dissolving the partnership.^ And certainly a court of equity will not dis- solve a partnership on slight grounds ; as, for instance, because one partner may have conducted himself towards the other in an overbearing and insulting manner. "The court," to. use Lord Eldon's expressions before adverted to, " having no jurisdiction to make a separation between them, because one is more suUen or less good-tempered than the other." * So, again, want of pru- dence or ability on the part of the person seeking rehef is no just ground for a dissolution ; as, where he has made larger advances of capital than he is bound to do, and has received none of the profits.^ 1 Pothier, Traits du Contr. de Soc. No. 142, 152 ; 2 Bell Com. 634, 635 ; Story Partn. §§ 291-294. ^ 3 Kent Com. 62. The Chancellor adds at this place, that the same result would arise if one of the partners had lost his capacity to act sui juris, by nonviotion and attainder of treason, or by absconding for debt, or crime, felony, or any state-prison' offence. See Story Partn. § 304. In Arnold v. Brown, 24 Pick. 8^, it was held that the absconding of a partner from the State does not per se operate as a dissolution. See Whitman v. Leonard, 3 Pick. 177. But it is said, that, in case of long absence of one partner in the public service, or his protracted absence abroad for mere personal or private objects, or his change of domicil to another State or country, or his voluntary engagement in any other incompatible pursuits, if the interests of the partnership will materially suffer thereby, it will furnish a just and reasonable cause for a court of equity to dissolve the partnership. Story Partn. § 298. ' Liardet v. Adams, 1 Mont. Partn. 112. ' Goodman v. Whitcomb, 1 Jac. & W. 592. See Wray v. Hutchinson, 2 Myl. & K. 235. ' Goodman v. Whitcomb, supra. CH. III.] LEGAL AND EQUITABLE REMEDIES. 277 § 297. However, it may with safety be laid down, that not only wilful acts of fraud and bad faith, but gross instances of careless- ness and waste in the administration of the partnership, as well as exclusion of the other partners from their just share of the management, so as to prevent the business from being conducted on the stipulated terms, are sufficient grounds for the dissolution of the contract by a court of equity.^ So, also, it seems clear, that a habit on the part of one partner of receiving moneys and not entering the receipts in the books, or not leaving the books open to the inspection of the other partners, whether such conduct arise from a fraudulent intent or not, is good ground for a dissolu- tion.^ So, if a partner in a banking-house allows a customer to overdraw, and by way of security takes bonds from the customer, executed to himself separately, and not to the firm, this is such misconduct as will warrant a court of equity in decreeing a disso- lution.3 And although this relief will not be administered for mere defects of temper in some of the parties, yet violent and lasting dissension seems to be a ground upon which a court of equity will decree a dissolution ; as where the parties refuse to meet each other upon matters of business, a state of things which precludes the possibility of the partnership affairs being conducted with advantage.* And it has been laid down, that, though the court stands neuter with respect to occasional breaches of agree- ments between partners, which are not so grievous as to make it impossible for the partnership to continue, yet when it finds that the acts complained of are of such a character that relief cannot be given to the parties except by a dissolution, the court will de- cree a dissolution, though it is not specifically asked.^ ' See Marshall v. Colmah, 2 Jae. & W. 200 ; Goodman v. Whitcomb, 1 Jac. & W. 592 ; Chapman v. Beach, id. 594 ; Norway v. Kowe, 19 Ves. 148 ; Waters v. Taylor, 2 Ves. & B. 304 ; Howell v. Harvey, 5 Ark. 278, 279; Gowan v. Jeffries, 2 Ash. 309, 310; Smith v. Jeyes, 4 Beavan, 502 ; Harri- son V. Tennant, 21 Beavan, 482. ' Goodman v. Whitcomb, 1 Jac. & W. 593 ; Gowan v. Jeffries, 2 Ash. 306, 309, 310. = Master v. Kirton, 3 Ves. 74 ; R. L. 1796, B. 428. * De Berenger v. Hammell, 7 Jarm. Conv. 26 ; Gow Partn. (3d ed.), 227 ; Blake V. Dorgan, 1 Iowa (Greene), 537. ' Per Sir L. Shadwell, 4 Sim. 11. The court in Howell v. Harvey, 5 Ark. 278, 279, enumerating some of the grounds on which equity will decree a 24 278 MUTUAL RIGHTS OF PARTNERS. [bOOK II. SECTION IV. OF ACCOUNTS BETWEEN PAKTNEES. § 298. The account -svliicli a court of equity^ decrees be- tween partners is usually consequent upon a dissolution.; and dissolution, remarked, that " gross misconduct, want of good faith, or crimi- nal Tvant of diligence, or such cause as is productive of serious and perma- nent injury to the partnership concern, or renders it impracticable to carry on the business, is good ground for dissolution at the suit of the injured partner. Habitual intoxication, great extravagance, or unwarrantable neg- ligence in conducting the business of the partnership, justifies a dissolution ; but then it must be a strong and clear case of positive or meditated abuse, to authorize such a decree. For minor misconduct and grievances, if they require redress, the court will interfere only by way of injunction to prevent the mischief." Substantially the same causes are stated in Story Partn. § 288. See also, Gow Partn. (3d ed.), 227. Mr. Chancellor Kent (3 Kent Com. 60), says that the court will require a strong case to be made out, be- fore it will dissolve the partnership and decree a sale of the whole concern. The misconduct of the partner must amount to an exclusion of his copartner from his proper agency in the house, or be such as renders it impossible to carry on the business upon the terms stipulated. In Smith v. Jeyes, 4 Bea- van, 503, it was held, that where a partner does acts inconsistent with the duty of a partner, and of a nature to destroy the mutual confidence which ought to subsist between partners, and makes it impossible that the business can be conducted in partnership with benefit to either party, the court will decree a dissolution before the expiration of the term for which the partner- ship was entered into. When it is insisted, that the conduct of one partner entitles the other to a dissolution, the court must consider, not merely the terms of the express contract between them, but also the duties and obliga- tions implied in every partnership contract. Smith v. Jeyes, 4 Beavan, 503. See Gow Partn. (3d ed.). Ill, 112, 114, 116, 227; Durbin v. Barber, 14 Ohio, 315. In this last case, where the aggrieved party was obliged to aban- don the concern in consequence of the misconduct of his copartner, the court held, that they might declare at what date the contract of partnership should be at an end, and that they might fix the date of the dissolution at the time of the abandonment by the aggrieved party. The profits made in the concern after such dissolution, if growing out of the use of the joint capi- tal, are an increase of such capital, and if the proceeds of the individual or original capital of the aggrieved party, they are his. ■" For some particulars as to the action of account, which is now fallen into disuse in England, see Co. Litt. 172 a ; 11 Kep. 38 a ; Brownl. 24 ; Hutton, CH. III.] LEGAL AND EQUITABLE REMEDIES. 279 Lord Eldon was inclined to hold that it must depend upon a dis- solution. Thus, in Forman v. Homfray,^ a bill filed by one part- 133 ; Cro. Car. IIG ; 2 Bulstr. 256 ; 2 Lev. 126 ; 1 Ld. Raym. 340 ; 11 Mod. 187 ; Willes, 208 ; 2 Vez. 388 ; 3 Wils. 73 ; 1 Marsh. 115 ; 3 Dowl. & Ryl. 596 ; Com. Dig. Accompt ; Bull. N. P. 127 ; Wats. Partn. 394 ; and see the late case of Baxter u. Hoosier, 5 Bing. N. C. 288 ; 2 Scott, 129. Although this action of account has fallen into disuse in England, yet, as it is still em- ployed in a modified form as a remedy between partners in some of the States, it is proper, in this connection, to consider the subject. Mr. Chan- cellor Kent, in Duncan v. Lyon, 3 Johns. Ch. 360, 361, speaking of this action, said : " I do not find that even matters of account between copart- ners belong exclusively to courts of equity, though in practice they may be confined there. Courts of law and equity have concurrent jurisdiction in matters of account, and it is conceded that an action of account at law may be brought by one partner against another. Co. Litt. 171, a; 1 Mont, on Part. 46. In that action the auditors have all the requisite powers, for, they can compel the parties to account and to be examined under oath ; and I have not been able to discover any good reason Tvhy that action has so totally fallen into disuse." See 1 Story Eq. Jur. §§ 442-449, 663. The reason why the action of account, before it was abolished by statute, in Massachusetts, had fallen into disuse in that State, was suggested by Mr. Justice Wilde in Fanning v. Chadwick, 3 Pick. 424, where he said : " This action is almost obsolete even in England, and there seems to be no necessity for reviving it here. Justice may be administered in a form more simple and less expen- sive by an action of assumpsit, especially since the court is authorized to appoint auditors. Assumpsit now has all the advantages, without the disad- vantages, peculiar to an action of account." The action, however, was sus- tained in Towle v. Kirkland, 18 Pick. 299. But it is now expressly abol- khed by statute in Massachusetts. Rev. Stat. ch. 118, sec. 43. In Neal v. Keel, 4 Monroe, 162, 163, Bibb C. J., said: "This antiquated action [of ac- count] at common law has been supplanted by the more beneficial powers of a court of equity." Nature of the action of account, and pleadings tlierein. — The relation of partners has always been considered a sufficient privity to give them this action. Gow Partn. (3d ed.), 70 ; Aiken J., in Moore v. Wilson, 2 D. Chip. 91; Griffith v. Willing, 3 Binn. 317; Duncan u. Lyon, 3 John. Ch. 361. And it is laid down by Lord Coke (Co. Litt. 172, a), that if two joint mer- chants occupy their stock, goods, and merchandise in common, to their com- mon profit, one of them, naming himself a merchant, shall have an account against another, naming him a merchant, and shall charge him as receptor denariorum ipsius B., ex quacunque causa et contractu ad communem ultili- tatem ipsorum A. et B., prouenien' sicut per legem mercatoriam rationabiliter monstrare poterit. There are two judgments in this action; the first judg- ' 2 Ves. & B. 329. 280 MUTUAL EIGHTS OF PARTNERS. [BOOK II. ner against the other prayed payment by the defendant of certain sums alleged to have been taken by him out of the partnership ment is, that the defendant do account (Co. Ent. 46, b ; Rast. Ent. 1 7), usually termed a judgment quod computet ; this is in the nature of an award of the court, Interlocutory, only, and not definitive ; Metcalf's case, 11 Rep. 38, a ; per Gibson J., in 4 Serg. & R. 78 ; Kitchen v. Strawbridge, 4 Wash. C. C. 84 ; and after such a judgment, the defendant usually offering to ac- count, the court assigns auditors to take and declare the accounts between the parties. If the defendant before the auditors (Bull. N. P. 128), plead any matter in discharge which is denied by the plaintiff, so that the parties are at issue, the auditors must certify the record to the court, who there- upon, if it be matter of fact, will award a venire facias to try it; if it be mat- ter of law the court will decide it. Crousillat v. McCall, 5 Binn. 433. If on the trial the plaintiff make default, he will be nonsuited ; but notwith- standing the nonsuit, he may bring a scire facias upon the first judgment. Gow Partn. (3d ed.), 70. The final or second judgment in account is (Metcalf's case, 11 Rep. 38, a), that the plaintiff do recover against the defendant so much as he, the defendant, is found in arrear. Gow Partn. (3d ed.), 70. The mode of proceeding in this action is very fully discussed in McMurray v. Rawson, 3 Hill (N. Y.), 69. Auditors may in this action report a balance in favor of the defendant. Dickerson v. Whittiesay, 2 Root, 121. But it seems to be considered doubtful whether judgment may be lawfully entered for such balance. Crousillat v. MoCall, 5 Binn. 433 ; McCall V. Crousillat, 3 Serg. & R. 7. It is, however, settled that the defend- ant may support an action of debt against the plaintiff for the amount of it. McCall V. Crousillat, 3 Serg. & R. 7. In Connecticut, an action of account will not lie for the settlement of part- nership accounts where the number of partners exceeds two. Per Gould J., in Beach u. 'Hotchkiss, 2 Conn. 425, 430; Russell v. Green, 10 Conn. 270. So in Vermont. Albee v. Fairbanks, 10 Vermont, 314. But the law is different in Pennsylvania. See Grifiith v. Willing, 3 Binn. 317, where there were more than two defendants. Still, in this latter State, one partner can- not sustain the action against two others of his partners, unless there be a joint liability on the part of the defendants to render an account to the plaintiff. Whelan v. Watmough, 15 Serg. & R. 153. In Murray v. Rawson, 3 Hill (N. Y.), 59, it was said, that in general this action will not lie between partners, unless the partnership be mercantile ; and hence the declaration must show such to have been its character, or it will be bad. And, in the same case, it was said that parties resorting to the action of account in New York must be held to the ancient rules of pleading, subject only to such alterations as may have been made by the legislature. See also, Griffith v. Willing, 3 Binn. 317 ; Irvcne v. Hanlin, 10 Serg. & R._220. In Towle v. Kirkland, 18 Pick. 299, it was held, that before this action was abolished in Massachusetts, it might be maintained by a goldsmith and retailer of wares appertaining to that trade, against his former partner in the same business, CH. Iir.] LB9AL AND EQUITABLE KEMEDIES. 281 funds,' or that an account might be taken of the copartnership dealings, and that an injunction might be granted, restraining the defendant from receiving the partnership moneys, &c. The prayer did not extend to a dissolution. The defendant having put in his answer, a motion was made by the plaintiff that the defend- ant might be ordered to pay into court, or into the cash of the co- partnership, a sum of £1,478 14s. 6d., admitted in his answer to ' be due from him to the copartnership concern. Lord Eldon re- fused the motion, observing, that he did not recollect an instance of a bill, filed by one partner against the other, praying for an account merely, and not a dissolution, — proceeding on the foun- dation that the partnership was to continue. If a partner could come here for an account merely, pending the partnership, there seemed to be nothing to prevent his coming annually.^ § 299. In a subsequent case of Harrison v. Armitage,^ Sir John Leach was clearly of opinion that one partner might file a bill against another for an account, without praying for a dissolu- tion, since it was the only remedy he had ; and in a still later case,* his Honor adhered to his former opinion, observing, that, to refuse rehef in these cases, except upon the terms of putting an end to the partnership, was contrary to the plain principles of justice. And in answer to an objection which had been raised for who, after the dissolution of the partnership, became the receiver of money coming to their common profit. The action of account between partners in Vermont is founded upon the provisions of the common law, and it is there held unnecessary for the plaintiff to state in his declaration from whose hands the defendant received the money for which he is called to account. Moore v. Wilson, 2 D. Chipman, 91 ; Kobinsou v. Wright, Brayt. 22 ; Squire V. Allen, Brayt. !l90. The privity between the parties is sufficiently shown by a statement of their partnership connection. Aiken J., in Moore v. Wil- son, 2 D. Chipman, 91. For other authorities respecting the pleading and practice in this action, see James v. Brown, 1 Dall. 339 ; Jordan v. Wilkins, 2 Wash. C. C. 482 ; Odenwelder v. Odenwelder, 1 Whart. 108 ; Leonard v. Leonard, 1 Watts & S. 342 ; Brown v. Agnew, 6 id. 235 ; Cochran v. Perry, ' 8 id. 262; 1 Story Eq. Jur. §§ 442-449. ' A partner cannot demand an account in respect of particular items and a division of particular parts of the property, but the account must neces- sarily embrace every thing. Baird v. Baird, 1 Dev. & Bat. Eq. 524. ' Forman v. Homfray, 2 Ves. & B. 329. ' 4 Madd. 143. * Richards v. Davies, 2 Kuss. & M. 347. 24* 282 MUTUAL RIGHTS OF PARTNERS. [eOOK II. the defendant, that, if this suit were entertained, he might be vexed by a new bill whenever new profits accrued, his Honor said : " What right has the defendant to, complain of such new biU, if he repeats the injustice of withholding what is due to the plaintiff ? "Would not the same objection lie in a suit for tithes, which accrue de anno in annum ? " § 300. But considerations of general inconvenience have in- duced other learned judges to overrule the opinion of Sir John Leach and to adopt that of Lord Eldon. Thus, in Loscombe v. Russell,! -vyJiieh was a bill for an account of the profits of a part- nership between two carriers, a demurrer was put in on the ground that the bill did not pray a dissolution, and Sir L. Shad- well V. C, allowed the demurrer. His Honor, in giving judg- ment, said that there was no instance ^ of an account being ' 4 Sim. 8. ' But in the case of Knowles u. Houghton, 11 Ves. 168, which was de- cided many years before that of Forman v. Homfray, the bill was for th? establishvient of the partnership and for an account ; and the court did not object to the nature of the relief sought by the bill. Accordingly, though the decree dismissed so much of the bill as sought. an account of the profits of the underwriting business (see ante, § 60), yet it directed an account of the other business upon the footing of the partnership. In this case, the bill stated, that, in the year 1794, the plaintiff and defendant agreed to com- mence partnership in the brokerage and underwriting business, to be carried on in the name of the defendant. That, in consideration of the plaintiff's superintending the other mercantile concerns of the defendant, he was to have a yearly salary of £125; and that, if the moiety of the brokerage business did not amount to £200, the defendant was to make up that sum ; so that the plaintiff was to receive at least £325 a year for salary and bro- kerage business, besides his moiety of the underwriting business. That the plaintiff and the defendant came to yearly statements of the brokerage busi- ness up to the beginning of the year 1801, when the plaintiff received what was due to him on that account, except a certain balance in the bill men- tioned. That, from that period, to the filing of this bill, a moiety of the profits of the brokerage was due and unaccounted for to the plaintiff. That the underwriting account was, for the first time, settled between the plaintiff and defendant in the year 1798, when the defendant gave the plaintiff a promissory note for the balance due to the latter ; but that a large sum of money for his moiety of the profits of the subsequent underwriting business was due from the defendant to the plaintiff. That the plaintiff, by reason of ill health, ceased to take an active part in the business of the partnership during several years, and accordingly a deduction on that account was made in his salary. That, in the year 1801, the defendant proposed taking other OH. III.] LEGAL AND EQUITABLE REMEDIES. 283 decreed of the profits of a partnership on a hill which did not pray a dissolution, hut contemplated the subsistence of the part- persons as partners in the concern ; to which the plaintiff objected, on the ground that his health was improving, and that he should soon be able to resume his duties as a partner. That some time afterwards the plaintiff went to the counting-house, and was then for the first time told by the de- fendant that their partnership must be considered to be at an end, and to have been so as to the underwriting business from the 31st December, 1803, and as to the brokerage business from the 31st December, 1799. The bill then charged that the partnership was not and ought not to be considered as dissolved, and prayed " that the plaintiff may he declared to be and continue a partner in the said brokerage and underwriting business, as to a moiety or half part thereof; and that an account may be taken of the profits which have been made in the said business of underwriting from the end of the said year 1798 ; and that a like account may be taken of the profits which have been made in the said brokerage business from the end of the year 1799 ; and also an account of the moneys paid by the said Henry Houghton to the plaintiff in respect of his share in the said concern ; and that the said Henry Houghton may be decreed to pay to the plaintiff a moiety or half part of such profits in both businesses, after deducting what he has already paid to the plaintiff in respect thereof; and that an account may also be taken of what is due to the plaintiff in respect of the aforesaid salary of £125 agreed to be allowed to him by the said Henry Houghton ; and also an account of what is due to the plaintiff for deficiencies, according to the aforesaid agreement between the plaintiff and the said Henry Houghton, in such years in which the amount of such salary and partnership in the bro- kerage business has been less than £325 a year; and that the said Henry Houghton may in like manner be decreed to pay to the plaintiff what is due to him for such salary and deficiencies,'' — and for further relief. The de- fendant, by his answer, denied that any agreement for a partnership had been entered into between him and the plaintiff, or that any partnership had in fact subsisted between them, or that he had stated to the plaintiff that their partnership had been dissolved. He insisted that he had dealt with the plaintiff merely as his clerk, admitting, however, the money trans- actions stated iu the bill, and submitting to an account. The order was : " That so much of the plaintiff's bill as seeks to have an account taken of the profits which have been made in the business of underwriting in the pleadings mentioned be dismissed out of this court. That it be referred, &c., to take an account of the profits which have been made by the broker- age business in the pleadings also mentioned, and to state whether any thing, and what, is due from the defendant to the plaintiff in respect thereof And, in taking the same account, if the master shall find that any account has been settled between the plaintiff and defendant relating thereto, he is not to unravel the same. And it is ordered, that the said master do inquire whether any thing, and what, is due from the defendant to the plaintiff on 284 MUTDAL RIGHTS OF PAETNEES. [bOOK II. nership; and he observed strongly on the inconvenience which would arise if such bills -were permitted, inasmuch as the court would have to decide upon an endless number of successive appli- cations, made by each party in respect of the balance, and that in fact a balance would never be ascertained till the partnership ex- pired or the court put an end to it. And this opinion of his Honor was adopted by Mr. Baron Alderson, after some considera- tion, in the case of Knebell v. White.^ It may now, therefore, be considered as settled, with certain exceptions under peculiar circumstances noticed in the note below, that in the case of ordi- nary trading partnerships an account of partnership dealings and transactions must be consequent upon a dissolution of the partner- ship, and the following observations are made with reference to an account so taken.^ account of his salary as clerk to tlie said defendant, during the time he acted as such clerk. That the said master do also take an account of all sums of money received by the plaintiff from the defendant, or for his use, except such sums as have been received by him on account of the said business of underwriting. That the said master do inquire and state to the court ■whether the partnership between the plaintiff and the defendant in the pleadings mentioned hath at any time, and when, been dissolved," — with the usual directions. K. L. 1804, A. fol. 1008. > 2 You. & Coll. 15. ' For some practical details on this subject, see Mr. Cory's useful treatise on mercantile accounts. Notwithstanding the statement in the text, it may still be regarded as a question open for consideration, whether a person engaged in trade in copartnership ■with others cannot maintain a bill against his copartners for an account, ■\vithout praying also a dissolution of the part- nership. In 1 Story Eq. Jur. § 671, Mr. Justice Story remarks, that " courts of equity may, perhaps, interpose and decree an account where a dissolution has not taken place and is not asked for ; although, ordinarily, they are not Inclined to decree an account, unless under special circum- stances, if there is not an actual or contemplated dissolution, so that all the affairs of the partnership may be wound up." The learned judge then cites the cases referred to in the text, and in addition thereto quotes largely from the opinion delivered in the case of Wallworth v. Holt, k Myl. & Craig, 619, 635-639, in which Lord Cottenham reviewed the cases at large, and re- marked : " When it is said that the court cannot give relief of this limited kind, it is, I presume, meant that the bill ought to have prayed a dissolution and a final winding up of the affairs of the company. How far this court will interfere between partners, except in cases of dissolution, has been a subject of much difference of opinion, upon which it is not my purpose to say any thing beyond what is necessary for the decision of this case." " It CH. III.] LEGAL AND EQUITABLE REMEDIES. 285 § 301. An account mil be decreed at the suit of any of the partners or their representatives,^ showing a proper case for the is true, that the bill does not pray for a dissolution, and that it states the company to be still subsisting ; but it does not pray for an account of part- nership dealings and transactions, for the purpose of obtaining the share of profits due to the plaintiffs, which seems to be the case contemplated in the opinions to which I have referred ; but its object is to have the common assets realized and applied to their legitimate purpose, in order that the plaintiffs may be relieved from the responsibility to which they are exposed, and which is contrary to the provisions of their common contract, and to every principle of justice." After citing and commenting on several cases, in which a prayer for dissolution does not seem to have been regarded as necessary, he adds : " It may be suggested that the supposed rule, that the court will not direct an account of partnership dealings and transactions, except as consequent upon a dissolution, though true in some cases and to a certain extent, has been supposed to be more generally applicable than it is upon authority, or ought to be upon principle. It is, however, certain that this supposed rule is directly opposed to the decision of Sir J. Leach in Har- rison V. Armitage, and Richards v. Davies." See post, § 1130. In Eichard- son V. Hastings, 7 Beavan, 307, Lord Langdale, Master of the Rolls, re- marked : " At one time the court would not entertain a suit between part- ners in relation to partnership transactions, except on a bill to wind up the partnership. That is not now the rule of the court, and the cases which have been referred to corroborate the view, that the court will, as between partners, entertain a bill to settle a question that may arise between them, without proceeding to wind up the concern and affairs of the partnership." See also, Fairthorne v. Weston, 3 Hare, 387, to the same effect. In this last case, pp. 391, 392, Sir James AVigram, Vice-Chaneellor, said : "The argument for the defendant turned wholly upon the proposition, that a bill praying a particular account is demurrable unless the bill seeks and prays a dissolution of the partnership ; in support of which the case of Loscombe v. Russell, 4 Simmons, 8, and the cases there cited, were relied upon. That there may be cases to which the rule there laid down is applicable, I am not prepared to deny ; but the law as laid down in that case was never admitted to be a rule of universal application. Harrison v. Armitage, 4 Madd. 143 ; Richards v. Davies, 2 Russ. & Myl. 347. And the unequivocal expression of the opinion of Lord Cottenham, in Taylor v. Davies, M. R. 8 June, 1834, 4 Law J. Rep. n. s. Chan. 18, and Wallworth v. Holt, 4 Myl. & Craig, 619, of the Viee-Chancellor of England in Miles v. Thomas, 9 Simmons, 609, and ' For early cases on the subject, see Wells v. Wells, Ventr. 40 ; Beaumont V. Grover, Eq. Ca. Abr. 8; Heyne v. Middlemore, Ch. Rep. 261; Holts- combe V. Rivers, 1 Ch. C. 127. A creditor cannot file a bill to stop a part- nership and wind up its concerns ; it is only at the instance of a partner that this can be done. Clement v. Foster, 3 Iredell Eq. 213. 286 MUTUAL EIGHTS OF PARTNERS. [BOOK II. interference of the court.^ But as the rule is, that he who seeks equity must do equity, it, seems clear that, where the plaintiff is a of Lord Langdale in Kichardsoti v. Hastings, M. E. 15 January, 1844, shows that there is no such universal rule at the present day ; and I cannot but add, that it is essential to justice that no such universal rule should be sustained. If that were the rule of the court, — ^ if a bill in no case would lie to compel a man to observe the covenants of a partnership deed, — it is obvious that a person fraudulently inclined might, of his mere will and pleasure, compel his copartner to submit to the alternative of dissolving a partnership, or ruin him by a continued violation of the partnership con- tract." " Upon the allegations of this bill, the defendant, for the fraudulent purpose of compelling the plaintiff to submit to a dissolution upon very in- jurious tei-ms, is violating the partnership contract, and the object of the bill is to have the benefit of the partnership articles without a dissolution. If the allegations of the bill are true, some accounts must be directed ; " and " if the case made by the plaintiff is true, he is clearly entitled to some relief, and to that relief the right to discovery and to have accounts taken in some form must be incidental." " It is unnecessary to say, in this stage of the cause, what relief may he given ; it is sufficient to say, that the court will go as far as it can to protect the rights of the parties ; and I have no doubt that it may interfere to support as well as to dissolve a partnership." The above was a case of a partnership for a certain term, and the bill was filed during the term, and the court held that a bill for a partnership ac- count and a receiver during the existence of the partnership is not demur- rable merely on the ground that a dissolution is not prayed. Mr. Daniell, in his work on Practice in Chancery, treats the question as still an open and vexed one, though he seems inclined to hold a prayer for dissolution neces- sary. See 1 Daniell, Ch. Pr. (Perkins's ed.), 289, 290, 382, 383. See also, Waters v. Taylor, 15 Ves. (Sumner's ed.), 10, note (b) ; Gow Partn. (3d ed.), 95; Loscombe v. Russell, 4 Sim. 8; post, §§ 1132-1134. In the late case, however, of Prole v. Masterman, 21 Beavan, 21, where the promoter of a company sought to make his co-promoters contribute to a debt paid by him, but for which they were liable as well as he, it was held that a decree might be made without directing a general account of what was due from the plaintiff in respect of other matters. Again, in the case of a mutual in- surance society, where the funds of the society are answerable for the pay- ment of the moneys due upon their policies, an assured member is entitled to an account of what is due to him upon his policy, and to a decree for the payment of what is so due, without involving himself in any general ac- count of the dealings and transactions of the society, or praying for a disso- ' A bill for an account by one partner against the others for losses sus- tained on account of a fraudulent contract between them, which was con- trary to public morals, being an attempt to defraud the government, cannot be sustained. Bartlo v. Nutt, 4 Peters, 184. CH. III.] LEGAL AND EQUITABLE EEMEDIBS. 287 private debtor to the partnership, lie cannot insist upon an account ■without paying the amount of his debt into court.^ Thus, in an early case it is laid down, that, if one partner borrows any money out of the partnership trade, his own share shall be an- swerable for it, and he shall not be permitted to come into equity and pray an account, without making satisfaction for the debt.^ So, in a case before Lord Nottingham, one partner having sued the other for money had and received, and the latter having filed his bill for an injunction to stay proceedings at law, and an ac- count, the court entertained the suit, and decreed an account, the lution thereof. See Hutchinson v. Wright, 25 Beavan, 444 ; Taylor v. Dean, 22 Beavan, 429. " The old rule, therefore," says a later writer, " that a decree for an account between partners will not be made save with a view to the final determination of all questions and cross claims between them, and to a dissolution of the partnership, must be regarded as no longer in force. There are three classes of cases in which suits for an account, without a dissolution, are more particularly common, and to which it is nec^ essary specially to refer. These are — " 1. Where one partner has sought to withhold from his copartner the profit arising from some secret transaction. See Hichens v. Congreve, 1 K. & M. 150 ; Fawcett v. Whitehouse, 1 E. & M. 132 ; The Society of Prac- tical Knowledge v. Abbott, 2 Beavan, 550 ; Beck v. Kantorowicz, 3 K. & J. 230 ; Clegg v. Fishwick, 1 Mac. & G. 294. " 2. Where one partner has sought to exclude or expel his copartner, or to drive him to a dissolution. Harrison v. Armitage, 4 Madd. 143 ; Chappie V. Cadell, Jac. 537 ; Richards v. Davies, 2 K. & M. 347 ; Fairthorne v. Wes- ton, 3 Hare, 387 ; Blisset v. Daniel, 10 Hare, 493. " 3. Where the partnership has proved a failure, and a limited account will result in justice to all parties. Walworth v. Holt, 4 M. & Cr. 619; Sheppard v. Oxenford, 1 K. & J. 491. " Having regard to the decisions in Sheppard v. Oxenford, and other modern cases of a similar kind (especially Apperley v. Page, 1 Phil. 770 ; and Clements v. Bowes, 17 Simmons, 167), it is conceived that the doctrine established in Walworth v. Holt, may be considered as extending not only to cases where an account is sought for the purpose of having joint assets applied in discharge of the joint liabilities, but also to cases where an ac- count is sought for the additional purpose of obtaining a division of the sur- plus assets and profits amongst the parties entitled thereto. If this be so, the last remnant of the doctrine that, in partnership cases, there can be no account without a dissolution, must be considered as swept away." ' As to the practice in reference to paying money into court, see 3 Daniell, Ch. Pr. (Perkins's ed.), 2010 et seq. ch. 39. ^ Vin. Abr. Partners (E), 5 ; Melliorucchi v. Royal Exch. Ass. Comp. 1 Eq. Abr. 8. See MulhoUan v. Eaton, 11 Curry (Louis.), 291. 288 MUTUAL RIGHTS OF PARTNERS. [BOOK II. plaintiff having first paid into court the money in question.^ Upon similar principles, it should seem that, if the defendant could by any means show that a specific sum was due from the plaintiff to the partnership as a private debt, that sum would be ordered to be paid into court by the plaintiff before an account was decreed. § 302. But one partner, whether plaintiff or defendant, may receive partnership money and effects, and insist on not paying in the amount, unless all the other partners will pay in what they have in their hands ; ^ and it has been laid down by Lord Eldon, that if a partner receives money belonging to the firm, and admit- ting that he has received it, insists that there is a balance in his favor, there is no pretence for making him pay it in.^ § 303. This leads us to the consideration of the principles on which a court of equity will order the payment of partnership money into court in a suit between partners, where no final ac- count has been taken in the cause. Where property is in the hands of stakeholders, factors, or trustees, who do not themselves claim any title to the money in their hands, the court will, on their bare admission of the possession of it, order it to be .paid into court ; because here the court does not disturb the posses- sion of the party claiming title, or direct payment, before the liability to pay is established,* though, even in this case, the court will take notice of any circumstances stated by the defendant in his answer which may essentially qualify his admission. But where partnership money in the hands of a defendant partner is required to be paid into court, here, as the defendant has a primd facie title to the money, the order for payment will not be made, unless there be a clear admission apparent on the face of his answer, not only that he has the money, but that he is liable to pay it. Thus, in Eichardson v. The Bank of England,^ the bill, which was brought by the personal representatives of Esdaile, a banker, against his surviving partners, for an account, charged that the defendant Thomas had been introduced into the firm, ' Gold V. Canham, 2 Swanst. 325 ; 1 Ch. Ca. 311. = 1 Jac. & W. 253. ' 1 Jac. & W. 252. * See4Myl. & Cr. 171. <■ 4 Myl. & Cr. 165. CH. III.] LEGAL AND EQUITABLE REMEDIES. 289 without capital, in 1828'; that the firm had afterwards become embarrassed; and that, on the occasion of a general arrangement in January, 1837, Esdaile appeared a creditor on the books in the sum of ^90,816. That, upon account subsequently taken in the same year by an accountant, it appeared that a sum of J35,833 was due as between the partners to Esdaile from the partnership, of which Thomas's share was £81,468 ; that Thomas had likewise overdrawn his account to the extent of £2).,B91, and that these sums, together with a balance due from him on a profit and loss account, left him a debtor to the firm, at the low- est, in the sum of £54,042. The bill also charged, that, upon the introduction of Thomas into the firm, Esdaile adyanced for Thomas, who had married Esdaile's daughter, a. sum of £20,000, which was placed in the books to the joint account of Esdaile- and Thomas, where it had remained ever since ; but that this sum was, in fact, merely an advance from Esdaile to the partner- ship, and had never been drawn out. The defendant, by his answer, admitted that Esdaile, at the time mentioned in the bill, stood as a creditor in the books, to the amount of £90,816, but he denied the accuracy of the accounts taken by the accountant ; and though he admitted that advances had been made to him by the house to the extent of £21,591, he denied that his account was overdrawn to that amount, or that he was indebted to the firm in that or any other sum ; claiming on the contrary, a bal- ance in his favor of £275. As to the £20,000, he admitted that that sum had never been drawn out, but he denied that it was an advance by Esdaile to the partnership; insisting that it was an advance by Esdaile to him, the defendant, as his capital for the partnership, though he admitted that he gave no considera- tion for it, except joining the partnership, and that he brought no capital' into the concern. Under these circumstances. Lord Lang- dale, M. R. upon a motion made by the plaintiff's before the hearing for that purpose, ordered the defendant Thomas to pay the sum of £21,591 into court ; but, upon appeal to Lord Cot- tenham, C. his Lordship reversed the order of the Master of the Rolls. After stating, that, in order to support a motion of this nature, two things were necessary, — first, a clear Uability in the defendant to pay, and, secondly, an admission of the facts from which such liabihty arises, — his Lordship proceeded to observe, that, in the present state of the partnership affairs, it could not 25 290 MUTUAL EIGHTS OF PAETNERS. [BOOK 11. be considered that tte money received by Mr. Thomas constituted a debt due from him to the partnership ; for that his ansiver con- tained no admission of such a debt, or of any facts from which his hability, as a debtor to the partnership, could be inferred; that, on the contrary, there was a positive denial of some of the material facts, which might operate as a substitute for a direct admission. And his Lordship took occasion to animadvert, at some length, on the inaccuracy of considering partners, in these cases, in the light of debtors or creditors to the concern ; for that, before any settlement of account, and before the payment of the joint debts or the realization of the partnership estate, neither ad- vances by one partner, nor receipts by another, could be consid- ered -as any thing more than items in the -account. Upon'these ♦grounds, his Lordship decided in favor of the appellant. § 304. But if the answer of the defendant partner contains an admission of facts,, from which it appears clearly that he is liable as a, debtor to the partnership in a specific sum, it is iromaterial that he does not, in words, admit the liabihty, or that he even in- sists that he is not liable. In such case, therefore, he must pay the money into dourt. Thus, in Mills v. Hanson,^ where there was no express admission. Lord Eldon ordered the defendant partner to pay money into court, on the ground of admission de- rived from a comparison of the facts admitted by the answer with accounts contained in schedules and books referred to by the de- fendant, and which accounts were cast up by an accountant. So, in Domville v. Solly ,^ the same learned Lord held, that, upon a motion of this nature, the plaintiiF was not bound by the defend- ant's denial of the plaintifif's interest in the money in question, but that th6 plaintiff was at liberty, notwithstanding such denial, to show, upon the case stated in the answer, that he had an inter- est in the sums in question. So, in Touhnin v. Copland,* Lord Abinger, C. B. ordered a surviving partner to pay into court a certain sum which he admitted to have received on account of the late partnership, although, by his answer and examination, he alleged that partnership debts, to a large amount, were outstand- 'ihg, for which he was liable, and also, that his copartner had I 8 "Ves. 68. ' 2 Kuss. 372. » 3 You. & Coll. 643. eg. III.] LEGAL AND EQUITABLE REMEDIES. 291 drawn out of the partnership sums to the amount of double the sums drawn out by himself; it appearing, from the defendant's admission, that there was a sufficient sum in court to pay the out- standing debts, and that, taking into consideration the true shares of the partners, which the defendant had not done, but which ap- peared from an order of the House of Lords in the same cause, the copartner had not overdrawn his copartnership account. § 305. There is another class of cases connected with this subject, in which it is unnecessary .to consider the question, whether money in the hands of a defendant partner constitutes a debt irom. him to the concern. The class referred to is that where the ^partner has received the money fraudulently, or, to use the . milder expressions of Lord Eldon, " under circumstances from which you can infer that he had agreed not to receive it, and that his receiving it was contrary to good faith ; " in such cases, he may be ordered to bring it into court. Thus, in Fos- ter V. Donald,^ the plaintiffs, and the defendant David Donald, carried on business together in the North of England. It had been, proposed to dissolve the partnership, and the terms of the dissolution had nearly been arranged, when the defendant said, that, before finally acceding to them, it would be proper for him to go to London, for the purpose of consulting a friend residing there. In the course of his journey, he went round to several customers of the firm, in different parts of the country, and col- lected of them debts due to the partnership to the amount of about £2,B16. In one instance, a debt due by himself had been set off against a debt due to the firm, and he received the differ- ence. Upon a bill filed for an account of the partnership trans- actions, the defendant, though by his answer.stating his belief that the balance of the account would be in his favor, was ordered to pay the £2,318 into court.^ M J. & W. 252. See Jorvis v. White, 6 Ves. 738. ^ It is to be observed in this case the judgment was founded upon the conduct of the defendant, which amounted in fact to a fraudulent abstrac- tion ; but where there are no circumstances of that description to support the application, the rule will be adhered to, that "if a partner as partner receives money belonging to the firm, and,. admitting that he has received it, insists that there is a balance in his favor, there is no pretence for making him pay it in." Per Lord Eldon, in Foster v. Donald, 1 J. & W. 253 ; 3 Daniell, Ch. Pr. (Perkins's ed.), 2018. 292 MUTUAL EIGHTS OP PAKTNERS. [B00K.II. § 806, To this class of cases, that of Costeker v. Horrox ^ may be referred, though that was not a suit between living part- ners, and not a case of positive fraud. A., B., and C, being in partnership. A., who had nearly the whole of the capital, re- tired, taking a warrant of attorney from B. and C. to secure to- him £12,500, but leaving his whole capital in the firm. The accounts of the partnership were not then made up. Soon after- wards, A., who still interfered in the business, mortgaged certain leaseholds, his private property, and certain policies of assurance on his life, for the purpose of paying off a partnership debt. A month or two afterwards, A. died, having made B. and C. his executors, and having by his will, directed that they might apply the moneys to be received from the policies in carrying on the trade, provided they gave such security to his residuary legatees as W. might approve. W. refused to act, and, according to their own admission, contained in their answer to a biU filed against them by A.'s residuary legatees, B. and C. omitted to give secu- rity pursuant to the will, and applied the money arising from the policies, amounting to £7,000, in discharge of the mortgage. They, however, alleged that A.'s share in the capital, at the time of his retirement, was far below £12,500, and that the warrant of attorney was given merely to secure what, upon an account taken, might be found to be his share. Upon motion for payment of the £7,000 into court. Lord Abinger C. B. was of opinion that the motion must be granted, as the defendants could only employ that money in the trade upon the terms of the will ; and that, having omitted to do so, they were guilty of a misapplica- tion of it. It may be remarked, in conclusion, that, although the court will not, generally, entertain motions of this nature before the coming in of the defendant's answer, because such motions depend only on admissions and not on evidence, yet if the plaintiff makes such a motion founded on affidavits, and the defendant answers the affidavits by counter-affidavits, the court will treat his affidavits as an answer.^ § 307. There are many cases in which a court of equity will assist the settlement of partnership accounts, by decreeing in the ' 3 You. & Coll. 530. ' Jervis K. White, 6 Ves. 738; 3 Daniell Ch. Pr. (Perkins's ed.), 2024; Vann v. Barnett, 2 Bro. C. C. 158. CH. III.] LEGAL AND EQUITABLE REMEDIES. 293 first place a sale of the property.^ Where no provision is made for the disposition of the partnership property upon a dissolution, this exertion of equitable jurisdiction seems to arise necessarily from that _g6neral principle, that the retirement of one partner is the dissolution of the whole society. In the words of a teamed ■writer, — " The effect of dissolving the company is different from that of mere renunciation, for in the latter case the partners will- ing to proceed with the contract would be left in possession of the premises, good-will, &c., paying for them a price by valuation ; whUe in the former case all these matters must be, settled on the footing of the whole connection being dissolved." ^ Hence the decision in Marshall v. Marshall.^ There the Court of Session held that a partner who was pursuer in the cause was entitled to withdraw from the company, and that the effect of his doing so was ■ to dissolve the copartnership. • The cause came before the Lord Ordinary to settle the effect of the dissolution ; and it was contended by the partner not wishing to -dissolve, that the other must take his departure and leave him in possession of the shop at valuation ; but it was held that the lease should be disposed of by public sale. ' § 308. The same principles have frequently been acted upon in our courts of equity, in cases where a partniership not under articles, or under articles not providing for a dissolution, has been dissolved by death or bankruptcy. Upon the death of a partner under such circumstances, his executor has a right to have the partnership affairs wound up by a sale. " In the case of an ex- ecutor," said Lord Eldon, " the question is, whether the surviving partners, instead of settling the account, and agreeing with the executor as to the terms upon which his beneficial interest in the stock is still to be continued, subject stUl to the possible loss, can take the whole property, do what they please, and compel the executor to take the calculated value. That cannot be without a contract for it with the testator. The executor has a right to ' 1 Lindley Partn; 857; Hale v. Hale, 4 Beavan, 375 ; Do-wns v. Collins, 6 Hare, 418; Leaf u. Coles, 1 De G., Mac. & G. 170. In the instance of a trading partnership actually dissolved, the court orders a' sale on motion. 1 Swanst. 523. ' 2 Bell Com. 641. See ante, §§ 117, 118. ' 17 Fac. Coll. 101. 25* 294 MUTUAL BIGHTS OS PARTNBES. [BOOK II. have the value ascertained in the way in -which it can be best ascertained, by sale." ^ § 309. The same right in this respect, which attends the execu- tors of a deceased partner, belongs likewise to the assignees of a bankrupt partner. In Orawshay v. ColHns,^ where there were ho articles, the plaintiffs, assignees of a bankrupt partner, by their bill filed against the copartners,' prayed that three eighth parts of the partnership stock and profits might be sold for the benefit of the bankrupt's estate. It was argued for the defendants, that the plaintiffs could not insist upon a sale of the entirety of the lease- hold premises, but only of the individual interest ; that in every instance of a separate bankruptcy the right' of the assignees was only to an account, and to have a value set upon the specific chat- tels at the time of the bankruptcy ; that it never was held that upon the bankruptcy of one partner there must necessarily be a sale of the whole. But Lord Eldon considered the case of the assignees to be similar to that of the executor of a deceased part- ner. His Lordship said : " As to the case now before the court of the bankruptcy of one partner, supposing it the simple case of profit made by the mere sale of the property, there must be an account. It is said, a duty was imposed upon the assignees to call for the account. That is true. It is, however, no more the duty of the assignees to settle with the others, than it is their duty to settle Avith the assignees. Is it possible, then, to say, that upon any rule of law the other partners can take, as sole owners, all the houses, buildings, and stock in trade? The con- sequence of the destruction and dissolution of the partnership is, that they become tenants in common in each and every article ' 15 Vos. 227. And this sale should be effected without any unnecessary delay. Evans v. Evans, 9 Paige, 1 78. In Maine, by statute passed March 24th, 1835, the appraisers, in taking an inventory of the estate of any de- ceased partner, are required to appraise and return the -whole of the part- nership estate, and carry into the footing an amount equal to such deceased partner's proportional part of the copartnership interest ; whereupon the surviving partner shall execute a bond to the judge of probate, conditioned to use due diligence in settling up the partnership affairs,- and to pay over the balance, if any,' to the persons interested in the estate of the deceased partner. In case of his neglect or refusal, the administrator of the deceased partner may take the whole partnership property into his possession, &c. ' 15 Ves. 218 ; and see Crawshay v. Maule, 1 Swanst. 495. CH. III.J LEGAL AND EQUITABLE EBMEDIBS. 295 embarked in it, under an obligation to deal with tbe whole stock and. every article as the equitable title of the bankrupt and them- selves requires ; and according to the case of Fox v. Hanbury,i the right is, not to an individual proportion of a specific article, but to an account : the property to he made the most of, and di- vided." § 310. So, in Featherstonhaugh v. Fenwick,^ where there had originally been articles of partnership, and by those articles it was stipulated that upon the retirement of a partner his share should be taken at a valuation, yet, inasmuch as the partnership had been continued beyond the term limited by the articles, and so had become a partnership at will,^ Sir William Grant held that the share of the retiring partner was not to be taken at a valuation, without his consent, but that a court of equity might decree a sale of the whole property. In the case just mentioned, upon the retirement of the plaiutiff, some time after the expiration of the articles from the partnership concern, the offer of the copartners was, to take the contracts with the workmen off the plaintiff's hands, and to give him an indemnity, or to divide the workmen. They also offered to take the partnership property and utensils at a valuation ; and desired the plaintiff, if he would not comply with that proposal, to take his share off the premises. It was insisted for the plaintiff, that he was entitled to a sale of the partnership > property, and an account. On the other hand, it was said, that, where partnership property is capable of a division, it ought to be divided and not sold. Sir Wilham Grant held that the plaintiff might insist upon a sale. " The proposition," he said, " was, that a value should be set on the partnership stock, and that they should take his proportion of it at that valuation, or that he should ' Cowp. 445 ; post, Book 4, chap. 1. " ,19 Ves. 298; 2 Hov. Supp. 478. ' Ante, § 214. As to tliis, however, see the cases, which hold, that, where articles of partnership are entered into for a fixed period, and the parties continue to trade as before after the partnership has expired by effluxion of time, all the covenants of the old partnership, with the exception of that for duration, are infused into the transactions of the new partnership. Per Sir A. Hart, 1 MoUoy, 466 ; Mifflin v. Smith, 17 Serg. & R. 165 ; Bradley V. Chamberlin, 16 Vermont, 613 ; U. States Bank v. Binney, 5 Mason, 185 ; Story Partn. §§ 197, 198, 278, 279; ante, § 214; Dickinsoii v. Bold, 3 De- saus. 501. 296 MUTUAL RIGHTS OF PARTNERS. [BOOK II. take away Ms share of the property from the premises. My opin- ion is, clearly, that these are not terms to which he was bound to accede. They had no more right to turn him out, than he had to turn them" out, upon those terms. Their rights were precisely equal, to have the whole concern wound up by a sale, and a di- vision of the produce." ^ § 311. In Wilson v. Greenwood,^ the partnership was founded in article's, and a special proviso was made as to the assignment of each partner's share, upon his death, retirement, or bankruptcy. Upon the bankruptcy of one of the partners, it was found to be impracticable, if not illegal, to act upon the proviso. The part- nership, therefore, being pro tanto a partnership at wiU, a sale of the whole property was decreed, without hesitation. § 812. Again, in Cook v. CoUingridge,^ a proviso was contained in the articles of partnership, specifying the mode of distribution of the stock at the expiration of the term; It was held, however, that the articles could not be literally acted upon, and therefore that upon the expiration of the term the stock was to be sold, and the accounts taken, as in the case of a partnership at will.* " The case," said Lord Bldon, " depends upon the will of the testator, and upon articles of partnership not very capable of being liter- ally carried into execution. The articles, dated in 1812, begin in the usual manner, with stating their agreement to become part- ners, and their shares of the capital ; and then follow clauses providing for what was to be done upon the determination of the partnership, or upon the death of any of the partners. They first put the case of its ending by the expiration of the term of ' The same principle, that one partner, in winding up the affairs of a partnership, after dissolution, has no right to talie the property at a valua- tion, but that its value must be ascertained by a conversion into money, was adopted in Sigourney v. Munn, 7 Conn. 11, S24. '^ 1 Swanst. 471 ; 1 J. Wills. 223. ' Jac. 607. * There were, however, other circumstances sufficient to warrant a sale. In Leach v. Leach, 18 Pick'. 75, Wilde J., remarked that the decision in Cook V. Collingridge " is not opposed to the general principle, that stipula- tions of this kind are valid and binding ; but it is founded on the difficulty and impracticability, from the situation of the property, of executing the agreement of tke parties in that case. The validity of such stipulations, if the execution of them be practicable, cannot be questioned." CH. III.] LEGAL AND EQUITABLE REMEDIES. 297 seven years, or other sooner determination; in that event, the . property of every description belonging to the business was to be divided, received, and taken by them respectively, according' to their respective interests. Now the property of the partnership consisted of leasehold premises, of materials necessary for the manufacture, and other stock in trade, and of what would be still more difficult to deal with according to these articles, a number of agreements with customers to provide them with carriages for certain periods, at specified rates. It is difficult to conceive what was to be done, according to the articles, with these engagements, unless they happened to end at the expiration of the seven years. This, however, was the agreement on which the partnership was formed. Another case is then put, of the death of one or more of the partners during the term of seven years ; the trade was then to be carried on till the end of the term ; and in the mean time the outstanding debts to be collected and divided with as much expedition as could be, reserving enough to carry on the trade. This, again, would not be very easy to manage, as it would be very likely to be a matter of dispute how much would be necessary for that purpose. Another case is then put, that of the death of all the partners within the term ; and then it was pro- vided that the same course should be pursued, to assign the pro- portion of each, as in the case of a determination by effluxion of time. The other circumstances of the case make it not very ma- terial what is the meaning of the articles. It might be the mean- ing literally, that the leases, stock, and engagements were to be divided, and that the partners were to take a share of every article. The Vice-Chancellor thought the division was to be by means of a sale. Being myself of opinion that it is impossi- ble to act upon the articles, taken literally, the general law of partnership must be applied ; which appears to me to be properly laid down in Featherstonhaugh v. Fenwick. To the doctrine there laid down by Sir W. Grant, as to the adjusting the affiiirs of a partnership on its dissolution, I entirely accede." The stock was then decreed to be sold, and it was referred to the master to inquire what would be the most beneficial manner of disposing of it. §• 313. It appears, therefore, that in all cases of a partnership at -grill, whether the contract was originally of that nature or has become so by effluxion of time or other circumstances, a court of 298 MUTUAL EIGHTS OF PARTNERS. [bOOK II. equity will, upon a dissolution, decree a sale of the entirety of tte partnership effects, at the desire of any of the parties. ' And ' 3 Kent Com. 64 ; Story Partn. §§ 350, 351 ; Sigourney v. Munn, 7 Conn. 11, 324; ante, § 310, note; Conwell v. Sandidge, 8 Dana, 278; Evans v. Evans, 9 Paige, 178. Mr. Gow (Partn. 3d ed. 234) holds, that, when the common property is ascertained, either partner may insist upon a sale of the whole concern. He says : " The rights of the partners respec- tively are then precisely equal ; each may require the whole concern to be wound up by a sale, and a division of the produce. One partner has no claim upon his individual proportion of a specific article, nor can he insist upon an exclusive right in it, but he is entitled only to a general arrange- ment of the partnership concerns, and for that purpose to an account of the produce of the aggregate joint effects. Pie cannot separate his share from the bulk of the joint property, nor compel his copartner to accept what, according to a valuation, his interest may be worth. That is not the mode in which a court of equity winds up the concerns of a partnership ; but in every case in which that court interferes, in closing the transactions of a firm, it directs the value of the whole of the joint property, whether real or personal, to be ascertained in the way in which it can best be ascertained, namely, by a sale and its conversion into money." The same doctrine was acted on in Sigourney v. Munn, 7 Conn. 11, 324. In this case it appeared that,,after the dissolution of a partnership, one of the partners abandoned the partnership concerns, refused to divide the stock, and made no reply to the repeated solicitations of the other partner to settle their concerns amicably ; it also appeared that, in that State, among merchants and traders, the cus- tomary mode of winding up the concerns of a solvent partnership, after a dissolution, was to divide the stock of goods on hand between the partners, or for one partner to purchase out the other, and that it was not customary to sell the stock on hand by auction, and thajt, when this mode of sale was resorted to, it was generally attended with a considerable loss with reference to the appraised value : it further appeared, that the partner in whose sole possession such goods were left, in order to fender them salable, had re- plenished the stock with new and more salable goods, and had so inter- mingled the new and old goods that it became impracticable for him to keep a separate account of the sales of the old stock ; and it was held that these circumstances did not prevent the operation of the general rule requiring a sale as a criterion of value. " The true doctrine of courts of equity on thjs subject," says Mr. Justice Story, " would seem to be, in all cases, to decree a sale of the partnership property, rather than a division thereof in kind, whenever a sale would be most beneficial for the interests of all the part- ners." Story'Partn. § 350. In Fereday v. Wightwick, 1 Tamlyn, 261, the Master of the Rolls, Sir J. Leach, remarked : " It is a principle that all property, whether real or personal, is subject to a sale on a dissolution of the partnership." Mr. Chancellor Kent maintains the same doctrine. 3 Kent Com. C4. See also, Rigden v. Pierce, 6 Madd. 353, where the articles stipu- CH. III.] LEGAL AND EQTIITABLE REMEDIES. 299 even in the case of a partnership with articles, supposing it to be dissolved for the misconduct of one partner, a case might be stated where a court of equity would decree a general sale and account, as of a partnership at will, notwithstanding express pro- visions in the articles as to the proceedings tp be had upon a dis- solution. § -314. From what has preceded it is obvious .that there may be many cases, perhaps, indeed, a majority of cases, in which the sur- viving or solvent partners, are interested in resisting a sale of the property ; on the other hand, while it is the object of the execu- tors of the deceased partners, or the assignees of the bankrupt partner, to promote a sale, this consideration renders it highly inexpedient for any person to stand in the situation of surviving, partner and executor of a deceased partner ; at least where the parties for whose benefit he acts as executor are incapable, by reason of infancy or otherwise, of indemnifying him for his con- duct in the character of partner. The unfortunate consequences arising from the same persons acting m these inconsistent charac- ters have been already exemplified.^ .§ 315. When the account is decreed, the master to whom the accounts are referred is generally at liberty under the decree to examine the parties in the cause. ^ But at any rate it is his duty lated for an equal division of the partnership property on a dissolution, after payment of the partnership debts, and yet it was held that it necessarily required a conversion into money, and that either party had a right to insist on a sale of the whole. In Pierce v. Trigg, 10 Leigh, 406, it was held by Tucker, President of the Court of Appeals in Virginia, and by Cabell J., that, when lands are purchased by two partners for partnership purposes with partnership funds, and used as a part of, the stock in trade, although, if the conveyance has been made to both partners, there will, upon the death of one, pass to his heirs a legal title, yet the whole beneficial interest devolves upon the survivor, and he may sue the heii-s, compel a sale for the purpose of distribution, and dispose of the proceeds as he would dispose of the personal estate of the firm. The President says : " The representatives of the deceased partner, indeed, may also insist on a sale, if the surviving partner is backward. But, beyond doubt, the survivor may apply to equity to decree a sale. For neither party has a right to compel a division of the specific subject in kind, or require the other to accept what, according to a valuation, his interest may be worth." Ibid. p. 423. ' See ante, § 186. ' The common form of a decree, referring the case to a master to take an 300 ' MUTUAL EIGHTS OB PARTNERS. [BOOK II. to go on with the accounts, until he finds a diifioultj arising from the want of sufficient powers ; and if it be necessary, and he had no original authority to examine parties, he may apply to the court for that purpose.^ Where a partner, defendant, is examined in the master's office relative to his receipts and payments on the partnership account, although his admissions as to the receipts will be taken conclusively against him, he must prove his pay- ments, unless they form one transaction, with the receipts,. by other evidence than his own oath. In Talbot v. Rutledge,^ which was a suit between partners. Lord Hardwicke took notice of the distinction in this respect between entries made by a man in his books, and statements made by him in his answer or his examina- tion in the master's office. " In this court," said his Lordship, " if a man is to be charged by a book or other writing, he shall also be discharged if the entries are made for that purpose therein ; but what is sworn by a man's answer or examination admits of a account, contains an authority for examining the parties. HoUister v. Bark- ley, 11 N. Hamp. 507. This direction that the parties may be examined on oath has been long established in practice, and is considered in the books as a thing very much of course. Hart v. Ten Eyck, 2 Johns. Ch. 515, '516; 2 Daniell Ch. Pr. (Perkins's ed.), 1366, 1367. Where, however, this direc- tion is omitted in the decree or order, the master has no power to examine the parties, but in such case, if the decree has not been enrolled, the court will order it to be rectified. 2 Daniell, uhi supra. Tn Copeland v. Crane, 9 Pick. 73, a bill in equity was filed by an administrator of a deceased part- ner against the surviving partner for an account, and the bill and answer of the defendant were referred to a master, " he to take the books and papers of the partnership, examine the same, receive the evidence, hear the parties, audit and state the accounts, and report the facts material for the decision of the cause ; " and the master examined the defendant on oath without any objection on his part. One of the exceptions taken to the master's report was, that the defendant was examined on oath, without any special author- ity by the order of reference being given to do so. The court say in their decision : " This exception cannot be allowed, because it is not founded on any objection made before the master ; here we understand the defend- ant submitted to an examination, and it is too late to question the authority of the master." — pp. 77, 78 ; Method. Epis. Church v. Jaques, 3 John. Ch. 80, 81. ' For the method of taking the accounts in the master's office generally, see 2 Daniell Ch. Pr. (Perkins's ed.), 1418 et seq. and notes. * 4 Bro. C. C. 74, cited. See also, Smith's Chancery Practice, vol. 2, ch. 11. CH. III.] LEGtAL AND EQUITABLE REMEDIES. 301 different consideration ; for if a man admits by Hs answer that he received several sums at particular times, and in the same answer swears he paid away those sums at other times in discharge, he must prove his discharge ; otherwise it would be to allow a man to swear for himself and to be his own witness." ^ ' Where the evidence in support of a charge consists of entries in books kept by the party himself, the party has a right to make use of entries in the same book in support of his discharge. Darston v. Earl of Oxford, 1 Eq. Ca. Abr. 10, PI. 9. And so if a paper is produced by one of the parties, from which he takes his charge, the same paper may be read by the other party by way of discharge. Carter v. Lord Colrain, Barnardis. 126 ; 2 Ball & B. 386 ; Method. Episc. Church v. Jaques, 3 John. Ch. 77, 116. But it does not follow, that each part is entitled to the same credit. 3 John. Ch. 116, 117. See Boardman u. Jackson, 2 Ball & B. 382; Jones i^. Jones, 4 Hen. & Munf. 447; Waggoner v. Gray, 2 Hen. & Munf. 603; Freeland V. Cocke, 3 Munf. 352; Robertson v. Archer, 5 Rand. 319. This rule is adopted in equity, in analogy to the rule at law which provides, " that, if to prove a debt it be sworn that the defendant confessed it, but withal said, at the same time, that he paid it, his confession shall be valid as to the pay- ment, as well as that he owed it." Trial Per Pais, vol. 2, p. 363 ; Hart v. Ten Eyck, 2 John. Ch. 88 ; Carver v. Tracy, 3 John. 427 ; Smith v. Jones, 15 John. 229 ; Wailing v. Toll, 9 John. 141 ; Fenner v. Lewis, 10 John. 38 ; Hopkins v. Smith, 11 John. 161. Upon this principle it is held, that, where a man by his answer or examination admits that he has received cer- tain sums, which sums he had paid, &e., the discharge fuUowing in the same sentence, that will be sufficient to discharge him. llidgeway v. Darwin, 7 Ves. 404. If the discharge occurs in a sentence different from that in which the charge is, it cannot be made use of Robinson v. Scotney, 19 Ves. 582. And it seems that it is not only necessary .that the discharge should be by the same sentence with the charge, but it must form, as it were, one and the same transaction. See Thompson v. Lambe, 7 Ves. 688, where the rule is stated by Lord Eldon, and Hart v. Ten Eyck, 2 John. Ch. 89, where the subject is discussed by Mr. Chancellor Kent. Upon the same principle, it has been held that a party charged with one sum of money cannot discharge himself by distinct independent items on the other side of the account. Robinson v. Scotney, 19 Ves. 582. The authorities on this subject were very thoroughly sifted in Hart v. Ten Eyck, 2 John. Ch., at pages 87 to 98, by Mr. Chancellor Kent. In this case he says : " It appears to me there is a clear distinction, as to proof, between the answer of the defendant and his examination as a witness. At any rate, the question how far the matter set up in the answer can avail the defendant, without proof, is decidedly and rationally settled."— p. 88. See Beckworth v. Butler, 1 Wash. 224 ; Paynes V. Coles, 1 Munf 337. In Hollister v. Barkley, 11 N. Hamp. 501, 509, 519, it was held, in a case between partners, upon a bill in equity, that the state- ments of a party under oath, upon the taking of an account, cannot have 26 302 MUTUAL ElfiHTS OF PARTNERS. [BOOK II. § 316. It is likewise a common direction in the decree, that the parties shall produce before the master, on oath, all books and papers in their custody, relating to the taking of the accounts. ^ This order comprehends, not merely the original partnership books, but all books in which entries relating to the partnership concern have been made since the dissolution.^ In Toulmin v. Copland,^ one of the partners carrying on the business of navy- agents having died, the surviving partner continued the business, and without the consent of the executors took upon himself cer- tain of the debts due to the firm ; at the same time transferring the accounts of those debtors to new books, which he had opened on his private account. He also transferred to the new books the account of the debtors whose debts he did not undertake. He, however, swore, in conjunction with an accountant, that the entries made in the new books for the last class of debtors was uniformly and without alteration transferred to the partnership books, which were open for the executor's inspection. It was held by Lord Abinger C. B., that, in taking the accounts of the partnership be- fore the master, the defendant must produce his private books, in order to show the entries of both classes of debts : of the first, class, because he might have made a profit of the debts which the executors had a right to share ; and of the second Class, because he might have made an improper appropriation of the payments made from time to time in their discharge, by applying those pay- ments in discharge of his own advances, and not in discharge of the balance due to the partnership.* the character or effect of matter in an answer responsive to a bill, except perhaps so far as they are answers to the interrogatories of the other party, or explanations of such answers. See Higbee v. Bacon, 8 Pick. 484 ; Kirk- patrick v. Love, Ambler, 589, cited in 2 John. Ch. 87. ' See 2 Daniell Ch. Pr. (Perkins's ed.), 1360 ; Seton on Decrees, 23. If a partner has books or accounts in his possession, and he will not produce them, an account may, nevertheless, be arrived at by presuming every thing against him. Walmsley v. Walmsley, 3 Jo. & Lat. 556 ; Gray v. Haig, 20 Beavan, 219 ; 1 Lindley Partn. 839. ^ See Hue v. Richards, 2 Beavan, 305 ; Brown v. Perkins, 2 Hare, 540. ' 3 You. & Coll. 655 ; 2 Daniell Ch. Pr. (Perkins's ed.) 1360. ' In taking an account between partners, entries on the partnership books, to which all had access at the time the entiies were made, or immediately afterwards, are to be considered as priina facie correct, but subject to the right of either party to show errors or mistakes in the account. Heartt v. CH. III.] LEGAL AND EQUITABLE REMEDIES. 303 § 317. The accounts of the partnership must be taken ac- cording to the method prescribed by the articles, if there be special clauses to that effect, and the parties have acted upon them ; ^ and this will be the rule where the articles are not actually executed. Thus, where articles were entered into for a partner- ship, and, two of the parties being esquire beadles of the Uni- Corning, 3 Paige, 566 ; Caldwell v. Leiber, 7 Paige, 483 ; Simms v. Kertley, 1 Monroe, 80 ; Lodge v. Prichard, 8 De G., Mac. & G. 906 ; Hutclieson u. Smith, 5 Irish Eq. 117; 1 Lindley Partn. 837. See Stoughton v. Lynch, 2 John. Ch. 217, 218. The ordinary presumption is, that all the partners have access to the books of the partnership, and might know the contents thereof. Allen V. Coit, 6 Hill (N. Y.), 318; Fosters. Fifield, 29 Maine, 136. But this presumption may be rebutted by circumstances going to show the con- trary. Withers v. Withers, 8 Peters, 359; U. States Bank u. Binney, 5 Mason, 188; Phillips v. Turner, 2 Dev. & Bat. Eq. 123. Partners are chargeable with entries made in their books by their agent in the course of the business, and with the meaning of the entries as understood by the agent, and that meaning may be proved by the agent. Allen v. Coit, 6 Hill (N. Y.), 318. In settling the accounts between partners, where they have had access to the books, it is sufficient to examine and state the books of the partnership without requiring vouchers in support of each specific item ; Fletcher v. Pol- lard, 2 Hen. & Munf. 544 ; Brickhouseu. Hunter, 4 Hen. & Munf. 363 ; ex- cept under very peculiar circumstances. Heartt v. Corning, 3 Paige, 572. See Kyle v. Kyle, 1 Grattan (Virg.), 526. The true dates, as furnished by the books of account themselves, ought to be assumed. Stoughton v. Lynch, 2 John. Ch. 209. Upon the production of the books, &c., before the master, those parts which do not relate to the subject of the litigation may be sealed up. And it is contempt of the court for the adverse party to break open the parts thus sealed up. Dias v. Merley, 2 Paige, 294. See Calloway v. Tate, 1 Hen. & Munf. 9. If there is reason to suppose that the party has not made a full disclosure, all persons interested in the production or de- livery of the books, &c., may examine such party as to the fact whether the order of the court has been fully and fairly complied with. Hallett v. Hal- lett, 2 Paige, 422. In such cases the master should allow a reasonable time to inspect the books and papers delivered, and to prepare interrogatories for the examination of the party, if necessary. Ibid. Partnership accounts having been directed to be taken by the master, in a case in which some of the books had been lost, the court directed the master, if it should appear in taking the account that any necessary books, &c., should be wanting, to report the same specially ; and whether, in consequence of the want of such books, he was unable to proceed satisfactorily in taking the accounts. Millar V. Craig, 6 Beavan, 433. * 1 Swanst. 469. 304 MUTUAL EIGHTS OF PARTNERS. [BOOK II. yersity of Cambridge, it was agreed to conceal the partnership from the University, and therefore that the articles should not be executed ; Lord Cowper decreed an account of the partnership according to the terms of the draft of the articles, so far as the same were reduced to a certainty.^ § 818. But where no provision for taking the account is set forth^ the articles, the principle of a court of equity is, that •each partner is entitled to be allowed against the other every thing he has advanced or brought in as a partnership transaction, and to charge the other in that account with what that other has not brought in, or has taken out more than he ought ; and nothing is to be considered his share but his proportion of the residue or balance of the account.^ In taking the account, the master is to begin from the last settled balance, but if there be no settled balance, then from the commencement of the partnership.^ But the account of the partnership dealings should be brought to a close at the day of the death of the deceased partner ; for the further account, which is to wind up the concern, is not an account of profits, and diflfers essentially, from a partnership ac- count.* § 319. Where partners have carried on business in the nature of a banking business, it will frequently be necessary to take the partnership accounts on the principles of the rule in Clayton's case, which will be discussed more at length hereafter.^ It has been sometimes doubted whether that rule is apphcable to cash accounts between the partners themselves, though it has been fre- quently adopted as between partners and their creditors. That point, however, has been settled in the case of Toulmin v. Cop- land,*" in which, upon a change of the members of the firm, the ' Worts V. Pertn, 3 Bro. P. C. 548. ° Per Lord liardwicke, West v. Skip, 1 Ves. 242. See Cory on Ac- counts, chap. 5 ; Story Partn. § 348 ; Conwell v. Sandidge, 8 Dana, 278. As to the mode of keeping, stating, and taking accounts under a decree, see ante, § 189, note; 1 Lindley Partn. 828. = Beak v. Beak, Rep. Temp. Finch, 190 ; Story Partn. § 349; Gow Partn. (3d ed.), 354, 355 ; Fuijk v. Leachman, 4 Dana, 26, 27; I Lindley Partn. 830. * Per Sir A. Hart, 1 MoUoy, 465. * Posft, Book 3, chap. 3, sect. 3. « 3 You. & Coll. 625. The time of the dissolution of a partnership fixes CH. ni.] LEGAL AND EQUITABLE EEMEDIES. 305 balances of the customers of the old partnership were transferred from the books of the old firm to those of the new, without any- special agreement as to the manner in which the particular pay- ments made by the customers were to be apphed, but under a general understanding that the new house was to be responsible for the debts due from the old house. The new house having appropriated in their own favor certain payments made by the customers since the change in the firm had taken place, instead of appropriating them in hquidation of the balances due from the old firm, Lord Abinger C. B., overruled the master's report, which allowed of such apphcation. Where a person appoints his copart- ner to be his executor in India, the executor in passing his accounts before the master is entitled, unless he have a legacy- given to him in the character of executor, to a commission of £5 per cent, on all the assets collected in India, including the moneys of the testator in the hands of the partnership.^ §320. In taking the partnership accounts, it is mainly to be considered what was the value of the joint property, and what the amount of the joint debts at the time of the dissolution ; ^ what was the share of the retired deceased, or bankrupt partner in the joint property ; whether, and to what extent, the joint capital has been employed, or joint debts incurred, since the dissolution; whether any of the joint property in specie has been sold since the dissolution ; if so, what the gross amount, and what the in- terest of the profits ; on the other hand, whether any of the joint property in specie having been sold, the profits have been applied to the purchase of other property in specie; and, generally, whether, and to what extent, the joint property has been traded ' the time at which the account is to be taken, in order to ascertain the rela- tive rights of the partners, and their respective shares in the joint fund. The debts may be numerous, and the funds widely dispersed and difficult of col- lection ; and therefore much time may elapse before the aifairs can be wound up, the debts paid, and the surplus put in a condition to be divided. But whatever time may elapse before the final settlement can be practically made, that settlement, when made, must relate back to the time when the partnership was dissolved, to determine the relative interests of the partners in the fund. Per Shaw, Ch. J., arg. Dyer v. Clark, 5 Metcalf, 575 ; Stough- ton V. Lynch, 2 John. Ch. 209. ' Cockerell v. Barber, 1 Sim, 23 ; 2 Daniell, Ch. Pr. (Perkins's ed.), 1433. ' See ante, § 319, and note. 26* 306 MUTUAL RIGHTS OF PARTNERS. [BOOK 11. with since the dissolution. These, with many other considerations bearing on each particular case, must be duly weighed in the ar- rangement of complicated partnership accounts. And it may here be remarked, that the account is founded on the same princi- ples, in whatever manner the dissolution may have taken place ; — whether,, therefore, the affairs are to be adjusted between the remaining and retiring partner, the surviving partner and the executors of the deceased partner, or the solvent partner and the assignees of the bankrupt .partner. § 321. In estimating the value of the joint property at the time of the dissolution, a question naturally arises, what species of property may constitute the joint property of a partnership? That question, however, inasmuch as it involves the general out- lines and principles of the contract of partnership, has been dis- cussed in a former chapter.^ Enough, perhaps, has been already said to show that not only movable, but real property, of what- ever tenure, together with the good will of the partnership prem- ises, may be comprised in the partnership stock. Another ques- tion, however, may here be noticed, namely, whether, upon the dissolution of a partnership, the right of a partner or his repre- sentative to call for a sale of the joint property would in any manner be affected by considerations as to the nature of that property. Now, although the cases in which a sale has been decreed have generally related to real effects, and although it has been said, arguendo, that partnership property which is capable of a division ought not to be sold,^ yet it seems clear, upon au- thority as well as principle, that, whatever be the nature of the property, if it can be shown that a settlement of accounts on the footing of a general sale would be most beneficial to the parties, such a sale will be decreed.^ Thus, the household goods, furni- ture, &c., of a house may be decreed to be sold, as well as the house itself; and where a house which is partnership property is decreed to be sold, and several years have elapsed since the dis- solution, the master will be directed to take an account of the particulars of the partnership property, which was in the house ' Ante, Book 2, chap. 1. ' Ante, § 310. See also, § 150. 'See Story Partn. § 3.50; ante, § 313 and note; Gow Partn. (3d ed.), 2S4; Fereday v. Wightwick, 1 Tamlyn, 261 ; 3 Kent Com. 64. CH. III.] LEGAL AND EQUITABLE REMEDIES. 307 at the time of the dissolution, and of the value of the property at that time ; and to inquire whether any part of that property still remains la the house. ^ § §22. But whatever may be the rule respecting the chattels of the partnership, which are certainly of a divisible nature,^ it is clear, that, of a privilege attending the partnership which is not of a divisible nature, a court of equity will decree a sale. Thus, although the good will of a trade is not a commodity upon which any definite price can be put,^, yet it will be considered to enhance the value of the effects on which it is attendant, and will therefore be included in a decree for the sale of those effects. Moreover, as it cannot be taken at a separate valuation, the sale will be so adjusted that an accurate notion of its worth shall be impressed upon the mind of a purchaser. Therefore, in a case * where very ' Nerot V. Burnard, 4 Russ. 261 ; Sigourney v. Munn, 7 Conn. 11, 324. See Yates v. Petty, 1 Harr. & John. 58. ^ In Fereday v. Wightwick, 1 Tamlyn, 261, Sir John Leach, Master of the Rolls, remarked : " It~ls a principle, that all property, whether real or personal, is subject to a sale on a dissolution of the partnership." Mr. Chan- cellor Kent lays down the same doctrine. 3 Kent Com. 64. Mr. Gow insists on the same. Gow Partn. (3d ed.), 234. In Honore v. Colmesnil, 7 Dana, 203, certain uncollected debts were divided between the partners by order of the court, so as to effect an entire settlement of the concern. ' See ante, § 161 et seq. * Cook V. Collingridge, Jac. 607. The defendants, Rowley, Mansel, and W. Cook, presented their petition in this cause, dated the 16th November, 1824, stating, that, immediately after the pronouncing of the decree (see Jacob's Reports, 623), an amicable arrangement between all the parties in- terested had been attempted, but without success. That afterwards the Col- lingridges and the petitioner. Cook, had left a proposal with the master for the sale of the leasehold houses, shop, warehouses, and effects of the part- nership, at a valuation. That the plaintiff, John Cook, had also abandoned his previous proposal to have the whole premises sold by auction, and had consented to a valuation ; insisting, however, that the good will should form a part of such valuation. Th^t the petitioners, on the other hand, had in- formed the master, that, if any sum was to be given for profits under the name of good will, then they must decline the purchase altogether. That the master had made his report, whereby he certified, that if good will was to be estimated in the valuation, it would be most beneficial that the whole premises should be sold at a valuation ; but if not, then by public auction. The petition then, after charging the plaintiff with an attempt to delay the proceedings, prayed that the premises might be sold by auction, with such directions as to the Lord Chancellor might seem meet. His Lordship ordered, that, with the following directions and declara- 308 MUTUAL EIGHTS OP PARTNERS. [bOOK II. extensive partnership premises were decreed to be sold, Lord Eldon drew up an extremely minute order, declaring tlie limited tions, it should bo referred back to the master, to review his report ; namely, his Lordship did declare, that in this case the partnership expired by efflux- ion of time, and that there existed no obligation restraining the petitioners, or any of them, from carrying on the same business or trade as that in which they were engaged in the partnership which had expired, and form- ing a new establishment in the same business or trade, after the sale of the business or trade of the late partnership was made. And his Lordship did declare, that there existed no obligation upon any of the partners to re- strain thorn from uniting in a new partnership in the business or trade, with any other persons, after such sale. And his Lordship did declare, that the claim, therefore, to have any estimated value to be put upon any subject that could be considered as described by the term good will could not be supported upon the same grounds or principles as those upon which a com- pensation or value was in this establishment received from a partner buying the share of the partner going out of the business of this establishment, and retiring from trade or business altogether. And his Lordship did declare, that, in this case, if the property of the then present establishment were sold, and the then present partners, or any of them, with any other persons, engaged in a new establishment carrying on the same trade or business (which they were at full liberty to do), it was obvious, that, if by good will were meant the value of the chance that the customers of partners retiring altogether would deal with those who purchased from such retiring partners, and succeeded to their establishment, a good will of that nature could not be valued on the same principles ; as the persons retiring, but not retiring altogether from trade, had also a chance of conveying the old customers with their new establishment ; which must most materially affect, if it did not destroy, the chance, that the persons purchasing the old establishment would retain many of the customers of the old establishment. And his Lordship did declare, that, on the other hand, though the value of the chance that such customers could be retained by those who purchased the old establish- ment could not be the subject of estimation, it was going much too far to hold that that chance was to be treated as of no speculative value, of none sufficient to be regarded in the sale. And his Lordship did declare, that it therefore appeared to be reasonable, that, if the partners in the old estab- lishment were to be allowed to stand amongst the proposed purchasers of its property, in order to bring the interests to sale fairly (which interests in- cluded the real property and leasehold, and all other tangible subjects, and the contracts for building coaches, and the contracts for jobbing coaches, and any interest besides that could be enumerated as belonging to the sub- jects of sale, not under the terra good will), other persons proposing to buy should have as reasonably good information as the present partners, if they proposed to buy; and (in addition to the specification of articles which could be enumerated) if they were informed of the last three or four years' CH. in.] LEGAL AND EQUITABLE REMEDIES. 309 nature of the good will; how far it might be abridged in the hands of a purchaser by the influence of the original partners ; profits, and -who were the persons that were the customers of the present concern, they might then speculate (as far as the nature of the transactions could admit of their speculating prudently) what they would give for the chance of retaining the old customers or any of them ; having regard to the fact that the old partners were, or some of them were, about to engage in the same business, and might attach to their new establishment those cus- tomers, many, or some of them. And his Lordship did declare, that no court could prevent the late copartners from engaging in the same business, and therefore the sale thereof could not proceed upon the same principles as if a court could prevent their so engaging. And his Lordship did declare, that in this case, as it appeared to the court to be circumstanced, the said valuation or estimation was or could only be that which every bidder, ac- cording to his own speculations, could fancy to be worthy of his chance of retaining old customers, and their not following the old partners, or any of them, into a new establishment. And his Lordship did declare, that it seemed to the court also, in the circumstances of this case, to be advisable to allow the old partners, or any of them, or any persons interested, to bid for or propose to be buyers of the said concern. And his Lordship did order, that the said master, in reviewing the said report, should proceed de die in diem. The master, by his report, dated the 4th July, 1826, having stated that he had reviewed the former report, and having set forth the particulars of the estate and effects of the copartnership, proceeded to state that two pro- posals had been made to him ; one by the petitioners, that the whole of the property and effects should be sold by public auction in one lot,' — the other by the plaintiff, that the same should be sold by auction in distinct lots, some of the lots to comprise the materials of the partnership, others the benefit of the unexecuted orders, others the leases, &c. ; but the master certified, that, having regard to the declaration and directions contained in the said order of 5tb January, 1825, and having disapproved of the proposal to sell the premises in one lot, he was of opinion that it would be most beneficial for all parties that the said partnership property and effects should be sold by public auction, with his approbation, on the premises in Liquorpond Street, in the following lots and order (to wit), that the carriages in building, anid all the unwrought materials, &c., should be sold in such lots and such order as should be recommended by A., the auctioneer, and as the said master should approve. That, secondly, all the carriages and harness let on jobs, and the engagements and jobs themselves, and all benefit thereof respec- tively, should be then sold, each carriage and harness and the engagement i;especting it in a distinct lot; and immediately after the sale of the said stock and jobs, that the leasehold houses, shops, warehouses, buildings, &c., should be sold in distinct lots ; and that the declarations and directions con- tained in the said order should be inserted in the printed particulars of sale, 310 MUTUAL EIGHTS OF PARTNERS. [bOOK II. and by what means a purchaser might be made acquainted with the probable advantages or disadvantages arising from it. Ac- cordingly, in the printed particulars of sale, the master inserted a notice that the old partners were to be at liberty to bid, and that no estimated value was put on any subject as good will. He like- wise inserted the amount of the preceding three or four years' profits, with the names of the customers of the concern at the time of the dissolution. to the intent that every bidder might know that there existed no obligation in the then present partners, or any of them, to prevent them from carrying on the same business after the sale ; and that the then present partners, or any of them, were at liberty to bid at such sale ; and that no estimated value was put on any subject as good will ; and, further, that the amount of the last three or four years' profits, and names of the customers of the pres- ent concern, should be also inserted in the printed particulars, for the pur- pose of giving to persons proposing to purchase as reasonably good informa- tion as the then present partners had ; and that the said A. should previously to such sale give security to pay all the money to be received by him into the Bank of England, with the privity, &c. The plaintiff took exceptions to this report, which were overruled. Pend- ing the exceptions, the former petitioners, partners, presented another peti- tion, alleging the great detriment which was accruing to the premises from the suspension of the sale, and praying that the master's report might be confirmed and carried into execution ; that they might be allowed to be- come purchasers of the whole or any part of the premises ; that the parts to be purchased by them might be duly assigned to them ; and that one fifth of the purchase-money might be paid to them. The order was as follows : His Lordship doth order that the sale of the estate and premises men- tioned in the said master's said report, dated the 4th day of July, 1826, be made with the approbation of the said master, according to the mode by the said report approved, regard being had to the declarations and directions contained in the order made in this cause, bearing date the 5th day of Janu- ary, 1825. And for the purpose of settling the particulars of such sale, it is ordered that the plaintiff in the first-mentioned cause, and defendants, Charles Lloyd Grey, and Maria his wife, M. G., C. G., and E. G., do, on or before, &c., exhibit interrogatories before the said master, for the examina- tion of all the other defendants, or either of them, as to what have been the amounts of the average profits of the copartnership concern in the plead- ings mentioned for the last three or four years, and as to the names of the present customers of the said concern. And for the purposes aforesaid, it is ordered that the said parties do produce before the said master, upon oath, all books, papers, and writings in their custody or power, relating to the said concern, as the said master shall direct. And it is ordered that all Or any of the said parties be at liberty to bid for the said estate and premises, or any part thereof, as they may think fit. CH. III.] LEGAL AND EQUITABLE KEMEDIES. 311 § 323. Contracts which were complete during the partnership, but the events of which, by reason of their nature, were not known at the dissolution, must of course be taken into the account, and the partners or their reprfesentatives must abide by the event. In the case of Smith v. De Sylva,^ the claims of joint adventurers to the profits of outstanding adventures were admitted to an ex- tent inconsistent with the general doctrine regarding the specific lien of partners. There, one of three partners, in thirds, of an adventure, having advanced only^ari of his share of the expense, and giving notes for the remainder, and become bankrupt, his assignees were allowed to recover, in an action against another partner, \Asfull share of the profits, leaving the creditor partner to take his chance of a dividend for the notes under the commis- sion. But Lord Tenterden has observed, that the case of Smith V. De Sylva is a very entangled case ; that the facts are not very clear or perspicuous ; and that it is a general principle of law, that the assignees of a bankrupt partner can obtain no share of the partnership eflFects, until they first satisfy all that is due from him to the partnership. ^ But it is not inconsistent with this gen- ^ Cowp. 471. ° Holderness v. Shackles, 8 Barn. & Cress. 618. The case of Smith u. De Sylva, ■which was an issue out of chancery, may be shortly stated thus : Hague, together with the defendants Birnal and Lara, agreed to purchase and fit out a ship for the slave-trade, at their joint expense, and for their joint account and risk, in thirds ; and that the other defendant, De Sylva, should have the conduct and management of fitting out the ship as ship's husband. De Sylva was at the whole expense of fitting out the ship, sup- plying cargo, &c., to the amount of £4,658. Of this sum the defendants, Lara and Birnal, paid him their respective proportions. Hague paid only £410 in cash, and gave promissory notes for the remainder. De Sylva after- wards purchased a share in the ship. Before the notes became due, and many months before the event of the voyage was known, Hague became a bankrupt. The plaintiff, one of the assignees, applied several times to De Sylva to take the bankrupt's share or interest in the ship, and in the profits and risk, to himself, and to pay the plaintiffs the £410. De Sylva refused this offer, but he persuaded the two other defendants to pay him their re- spective thirds in discharge of the promissory notes ; and from that time the defendants considered the assignees as interested in the share of the ship only as the sum of £410 to £4,658. The assignees claimed one third of the profits. Lord Mansfield : " The question is, what was the right of the bank- rupt at the time of the bankruptcy ? The bankrupt, upon paying the full amount of his share, was entitled to a third of the profits, as he would have 312 MUTUAL RIGHTS OF PARTNERS. [bOOK II. eral principle to say, that, subject to a set-off at law or to an ac- count in equity, the assignees of a bankrupt partner, or the repre- sentatives of a solvent partner, possess the interest of the quondam partner in the outstanding adventures of the firm. Thus, where A., B., and C. engaged in an adventure in pearls, in equal shares, and A. advanced the money for the purchase, and B. became bankrupt, being at the time of his bankruptcy indebted to A. in a much larger sum than a third of the profits of this adventure ; it was held that the assignees of B. might well maintain action against A. for a third of the profits, though under the circumstances, the set-off of the defendant was allowed.^ So in equity, in a suit ^ instituted between the surviving partners and the executors of a deceased partner, it appeared that the firm had engaged in vari- ous 'adventures, by shipment of goods and otherwise, which, at the time of the partner's death, were depending, and the result of profit or loss unascertaifted. After the partner's death, loss actually occurred. Lord Eldon appears to have entertained no doubt that the balance of profit and loss at the time of the part- ner's death, was to be ascertained, by consulting the result of all engagements in which the firm was then embarked, and for which it was responsible ; and that the losses sustained in consequence of such engagements should be brought into the account between them and the executor. § 324. Where upon the dissolution of a partnership, the part- nership effects are not assigned, but the remaining partners con- tinue to trade with the stock and capital of the original partner- ship, the profit and loss made by such trading must be brought into the account with the original firm.^ Thus, in an early case, been liable to a third of the loss, if the adventure had been unprofitable. When I say upon payment in full, I mean payment according to law. If he had not become bankrupt, it must have been an actual payment of the whole'of his share ; but as he is become bankrupt, it must now be a pay- ment according to the distribution made by law in that case, which is a pro- portionable dividend with the rest of the creditors. Therefore, whether it were a profitable or a losing adventure cannot vary the right. The conse- quence is, that the assignees are entitled to one third of the ship and adven- ture in question." ■ French v. Fenn, 1 Co. B. L. 536 ; 3 Doug. 257. " Jackson v. Sedgwick, 1 Swanst. 468. " Story Partn. § 349 and note, § 343 and note. This is perhaps more cor- CH. III.] LEGAL AND EQUITABLE REMEDIES. 313 Lord Keeper Harcourt declared, that, where one of two joint traders dies, and the surviror carries on the trade after the death of the partner, the survivor shall answer for the gain made by this trade.^ And by the short note of Hammond v. Douglas,^ it ap- pears that Lord Loughborough decided the very point. So, in HiR V. Burnham,^ A. and B. being partners, A. died, having by his will appointed B. his executor. A.'s children then filed a bill against B. for an account, and Lord Eldon declared that, the testator's trade having been carried on after his death, with his capital, the plaintiffs were entitled to the profits in proportion to the shares they were respectively entitled to in his personal estate. So, where a dissolution of a partnership for a term of years was set aside as fraudulent after the expiration of the term, the busi- ness having been in the mean time continued, it was held that the partner who had been improperly excluded had a right to an ac- count, not only to the end of the term, but till a final settlement should take place.* rectly stated by Mr. Chancellor Kent, who says : " If, before a sale ot » settlement of the joint concern, the partner in possession of the capital con- tinues the trade with the joint property, he will do it at his own risk, and will be bound to account with the other partner, or with the representatives of a deceased partner, for the profits of the trade, subject to just allow- ances." 3 Kent Com. 64. See also, Sigourney v. Munn, 7 Conn. 11; Story Partn. §§ 233, 329, 343 ; Gow Partn. (3d ed.), 354, 355 ; s. P.. Stoughton- V. Lynch, 1 John. Ch. 469, 470. And the party so continuing to trade shall be liable to the option of the other partners, or the representatives of a de- ceased partner, to take such profits, or to take interest on their share of the surplus of the joint stock, according to the rules for computing interest in such cases. Ante, § 130 ; Booth i\ Parks, 1 MoUoy, 465 ; Story Partn. § 343 ; post, § 335 and notes ; Millard v. Eamsdell, 1 Harr. Ch. (Mich.), 373. But in a case where one of the partners was appointed receiver, and used. the money of the firm in his own trade, and made profits thereon, the other partner was held hot entitled to a share of the profits. Whitesides v. Lafferty, 3 Humph. 150. ^ Brown V. Litton, 1 P. W. 140. A bequest of the interest of a person's property to A. for life will not entitle A. to the profits of the testator's trade carried on after his decease. Pearns v. Young, 9 Yes. 549. ' 5 Yes. 539. = 15 Yes. 220, cited; Coxwell v. Bromet, id. * Brown V. Yidler, 15 Yes. 223 ; 2 Russ. 340. See Brown v. Be Tastet, Jac. 284 ; Fearns v. Young, 9 Yes. 549 ; Wedderburn v. Wedderburn, 4 Myl. & Cr. 53. 27 314 MUTUAL EIGHTS OF PARTNERS. [bOOK n. § 325. Generally, if one partner become a bankrupt, and the solvent partners continue the trade with the capital of the original partnership, in the absence of any provision to the contrary, the assignees of the bankrupt partner have a right to a share of the profits until the final adjustment of the afiairs of the concern, and to a share of the money to be produced by the sale of what re- mains in specie of the capital and stock ; such respective shares being proportioned to the bankrupt's share of the profits before the bankruptcy. In the case of Crawshay v. Collins,^ Collins, Noble, and Boughton, were in partnership together as pump and engine manufacturers ; and as such they were in possession of certain leasehold premises for the purposes of their trade, besides tools, goods, &c. They also possessed patents for inventions ap- plicable to ship-pumps, and by means of such patents entered into valuable contracts with government. Of this capital, Collins had three eighths, Noble three eighths, and Boughton two eighths. On the 7th October, 1803, Noble committed an act of bank- ruptcy. A bill was afterwards filed by his assignees against Col- lins and Boughton, praying that the plaintiffs, as assignees of Noble, might be declared entitled to three eighth parts of the profits which had arisen, and which should arise, from carrying on the said copartnership business, and which remained unaccounted for to Noble at the time of his bankruptcy, or had accrued since ; and also to three eighth parts of the said patents, and to all pro- fits and emoluments to arise therefrom ; and that the said three eighth parts thereof might be sold for the benefit of the bank- rupt's estate ; an account of all deahngs and transactions, &c. The first decree made in the case directed an account of all deal- ings and transactions in partnership between Noble and the de- fendants, down to the 7th October, 1803, the time of Noble's bankruptcy, without prejudice to the question whether the plain- tiffs, as assignees of Noble, were entitled to a share of the profits of the partnership business subsequent to the 7th October, 1803. Upon the cause being heard on further directions, another decree was made, directing an inquiry, whether there were any and what profits made since the 7th of October, 1803, by any and what use or application of, or by means of, the stock in trade and capital of > 15Ves. 218: 2 Russ. 325. CH. III.] LEGAL AND EQUITABLE REMEDIES. 315 the partnership business. The master accordingly made two dis- tinct reports, of different dates, by which he found that certain profits had been made with the partnership fund by the continuing partners, to certain periods which he specified, and he ascertained the amount of those profits.^ At the final hearing of the cause, Lord Eldon held that the assignees were entitled to three eighths of the profits, from the bankruptcy of Noble until the final adjust- ment of the partnership affairs of ColUns, Noble, and Boughton. Lord Eldon : " In this particular case, I take it to be established by the master's report, and by the other documents before me, that whether you call it stock, or whether you call it capital, the materials with which the business was carried on after the bank- ruptcy of Noble consisted in fact of the patents, the leasehold property, the tools and utensils, &c., of the old partnership, and were materials which, though of course admitting of fresh sup- pUes, were, as to what I may caU the substratum of stock, ahke the property of Noble, Boughton, and CoUins, at the bankruptcy. And I cannot bring myself to thiok, that if it be clearly made out that a business is carried on with the property which belonged to a deceased partner, for instance, by the surviving partner, and no particular circumstances occur to vary the rule, the mere accident of one man surviving the other can authorize him to say, ' I shall carry on the trade by the application of the funds of the partner- ship, at the hazard of the funds of the partnership, and I shall have the whole of the profits, and you shall have no share of them.' It is clear, upon what is before me in this case, that the patents of Noble and Collins were, in truth, part of the partner- ship property ; that, whether those patents were worth any thing or nothing to the world, they were the media through which the parties procured the contracts with government ; that these con- tracts were made in the name of Collins, Noble, and Boughton, and, when the payments on account were made by government, they were made by bills payable to Collins, Noble, a"nd Boughton ; that the contract went on for several years, producing fruits, which I consider fruits of the partnership property ; and that all * At one period of the cause it was referred back to the master to state, not only what was capital, but what was CoUins's stock in trade at the time of the bankruptcy. 1 Jac. & W. 270. 316 MTITDAL ElfiHTS OP PARTNERS. [bOOK II. the property wMch belonged to the partnership at the bankruptcy of Noble was employed in carrying on the trade afterwards. It appears to me also to be quite clear, that Noble had an interest in the partnership, and that a sum would have been found coming due to him, even if the account had been taken inomediately after the bankruptcy." ^ In the preceding case, it appears that Noble had drawn and indorsed various notes and bills in the name of the firm for his private accommodation, which Collins had been obliged to pay. Hence, at the time of the bankruptcy, Collins had increased, and Noble had diminished, the actual balance due to them respectively, on the adjustment of all accounts. Never- theless, the profits accruing after the bankruptcy were calculated both for ColUns and for Noble, according to their respective origi- nal shares of three eighths; the proportion of the profits of the ^ The decree, as far as is material to the present point, was as follows : " That, having regard to all the circumstances of this case, the three eighth parts or shares of Mark Noble in the partnership ought to be considered as continuing, notwithstanding and after his bankruptcy ; and it was ordered, that the master should inquire and state to the court what profits had been made by carrying on the said business since the date of his last report of profits made therein ; and that the master should inquire and state how much of the profits reported to have been made by his former report, and of the profits which he should find to have been made since his said last report, had been made in each and every of the several years in which such profits had been made ; and the consideration of interest upon what profits should appear to have been made was reserved, till after the master should have made such report ; and it was declared, that the plaintiffs, as assignees, were entitled to three eighth parts of the profits which had been already reported by the master to have been made, and three eighth parts of such further profits as should appear to have been made ; and it was declared, that what, upon taking the account thereinbefore directed, should appear to be coming due to the plaintiffs, on the account of the profits already made and not satisfied, and also of the profits of which the account had not been taken, and which was thereinbefore directed, and of any interest that might be ordered to be paid in respect thereof, was to be paid to the plaintiffs, or one of them, by the defendant Collins ; and it was further ordered, that the partnership patents, and what remained in specie of the capital and stock in trade, should be sold to the best purchaser or purchasers that could be gotten for the same ; and such sale was to be with the approbation of the master, in case the parties should differ ; and it was declared, that the plain- tiffs w6re entitled to three eighth parts 6f the proceeds of such sale ', and the master, in taking the said accounts, was to make the defendant all just allowances for money expended in carrying on the trade." CH. III.J LEGAL AND EQUITABLE KEMEDIES. 317 one not being increased, and that of the other not being dimin- ished. This result seems accordant with the general principle before stated,^ that the stock is only to be employed in augmenta- tion of the trade for the mutual benefit of the partners. Lord Eldon at first Inclined to think that these advances were not even to be considered in the light of loans from the partnership to Noble, but as transactions between Collins and Noble in their in- dividual characters. § 326. Where a sum is advanced as a loan to an individual partner, his profits are first answerable for that sum ; and if his profits shall not be sufficient to answer it, the deficiency shall be made good out of his capital ; and if both his profits and his capital are not sufficient to make it good, he is considered as a debtor for the excess.^ It was said arguendo in Brown v. De Tastet,^ that cases of the greatest hardship had occurred, flowing from the doctrine supposed to be established by Crawshay v. Col- lins ; that it was supposed that if the representatives of a deceased partner could establish a balance of the smallest amount against the survivor, they were entitled to a participation in the profits, and, as a consequence, to an inspection of the books, and an ac- count of all the concerns of the partnership ; that an immediate settlement was often impossible ; and where there were outstand- ing transactions, the surviving partner could not at once ascertain whether the balance was in his favor or against him ; and he was left in doubt whether he was carrying on the trade for the benefit of himself or for that of others, who might start up at a distance of time, expose all his affiiirs, and involve him in the utmost vexar tion. Lord Eldon seemed to admit the force of these observa- tions, but thought that such results arose from unavoidable neces- sity. He observed, — "But it is asked, will you say that, in all cases where there is a partnership, such is to be the consequence of carrying on the business, that the profits shall be divisible in the same way as if the partner had not died, or had not become bankrupt ? I say no : I do not mean to say that it will be so in all cases ; but, on the other hand, I will not deny that it may be the law in some cases. The general principle, I should say, ought ' Beeclier v. Guilburn, ante, § 196. =■ 2 Russ. 347. ' Jac. 292. 27* 318 MUTUAL KIGHTS OF PAKTNBRS. [bOOK II. to be this : that as it is quite competent to the parties to settle the accounts and to mark out the relation between themselves as creditors or debtors, so where there is a non-settlement of the ac- count (though a settlement may sometimes introduce great hard- ships and difficulties), yet those who choose to employ the prop- erty of another for the purposes of their trade, exposing it to all the risks of insolvency or bankruptcy, have- no right to say that the account shall not be taken, if it can be taken without incur- ring difficulties which might embarrass the house to such an extent as to make it unjust to demand it." ^ § 327. Where a surviving partner has carried on the partner- ship business without withdrawing from the concern the capital or ' share of a deceased partner, there is no absolute rule that, in taking the subsequent accounts of the partnership dealings, as between the surviving and the estate of the deceased partner, the division of the profits shall be determined by the aliquot shares of the several partners in the business, in their joint lifetime or by the amount of the agreed capital which they were respectively to supply, or by the actual amount of the capital belonging to the surviving and the estate of the deceased partner respectively ; but the principle of division may be affected by considerations of the source of the profit, the nature of the business, and the other circumstances of the case.^ Sir James Wigram, Vice-Chancellor, in delivering his opinion in the case of Willett v. Blanford,^ said: " No one can attend to the elaborate judgments of Lord Eldon in Crawshay v. Collins,^ Brown v. De Tastet,^ and even in Cook v. CoUingridge,® without being satisfied that his mind saw the impos- sibility of subjecting cases so various as those of trading partner- ships to any universal rule. The decrees in these cases, that of Sir William Grant in Featherstonhaugh v. Fenwick,'' and the ' In Keybold v. Dodd, 1 Harrington, 401, it was held that the court will not decree a division of the subsequent profits after the dissolution of a part- nership, merely because the withdrawing partner's share of the profits al- ready accrued have not been paid over to him. ' Willett V. Blanford, 1 Hare, 263. In this case is a very thorough con- sideration of the authorities, and an elaborate examination of the principles by which a division of profits in such cases should be regulated. ' 1 Hare, 253. * 15 Ves, 118 ; 2 Russ. 325. » Jac. 229. « Jac. 607. ' 19 Ves. 298. CH. III.] LEGAL AND EQUITABLE REMEDIES. 319 judgment and decree of Lord Cottenham in Wedderburn v. "Wed-^ derbum,' confirming Lord Langdale's decree in tbe same case, all concur to establish the soundness of Lord Eldon's opinions ; and I think it impossible to consider the subject abstractedly from au- thority, without feehng satisfied that justice would be endangered by an attempt to subject all cases of this description to any uni- form rule." 2 After suggesting many different states of facts, ■which would require the application of different rules of division, he adds, in conclusion, — " I consider myself, therefore, bound by authority and reason to hold, that the nature of the trade, the manner of carrying it on, the capital employed, the state of the account between the partnership and the deceased partner at the time of his death, and the conduct of parties after his death, may materially affect the rights of the parties." § 328. In the particular class of cases which we have just con- sidered, it seems clear, particularly where the partnership has been continued for any length of time since the death of a part- ner, that the survivors should, be allowed something in regard to their skill and personal services.^ This is matter peculiarly for the consideration of the master, and will be one of those just al- lowances which the decree usually, directs him to make to the parties, — the extent or necessity of which the court does not usiially^ settle beforehand, it not being in the ordinary course for the court to say, in the first instance, what is a just allowance.* ' 4 Myl. & Cr. 53. 2 1 Hare, 269. ' 1 Lindley Partn. 833 et seq. ; Featherstonhaugh v. Turner, 25 Beavan, 382 ; Willett v. Blanford, 4 Hare, 253 ; Simpson v. Chapman, 4 De G., Mac. & G. 154 ; Wedderburn v. Wedderburn, 2 Keen, 722 ; 4 M. & Cr. 41 ; Decker v. Somes, 2 M. & K. 672. * Jac. 294. The court, at least, will decline to take this course in an or- der made upon exceptions not referring to the particular point ; though per- haps, in an original decree, it would direct the attention of the master to the equity in question. Ibid. Mr. Justice Story puts this point thus : " Where an election is made to have a decree for a share of the profits, there it should seem that the surviving partners are, or at least may be, entitled to all just allowances and deductions, and even to some compensation for their skill and personal services." Story Partn. § 343, note. This, how- ever, differs entirely from a claim for services in winding up and settlmg the affairs of a partnership, in which case, in the absence of any agree- ment upon the Subject, no compensation for trouble or services is allowed to 320 MUTUAL RIGHTS OF PAETNEES. [BOOK II. Where, however, by articles of copartnership, the children are to succeed to the share of their parent, the surviving partner is not entitled, unless the articles say so, to any allowance for his man- agement, time, or labor in carrying on the trade. For, as he has agreed that the partnership shall continue beyond the death of his copartner, his management after that event is in fact voluntary?- But he will be allowed expenses hond fide incurred since the death of his copartner, under an erroneous belief that he was the sole proprietor.^ § 329. Where the partnership is dissolved by the bankruptcy of one of the partners, the accounts of the partnership will be taken, in the bankruptcy.^ § 3-30. Where the partnership is dissolved by the death of a partner, the accounts of a partnership may be taken in a suit by the survivors against his exeteutors, or vice vend ; or even in a suit against the executors by the separate creditors of the de- ceased partner. In cases of the last description, the suit being instituted for the administration of the effects of one partner only, it has been objected that the copartners, his creditors, ought not to be allowed to prove, in such a suit, the balance due to them on the partnership account ; because, except under particular circum- stances, they could not have maintained an action at law for the amount. An objection of this nature was made by the master, in a case where Houston, who had been a partner in a banking-house, and had also been a separate trader, died, and the bankers claimed to prove the balance due to them from Houston in a suit instituted by his separate creditors against his executors. The master ob- jected to the proof, on the ground that the partnership including Houston could not at law have sued Houston in his separate capac- ity ; but Lord Bldon overruled the objection. He said : " There is nothing more clear than that, where an account is decreed, the the surviving partner or partners. 3 Kent Com. 64, note ; Story Partn. § 3S1 and note; Hite w. Hite, 1 B. Monroe, 179. See ante, §§ 183 and note, 199 and note; Whittle v. M'Farlane, 1 Knapp, Priv. C. C. 312; Wash- burn V. Goodman, 17 Pick. 519. But see Bradley u. Chamberlin, 16 Ver- mont, 613. " Burden v. Burden, 1 Veg. & B. 170 ; Stocken v. Dawson, 6 Beavan, 371. " Ibid. ' PosJ,,Book 4, chap. 2. CH. III.] LEGAL AND EQUITABLE REMEDIES. 321 equitable creditors have a right to be satisfied ; and that no distri- bution of assets can take, place, until the accounts of all the cred- itors of every description have been gone into. Generally speak- ing, it is the duty of the master to meet all the difiiculties that may arise in the discharge of this office. In some way or other he must so provide as that aU the accounts, both legal and equita- ble, shall be fully taken ; so that the fact of Houston's having been a partner in the house, however it may alter the nature of his debt, is of no weight at all with reference to the right of the claimants to have their account taken." ^ § 331. It appears, therefore, that the claims of surviving part- ners against the estate of the deceased partner are to be treated in the same manner as the cMims of the other creditors. And it may happen that the surviving partners are specialty creditors of the deceased ; in which case they will take all the benefits of spe- cialty creditors in general. Thus, where one partner retired and the remaining partner covenanted to pay the partnership debts, and to indemnify the retiring partner against them, and died with- out having performed his covenant, and the covenantee was com- pelled to pay a portion of the debts, the latter was held to be a specialty creditor of the estate of the deceased ; it being settled, that, if a covenant is broken, though the damages are unliqui- dated, the covenantee is a specialty creditor. And it was likewise held, that against this debt by specialty the administrator of the deceased partner could not retain his own simple contract debt, though he might retain a debt in equal degree.^ § 832. It frequently happens, as we have already had occasion to remark, that a partner appoints his copartner to be his executor. If the executor is indebted to the testator, his debt must be placed in the account, notwithstanding that it is extinguished at law. Generally speaking, this must have been the case even before the statute of 11 Geo. 4 & 1 Will. 4, c. 40 ; for, except where the executor took the residue as being undisposed of, his debt, which was included in the residue,^ was not extinguished in the consid- ' Paynter v. Houston, 3 Mer. 302 ; Gow Partn. (3d ed.), 857, 358. ' Musson V. May, 3 Ves. & B. 194. See Kerr v. Hawthorne, 4 Yeates, 170. ' Per Lord Talbot, Brown v. Selwyn, Forrester, 242. But see Harg. Co. Litt. 264, b. (1). 322 MUTUAL EIGHTS OF PARTNERS. [BOOK II. eration of a court of equity.^ Now, however, even fewer cases can occur in the extinguishment of the executor's debt, because the above-mentioned statute gives the residue undisposed of to the next of kin, unless it appear by the will that the executor is to take it beneficially.^ A legacy by one partner to another of a certain sum, if he does not draw it out of trade, is a specific legacy.^ § 333. We have already, in speaking of the claims of a sur- viving partner in certain cases, had occasion to mention just al- lowances.^ It should here be remarked, that although the court will not usually determine, in the first instance, what is a just al- lowance, yet it will direct that a positive allowance, fixed by the articles, shall be paid. Thus, in Hibbert v. Hibbert,^ the master was directed to take an account of all dealings between the par- ties, who were wine-merchants, and state what was due from any ' Phillips V. Phillips, Eep. Teaip. Pineh, 310. In this case, A. and B. were partners. A. died, having bequeathed to B. and his nephew, the plaintiff, all his real estate and household goods, and all his shipping, and all his debts, goods in his shop, &c., and the remainder of all his personal estate, equally to bo divided ; and he made B. his executor. At A.'s death, B. owed A. two several sums, one secured by bond, the other unsecured. Lord Nottingham was of opinion that the debts which the executor owed to the testator were not discharged, but ought to come into the account. See Carey v. Goodinge, 3 Bro. 110 ; Berry v. Usher, 11 Ves. 87; Wankford v. Wankford, 1 Salk. 299 ; Winship v. Bass, 12 Mass. 199 ; Stevens v. Gay- lord, 11 Mass. 266; Hays v. Jackson, 6 Mass. 149; Bigelow v. Bigelow, 4 Ham. 138; Freakley v. Fox, 9 Barn. & Cress. 130; Lockier v. Smith, 1 Keb. 313; Kinney v. Ensign, 18 Pick. 232, 236; Ips. Manuf Co. v. Story, 5 Metcalf, 310; Bacon v. Fairman, 6 Conn. 121 ; Hobart v. Stone, 10 Pick. 220; Ritchie kU. Williams, 11 Mass. 50; Pusey v. Clemson, 9 Serg. & R. 208 ; Hall v. Hall, 2 M'Cord Ch. 304 ; Decker v. Miller, 2 Paige, 149 ; Stagg v. Beekman, 2 Edw. 89 ; Marvin v. Stone, 2 Cowen, 781 ; Simmons v. Gutteridge, 13 Ves. 262 ; Schell v. Schroder, 1 Bailey, Eq. 334. ' In this country, the residue undisposed of is by law universally distribu- table among the next of kin, in the absence of all contrary expressions of intention on the part of the testator. 2 Story Eq. Jur. § 1 208. See also, Hays u. Jackson, 6 Mass. 153 ; Hill v. Hill, 2 Hayw. 298 ; Wilson v. Wilson> 3 Binn. 557; s. o. 9 Serg. & R. 424; Neave's Estate, id. 186, 189, 190; Hagthorpe v. Hook, 1 Gill & John. 270. ' Ellis V. Walker, Ambl. 309. ' Ante, § 328. 5 Rolls, Trin. T. 1807. CH. III.] LEGAL ANB EQUITABLE EEMEDIBS. 323 or either of the parties to the other, and to allow £200, agreed to be allowed by the articles to the person occupymg the house, in consideration of his entertaining the customers, but to the time only when the same had been allowed in the last account.^ § 334. It is doubtful whether an allowance for treating the cus- tomers will, under any circumstances, or at any period of the cause, be sanctioned by the court, unless it be expressly provided for or referred to by the articles. In the case of Thornton v. Procter,^ the plaintiff and defendant were partners in the wine trade. The plaintiff, for a space of nine years, and until the dis- solution of the partnership, managed the whole business, and was at considerable expense in treating the customers, which was found to be necessary in that trade. The plaintiff had kept a cash ac- count of all profits and expenses, and struck a balance every year. In such accounts there was no charge for entertaining customers. There was no proof of the plaintiff having ever, during the part- nership, demanded any allowance on that ground. The plaintiff proved that £50 per annum would be a reasonable allowance to him for such expenses in entertainments, and that such an allow- ance was usual in the trade ; and it was admitted that an article of that nature is commonly inserted in the agreement of copart- nership. On reference to the master, he allowed the plaintiff the £50 a year for entertainments of customers. Exceptions being taken to the master's report, the Court of Exchequer heldj that, there being no universal custom in the trade to make such an allowance to the acting partner, and it being, on the contrary, the common practice to insert such a clause in the agreement where it is intended to be made, this should have been inserted in the ^ In a case where the bill prayed that a just and full account should be taken of the partnership concerns, and the master was directed to state such an account, and to report all the facts touching the same which he might deem material, it was held that this clearly authorized him to examine and state all the partnership accounts, whether the items were mentioned in the bill or not. Copeland v. Crane, ' 9 Pick. 73. It was also decided, in the same case, that in stating an account between partners, the mas- ter is not obliged to state the disbursements on account of the firm, if the evidence is insufficient to show the whole amount, and a partial state- ment would not lead to a satisfactory result. See Chaffin v. Chaffin, 2 Dev. & Bat. 255. 2 1 Anstr. 94 ; Gow Partn. (3d ed.), 105, 106. 324 M0TUAL RIGHTS OF PARTNERS. [eOOK II. original articles of copartnership ; and there being no such agree- ment, the court could not make one. If the plaintiff were enti- tled to any such allowance at all, he must claim it as being a gross article of expenditure ; and, therefore, it should have been in- cluded in the account ; but having struck a balance yearly without any such article in it, he should be concluded thereby .^ When the bill charges a specific loss, occasioned by the misconduct of a partner on particular occasions, an inquiry will be directed on that point.^ This, however, is not of course, but upon a case made out of sufficient doubt to induce the court to direct the inquiry.^ § 335. Before we quit this subject, it ought to be considered when, and at what rate, interest will be computed on the profits in the hands of any of the partners. It has been laid down by a learned writer, that, in all cases in which it is thought that justice would not be satisfied by the mere payment to the party of the balances to which he is entitled in the hands of another, and that he ought to have the advantage whichhas, or which, at the least, might have been made of the money, a court of equity, in decree- ing an account, will direct interest to be calculated accordingly.* ' See Caldwell v. Lelber, 7 Paige, 505. A provision in a partnership con- tract, that each partner shall pay his own individual expenses, must bo un- derstood as intended to apply when the parties were at home, and not when travelling on the business of the concern. Withers v. Withers, 8 Peters, 355. And when travelling abroad on the business of the concern, he should be allowed the whole of his expenses and not merely the excess of those above his ordinary expenses at home. Ibid. See Stainton v. The Carron Co. 24 Beavan, 356. ^ Plibbert v. Hibbert, supra ; Tomlinson v. Ward, 2 Conn. 396. See Cun- ningham V. Littlefield, 1 Edw. 104. A partner is not answerable to the firm for a mistake in judgment in a matter concerning the common interests of the firm. Caldwell y. Leiber, 7 Paige, 483 ; 1 Lindley Partn. 643, 644 ; Ex parte Letts v. Lteer, 26 L. J. Ch. 455 ; Cragg v. Ford, 2 Y. & C, C. C. 280. ' Cooke's MSS. ' Jer. Eq- Snr. 543. The period of the dissolution of a partnership is the proper time to inake a rest and adjust the balance of the partnership ac- count, and the partner against whom the balance is found is chargeable with interest thereon. Stoughton v. Lynch, 2 John. Ch. 209 ; Plollister v. Bark- ley, 11 N. Hamp. 501, 511, 512. But annual rests will not be made on the individual accounts of partners, with a view of charging interest on the bal- CH. III.] LEGAL AND EQUITABLE REMEDIES. 325 Therefore, in an account of the profits made by the remaining ■partners with the partnership stock in their hands after the disso- ances of the largest account, unless it appears that the partner having such balances has made a profit by retaining them. Colgin v. Cummins, 1 Porter, 148. Simpson v. Feltz, 1 M'Cord, Ch. 213, was a bill for an account and settle- ment of a partnership concern. The plaintifif furnished capital, and the de- fendant was the active partner, — kept the books, took the money and man- aged the whole business. It appeared that the defendant had received cash in the transaction of the business. The court, per Nott J., said : " Our rule has been, where one man has retained the money of another, to presume that he kept it for the purpose of profit, and that therefore he ought to pay interest upon it. Goddard v. BuUon, 1 Nott & M'Cord, 46. The bstlance due by the defendant is so much of the funds of the firm retained by him, to which he was not entitled, and for the use of which he ought therefore to pay interest." — p. 220. In Honore v. Colmesnil, 7 Dana, 201, it is held, that, if upon the dissolu- tion of a partnership there is a balance due from one of the firm to the other, which he fails or refuses to pay over ; or if one has put in more cap- ital than the other, which, upon the dissolution, and the debts being paid, he has an immedictte right to withdraw, but the other retains it, the partner who is thus indebted is liable for interest from the time of the dissolution till he pays over the money. If in any case, the fact, that, at the time of the dissolution of a partnership, the accounts are unliquidated, and the bal- ance due to the creditor partner is uneertam m amount, can excuse the debtor partner from the payment of interest, it will not avail where the debtor partner was the book-keeper, and was bound to know the state of the partnership accounts, and the extent of his own indebtedness. See also Moon v. Story, 8 Dana, 233. The balance found due and on which interest was cast, in Honore v. Colmesnil, was the amount found to have been due from the debtor partner, at the dissolution of the partnership, exclusive of the property on hand, as well as of the uncollected debts of the late firm. In Washburn v. Goodman, 17 Pick. 519, where a partnership had been dissolved by the death of the silent partner, it was held that the surviving partner should be charged with interest on his share of the capital stock, after the lapse of a reasonable time for settling the partnership concern. Parker C. J., in the above case, said : " As to interest, the survivors became indebted to the deceased partner's estate for the capital on his death. Time should be allowed them to settle the afiairs, collect and pay debts, after which they ought to be charged with interest." — p. 526. In Dexter v. Arnold, 3 Mason, 284, 289, Mr. Justice Story remarked': " Interest is not allowed upon partnership accounts generally, until after a balance is struck on a settlement between the partners, unless the parties have otherwise agreed or acted in their partnership concerns." This was 28 326 MUTUAL KIGHTS OF PARTNERS. [BOOK n. lution, interest mil be calculated on those profits.^ And in a case where the sale of a partner's share by his executors was set asidef said in a peculiar case. The defendant was a surviving partner. The part- nership accounts had been settled in the lifetime of the deceased partner. Certain errors and omissions were proved or admitted in the partnership accounts against the surviving partner, under liberty to surcharge and falsify. Interest was claimed on the amount of these errors and omissions. It appeared that they were unintentional, and as much attributable to negli- gence on one side as the other. There had been no habit of charging inter- est between the parties. Mr. Justice Story said he " could see no ground for an allowance of interest before the ascertainment of the errors." This subject was examined and some of the authorities reviewed by the Assistant Vice-Chancellor Sandford in Beaoham v. Eckford, 2 Sandford, Ch. 116. He there arrives at the conclusion, that there is no general rule ' 2 Buss. 348. This must surely mean profits invested, and not again em- ployed in trade ; for the party seeking relief must make his election between profits and interest. Gow Partn. (3d ed.), 355 ; Story Partn. § 343 ; Good- burn V. Stevens, 5 Gill, 1 ; Bernie v. Vandever, 16 Ark. 616. In Burden v. Burden, ante, § 328, it was declared that the infant children of the testator were entitled to an account of the profits made since his death ; and it was referred to the master to take the accounts, and inquire whether it would be most for the benefit of the infants to take the testator's share of the stock in trade and the profits, or the value of it at the time of his death, with in- terest. The master reported the balance in favor of the profits, and the option was accordingly given for the larger sum. 1 Jac. & W. 134. But inasmuch as the principle of the option is, whether the party will or will not elect to ratify the employment of the capital, if he does so elect he cannot ad Uhitam take interest or profits for different periods, but must abide by his election for the whole period. Gow Partn. (3d ed.), 355. Circumstances may indeed arise to entitle the party to divide his election, and to take prof- its for one and interest for another part of the period, as if the property were subsequently embarked in a new trade, or at a different place, or in adventures substantially new at the same place. Ibid. Heathcote v. Hulme, 1 Jac. & W. 122. In a case where there was a partnership for three years, and, after the death of a silent partner in the firm within that time, the sur- viving partners continued the business of the firm as usual until the time fixed by the indenture for the termination of the partnership, and during that interval contracted some bad debts and made some profits, it was held, that, if the estate of the deceased took a share of such profits, it should also be charged with such bad debts, — that the whole of the transaction should be adopted or the whole repudiated. Washburn v. Goodman, 17 Pick. 619. The rule respecting a right to elect between profits and interest does not apply in a case where the interest of a deceased partner has become vested in one of the surviving partners, who consents to the continuance of the partnership. Millard v. Eamsdell, 1 Harr. (Mich.), Ch. 373. OH. ni.] LESAL AND EQUITABLE REMEDIES. 327 as irregular, — one of his executors, who was also a partner, being in fact the purchaser, though in^ a circuitous manner, — fixing the date of the dissolution of a partnership as the period from which interest is to be computed against the partner who is indebted to his asso- ciate ; but that the allowance or refusal of interest in such cases depends upon the circumstances of each. In reference to Stoughton v. Lynch, above cited, the Assistant A'^ice-Chancellor said he was satisfied that that case was not to be regarded as a decision establishing a general rule, " and the opinion of the revered Chancellor (Kent) on this point," he remarked, " is met by the contrary opinion of another eminent jurist in Dexter v. Arnold." 2 Sandford, Ch. 129. He further observed, that the principle asserted by Nott J. in Simpson v. Feltz, as the ground for imposing interest is not the law in New York. As to Honore v. Colmesnil, above cited, he remarked that the most prominent feature in that case, and the one which was decisive as to the allowance of interest, was the fact that the defaulting party was the one who kept the books, and was thus chargeable with actual knowledge of the precise state of their afiairs ; a fact which did not exist in Beacham V. Eckford. This case of Beacham v. Eckford presented many equitable cir- cumstances against the claim of interest from the debtor partner. It ap- peared that E. in New York and B. in Baltimore were partners in building a frigate in Baltimore, and subsequently in conducting a ship-yard the*. E. made the advances on building the frigate and received the price ; and in 1827, three years before the dissolution, was aware, in general terms, that, in a settlement of their accounts, there would be a large balance due to B. ; but he did not know what such balance was. There never was any settlement made between the partners. The accounts were kept at Balti- more, and there were extensive transactions afterwards, so that at the disso- lution, in 1830, though E. might have well inferred that he owed B., he had no means of ascertaining what was the true balance. E-, in 1827, applied to B. for an account, which B. promised to send from time to time, but it was never sent. And E. neglected to furnish his accounts to B. when re- quested. E. died in 1832, and there was no accurate statement of the accounts made out until 1837, after a suit was commenced by B.'s assignees against E.'s executors for a settlement. Such statement was then made known to the executors ; and it thereby appeared that there was a balance of more than $27,000 due from E. to B. in 1830. Upon these facts the As- sistant Vice-Chancellor held that both parties had been remiss in their duty ; that B. should have furnished his accounts so as to put E. in default ; that E.'s executors should not be charged with interest, from the date of the dissolution, on the balance afterwards found to have then been due from E. ; but that they were liable to pay interest from 1837, the date when they were authentjj^ly informed of the extent of such balance, because, although the suit was then in progress, they might have paid the ascertained amount into court for the benefit of B.'s assignees. In Moon v. Story, 8 Dana, 233, where one partner ejected his copartners 328 , MUTUAL RIGHTS 01- PARTNERS. [BOOK II. interest at ,£5 per cent, was directed to be computed on tlie pur- chase-money advanced, althougli no fraud was intended by any of the parties.-' § 336. In these instances, the partner against whom interest is a : and held possession of the concern, and retailed the stock on his own ac- count, the court allowed interest on the balance due the aggrieved partners from the time of filing the bill for account. See Bowling v. Dobyer, 5 Dana, 438. In a case where the articles of partnership stipulated that the capital and profits of the company should remain in the concern, and be employed during the partnership for the benefit of the firm, each party being at liberty to withdraw from the joint funds so much only as was necessary for his private expenses, the Chancellor (Kent) held, that, if one of the partners ■withdrew or used the partnership funds for his own private trade or specu- lations, he must account, not only for the interest of the money so with- drawn, but for the profits of that trade. Stoughton v. Lynch, 1 John. Ch. 467; Solomon v. Solomon, 2 Kelly, 18. By this, however, it must be intended only that the debtor partner shall account for both, and the creditor partner shall have his option which to take; for interest on the capital and profits on the investment certainly cannot both be allowed. Jones V. Jones, 1 Ired. Eq.. 335. See Gow Partn. (3d ed.), 335 ; Story Pfrtn. § 343. But, in general, where articles of copartnership permit the partners to withdraw certain sums annually, without containing any stipulation in re- gard to interest thereon, interest will not be allowed on the sums withdrawn by virtue of the permission. Miller v. Lord, 11 Pick. H. Wilde J., in this case, said : " The general principle is, that, where there is no agreement to pay interest, none can be charged until the principal falls due, for, if inter- est is not included in the terms of the contract, it can be claimed only as damages for the detention of the debt. There are, however, some excep- tions to this rule, as where fraud is proved in the party to be charged, and in cases depending on mercantile usage." But, as no usage was proved or admitted in that case, the court said : " We give no opinion as to the ques- tion of mercantile usage." The court rest their decision on a construction of the articles, and say ; " By the terms of the articles of partnership, the inference is, that the sums to be withdrawn were considered as a division of the profits in advance; and, even if they were considered as loans, they were loans not upon interest ; they were withdrawn under a written con- tract, and the presumption is, that, if interest was intended to be charged, it would have been so expressed in the contract. It appears, also, that the claimant, in making up accounts of profits during the partnership, did not charge any interest on the sums withdrawn.'' 11 Pick. 26, 27. See Solo- mon V. Solomon, 2 Kelley, 18. W^ood v. Wood, 26 Barbour (N.1^, 356. ' Jac. 623. See Ex parte Chippendale, 4 De G., Mac. & G. 36 ; Ex parte Bignold, 22 Beavan, 176; Hart v. Clarke, 6 De G., Mac. & G. 254 ; 1 Lind- ley Partn. 649, 660. CH. in.] LEGAL AND EQUITABLE REMEDIES. 329 decreed is considered by a court of equity as a trustee for the partnership ; and with regard to a trustee the general rule is, that he is chargeable with interest, whenever he appears to have made interest, and with the whole of the profits, whenever, by trading or otherwise, he has derived profits beyond the rate of interest.^ Where interest is decreed, it is usually simple interest only — £5 per cent, in the case of mismanagement, otherwise only £4 per cent.2 § 337. We ought here to notice another important question connected with the subject of interest, arising from a state of cir- cumstances almost the converse of those which have just been considered; it is this, — Whether, and under what restrictions, a partner winding up the affairs of the concern, and using due diligence for that purpose, is entitled to charge his copartner with interest on the excess of his payments beyond his receipts, on account of the late partnership ? There seems to have been no express decision on this subject ; and it is conceived, that, if a partner have a right to interest under such circumstances, that ^ See 2 Fonbl. Eq. 186. ' Jer. Eq. Jur. 544. Where a trustee' has employed the trust money in trade, and refuses to account, he will be charged with compound interest Schieffelin v. Stewart, 1 John. Ch. 620. See Myers v. Myers, 2 M'Cord Ch. 214, 266; DiflFenderfifer ». Winder, 3 Harr. & Gill, 311; Connecticut V. Jackson, 1 John. Ch. 13 ; Wright v. Wright, 2 M'Cord Ch. 202. So, where an executor refused to render an account of the use he had made of money in his hands, but claimed it as his own, it appearing that he had been in the habit of receiving compound interest, and also that he had repelled . in an unsatisfactory manner the imputation of fraud or gross negligence, he was held chargeable with compound interest,- with annual rests, from the time when he ought to have settled his administration accounts. Jennison V. Hapgood, 10 Pick. 77, 104, 105. The cases on the subject of allowing compound interest against trustees, &c., will be found cited and considered in 2 Kent Com. 231, note ; 2 Daniell Ch. Pr. (Perkins's ed.), 1508, note (1) ; 2 Story Eq. Jur. § 1277. The true rule in equity in such cases is, to take care that all the gain shall go to the cestui que trust. 2 Story Eq. Jur. § 1277. In Stoughton v. Lynch, 2 John. Ch. 209, it was suggested, that, before compound interest could be charged on moneys overdrawn by one partner from the partnership funds, the partner should be called upon to account fot the profits of the money so overdrawn, and if he did not dis- close the profits, then a recourse could be had to compound interest, as a substitute for the profits which he might reasonably be supposed to have diade. 28* 330 MUTUAL EIGHTS OF PARTNERS. [BOOK II. right will be a legal, not an equitable right ; and will depend, not on any general principles of law, — for, generally, money lent does not carry interest, — but upon the usage of trade ; the usage raising an implied contract at law to receive interest on the prin- cipal advanced.^ § 338. The usage of hankers to receive interest on advances made to their customers has been expressly sanctioned by the courts.^ There is likewise sufficient authority for insisting that a similar usage extends to traders in general, upon an advance of capital for partnership purposes ; ^ this at least has always been the opinion of traders and accountants in the city of London. ' In Dougherty v. Van Nostrand, 1 Hofi". Ch. 88, it was held to be a clear rule of law, that continuing partners, when allowed or authorized to wind up the business of the concern, are entitled to interest when in advance, and are chargeable with interest when in funds. The subject of interest on ad- vances has been considered in cases which, though in some respects resem- bling, may not perhaps depend on precisely the same principles as that sug- gested in the text. As where an executor or administrator, in settling up an estate, has advanced money in good faith for the estate, he has been allowed interest on such advances in a case where he was guilty of no neg- lect or unreasonable delay in converting the effects into money. Rix v. Smith, 8 Vermont, 365; Jennison v. Hapgood, 10 Pick. 77, 102; Liddellu. M'Vickar, 6 Halsted, 44. But see Storer v. Storer, 9 Mass. 37 ; Brewster V. Brewster, 8 Mass. 131. Still, the general policy of the law is adverse to the allowance of interest to agents or trustees for advances made ; and it will not be allowed to an executor, where funds of the estate sufficient to meet the claims might have been subject to his control. Evarts v. Nason, 11 Vermont, 122 ; Liddell v. M'Vicar, 6 Halsted, 44. See Taylor v. Knox, 1 Dana, 398. See the case of Keid v. Renss. Glass Factory, 3 Cowen, 393 ; s. c. 5 Cowen, 587, where the subject of interest on advances by an agent and of allowance of interesf in general was very fully and laboriously dis- cussed. See also the remarks on this case in Winsor v. Savage, 9 Metcalf, 351. ^ Wright V. Bonter, 3 Chit. Laws of Commerce, 310 ; Gwyn v. Godby, 4 Taunt. 346 ; Arnot v. Redfern, 9 Moore, 209. As to the custom of India, see Boddam v. Riley, 2 Bro. 2. ' See Denton v. Rodie, 3 Camp. 493 ; and the dicta in Higgins v. Sar- gent, 2 Barn. & Cres. 348, 3 Dowl. & Ryl. 613 ; Page v. Newman, 9 Barn. & Cres. 378. There is a short note in Ridgway's Rep. temp. Hardwicke, as follows : " If, in a current account between merchants, one of them has laid out a gross sum of money, the Court (i. e. of Chancery) will allow interest, notwithstanding it is a current account." Omychund v. Barker, Rid^w. 285. But see 3 Price, 250. See further, as to interest, Stat. 3 & 4 Will. 4, c. 42, sec. 28. CH. III.] LESAL AND EQUITABLE EEMEDIBS. 331 On the other hand, it is manifest that a general custom of this kind might -work great injustice in cases where the party sought to be charged has not been regularly apprised of the advances made. The right, therefore, to demand interest, under such cir- cuinstances, if it should ever be established by express decision, must be accompanied with some qualification in respect of notice to the party charged.^ ' The question,' -whether interest is to be allowed in any case on advances of capital by one of the partners to the firm, ■without any agreement or understanding on this subject, is one of considerable importance, and seems to have been very little discussed. Where there has been an agreement or understanding relative to the allowance of interest, of course that will gov- ern. Such was the case of Millar v. Craig, 6 Beavan, 433. In this case, interest was allowed on the capitals in the transactions of the business of a partnership between A. and B. C, who was a clerk and relative, was cog- nizant of the terms on which the partnership was carried on. B. retired, and A. C. continued the business ; the whole capital embarked therein be- longed to B. There was an absence of all proof of any agreement between A. and C. in respect of interest or capital. D. and E. were afterwards ad- mitted into the business, and an interest account of capital was then re- sumed ; and it was held under these circumstances, and from the knowledge that C. had of the terms on which the first partnership had been carried on, that it must be assumed that interest on capital was to be allowed in the second partnership. The Master of the Rolls (Lord Langdale), said^: " Sup- posing it to be the law (which I do not think is quite so Clear), that, when you find partners equally laborious and equally attentive to business, you allow no interest on any excess of capital, and that therefore you do not put the parties on equal terms in that respect, still you would clearly give it if you can collect from circumstances, or from the usage between the par- ties, that there ought to be or was intended to be such a computation of in- terest." In Winsor v. Savage, 9 Metcalf, 346, two persons were tenants in com mon of sundry vessels, and joint owners of their cargoes ; one of them at- tended to the care and management of the vessels, and the other attended to the purchases and sales of cargoes; each made purchases, procured work to be done, and paid and received moneys on accounts in which each had a common and joint interest. An agreement was understood by the court to be proved between them to keep an interest account, and the court, regard- ing the mode in which they had dealt with each other in reference to this matter, directed that interest should be cast on the items of their respective accounts, from the several times of payment up to the date of the final ad- justment. See Wilandon v. Sylvestre, 8 Curry (Louis.), 262. A case in Vermont, not very fully reported, has touched upon this point. Hodges v. Parker, 17 Vermont, 242. In this case it was held that the individual mem- 332 MUTUAL EIGHTS OF PARTNERS. [BOOK II. § 339. With regard to costs, the general rule is, that the party against whom the balance is reported is, primd fade, the per- son to pay them. It has even been laid down, that the plaintiff always pays costs where an account turns against him.^ But Mr. Beames observes, that this passage expresses the rule too largely ; for that although costs usually follow the event of an account, yet it has been decided by the highest authority that, where the ac- count is mtricate and doubtful, there should be no costs ; ^ and this remark seems applicable to partnership accounts.^ And bers of a copartnersliip, who have advanced money for the benefit of the firm, are, in an action of account brought to liquidate the concerns of the firm, entitled to interest on such advances from the time they were made. It does not appear from the report whether there was or was not any agree- ment or usage respecting the allowance of interest on such advances. But in Lee v. Lashbrooke, 8 Dana, 214, it was held that interest is not to be allowed to any partner for money advanced to, or deposited with, the firm, for its use, but from the time of a general settlement, or dissolution ; unless there is a special contract, or some very peculiar circumstances to justify it. The court in this case said : " In the absence of any evidence of a contract to the contrary, it is a general rule, as fixed as it is just, that neither of the partners will be entitled to compensation from the others, either for any services voluntarily rendered by him in the partnership busi- ness, or to interest on balances from time to time in the partnership account, or on deposits or advances of money for the use of the firm, and before a general settlement or dissolution." See, to the same efiect, Jones v. Jones, 1 Iredell Eq. 332. ' 8 Bro. P. C. 361 ; 11 Ves. 458. See 3 Daniell Ch. Pr. (Perkins's ed.), 1515 el seq. and notes, 1535-1537. ' Beames on Costs, 12. ' Although the prevailing party is, as a general rule, prima facie entitled to costs as well in equity as at law (3 Daniell Ch. Pr., Perkins's ed. 1520 and note), yet costs do not always follow a decree in favor of a party. They rest in the sound discretion of the court, and are to be awarded or refused, aecording to the justice of each particular case. (lb. 1515, 1516 and note, and cases cited.) In Jones v. Morehead, 3 B. Monroe, 385, it was held, that, in a case where a suit is necessary t» wind up the partnership, it is proper to divide the costs. In Taylor v. Cawthorne, 2 Dev. Eq. 221, it was said that costs are usually taxed on the partnership effects, but that the improper conduct of a party may be punished by taxing him with costs. The defendant was taxed with costs, because his unjust conduct had rendered it necessary for his copartners to resort to a suit in equity to obtain a fair settlement, in Moon V. Story, 8 Dana, 226, 233. In Simpson v. Feltz, 1 M'Cord Ch. 213, 217, the plaintiffs in a suit for a settlement against a copartner were ordered, CH. III.] LEGAL AND EQUITABLE REMEDIES. 333 even where a bill filed by a partner for an account is dismissed on a point of law which was previously doubtful, it may possibly be dismissed without costs, if he was morally justified in proceed- ing. In Sumner v. Powell,^ the executor of a deceased partner had received from the survivors a joint covenant of indemnity from the partnership debts. Having afterwards beea compelled to pay partnership debts, he brought his bill for an account and repayment against one of the other partners, the rest having become bankrupt ; it was held, that, having disposed of his origi- nal equity against the firm, he had no equity against this partner severally, the covenant being joint and not several ; but the bill was dismissed without costs. It is the usual course of the court, where mutual account is decreed, to reserve costs till after the report; 2 but where a partner is guilty of fraud, or of excluding his copartners from a due proportion of the profits, by means of a secret agreement, costs may be decreed against him up to the hearing, and the subsequent costs may be reserved.^ SECTION V. OF THE RIGHT TO AN INJUNCTION. § 340. Although, as we have already seen,* a court of equity will not interfere to restrain the violation of a particular cove- nant between partners, yet, where one party has committed such breaches of duty as would warrant a decree for a dissolution, the court will relieve against the future acts of the offender by injunc- tion. Thus, where one partner has involved the partnership in under the circumstances, to pay two thirds of the costs. In Caldwell v. Leiber, 7 Paige, 483, it appeared that each partner had made claims against the other both before and during the progress of the suit, which were not sustained by the decree, and neither party was allowed the general costs in the suit. See also, Beacham v. Eekford, 2 Sandford Ch. 116. ' 2 Mer. 30 ; and see Jacobsen v. Hennekenius, 5 Bro. P. C. 488. » Beames, 12; 8 Bro. P. C. 360. « 1 Sim. 63. See Taylor v. Cawthorne, 2 Dev. Eq. 221; England v. Curling, 8 Beavan, 129. * Ante, § 246. 334 MUTUAL RIGHTS OP PARTNERS. [BOOK II. debt, or haa himself become insolvent, the court will restrain him from drawing, accepting, and indorsing bills in the name of the firm, and from receiving the partnership debts.^ So, it wiU re- ' Williams v. Bingley, 2 Vem. 278, Mr. Eaithby's note; Master v. Kir- ton, 3 Ves. 74 ; Lawson v. Morgan, 1 Price, 303 ; Hood v. Aston, 1 Kuss. 412; Eden Injunot. (2d Amer. ed.), 359, 360, and notes; Story Partn. § 227; Miles v. Thomas, 9 Sim. 606 ; Gow Partn. (3d ed.), 108, 109; 1 Story Eq. Jur. §§ 667, 669; and see Seton on Decrees, 306. In Wil- liams V. Bingley, the bill prayed for an injunction and dissolution. On mo- tion for a special injunction, " upon hearing the said affidavit, and the six clerks' certificate, his Lqrdship doth order that an injunction be awarded to restrain the defendant, Thomas Bingley, from negotiating or accepting any bill of exchange or promissory note, except for partnership purposes or doing any thing in the name and firm of the partnership, except for partner- ship purposes ; and from receiving and applying any money belonging to the said copartnership except for partnership purposes, until the said defend- ant shall fully answer the plaintiff's bill, and this court make an order to the contrary." K. L. 1805, B. 51. It is believed that this suit was afterwards compromised. The usual form of the order is simply, " that the defendant be restrained from entering into any contract or contracts, and from accept- ing, &c., any bills, &o., in the name of the copartnership.'' Seton, 308. AVhere there has been collusion between a partner and a third person, ap injunction may be awarded against the latter also. See Jervis v. White, 7 Ves. 412. In Master v. Kirton, one N., a debtor of the firm, had colluded with the defendant K. The bill prayed for an injunction against the debtor, to restrain him from paying, and against the defendant K., to restrain him from receiving the money. On motion for the injunction, it was stated that, since the coming in of the answers, the partnership between the plaintiff and the defendant J. K. had been dissolved, and a deed of dissolution had been executed by all parties thereto, and the defendant K. had assigned over his interest in the partnership stocks, deeds, moneys, securities, and effects to the plaintiffs ; and the plaintiffs, by virtue of the power contained in the assignment from the said defendant J. K., had commenced an action against the defendant J. N. on the said bonds, in the name of the defendant J. K. ; which action had been tried and a verdict obtained therein against the defendant J. K. It was therefore prayed " that an injunction may be awarded, to restrain the defendant J. N. from paying to the said J. K. the moneys now due and owing from him upon and by virtue of the several bonds, bearing date, &c., for securing the two several sums of, &c., and in- terest, or any part thereof; and that the defendant J. K. may in like man- ner be restrained from receiving the same, or any part thereof; and also from releasing or discharging the said J. N. from the payment thereof, or from the action commenced by the said plaintiffs in his Majesty's Court of Kind's Bench, in the name of the said defendant J. K., against the said defendant J. K., or the judgment to be obtained in such action, or any exe- CH. ni.J LEGAL AND EQUITABLE KEMEMES. 335 strain an action brought by one partner against Hs copartner, on a separate and private account, upon payment by the latter of the money due into court.^ So, it will restrain the overbearing and oppression of one partner ; ^ or the application of partnership property to a use not warranted by the articles ; ^ or an execution against the partnership property for the separate debt of one part- ner.* § 341. The mere circumstance, that a partner gives a partner- ship bill for his separate debt, may or may not lay a ground for the issuing of an injunction against its negotiation ; for the person who takes it may or may not have some reason for supposing that cution or executions, or other proceedings to be had or taken therein by the said plaintiffs in the name of the said defendant J. K., against the said de- fendant J. N. ; " and it was ordered accordingly. K. L. 1796, B. 428. • Gold V. Canham, 2 Swanst. 325. 2 Charlton v. Poulter, 1 Ves, 429 ; 19 Ves. 148 ; Story Partn. § 227. ' Glassington v. ThwaJtes, 1 Sim. & Stu. 124 ; Story Partn. §§ 178, 193 ; 1 Story Eq. Jur. § 667. * Taylor v. Field, 4 Ves. 396 ; s. C. 15 Ves. 559, note ; Beran v. Lewis, 1 Sim. 376 ; Eden Injunct. (2d Amer. ed.), 53 ;• Gow Partn. (3d ed.), 144. Mr. Justice Story regards this as a proper case for interference and re- straint by injunction, and says that it seems to be the true result of the English decisions on the subject. 1 Story Eq. Jur. § 678; and he reasserts the same in Story Partn. § 264. But Mr. Chancellor Kent has decided that equity will not stop an execution or sale in such case by injunction, until the partnership, accounts are taken and liquidated. Moody v. Payne, 2 Johns. Ch. 548. The Chancellor in this case said : " I do not know that this court has ever undertaken to stop an execution at law, in such a case, until the partnership accounts have been taken, and it would be too much for me to assume it without precedent. The principle would go to stay executions at law, in every case, against the partnership property of one partner who owed separate debts until the disclosure and liquidation of the concerns of the copartnership. This would produce inconceivable delay and embarrass- ment in respect to separate creditors." " If any sacrifice of the interest of the separate partner is made by reason of the uncertainty, it affects only that partner who does not here raise the objection." pp. 549, 550. The same was held in Sitler v. Walker, 1 Freeman (Miss.), 177. In his Com- mentaries (3 Kent Com. 65, note 6), Mr. Chancellor Kent notices the above suggestions of Mr. Justice Story, and repeats, that, as he reads the authori- ties, especially those in New York, they are in favor of his decision in Moody V. Payne, although he suggests that the more fit and suitable rule of practice would seem to be to have the adjustment of the partnership account pre- cede the sale. Ibid. See post, § 831, Book 3, chap. 6, sec. 10. 336 MUTUAL EIGHTS OF PARTNERS. [BOOK II. Ms debtor had a right or authority so to use the partnership name. But where it appears that an individual partner, indebted to the partnership, being unable to pay his separate bill holden by his bankers, substitutes for it, by a negotiation with them, a partner- ship security, made and given without the consent or knowledge- of his copartners, and the bankers are aware that it is so given without their consent or knowledge ; that is a case which comes within the principle upon which the court has always been in the habit of interfering by injunction.^ Accordingly, in one case, an injunction was granted ex parte, to restrain the negotiation of a bin of exchange by a holder, who had given valuable consideration for it, but who had notice that it had been improperly accepted by a partner of the plaintiffs in the partnership name.^ And in another case, where the holder took the bill after the plaintiff's partner had obtained an injunction, but before the order was drawn up, the court not only extended the injunction to the holder, but ordered the security to be deposited with the mas- ter, and it was afterwards cancelled by consent.^ § 342. 'Where a partnership has been dissolved, and any of the quondam partners attempt to carry on the business for their ovra benefit, the court will interfere by injunction.* And if an account has been finally settled between the parties, and one partner is indemnified by the other from the debts of the copart- nership, then, if the indemnified partner be afterwards compelled to pay a partnership debt, he may retain money of the other part- ner to an- equal amount, subsequently coming into his hands, although such money be paid on the separate account of the other ' Per Lord Eldon, 1 Russ. 415. ^ Hood V. Aston, 1 Euss. 412. » Jervis v. White, 7 Ves. 413. ' De Tasteij v. Bordenave, Jac. 516. After a dissolution the Court con- stantly interferes by injunction to restrain breaches of special agreements entered into between the partners ; such, for example, as agreements not to carry on business, Whittaker v. Howe, 3 Beavan, 383 ; not to get in debts of the firm, Davis v. Amer, 3 Drew, 64 ; not to divulge a trade-secret, Mor- ison I'. Moat, 9 Hare, 241. So, if a partner assigns his interest in the part- nership, and in the good-will thereof, to the continuing partners, he will be restrained from recommencing or carrying on business in such a way as to lead people to suppose that he is the successor of the old firm. Churton v. Douglas, 1 John. 174. CH. in.] LEGAL AND EQUITABLE REMEDIES. 337 partner. Hence, upon payment of the money into court, he may obtain an injunction to restrain all proceedings at law, by the other partner, to recover the money so retained.^ § 343. Upon the death of a partner, occasions will arise for injunctions between the survivors and the representatives of the deceased. Thus, where an agreement is entered into with one partner for a lease to that partner alone, but the lease is in fact for the benefit of the partnership, upon the death of the partner with whom the contract was made, the court will grant an injunc- tion to restrain his executor from disposing of the lease when granted, except for partnership purposes.^ On the other hand, upon motion by the representatives of a deceased partner, an in- junction will be granted to restrain the surviving partner from bringing ejectment upon his title as surviving lessee of the part- nership premises.^ So, if there be any danger of abuse or posi- tive misappKcation of the partnership funds by the surviving part- ner, the court will interpose and restrain it by injunction, and even appoint a receiver, upon the application of the representa- tives of the deceased.* But the mere apprehension of one part- ner, that the other will misapply the partnership funds, seems not a sufficient ground for the injunction.® § 344. It seems clear, that a court of equity will sometimes award an injunction against one partner, without dissolving the partnership ; perhaps even where the delinquency of that partner is not sufficient to warrant a dissolution. At any rate, it certainly seems to have been held that a court of equity will restrain the gross personal misconduct of a partner, without compelhng a dis- solution of the partnership before the expiration of the term.^ In ' Gold V. Canham, 1 Ca. Ch. 311 ; 2 Swanst. 325 ; Fran. Max. 36.^ ^ Alder v. Fouracre, 3 Swanst. 489 ; Story Partn. § 331 ; Gow Partn. (3d ed.), 349. " Elliot V. Brown, 3 Swanst. 489, u. * 3 Kent Com. 57, 63 ; Story Partn. §§ 344, 347 ; Gow Partn. (3d ed.), 352 ; Hartz v. Schrader, 8 Ves. (Sutnner's ed.), 317, 318, and notes ; Mur- ray V. Mnmford, 6 Cowen, 441 ; Eden Injunct. (2d Am. ed.), 359, 360, note. ' Woodward v. Schatzell, 3 John. Ch. 412. ' In England «. Curling, 8 Beavan, 129, a partnership had been entered into for a term of years which had not expired. One of the partners insisted on a dissolution and retired from the partnership, and entered into another 29 338 MUTUAL EIGHTS OF PAKTNERS. [BOOK IL Charlton v. Poulter,^ a bill was filed by Ricbard Charlton, senior and junior, partners in a brewery, charging great misconduct by the defendant, the third partner, in disobliging and turning away the customers, prevailing on the servants to leave the brewhouse, assaulting and obstructing them, causing them to quit their ser- vice, locking up the books, retaining as servants (without the plain tiflF's consent), bruisers and boxers who obstructed the trade, threatening to ruin the trade, and refusing to account. The bill prayed, that, at the end of the partnership, the stock and utensils might be valued, and that the defendant might be compelled to receive one third part of the Value, and for an injunction restrain- ing the defendant from any act to the obstruction or damage of the trade. On motion after answer for an injunction, it was ordered, that the defendant be restrained from using force, either by him- self or any other person or persons, to the obstruction or interrup- tion of the brewing trade in question, and from removing or dis- placing any of the servants hired or employed by the partners, or the major part of them, in carrying on the trade, without leave of the court ; and from carrying away or removing out of the count- ing-house belonging to the partnership any partnership books or papers relating to the said trade ; and uppn the plaintiff's submis- sion, it was further ordered that the plaintiffs be restrained in like manner. partnership, wliich assumed the name of the old firm, opened the letters ad- dressed to it and circulated notices of its dissolution. But on a bill filed by the continuing partners of the old firm against their copartner and the other members of the new firm, the court granted an injunction restraining the retired copartner from carrying on business with his new partners or any other persons except his old copartners, until the expiration of the term ; and restraining his new partners from carrying on business with him, or otherwise, in the name of the old firm, and from receiving or opening let- ters addressed to it, and from interfering with its property ; and restrain- ing the retired partner from publishing or circulating any notice of the dissolution of the old firm, before the expiration of the term for which it had been entered into. So in the subsequent case of Hall v. Hall, 12 Beavan, 414 ; 20 Beavan, 130 ; 3 Mac. & G. 70, a partnership for twenty-one years, determinable on twelve months' notice by either party, was entered into by the plaintifif and the defendant ; disputes arose, and the defendant wholly excluded the plaititiff from the partnership business. The plaintiff filed a bill praying that the articles might be performed, and, amongst other things, for an injunction, but not for a dissolution. An injunction was granted. 1 Lindley Partn. 840, 841. » 19 Ves. 148, n. CH. III.] LEUAIi AND EQUITABLE EBMBDIES. 339 § 345. The opinion tliat a partner's misconduct may be re- strained by injunction, without the necessity of a dissolution, is sanctioned by Lord Eldon in the case of Goodman v. Whitcomb.^ The parties in that case being partners in the business of carpet manufacturers, the bill was filed for a dissolution of the partner- ship, and the usual accounts. One of the grievances stated in the bill was, that the defendant had sold goods at an under price, and exchanged others for household furniture, which he had ap- propriated to his own use. Lord Eldon said, that trifling circum- stances of conduct were not sufficient to authorize the court to award a dissolution. It was stated that the defendant had ex- changed carpets for household furniture ; that, perhaps, might be an improper act; but still, there might be a thousand reasons why the court should not do more than restrain him in future from so doing ; more particularly, as it was stated by^ the answer that he did it because he thought it the best thing that could be done. 2 M J. & W. 592. ■' Mr. Gow (Partn., 3d ed., Ill, 112), remarks, in reference to this sub- ject, that, " although the general principle of the court is not to interfere in a partnership concern unless the bill prays a dissolution, yet there are cases of partnerships for a term of years, in which it has been said the court will interpose during the term, notwithstanding a dissolution be not prayed. Thus, where some of the members of a partnership or company seek to em- bark one of their body in a business which was not priginally part of the partnership concern, and they are unable to show that such partner either expressly or tacitly acquiesced in the proposed extension of the concern, a court of equity would, it is apprehended, restrain them from proceeding in the execution of their intention without dissolving the partnership or com- pany. Natusch V. Irving, Gow App. 398. So, where a member of a firm neglected to enter the receipt of partnership money-in the books, and did not leave the books open for the inspection of the other partner, equity interfered without dissolving the partnership; or where there has been a studied, intentional, prolonged, and continued inattention to the application of one partner calling upon the other to observe the contract of partnership, the Court will grant an injunction against the breach of it ; and, in general, circumstances of the latter description must be disclosed, to induce a judicial interference on a breach of the articles of partnership unless a dissolution be prayed." See Loscombe v. Eussell, 4 Sim. 8 ; Miles v. Thomas, 9 Sim. 606, 609. Mr. Justice Story treats it as a very serious question, whether, when an injunction is sought to restrain improper acts by a partner, the court will interfere unless the bill not only asks for an injunction, but also 340 MUTUAL RIGHTS OF PARTNERS. [BOOK 11. § 346. A court of equity, however, will be reluctant to award an injunction against a partner, unless there be grounds for a dis- solution ; and in many cases such a course would be attended with obvious inconvenience to the parties.'' And cases may arise, where an injunction cannot with propriety be granted, whether the parties do or do not contemplate a dissolution of the partner- ship, and even though the party against whom the injunction is sought may have acted contrary to the spirit of the partnership arrangements. Thus, two persons agreed to work a coach from Bristol to London, one providing horses for a part of the road, and the other for the remainder. In consequence of the horses of one having been taken in execution, the other provided horses for that part which had been undertaken by the first. He afterwards per- sisted in providing horses for the whole journey, and claimed the whole profits. Upon a motion for an injunction to restrain him from so working the coaches. Lord Eldon refused the injunction. " It is difficult," said his Lordship, " to understand how such a case can be the proper subject of the jurisdiction of this court by injunction. If I enjoin the defendant from bringing horses to convey the coaches between the limits in question, I must enjoin the plaintiff from not bringing horses there. I cannot restrain the defendant unless I have the means of assuring him that he shall find the plaintiff's horses ready. I should otherwise enjoin him from doing that which, if he omits to do, he will be liable to actions by every person whom he has undertaken to convey from Bristol to London." ^ § 347. In ordinary cases, however, the court will grant an injunction to restrain the working of stage-coaches in a manner inconsistent with the terms of an agreement. Thus, in "Williams V. Williams ,2 the plaintiff and defendant had been partners in stage-coaches ; and, by an agreement on the dissolution of their partnership, it was stipulated that the business, so far as it was for a dissolution of the partnership. Story Partn. § 229 et seq. ; 1 Story Eq. Jur. § 669 ; Knebell v. White, 2 You. & Coll. 15 ; Bentley v. Bates, 4 Eng. .Jur. 552. 1 Marshall v. Colman, 2 J. & AV. 266. ' Smith V. Fromont, 2 Swanst. 330. In this case Lord Eldon said that a question might arise, whether the plaintiff, showing that his horses were always ready, would not be entitled to the same profit as if they were used. » 1 J. Wils. 473, n. CH. in.] LEGAL AND EQUITABLE EEMEDIBS. 341 carried on between Newbury and London, sbould belong to the plaintiff, and that the defendant should not carry on the business of coach proprietor between Newbury and London. The defend- ant afterwards set up a^tage-coach, which began its journey at a place a few miles distant from Newbury, but travelled through Newbury to London. And on a bill filed, and an affidavit, Lord Eldon granted an injunction to restrain the defendant from carry- ing on the business between Newbury and London. So, where a company, in which A. and B. were partners, contracted with the Postmaster-General for the service of the mail, each partner supplying horses for a distinct part of the road, but, in conse- quence of the bad manner in which A. horsed the coach, the Postmaster had been frequently obliged to suspend the contract ; it was held that B. might maintain an injunction against A. to re- strain him from interfering with B.'s portion of the road, on the ground of the irreparable injury to the partnership which would ensue from such interference.^ § 348. So, where, on the event of one of two partners retiring from trade, it was left to arbitrators to determine, among other things, what was to be paid to the retiring partner for the good will of the trade ; and they, on the understanding that the retir- ing partner would not set up the trade in the same street, or its vicinity, awarded a certain sum as his share for the good will, which was paid; but no mention was made in the award as to the retiring partner not carrying on the trade in the same street or its vicinity, and rie afterwards in fact set up the trade in the same street, the court granted an injunction restraining him from carrying on the trade there, upon parol evidence of the under- standing on which the award was made.^ § 349. Before we conclude this section, a few remarks should be made on the mode of obtaining and supporting an injunction. Where the plaintiff's case is not of such an urgent nature as to require the most summary interference, or if it be of that descrip- tion, and he should not seek immediate protection, it is usual for him to defer making his application until after the defendant has filed his answer.^ But where the object of the plaintiff is to pre- ' Anderson v. Wallace, 2 Molloy, 540. ^ Harrison v. Gardner, 2 Madd. 198. " Jeremy Eq. Jur. 337 ; Anon. 1 Vez. 477 ; Lawson v. Morgan, 1 Price, 303. 29* 342 MUTUAL RIGHTS OE PARTNERS. [BOOK II, vent irreparable mischief, as, for instance, if the defendant is insolvent and is wasting the effects of the partnership, a special injunction may be granted on motion before answer, supported by- affidavit, as in other cases of waste. ^ § 350. It is, however, to be observed, that many acts may be committed productive of great inconvenience, and even of loss, but which are not therefore in, the nature of waste .^ In the case of Crofton v. Horner,^ the plaintiff and defendant agreed to dis- solve partnership, and that the defendant, on payment of half the value of the effects, should take the whole. The defendant ac- cordingly took possession of the partnership property, but failed to make payment, and had begun to pull down part of the build- ings. The plaintiff filed his bill for an account, and for an injunc- tion from collecting the debts, &c., and from committing waste on the partnership premises. He then moved for an injunction be- fore answer, on the usual affidavit ; but the Court of Exchequer held that the conduct of the defendant did not amount to waste, and dismissed the apphcation. § 351. In a suit for an account of partnership transactions, and upon a motion for an injunction before answer, to restrain the ' Lawson v. Morgan, supra ; Read v. Bowers, 4 Bro. 441. In the latter case, the bill charged the insolvency of the defendant, and the probable loss of the partnership effects through his acts, and on motion " it was prayed that an injunction may bo awarded against the defpndant, to restrain him from collecting or receiving any more of the debts now due and owing to the said copartnership, or any of them, or any sum of money on account thereof, which, on hearing the said plaintiff's said affidavit and the six clerks' certificate read, is ordered accordingly, until the defendant shall fully answer the plaintiff's bill, and this court make other order to the contrary." R. L. 1793, B. 10. In the case of waste and other cases of an analogous nature, the court will grant the injunction without notice, and before appearance, and before subpoena served, provided the plaintiff makes an early apphcar tion to the court. 1 Newl. Pr. 219. But, in general, if the motion is made after appearance, notice is necessary. Ibid, and see Jeremy Eq. Jur. S3 7. As to waste between tenants in common of real estate, see 7 Ves. 589 ; 16 Ves. 128. * Mere squabble? and improprieties arising from infirmities of temper are not considered sufficient ground for an injunction. See Marshall v. Colman, 2 J. & W. 266 ; Smith v. Jeyes, 4 Beavan, 603 ; Warder v. Stilwell, 3 Ju- rist (n. B.), 9. « 5 Price, 537. CH. III.] LEGAL AND EQUITABLE REMEDIES. 343 defendant from acting as a partner, it is a complete bar to the motion, if the defendant aver by affidavit that the plaintiff has pos- sessed himself of the partnership books, and that for such reason the defendant is unable to account properly, or to put in a full an- swer ; accordingly, in such case, notwithstanding palpable miscon- duct on the part of the defendant, the injunction will be refused.^ When a special injunction has been obtained, as the injunction by the terms of the order is to continue until answer or further order, the defendant may apply to dissolve it, either upon putting in his answer, or upon affidavit before answer.^ § 352. The general rule is, that, for the purpose of obtaining or continuing an injunction, affidavits cannot be received in con- tradiction to assertions positively made by the answer.^ To a certain extent, however, there is an exception to this rule in cases of waste,* and of misconduct in partners analogous to waste.^ In these cases affidavits filed prior to the answer may be read against the answer.^ Affidavits filed subsequently to the answer may be read in support of an allegation in the bill, not contra- dicted by the answer.^ • Littlewood V. Caldwell, 11 Price, 97. ' 1 Newl. Ch. Pr. 226 ; Read v. Dews, E. M. Charlt. 360, 361 ; Kead v. Consequa, 4 Wash. C. C. 174; Minturn v. Seymoiir, 4 John. Ch. 173; 3 DanielJ Ch. Pr. (Perkins's ed.), 1894, 1895, and notes. = 1 Newl. Ch. Pr. 227 ; Morgan v. Goode, 3 Mer. 10. * Smythe v. Smythe, 1 Swanst. 252. It has long been settled, that affida- vits may be read against the answer in cases of waste. Robinson v. Lord Byron, 1 Bro. C. C. (Perkins's ed.), 589, note (3) ; Merwin v. Smith, 1 Green Ch. 182. But not where the title to the property is in dispute. Norway v. Rowe, 19 Ves. 144; 3 Daniell Ch. Pr. (Perkins's ed.), 1827, note (1), 1884. But see Poor u. Carlton, 3 Sumner, 80, 81 ; Powers v. Heery, R. M. Charlt. 523. ' Charlton v. Poulter, 19 Ves. 148 ; Peacock v. Peacock, 16 Ves. 49 ; Lawson v. Morgan, 1 Price, 303. See Eastburn v. Kirk, 1 John. Ch. 444. » 3 Daniell Ch. Pr. (Perkins's ed.), 1884, 1885, and notes. In Poor v. Carlton, 3 Sumner, 81, 82, Mr. Justice Story remarked: "The admission of affidavits, whether filed before or after the answer, whether they are to the title of the plaintiflf, or to the acts of the defendants, although they are contradictory to the answer, ought to rest in the sound discretion of the court, according to the circumstances of each particular case, without the court's binding itself by any fi.\ed and unalterable rules, as to the exercise of that discretion." See Peacock v. Peacock, 16 Ves. 51 ; Roberts v. An- derson, 2 John. Ch. 202, 205. ' 1 Swanst. 254, note (b) ; Farrar v. Hutchinson, 2 You. & Coll. 706. 344 MUTUAL EIGHTS OF PARTNERS. [bOOK II. SECTION VI. OF THE EIGHT TO A KECEIVEK.' § 353. It seems clear that the party who seeks the benefit of a receiver, whether he desires to continue or to dissolve the part- nership, should be able to prove such a case to the court as would authorize a decree for a dissolution. It has been decided that the court wiU not upon motion appoint a receiver of the part- nership, unless it appear that the plaintiff will be entitled to a dis- solution at the hearing.^ It has been laid down by Lord Eldon, that in the ordinary course of trade, if any one of the partners seek to exclude another from taking that part in the concern which he is entitled to take, the court will grant a receiver.^ Where, therefore, such a course would be for the benefit of the excluded person, the court would appoint a receiver, even with a view to the continuation of the partnership. But, generally, in thus interposing between the parties, the court looks to a dissolu- tion and general winding up of the afiairs.* And in' one case it ' For a full discussion of ttis subject of receivers in eases of partnership the reader is referred to Mr. Edwards's treatise on Receivers, ch. 6, p. 136 et seq. " Goodman v. Whitcomb, 1 J. & W. 689 ; Hone v. Webb, 2 Edw. 129; Garretson v. Weaver, 3 Edw. 385 ; 3 Daniell Ch. Pr. (Perkins's ed.), 1966, 1967; 1 Barbour Ch. Pr. 662; Smith v. Jeyes, 4 Beavan, 503. Whore application is made for the appointment of a receiver, on a bill filed for the dissolution of a subsisting partnership, before answer and final decree, it has been held in Pennsylvania that it will be granted only under circumstances which would authorize a decree for dissolution ; and when it is apparent that a dissolution will be decreed on the ground of some breach of contract or duty, a receiver will be appointed. Gowan v. Jeffries, 2 Ashmead, 296. ' 1 Swanst. 481. ' Waters v. Taylor, 15 Ves. 10; Harrison v., Armitage, 4 Madd. 143. See Skip v. Harwood, 1 Dick. 114. It is to be observed that there are cases in which Lord Eldon himself has held, that, even where no dissolu- tion is sought, the court will grant a receiver. These are where suits have been instituted to compel partners to act according to the provisions of in- struments into which they have entered ; in such cases the court will take care that the decree shall not be defeated by any thing to be done in the CH. III.] LEGAL AND EQUITABLE REMEDIES. 345 is reported, that, upon a .motion by a partner for a receiver dur- ing the partnership, by reason of his copartner having embezzled the partnership funds, the court thought that the receiver of the stock of a subsisting partnership, where the trade is going on, could not be appointed unless upon the very grossest abuse, for it must destroy the trade. ^ § 354. Where a dissolution is intended, or has already taken . place, a court of equity will appoint a receiver, provided there be some breach of the duty of a partner, or of the contract of partnership.^ Thus, if, in breach of moral obligation, one part- mean time, and will appoint a receiver to protect the property. Const v. Harris, Turn. & R. 496 ; 3 Daniel Ch. Pr. (Perkins's ed.), 1967. In Fair- thorne u. Weston, 3 Hare, 387, Sir James Wigram, Viee-Chancellor, after a full examination of the subject, held that a bill for a partnership account and a receiver, during the existence of a partnership entered into for a cer- tain period is not demurrable merely on the ground that a dissolution is not prayed. ' Oliver V. Hamilton, 2 Anst. 453. One would have thought that em- bezzlement w^s sufficiently gross. ' Harding v. Glover, 18 Ves. 281 ; Estwjck v. Cpnningsby, 1 Vern. 118 ; Henn u. Walsh, 2 Edw. 129; Gowan v. Jeffries, 2 Ashmead, 296; Story Partn. §§ 228-231 ; Law v. Ford, 2 Paige, 310. In New York it is a mat- ter of course to appoint a receiver, if the parties cannot agree among them- selves as to the disposition and control of the property, upon a bill filed by one of the partners to close up the partnership concern. Marten v. Van Schaick, 4 Paige, 479. See Innes v. Lansing, 7 Paige, 583. So, a receiver will be appointed as a matter of course, where either partner has a. right to dissolve the partnership, and the articles of partnership do not provide for the settlement of the concern, upon a bill filed for the purpose. Law v. Ford, 2 Paige, 310. In Skip v. Harwood, a receiver was appointed of the brewery. " It was ordered that it should be referred to the master to ap- point a proper person to be a receiver of the stock, goods, &c., of the brew- ing trade, and the debts due to the partnership. That the defendant be restrained from receiving any debts due or to become due in the said trade. That the master do allow the receiver a reasonable salary for his care, he giving security, &e. That such receiver do act as broad clerk in the said brewing trade, and collect and get in the debts according to the custom and usage of the trade, and out of the money to be received on account of the said debts, &c., that the said receiver do pay the excise and the charges, &c., in the said brewing trade. That the receiver be at liberty to bring actions for such debts as are now or shall become due, as occasion shall require ; and the persons in whose names such actions shall be brought are to be indemnified against any costs and damages on account thereof, out of the 346 MUTOAL KISHTS OF PAKTNBKS. [BOOK II. ner unjustly takes possession and refuses to give security to Ms copartner for his share of the stock, moneys, and securities,' or if he in any respect behaves unrighteously against the interest of the other partner, a receiver will be appointed.^ So, also, if, in breach of the contract of partnership, he carries on the trade with stock, goods, and efifects in the said trade. The stock, goods, and money in the hands of the receiver to be applied as the court shall direct. The books relating to the trade to be in his custody. In the mean time the defendants to be restrained from alienating, disposing, or removing any of the utensils or dead stock belonging to the said trade." K. L. 1748, B. 517. Where it is necessary to preserve the good will of the business, the receiver may be directed to carry it on, under the direction of the court, until a sale can be effected. Marten v. Van Schaick, 4 Paige, 479. A receiver may be appointed of a steamboat, where the owners dispute and require the court to settle their rights ; and such receiver can be directed to run the boat. This was done for two years in the case of the steamboat Ontario; Crane u. Ford, 1 Hopkins, 114; but the court observed, that it was highly inconvenient and unfit that, such operations should be conducted under the direction of the court for so long a time ; and an order for a sale was made. The practice of the English Chancery, to refei; the appoint- ment of a receiver to a, master does not prevail in Pennsylvania, but the court acts directly on nominations of persons for the office made by the par- ties. Gowan t>. Jeffries, 2 Ashmead, 296. 1 Peacock v. Peacock, 16 Ves. 49 ; Milbank v. Eevett, 2 Mer. 405. But where one partner has the partnership effects in his own hands, and the other does not object to such possession, there can be no ground for a re- ceiver. Smith V. Lowe, 1 Edw. 33. ^ " If partnex's quarrel, and one of them behaves unrighteously against the interest of the other, a receiver will be appointed. But if partners quarrel, a receiver will not merely on that account be appointed." D. Lord Eldon, Texiere v. Da Costa, in Chancery, Nov. 1815, Cooke's MSS. ; Henn V. Walsh, 2 Edw. 129. Where it appeared that a partnership was insolvent, and that the plaintiffs, who were partners, were excluded from their full share in the management of the concern, and the defendant, who was the acting partner, neglected to keep proper books of account, which he was I'equired to do by the articles of partnership, as well as to keep them free and open at all hours to the inspection of the plaintiffs, who were refused access to them ; the court, on motion, appointed a receiver, before answer and final decree, and on final hearing decreed a dissolution of the partner- ship. Gowan v. Jeffries, 2 Ashmead, 296. In Williamson v. Wilson, 1 Bland, 423, it was held that a receiver may be appointed at the instance of a partner, alleging that the firm is insolvent, and that his copartners are, wasting the effects. The remarks of Mr. Chancellor Bland in this case are worthy of an attentive consideration. CH. III.] LEGAL AND EQUITABLE REMEDIES. 347 the partnership effects on his separate account after the dissolu- tion,i and thus, or in any other manner, excludes his copartner from that share to which he is entitled in winding up the concern, a receiver -mil be appointed.^ § 355. On these latter considerations a receiver was appointed in the case of Wilson v. Greenwood.^ There, certain partners had entered into an agreement, by which, upon the bankruptcy of one of them, his share was to be valued and assigned to the remaining partners, for a consideration payable by instalments, and upon the footing of this arrangement the remaining partner continued to trade with the partnership effects ; upon a bill filed by the assignee of the bankrupt partner against the solvent part- ner, praying for a sale of the partnership effects, a division of the proceeds, and a receiver. Lord Eldon granted a receiver upon motion made before answer ; observing that the court would here apply the principle on which it proceeds in all cases where some members of a partnership seek to exclude others from that share to which they are entitled, either in carrying on the concern, or winding it up when it becomes necessary to sell the property.* In this case, there being no imputation of misconduct, or suspicion of insolvency against the partners defendants, one of them, with the consent of the plaintiffs, was made receiver, but without salary and upon giving security for the management, &c.^ ' Harding v. Glover, supra. ' Edward's Receivers, 151. The dissolution which takes place on the refusal of an appointee under a will to become partner is clearly not a dis- solution arising from the exclusion of the appointee by the surviving part- ners, and will therefore be no foundation for a receiver. Kershaw v. Mat- thews, 3 Kuss. 52. ' 1 Swanst. 483. * Wilson V. Greenwood, 1 Swanst. 471. The principle on which a re- ceiver is appointed by a court of equity, in the case of a dissolution of the partnership, and a disagreement between the partners as to the present dis- position of the joint estate, is said to be because that each partner has an equal right to and control of the business and effects, and the exclusion of a partner from the full share of management is the strongest ground for ap- pointing a receiver. Gowan v. Jeffries, 2 Ashmead, 296. ' In a case where one partner was appointed receiver, and used the money of the concern in his own trade, and made profits, the other partner •was held not entitled to a share of the profits. Whitesides v. Lafferty, 3 Humph. 150. 348 MDTEAL RIGHTS OF PARTNERS. [bOOK II. § 356. The same rules which prevail respectiag the appoint- ment of a receiver, in a suit between partners, are applicable in a suit between the representatives of a deceased partner and the surviving partner. However, in the case of Hartz v. Schrader,i where the bill was filed by the administrator of a deceased part- ner against the surviving partner, and a motion was made before answer to restrain the defendant from disposing of the joint stock, and receiving the outstanding debts, and for a receiver, and the affidavit stated, according to the information and belief of the deponent, " that the defendant is in embarrassed circumstances, and at present imprisoned in Newgate for a separate debt, and now expends the joint stock or the moneys received by him for the outstanding debts in the maintenance of himself and his family, and not in discharge of the debts due from the partnership ; " Lord Eldon made the order for an injunction, but refused it as to a receiver. § 357. Where all the partners are dead, and a suit is instituted between their representatives, a receiver will be appointed as a matter of course. For, as Lord Kenyon observed, " where there is a copartnership there is a confidence between the parties, and if one dies, the confidence in the other partner remains, and he shall receive ; ^ but where both are dead, there is no confidence between the representatives, and therefore the court will appoint a receiver " 3 § 358. It should seem that courts of equity will sometimes empower the receiver to sue for debts due to the partnership, upon motion founded on affidavits that the suit will probably be attended with success.* But in a case in which one partner, in a > 8 Ves. 317; 2 Hov. Supp. 106. ^ Where one of the partners survives, he settles the affairs of the concern ; and the business will not be taken from him, and a receiver appointed, un- less confidence be destroyed by his mismanagement or improper conduct. 3 Kent Com. 63 ; Evans v. Evans, 9 Paige, 178 ; 3 Daniell Ch. Pr. (Per-, kins's ed.), 1968, 1969. If the surviving partner wastes the funds, the court ■will, on a proper application, protect the estate of his deceased partner, by obliging him to give security, or will appoint a receiver. Higginson v. Air, 1 Dcsaus. 429. So, a receiver will be appointed where the surviving part- ner insists on continuing the partnership with the assets of the deceased partner. Madgwick v. Wimble, 6 Beavan, 495. ' Phillips V. Atkinson, 2 Bro. C. C. 272 (Perkins's ed.), notes (1) and (a). ' Estwiok V. Conningsby, 1 Vern. 118 ; Dacie v. John, M'Clel. 575. CH. III.] LEGAL AND EQUITABLE REMEDIES. 349 suit against Ms copartner, moved that the receiver might file a bill against the agent of the partners, Lord Eldon refused the motion to the extent prayed for, but directed a reference of the master to inquire whether the proposed suit was beneficial to the parties.! In all urgent cases a receiver and manager may be moved for on affidavit before answer.^ SECTION vn. OF THK PLEADINGS IN EQUITY BETWEEN PAETNEES. § 359. Having already considered the equitable rights between partners, we have necessarily noticed the various Mnds of relief which may be prayed for by a bill filed between them in a court of equity. "We have seen that a bill will lie for the specific per- formance of a partnership agreement,^ for the enforcement by injunction of the rights of a partner under a series of breaches of covenant committed by his copartner,* for an account under a particular breach of covenant,^ for a dissolution and general ac- count of the partnership,^ and, concurrently with the relief last mentioned for a sale of the partnership effects,^ for an injunction from receiving the partnership moneys and negotiating the part- nership securities,^ and for a manager or receiver.^ § 360. To these various heads of equity may be added those which arise in cases of fraud in mutual partnership transactions. Thus, it has been held that a person who has been induced by fraudulent representations to enter into partnership may file a biU * Musgrave «. Medex, 3 Ves. & B. 167. ' 1 Swanst. 475 ; Duckworth v. Trafford, 18 Ves. 283 ; Gowan v. Jeffries, 2 Ashmead, 296. In this last case, it was held that, as a general rule, a receiver -will not be appointed without notice ta the parties interested ; but to this principle there is exception, as where irreparable injury would be sustained by the delay. See. Williamson v. TViIson, 1 Bland, 481 ; People v. Norton, 1 Paige, 17. ' AntBy^l 247, 248. * Ibid. ^ 5 jinte, § 249. » Ante, § 298. ' Ante, § 307. 'Ante, § 340. » Ante, § 353. 30 350 MUTBAIi EIGHTS OF PARTNERS. [BOOK II. for a return of the premium,^ or for an account and receiver,^ and that the partnership may be declared void.^ So, it seems clear that in many cases a bill may be filed by one partner for the de- livery up of a false instrument executed by the other partner, on which the partnership might be sued, even though unsuccessfully, at law.* Lord Thurlow, however, refused to extend this doctrine to the case of a promissory note, alleged to have been made in the name of the firm after the dissolution of p.artnership. The bill prayed that the note might be delivered up to be cancelled, > Per Lord Eldon, Tattersall v. Groote, 2 Bos. & Pull. 131 ; Pillans v. Harkness, CoUes P. C. 442 ; Hamilton v. Stokes, Daniell, 20 ; Evans v. Biok- nell, 6 Ves. 1 74. And in a case of this sort, in the event of the insolvency of the defrauding partner, the amount of the premium paid to him is a debt provable against his estate in competition ■with his separate creditors. Ex parte Turquand, 2 M. D. & D. 239, and see Bury v. Allen, 1 Colles, 689. As to the remedy in cases where a premium has been paid, and the part- nership has been dissolved before the time contemplated, vrithout any fraud, see 1 Lindley Partn. 59 et seq.; Akhurst v. Jackson, 1 Swanst. 85; Hamil V. Stokes, Daniell, 20 ; Hirst v. Tolson, 2 Mac. & G. 134 ; Ex parte Bayley, 9 B. & C. 691 ; Astle v. Wright, 23 Beavan, 77 ; Freeland v. Stansfield, 2 Sm. & G. 479 ; Eeatherstonhaugh v. Turner, 25 Beavan, 382. ^ Ex parte Broome, 1 Eose, 71. Lord Erskine, however, was of opinion that such a question would be more properly tried at law in an action for damages ; and at all events, that if the fraud charged by the bill was not most fully made out by evidence, the bill should be dismissed, with costs. His Lordship accordingly adopted that course in Clifford v. Brooke, 13 Ves. 132. Upon this case Mr. Hovenden observes, that its circumstances are dis- tinguishable from those alleged in Ex parte Broome, and that, though in the last-named case a bill was sustained on the ground of fraud, the relief there prayed was not merely satisfaction for money advanced, but the prayer was extended to other relief, of a nature which a court of equity alone could give. 2 Hov. Supp. 327. In Clifford v. Brooke, the prayer seems to have been for mere satisfaction of the sum advanced. ^ Courts of equity will declare partnerships utterly void ah initio, where there has been fraud, imposition, misrepresentation, or oppression in the original agreement. Howell v. Harvey, 5 Ark. 278 ; Story Partn. §§ 6, 232, 285 ; Gow Partn. (3d ed.), 107 ; per Lord Eldon in Tattersall v. Groote, 2 Bos. & Pull. 131. They wiU also interpose and restore the injured party to his original rights and property, as far as is practicable. Story Partn. § 232; Oldaker v. Lavender, 6 Sim. 239; Jones v. Yates, 9 Barn. & Cres. 532. * See Jackman v. Mitchell, 13 Ves. 581 ; Mayor of Colchester v. Lowten, 1 Ves. & B. 244. CH. III.] LEGAL AND EQUITABLE REMEDIES. 351 or the plaintiff's name erased. Lord Thurlow said, that in de- creeing such relief he must determiae that, wherever one party hath an instrument upon which he cannot maintain an action at law, he must be decreed to give it up ; and that the bent of his inchnation was against laying down the rule to this extent.^ ' Ryan v. Maokmatli, 3 Bro. 15. And it should seem that, upon the same principles, a court of equity will refuse an injunction to restrain the use of the partnership name after the dissolution. In both cases a successful de- fence may be made at law. Opinions on this point appear to differ. See D. Sir Samuel Romilly, arg. 13 Ves. 585 ; D. Sir John Leach, 3 Russ. 432, line 3 ; and the case of Hodgson v. Murray, 2 Sim. 515 ; 3 Sim. 283 ; Hawk- shaw V. Perkins, 2 Swanst. 543. Mr. Justice Story, in reference to the above suggestion in this note, says: "Mr. CoUyer seems to think that a court of equity would refuse an injunction to restrain the use of the partner- ship name by one partner after a dissolution ; and he founds himself upon the doctring of Lord Thurlow in Ryan v. Mackmath, that a court of equity would not decree a written- instrument to be delivered up and cancelled, upon which no action could be maintained at law. Lord Thurlow's opinion upon the general doctrine seems now abandoned ; and the contrary rule as to written instruments generally established." See the notes to Ryan v. Mackmath, 3 Bro. C. C. (Perkins's ed.), 15-19; Hamilton v. Cummings, 1 John. Ch. 520-524 ; Simpson v. Howden, 3 Myl. & Cr. 104, 105 ; Piersall V. Elliott, 6 Peters, 95 ; Duncan v. Worrall, 10 Price, 31 ; Pettit v. Shep- hard, 5 Paige, 493 ; Torrey v. Buck, 1 Green Ch. 367 ; Jones v. Perry, 10 Yerger, 59 ; Thomas v. Graham, 1 Paige, 384 ; Leigh v. Everhart, 4 Mon- roe, 380 ; M'Meekin v. Edmonds, 1 Hill Ch. 295 ; 2 Story Eq. Jur. §§ 699- 702, and the cases there cited. " But, as between partners, the doctrine of Lord Thurlow would seem (even if it were admissible in , common cases) to be unsatisfactory and inconsistent with sound principles ; for every such use of the partnership name after the dissolution may expose the other parfc^ ners to the hazard of a suit at law, and perhaps to a recovery against them, where actual knowledge of the dissolution could not be brought home to the holder, if it be a negotiable instrument. But see Webster v. Webster, 8 Swanst. 491, note, and Lewis v. Langdon, 7 Sim. 421." In Hamilton v. Cummings, 1 John. Ch. 517, Mr. Chancellor Kent held, that a court of equity has power to order a bond or other instrument to be delivered up to be cancelled, whether such instrument is or is not void at law, or whether it be void on the face of it, or by matter shown by the proofs in the cause ; but the exercise of this power rests in the sound discretion of the court, and is regulated by the circumstances of each particular case. Referring to the case of Ryan v. Mackmath, the Chancellor remarked : " Sir Samuel Rom- illy, in citing this case, in 13 Ves. 584, observed that the decision was ap- proved of at the time, as the note was void, not upon the face of it, but from collateral circumstances; and in Newman v. Miller, 2 Ves. jun. 483, notwithstanding this case of Ryan v. Mackmath was mentioned, Lord Lough- 302 MUTUAL EIGHTS OF PABTNERS. [bOOK II. § 361. To a bill for an account of partnership transactions, all the partners should be parties.^ To a bill filed for payment of a share in a partnership adventure, all the parties having shares must be parties .^ In a bill filed by a partner in respect of a fraud committed against him by his copartner and a third person, the latter should be joined as a defendant, if rehef is sought against his acts; as where it is necessary that he should dehver up a borough ordered a bill of exchange, avowedly given by one partner in the name of the firm for his private debt, to be delivered up, with costs, without even waiting to have its validity tried at law, and he did this on the ground, that the evidence was clear and decisive against the bill, and that the payee took it knowing it to be for a private debt, and that there was no need of a verdict to satisfy the conscience of the court. But the subsequent cases of Franco v. Bolton, 3 Ves. 368, and of Gray v. Mathias, 5 Ves. 286, are cal- culated to throw doubt once more on the exercise Of this power." " The equity power was afterwards asserted by Lord Eldon, in Bromley v. Hol- la,nd, 7 Ves. 3, and he dwelt much on the question of jurisdiction, and did not concur in the decision in Franco v. Bolton." " In Jaokman v. Mitchell, 13 Ves. 581, the equity jurisdiction was again freely exercised." "It is every day's practice, as the counsel observed, in French v. Connelly, 2 Anst. 454, to order instruments to be delivered up, of which, a bad use might be attempted to be made at law, although they could not even then entitle the holders to recover." ' Thomas v. Leigh, 2 Ves. 312; Longe v. Younge, 2 Sim. 369; Mitf PI. 164 ; Story Eq. PI. ch. 4, §§ 167, 218 ; Calvert on Parties, ch. 3, sec. 19 ; Waggoner v. Gray, 2 Hen. & Munf 603 ; Harvey v. Bignold, 8 Beavan, 343 ; 1 Daniell Ch. Pr. (Perkins's ed.), 263, 264 ; Story Eq. PI. § 98 ; Good V. Blewit, 13 Ves. 397 ; West v. Randall, 2 Mason, 193, 19,4. If a necessary party will not consent to be made a plaintiff, though in interest on the same side as that of the plaintiff, he may be made a defendant. Fallowes i\ Wil- liamson, 11 Ves. 313; Leigh v. Thomas, 2 Vez. 312, 313; Story Eq. PI. § 167, note. There is an exception in the case of a suit brought against. a, partnership, where there is a dormant partner ; for the plaintiff has his elec- tion to make him a party or not. Hawley v. Warner, 4 Cowen, 717 ; Ex parte Hodgkinson, Cooper Eq. PI. 99 ; Ex parte Norfolk, 19 Ves. 457 ; Story Eq. PI. § 167, note. So, also, where the parties are numerous, a suit may be brought on a sus- pension or dissolution of a partnership by a bill for an account in the name of a part of the number on behalf of themselves and the others ; but if the bill, prays that the partnership may be dissolved, all must be parties. Decks V. Stanhope, 14 Sim. 57 ; Walworth v. Holt, 4 Myl. & Craig, 619. ' Ireton v. Lewis, Rep. Temp. Finch, 96. See 1 Daniell Ch. Pr. (Per- kins's ed.), 286-292 ; Mande v. Rodes, 5 Dana, 144. CH. ni.] LEGAL AND EQUITABLE REMEDIES. 353 fraudulent instrument,^ or that should be restrained from paying money to the fraudulent partner,^ or from indorsing and negotiat- ing a partnership bill which he has fraudulently taken from such partner.^ In a bill by partners against a copartner, to have the benefit of a fraudulent transaction clandestinely committed by the latter, not only they who were partners at the time of the fraud and have since retired, but they also who have become partners since the fraud, should be plaintifis, if they share by agreement the stock, profits, and benefits of the old partnership.* And, gen- erally, all persons who have such an interest in the matters 'in litigation as that their rights may be affected by the decree should strictly be parties to the suit.^ Hence, when partnership stock is standing in the name of one of the defendant partners, the Governor and Company of the Bank of England must be made parties to the suit, in order that they may be restrained from transferring the stock.^ So, also, where the bill prays for an in- junction to restraia execution against the partnership effects, the sheriff should be made a party.'' § 362. When a partner, plaintiff or defendant, becomes bank- rupt pending a suit between them for an account, the suit becomes defective, and the assignees must be brought ^)efore the court by supplemental biH.^ When a partner, plaintiff or defendant, dies pending a suit between the partners for an account, the suit be- ' Ryan v. Mackmath, 3 Bro. 15. ^ Master v. Kirton, 3 Ves. 74. See Alsager v. Eowley, 6 Ves. 748 ; Duff V. East India Co., 15 Ves. 198. ' Hood V. Aston, 1 Euss. 412. * Fawcett v. Whitehouse, Buss. & M. 143. " Lub^ Eq. PI. 282 ; 1 Daniell Ch. Pr. (Perkins's ed.), 240, 241, and cases cited in note ; Wendell v. Van Rensselaer, 1 John. Ch. 349 ; Chand- ler V. Chandler, 4 Pick. 78. The exceptions seem to be, where the interest of the party is very remote, or his rights depend upon the establishment of prior claims, or there is already before the court a person competent to pro- tect them. Lube Eq. PI. 282. And see Mitf. PI. 165. ' Vulliamy v. Noble, 3 Mer. 593 ; Toulmin v. Copeland, 6 Price, 405 ; Scott V. Bank of England, 2 You. & Jerv. 327. ' Bevan v. Lewis, 1 Sim. 376. See ante, § 340, and note, as to enjoining an execution in such case. ' See Murray v. Murray, 5 John. Ch. 60, 70. If, upon the bankruptcy of one of several plaintiffs, the cause be not proceeded with, the defendant may obtain the usual order to dismiss for want of prosecution. Caddick v. Mas- son, 1 Sini. 501. 30* 854 MUTUAL EIGHTS OF PAKTNERS. [BOOK II. comes to that extent defective, and can only be continued by a revivor as to tte representatives of the deceased party.^ § 363. After the bankruptcy of a partner, a bill for an account may be filed by the assignees against the solvent partners,^ or their representatives,^ and the bankrupt partner.* Geherally speaking, the bankrupt himself cannot file a bill relating to his estate after the bankruptcy.^ But it is evident that there may be excep- tions to this rule. Thus, upon the bankruptcy of a firm, it seems clear that any one of the bankrupts may file a bUl against a cred- itor and the assignees for an account, provided there be specific charges of fraud on the part of the creditor, and of eoUusion on the part of the assignees, and likewise of a refusal by the latter to institute a suit against the creditor for the benefit of the plain- tiff.^ It has likewise been laid down, though the point was not 1 Lube Eq. PI. 285 ; Boddy v. Kent, 1 Mer. 364 ; Fallowes v. William- son, 11 Ves. 306. " 1 Swaust. 471. ' 2 Mer. 119. In West v. Skip, a cross-bill was filed by the assignees of Kalpb Harwood against Skip and the execution creditors of the partnership. The bill prayed, — " That the said defendants may account with and deliver to the plaintiffs the possession of the said partnership brewhouse, utensils, stock, debts, and effects of or belonging to the bankrupt's estate, and may account for and pay to the plaintiffs all such money, notes, and effects, as they or the said receiver have or hatli received by and out of the same, that so they may be sold, disposed of, or applied to or for the benefit of the plaintiffs, and of such other creditors of the said bankrupt, who have already proved their debts, or shall seek relief under the said commission ; or in case any of the defendants have a right to a priority to the plaintiffs and the rest of the said bankrupt's joint creditors, and to have a satisfaction of any of the said defendants' demands, then that an account may be taken of such demands, and that the residue of the said bankrupt's estate and effects, over and above what would satisfy such demands, may be applied to satisfy the plaintiffs, and other the joint creditors under the said commission ; and that in the mean time, and whilst such accounts shall be taken, the plaintiffs may be at liberty to sell and dispose of, receive, and get in all such the said bank- rupt's estate and effects ; and that the said receiver may deliver over to the plaintiffs all the said bankrupt's estate and effects, which came to his hands, custody, or power as receiver of the said partnership estate," — and for gen- eral relief. E. L. 1 748, B. 618. * SeepT)s(,§364. ' Co. B. L. 213, 7th ed. ; Tarleton v. Ilornby, 1 You. & Coll. 172 ; 1 Dan- iell Ch. Pr. (Perkins's ed.), 70-72. ' Benfield v. Solomons, 9 Ves. 77 ; 1 Daniell Ch. Pr. (Perkins's ed,), 71, 72. But see S Madd. 158. CH. in.J LEGAL AND EQUITABLE REMEDIES. 855 expressly decided, that a bankrupt may file a bill for an account and an injunction to restrain proceedings at lav, without making his assignees parties to the suit. In the case which gave rise to this opinion, an action had been brought against the bankrupts by certain persons claiming to be creditors, but who it seems had had partnership dealings with the bankrupts, and who, as alleged by the bankrupts, would have been found indebted to them on a balance of the accounts. To a bill filed by the bankrupts against the plaintifis at law for a discovery, an account and payment of the balance, an injunction and general relief, the latter pleaded the bankruptcy of the plaintiffs in equity as a bar to the suit ; but Sir Thomas Plumer overruled the plea, observing that these de- mands arising out of partnership transactions, could not be adjusted in the action at law as a set-off; that, although the plaintiffs were not entitled to that part of the relief which sought the payment to them of what might appear due on the taking of the accounts, for that belonged to the assignees, yet he thought they were entitled to much of the rehef prayed as related to taking the accounts. This was not an objection for want of parties ; but he thought that such an objection would not have been available.^ § 364. After the bankruptcy of a partner, a bill for an account may be sustained by the solvent partners against the assignees of the bankrupt; and it is clear that in many cases the bankrupt may be joined as a defendant. Thus it has been laid down, that although a bankrupt, who is made party to a bill against his assignees touching his estate, may demur to the relief, because all his interest is transferred to his assignees, yet it has been generally understood, that, if any discovery is sought of his acts before he became a bankrupt, he must answer to that part of the bill, for the sake of discovery, and to assist the plaintiff in obtain- ing proof; although his answer cannot be read against his as- signees.2 And this will be stiU more essential, where the bank- rupt is charged with gross acts of fraud.^ Lord Eldon, likewise, » Lowndes u. Taylor, 1 Madd. 423 ; 2 Rose, 365 ; 1 Daniell Ch. Pr. (Per- kins's ed.), 69, 70. ^ Mitf. 161 ; Robinson v. Field, 5 Sim. 14. But, generally, either to a bill for relief, or to a bill for discovery in aid of an action, a mere witness cannot be made a party. 1 Daniell Ch. Pr. (Perkins's ed.), 180, note, 343 and note, and cases cited. See 7 Ves. 287. ' Hamilton v. Stokes, 4 Price, 161 ; Daniell, 20. In this case the bank- 356 MUTUAL EIGHTS OF PARTNERS. [BOOK II. has expressed an opinion, that it might be necessary to make a bankrupt a party, in order to enable the plaintiff to frame the interrogatories on which he was to be examined as a witness.^ And in the case of Binford v. Dommett,^ the bankrupt partner was made a co-defendant to a bill filed by the solvent partner against the assignees of the bankrupt for an account, the latter being likewise examined as a witness to prove the partnership.^ ,§ 365. But, although it may be laid down as a general rule, that all persons materially interested, in the subject ought to be parties to a suit, however numerous they may be,* yet, in general, in a bill founded on a contract it is only necessary to make those persons parties who are parties to the contract.^ Where, there- fore, an agreement for a lease had been made with one of two partners, and there was no evidence that the lessor knew that it was on the partnership account, upon the death of the intended lessee it was held that a bill could not be maintained by the sur- viving partner against the lessor, to restrain the latter from grant- ing a lease to the executors of the deceased, there having been no contract between the lessor and the surviving partner ; but it was held, that such surviving partner might file a bill to restrain the executors from disposing of the lease, if the lessor should grant one, except for partnership purposes.® Upon the same prin- ciples, except in cases of collusion, a debtor of the partnership ought not to be made a party.'' And clearly, where there is a rupt had fraudulently induced tte plaintiff to become a partner, and taken a bond from him for payment of money by instalments, and then procured a joint commission to be sued out. The bankrupt, the assignees, and the assignee of the bond, were made defendants, and were refused their costs. See 1 Daniell Ch. Pr. (Perkins's ed.), 229. ^ Le Texier v. Margravine of Anspaoh, 1 Ves. & B. 546, cited. " 4 Ves. 756 ; Glassford v. Jaffrey, 1 Ves. & B. 549, cited ; but see Whit- worth V. Davis, id. * The subject of making a bankrupt a party to a bill against his assignees is fully discussed in 1 Daniell Ch. Pr. (Perkins's ed.), 225-231. * Mitf. PI. 164. ^ Humphries v. HoUis, Jac. 75. See Roberts v. Great Western Railway Company, 10 Sim. 314; Patersori v. Long, 5 Beavan, i86 ; 1 Daniell Ch. Pr. (Perkins's ed.), 280. ' Alder v. Pouracre, 3 Swanst. 489. ' Ante, § 361. CH. III.] LEGAL AND EQUITABLE REMEDIES. 357 sub-partnersMp, the sub-partner ought not to be made a party to a suit for taking the accounts of the general partnership.^ § 366. Upon principles analogous to the foregoing, if there are two partners, and one of them by -will give a sum of money out of his share of the partnership effects, the executor of the partner who is dead and the surviving partner may settle the account of the effects without the legatee, for all the legatee is entitled to is to come out of the surplus which is after the account is taken.^ However, the legatee may in some instances file his bill against the surviving partners, as well as the executors of the deceased ; but this wiU be more properly considered at a future page.^ § 367. The prayer of a bill for an account of partnership transactions very frequently extends to an injunction,* and some- times to a writ of ne exeat regno. ^ Upon these two points it ought to be observed, that generally the writ of injunction will not be granted unless prayed for by a bill which is already filed ; ^ and likewise that a writ of w§ exeat regno ought regularly to be prayed for by the biU.^ Where a dissolution is intended, it ought to be prayed for ; and even where a dissolution has in fact taken place, the bill ought to pray that the partnership may be declared 1 Brown v. De Tastet, Jac. 284. See 1 Daniell Ch. Pr. (Perkins's ed.), 266. ^ Langley v. Earl of Oxford, 2 Ambl. 798, ed. Blunt. But see Newton V. Bennett, 1 Bro. 135. ' Post, Book 3, the concluding chapter. See Bowsher v: Watkins, Kuss. & Myl. 277. * See ante, § 340. ^ Generally, the application for this writ must be supported by an affida- vit, positive as to the amount of the debt. But information and belief will be sufficient in matters of pure account, as in the case of partners and ex- ecutors. Per Lord Eldon, Petrie v. Jackson, 10 Ves. 165 ; 3 Daniell Ch. Pr. (Perkins's ed.), 1931-1933 and notes; Thorne v. Halsey, 7 John. Ch. 189; Gernoe v. Boccaline, 2 Wash. C. C. 130; Gibert u- Colt, 1 Hopk. 600 ; Denton v. Denton, 1 John. Ch. 441. » 1 Daniell Ch. Pr. (Perkins's ed.), 447, 448 ; Story Eq. PI. § 44 ; Eden Injunct. (2d Am. ed.), 73, 74. ' MItf 46, Jeremy's notes. This rule, of course, cannot be enforced where the cause of the application for a ne exeat regno has not arisen at the time of filing the bill. See 1 Daniell Ch. Pr. (Perkins's ed.), 448. Under the same bill a ne exeat and an injunction may be granted. Bryson v. Petty, 1 Bland, 182. 358 MUTUAL EISHTS OF PABTNBRS. [BOOK II. to be dissolved. In a case where the bill prayed the dissolution of a parol partnership, a demurrer to such bill, alleging that the prayer was nugatory in caUing upon the court to do what the par- ties had a right to do themselves, was overruled.^ § 368. The defendant may take advantage of the want of par- ties by demurrer, if the defect appear on the face of the biU ; by plea, if it do not so appear.^ So, if parties having no interest in the suit be joined as plaintiffs, the defendant may demur or plead in like manner.^ § 369. The defendant, instead of answering, will sometimes be advised to plead in bar of the suit. Whether the plea can be made to extend to the discovery, as well as the relief sought by the bill, must depend on the circumstances of each particular case. Where the discovery sought would, if given, in no way affect the validity of the plea, the plea is a sufficient bar both to the discovery and the relief. Where, on the other hand, the discovery sought has reference to matters which would put in issue the truth of the plea, the defendant must deny those mat- ters by answer, and likewise by averments in the plea itself.* If the plaintiff believes the plea to be defective in form or sub- stance, he may take the judgment of the court upon its suffi- ciency,^ in which case it must be set down for argument.^ But, ' Master v. Kirton, 3 Ves. 74. See Miller v. Lord, 11 Pick. 11. ^ Cockburn v. Thompson, 16 Ves. 325. Story Eq. PI. §§ 541, 745 and note; Mitchell v. Lenox, 2 Paige, 281; Crane v. Deming, 7 Conn. 387; Mitford Eq. PI. by Jeremy, 220, 280. A defect of parties to a suit may be taken advantage of either by demurrer, plea, or answer. 1 Daniell Ch. Pr. (Perkins's ed.), 334, 336. On a plea for want of parties, it is discretionary in the court either to dismiss the bill without prejudice', or to give leave to amend on payment of the costs of the day. 2 Eq. Abr. 1. Miller v. M'Can, 7 Paige, 452. So, where advantage is taken of a defect of parties by de- murrer. 1 Daniell Ch. Pr. 341, note (2); Van Epps v. Van Deusen, 4 Paige, 64. * Cuff V. Platell, 4 Kuss. 242; Makepeace v. Haythorne, 4 Kuss. 244. See 1 Daniell Ch. Pr. (Perkins's ed.), 248 ; Clarkson v. De Peyster, 3 Paige, 336 ; Rowlinson v. Hallifax, 2 Sim. & Stu. 27. * See Mitf. 271, 298; James v. Sadgrove, 1 Sim. & Stu. 4 ; Moronyy. O'Dea, 1 Ball & Beat. 119 ; 1 Daniell Ch. Pr. (Perkins's ed.), 687-712. ^ Mitf. 301. As to the costs of allowing or overruling pleas and demur- rers, see Orders 45, 48, 52, May, 1845 ; 1 Daniell Ch. Pr. (Perkins's ed.), 674, note (r), 671, 676 ; 2 id. 792, 799. « 2 Daniel! Ch. Pr. (Perkins's ed.), 793, 794. GH. III.] LEGAL AND EQUITABLE EEMBDIES. 359 whether it be allowed upon argument, or replied to by the plain- tiff, and so admitted without argument,' stiU issue may be taken upon it in point of fact.^ If the defendant succeed upon this issue, the suit so far as the plea extends is barred. If he faU, he will be examined on interrogatories to supply the defect of answer.^ § 370. Where a bUl calls for an account of partnership trans- actions, and in its whole frame is adapted and confined to that object, the defendant may plead in bar that he is no partner.^ But, on the principles already stated,^ where there are facts charged in the biU as evidencing the partnership, the plea must be accompanied by an answer and discoyery as to the circum- stances so charged.^ § 371. A plea of a stated account is a good bar to a bill for an accOunt.7 But a man who pleads a stated account must show ' Gilb. For. Kom. 95 ; 2 Daniell Ch. Pr. (Perkins's ed.), 795, 796, and notes. " Mitf. 302; 2 Daniell Ch. Pr. (Perkins's ed.), 797, 798. ' Mitf. 302 ; 2 Daniell Ch. Pr. (Perkins's ed.), 798. And see Lub^ Eq. PI. 45. * Drew V. Drew, 2 Ves. & B. 159 ; 2 Daniell Ch. Pr. 700. ^ Supra. ° Sanders v. King,.Madd. & Geld. 51 ; 2 Sim. & Stu. 277 ; Yorke v. Fry, id.; 2 Daniell Ch. Pr. 700 et seq. ; Thring v. Edgar, 2 Sim. & Stu. 274 ; Everit v. Watts, 10 Paige, 82; Story Eq. PI. § 675, note (2). In Everit v. Watts, Mr. Chancellor Walworth said : " The only object in allowing the defendant to put in a negative plea in such a case is to save him the expense and trouble of a long answer and statement of accounts, which will be wholly immaterial to the plaintiff if there was no partnership. But it would- be a violation of the principle upon which this court acts, in requir- ing a discover}- of every thing which is necessary to the plaintiff's case and thereby saving the expense of procuring the attendance of witnesses to prove facts within the knowledge of the defendant, to permit the defendant, by a dry n'egative of the existence of the alleged partnership, to deprive the plaintiff of the discovery of facts stated in the bill to prove the partner- ship." 10 Paige, 84, 85. See v. Harrison, 4 Madd. 252. ' Mitf. 261 ; Taylor v. Shaw, 2 Sim. & Stu. 12 ; 2 Daniell Ch. Pr. 761* What will constitute a stated account in the sense of a court of equity is in some measure dependent on the circumstances of theA case. 1 Story Eq. Jur. § 526. A stated account properly exists only where the accounts have been examined, and the balance admitted as the true balance between the parties, without having been paid. When the balance thus admitted is paid, 360 MUTUAL RIGHTS OP PARTNERS. [bOOK II. it was in writing, and likewise the balance in writing, or at least set forth what the balance was ; ^ although, to support such a plea, it is not absolutely necessary that the account should be signed by the parties, if there be other evidence of acquiescence.^ The possession of the account for a long time by the party charged, as also the delivery of vouchers, has been held strong evidence of acquiescence.^ In a modern case, however, the possession of the account three years, without any objection made, was held not to be sufficient.* The defendant must by the plea aver that the ac- count is just and true, to the best of his knowledge and belief.^ the account is deemed a settled account. Endo v. Caleham, 1 Younge, 306 ; Capon V. Miles, 13 Price, 767 ; Weed v. Small, 7 Paige, 573 ; Story Eq. PI. § 798. ' Per Lord Hardwicke, 2 Atk. 399 ; 2 Daniell Ch. Pr. 761. The account must also be shown to have been final. Dawson v. Dawson, 1 Atk. 1 ; 2 Daniell Ch. Pr. 761. " Morris v. Harrison Colles, P.C. 157 ; 1 Story Eq. Jur. § 526 ; 2 Daniell Ch. Pr. 762, 763 ; Heartt v. Corning, 3 Paige, 666. See Jessup v. Cook, 1 Halsted, 436 ; Lamalere v. Caze, 1 Wash. C. C. 436 ; s. c. 2 P. A. Browne, 128. ° Willis V. Jernigan, 2 Atk. 251 ; Murray v. Toland, 3 John. Ch. 569 ; Wilde V. Jenkins, 4 Paige, 481 ; 1 Story Eq- Jur. § 526 ; 2 Daniell Ch. Pr. 762, 763 ; Freeland v. Heron, 7 Cranch, 147 ; Codman v. Eogers, 10 Pick. 112. In Heartt v. Corning, 3 Paige, 566, where the articles of copartner- ship required one of the partners to make an annual statement of the part- nership accounts upon the books of thfe firm, and he made such statement accordingly, it was held that the other partner would be deemed to have acquiesced in the correctness of the statement by not objecting to it within a reasonable time thereafter. See Story Partn. § 206 ; 1 Story Eq. Jur. §§ 526, 528 ; Lamalere v. Caze, 1 Wash. C. C. 436 ; Killman v. Preston, 4 Watts & Serg. 14. Where partners, by the articles, fix the rate of inter- est to be charged by them at six per cent., and a partner renders an ac- count for advances to the firm, and charges interest at ten per cent, which the acting partners receive and enter upon the partnership books, it is writ- ten evidence of their assent to that rate of interest. Willandon v. Sylves- tre, 8 Curry (Louis.), 262. * Irvine v. Young, 1 Simi. & Stu. 333, overruling Tickle v. Short, 2 Vez. 239. Silence for thirteen years in reference to a statement of an account made by one partner to another was deemed an acquiescence. Attwater v. Fowler, 1 Edw. 417. See Codman v. Rogers, 10 Pick. 112 ; Story Eq. PI. § 801 ; Cooper Eq. PI. 278, 279. ' 2 Daniell Ch. Pr. 763 ; Danels v. Taggart, 1 Gill & John. 312. In this last case it was remarked by Chancellor Bland, that, " in pleading an account stated as a bar, it is essentially necessary to set forth the particular balance found to be due." — p. 317. CH. in.] LEGAL AND EQUITABLE EEMEDIBS. 861 Moreover, the dejivering up of voucliers at the tiiiie the account was stated seems to be a proper ayerment m a plea of this nature, if the fact was such.^ § 372. The same principles which have been stated in regard to pleas of no partner, where matters are charged by the bill as evidence of the partnership, will have place in regard to a stated account. For although, if a man prefer a bill generally for an account, an account stated is a good plea ; yet, if in his bill he set forth that there was an account, and that there was a mistake, and set forth the particular mistake, there an account stated is no good plea,2 unless there be an answer as to the mistake. And if error or fraud are charged, they must, it seems, be denied by the plea, as well as by way of answer .^ "Where A. and B., partners in trade, stated their account, and A. gave B. a note for the bal- ance, but B. at the same time promised to rectify any error or mistake in the account, although B. obtained judgment against A. on the note at law, the Court of Chancery decreed a new account and payment with interest.* § 373. The court, however, is generally averse to the unravel- ling settled accounts. In Morris v. Harrison,^ it was covenanted in the articles, that the surviving partners were to save harmless from the partnership debts the executors and administrators of such partner as should die during the partnership, and were to take no advantage of survivorship, and were, within one month after such partner's decease, to render an account in writing of the trade and stock to his executors or administrators, as it stood at the partner's death. Harrison, one of the partners, died ia September, and within a month after his death his administratrix desired an account, according to the articles. An account was made out, dated the 6th January following. At tjiis period, one of the, partners who survived Harrison was abroad, and in Febru- » Mitf. PI. 260 ; 2 DanicU Oh. Pr. 763 ; Story Eq. PI. § 802 ; 1 Story Eq. Jur. § 527 ; Meeker v. Marsh, i Saxton (N..J.'), 198. ^ Anon. 2 Fxeem. 62 : Story Eq. PI. § 802 ; Cooper Eq. PI. 279, 280 ; Phelps r.-Sprpule, i Myl. & K. 231 ; 2 DanieU Ch. Pr. 764. ' Mitf. 259 ; Story Eq. PI. § 802. * Chandler v. Doirsett, Rep. temp. Finch, 431. See Walker v. Consett, Forrest, 167 ; Proud v. Coorab.es,r2 Freem. 183 ; Nels. 100. ' CoUes P. C. 157. See Sherman v. Sherman, 2 Vern. 276; Gray v. Minnethorpe, 3 Ves. 103. 31 362 MUTUAL EIGHTS OF PARTNERS. [BOOK H. ary he died, without ever having interfered in the transaction. His representative then filed a bill, impeaching the account so delivered, and praying for general aiccount of the partnership. But the Master of the EoUs held, that the account delivered to the administratrix of Harrison should stand as a stated account, with liberty to the representatives of any of the partners to sur- charge and falsify. Upon appeal to Lord Somers, and afterwards to the House of Lords, this decision was affirmed.^ § 374. The Statute of Limitations ^ bars only legal remedies ; ^ A party who seeks to impeach a settled account on the ground of error, should in his bill point out the specific errors in it. Taylor v. Haylin, 3 Bro. C. C. (Perkins's ed.), 310, and notes and cases cited; Johnson v. Curtis, 3 id. 266, notes; 1 Daniell Ch. Pr. (Perkins's ed.), 424, 425, and notes; 2 id. 762. See Union Bank v. Knapp, 3 Pick. 113. Where errors and mistakes only are shown to exist in a settled account, the account will not be opened, but the party will be permitted merely to surcharge and falsify it. 2 Daniell Ch. Pr. (Perkins's ed.), 764, and notes ; 1 Story Eq. Jur. § 523. But where fraud is proved to have taken place in the settle- ment of an account, it will be sufficient ground to open the whole account ; and this has been done by the court, though the account had been settled for twenty-three years, and the party who was guilty of the fraud was dead. Vernon u. Vawdry, 2 Atk. 119; 2 Daniell Ch. Pr. (Perkins's ed.), 764; Matthews v. Wallwyn, 4 Ves. (Sumner's ed.), 118, note (b) ; Middleditch v. Sharland, 5 id. 87, note (a) ; Botifeur v. Weyman, 1 M'Cord, Ch. 161 ; Gray V. Washington, Cooke, 321. In Parnam v. Brooks, 9 Pick. 212, it was held; that, if in a bill in equity to open a settled account the facts alleged and proved show fraud actual or constructive in the settlement, the plaintiff will be entitled to relief, notwith- standing the bill contains no direct averment of fraud. The distinction be- tween opening an account and merely giving leave to surcharge and falsify it is important ; because, where an account is opened, the whole of it may be unravelled. Osborne w. Williams, 18 Ves. 379, 382. But where a party has leave to surcharge and falsify, the burden of proof is on the party having the liberty ; if he can show an omission for which there ought to be a credit, it will be added, which is a surcharge ; or if any wrong charge is inserted it will be deducted, which is a falsification. 2 Daniell Ch. Pr. 764, 765, and notes; 1 Story Eq. Jur. § 525. The court allows greater latitude in looking into accounts between parties holding relations of trust and confi- dence than between others. 2 Daniell Ch. Pr. 764 and notes; Brownell v. Brownell, 2 Bro. C. C. 62 ; Matthews v. Wallwyn, 4 Ves. 125. " 21 Jac. 1, e. 16, s. 3. By which it is enacted that "all actions of ac- count and upon the case, other than such accounts as concern the trade of merchandise between merchants, their factors or servants, and all actions of debt grounded upon any lending or contract without speciality, shall be CH. III<] LEGAL AND EQUITABLE REMEDIES. 363 but courts of eqmty, by their own rules, independently of any statutes of limitation, give great effect to length of time, and they refer frequently to the statutes of limitation as furnishing a con- venient measure for the length of time that ought to operate as a bar in equity of any particular demand.^ They have therefore thought proper to adopt the limit of six years, in analogy to the statute .2 And accordingly the statute of Hmitations is a good plea in bar of a bill for an account.^ Where, therefore, a bill prayed an account against the representatives of a surviving part- ner, alleging the partnership to have commenced in 1788, and to have continued to 1798, without any account settled, and the part- ner died in 1806, and the biU was filed in 1808, the case was held to be within the statute.* On the same principle, the statute of limitations is a good plea in bar of a suit against the representa- tives of a deceased partner for an account, if there have been no commenced and sued ivithm six years next after the cause of sucli action or suit, and not after." The exception as to merchants applies only to running accounts, and not to any case where the account is closed and concluded be- tween the parties. Welford v. Liddell, 2 Vez. 400. ' Per Lord Eldon, 17 Ves. 96. » 1 Sim. 398 ; 2 Daniell Ch. Pr. 730, 731. ' Acherley v. Eoe, 5 Ves. (Sumner's ed.), 565, note (b), and cases cited ; Baker j;. Biddle, 1 Bald. 394, 418; Graham v. Torrance, 1 Iredell Eq. 210 ; 1 Daniell Ch. Pr. (Perkins's ed.), 622, 623, and notes; 2 id. 731 and notes and cases cited ; Parks v. Eucker, 5 Leigh, 149 ; Story Eq. PI. § 751 et seq.; Kobinson v. Hook, 4 Mason, 150 ; Stafford v. Bryan, 1 Paige, 239 ; Coulson V. Walton, 9 Peters, 82. In Massachusetts, the statute of limitations oper- ates, in cases where it applies, ex propria vigore, in equity as well as at law. Farnam v. Brooks, 9 Pick. 243 ; Johnson v. Ames, 11 Pick. 182. See Bow- man V. Wathen, 1 Howard (U. S.), 189. In Kentucky it seems to operate as a bar in equity, because it is reasonable and consistent. Grain v. Pra- ther, 4 J. J. Marsh. 77 ; M'Dowell v. Heath, 3 A. K. Marsh. 223 ; Brecken- ridge v. Churchill, 3 J. J. Marsh. 15. For a very full and learned discussion of this subject in New York, see Kane v. Bloodgood, 7 John. Ch. 90 ; in Connecticut, Banks v. Judah, 8 Conn. 145 ; in Maine, Chapman v. Butler, 22 Maine, 191. If the lapse of the period of limitation appears with cer- tainty on the face of the bill, the objection may be taken by demurrer. 1 Daniell Ch. Pr. 622, 623, and notes ; Deloraine ». Brown, 3 Bro. C. C. (Perkins's ed.), 633, notes (1) and (7) ; Story Eq. PI. §§ 503, 751 ; Bamp- ton V. Birchall, 5 Beavan, 67. The objection may also be takeri by way of answer, and relied on as a defence. Story Eq. PL §§ 751, 847 ; Van Hook V. Whitlock, 7 Paige, 373 ; 2 Daniell Ch. Pr. 818, 819. * Barber Vi Barber, 18 Ves. 286 ; Attwater v. Fowler, 1 Edw;. 417. 864 MUTUAL EIGHTS OP PAETNERS. [bOOK ll. dealings within six years before the filing of the bill, and no, ad- mission on the part of the testator or the representatives, which can take the case out of the statute.^ § 375. But as pleas of the statute of limitations are admitted in -courts of equity by analogy only, it follows that, where the cir- cumstances of a case are such as to make it against conscience to apply the rule founded upon this analogy, the court will not en- force it.^ Therefore, if a partner devises his estate for payment of his debts, and dies, the court wiU not permit his representatives to set up the statute in bar of demands which had legal existence at the time of his death ; and on a bill filed for that purpose, the partnership account must be taken.^ So, other cases might be stated in which the court would relax the general rule. On the other hand, if there have been that delay or forbearance on the part of the plaintifi", that makes it not illegal but inequitable to de- mand payment, the court will not sanction that indulgence of time which the statute gives him, but will leave him to his action at law.* § 376. In a court of equity, the exception in a statute rela- tive to merchants' accounts extends to all accounts current ; ^ and ' Ault V. Goodrich, 4 Russ. 434 ; Tatam v. Williams, 3 Ilare, 358, per Sir James Wigram, V. Chancellor; post, § 376, note. ^ Per Sir A. Hart, Sterndale v. Hankinsen, 1 Sim. 398 ; Kane v. Blood- good, 7 John. Ch. 90, 134 ; Marsteller v. Weaver, 1 Grattan (Virg.), 391. ■ Ault V. Goodrich, supra. "■ Bridges V. Mitchell, Gilb. 257. * Anon. 19 Ves. 185, cited. This exception is to be confined strictly to merchants' accounts, and to trade in merchandise. See Foi v. Fiske, 6 How. (Miss.), 328 ; Blair v. Drew, 6 N. Hamp. 235 ; Codman v. Rogers, 10 Pick. 118 ; Spring v. Gray, 5 Mason, 528 ; s. C. 6 Peters, 151. The exception of merchants' accounts does not apply to stated accounts. Toland v. Sprague, 12 Peters, 300; Sandys v. Blodwell, Wm. Jones, 401; Webber v. Tivill, 2 Saund. 124 ; Spring v. Gray, 5 Mason, 526. Nor does it apply where all the items of the account are on one side. The account must be mutual, consisting of debits and credits. Per Tindal C. J., in Cottam v. Partridge, 4 Man. & Grang. 278 ; Coster v. Murray, 5 John. Ch. 522 ; 2 Daniell Ch. Pr. 732 and note; Spring v. Gray, 5 Mason, 505, 529 ; Mandeville v. Wilson, 5 Cranch, 15 ; Fox v. Fiske, 6 How. (Miss.), 328. The question, whether the exception is to be confined to cases where there are items in the account running within six yfiarS, or is extended to cases, also, where, though the account is open, yet there has been no dealitig and no item in the account CH. III.] LEaAL AND EQUITABLE REMEDIES. 365 where accounts have remained nnsettled tkrough several succeed- ing partnerships, they will be considered, with reference to the within that time, has great weight of authority on each side. That the ex- ception is not to be confined to cases where there are items within six years, but that it entirely excludes merchants' accounts from the operation of the statute, appears to be the opinion in the following cases. Bass v, Bass, 6 Pick. 364 ; s. c. 8 Pick. 187; M'Lellan v. Crofton, 6 Greenl..308; Robin- son V. Alexander, 8 Bligh (n. s.), 352 ; s. c. 3 Clark & Fin. 717 ; Mande- ville V. Wilson, 5 Cranch, 15. That the exception applies only where there is some item of the account within six years, see Barber v. Barber, 18 Ves. 286 ; Spring v. Gray, 5 Mason, 528 ; s. c. 6 Peters, 151 ; Union Bank v. Knapp, 3 Pick. 96 ; Coster v. Murray, 5 John. Ch. 522 ; Jones v. Pengree, 6 Ves. 580 ; Crawford v. Liddle, cited 6 Ves. 582 ; Welford v. Liddell, 2 Ves. 400. Tatan v. Williams, 3 Hare, 847, was a bill in equity by surviving partners against the executors of a partner who had died thirteen years before the institution of the suit, for an account of the partnership dealings and trans- actions, charging that the deceased partner was indebted to the firm at the time of his death ; the bill was dismissed with costs, on the ground of the lapse of time ; no new liability of the former partnership appearing to have arisen or become known after the death of the deceased partner. In this case, Sir James Wigram, Vice-Chancellor, said : " The cases at law, which appear to have been commonly argued upon in this court as affording an analogy on questions between partner and partner after a dissolution of the partnership, are those which fall within the exception as to merchants' ac- counts in the statute of limitations. Now, notwithstanding the doubts which appear for a long time to have hung over the construction of the exception in the statute of limitations respecting merchants' accounts, I understand the rule at law to be now settled, that, if all dealings have ceased for more than six years, the statute (even between merchant and merchant, their factors or servants) is a bar to the whole demand, except where the proceeding is an action of account, or perhaps an action on the case for not accounting. Inglis 0. Haigh,' 8 Mee. & W. 769 ; Cottam v. Partridge, 4 Man. & Grang. 271 ; in which cases the antecedent authorities are referred to." " In this court there is direct and high authority for the proposition that a court of equity will not, after six years' acquiescence unexplained by circumstances, or countervailed by acknowledgment, decree an account between a surviv- ing partner and the estate of a deceased partner. Barber v. Barber, 18 Ves. 286 ; Ault v. Goodrich, 4 Kuss. 430 ; Bridges v. Mitchell, Gilbert Eq. Kep. 224 ; Bunb. 217 ; 15 Viner Abr. tit. Lim. E. 2, pi. 7, p. 110 ; Martin V. Heathcote, 2 Eden, 169. The authority of Barber v. Barber, and, conse- quently, the authority of the other cases, is, without doubt, much shaken by the observations of Lord Brougham in moving judgment in the House of Lords in the case of Eobinson v. Alexander, 8-Bligh (n. s.), 352 ; 3 Clark & Fin. 717." In Codman v. Rogers, 10 Pick. 112, a bill was brought by the 31* ^66 MUTUAL EIGHTS OE PAETNBRS. [BOOK II. statute, as one unsettled account against any person who was a member of all the partnerships. In Robinson v. Field,^ it ap- peared that three persons, A., B., and C, entered into partner- ship as attorneys. In 1808, A. died, leaving B. his executor and residuary legatee, and thereupon B. and C. continued the part- nership upon the same terms as before, as nearly as circumstances would permit, until the 31st of December, 1825, when their part- nership was dissolved by consent. In 1827, B. became bankrupt, and no, settlement of accounts having taken place between any of the parties, B.'s assignees, in July, 1831, filed their bill for an account of the dealings and transactions in both partnerships, from the commencement of the original partnership until the 31st December, 1825, alleging that joint and separate advances had been made by A. and B. to C, during A.'s lifetime, and that ad- vances had likewise been made by B. to C. since A.'s decease. C. then pleaded the statute of limitations to so much of the bill as related to the advances, but Sir L. Shadwell overruled the plea, on the ground that the partnership accounts could not be taken without having regard to the joint advances made by A. and B., and the advances made by B. after A.'s death, aiid, there- fore, that the plea covered too much, though possibly it might have been good as to the separate advances made by A. and B. in A.'g lifetime. § 377. A release or an award may likewise be pleaded in bar to a bill for an account ; ^ but if a release be pleaded to a bill for an account, it must be under seal, otherwise it must be pleaded as a stated account only.^ But in all cases, if there be any equita- executor of a deceased partner against the administrator of the surviving partner, founded on a supposed promise of the defendant's intestate to col- lect and account for the partnership debts. The court held that such suit did not concern merchants' accounts, and so was not within the exception in the statute respecting merchants' accounts. In Bridges v. Mitchell, Bunb. 217 ; S. C. Gilbert Eq. K. 224, the court strongly incline to the opinion, that accounts between partners were not within the exception, as partners do not deal as merchants with each other, but as one merchant with others. See also, to the same efi'ect, Coalteru. Coalter, 1 Rob. (Virg.), 7 ; and see Spring V. Grray, 5 Mason, 530 ; Forbes v. Skelton, 8 Sim. 335. 1 5 Sim. 14. « Beames PI. 218, 230 ; 2 Daniell Ch. Pr. 766. » Beames PI. 221 ; 2 Daniell Ch. Pr. 756. Whether it must be signed, see Taunton v. Pepler, Mad. & Geld. 166 ; 2 Daniell Ch. Pr. 766. CH. III.] LEGAL AND EQUITABLE EEMEDIES. 367 ble objection to the release, or to the award charged by the bill, the defendant must meet those charges in the same manner as has been alluded to in the case of other pleas ; namely, by averments in contradiction of such charges, both by the plea itself, and by an answer in support of the plea.^ The lanhrdptcy of one of the plaintiffs is a good plea in bar to a biU for an account ; for a bill cannot be sustained unless every plaintiff has some interest, legal or equitable, in the matters of the suit.^ We have seen that a covenant to refer to arbitration is not a valid defence by way of plea.* § 378. What is a good defence by plea is also good by de- murrer, if the facts appear sufficiently by bill.* Thus, where the plaintiff sought an account of partnership transactions, but it ap- peared by the biU that all accounts between the parties had ceased for more than six years, and no demand had been made during that time, a general demurrer was allowed.^ Bo, if a person be joined as co-plaintiff, who has no interest, the bill is demurrable, if that fact appear on the bill.^ Where the biU is clearly demurra- ble, the defendant ought in prudence to demur, with a view to costs. For, in two cases where the defendants might have de- murred, and the bill was dismissed. Sir John Leach refused the defendants their costs.'' § 379. If the defendant submit to answer, he must, according to modern decisions, answer fuUy.^ Therefore, if he mean to ' Beames PI. 219, 231 ; 2 Daiiiell Ch. Pr. 766. ^ Makepeace v. Haythorne, 4 Russ. 244 ; 1 Daniell Ch. Pr. 348, 350, 361. ' Ante, § 251. * See Mitf. PI. 216. ' Foster u. Hodgson, 19 Ves. 180 ; 1 Daniell Ch. Pr. 621, 622. ° Harrison v. Hogg, 2 Ves. jun. 323; Makepeace v. Haythorne, supra; 1 Daniell Ch. Pr. 348, 350, 361. See Sangar v. Gardiner, C. P. Coop. 119. ' Hill V. Reardon, 2 Sim. & Stu. 431 ; Jones v. Davids, 4 Russ. 277. « See 2 Daniell Ch. Pr. (Perkins's ed.), 826, 827 et seq., and notes ; Bank of Utica u. Mersereau, 7 Paige, 717; Desplaces v. Goris, 1 Edw. 352, 353. For cases which furnish exceptions to this rule, see 2 Daniell Ch. Pr. 826, 827. The extent of the application of this general rule has been materially curtailed by the operation of the 38th Order of August, 1841, in England. This Order has been adopted by the Supreme Court of the United States ; 44th Rule in Equity, adopted January Term, 1842; and a still further change has been effected by the 39th Rule of the Supreme Court of the United States, adopted at the same time. 368 MUTUAL EIGHTS OS PARTNERS. [BOOK II. deny the partnership, he must do so by plea, though formerly he might have used the same defence by answer, refusing at the same time to set forth any account.^ However, the defendant may by his answer decline to admit the copartnership, if the ad- mission would subject him to penalties.^ If the defendant by his answer suggests a settled account, which he is not able to prove, the court will direct an account, with liberty to the plaintiff to surcharge and falsify, if the master should find any settled ac- count.^ § 380. If one of the defendants reside abroad, and the plaintiff consent to take his answer without oath, it ought likewise to be taken without signature, though put in by his agent having a power of attorney to appear and defend suits for him.* If he be a foreigner, he ought to put in an answer in his own language,^ together with a sworn translation.^ Every defendant is entitled to put in a separate answer, although all should have but one com- mon defence.^ Where the bill calls for a discovery which the defendant cannot make completely without seeing the partnership books and accounts, which are not in his possession, but which he believes to be in the hands of the plaintiff, he must put in an answer stating to that effect, and then move that the court would stay proceedings against him for not putting in his full answer, 1 V. Harrison, 4 Madd. 252 ; Somerville v. Mackie, 16 Ves. 328 ; Ewing V. Osbaldiston, 6 Sim. 608. But see, as to the practice in the Ex- chequer, John V. Dacie, 13 Price, 632 ; Corbett v. Hawkins, 1 You. & Jerv. 425 ; Desborough v. Curlewis, 3 You. & Coll. 175. ^ Nelme v. Newton, 2 You. & Jerv. 186. ' Kinsman v. Barker, 14 Ves. 579. But generally, if the bill seek to im- peach an account which is proved or admitted, liberty will not be given to surcharge and falsify, unless specific errors be alleged. Ibid. And see 2 Bro. 62 ; 3 Bro. 266 ; ante, § 373, note ; 1 Daniell Ch. Pr. 424, 425 ; 2 id. 762 and note (1). * Bayley v. De Walkiers, 10 Ves. 441 ; 2 Hov. Supp. 232 ; 2 Daniell Ch. Pr. 844. " Hayes v. Leguin, Hogan, 274, to which, of course, and not to the trans- lation, he ought to be sworn, if sworn. » Simmonds v. Du Barre, 3 Bro. 263 ; 2 Daniell Ch. Pr. 855. As to the course to be pursued when the defendant is deaf and dumb or blind, see 2 Daniell Ch. Pr. ff55. ' Van Sandau v. Moore, 1 Euss. 441. See 2 Daniell Ch. Pr. 840 ; Story Eq. PI. § 869. But as to the costs of separate proceedings by defendants who appear by the same solicitor, see Orders, April, 1828, No. 27. CH. III.] LEGAL AND EQUITABLE REMEDIES. 369 iintil he tas been Assisted with that inspection. In such circum- stanceSy a motion hy the defendant for the production of the books and accounts, before. answer, will be reftised.^ § 381. It msty be observed, in conclusion of this section, that where a partnership is disputed, a court of equity will sometimes direct an issue to ascertain the truth ; ^ and wUl even direct the parties to be examined at the trial of such issue.^ So, where it is uncertain whether a partnership was real or nominal, an issue may be directed to try the fact.* However, unless the point is very doubtful, an issue will be refused.^ SECTION VIII. OF TORT BETWEEN PARTNERS. § 382. As wrongs unconnected with fraud in the settlement of contracts or accounts, are iu their nature personal, partners wiU have the same remedies between themselves, in respect to these matters, as other persons have. Thus, if one tenant iQ common destroy the thing in common, the other' may bring trover, for this amounts to a wrongful conversion.^ Hence, where one tenant in common of a ship took it away and sent it to the West Indies, where it was lost in a storm, Lord King left it to the jury whether ' Pickerings. Rigby, 18 Ves. 484 ; 3 Daniell Ch. Pr. 2071, 2072; Kelly V. Eekford, 5 Paige, 348. ^ Peacock v. Peacock, 16 Ves. 49 ; and see Ex parte Langdale, 18 Ves. 300; Binford v. Dommett, 4 Ves. 746. ' De Tastfet v. Bordenave, Jao. 516. See, however, as to the examination Of parties in such cases, 3 Daniell Ch. Pr. 1298. * Jacobsen v. Hennekenius, 5 Bro. P. C. 482. ^ Foster v. Hale, 5 Ves. 322 ; Metcalfe v. Royal Exch. Ass. Comii., Bar- nardist. 343. As to the constitutional right of a party to have matters of fact, alleged in the bill, and denied by the answer, tried by a jury, see 3 Daniell Ch. Pr. (Perkins's ed.), 1289, note (1) ; Marston v. Brackett, 9 N. Hamp. 336 ; Charles River Bridge v. Warren Bridge, 7 Pick. 344, 367, 368 ; Dodge V. Griswold, 12 N. Hamp. 575. » Bull. N. P. 34; Cowan v. Burgess, Cooke, 58 ; 2 Caines, 167; Tubbs V. Richardson, 6 Vermont, 442 ; Ladd v. Hill, 4 id. 164 ; Hurd v. Dariing, 14 id. 214. 370 MUTUAL BIGHTS OF PARTNERS. [BOOK II. this were not a destruction by the defendant ; and they found it so accordingly.! It has likewise been laid down, that, unless there be an authority for that purpose, either expressed or im- plied, a sale of the whole property by one tenant in common is, with respect to the other, a wrongful conversion of his undivided part.^ How far this general dictum will apply to partners must in a great measure depend on the mode, extent, and subject of their trade. ^ § 383. But although trover may be maintainable by one part- ner against another, in the case of a wrongful conversion, yet the general rule is, that one joint tenant or tenant in common cannot bring trover against his companion for a thing still in his posses- sion, because the possession of one is the possession of both ; if he do, it is good evidence upon not guilty.* ,And hence, the ^ Barnardiston v. Chapman, Bull. N. P. 34 ; S. c. 4 East, 121, cited. See Cubitt V. Porter, 2 Man. & Eyl. 267 ; Lowthrop v. Smith, 1 Hayw. 255. " Per Bayley J., 5 B. & Aid. 403. But see Co. Litt. 200, a. ' See Gow Partn. (3d ed.), 91, 92. In Wilson v. Reed, 3 John. 175, 178, Spencer J., remarked, — " That an action of trover -will lie by one tenant in common against another for a destruction of the chattel, or for its loss whilst under his management, has not been controverted ; but a distinction has been attempted between a sale of the chattels and a tortious destruction, a distinction, I think, not maintainable." " Tenants in common are not like partners ; the latter may dispose of chattels by virtue of an implied author- ity to stell, without being liable as for a tort, whilst the former cannot dispose of them without violating the right of their cotenants ; for a sale,«therefore, of a chattel, an action of trover will lie by one tenant in common against another." It seems to be well settled, that a tenant in common may bring trover against his cotenant for a conversion by a sale of the entire property held in common. Farr v. Smith, 9 Wendell, 338 ; Odiorne v. Lyford, 9 N. Hamp. 511; Thompson v. Cook, 9 South. 580; Weld v. Oliver, 21 Pick. 559; White v. Osborne, 21 Wendell, 72; White v. Phelps, 12 N. Hamp. 386. But see Tubbs.u. Richardson, 6 Vermont, 442 ; Sanborne v. Merrill, 15 Vermont, 700. The sale must, however, be such as to destroy or sever the tenancy in common. Mersereau v. Norton, 15 John. 179. A sale made by a sheriff' on an execution against one tenant in common is not sufficient. Bell V. Lyman, 1 Monroe, 40 ; St. John v. Standring, 2 John. 468 ; Mer- sereau V. Norton, ubi supra. But, as one partner has an implied authority to sell all the partnership property (Arnold v. Brown, 24 Pick. 89 ; 3 Kent Com. 44 ; Story Partn. § 94), such a sale would not be a wrongful conver- sion. Mountjoys v. Holden, Litt. Sel. Ca. 447. See Furlong v. Bartlett, 21 Pick. 401. * Bull. N. P. 34 ; Brown v. Hedges, 1 Salk. 290 ; HoUiday v. Camsell, CH. III.] LEOAL ANB EQUITABLE EEMEDIES. 371 mere taking and refusal to deKver up by one of two joint tenants or tenants in common mil not give the other a right of action against him.^ Upon the bankruptcy of one of two partners, the assignees become tenants in common with the solvent partner, his representatives, or assigns, and cannot sue any of these parties in trover for the partnership goods.^ It may here be remarked, that ejectment will lie by one partner against his copartners on a demise by him to the firm ; and that the lessees in such case can- not dispute their lessor's title on the ground of partnership." 1 T. K. 658 ; Odiorne v. Lyford, 6 N. Hamp. 511 ; St. Join v. Standring, 2 JoLn. 468 ; GUbert v. Diekerson, 1 Wendell, 449 ; Hyde v. Stone, 7 Wendell, 354; s. c. 9 Cowen, 230; Mersereau v. Norton, 15 John. 179; Furlong V. Bartlett, 21 Pick. 401 ; Cole v. Terry, 2 Dev. & Bat. 252 ; per Dewey J., arg. Weld v. Oliver, 21 Pick. 562. It has been held in America, that a surviving partner may maintain detinue against the representatives of the deceased partner for the books of account. Murray v. Mumford, 6 Cowen, 441. But see Clowes v. HaWley, 12 John. 487. One partner can- not maintain replevin against another to recover exclusive possession of part- nership property. Azel v. Betz, 2 E. D. Smith (N. Y.), 188. ' Penning v. Lord Grenville, 1 Taunt. 241. ' Fox V. Hanbury, Cowp. 445 ; Smith v. Stokes, 1 East, 363 ; Smith v. Oriel, 1 East, 868 ; Salomons v. Nissen, 2 T. K. 674. ' Francis v. Doe, 4 Mee. & W. 331. BOOK THE THIED. OF THE RELATIVE EIGHTS OF PARTNERS AND THIRD PERSONS. CHAPTER I. OF THE LIABILITIES OF PARTNERS FOR THE ACTS OF THEIR COPARTNERS. § 384. Generally, unijer the law of England one partner has an implied authority to bind the firm by contracts relating to the partnership, whether such contracts be evidenced by bare agreements, oral or written, or by negotiable securities, as bills of exchange and promissory notes.^ He may buy, sell, or pledge partnership effects, he may borrow, receive, or pay money, he may draw, indorse, or accept bills, notes, checks, and other nego- tiable instruments, and he may procure insurance for the firm, and do any other acts and enter into any contracts in reference to the business of the firm, which are incident or appropriate to such business, according to the ordinary course and usages thereof.^ It has been well observed, that the transactions of part- ' The firm, however, are not bound by entries in the partnership books ■which have not been communicated to their customer. Simpson v. Ingham, 2 B. & C. 65. ' Gow Partn. (3d ed.), 36-58 ; 3 Kent Com. 40-46 ; Story Partn. §§ 102, 126 et seq. and notes; Winship v. Bank of the U. States, 5 Peters, 529, 561-563; s. c. 5 Mason, 188, 189; Livingston u. Koosevelt, 4 John. 251 ; Etheridge v. Binney, 9 Pick. 272 ; Tapley v. Butterfield, 1 Metcalf, 515. One partner has power to transact the whole business of the firm, whatever that may be, and, consequently, to bind his partners in such transactions as CH. I.] LIABILITIES OF PARTNERS. 373 ners, in -vrliich they all severally and respectively join, differ in nothing, in respect to legal consequences, from transactions in which they are concerned individually ; but it is the capacity by which each partner is enabled to act as a principal, and as the authorized agent of his copartners, that gives credit and efficacy to the association. It may be laid down as a general rule that partners are bound universally by what is done by each other in the course of the partnership business.^ To use a strong expres- entirely as himself. This is a general power, essential to the well conduct- ing of business, which is implied in the existence of a partnership. When, then, a partnership is formed for a particular purpose, it is understood to be in itself a grant of power to the acting members of the company to trans- act its business in the usual way. If that business be to buy and sell, then the individual buys and sells for the company, and every person with whom he trades, in the way of its. business, has a right to consider him as the com- pany, whoever may compose it. It is usual to buy and sell on credit ; and if it be so, the partner who purchases on credit in the name of the firm must bind the firm. This is a general authority held out to the world, to which the world has a right to trust. Per Marshall C. J. in Winship v. Bank of U. States, 5 Peters, 561, 562. One partner may bind the firm under a penalty to observe a contract which he is authorized to enter into in its be- half. Beckham v. Drake, 9 M. & VV. 79. 1 Gow Partn. (3d ed.), 3G ; 3 Kent Com. 41 ; Watson Partn. 167. Mr. Watson (Partn. 167, 168), has remarked on this subject as follows: "Al- though the general rule of law is, that no one is liable upon any contract except such as are privy to it, yet this is not contravened by the liability of partners, since they 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 distinct parts of the country, or in different quarters of the globe. A due regard to the inter- ests of strangers is, at the same time, observed ; for where a merchant deals with one of several partners, he relies upon the credit of the whole partner- ship, and therefore ought to have his remedy against all the individuals who compose it." Story Partn. §§ 103-105. Whatever, as between the partners themselves, may be the limits set to each other's authority, every person not acquainted with those limits is entitled to assume that each partner is em- powered to do for the firm whatever is necessary for the transaction of its business, in the way in which that business is ordinarily carried on by other people. The consequences of this principle are : — 1. That if an act is done by one partner on behalf of the firm, and it 32 374 EIGHTS OF PAETNBKS, ETC. [BOOK III. sion of Lord Kenyon, — " One partner may pledge the credit of the other to any amount." The exceptions to this general rule can be said to have been necessary for the carrying on of the partnership business in the ordinary way, the firm will, prima facie, be liable, although in point of fact the act was not authorized by the other partners. 2. That if an act is done by one partner on behalf of the firm, and it cannot be said to have been necessary for the carrying on of the partner- ship business in the ordinary way, the firm will, prima facie, be not liable. In the first case the firm will be liable unless the one partner had in fact no authority to bind the firm, and the person dealing with him was aware of that want of authority ; whilst, in the second case, the firm will not be lia- ble unless an authority to do the act in question, or some ratification of it, can be shown to have been conferred or made by the other partners. See Dickinson v. Valpy, 10 B. & C. 128 ; Crellin v. Brook, 14 M. & W. 11. From this it appears, that where no actual authority or ratification can be proved, the test of a partner's authority to bind the firm is, what is neces- sary for carrying on the business of the firm under ordinary circumstances and in the usual way. This is conformable to the most recent and carefully considered decisions. The act of one partner to bind the firm must be necessary for the carrying on of its business ; by which is not meant a neces- sity arising out of extraordinary emergencies ; but that which arises out of the ordinary operations of business ; if all that can be said of an act is that it was convenient, or that it facilitated the transaction of the business of the fij-m, that is not sufficient in the absence of evidence of sanction by the other partners. See Brettel v. "Williams, 4 Exch. 630. In a case where the nature of the business was one, where there was no ne- cessity to borrow money to carry it on under ordinary circumstances and in the ordinary manner, the Court held the firm not liable for money borrowed by its agent under extraordinary circumstances, although money was abso- lutely requisite to save the property of the firm from ruin. See Hawlayne V. Bourne, 7 M. & W. 595 ; Ex parte Chippendale, 4 De G., Mac. & G. 19. This case is an authority for saying that a power to do what is usual does not include a power to do what is unusual, however urgent ; and although in the case referred to, the money was not borrowed by a partner, but by a person who was only an agent of the firm, the decision would, it is appre- hended, have been the same if he had been a partner. For, notwithstand- ing the fact that every partner is, to a certain extent, a principal as well as an agent, the liability of his copartners for his acts can only be established on the ground of agency. As their agent, he has no discretion except within the limits set by them to his authority, and the fact that he is himself, as one of the firm, a principal, does not warrant him in extending those limits, save on his own responsibility. See Ricketts v. Bennett, 4 Com. B. 686 ; Dickin- son y. Valpy, 10 B. & C. 128. The question whether a given act can or cannot be said to be necessary to the transaction of a Business in the way in which it is usually carried on, must evidently be determined by the nature CH. I.] LIABILITIES OF PARTNERS. 375 ■will be noticed in another chapter. The rule is applicable both to dormant and nominal partners.^ For, notwithstanding some few dicta which tend to a contrary doctrine,^ it is now an undoubted and universal proposition, that a dormant partner is in all cases liable for the contracts of the firm during the time that he is act- ually a partner ; ^ and we have already seen that a nominal part- ner is similarly liable during the time that he holds himself out to the world as partner.* § 385. It makes no difference, as to third persons, whether the partnership is carried on for the benefit of the partners them-- selves, or for the benefit of their cestui que trusts.^ Both the trustees and the cestui que trusts are hable. In regard to the liability of the latter, this rule has been carried so far, that, where A. took a lease of a mine for twenty-one years, and declared him- self a trustee for five persons who worked the mine in partnership, it was held that, the lessee being insolvent, the lessor might re- cover the rent from the partners for the time during which they took the profits ; they being deemed in equity in the same situa- tion as if they had been assignees of the lease.® of the business and by the practice of persons engaged in it. 1 Lindley Partn. 193, 194 ; post, § 484. ' Bank of U. States v. Binney, 5 Mason, 187, 188 ; Winship v. Bank of U. States, 5 Peters, 562, 563; Etheridge v. Binney, 9 Pick. 272; Story Partn. § 103 and note. The whole doctrine is ably summed up by Marshall C. J. in Winship v. Bank of U. States, 5 Peters (U. S.), 561-563, where he states the reasons of the general rule and the application of it to a dormant partnership. ' D. Gibbs J., Young v. Hunter, 4 Taunt. 583 ; D. Lord Tenterden, Lloyd V. Ashby, 2 Carr. & P. 138. * Hubert V. Nelson, Davies's B. L. 8 ; Hoare v. Dawes, 1 Doug. 371 ; Coope I'. Eyre, 1 H. Bl. 37 ; Robertson v. Wilkinson, 3 Price, 538 ; Wintle V. Crowther, 1 Crom. & Jerv. 316 ; U. States Bank v. Binney, 5 Mason, 176 ; Etheridge v. Binney, 9 Pick. 272 ; Winship v. U. States Bank, 5 Pe- ters, 529 ; Story Partn. § 103. The liability of a dormant partner to credi- tors may be avoided by proof of fraud in the original formation of the part- nership, if no part of the funds have been received by him. Mason r. Con- nell, 1 Wharton, 381. But actual fraud must be proved. Wood v. Connell, 2 Wharton, 542. * Ante, §§ 6, 86 et seq. * Thicknesse v. Bromilbw, 2 Crom. & Jerv. 428. » Clavering v. Westley, 3 P. W. 402. For an instance of a partner being considered at law in the light of a tenant, see Doe v. Sales, 1 M. & S. 297. 376 EIGHTS OF PARTNERS, ETC. [BOOK III. § 386. Of course, any arrangement between the partners themselves cannot limit or prevent their ordinary responsibilities to third persons, unless the latter assent to such arrangement. "Suppose a case," said Lord Tenterden, "where two persons in partnership for the sale of horses agree between themselves never to warrant any horse ; yet, though this be their course of business, there is no doubt that if, upon the sale of a horse, the property of the partnership, one should give a warranty, the other would be thereby bound." ^ Again, as we shall see presently, it is within the general authority of a partner to bind the firm by drawing, accepting, or indorsing bills of exchange in the partner- ship name. Now, even if it be agreed that a partner shall not have such authority, and he transgress the terms of the agreement in this respect, the firm will nevertheless be bound, as far as re- gards all third persons who have no notice of the arrangement.^ In the case of The South Carolina Bank v. Case,^ Crowder, Per- fect, and J. B. Clough carried on business in copartnership, as factors and commission-merchants, in England and America ; in England, under the firm of Crowder, Clough & Co. ; in' America, in the name of Clough alone. When Clough went to America, he had written instructions from his partners, one of which was : " It is understood that our names are not to appear on either bills or notes for the accommodation of others, and that they should appear as little as possible on paper at all, and then only as re- gards direct transactions with the house here." Crowder, Perfect, and Clough, in order to obtain consignments from America, made advances, or granted drafts or bills of exchange, or indorsements of them, to their , principals, on the security of the goods con- signed. In order to obtain a consignment from Weyman, of Charleston, Clough in his own name indorsed bills for him, which 1 2 Barn. & Aid. 697 ; ante, § 98, note. See Smith v. Jameson, 5 T. 'R. 601 ; Lord Craven v. Widdows, 2 Chan. Cas. 139. An arrangement of this kind by a dormant partner is not more effectual. Herbert v. Nelson, Davies's B. L. S.; Watts, Partn. 168 ; Winship v. U. States Bank, 5 Peters, 529. ^ 3 Kent Com. 41 ; Bank of U. States v. Binney, 5 Mason, 176 ; Winship V. Bank of U. States, 5 Peters, 529 ; Reynolds v. Cleveland, 4 Cowen, 282 ; Post V. Kimborly, 9 John. 489 ; Walden v. Sherburne, 15 John. 409 ; Bank of Rochester v. Monteath, 1 Denio, 406 ; Whittaker v. Brown, 16 Wendell, 505 ; ante, § 98, note. » 8 Barn. & Cress. 427 ; 2 Man. & Ryl. 459. CH. I.] LIABILITIES OF PARTNERS. 377 were to be provided for by others drawn by Weyman on Crowder, Clough & Co., in England, which were to be provided for by the proceeds of the consignment. Before the latter bills were pre- sented for acceptance, Crowder and Perfect had become bank- rupts ; it was held, that the indorsement of the bills by Clough must be considered as an indorsement by the firm, and that the bankrupts and Clough were liable as indorsers of the biUs. § 387. On the other hand, where the creditor has express notice of a private arrangement between the partners, by which either the power of one partner to bind the firm, or his hability in respect of partnership contracts is qualified or defeated ; in such case, it is clear that the creditor himself must be bound by the arrangement between the partners.^ In Minnett v. Whitney,^ three persons were in partnership as sugar-brokers ; and after the trade had been carried on some time, one of the partners gave notice of his intention to withdraw from the firm, which was agreed to. Afterwards the other partners treated with a trader for some raw sugar. The retiring partner then gave notice to the trader, that he would not be accountable for any sugars which the remain- ing partners might buy of him ; and the trader having answered that he was satisfied with the security of the remaining partners only, the retiring partner was held not Hable. So, in the case of Ex parte Harris,^ wines were ordered in the joint names of two ' Dow V. Say ward, 12 N. Hamp. 275 ; Baxter v. Clark, 4. Iredell, Law, 129 ; Ensign v. Ward, 1 John. Ca. 171 ; Boardman v. Gore, 15 Mass. 339; Bailey v. Clark, 6 Pick. 372; Story Partn. §§ 128, 129, 130; N. Y. Fire Ins. Co. V. Bennett, 5 Conn. 597, 598 ; Gram v. Cadwell, 5 Cowen, 489 ; ante, § 98 and note ; Hastings v. Hopkinson, 28 Vermont, 108. A knowl- edge in third parties of the limited nature of a partnership will be inferred froiJi circumstances ; and it seems that a publication in the newspapers of the nature of a copartnership, at the time of its commencement, is construc- tive notice to all those who may afterwards take the partnership, security. Livingston v. Roosevelt, 4 John. 251. It appeared, in the above case, that the party seeking to charge the partnership took the newspapers in whiob the notice of the partnership was published. Ibid. Third parties will be equally bound by the arrangements or agreements between partners if they have, been informed of such facts as should have led a reasonably prudent and cautious man to make inquiry. Bromley- v. Elliott, 38 N. Hamp. 303 ; Pierson v. Stieumyer, 4 Rich. 309 ; Town v. Hendee, 27 Vermont, 258. ' 5 Bro. P. C. 489 ; 16 Vin. Abr. 244. See Vice v. Fleming, 1 You. & Jerv. 227. » 1 Madd. 583. 32* y78 EIGHTS OF PAETNERS, ETC. [eOOK III. partners, A. and B. Before the delivery of them the partnership was dissolved, and the creditors had notice of the dissolution. The creditors drew a bill upon both partners for the wines ; but when it was presented at the house where the partnership had formerly been carried on, and where A., the remaining partner, carried on his separate concern, A. refused to accept the bill in the partnership firm, and accepted it only on his separate account, and in his own name, and the wines were afterwards dehvered to A. ; it was held that the delivery of the wines was made to A. only, and that B. was not hable in respect of this contract. Upon the same principle, where the creditor has express notice that, by an arrangement between the partners, one of them, though ap- pearing to the world as a partner, is not to participate in the profit and loss, and is not to be liable as a partner, the creditor will be bound by the arrangement.^ § 388. It seems, also, that the mere disclaimer by one partner of the future contracts of his copartner will be binding on third persons, whatever be the effect of such an act between the par- ties themselves, or whether it be or be not in conformity with the partnership agreement. Thus, in Willis v. Dyson,^ one of two partners sent a circular in these words : "I am sorry that the conduct of my partner compels me to send the annexed circular. I recommend it to you to be in possession of my individual signa- ture before you send any more goods." The partnership was afterwards dissolved. There appears to have been no proof of any misconduct on the part of the accused partner. But Lord EUenborough ruled, that a person who had supplied goods between the times of the receipt of the letter and of the dissolution could not charge the firm, unless he could prove some act of adoption by the partner who gave the notice, or that he derived some ben- efit from the goods. § 389. The same doctrine in reference to the right of a partner to dissent from the future contracts of his copartner, and thereby to discharge himself from liability to persons having knowledge • Alderson v. Clay, 1 Camp. 404. See Bailey v. Clark, 6 Pick. 372 ; ante, § 98 and note. But see Brown v. Leonard, 2 Chit. 1 20. = 1 Stark. 164. See also, v. Layfield, 1 Salk. 291 ; Minnet v. Whit- ney, supra; Rooth v. Quin, 7 Price, 193 ; Lord Galway v. Matthew, 1 Camp. 438 ; Johnston v. Button, 27 Alabama, 245. CH. I.] LIABILITIES OF PAKTNEES. 379 of such dissent, was maintained in Leavitt v. Peck ; ^ and it was further held in that case, that it made no diiference, in such case, that the partner dissentuig was a secret partner, and that the ex- istence of the partnership was unknown to the opposite party. Mr. Chancellor Kent says,^ that " it seems to be the better opin- ion, that it is in the power of any one partner to interfere and arrest the firm from the obligation of an inchoate purchase, which is deemed injurious." And he adds, that " if a purchase be con- trary to a stipulation between the partners, and that stipulation be made known to the seller, or if, before the purchase and delivery, one of the partners expressly forbids the same on joint account, it has been repeatedly decided that the seller must show a subse- quent assent of the other partners, or that the goods came to the use of the firm." ^ But a question has been made, whether in such a case the dissenting partner would be liable merely because the goods purchased or the fruits of the contract came to the use ' 3 Conn. 124. " 3 Kent Com. 45. ' Ibid.' See Gow Partn. (3d ed.), 52, and note by the American editor. In the case of Vice v. Fleming, 1 You. Se Jerv. 227, 230, Mr. Chief Baron Alexander said : " It is clear that the defendant might, by an absolute notice, have discharged himself from all future liability, whether he ceased or con- tinued to be a partner." Mr. Justice Garrow added : " All thS partners of a firm are liable for the debts of the firm ; but this responsibility may be limited by express notice by one, that he will not be liable for the acts of his copartners." It has, however, been questioned, whether, in a case where the partnership consists of more than two persons, the dissent of one will affect the validity of a partnership contract in the usual course of business, and within the scope of the concern, made by the majority of the firm. 3 Kent Com. 75. Mr. Justice Story seems to be of opinion, that it should not. And he puts the efficacy of the dissent in the case of Willis v. Dyson upon the fact that there were but two partners. Story Partn. § 123 and note. See also, Rooth v. Quin, 7 Price, 198 ; Kirk v. Hodgson, 3 John. Ch. 400 ; Johnston v. Dutton, 27 Alabama, 245. In Kirk v. Hodgson, it was considered that the act of the majority, done in good faith, must govern in copartnership business, and control the objections of the minority, unless special provision in the articles of association be made to the contrary. But this last decision related only to the case of the management of the internal concerns of the partners among themselves, and to that it is to be confined. 3 Kent Com. 45. Respecting the power of a majority to govern in the management of the concerns of a partnership, see ante, §§ 197, 198, and note. 380 EIGHTS OF PARTNERS, ETC. [bOOK III. of the firm. In Monroe v. Conner,^ the court held that he would not be liable merely on that ground. Shepley J.,^ remarked: " It is quite obvious that there may be a difiference between the goods coming to the use of the firm, and a benefit derived to the dissenting partner from their delivery to the firm. The bargain may have proved to be a very losing one, and this may have been foreseen by the dissenting partner, and have been the very cause of the notice ; and why should he be held to pay, perhaps from his private property, for goods the purchase and sale of which may have absorbed the whole partnership stock, when he had pro- vided against such a calamity by expressing his dissent from the contract before it was consummated ? " In this case it was de- cided that a partner who has given actual notice that he will not be holden as a partner, is not bound for debts contracted by an- other partner, after such notice, without his consent.^ Having made these preliminary remarks, we wiU proceed to examine, seriatim, the various liabihties whieh may be incurred by one partner for the acts of his copartner. SECTION I. , OP LIABILITIES UNDUE LOAHS, PUKOHASES, SALES, ASSIGNMENTS, PLEDGES, AND MORTGAGES, EFFECTED IN THE NAME OF THE FIRM. § 390. Perhaps the most remarkable instances of partnership liability are those where loans, purchases, sales, assignments, pledges, or mortgages are effected by one partner on the partner- ship account. Such transactions, if bond fide on the part of the creditor, are uniformly binding on the firm. Thus, money lent to one partner for his own expenses, while engaged in the partner- ship business, is a partnership debt.* There are also other cases, ' 15 Maine, 178. 2 15 Maine, 181. ' See Galway v. Matthew, 10 East, 264 ; Leavitt v. Peck, 3 Conn. 124 ; Gow. Partn. (3d ed.), 48, 49, 62 ; Le Roy v. Johnson, 2 Peters, 186 ; Feigley V. Sponeberger, 5 Watts & Serg. 567. * Rothwell V. Humphreys, 1 Esp. 406. The implied authority of one CH. I.] LIABILITIES OF PARTNERS. 381 in -wticli it should seem that money lent to one partner in the partnership name, and apphed to partnership purposes, -will, even at law, be considered a debt due from the partnership, although the money may not be the subject of written securities. Thus, where an action was brought against partners on certain bills of exchange, which had been indorsed by one partner, and it was doubtful whether the bills could be recovered upon as genuine bills, Bayley B., asked whether, if the case failed on the bills, the plaintiff could not recover the consideration ; and whether, if a partner borrows money in the partnership name, and apphes it to partnership purposes, the party lending the money is to act at his peril ; and the learned judge seemed to consider it as clear, that, in such case, the lender is not bound to show that the money has been applied to partnership purposes.^ § 391. If money has been actually borrowed by one partner on the credit of the firm, in the course of the business of the firm, it will make no difference in the liability of the other partners, that it has been misapplied by the borrowing partner.' So also, wh^re money has been borrowed by one of the partners, not ex- pressly on his individual credit, and it is shown that it is borrowed for and appropriated to the uses of the firm, the firm will be lia- partner to hire money for partnership purposes, in the ordinary course of trade, does not necessarily extend to the raising of money to increase the fixed capital of the firm. And a person lending money, knowing it was for that purpose, is not entitled as a matter of course to charge the other part- ners with the money so lent, unless they consented or gave some authority. Fisher v. Taylor, 2 Hare, 218. An attorney has no general authority to ob- tain loans on the credit of the firm of which he is a member, resulting from the nature of the profession. Breckenridge v. Shrieve, 4 Dana, 378. ' Thieknesse v. Bromilow, 2 C. & J. 431 ; Etheridge v. Binuey, 9 Pick. 272; Whiltaker v. Brown, 16 Wendell, 505. The difference, however, seems to be considerable between the case which was before the learned judge in Thieknesse v. Bromilow, in which a negotiable security, though of questionable validity, had been given, and that where no security beyond a mere acknowledgment is taken by the lender. In the latter case, it would depend on the special circumstances whether the firm would be bound by the act of their copartner. See post, book 3, chap. 2, sec. 2. But see Eth- eridge V. Binney, 9 Pick. 272. * Church V. Sparrow, 5 Wendell, 223 ; Onondaga Co. Bank v. De Puy, 17 Wendell, 47 ; Story Partn. § 140 ; Winship v. Bank of U. Statc*^, 5 Pe- ters, 529 ; s. c. 5 Mason, 176. See Loyd v. Freshfield, 2 Carr. & P. 325 ; Steel V, Jennings, Cheves, 183 ; Bascom v. Young, 7 Missouri, 1. 882 EIGHTS OF PARTNERS, ETC. [BOOK III. ble.^ And where the money of a third person, which is in the hands of one of the members of a partnership as a trustee or otherwise, is applied by him to the use of the firm, with the knowledge and consent of all the partners, such third person has a claim on all the partners for the money.^ In Richardson v. French,^ however, the knowledge and consent of the other mem- bers of the firm was not regarded as important. In this case, an administrator, who was a member of a partnership, applied to the partnership concern money which belonged to the estate of his intestate, and afterwards gave the note of the firm to a creditor of the intestate, to whom such money was due, in discharge of such creditor's claim on the estate of the intestate ; the firm was held bound to pay the note, although the money was not in the hands of the firm when the note was given. Hubbard J. said, that, whether the other partner was ignorant or not of the giving of the note at the time, the act of his copartner in this respect was equally binding upon him, the firm having had the money.* But if a partner borrows money on his own credit, and afterwards applies it to the payment of partnership (debts, or to other part- nership purposes, this does make the original lender a creditor of the firm.^ § 392. Again, in a very early case, it was admitted that the firm were liable for goods purchased by one partner.^ A sale ' Churcli V. Sparrow, 5 Wendell, 223. See Jaques v. Marquand, 6 Cowen, 497; Whitaker v. Brown, 16 Wendell, 505; Miller v. Manice, 6 Hill (N. Y.), 119. 2 Hutchinson v. Smith, 7 Paige, 26. See Whitaker v. Brown, 16 Wen- dell, 505 ; Jaques v. Marquand, 6 Cowen, 497. ' 4 Metoalf, 577. ' 4 Metcalf, 579, 580. See also, the remarks of Walworth, Chancellor, in Whitaker v. Brown, 16 Wendell, 509; Hogan v. Reynolds, 8 Alabama, 59. ° 3 Kent Com. 41, 42 ; Bevan v. Lewis, 1 Sim. 376 ; Jaques v. Marquand, 6 Cowen, 497 ; Green !). Tanner, 8 Metcalf, 411 ; GraefF v. Hitchman, 5 Watts, 454; Wiggins v. Hammond, 1 Missouri, 121 ; Loyd v. Freshfield, 2 Carr. & P. 325 ; Story Partn. § 140 ; Worcester Corn Exch. Co. 3 De G., M. & G. 180; Burmestor v. Norris, 6 Exch. 796; Bicketts v. Bennett, 4 Com. B. 866 ; Hawtayne v. Bourne, 7 Mees. & W. 595. See the remarks on the case of Jaques v. Marquand, in Whitaker v. Brown, 16 Wendell, 508, 509. ° Hyatt V. Hare, Comb. 383. See Gow Partn. (3d ed.), 52 ; Story Partn. §§ 102, 126 ; Winship v. Bank of U. States, 5 Peters, 561. CH. I.] LIABILITIES OF PARTNERS. 383 made to one partner, in the course and in the scope of the part- nership business, is, in contemplation of law, a sale to the partner- ship.i And the seller of the goods will not be affected by any- fraudulent intention of the purchasing partner m buymg them, ot by his subsequent misapphcation of them, unless the seller is guilty of collusion.^ § 393. Upon the same principles, if one partner, haviug pur- chased goods for the partnership, become a bankrupt, and his vendor (without notice of the partnership) stop the goods in tran- situ, such stoppage will be good against the whole firm, although they may have paid the price of the goods to the bankrupt part- ' ner. In the case of Salomons v. Nissen,^ one Hague bought 705 pigs of lead of the defendants at Liverpool, and ordered them to be shipped to Garvey & Co. at Rouen. The lead was accordingly shipped, and the bill of lading was indorsed by the defendants in blank and sent to Hague. A few days afterwards, the plaintiff gave Hague his acceptances on account of the lead to a large amount ; which acceptances were paid to the indorsees when due. Soon after the acceptances were given, the following agreement was made between Hague and the plaintiff: " That the said J. Salomons shall pay for and send in his name to Messrs. Garvey & Co., merchants at Eouen, a cargo consisting of 705 pigs of lead, to be shipped at, &c., to be sold by Messrs. G. & Co., at the best price, &c., and the net proceeds to be remitted to the said J. Sal- omons. And it is hereby agreed, that the profit and loss arising from the said cargo of lead shall be equally divided between the said E. Hague and J. Salomons." The vessel sailed with the lead for Rouen, but was forced back by stress of weather, and Hague, having become a bankrupt, and the defendants not having received the price of the goods, stopped them while on board the ship in England, and took them away. The lead not being paid for by Hague or any other person, and the defendants having ', 3 Kent Com. 44; Walden u. Sherburne, 15 John. 422, 423 ; per Brain- erd J. in Mills v. Barbour, 4 Day, 430 ; per Baldwin J. in Dougal v. Cowles, 5 Day, 515. " Bond V. Gibson, 1 Camp. 185 ; per Spencer J. in Walden v. Sherburne, 15 John. 422, 423 ; 3 Kent Com. 44, 45 ; Gow Partn. (3d ed.), 52 ; Dickson V. Alexander, 7 Iredell, 4. = 2 T. K. 674. 3S4 KlfiHTS OF PAETNEES, ETC. [BOOK III. refused to deliver it up, the plaintiff brought trover against them, but failed in his suit. Ashurst J. : " It appears, upon the con- tract, that the plaintiff made himself a complete partner with Hague, quoad this transaction, and that he also made himself the paymaster ; therefore he put himself in the place of the original consignee, and must take the bill of lading subject to the same rights. That being the case, it follows, as a necessary conse- quence, that the defendant had a right to stop the goods in transitu.'" § 394. In a very early case, " it was agreed by the court that the sale of one partner is the sale of them both ; " ^ and in more recent times the power of one partner to bind the firm by simple contract has been continually recognized in cases of sale of the partnership effects.^ It is within the general scope of partnership authority for one partner to sell and dispose of all the partner- ship goods, in the orderly and regular course of business. He may sell the whole stock in trade at once by a single contract.* And it will not invalidate the sale in such a case, though the price paid be appropriated to the payment of the private debt of the partner making the sale."* The right of one partner to dis- pose of partnership property is, however, confined strictly. to per- sonal effects, and does not extend to real estate held by the part- nership." One partner cannot convey away the real estate of the firm without special authority.^ Nor can one partner, without ' Lambert's case, Godbolt, 244. ^ M'Cullough V. Sommerville, 8 Leigh, 415. ' Arnold v. Brown, 24 Pick. 89; Tapley v. Butterfield, 1 Metcalf, 518; 3 Kent Com. 44 ; Anderson «. Tompkins, 1 Brockenb. 456 ; per Kent 0. J. in Pierson v. Hooker, 3 John. 70 ; and in Livingston v. Roosevelt, 4 John. 277; per Brainerd J. in Mills v. Barber, 4 Day, 430; Pierpont v. Graham, 4 Wash. C. C. 234 ; Kirby v. IngersoU, 1 Harr. Ch. (Mich.), 181 ; Whitton V. Smith, Freeman Ch. (Miss.), 231. * Arnold v. Brown, 24 Pick. 89. ' Per Shaw C. J. in Tapley v. Butterfield, 1 Metcalf, 518, 519; Story Partn. § 101 ; Anderson v. Tompkins, 1 Brockenb. 4.'i6, 463. » Per Shaw C. J. in Tapley v. Butterfield, 1 Metcalf, 519 ; Story Partn. § 101; Piatt V. Oliver, 3 M'Lean, 27; Galbraith v. Gedge, 16 B. Mon. 631. But a conveyance by one partner of real estate owned by the partnership, in trust to secure a creditor of the partnership, passes a good title, both at law and in equity, to an individual moiety of such estate ; and such creditor ■is entitled to priority over all other creditors of the firm. But when such CH. I.] LIABILITIES OF PARTNERS. 385 authority from his copartner, bind the firm by a contract for the sale of real estate employed in the business of the firm.i § 395. The power of a partner to dispose of the property of the firm extends to assignments of it as a security for antecedent debts, as weU as for debts theri3after to be contracted on account of the firm.2 Lord Mansfield, in a celebrated case,^ decided, that, even after an act of bankruptcy committed by one partner, an assignment bond fide of partnership efiects by the solvent part- ner to a creditor of the fitrm, in payment of his debt, was bind- ing on the firm. The assignment may be for the benefit of one creditor, or of several, or of aU the joint creditors, where all are admitted to an equal participation.* But in Havens v. Hussey,^ it was held that the imphed authority arising from the ordinary contract of copartnership does not authorize one partner, without the consent of the others, to appoint a trustee for the partnership, by a general assignment of the partnership effects, for the benefit of creditors, and giving preferences. Such an assignment would be illegal, inequitable, and void. The same doctrine was main- tained by Mr. Vice-Chancellor Hofiinan, in the case of Hitchcock V. St. John.^ Mr. Justice Story expresses a doubt, whether one property is conveyed by one partner in trust to secure his individual credi- tors, the property remains subject to the payment of the partnership debts. Jones V. Neale, 2 P. & H. (Va.), 339. ' Lawrence v. Taylor, 5 Hill (N. Y.), 107 ; Euffner v. McConnell, 17 III. 212. In this case, however, a previous verbal authority from the copartner, or a subsequent ratification by words or acts seems to be sufficient to render the contract binding. Lawrence v. Taylor, uhi supra. " Story Partn. § 101; Harrison v. Sterry, 5 Cranch, 289 ; Anderson v. Tompkins, 1 Brockenb. 456; Dana v. Lull, 17 Vermont, 394. " Fox V. Hanbury, Cowp. 445. See post, Book 4, ch. 1. Lord Mans- field, however, chiefly addressed himself to the form of the action. * Story Partn. § 101 ; Mills v. Barber, 4 Day, 428 ; Robinson v. Crowder, 4 M'Cord, 519 ; Hodges v. Harris, 6 Pick. 369 ; Deckard's case, 5 Watts, 22; Hitchcock v. St. John, 1 Hoff. Ch. K. 511; Anderson v. Tompkins, 1 Brockenb. 456 ; 3 Kent Com. 44, note. ' 5 Paige, 30. ' 1 Hoff. Ch. R. 511. See Egbert v. Woods, 3 Paige, 517; Mills v. Ar- gall, 6 Paige, 577; Fisher v. Murray, 1 E. D. Smith (N. Y.), 341. In Hitchcock V. St. John, the Vice-Chancellor remarked: "A direct payment of money, or a transfer of property to an acknowledged creditor, is an ad- mitted and a necessary power during the existence of the partnership. We 33 386 RIGHTS OF PAKTlSrERS, ETC. [BOOK III. partner has the power to make a general assignment of all the ■ funds and eflfects of the partnership for the benefit of creditors, " for such an assignment," he says, " would seem to amount of itself to a suspension or dissolution of the partnership itself." ^ probably are oompelled by the authorities to go so far as to say, that it is a necessary surviving power after a dissolution, in whatever way that is ef- fected. All that is requisite to test the transfer is the amount of the debt and the extent of the fund assigned. But upon the assignment of the prop- erty of a firm to a trustee, a complication of duties and responsibilities is involved. An agent is appointed to control and dispose of the whole. The capacity, integrity, and industry of another are brought to the management, and the fitness of the party selected is judged of solely by one member of the firm. From what part or principle of the partnership relation can such an authority emanate ? It is impossible to uphold a rule, which would rob every member of a firm of a voice and share in this last, and probably most important act of a failing house." In Kirby v. IngersoU, 1 Harr. Ch. (Mich.), 172, it was said that one partner may transfer a portion of the assets of the firm for the purpose of paying or securing debts, or to raise money to carry on the concern, but the power of divesting entirely one partner of his interest, appointing a trustee for both, and breaking up the concern, is not one of the powers either contemplated or implied by the contract of partnership. In this case the assignment was made to a person as trustee to pay himself and to pay other creditors, preferring some over others, and it was held that the assignment was not good for his own debt, but was void in toto. s. c. 1 Douglass (Mich.), 477. In Dana u. Lull, 17 Vermont, 390, Kedfield J. and Bennett J. deny the power of one partner to assign all the partnership property to a trustee, for the benefit of the credi- tors of the firm, and thus put an end to the entire business of the firm. The assignment in this case gave prefefences. ' Story Partn. § 101. Mr. Vice-Chancellor Hoffman, in Hitchcock v. St. John, 1 Plofi'. Ch. R. 511, said: "Now a transfer of all the effects of the firm for the payment of its debts is a virtual dissolution of the partnership. It supersedes all the business of the firm, as such. It takes from the control of each all the property with which such business is conducted. The pur- poses of the business, then, clearly do not require that such power should be implied." See Dickinson v. Legare, 1 Desaus. 537 ; Pierpont v. Graham, 4 Wash. C. C. 282 ; Dana v. Lull, 1 7 Vermont, 390 ; Hughes v. Ellison, 5 Missouri, 463 ; Drake v. Rogers, 6 id. 317, 322 ; ante, § 110, hote and cases cited. But in Anderson v. Tompkins, 1 Brockenb. 456, Mr. Chief Justice Marshall affirmed the authority of one partner to assigil all the partnership effects for the payment of the creditors thereof. See also Robinson w. Crow- der, 4 M'Cord, 519 ; Egbert v. Woods, 3 Paige, 517 ; Havens v. Hussey, 5 Paige, 30, 31 ; 3 Kent Com. 44, note ; Hennessy v. Western Baflk, 6 Watts & Serg. 300; M'CuUoch v. Summerville, 8 Leigh, 416. And in Tapley u. CH. I.J LIABILITIES OE PARTNERS. 387 § 396. Again, if one partner pledge the partnership eiFects to a hond fide pledgee, this contract will bind the firm, if made in the ordinary course of business ; and it should seem from an early case that such a contract is consistent with the business of a gen- eral trading partnership.^ The more modern decisions on the sub- ject have related to particular adventures, and the contract has been held binding on the firm, where the pledgee has had no notice of the joint interest? Thus, in Raba v. Ryland,^ the plaintiffs, Raba and Robles, were merchants at Bordeaux, and the defend- ants com and seed factors in London. The plaintiffs purchased for the joint account of themselves and Caumont, in equal thirds, thirty-three bags of clover seed, and consigned them to Caumont, who lived in London. Caumont pledged the seed to the defend- ants, who had no notice of the joint interest. Caumont became a bankrupt, and the defendants were his creditors to more than the amount of the clover seed. It was hold, that the plaintiffs could not maintain trover for the seed ; Dallas J., observing that Cau- mont, being jointly interested in the seed with the plaintiffs as a partner, was in that character possessed of the entirety ; that as a partner he had a clear right to sell ; and that, so far from its being pretended that the defendants had notice of the ' partnership, the contrary was admitted. § -397. Another case of the same complexion was decided in the same manner. Tupper & Co. consigned to Smith & Co. a quantity of wool on the joint account of the two houses. T. & Co. were to be interested in one moiety, and S. & Co. in the other moiety. S. & Co. pledged the wool to 11. & Co., who were ignorant that the consignment" had been made on the joint account, and to whom, when the bills of lading were indorsed to them, it ButterfieU, 1 Metcalf, 515, a mortgage, made by one partner without the consent or knowledge of his copartner, of all the stock in trade of the firm, to secure a particular creditor of the firm, was held to be valid. ' Metcalfe v. Koyal Exch. Ass. Comp., Barnardist. 343 ; Butchart v. Dresser, 10 Hare, 453 ; 4 De G., M. & G. 542 ; Brownrigg v. Rae, 5 Exch. 489 ; Gordon v. Ellis, 7 Man. & Gr. 607. It was held in a recent case, {.hat the majority of a steamship company had power to borrow money on the security of its ships. Australian Steam Clipper Co. v. Mounsey, 4 K. & J. 733. • " 3 Kent Com. 46 ; Gow Partn. (3d ed.), 52. ' Gow N. P. C. 132. See Ex parte Gellar, 1 Rose, 297. 388 EIGHTS OF PARTNEKS, ETC. [bOOK III. was represented that the tvooI was to be sold on the sole account of S. & Co. S. & Co. became bankrupts, and H. & Co. were greatly their creditors. Sir William Grant held, that S. & Co. as partners, had a right to pledge the wool as against Tupper, their partner, there being no evidence of collusion and fraud between S. & Co. and H. & Co., and that as against Tupper & Co. H. & Co. had a right to have their claim satisfied out of the proceeds of the cargo. 1 So, where Reid & Co. and Davidson & Co. agreed to be jointly interested in an adventure in cottons, for which R. & Co. paid, and D. & Co., having possession of the cotton, pledged it to H., who was ignorant of the interest of R. & Co. therein, and afterwards D. & Co. became bankrupts, and H., being their creditor by more than the value of the cotton, refused to deliver it up ; the Court of King's Bench held clearly on the authority of the two preceding eases, that R. could not maintain trover against H. for the cotton.^ ■ § 398. But in Ex parte Copeland,^ doubt was entertained by two of the judges of the court of review, as to the power of one partner to pledge the goods of a joint adventure, where the pledgee has notice of the joint interest in the goods. In that case. A., B., and C, being partners in a joint adventure for the shipping and sale of goods, C. found the goods, and A. and B. gave their acceptances to bills drawn upon them by C, which were to be answered by the proceeds of the sales. After the goods had been shipped, C. procured discount of the bills, and pledged the goods as a security to the discounter. Upon the bankruptcy of all three, the discounter applied to prove the amount of the bUls. It ap- peared that A. and B. had ratified the transaction of C, and that there were no joint creditors of the three, and on this ground the petitioner was permitted to prove ; but Erskine C. J., said, that if the case had rested merely on the letters of C, by which he pledged the goods, he should have thought the case distinguishable from Read v. HoUinshed, because there the partner who created the lien had the possession of the goods, and had an apparent right to deal with them as his own, and the receiver had no notice of the interest of other parties, and therefore it was decided the * Tupper V. Haythorn, Gow, 135. = Eeid V. Hollinshead, 4 Barn. & Ores. 867 ; 7 Dowl. & Ry.l. 444. » 2 Mont. & A. 177 : 3 Dea. & Chit. 199. CH. I.] LIABILITIES' OB PARTNERS. 889 partner miglit pledge the goods, and bind not only his own share but the whole interest. But here, where those circumstances did not occur, if it depended merely on the letter of C, his Honor would have been inclined to doubt- the power of one partner in such a transaction to bind the joint property, it being out of the ordinary course of trade. And Rose J., appears to have thought, that, except under the special circumstances of the case, it would have been difficult for 0. to have bound the whole interest of the partners, though he might have encumbered his own interest. § 399. It has been decided in Massachusetts that one partner has authority, without the consent or knowledge of his copartner, to mortgage the whole stock in trade of the firm, to secure a par- ticular creditor.^ ' Tapley v. Butterfield, ' 1 Metoalf, 515. In this case^ Mr. Chief Justice Shaw remarked : " It is within the general scope of partnership authority for one partner to sell and dispose of all the partnership goods in the orderly and regular course of business. It is also within the scope of partnership authority to pay the debts of the firm, and to apply the assets of the firm for that purpose. He being authorized to sell the goods to raise money to pay their debts, he may apply the goods directly to the payment of the debts ; and, according to the exigencies of the occasion, he may pledge the partner- ship goods to raise money to pay the debts of the firm. To this extent, we think each partner has a disposing power over the partnership stock, arising necessarily from the nature of that relation. If it were in the form of a consignment to a commission merchant, or an auctioneer, and an advance of money obtained for the use of the firm, we think there could be no question but that it would be within the scope of partnership authority. And now that the law has given encouragement to mortgages of personal property, — which is only another mode of pledging goods, — and has substituted an in- strument in writing capable of being recorded in the town-clerk's book, and has given to such record an effect equivalent to the actual delivery of the goods (Bullock V. Williams, 16 Pick. 83), we cannot perceive why it may not be resorted to by partners as well as individual persons. To what ex- tent one partner can bind another in the disposition of the entire property of the concern is a question of power, arising out of the relation of partner- ship, and does not, we think, depend upon the form or manner in which it is exercised. 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 co- tenant, and as land cannot pass without deed, it follows that one partner cannot convey away the real estate of the firm without special authority. But considering that the authority of selling and pledging the personal prop- erty is within the scope of partnership power, and may be done by either partner, and considering that it may be done without deed, the court are of 33* 390 EIGHTS OF PARTNERS, ETC. [bOOK III. § 400. From the preceding cases it appears that partners in a particular adventure, as well as they who are engaged in general trade, have power (at least with certain Hmitations), to bind their copartners by pledge, mortgage, or sale of the partnership effects. But care must be taken to distinguish a partnership in a partic- ular adventure from a mere joint purchase or sub-purchase made without any view to a joint sale. On the ground of this distinc- tion, the case of Barton v. Williams ^ was decided. There Moon & Co. and Barton & Co. agreed to purchase cottons on their joint account. In pursuance of this agreement, Moon gave orders to his brokers to purchase cottons on his own account, not acquaint- ing them with the joint transaction. The purchases were made, and the goods left in the hands of the brokers, and Barton & Co. paid Moon & Co. for their share. Before the purchases were com- pleted, the interest of Barton & Co. was known to the brokers. In November, 1818, Moon wishing to borrow £20,000, he and the brokers, unknown to Barton, pledged the whole of the cotton warrants to the defendants for that sum, which was advanced by the defendants by means of the discount of bills. In February, 1819, by consent of all parties, the cottons were divided between Barton & Co. and Moon & Co., according to their respective shares. In March following. Moon paid off half the £20,000 by the produce of the cottons, and gave renewed bills for the other half. On that occasion, the brokers received the warrants from the defendants and divided them ; returning to the defendants, as a security for the renewed bills, the warrants of the plaintiffs, Barton & Co., and retaining the warrants of Moon. Throughout the transaction no notice was given to the defendants of the in- terest which the plaintiffs had in the cottons. The court held clearly, that the plaintiffs might maintain their action of trover for the value of the warrants so pledged. There were two grounds on which to rest their decision, and they chose that upon which it was the most difficult to raise a question ; namely, that, upon the opinion that such a mortgage, made by one partner in the absence of the. other, although unnecessarily made by deed, was binding upon the property, and constituted a valid lien upon the property, which the plaintiff may avail himself of. Anderson v. Tompkins, 1 Brookenb. 456 ; Deckard's case, 6 Watta, 22." Milton v. Mosher, 7 Metcalf, 244. > 5 Barn. & Aid. 395. See ante, §§ 22, 23. * CH. I.] LIABILITIES OP PARTNERS. 391 partition being made, between the plaintiffs and Moon, the tenancy in common was determined ; that the second pledge, therefore, was not of an undivided moiety, but a specific chattel, of which the property was at that time vested in the plaintiffs, and made by a person having no authority to pledge. But they likewise held, without hesitation, that at the time of the original pledge Moon & Co. and the plaintifis were not partners with reference to the goods, but part-owners ; each of them being entitled to an undi- vided moiety. That Moon & Co. taking upon themselves to pledge the whole, the legal operation of such pledge would be to give the pawnee no better title than Moon & Co. had, which would be an undivided moiety. Therefore, that, even if there had been no partition, the sale was a conversion of the undivided in- terest, and consequently that trover would be maintainable. SECTION II. OF LIABILITIES UNDER BILLS OF EXCHANGE AND PROMISSORY NOTES NEGOTIATED IN THE NAME OF THE FIRM. § 401. If a partner in trade draw, accept, or indorse a bill of exchange in the name of the firm, ior if he give a promissory note in the name of the firm, such a biU or note will be binding on the firm jointly in the hands of a bond fide holder.^ The power of ' Pinkney v. Hall, Salk. 126; s. c. Lord Raymond, 176 ; Anon., Styles, 370 ; Smith v. Trivas, 2 Lord Raymond, 1484 ; Harrison v. Jackson, 7 T. R. 207 ; Smith v. Bailey, 11 Mod. 401 ; Swan v. Steele, 7 East, 200 ; Bull. N. P. 279 ; Commercial Bank of Manchester v. Lewis, 13 Smedes & Marsh. 226. The power of one partner to bind the firm in partnership transactions, by the making of promissory notes, or the drawing, accepting, or indorsing bills of exchange, has never been disputed. Per Lord Kenyon, Harrison v. Jackson, 7 T. R. 207 ; Livingston v. Roosevelt, 4 John. 265. It is within the scope of a trading partner's general authority so to act, without the necessity of the creditors inquiring whether the particular partner had such an authority expressly delegated to him. Gow Partn. (3d ed.), 38 ; Coursey V. Baker, 7 Harr. & John. 28 ; Storer v. Hinckley, Kirby, 147 ; Dougal v. Cowles, 5 Day, 511; Hawes v. Danton, 1 Bailey, 146; Drake v. Elwyn, 1 Caines, 184; Vallett v. Parker, 6 Wendell, 615 ; Foster v. Andrews, 2 Penn. 1^0 ; Porter v. Cumings, 7 Wendell, 172 ; Mills v. Barber, 4 Day, 430 5 392 RIGHTS OF PARTNERS, ETC. [BOOK III. one partner, in this as in other contracts, is implied by law, no express authority from Ms copartner being necessary for that pur- Le Roy v. Johnson, 2 Peters, 186. Mr. Chancellor Kent has thus summed up the doctrine: " In all contracts concerning negotiable paper, the act of one partner binds all, and even though he signs his individual name, pro- vided it appears on the face of the paper to be on partnership account, and to be intended to have a joint operation. But if a bill or note be drawn, or other contract be made by one partner in his name only, and Tvithout ap- pearing to be on partnership account, or if one partner borrow money on his own security, the partnership is not bound by the signature, even though it was made for a partnership purpose, or the money applied to a partner-, ship use. The borrowing partner is the creditor of the firm, and not the original lender, and the money was advanced solely on the security of the borrower. Siffkin v. Walker, 2 Camp. 308 ; Kipley v. Kingsbury, 1 Day, 150, note; Emly v. Lye, 15 East, 7; Loyd v. Freshfield, 2 Carr. & Payne, 325; Bevan v. Lewis, 1 Sim. 376; Faith v. Richmond, 11 Adol. & Ellis, 339; Foley v. Robards, 3 Iredell, Law, 179, 180; Jaques v. Marquand, 6 Cowen, 497 ; Willis v. Hill, 2 Dev. & Bat. 231. The question is not. Has the firm obtained the benefit of the contract ? but. Did the firm, by one of its partners, enter into the contract ? Per Rolfe B., in Beckham ;;. Drake, 9 Mees. & W. 99, 100 ; Kingsbridge Flour Mill Co. v. The Plymouth Grind- ing Co. 2 Exch. 718 ; Ernest u. Nicholls, 6 Ho. Lo. Ca. 423; 1 Lindley Partn. 290 et seq. : Hawtayne v. Bourne, 8 M. & W. 595 ; Burmester v. Nor- ris, 6 Exch. 796 ; Ricketts v. Bennett, 4 Com. B. C86 ; The Worcester Corn Exch. Co. 3 De G., M. & G. 180; Fisher v. Tayler, 2 Hare, 218 ; Ex parte Chippendale, 4 De G., M. & G. 19. If, however, the bill be drawn by one partner, in his own name, upon the firm on partnership account, the act of drawing has been held to amount, in judgment of law, to an acceptance of the bill by the drawer in behalf of the firm, and to bind the firm as an ac- cepted bill. Dougal u. Cowles, 5 Day, 511. And though the partnership be not bound at law in such a case, it was held that equity will enforce pay- ment from it if the bill was actually drawn on partnership account. Van Reimsdyk v. Kane, 1 Gall. 630. Even if the paper was made in a case which was not in its nature a partnership transaction, yet it will bind the firm, if it was done in the name of the firm, and there be evidence that it was done under its express or implied sanction. Ex parte Peele, 6 Vesey, 602." — 3 Kent Com. 41, 42. One member of a firm may order the con- tents of a note, made payable to the firm or order to be paid to himself, using the style of the firm for that purpose, and as indorsee in his individ- ual capacity, sue the maker of the note and recover. Kirby v. Cogswell, 1 Caines, 505 ; Burnham v. Whittier, 5 N. Hamp. 334. One partner has implied power to bind the firm by checks drawn on the bankers of the firm in the partnership name. Laws v. Rand, 4 Jur. (n. s.), 74, C. P. In an action against all the partners, on a note made by one of them in the part- nership name, it is not incumbent on the plaintiff, in the first instance, to CH. I.] LIABILITIES OF PAETNERS. 393 pose ; and in the case of bills of exchange it exists by the custom of England. Thus P., a partner in the house of Lewis & Potter in London, and also in the house of Gregory & Potter in America, in order to accommodate the former house, directed the cleric of that house to draw a bill in the name of Gregory & Potter. The bill, though drawn in London, was dated at Boston. It was ac- cepted by another clerk of the London house the moment it was drawn. In an action by the indorsees against the drawers, the American partner was held liable.^ § 402. The power of binding by biU of exchange is not confined to general partners ; it has been laid down that one of several ad- venturers wiU be bound by the indorsement and acceptance of the other.2 This, however, is to be received with some limitation, for in adventures conducted by a joint stock company the power of the adventurers to bind each other by bills of exchange is not co- extensive with the power of ordinary partners.^ Neither does the right of one partner to bind the firm by bill exist in certain part- show that the note was given for a partnership transaction. Waldo Bank V. Greely, 16 Maine, 419; Vallett v. Parker, 6 Wendell, 615. And the same is true, although the partnership is limited to a particular branch of business. Barrett v. Swann, 17 Maine, 180; Ensminger v. Mavin, 5 Blackf. 210 ; Knapp v. M'Bride, 7 Alabama, 19 ; Holmes v. Porter, 39 Maine, 157. This rule, however, is confined to cases where the signature or other circum- stances indicate a partnership transaction. Manuf. & Mech. Bank v. Win- ship, 5 Pick. 11 ; U. States Bank v. Binney, 5 Mason, 176 ; s. c. 5 Peters, 629 ; Etheridge v. Binney, 9 Pick. 272. But where the name of the firm is not used, and one partner signs his own name and that of his copartners severally, the instrument imports, prima facie, an individual transaction. Crouch V. Bowman, 3 Humph. 209. And one partner may render himself separately liable by so framing the contract as to bind himself not only as a member of the firm, but independently by his connection with it. See Hig- gins V. Senior, 8 Mees. & W. 834 ; Ex parte Wilson, 3 M., D. & D. 57. A partner who enters into a contract avowedly on behalf of the firm, and so as to bind the firm, incurs no liability upon the contract except as one of the members of the firm. 1 Lindley Partn. 294, 295. See Jenkins v. Hutchin- son, 13 Queen B. 744 ; Lewis v. Nicholson, 18 Queen B. 503 ; Kandell v. Tri- men, 18 Com. B. 786 ; Eastwood v. Bain, 3 H. & N. 738. As to the effect of a bankrupt partner's acceptance in the name of the firm, see post, Book 4, chapter 1. ' Sutton V. Gregory, 2 Peake, 150. " Davidson v. Robertson, 3 Dow. 229. » Post, Book 5, chap. 1, sec. 3 ; Story Partn. § 126. 394 RIGHTS OF PARTNEHS, etc. [book III. nershlps of a particular nature. Thus, it has been laid down by a learned judge, that one of several persons jointly interested in a farm has no power to bind the otliers by drawing or accepting bills ; because such a practice is not necessary for carrying on the farming business.^ And the same observations will apply to partnerships in mines, and to other partnerships, where bills of exchange are neither usual nor necessary for conducting the part- nership business ; ^ but the mere circumstance that the business consists in making profits out of real estate, as in working a stone quarry, will not take the case out of the operation of the general rule.^ § 403. A partner may be liable in an action on a bill of ex- change negotiated in the name of tlie firm, although his own name individually is not used in the firm, and therefore does not appear on the instniment. This may happen either when a partnership, consisting of several members, or of minor partnerships, is con- ducted in the general name and style of A. & Co., or A. & B. ; or else, when it is conducted in the particular name of A. only. § 404. First. — Suppose the firm to be that of A. & Co., or A. & B., and a bill is drawn, indorsed, or accepted in the name of the firm. In this case, it is evident from the instrument itself that a partnership name is pledged. Now, it has been clearly decided on various occasions, and emphatically laid down in a modern case, that where a partnership name is pledged, the part^ nership, of whomsoever it may consist, and whether the partners are named or not, and whether they are kno^vn or secret partners, will be bound, unless the title of the person who seeks to charge them can be impeached.'* In the case of Baker v. Charl- ' D. Littledale J., 10 Barn. & Ores. 138. ' See D. Parke J., s. c. ; D. Hol- royd J., 7 Barn. & Cres. 633 ; and D. BoUand B., 2 Cromp. & Jerv. 435 ; Story Partn. § 126. ^ See Gray v. Ward, 18 Illinois, 32 ; Brown v. Byers, 16 Mees. & W. 252 ; Dickinson d. Valpy, 10 B. & C. 128; 1 Lindley Partn. 192 et seq., 214; Brown v. Kidger, 3 M. & N. 853 ; Yates v. Dalton, 4 H. & N. 850. " Thicknesse v. Bromilow, 2 Cromp. & Jerv. 425. A promissory note given by one of two partners in -the business of farming and coopering, signed A. B. & C. D., is binding upon both. M'Gregor v. Cleveland, 5 Wendell, 475. See Johnston v. Button, 27 Alabama, 245; Brownlee v. Allen, 21 Mis. (6 Bennett), 123 ; Morgan v. Allen, id. 127. ' Per Bayley B., 1 Cromp. & Jerv. 318. But in Jones v. Hunter, Danson CH. I.] LUBILITIES OF PARTNERS. ' 395 ton,^ an action of assumpsit -was brought on a bill of exchange, by the indorsees against one of the drawers, the other having become bankrupt. The bill was drawn in the firm of " James King & Co. ; " under which firm the defendant and bis partners had traded. It also appeared that there were other partnerships car- ried on under the firm of " James King & Co. ; " in which the other drawers were concerned, but in wliich the defendant had no share. The defendant offered to show that this bill was not drawn on account of the partnership in which he was concerned, but on account of one of the others, and that he knew nothing of it. But Lord Kenyon was of opinion that the defendant was nevertheless liable ; he had traded with the other partners under that firm, and persons taking bills under it, though without his knowledge, had a right to look to him for payment. The plaintiffs obtained a verdict. § 405. In the case of M'Nair v. Fleming,^ this doctrine was carried still further; for there the several partnerships did not trade generally under one name, but they>conducted a particular business apart from their general trade, in respect of which they negotiated bills under one name, which name was that of one of the firms, and not of all the firms collectively. The facts were shortly these : A partnership, under the firm of Hugh Mathie & Co., car- ried on trade at Greenock. Another branch of trade was under- taken by Mathie & Fleming to Nassau in New Providence, Flem- ing having no share in the partnership of 11. Mathie & Co. The Nassau trade was carried on at Greenock by Hugh Mathie & Co., without any distinction ; in Nassau, by one Home ; and at Lon- don, by A. Fleming & Co. Mathie kept separate accounts for the concern, distinguished by the letters N. C. for Nassau con- cern ; and those accounts were clear. Certain bills had been discounted at the branch of the Bank of Scotland in Greenock, & Lloyd, 214, where A., B., and C, partners, were sued as acceptors by an indorsee, Lord Tenterden seemed inclined to admit evidence to show that C. was not engaged in the India business, on whi(;h account the bill was drawn. The evidence was rejected for reasons unconnected with this point. Qu. Whether the indorsee had not notice of the circumstances under which the bill was drawn ? ' 1 Peake, 111. See Baker v. Nappicr, 19 Geo. 520. ' 2 Bell Comm. 672 ; Mont. Partn. 37. See D. Lord Eldon, 3 Dow, 229. 396 EIGHTS OF PAETNERS, ETC. [BOOK III. having the firm of H. Mathie & Co. subscribed to them ; and no explanation was required or given at the time they were so dis- counted. H. Mathie & Co. failed, and M'Nair, as agent for the bank, on the ground of his having rehed on Fleming's credit as included in the firm, made his demand against him. A proof was taken ; and the Court of sessions was satisfied that Fleming was not a general partner with H. Mathie & Co., but that, bills hav- ing formerly been discounted under that firm for the use of the Nassau concern, and sanctioned by Fleming, a credit was raised, entitling bill-holders to rely on his credit ; and on that ground the court held Fleming liable. Upon appeal to the House of Lords, the general principle of this decision was confirmed ; but they considered it to be still a question whether M'Nair, by proving his debt, and receiving a dividend under the sequestration against Mathie & Co., had not barred himself of all further remedy ; and according to an opinion given by Sir Samuel Romilly, they ex- pressly reserved to the defendant the benefit of that defence. The same learned person adds, — " The House of Lords was (as I understood that decision) of opinion, that where several partner- ships, consisting of difierent individuals, carry on business under the same firm, and enter into negotiable securities under the same signature, the holder of such securities has a right to select which of those partnerships he chooses for his debtors ; but it never, as I conceive, entered into the minds of any of the Lords, that he could take all the partnership as his debtors." § 406. The case of M'Nair v. Fleming is, in many of its cir- cumstances, similar to that of Baker v. Cljarlton, and it has there- fore been thought right to state the two cases consecutively. But perhaps the decision of most practical importance upon this sub- ject is that of Swan v. Steele.^ Wood and Payne carried on business as wholesale grocers, under the firm of Wood & Payne ; and Wood, Payne, and Steele carried on business as cotton-mer- chants, under the same firm of Wood & Payne. Steele was never interested in the grocery business, and was unknown as a partner in the cotton trade. The plaintifF sold to Wood & Payne, as grocers, a quantity of sugar, for which they gave their accept- ance. Being unable to provide for this acceptance when due, 1 7 East, 210; 3 Smith, 199. CH. I.] LIABILITIES OF PARTNERS. 397 Wood & Payne, witliout the knowledge of Steele, indorsed to the plaintiffs, in the name of Wood & Payne, a bill drawn by one Maitland, and which they had received in payment for some cotton. The question was, whether, in the absence of any fraud on the part of the plaintiffs, Steele was liable in an action on the bill ; and the Court of King's Bench held that he was, and that the case was too clear for argument. Lord Ellenborough : "It would be a strange and novel doctrine, 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. There is no doubt, that, in the absence of. all fraud on the part of the indorsee, such indorsement would bind all the part- ners. There may be partnerships where none of the existing partners have their names in the firm. Third persons may not know who they are ; and yet they are all bound by the acts of any of the partners in the name or firm of the partnership. Now, here the three persons were trading under the firm of Wood & Payne, and in the course of their deahngs 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 I 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. And it would be highly inconvenient that it should ; because, if the plaintiffs had been apprised at the time that the partner who indorsed the bill had no authority to do so, they might have obtained some other security for their demand." § 407. The case of Vere v. Ashby ^ was not so strong in its circumstances, but was decided on the same principles. Ashby and Rowland were partners, trading under the firm of that name. They opened an account in that name with the plaintiffs, who were bankers, and who discounted bills for them, carrying the proceeds to that account. A short time after this account had been opened, Shaw joined the partnership of Ashby & Rowland, • 10 Barn. & Ores. 288; Lloyd & Welsby, 20. 34 398 EIGHTS OF PARTNERS, ETC. [bOOK III. but the business of the firm was conducted as before. Shaw never appeared in the business, nor was he introduced or known to the plaintiffs, nor even to the clerks of the partnership, as a partner; moreover, he was abroad from the commencement of the partnership until about the time of its dissolution. During the period of Shaw's partnership, Rowland indorsed two bills, in the firm of Ashby & Rowland, to the plaintiffs, who discounted them, and carried the proceeds, as usual, to the account of Ashby & Rowland. The plaintiffs were not aware that the money raised by these bills was intended to be applied to other than partnership purposes. At the dissolution of the partnership, and not before, the plaintiffs ascertained that Shaw had an interest in the fimi. In an action against Ashby, Rowland, and Shaw, as indorsers of these bills of exchange, a question being raised as to the liability of Shaw, the Court of King's Bench held that he was clearly liable. § 408. The same principles apply to acceptances,^ In the case of Lloyd V. Ashby ,^ Ashby, Rowland, and Osborne were partners under the firm of Ashby & Co. In May, Osborne left the partner- ship, which was thenceforth carried on in the name of Ashby & Rowland. In June, Shaw entered the firm as a dormant partner. In July, the plaintiff supplied goods to Hugh Rowland, the father of the defendant Rowland, who, in payment of the amount, drew and deUvered to the plaintiff a bill payable to the plaintiff's order, and addressed to Ashby & Co. The bill, after dehvery to the plaintiff, was accepted by the partner Rowland in the name of Ashby & Rowland. On an action brought against Ashby, Row- land, and Shaw, as acceptors, the Court of King's Bench held, not- withstanding the variance between the names to which the bill was addressed, and those in which it was accepted, that the three de- , fendants must be taken to be the persons designated by the accept- ance in the name of Ashby & Rowland, and that the acceptance was binding on them all. § 409. Again, in the case of Wintle v. Crowther,^ Crowther & Combes carried on the business of coal-merchants at Bristol, Combes ' A bill being drawn upon the partners jointly, the acceptance of a single partner, in the names of both, or even in his own name, is in legal effect a joint acceptance. Dougal ». Cowles, 5 Day, 511 ; Anon. Holt, 67; Pink- ney v. Hall, 1 Salk. 126. ' 2 Barn. & Adolph. 23. ' 1 Cromp. & Jerv. 316 ; 1 Tyrw. 210. CH. I.] LIABILITIES OF PARTNEES. 399 bemg a secret partner, residing at Newport ; Crowther also car- ried on the business of a slop-seller at Bristol, on his own separate account. In the latter business, Crowther contracted a separate debt with the plaintiffs, for which they drew on him two bills of ex- change, one of which was dishonored. Upon the other bill becom- ing due, it was delivered, together with the dishonored bill to Crowther, who instead thereof gave the plaintiffs a bill, accepted in the firm of Crowther & Co., which greatly exceeded the amount of his separate debt. The plamtiffs had likewise in their hands another bill accepted by Crowther & Co. At the time these latter bills were taken by the plaintiffs, they knew nothing of Combes, and they made no inquiry after him, until long after the bills were due ; treating Crowther as if he only were the person bound by the biUs. In an action against both Crowther and Combes, as the ac- ceptors of these bills, the plaintiffs recovered a verdict, which the Court of Exchequer permitted to stand, subject to deduction of the amount of Crowther's separate debt. § 410. Even if the bill be accepted in the name of one partner only, and not in that of the firm, yet, if the bill be addressed to the firm, all the members of it, whether dormant or not, will be bound by Such acceptance ; for, as Lord EUenborough said, " The ac- ceptor must be understood to exercise his power to bind his copart- ners, and to accept the bill according to the terms in which it is drawn." ^ Two cases had been decided in conformity with this doctrine. In Wells v. Masterman,^ an action of assumpsit was brought on two bills of exchange drawn by the plaintiffs on the de- fendant, by the style of James Masterman & Co., accepted by James Masterman only, without the words " & Co." James Mas- terman carried on a separate trade, and the plaintiff had had deal- ings with him before his partnership, but he also had dealings with the partnership ; and there was nothing to show any fraud on the part of the plaintiff. Lord Kenyon held that all the firm were liable, observing, that " if a bill is drawn upon the partnership in their usual style and firm, and it is accepted by one of the part- ners, it certainly binds the partnership to the payment of it." So, where a bill was drawn on Messrs. R. & Co., and R. accepted it thus: — "Accepted, T. R."— Lord EUenborough said, — "The ' 1 Camp. 384. « 2 Esp. 731. 400 EIGHTS OF PARTNERS, ETC. [bOOK III. partners are bound by this acceptance. It -would have been enough if the word ' accepted ' had been written on the bill ; and the effect cannot be altered by adding ' T. R.' " ^ § 411. Secondly. — Suppose the partnership to be conducted in the name of an indiyidual partner, as A., and that a bill is drawn, indorsed, or accepted in the name of A. In this case it does not appear by the instrument that a partnership name is pledged ; therefore, if A. and B. be the partners, carrying on trade under the firm of A., and an action is brought against A. and B., on a biU drawn by A., the plaintiff must be prepared to show that A. drew the bill, not as A., but as A. and B.^ In 'Mason v. Eumsey, 4 Camp. 384; Dolman v. Orchard, 2 Car. & P. 104. ^ See Bank of Rochester v. Monteath, 1 Denio, 405 ; Rogers v. Coit, 6 Hill (N. Y.),-322 ; Palmer v. Stephens, 1 Denio, 471, 481. In U. States Bank v. Binney, 5 Mason, 1 76, it was held, that where a partnership is car- ried on by a firm in the name of one partner only, and he indorses notes in his own name, the firm is not bound thereby, unless the notes were received or discounted as notes binding the firm, upon a representation to that effect of the partner giving the same, and were made for the common benefit and business of the firm. Mr. Justice Story in this case (pp. 183 184), re- marked : " Where the firm imports on its face a company, as A. B. & Co., or A., B , & C, there the contracts made by the partners in that name bind the firm, unless they are known to be beyond the scope and business of the firm. But where the business is carried on in the name of one of the part- ners, and his name alone is the name of the firm, there, in order to bind the firm, it is necessary not only to prove the signature, but that it was used as the signature of the firm by a party authorized to use it on that Occasion, and for that purpose. In other words, it must be shown to be used for part- nership objects, and as a partnership act. The proof of the signaturi3 is not enough. The plaintiffs must go further, and show that it is a partnership signature. In the present case the signature of ^ John Win'sMp' may be on his own individual account, as his personal contract, or it may be on account of the partnership. Upon the face of the paper it stands indifferent. The burden of proof, then, is upon the plaintiffs, to establish that it is a contract of the firm and ought to bind them." Again he added (p. 189): " The notes are all indorsed in the name oi^John WinsMp.' For aught, there- fore, that appears on the face of them, they were notes only binding him personally. The plaintiffs must, then, go further, and show, either expressly or by implication, that these notes were offered by WinsMp as notes binding the firm, and not merely himself personally, or that the discounts were made for the benefit, and in the course of the business of the firm. It is not sufiicient for the plaintiffs to prove that the bank, in discounting these notes, acted upon the 6eHe/that they bound the firm, and were for the benefit and CH. 1.] LIABILITIES OP PARTNERS. 401 Ex parte Bolitho,^ Peter Blackburn was a secret partner with Isaac Blackburn, in the business of ship-builder at Plymouth, and Ukewise carried on a separate trade as general merchant in his own name, in London. Isaac kept a banldng account in his own name at Plymouth ; Peter kept a bankiag account in his own name with business of the firm. They must go further, and prove that the belief was known to and sanctioned by Winship himself in offering the notes, and that he intentionally held out to them that the discounts were for the credit, and on the account, of the firm ; and that his indorsement was the indorsement of the firm, and to bind them ; and that the banks discounted the notes upon the faith of such acts and representations of Winship." See also Winship V. Bank of United States, 5 Peters, 529. In Etheridge v. Binney, 9 Pick. 272, it was ruled, that in the case of a limited and dormant partnership car- ried on by one of the partners in his individual name, if he borrows money, representing it to be for the use of the partnership, the dormant partners will be liable, without proof on the part of the creditor that the money went to the use of the partnership. It is otherwise, however, if he borrows without such a representation. In that case it was remarked by the judge at the trial : " Now as the partner whose name is assumed by the firm may also engage in other branches of business, in which he may want credit on his own pri- vate account, if he applies for a loan of money to one who is ignorant of the copartnership, and no information is given of its existence, it is a private loan, and does not bind the firm, unless the creditor shall know that the money borrowed or the goods procured by the individual went to the use of the firm. The burden of proof in such case is upon the creditor, in order to make good his claim upon the firm ; for he credited the individual and not the firm, and it will be presumed to be for the private benefit of the individual, unless the contrary is proved. But if the existence of the firm is known to the person who makes the loan, and representations are made to him by the borrower, that he borrows for the use of the company, and that they are an- swerable for the debt, so that credit is given to the company and not to the individual partner, the burden of proof is upon the company, when sued, to show that the power confided to the individual has been abused, and that the money borrowed was applied to his private use, and also that this was known to the lender to be his intention." In Manuf and Mech. Bank v. Winship, 5 Pick. 11, where a partnership was carried on in the name of an individual, it was held that a note in common form, signed by such individual, did not prima fade bind his copartners; and that, upon the question whether it was given for the use of the copartnership, the burden of proof was upon the holder. See further, upon this point, Story Partn. § 139 ; Mifflin v. Smith, 17 Serg. & R. 165 ; Mercantile Bank «. Cox, 38 Maine, 500. It was so held, also, in Bank of Rochester v. Monteath, 1 Denio, 405, where it appeared that the partner in whose name the business was done was also engaged in business on his own separate account. * Buck, 100. 34* 402 RIGHTS OF PARTNERS, ETC. [BOOK III. Down & Co. in London. Isaac drew bills in his own name upon Ms correspondents in London in' favor of himself. These bills he indorsed ; and when the bills were accepted, Peter was in the habit of discomiting them with Messrs. Down & Co. ; and when the bills were so discounted, Peter also indorsed them with his own name. The question was, whether Down & Co. were joint creditors of the two Blackbums, it being contended, on the one hand, that the biUs were drawn and the money raised for the accommodation of Peter Blackburn's separate trade ; and on the other, that Down & Co. supposed that the money to be raised by the bills was to be apphed to partnership purposes ; and that, as the bills were drawn in the name under which the partnership was carried on, the holder had a demand upon the partnership, by force of the contract. Lord Eldon directed issues to try whether the bankrupts were jointly liable upon all or any of the bills, and whether they were jointly liable as for moneys lent and advanced. In The South Carolina Bank v. Case, the leading facts of which have been already stated,^ it appeared that the business of the house of Crowder, Clough & Co. was carried on in England in that name ; but that, in the United States, all the partnership business was transacted in the name of J. B. Clough alone. He had no individual business what- ever, and the name of J. B. Clough was never used by him in trade, or in drawing, indorsing, or accepting, or negotiating bills of exchange, except for the benefit and on account of the partnership. The Court of King's Bench held that J. B. Clough was to be con- sidered as the name of the firm for the purpose of business in America, and consequently that he and the bankrupts were liable as indorsers of the biQs which were the subject of the issue in that case. § 412. It has even been held that the indorsement of a bill by one partner, although not in the name of the firm, will neverthe- less be binding on the firm, if it be proved that there has been a habit of so ind Sandilands i'. Marsh, 2 Barn. & Aid. 679. ' 15 Ves. 286 ; 2 Hov. Sup. 406. ' Ex parte Nolte, 2 Glyn & Jam. 306. 408 EIGHTS OF PARTNERS, ETC. [bOOK III. they will be bound by sucb adoption, althougb the guaranty may have been given out of the regular line of their business ; ^ and it ■wiU be for a jury to consider whether or not the firm have adopted the act of their copartner.^ " If," said Lord Eldon, " they accede to the act of the partner giving the guaranty, it is not the mere circumstance of his having given it, but their having acceded to what he proposed, which constitutes the deahng be- tween them and the parties secured. So, if partners are informed of such a measure having been taken by a person who is a part- ner, though perhaps not in that particular transaction, yet, inas- much as it may not easily be known to those who deal with such partner in what dealings the other partners are, and in what they are not interested, and they do not think proper in answer to state whether they authorized such partner so to act or not, it is not too much to take it for granted that they accede to the guaranty which their partner has proposed." ^ But they may give in evi- dence a disclaimer of the guaranty.'' § 421. The law seems now to be settled, both in England and America, that one partner is not authorized to bind the partnership by a guaranty of the debt of a third person, without a special authority for that purpose, or one to be implied from the common course of the business, or the previous course of dealing between the parties, unless the guaranty be afterwards adopted and acted upon by the firm.^ The guaranty must have reference to the reg- ular course of the partnership business, and it must be confined to advances made or credit given to the partnership as constituted at the time of the guaranty. It cannot be extended to new advances or credits, after a change of any of the original partners by death or retirement." The same general rule will apply to cases where * Crawford v. Sterling, 4 Esp. 207. " Payne v. Ives, 3 Dowl. & Eyl. 664. * Ex parte Nolte, supra. * V. Layfield, 1 Salk. 291. ^ There appears to be some discrepancy in the authorities. But the above seems to be the just result of them, and is adopted as such by Mr. Justice Story and Mr. Chancellor Kent. Story Partn. § 127 and note ; 3 Kent Com. 46, 47 ; Long v. Carter, 3 Iredell (Law), 241 ; Mayberry v. Barniton, 2 Harring. 24 ; Maudlin v. Branch Bank, 2 Alabama, 502 ; Sweetster v. French, 2 Cushing, 309. ' 3 Kent Com. 47; Duncan v. Lowndes, 8 Camp. 478; Sandilands v. CH. I.] LIABILITIES OP PARTNERS. 409 one partner signs the name of the firm to a note, as a mere and avowed surety- for a third person, in -which note the partnership has no interest, and where it is not in the regular course of their business, and the transaction takes place without the authority or consent of the other partners.^ Marsh, 2 Barn. & Aid. 673 ; Sutton v. Irwine, 12 Serg. & E. 13 ; Ex parte Nolte, 2 Glyn. & Jam. 295 ; Hamill v. Purvis, 2 Penns. 177 ; Cremer v. Hig- ginsou, 1 Mason, 323, 335, 336 ; Myers v. Edge, 7 T. R. 250, 252 ; Pember- ton V. Oakes, 4 Russ. 154 ; Wagnon v. Clay, 1 Marsh. 257 ; Coursey v. Ba- ker, 7 Harr. & Johns. 28 ; Story Partn. § 127, and notes. ' Foote V. Sabin, 19 Johns. 154; Laverty u. Burr, 1 Wendell, 531 ; New York Fire Ins. Co. v. Bennet, 5 Conn. 574 ; Story Partn. § 127 and note ; 3 Kent Com. 47; Andrews v. Planters' Bank, 7 Smedes & M. 192; Sweet- ser V. French, 2 Cushing, 309, 314 ; Langan v. Hewett, 13 Smedes & Marsh. 122; Rollins v. Stevens, 31 Maine, 452. In Foote v. Sabin, it was held that the burden of showing the authority or consent of the other partners lies on the creditor or holder of the note. So it was held in Sweetser v. French, 2 Cushing, 309, 314, 315 ; Hamill v. Purvis, 2 Penns. 177 ; Langan v. Hewett, 13 Smedes & Marsh. 122. See also Dob v. Halsey, 16 John. 34; Bank of Dochester v. Bowen, 7 Wendell, 158; Livingston v. Roosevelt, 4 John. 251 ; Schermerhorn v. Schermerhorn, 1 Wendell, 119; Rolston v. Click, 1 Stewart, 526 ; Merceiu v. Mack, 10 Wendell, 461 ; Bank of Kentucky v. Brooking, 2 Litt. 45 ; Andrews v. Planters' Bank, ubi supra. The word surety added to the name of the firm is sufficient to cast the burden of proof on the holder, to show that the bill was drawn with the assent of all the partners. Boyd v. Plumb, 7 Wendell, 309. One partner cannot give the name of the firm upon accommodation paper. Bank of Tennessee v. Saffar- rans, 3 Humph. 597 ; Gansevoort v. Williams, 14 Wendell, 133, 138 ; Wil- son V. Same, id. 146 ; Austin v. Vandermark, 4 Hill (N. Y.), 261 ; Williams V. Wallbridge, 3 Wendell, 415. Unless done with the knowledge of the firm, or unless it be that habit of that partner, with consent of the firm. Bank o£ Tennessee v. Saffarrans, 3 Humph. 597 ; Whaley v. Moody, 2 Humph. 495 ; Chenowith v. Chamberlin, 6 B. Monroe, 60 ; Sweetser v. French, 2 Cushing, 309. See Early v. Reed, 6 Hill (N. Y.), 12; Darling v. March, 22 Maine, 188, 189. In this last case it was decided, that, where a party receives a note indorsed by one of the members of a firm in the name of the partner- ship, and knows at the time that the partner indorses it as security for the maker, it is incumbent on the person so receiving the note to rebut the pre- sumption created by the law, that he received the firm name as surety for another in fraud of the partnership. Such presumption, however, may be rebutted by proof of frequent interchanges of the partnership names between the makers and indorsers for a long time, without direct proof of the assent of each member. The defence, however, that negotiable paper is signed by one partner for accommodation will not avail where it gets into the hands of 35 410 RIGHTS OF PARTNEES, ETC. [BOOK III. SECTION IV. OF LIABILITIES UXDEE ACTS AND ASSUEANCES IN GENEKAL, IN THE NAME OF THE FIRM. § 422. In the foregoing sections we have confined ourselves to the examination of particular contracts, as loans, purchases, sales, and pledges effected,' bills and notes negotiated, and guaranties given by individual partners in the name of the firm. But gener- ally, in the language of Lord Tenterden, — "The act and assur- ance of one partner, made with reference to business transacted by the firm, will bind all the partners." ^ Hence, the acknowledg- ment, promise, or undertaking of one partner, with reference to the contracts of the partnership, is the acknowledgment, promise, or undertaking of all.^ § 423. In Vicary's case,^ which was an action of covenant against two, it was held that the affidavit of one of them might be given in evidence as the acknowledgment of both. So, in an action against two as the drawers of a bill, the acknowledgment by one that' the bill was drawn by the partnership binds both.* Generally, also, an admission made by one of two partners, relative to a partnership transaction, which occurred during the existence of the partnership, whether made before or after the dissolution of the partnership, is competent, though not conclusive evidence, a hona fide holder for value. Bank of Tennessee v. SaiFarrans, 3 Humph. 597 ; Catskill Bank v. Stall, 15 Wendell, 364 ; Wells v. Evans, 20 Wendell, 251 ; Austin v. 'Vandermark, 4 Hill (N. Y.), 259 ; Gansevoort v. Williams, 14 Wendell, 133 ;. Wilson v. Same, id. 146 ; Gano v. Samuel, 14 Ohio, 592. ' 2 Barn. & Aid. 679. 'Wood V. Braddick, 1 Taunt. 104 ; Story Partn. § 107. The authorities are all agreed on this point, when such acknowledgments, promises, or un- dertakings occur during the existence of the partnership. But when they occur after the dissolution, the authorities are conflicting as to their effect. Story Partn. § J 07 and note. « Bac. Abr. Evidence, 623 ; Story Partn. § 107. * Hodenpyl v. Vingerhoed, Chit. Bills, 381, n. 7th ed. ; Gray v. Palmer, 1 Esp. 135. CH. I.] LIABILITIES OS PARTNERS. 411 to charge the other partner.^ And where two houses are partners in consignments, the acknowledgment by one house of the receipt and sale of goods is binding on both houses.^ 1 Wood V. Braddick, supra; Pritchard v. Draper, Kuss & Mylne, 199 ; Vinal V. Burrill, 16 Pick. 406 ; Bridge v. Gray, 14 Pick. 61. On this point there are many conflicting decisions. Cady v. Shepherd, 11 Pick. 407. Mr. Chancellor Kent (3 Kent Com. 49, 50), has thus stated the doctrine: "In Whitcomb v. Whiting, Doug. 652, it was held that the admission of one joint maker of a note took the case out of the statute of limitations as to the other maker, and that decision has been followed in this country. Bound v. Lathrop, 4 Conn. 336 ; Hunt v. Bridgham, 2 Pick. 581 ; Ward v. Howell, 5 Harr. & Johns. 60. The doctrine of that case has even been extended to acknowledgments by a partner after the dissolution of the partnership, in relation to antecedent transactions, on the ground that, as to them, the partnership still continued. Cady v. Shepherd, 11 Pick. 408 ; Austin v. Bostwick, 9 Conn. 496 ; Hendricks v. Campbell, 1 Bailey, 522; Simpson v. Geddes, 2 Bay, 533 ; Fisher v. Tucker, 1 M'Cord, Ch. 190; Fellows v. Gui- marin, Dudley (Goo.), 100; Brewster v. Hardeman, Dudley, 140 ;, Green- leaf u. Quincy, 3 Fairf. 11; Gray «. Bowen, '8 Metcalf, 100. But there have been qualifications annexed to the general principle, for, after the dis- sbliition of a partnership, the power of the members to bind the firm ceases, and an acknowledgment of the debt will not of itself be sufficient, inasmuch as that would, in effect, be ke&ping the firm in life and activity. Hackley v. Patrick, 3 Johns. 536 ; Walden v. Sherburne, 15 John. 409 ; Baker v. Stack- pole, 9 Cowen, 420; Shelton v. Cocke, 3 Munf 191 ; Chardou v. Calder, 2 Const. Rep. S. C. 685; Fisher u. Tucker, 1 M'Cord, Ch. 177, 179; Walker V. Duberry, 1 Marsh. 189 ; Chardon v. Oliphant, 3 Brevard, 183. To give that acknowledgment any force, the existence of the original partnership debt must be proved, or admitted aliunde. ; and then the confession, of a partner, after the dissolution, is admissible, as to demands not barred by the statute of limitations. Smith v. Ludlow, 6 Johns. 267 ; Johnson u. Beardslee, 15 Johns. 3; Cadyi;. Shepherd, 11 Pick. 400; Brisban u. Boyd, 4 Paige, 17; Greenleaf u. Quincy, 3 Fairf 11." In Mann v. Locke, 11 N. Hamp. 250, Mr. Justice Upham remarked : " The admission of either partner, while tlie partnership exists, will bind the firm, and it cannot be in the power of the firm by a mere dissolution, which either partner may ordinarily effect at any moment, to deprive those dealing with them of the benefit of any confessions, declarations, or statements of a partner in relation to contracts, made during the continuance of the partnership." " The partner can at no time be pre- sumed to make untrue admissions or confessions against the firm, as these confessions operate against himself equally with the other partners." In respect to such contracts, Mr. Justice Wilde, in Cady li. Shepherd, 11 Pick. ' Cheap V. Cramond, 4 Barn. & Aid. 412 EIGHTS OF PARTNERS, ETC. [BOOK III. § 424. It has been decided that the promise by one partner to pay a debt as a partnership debt is a promise by the firm. Gr., a creditor, of M'Neil & Co., was a debtor of Lacy & Wilson, who sued and arrested him. G. afterwards executed a deed of assign- 408, remarked : " It is immaterial whether the confession of any one of the partners was made before or after the dissolution. Whether the other part- ners are necessarily and conclusively bound by such confessions is a different question. Doubtless they may disprove the truth of such confessions ; they may prove payment, or any other discharge of the claim, or that the con- tract or claim had never any legal validity. But that the confessions of any one of the defendants, in an action against several on a joint contract, may be given in evidence against them, the joint contract being first proved aliunde, cannot, we think, be reasonably doubted." Vinal v. Burrill, 16 Pick. 406 ; Bridge v. Gray, 14 Pick. 61. " This rule does not enable a partner, after the dissolution, to create a new debt or obligation.'" Per Putnam J. in Vinal v. Burrill, 16 Pick. 406. In South Carolina, the confessions of one partner, made after dissolution, in respect to the balance of an account, were admitted in a suit against himself and the other partner. Geddes v. Simpson, 2 Bay, 533. So in Massachusetts. Vinal v. Burrill, 16 Pick. 401 ; Bridge v. Gray, 14 Pick. 55 ; Ide v. Ingrahara, 5 Gray, 106. So in Virginia. Garland v. Agee, 7 Leigh, 362. But see Woodworth v. Downer, 13 Ver- mont, 522. Such confessions were admitted in Maine as to facts that oc- curred before dissolution. Parker v. Merrill, 6 Greenl. 41. Mr. Justice Story thinks it difficult, upon principle, to perceive how any acknowledg- ments, declarations, or statements made by one partner after the dissolution, respecting the real or supposed transactions, or duties, or obligations of the partnership during the continuance thereof, are binding as evidence or otherwise upon the other partners who have not assented thereto, any more than the declarations Or acts or acknowledgments of any other agent of the partnership would be, after his agency had ceased. Story, Partn. § 323. See also, Hackley v. Patrick, 8 Johns. 536 ; Wilson v.. Torbet, 3 Stewart, 296 ; Chardon v. Calder, 2 Const. Rep. S. C. 685 ; Yandes v. Lafavour, 2 Blackf 371; Brady v. Hill, 1 Missouri, 315; Ward v. Howell, 5 Harr. & John. 60; Shelton v. Cocke, 3 Munf 191 ; Barringer v. Sneed, 3 Stewart, 201 ; Gleason v. Clark, 9 Cowen, 57; 1 Greenl. Ev. § 112 and note. Hop- kins V. Banks, 7 Cowen, 650 ; Baker v. Stackpole, 9 powen, 420; Wiggins V. Hammond, 1 Blissouri, 121;' Owings v. Low, 5 Gill & John. 134; Com- monwealth V. Simmons, 6 J. J. Marsh. 614; Flanagin v. Champion, 1 Green Ch. 51 ; Bispham v. Patterson, 2 M'Lean, 88. In Darling v. March, 22 Maine, 184, it was decided, that, if a note has been indorsed by partners in the name of their firm, a waiver of demand and notice, being but a modi- fication of an existing liability by dispensing with certain testimony which would otherwise be required, may be made by one partner after the dissolu- tion of the partnership and before the note became payable. , See 10 Moore, 393. CH. I.] LIABIIilTIBS OF PAETNEES. 413 ment to Lacy k Wilson, of all the money due to him from M'Neil & Co., and the action against him was discontinued. A written notice of the assignment was sent to Pizey, of the- firm of M'Neil & Co., who made no objection to it, but said that " another person had given prior notice of £500, which he must pay first ; but they would pay Lacy & Wilson, after the X500, as soon as they re- ceived the money." He also said, on a subsequent occasion, that " if the people of ChiU (meaning the partners in M'Neil's house resident at Chili) had not paid the money to C, he would pay it ; and a notice to Chili would have made no difference. Between the respective times at which Pizey made these promises, the partner- ship of M'Neil & Co. was dissolved by the retirement of M'Neil. Eventually the money was not paid ; whereupon Lacy & Wilson brought an action for money had and received against the part- ners of M'Neil's house, including M'Neil ; and one question was, whether Pizey's promise to pay was binding on M'Neil. The court held it to be clear that the promise to pay, being made by one partner, for and in the name of the rest, coupled with the dec- laration " that a notice to Chili would make no difference," was a perfectly good promise to bind the other partners.^ So one part- ner can bind the firm by assenting to a transfer of a debt due to it ; as for example, to a transfer of the firm's account from their banker to his successor in business.^ § 425. According to the English authorities |) 4 T. K. 720. 500 EIGHTS OF PARTNERS, ETC. [bOOK III. tion of the trust -whicli they severally repose in each other, and also in pursuance of the said agreement, have and do, each for himself, his heirs, executors, &e., mutually covenant and agree with each other, &e. ; 1st. That the said ship Triumph, whereof the said S., Pearce is sole owner, shall, from the day of the date, and until her return from her intended voyage, be at the disposal, direction, and risk of all the parties hereto, jointly, at the valua- tion of £3,750, &c. 2d. That the said J. K. and J. H., by themselves and others, who have or shall subscribe, &c., shall and will, on or before the 24th August next, procure and provide a cargo of goods for the said intended voyage, to the value of be- tween .£22,000 and £25,000, and wTiioJi goods shall, in the judg- ment and opinion of the majority of the parties to these presents, he deemed eligible and proper for the voyage and markets, &c., &c. ; and that they, the said J. R. and J. H., and other the per- sons who subscribe, &c., shall and will prepare and ship the said cargo, at such time and in such manner as the majority of the said concerned, or their committee, shall direct. 4th. That, in case the said S. Pearce shall be desirous to increase his interest in the ... . • said joint concern, he shall be permitted so to do, by shipping, on the joint account, as many goods, over and above the goods to be shipped by the said J. R., J. H., and others, who shall subscribe, &c., as he may think proper ; but the said goods so to be shipped by the said S. Pearce are to be such articles as the majority of the concerned, or their committee, shall approve of as proper for the voyage and market. 5th. That the said £3,750, together with the amount of the additional outfits to be advanced by the said S. Pearce, the amount of half of the premiums of insurance to be made by the said S. P. on the said ship, freight, and cargo, and such amount of goods as the said S. P. may ship on the joint account, as above mentioned, shall be considered as the said S. P.'s share or capital in the said joint undertaking; and he, the said S. P., shall be entitled to receive the profit or bear the loss thereon, in the exact proportion as the amount of all such sums shall be to the remainder or other part of the said joint concern ; and that the said J. R. and J. H., and the subscribers, &c., shall receive the profit, or bear the loss, in the Jike proportion as to the sums set opposite to their several names." On the 28th July, 1787, the following memorandum was indorsed on the articles by the same persons : " Notwithstanding what may be understood to CH. III.J LIMITS OF LIABILITY. 501 be the meaning of the foregoing articles, it is hereby declared by aU the parties, that, &c. ; and that each party whose name is hereunto subscribed is to hold no other share or proportion in the said concern than the amount of what each separately orders and ships ; and which interest will be hereafter declared, agreeably to the true intent and meaniag of this agreement. And it is further declared, that the orders given for the cargo and outfit of the ship are to be each separately paid ; and that one is not bound for any goods or stores ordered or shipped by the other; and that the said S. Pearce has free hberty to ship what goods are suitable for the voyage over and above the ship and outfit, leaving room clearly for those ordered by Robertson and Hutchinson, and W. R. And it is to be understood that the ship is made over in trust' for the general concern." In May, 1787, the plaintiff", by the order of Pearce, supplied copper to sheathe and repair the ship Tri- umph, to the amount of £482. In August, 1787, the plauitiff, by the orders of Pearce, delivered copper on board the said ship, to the amount of £938 3s. Zd., which formed part of the cargo thereof. In October, 1787, the ship sailed from London for Os- tend, and proceeded from thence to the East Indies, with the goods so furnished by the plaintiff, and other goods, on board. In January, 1788, Pearce became a bankrupt, and Saville proved his .debt under the commission against him ; and ia February, 1788, William Robertson also became a bankrupt. The ship returning in 1789, the defendant Robertson went on board, and, without sending advice to Pearce's assignees, took her clandestinely to Ostend, and sold her for his own and Hutchinson's benefit, be- cause (as he admitted) "he and his partner were liable to pay the whole debt for ship and cargo." In January, 1790, the de- fendants became bankrupts. Upon the argument of the case, before the Court of King's Bench, it was admitted that the plain- tiff was entitled to recover for the copper for sheathing ; but upon the question whether the defendants were liable for the rest of the goods, as partners, on the construction of the articles coupled with their subsequent acknowledgment and their acceptance of bills of exchange ^ drawn for the very goods, the court held they were not Uable, and founded their decision on the reasons urged ' As to the Bills of Exchange, see post, §§ 518, 519. 502 RIGHTS OP PARTNERS, ETC. [BOOK III. by the defendants' counsel, namely, that the defendants were not partners at the time when the contract was made ; and that, though their subsequent acts might explain the original contract, if it were doubtful at the time, they could not alter the original contract, against the intention of the parties, as expressed in .the articles. Lord Kenyon : " My difficulty arises from the form of this action, which is for goods sold and dehver^d ; for I do not see how any act which passed subsequent to the dehvery of the goods can have any retrospect so as to alter the nature of the contract, which was not doubtful. It might have been evidence to explain it to be a partnership contract, if the contrary had not expressly appeared. The facts of the case are shortly these : several per- sons who had no general partnership, nor any connection with each other in trade, formed an adventure to the East Indies. The outfit of the vessel was a joint concern of all the partners ; and that delivers the case from one consideration, namely, the parcel of copper for sheathing the ship, which is admitted to be a part- nership concern. But beyond that, I see no partnership between the parties till all the parcels of the cargo were delivered on board ; and that made it a combined adventure between all the parties. It was very properly asked, in the argument, if they^ were partners when the cargo was delivered, what share had Pearce ? ^ By the articles, he was not to bring in any definite aliquot part of the cargo ; but the agreement only was, that he should share in proportion to the part he should bring in ; it was optional in him whether or not he would bring in any goods ; and by another part of the agreement,^ if he were under any difficulty in bringing in the money, the others were to lend him credit. It is true that it was to be. determined by a majority of those con- cerned in the adventure, whether the goods which were to be sent to market were or were not proper ; and so far they all looked to each other's acts ; but each of them was to bring in his share only : and I cannot distinguish this case from that put at the bar, where several persons were to contribute their separate quota of money, and they applied to different scriveners to procure it ; they could not all be Hable for the capital which each should bor- row. At the time when this copper was furnished, Pearce stood See ante, § 510. » The Hth article. CH. m.] LIMITS OF LIABILITY. 503 in no relation whatever to the other persons, but he alone bought the copper in his own name, without carrying to market the name of any other person but his own.^ Suppose the plaintiff had brought an action for this copper the instant it was dehvered on board ; against whom must the action have been brought ? Pearce only ; for he alone was answerable at that time. I cannot, there- fore, see how it can be said that these goods, which were sold to Pearce only, and on his sole credit and account, were sold and dehvered on the partnership account. Afterwards, indeed, these defendants were to gain or lose by the joint cargo ; when the other goods were brought in, the partnership arose ; but each was to bring in his own particular stock. But in this case I think that the question stops short of affecting the defendants ; and I cannot see how the plaintiff can have a right to call on the defendants, as partners for the value of these goods, on a supposed contract, when the real contract between the buyer and seller was consum- mated before the joint risk began." § 514. The two cases of Saville v. Robertson, and Gouthwaite V. Duckworth, are clearly distinguishable ; still it will be proper to state their points of difference in the words of two learned judges. Lord Ellenborough, in Gouthwaite v. Duckworth, says : " The case of Saville v. Robertson does indeed approach very near to this ; but the distinction is, thgjt there each party brought his separate parcel of goods, which were afterwards to be mixed in the common adventure, on board the ship ; and till that admix- ture in partnership in the goods did not arise. But here the goods in question were purchased in pursuance of the agreement ^ This, however, would have been immaterial, had the parties been actual partners at the time, according to the general principles of our law of part- nership, ante, § 384. The point, if it needed decision, was expressly settled by Lord Ellenborough in Gouthwaite v. Duckworth. " There seems," said his Lordship, " to have been some contrivance to keep out of general view the interest which Duckworth had in the goods; the other two defendants were sen4^nto the market to purchase the goods of which he was to have a moiety ; and though they were not authorized, he says, to purchase ,on the joint account of the three, yet, if all agree to share in goods to be purchased, and in consequence of that agreement one of them go into the market and make the purchase, it is the same for this purpose as if all the names had been announced to the seller, and therefore all are liable for the value of them." 504 EIGHTS OF PARTNERS, ETC. [BOOK III. for the adventure, of wMcli it has been before settled that Duck- worth was to have a moiety." And Mr. Justice Bayley observed, that, " in Saville v. Robertson, after' the purchase of the goods made by the several adventurers, there was still a further act to be done, which was the putting them on board the ship in which they had a common concern, for the joint adventure ; and until that further act was done, the goods purchased by each remained the separate property of each. But here, as soon as the goods were purchased, the interest of the three attached in them at the same instant, by virtue of the previous agreement." ^ In the case of Post v. Kimberly, the leading facts of which have been already stated,^ it was held that there was no partnership between A. & B. and C. & D. in the outward cargo, except perhaps, so far as related to the transport and selling of it ; for that, although the whole cargo was shipped on board the same vessel, yet it was clear that each house purchased and put on board its alig^uot part without the concern or responsibility of the other. § 515. It is clear, from the preceding cases, that a person who supplies goods which are intended to be appropriated to the pur- poses of a joint adventure may, under certain circumstances, have no legal remedy for his debt, except against the individual adven- turer with whom he deals. But this will only be the case where, at the time when the goods are ordered, the partnership between the parties is not consummate, and the creditor has not acted on their joint credit. On the contrary, where several persons agree ' Upon ttis point Mr. Chancellor Kent remarks : " To render persons jointly liable upon a contract as partners, they must have a joint interest contemporary with the formation of the contract." 3 Kent Com. 36 ; Poin- dexter v. Waddy, 6 Munf. 418 ; Gow Partn. (3d ed.), 151, 152. See Sims V. Willing, 8 Serg. & R. 103 ; Post v. Kimberly, 9 John. 470 ; Brooke v. Evans, 5 Watts, 196 ; Story Partn. § 146 ; Ketchum v. Durkee, 1 Hoff. Ch. R. 538. " If, however," he adds, " goods are purchased in pursuance of a previous agreement between two or more persons, that one of them should purchase the goods on joint account in a foreign adventure, theyTn-e all an- swerable to the seller for the price, as partners, even though their names are not announced to the seller : for the previous agreement made the partr nership precede the purchase, and a joint interest attached in the goods at the instant of the purchase." 3 Kent Com. 56 ; Story Partn. § 147 ; Post v. Kimberly, 9 John. 470; Pelichy v. Hamilton, 1 Wash. C. C. 490. ' Ante, § 23. CH. III.] LIMITS OF LIABILITY. 505 to become partners in a particular adventure, and ttere is no stip- ulation between them that the partnership shall not be consum- mate until after the order of the goods, then, whether the order be given by one or more of the adventurers, their joint interest in the, goods will commence from the moment of the order, and their joint liability to the seller from the time of the dehvery. Therefore, where three persons engaged in a joint speculation for the purchase and importation of corn, but no partnership fund was raised for the speculation, and the parties met the expenses in thirds, and two only of the three had the management of the speculation, one of these two being the consignee, and the other the salesman of the corn ; it was nevertheless very truly said, that, if there had been a claim in that case by the seller of the corn, no doubt he would have been entitled to proceed against all the parties, and might have called upon them all for payment.^ Upon the same principles, where A. and others agreed to become partners in the purchase of fifteen shares of a copper adventure, and, in pursuance of the agreement, A. alone, and in his own name, contracted for the purchase of the shares, and paid a de- posit, to which the others contributed ; it was held that the others, as well as A., were bound by this contract, and that, upon an action and verdict against A. for the non-performance of it, the others were bound to contribute their proportion of the damages and costs.2 So, where A. & B., stationers, ordered certain paper- makers to supply paper to C. & D., printers, for the purpose of printing certain specified works, and, upon the bankruptcy of A. & B., the paper-makers discovered that 0. & D. were partners with A. & B. in the publication of those works. At the trial of an action, brought by the paper-makers against C. & D., to re- cover the value of the paper, Lord Denman C. J. told the jury that if they thought that at the time when the goods were fur- nished, the defendants were partners in the concern for whose benefit they were furnished, the jury were to find for the plain- tiffs. The jury did so find, and the Court of King's Bench re- fused to grant a new trial.^ § 516. If the separate supply of goods to one of several ad- ' Per Bayley B., Smith v. Craven, 1 Cromp. & Jerv. 500. ' Browne v. Gibbons, Bro. P. C. 491. ' Gardiner v. Childs, 8 Carr. & P. 345. 43 506 EIGHTS OF PAETNBRS, ETC. [BOOK III. venturers, before tlie partnership is consummate, creates no joint demand by the seller on the firm, it is still more easy to see that the separate loan of money to one of several adventurers, for the purpose of founding the partnership, will not constitute the firm the joint debtors of the lender.^ In the case of Saville v. l^obert- son, the judges continually referred to this principle as the founda^ tion of their judgment in that case. " I cannot," said Lord Ken- yon, " distinguish this case from that put at the bar, where several persons were to contribute their separate quota of money, and they applied to different scriveners to procure it ; they could not all be liable for the capital which each should borrow." And again : " Suppose several persons agreed to open a banker's shop, and it was agreed that each partner should bring into the house a certain sum of money as his share, it could not be contended, that, if one of them were to borrow money for his share, all the others would be liable for it." Again, per Grose J. : "I cannot distinguish this case from that put in argument, of several persons agreeing to enter into partnership, each bringing in a stipulated sum of money, and each borrowing his proportion of different persons ; in which case, it is impossible to say that the persons advancing could maintain actions against all the partners for the several proportions lent to each." § 517. The law on this subject is well settled by the case of Smith V. Craven.'^ There, Thompson, Craven, and Wharton, separate traders, engaged in a joint speculation for the purchase and importation of corn. For this purpose they employed Whar- ton's clerk, Rodbartus, as their agent, whom they despatched to Lubeck. Rodbartus was instructed, in a letter from Wharton, that he was to draw upon him, Wharton, for what moneys he might want ; Rodbartus being at the same time informed that the speculation was on the joint account of the three. Accordingly, in the course of this speculation, which lasted through several months, and consisted of various consignments to Wharton, bills were regularly drawn by Rodbartus on Wharton, and accepted by him, and were duly honored by the plaintiffs, the bankers of Wharton, on his account, and by his instructions. No partner- ship fund was raised for this speculation ; and it was agreed that the parties were to meet the expenses in thirds ; and the defend- • Story Partn. § 148. » 1 Cromp. & Jerv. 500. CH. III.] LIMITS OP LIABILITY. 507 ant, Craven, regularly contributed his proportion of the expenses. Wharton having become insolvent, the plaintiffs, who had no knowledge of the corn speculation during the time of these trans- actions, brought their action for money lent against the defendants. Craven and Thompson. Thompson having suffered judgment by default, the question was, whether, under these circumstances, the action ■vs;as maintainable against Craven ? And the Court of Ex- chequer held that it was not. Lord Lyndhurst : " It was agreed that each of these three persons should contribute a third, for the purposes of this joint speculation. It is expressly found by the case, that Craven did contribute his share. Nothing is stated on the case, which tends to show that Craven knew how the other two thirds were raised by Wharton and Thompson, his partners in this transaction. How could he know that they did not meet their shares with funds of their own ? He might suppose that Wharton, to whom the corn was consigned, might raise his share on the security of the proceeds. In point of fact, Wharton raised the money from the plaintiffs on his own credit ; but it does not appear that he had Craven's authority for so doing, nor is it found that Craven had any knowledge of his proceedings in this respect." Bayley B. : " If I supply my agent with money, which he mis- applies, and raises money elsewhere, can the person from whom he obtains the money sue me for the amount ? Wharton having given collateral security, the plaintiffs, as his agents and on his credit, not knowing any thing of the other parties, pay the money, and pay it in discharge of that which is the individual debt of their principal, and of him alone. As agents, they had no notice that they made the payment except on the iudividual behalf of Whar- ton; he only was trusted, and the advances were made on his credit alone ; the plaintiffs were not deluded by the prospect of a partnership security, and the claim must be restricted to Wharton alone." § 518. Where goods or money are supplied separately to one of several adventurers before the partnership is consummate, but they all draw a bill or give an acceptance for the value of the supply, the contract which was originally separate becomes joint under the security, and they who are parties to the security be- come in consequence jointly liable. In SaviUe v. Robertson,^ the ' Ante, § 513. 508 RIGHTS OF PARTNERS, ETC. [BOOK III. defendants accepted two bills of exchange for tlie amount of the cargo of copper supplied by the plaintiff, and the court held clearly, that though the action was not maintainable for goods sold and delivered, yet there was a good consideration for the bills, and the plaintiff might have recovered upon them. § 519. But to render all the drawers or acceptors liable on a bill or note so given before the commencement of the partnership, all must join in the security, for in such case one has no more implied authority to bind the rest by bUl, than he has to bind them by a mere order for goods. In the case of Greenslade v. Dower ,i A. and B. agreed to take a farm, and pay W., the former occu- pier, for fixtures, stock, crops, &c., by bOls at three months. W. afterwards, without the knowledge or consent of A., took from B. bills for the amount payable at six and twelve months, accepted by B. for himself and A. The Court of King's Bench held that the latter could not be sued on the bills. This case, it is true, might have been decided on the sole ground that one of two joint occupiers of a farm has no implied authority to bind the other by bill of exchange,^ and Holroyd J., rested his judgment entirely on this consideration. But two of the other judges were evidently of opinion that the partnership in a farm is not consummate untU the joint occupation, and consequently that a bill accepted before that period, by one of the intended partners of a farm in the name of the two, is not binding on the other. " I think," said Lord Tenterden, " that the mere joint occupation of the farm cannot operate by relation, so as to render these bids binding upon A., they haying been given contrary to the terms of the original con- tract, and without his assent." Bayley J. : "If several persons are in trade together, a bUl accepted by one in the names of the partnership, and in the course of their trading, biods them all. But there is a great difference between such a bill and one drawn for the purpose of founding the partnership. Originally, each partner would have to bring in his proportion of the capital, and it would be very unjust to let the acceptance of one for the capital birid all the others ; no authority of that nature can be implied, nor does it arise by operation of law, the debt not being a part- nership debt." ' 7 Barn. & Cres. 635 ; 1 Man. & Eyl. 640. See Fisher i'. Taylor, 2 Hare, 218 ; 1 Lindley Partn. 218. ' ^n(e, §402. CH. III.] LIMITS OF LIABILITY. 509 SECTION II. OF THE LIABILITIES OF AN INCOMING PAKTNEK. § 520. Generally, of course, an incoming partner will not be liable in respect of debts contracted by the firm previously to his joining it.^ In Shirreff v. Wilks, the facts of which have beeii already stated,^ Lord Kenyon said : " It would be carrying the liability of partners for each other's acts to a most unjust extent, if we sufiered a new partner to be bound in this manner for an old debt incurred by other persons." And it has been laid down as a general principle, that the liability of an incoming partner for contracts made by the firm- before his accession is not to be pre- sumed.^ § 521. Even where there is evidence of payment of interest by a new firm for an old debt, the incoming partner, by whose acces- sion the new firm is constituted, will not necessarily be bound thereby. In Kirwan v. Kirwan,* it appeared that A. kept an account in the nature of a banking account with the firm of B. & Co., and annual accounts were rendered to him. During the time that A. dealt with the firm, all the partners retired except C, who formed a new partnership with K. On the accession of K. a large capital was brought into the concern. A.'s account was then transferred from the books of the old to those of the new part- nership, and the balance was struck annually as before ; and A., until his death, which happened nearly three years afterwards, received sums on account, and interest on his balance from the new firm in the same manner as before. Upon the death of A., his administrators brought an action against the quondam partners and C, to recover the balance, and in that action the quondam partners contended that their responsibility had shifted to C. and 1 Story Partn. § 152; Poindexter v. Waddy, 6 Munf. 418; although the name of the firm continues the same. Hart v. Tomlinson, 2 Vermont, 101. « Ante, §497. ^ Catt V. Howard, 3 Stark. 5. See Beale v. Mouls, 10 Adol. & Ell. (n. s.), 976. * 2 C. & M. 617. And see Ex parte Sandham, 4 D. & C. 812. 43* 510 EIGHTS OF PARTNERS, ETC. [bOOK III. K., and it was argued in their behalf that the transfer of the ac- count into the books of the new firm, and the payments of money to A., amounted to evidence against K. that he intended to take the debt upon him. But the Court of Exchequer were of opinion that no inference of that sort could be drawn in the absence of any proof of A.'s assent to the substitution of K., as his debtor, for the original partners ; and BoUand B., observed further, that there was nothing to show that K. undertook to answer for the debts of the old firm, and the probabilities were that he would not incur further responsibilities. And although the account was transferred from the old to the new firm, the learned judge conceived that there might be many ways in which interest might be paid without K. being aware of it, and the manner of keeping the accounts led to the supposition that he was not aware of it. § 622. Unquestionably, however, peculiar circumstances may produce exceptions to the general rule ; ^ and it has been held that payment of interest of the old debts,^ length of standing in the firm, knowledge of the state of the books, accompanied with benefit derived from the contracts on which they are founded, will be evi- dence from which a jury may infer the assent of the incoming partner to debts previously contracted by the firm. The general rule, as well as the exceptions to it which may possibly occur, are well illustrated by the case of Ex parte Peele.^ There, Kirk, a warehouseman, carrying on business under the firm of Ku'k & Company, being indebted to Sir Robert Peele for goods sold, after that debt was contracted had entered into a treaty with Ford, a breeches-maker, for forming a partnership. About four months afterwards a commission of bankrupt issued against them. No articles having been executed. Ford disputed the point of partner- ship, which was tried at law, and the partnership was estabUshed upon the evidence as acts done. A petition was presented by Sir Robert Peele to prove his debt as a joint debt. In support of the petition, the affidavit of one Copeland stated that it was agreed that the separate debts of Kirk should be assumed by the partner- ship ; that entries were made in the books with the knowledge of Ford ; and, particularly, that the goods furnished by the petitioner, 1 Story Partn. § 152. ' Ex parte Jackson, 1 Yes. 131. ' 6 Ves. 602 ; 1 Hor. Supp. 631. CH. III.] LIMITS OF LIABILITY. 511 were entered at a reduced price. This was opposed by the affi- davit of Ford, denying the agreement, or even knowledge of these circumstances. Lord Eldon : " I agree it is settled, that if a man gives a partnership engagement in the partnership name, with regard to a transaction not in its nature a partnership transaction, he who seeks the benefit of that engagement must be able to say, that, though in its nature not a partnership transaction, yet there was some authority beyond the mere circumstance of partnership to enter into that contract, so as to bind the partnership, and then it depends upon the degree of evidence. Slight circumstances might be sufiicient, where in the original transaction the party to be bound was not a partner, but at the subsequent time had ac- quired aU the benefit, as if he had been a partner in the original transaction ; and it would not be unwholesome for a jury to infer largely that that obligation, clearly according to conscience, had been given upon an imphed authority. So here, if this was a case in which it was found upon the trial that this man was a partner upon a long existing partnership, with a regular series of transactions, books, &c., a knowledge of what his partner had been doing might be inferred against him ; that, which in common pru- dence he ought to have known. But that is not the case of this partnership : it was a treaty. It is not even yet agreed how the stock and partnership were to be formed. In the course of that treaty. Ford, ignorant of law, permits acts to be done which the law holds to be partnership acts. It is a very different considera- tion, whether this man, so trepanned into a partnership, had got regular books, &c. ; and it is difficult to say, not only that know- ing this he had agreed to it, but that he knew it : in which case I am afraid he must be bound. The fact has not been sufficiently inquired into." The order, therefore, directed a reference to the commissioners to inquire whether, at the commencement of the partnership, any debts due from Kirk on account of his stock in trade were assumed, and any debts due to him carried into the partnership, with the knowledge and assent of Ford. § 523. In a modem case of coach-proprietorship,^ the responsi- bility of incoming partners for the previous contracts of the firm was carried to a considerable extent. Mrs. Tomlinson, the pro- ^ Helsby v. Hears, ante, § 435. See Beale v. Mouls, 10 Adol. & Ell. (n. s.), 976. 512 EIGHTS OF PARTNERS, ETC. [BOOK III, prietor of the Liverpool and Chester mail agreed to convey watch- cases for Walker, the assay-master at Chester, at the ordinary charge for parcels. Upon the loss of some of the watch-cases, an action of assumpsit was brought against Mrs. T. and her partner, Sahsbury. It appeared that Salisbury did not become a partner until after the agreement, and after the last annual settlement of accounts between Walker and Mrs. T. Bayley J., in dehvering the judgment of the Court of King's Bench, said', that the contract was binding on all who were partners at the time, and all who might afterwards become so, until some notice of an intention to rescind the contract was given to Walker. § 524. It may be observed upon the case just cited, that a dif- ferent decision might have led to consequences highly injurious to the public. With respect, also, to Lord Eldon's order in Ex parte Peele, its equity is not to be doubted. But it seems clear, that in all cases of this nature the primary consideration for the jury is, between what parties was the contract actually made ? If, in- deed, it be clear from the evidence, that, upon the accession of a partner to the house, a new promise was made by the entire new firm in respect of the old debt, in such case there is a, deliberate novatio dehiti, and the new partner must be charged under the contract. But if no such new promise be proved ; if, for instance, the incoming partner was a dormant partner, and joined in no act to ratify the contract, he will not be concluded by it ; for neither was he a party to it originally, nor does the mere act of joining the partnership amount to a ratification. ^ In the case of Vere v. Ashby,^ it was agreed that Shaw should be a dormant partner in the firm of Ashby & Rowland, as from the 18th of May preceding the agreement. Accordingly Shaw became a partner, but his partnership was unknown to the world until after the dissolution of the firm. During the interval between the 18th of May and the date of the agreement, Rowland indorsed a bill of exchange in the partnership name of Ashby & Rowland to the bankers of the firm, who discounted it. It was held that Shaw was not liable on this bill, he not having been an actual partner at the time when it was discounted. In this case it was observed by Parke J., that the > See Story Partn. § 158 ; Ketchum v. Durkee, 1 Hoff. Ch. K. 528. no Barn. & Cres. 288; Lloyd & Welsby, 20; and consider Saville v. Robertson, 4 T. E. 720. CH. III.] LIMITS OF LIABILITY. 513 rule as to ratification applies only to the acts of one wto professes to act as the agent of a person who afterwards ratifies. Rowland, at the time when the first hill was discounted, did not profess to act as the agent of Shaw. The retrospective date of the partner- ship might affect the accounts between partners, but not the rights of third persons. § 525. But if, after the accession of a partner, a bill be accepted by the new firm in respect of a contract made by the old firm, that is a ratification of the contract by the new firm ; and every mem- ber of the new firm, whether dormant or ostensible, will be bound ; for the party who actually accepts the bill professes to act as the agent of all the partners, both dormant and ostensible.^ § 526. The principles which we have just been discussing will be applicable to circumstances unconnected with the general rou- tine of trade. Thus, when a person enters into partnership with another who is tenant under a lease, this gives the landlord no right of suing the firm. But it will be otherwise where there is a new promise by the firm. Therefore, where the lessee of a house and a person who became his partner after the commencement of the lease jointly agreed by parol with the lessor, that, if he would erect an additional story over the house, they would pay him during the residue of the term, besides the former rent, ^£10 per cent., it was held that the landlord might maintain a joint action of assumpsit against the partners on this collateral agreement.^ § 527. In adventures, an incoming partner is not liable for the price of the goods. In the case of Young v. Hunter ,3 it appeared that the defendants Hunter & Co. had purchased goods of the plaintiffs, which they intended to ship for the Baltic ; and that the defendants Hoffman &'Co., who were not otherwise partners with Hunter & Co., were afterwards allowed to join in the adventure, and to have a fifth share, upon the goods being put on board. The plaintiffs knew nothing of Hoffman & Co., but sold the goods to Hunter k Co. only. The Court of Common Pleas held that Hoffman & Co. were not liable as dormant partners for the price of the goods, and refused to grant the plaintiffs a new trial. ' See and consider Lloyd v. Ashby, 2 Carr. & Payne, 138 ; 2 Barn. & Adol. 23. 2 Hobey v. Koebuck, 2 Marsh. 434 ; 7 Taunt. 157. « 4 Taunt. 582. 514 RIfiHTS OF PARTNERS, ETC. [BOOK III. " Supposing it to be shown," said HeatL J., " that at one period of the transaction there was a partnership subsisting, it is not therefore to be inferred that there was a partnership in the par- ticular original purchase." And Gibbs J., observed as follows : — " The only possible ground for a new trial would be, if the plain- tiffs could show, that, at the time of the purchase of the goods from the plaintiffs, Hoffman & Co. and Hunter & Co. were con- cerned in that purchase on their joint account ; ^ now, the only evidence given of it was, that at the time of the shipment they were so interested. How long before the shipment the purchase was made does not appear ; but it is not to be inferred from Hoff- man & Co. being interested at the time of the shipment, that they were interested at the time of the purchase ; ^ it is for the plain- tiffs, who seek to implicate them, to make it out by evidence." § 528. An infant partner coming of age, and not disaffirming the partnership, may be considered in the light of an incoming partner as far as regards the future contracts of the firm. To avoid these, he must, as soon as he comes of age, give notice of his disaffirmance to the creditors of the firm.^ This was held in the case of Goode v. Harrison.* In April, 1818, Bennion, an infant, held himself out to the world as a partner with one Goode, particularly by joining with the latter in ordering goods of Har- rison, on the credit of Goode and Bennion jointly. After this purchase it did not appear that Bennion intended to continue a regular partnership with Goode, nor that he interfered with Goode's general business. Afterwards, and after Bennion came of age, Goode ordered more goods of Harrison, and accepted a bill for such goods in the joint names of himself and Bennion. No step had been taken by Bennion to apprise Harrison that he had ceased to be a partner with Goode. In an action brought by Harrison against Goode and Bennion, to recover the amount of the bill, it was held that Bennion was liable. At the trial, Bayley J., stated his opinion to the jury to be, that a fraud had been com- mitted by Goode, and that, where one of two innocent parties was ' See Gouthwaite v. Duckworth, ante, § 512. ' See Saville v. Robertson, ante, § 513. 8 3 Kent Com. 68; Chitty Cont. (ed. 1860) 170, 171 ; 1 LIndley Partn. 75, 76 ; ante, § 13 and note. » 5 Barn. & Aid. 150 ; ante, § 90. CH. III.j LIMITS OF LIABILITY. 515 to suffer, he ought to do so whose negligence occasioned the loss. That an infant may be in point of fact partner, and sue as a part- ner on a contract, though he is not Hable to the partnership creditors. That in April, 1818, Bennion held himself out as a partner with Goode, and to Harrison in particular ; and that after he came of age, in May, 1818, he should have given notice of his dissent from the partnership, or that he would be no longer liable as a partner, which he might easily have done. That he knew he would be supposed by Harrison still to continue a partner, and that he was negligent in not putting a stop to that delusion. That if an infant, shortly before he comes of age, represent himself as a partner, he ought to take care to notify that he is not so when he comes of age, as he facilitates the commission of a fraud. That though the payment after the infant came of age, was not sufficient to confirm the partnership, yet as there was in this case an actual partner- ship between Goode and Bennion, and inasmuch as Bennion might have prevented Harrison from being deceived, if he had given notice of his dissent to the partnership, or that he would be no longer hable as a partner, he ought to be hable to Harrison ; and that in effect, by his omission to do so, he suffered Goode to pledge his, Bennion's, credit to Harrison after he came of age. The jury accordingly gave their verdict for Harrison. A bill of exceptions was then taken to the learned judge's direction, but the, Court of King's Bench were unanimously of opinion that the direction was right.^ § 529. But, though such is the situation of an infant partner in regard to the future contracts of the firm, we may remark that he is much more secure against Hability for past contracts.^ In the first place, he will not be chargeable in an action in respect of past contracts by the English law, unless his promise to pay, or his rat- ification of a debt contracted during infancy, be made in writing.^ * See Dana v. Steams, 3 Gushing, 372. ' In Miller v. Sims, 2 Hill (S. C), 479, it was held that an infant partner, by confirming the contract of partnership after he came of age, would sub- ject himself to all the liabilities of the firm during his minority. " By the 5th section of Lord Tenterden's act, the 9th Geo. 4, c. 14, it is enacted, — " That no action shall be maintained, whereby to Charge any person upon any promise made after fnll age, to pay any debt contracted during infancy, or upon any ratification after full age of any promise or sim- ple contract made during infancy, unless such promise or ratification shall be 516 EIGHTS OF PARTNERS, ETC. [BOOK III. And, secondly, he may maintain an action to recover money paid by Mm on a contract entered into during Ms infancy, provided he has received no benefit fi-om the contract during that time ; ^ and d fortiori he may maintain such action against a party who holds the money as a penalty for the non-performance of the contract by the infant.^ If, on the other hand, he have received substan- tial benefit from the contract, it seems that he cannot, on attaining twenty-one, maintain an action for the recovery of money paid by himself personally, as the consideration of the contract.^ SECTION III. OP THE LIABILITIES OP A RETIRING PARTNER. § 530. When an ostensible partner retires from the firm, he must give notice of his retirement ; otherwise, he will be liable to the creditors of the continuing firm for contracts entered into by them subsequently to his retirement ; * for all the partners may be made by some writing, signed by the party to be charged therewith." A writing in such case is not generally, if it all, required in the United States. The current of authority in America in reference to the ratification of the voidable contracts of an infant is, that there must be an express confirmation, either by a new promise to pay, or by positive acts of the individual, after he has been of age a reasonable time, in favor of his contract, which are of a character to constitute as perfect evidence of a ratification as an express and unequivocal promise. Hale v. Gerrish, 8 N. Hamp. 3 74 ; Thompson r. Lay, 4 Pick. 48 ; Goodsell v. Myers, 3 Wendell, 479 ; Whitney v. Dutch, 14 Mass. 460 ; Ford v. Phillips, 1 Pick. 203 ; Lawson v. Lovejoy, 8 Greenl. 405 ; Cheshire v. Barrett, 4 M'Cord, 421 ; Bcnham v. Bishop, 9 Conn. 330 ; Mer- riam V. Wilkins, 6 N. Hamp. 432 ; Chitty, Cont. (6th Am. ed.), 152 et seq. and notes ; 2 Kent Com. 236 and notes ; Peirce v. Tobey, 5 Metcalf, 168; Dana v. Stearns, 3 Gushing, 372. A mere acknowledgment of the debt is not sufl5cient. Thompson v. Lay, 4 Pick. 48 ; Benliam v. Bishop, 9 Conn. 330; Hale v. Gerrish, 8 N. Hamp. 374 ; Peirce v. Tobey, 5 Metcalf, 168. > Corpe V. Overton, 10 Bing. 252; Chitty, Cont. (6th Am. ed.), 148, 149. " Corpe V. Overton, 10 Bing. 252. ' Holmes v. Blogg, 8 Taunt. 508 ; Chitty Cont. (6th Am. ed.), 148, 149 ; Breed v. Judd, 1 Gray, 455. * Parkin v. Carruthers, 3 Esp. 248 ; Stables v. Ely, 1 Carr. & Payne, 614 ; CH. III.] LIMITS OF LIABILITY. 517 bound, after the dissolution of the partnership, by a contract made by one partner, in the usual course of' business, and in the name of the firm, -with a person who contracted on the faith of the part- nership, and had no notice of the dissolution.^ The principle on ■which this responsibility proceeds is the negligence of the partners in leaving the -world in ignorance of the fact of the dissolution, and leaving strangers to conclude that the partnership continued, and to bestow faith and confidence on the partnership name in consequence of that behef ; ^ and where one of two innocent per- sons must suffer from giving a credit, he who has misled the confi- dence of the other and has been the cause of the credit, either by his representation, or his negligence, or his fraud, ought to suffer instead of the other.^ § 531. The effect of a proper legal notice of a partner's retire- ment is, to exonerate him from Uability for the future, though not for the past.* It is clear, therefore, that after a retirement prop- erly notified, no new contract by the conti&uing firm can bind the Graham v. Hope, 1 Peake, 154 ; Tombeckee Bank v. Dumell, 5 Mason, 57 ; Bernard v. Torrance, 5 Gill & John. 383 ; Lucas v. Bank of Darien, 2 Stew. 280; Sanderson v. Milton Stage Co., 18 Vermont, 107; Dundass v. Galla- gher, 4 Barr (Penn.), 205. ^ Gow Partn. (3d ed.), 248 ; 3 Kent Com. 66 ; Le Roy v. Johnson, 2 Peters, 186 ; Brisban v. Boyd, 4 Paige, 17 ; Price v. Towsey, 3 Litt. 423 ; Ketcham v. Clark, 6 John. 144; Thommon v. Kalback, 12 Serg. & E. 238 ; Tombeckee Bank v. Dumell, 5 Mason, 56, 57; Pitcher v. Barrows, 17 Pick. 365 ; AVhitman v. Leonard, 3 Pick. 177. ^ 3 Kent Com. 66; Story Partn. § 160. See Princeton & Kingston Turnpike Co. v. Gulick, 1 Harrison, 161. ' Story Partn. § 160. Mr. Justice Story in this connection, remarks ; " Unless the ostensible partner, who has retired from the firm, suffers his name still to appear as one of the firm so as to mislead the public (as by its being stated and still remaining in the firm name), he will not be liable to mere strangers, who have no knowledge of the persons who compose the firm, for the future debts and liabilities of the firm, notwithstanding his omis- sion to give public notice of his retirement ; for it cannot truly be said, in such cases, that any credit is given to the retiring partners by such strangers. Each new creditor or new customer is bound to inquire who are the parties really interested at the time in the firm, if he would be safe in his credit and dealings with them." Id. § 160. The learned judge cites the case of Car- ter V. Whalley, 1 Barn. & Adol. 11, and says it seems directly in point in support of the above doctrine. This case is referred to, post, § 536. * Wood V. Braddick, 1 Taunt. 104 ; Ault v. Goodrich, 4 Euss. 430. 44 518 EIGHTS OF PARTNERS, ETC. [bOOK III. partner who retires ; and hence, after the retirement of one or more partners, the remaining partner cannot put the partnership name to negotiable securities so as to bind the old firm.^ § 532. What shall amount to due and sufficient notice of the re- tirement of a partner has been treated as a question of considera- ble nicetj and difficulty ; for the notice need not be express ; it may be constructive, and may be implied from circumstances. A notice in one of the pubhc and regular newspapers of the city or county where the partnership business was carried on is the usual mode of giving the information, and may in ordinary cases be quite sufficient. But even the sufficiency of that notice might be questioned in many cases unless it was shown that the party enti- tled to notice was in the habit of reading the paper. Public no- tice, given in such reasonable way, would not be actual and express notice ; but it would be presumptive evidence for a jury to con- clude all persons, who have not had any previous deahngs with the firm.^ ' See more on this subject, post, § 540. " Godfrey v. TurnbuU, 1 Esp. 371. See Wrightson v. Pullan, 1 Stark. 375; 2 Chitty, 121; Story Partn. §§ 160, 161; 3 Kent Com. 66, 67; Watkinson v. Bank of Pennsylvania, 4 Wharton, 432; Lansing v. Gaine, 2 John. 300; Prentiss v. Sinclair, 5 Vermont, 149 ; Gravos u. Merry, 6 Cowen, 701. In Ketcham v. Clark, 6 John. 144, 147, Van Ness. J., said : '' In Eng- land, it seems to be necessary that notice should be given in a particular newspaper, viz. The London Gazette ; but we have no such usage or rule here. I think, however, we ought to go so far, at least, as to say that public notice must be given in a newspaper of the city or county where the part- nership business was carried on, or in some other way public notice of the dissolution must be given. The reasonableness of it may perhaps become a question of fact in the particular case; but public notice, in some reasonable and sufficient manner, must be given, and that will conclude all persons who have had no previous dealings with the firm; or if actual knowledge of the dissolution is, without such notice, brought home to the person dealing with the firm, such knowledge may be sufficient to conclude him." So, where the plaintiff, Godfrey (in Godfrey v. Turnbull, 1 Esp. 371), who had not previ- ously dealt with the firm, took a partnership bill which had been made in the partnership name after the retirement of a partner notified in the Lon- don Gazette, Lord Kenyon said to the jury : " If the dissolution be notified in the ordinary and usual way, as it is the only way in which the fact of dis- solution can be promulgated to the world, at least to those who have had no previous dealing with the partners, it seems sufficient at least to be left to the jury from thence to infer notice. In the present instance, there is no CH. III.] LIMITS OF LIABILITY. 519 § 533. As to persons who have been in the habit of dealing with the firm, it is requisite that actual notice be brought home to them ; ^ such notice may, however, be implied from circumstances. It is not material in what manner it is given.^ Where, on the proof of any actual notice to Godfrey, the plaintiff, but the publication in the Gazette is proved, antecedent to his taking the note. The jury are to judge from the practice in the usual course and ordinary mode of business. Notices are to be found in every Gazette of the dissolution of partnerships, which seem to point out that as a mode adopted by the world for notifications of this sort, and therefore every prudent man in business ought to consult them." See Tombeckbee Bank v. Dumell, 5 Mason, 56, 57. ^ Van Eps v. Dillaye, 6 Barbour S. C. Rep. 244; Hutchins v. Sims, 8 Humph. 423 ; Hutchins v. Hudson, 8 Humph. 426 ; Wardwell v. Haiglit, 2 Barbour (S. C), 549; Skannel v. Taylor, 12 La. An. 773; Johnson >. Totten, 3 Cal. 343; Page v. Brant, 18 111. 37. So held in this last case, though the person dealing with the firm had had only two transactions with the firm. See also, Clapp v. Rogers, 1 E. D. Smith (N. Y.), 549. The pre- vious dealer must have dealt directly with the firm ; it is not sufficient that he may have dealt in paper for which the firm was responsible. Hutchins V. Bank of Tennessee, 8 Humph. 418. " Vernon v. Manhattan Co. 17 Wendell, 526; s. c. 22 Wendell, 183; Watkinson v. Bank of Pennsylvania, 4 Wharton, 482 ; Mitchum v. Bank of Kentucky, 9 Dana, 166 ; Mauldin v. Bank of Mobile, 2 Ala. (n. s.), 502 ; Ketcham v. Clark, 6 John. 148 ; Coddington v. Hunt, 6 Hill (N. Y.), 595 ; Goddard v. Pratt, 16 Pick. 431-434 ; Ex parte Burton, 1 Gill & John. 207 ; Ex parte Leaf, 1 Deac. 176 ; Shurlds v. Tilson, 2 M'Lean, 458 ; Prentiss v. Sinclair, 5 Vermont, 149 ; White v. Murphy, 3 Richardson, 369. In Pitcher V. Barrows, 17 Pick. 365, Shaw C. J. said: "It has sometimes been held, that those who have been dealers and customers of a firm shall have actual notice of a dissolution ; but," he adds, " that may be thought too strict. But it has always been held, that, in default of actual and personal notice to a party, public notice in some newspaper shall be deemed necessary." " The doctrine," observes Mr. Chancellor Kent, " seems to be, that merely taking a newspaper in which a notice is contained is not sufficient to charge a party, for it is not to be intended that he reads the contents of all the notices in the newspapers which he may chance to take. The inference of construct!^, liotice from such a source was pretty strongly exploded in -some of the above cases." 3 Kent Com. 67, in note; Watkinson v. Bank of Pennsylvania, 4 Wharton, 482 ; Hutchins v. Bank of Tennessee, 8 Humph. 418; Boyd v. McCann, 10 Md. 118. But see Jenkins v. Blizard, 1 Stark. 418 ; Treadwell v. Wells, 4 Cal. 260 ; Page v. Brant, 18 111. 37. A news- paper notice accidentally reaching a bank director is not equivalent to act- ual notice to the bank ; but it seems it would be, if the notice was actually served on him, with directions to communicate it to the board. National Bank v. Norton, 1 Hill (N. Y.), 572. 520 BIGHTS OF PARTNERS, ETC. [BOOK III. trial of an action against three persons, ■who had been in partner- ship together at Liverpool, hut one of whom (Humble) had re- tired, it was proved that, upon his retirement, the new name of the firm was painted upon the counting-house, and the winding up of the affairs of the old partnership was removed to another place in Liverpool, and circular letters announcing the change of partners were sent to the correspondents of the old firm, ibut there was no particular advertisement of the change, nor any notice of it proved, which could affect the plaintiffs ; the Court of King's Bench held that these circumstances were a sufficient notification to all the world of a change in the firm, and that the action was not maintainable against Humble.^ In like manner, it has been ruled that a change in the forms of checks in a banking-house is, without any advertisement in the Gazette, or circular letter to the customers, sufficient notice of an alteration of the firm to a cred- itor who uses such checks.^ But where notice of the dissolution has not been published in a newspaper, or brought home to the knowledge of the party to be affected by it, evidence of the mere notoriety of the dissolution is not admissible to prove such notice.^ § 534. If the facts are all found or ascertained, the reasonable- ness of notice may be a question of law for the court ;* but gen- erally it will be a mixed question of law and fact, to be submitted to a jury under the direction of the court, whether notice in the particular case, under all the circumstances, has been sufficient to justify the inference of actual or constructive knowledge of the fact of the dissolution.^ So, also, it seems to be a question to be ^ ubmitted to a jury, whether there has been a previous dealing ' M'lver V. Humble, 16 East, 1G9. See Hart v. Alexander, 2 Mees. & W. 484 ; Irby v. Vining, 2 M'Cord, 379 ; Whitman v. Leonard, 3 Pick. 197 ; Howe V. Thayer, 1 7 Pick. 95, per Shaw C. J. ' Barfoot v. Goodall, 3 Camp. 147. = Pitcher v. Barrows, 17 Pick. 361; Goddard v. Pratt, 16 Pick. 412; Southwick V. Allen, 11 Vermont, 75. In Pitcher v. Barrows, 17 Pick. 365, Shaw C. J. said: "Mere notoriety may exist, and yet the party dealing with such firm may not be acquainted with it ; and where it is in the power of one party and his duty, to give public and explicit notice of a fact affect- ing the rights of others and he does not do it, it ought not to be assumed upon doubtful grounds of presumption." * Mowatt V. Howland, 3 Day, 353. 5 3 Kent Com. 67 ; Story Partn. § 161 ; 7 Jarm. Conv. (3d ed.), 89. CH. III.] LIMITS OP LIABILITY. 521 ■with the firm or not.^ The -weight of authority seems now to be, that notice in one of the usual advertising gazettes of the place where the business was carried on, and published in a fair and usual manner, is of itself notice of the fact of dissolution as to all persons who have not been previous dealers with the partnership.^ However, in all cases, the usual and most prudent mode of giving notice of dissolution is, to insert such notice in the Gazette, and also to send it round to the correspondents of the house. This has been ruled to be ample notice. ^ This being done, a retiring partner would be safe, though his name should be retained in the firm, provided it were without his authority.* § 535. But it matters not what notice is given of a partner's retirement, if he still retain his name in the firm. Until his name be removed, he will be hable for partnership contracts. Thus, where a retiring partner permitted his name to remain over the shopdoor after notice of dissolution in the Gazette, and, whUe his name so remained, a bill was accepted in the name of the firm, the retiring partner was held liable on this acceptance.^ Again, ^ Watkinson v. Bank of Pennsylvania, 4 Wharton, 482. J 3 Kent Com. 67; Godfrey v. TurnbuU, 1 Esp. 371; Parkin v. Car- ruthers, 3 Esp. 248; Gorham v. Thompson, Peake's Ca. 42 ; Graham v. Hope, id. 154 ; Leeson v. Holt, 1 Stark. 186 ; Jenkins u. Blizard, id. 420 ; Williams v. Keats, 2 Stark. 290 ; Wright v. Pulham, 2 Chitty, 121 ; Booth V. Quinn, 7 Price, 193; Lansing v. Gains, 2 John. 300; Ketcham v. Clark, 6 John. 144 ; Graves v. Merry, 6 Cowen, 701 ; Martin v. Walton, 1 M'Cord, 16; Bank of S. Carolina v. Humphreys, id. 388; Prentiss v. Sinclair, 5 Vermont, 149 ; Watkinson v. Bank of Pennsylvania, 4 Wharton, 482 ; Shurlds V. Tilson, 2 M'Lean, 458 ; Story Partn. § 161 ; Galliott v. Planters and Mechanics Bank, 1 M'MuUan, 209. ' Newsome v. Coles, 2 Camp. 617; Jenkins v. Blizard, 1 Stark. 418. Creditors may be expected to look into the Gazette for notices of the disso- lution of partnership. Munn v. Baker, 2 Stark. 255. But in matters un- connected with partnership and which are for the benefit of the person giving notice, as when he states in the Gazette that he intends to limit his responsibility in the course of his trade, the Gazette will be weak evidence in his favor as between him and his creditors, unless the latter can be proved to have been in the habit of reading that paper. Leeson v. Holt, 1 Stark. 186. • Newsome v. Coles, 2 Camp. 617 ; Jenkins v. Blizard, 1 Stark. 418 ; 3 Kent Com. 68. * Williams v. Keats, 2 Stark. 290 ; Dolman v. Orchard, 2 Carr. & Payne, 106 ; 3 Kent Com. 68. But where the retiring partner's name is retained 44* 522 RIGHTS OF PARTNERS, ETC. [bOOK III. A., B., and.C. were partners. B. retired from the firm, but it was agreed that his name should contmue until a future day. A. afterwards drew a note in the name of the old firm, payable to D. Before this note was drawn, B. informed D. that he had ceased to be a partner, but that his name was to continue for a certain time. It was held that B. was Uable on this note, notwithstanding such communication made to D. ; for that D. knowing that B.'s name was to be continued, knew that he was therefore responsible, and of course he relied on that responsibihty.^ § 536. A dormant partner is only chargeable to third persons in respect of contracts entered into by the firm during the time he is actually a partner, and his receiving the emoluments and profits of the business ; for third persons have never trusted to his credit ; ^ the dormant partner is hable during that time, because he is in fact a contracting party, taking a part of the profits of such contracts. But when he ceases to be in fact a partner, the reason ceases, and he is no longer liable.^ Therefore, upon a dis- solution between an ostensible and a dormant partner, it is not necessary for the protection of the latter from transactions subse- quent to the dissolution, that notice of such dissolution should be given to the creditors of the firm.* The dormant partner is no longer liable as a contracting partner after such dissolution, thou^ no notice is given, because the partnership name, under which the remaining partners continue to transact business, no longer in- cludes him, though that name may remain the same ; and he is not liable as holding out a false credit for the firm, because the in the form without Bis permission by tlie remaining partner, the former -is not bound to apply to the Court of Chancery for an injunction to restrain such use of his name where due notice of the retirement has been given. In such case, it is the duty of persons taking securities in the name of the old firm to inquire who are designated by that firm. Newsome v. Coles, 2 Camp. 617. ' Brown v. Leonard, 2 Chitty, 120. ' Evans v. Drummond, 4 Esp. 39 ; Kelley v. Hurlburt, 5 Cowen, 634 ; Grosvenor v. Lloyd, 1 Metcalf, 19; Armstrong v. Hussey, 12 Serg. & R. 315. ' Shaw C. J., in Grosvenor v. Lloyd, 1 Metcalf, 20 ; Story Partn. § 159 ; 3 Kent Com. 68. See Freel v. Campbell, 3 Hayw. 78. * Brooke v. Enderby, 2 Brod. & Bing. 71 ; 4 Moore, 501. Pe7- Patteson J., Heath V. Sansom, 4 Barn. & Adol. 177; Grosvenor v. Lloyd, 1 Metcalf, 19 ; Scott V. Colmesnil, 7 J. J. Marsh. 416. CH. ni.] LIMITS OF LIABILITY. 523 case supposes that he is not known as a partner, and therefore the firm derives no credit while he remains a secret or dormant part- ner. No customer, therefore, or other person deahng with the firm, can he disappointed in any just expectations if he silently withdraw from the firm.^ Where it is intended to be shown, that, in poiat of fact, a partner was strictly a dormant partner, and his interest not in fact generally known, ia order to excuse notice of dissolution, it is a question of fact for the jury.^ Even where a person has retired from a firm, who, though iatentionally a dor- mant partner, was known to many as a member of the firm, he wiU not, by failing to give notice of his retirement, become liable to the creditors of the remaining partners, if such creditors, at the time of their respective contracts, were ignorant that he was ever a partner.^ § 537. But a dormant partner will be liable to the wlwle amount of a debt due during his copartnership, whether his connection with the firm be or be not known to the creditor at the time of the contract.* Wilkinson had been a dormant partner in a ship with one Cay, but had retired. Robinson, the plaintiff, supplied the ship and the captain with stores and cash on account of the ship, to the amount of £1,000 and upwards. The amount of the debt at the time of Wilkinson's retirement, was .£401 16s. \d. Cay having become insolvent, the Court of Exchequer held clearly, that Robinson was entitled to recover against Wilkiason the total sum of £401 16s. Id. (with a trifling deduction on a particular account), although, when the goods were supphed, Robinson had no knowledge that Wilkinson was a partner. " A party," said Graham B., " has always a right agaiast a concealed partner of whom he has previously had no knowledge, as soon as he discovers ' Shaw C. J., in Grosvenor v. Lloyd, 1 Metcalf, 20, 21 ; Sutherland J., in Kelley v. Hurlburt, 5 Cowen, 536. ^ Shaw C. J., in Goddard v. Pratt, 16 Pick. 429 ; Cregler u. Durham, 9 Ind. 375. ' Carter v. Whalley, 2 Barn. & Adol. 1 1 ; Kelley v. Hurlburt, 5 Cowen, 534 ; 3 Kent Com. 68 ; Story Partn. §§ 159, 160 and note; Cregler v. Dur- ham, 9 Ind. 375. See Jones v. Shears, 4 Ad. & Ell. 832. But such partner would be liable after his retirement from the firm to creditors, who knew him as a member of the firm, if they were not notified of his retirement. Pavis V. Allen, 3 Comstock, 168. ' Lea V. Guioe, 13 Smedes & Marsh. 656. 524 RIGHTS OP PAETNBKS, ETC. [bOOK III. him, unless that ignorance were his own fault ; as, if he had not used due intelUgence in finding him." ^ Where the partnership of a dormant partner is known to one particular creditor, he will be hable to that creditor, until he has notice of the partner's re- tirement. Due notice ought, therefore, to be given to such cred- itor ; ^ because, as to him, the dormant partner is in the same situation as if the existence of the partnership had been notori- ous. ^ § 538. Notice, in fact, is not requisite where a partnership is dissolved by operation of law.* As, where it is dissolved by the death or bankruptcy (duly declared) of a partner.^ So in case of a dissolution by pubhc war.^ So in cases of Hmited partner- ships, where it is required that the terms of them and the time of their continuance shall be published at the commencement of their business, no formal notice of the dissolution of the firm at the end of the period limited is necessary to prevent the general partners from charging the partnership with new debts contracted after that time.' § 539. Having disposed of the preliminary subject of notice of ' Robinson i'. Wilkinson, 3 Price, 538 ; and see as to ignorance by the creditor of the dormant partnership, Wintle v. Crowther, 1 Cromp. & Jerv. 316; Vere v. Ashby, 10 Barn. & Cres. 288; Ex parte Gellar, 1 Rose, 297; Gardiner v. Childs, 8 Car. & Payne, 345. ' Evans v. Drummond, 4 Esp. 89 ; Farrar v. Deflinne, 1 Carr. & Kirwan, 580 ; Story Partn. § 159 ; Bernard v. Torrance, 5 Gill & Johns. 383. " Per Creswell J., in Farrar v. Deflinne, 1 Carr. & Kirwan, 580. Even generally in the case of a dormant partner's retirement from the firm, " it is usual and more safe," observes Mr. Jarman (7 Jarm. Conv. 90, 3d ed.), " to insert an advertisement in the Gazette, for the fact of the existence of the partnership may have been inadvertently divulged, though it was not notorious, and proof of its being partially known among third persons would, it should seem, be sufficient to charge the seceding partner without bringing the knowledge of it home to the plaintiff." Evans v. Drummond, 4 Esp. 89. See Carter v. Whalley, 1 Barn. & Adol. 11 ; Jones v. Shears, 4 Adol. & Ell. 832.. * 3 Kent Com. 63, 67 ; Story Partn. § 336. * Anle, § 120 ; D. Lord Eldon, VuUiamy v. Noble, 3 Meriv. 614 ; D. Lord Thurlow, Webster v. Webster, 3 Swanst. 490, note ; 3 Kent Com. 63 ; Story Partn. §§ 336, 337,339; Gow Partn. (3d ed.), 304-306 ; Caldwell v. Still- man, 1 Rawle, 212. ° Griswold V. Waddlngton, 16 John. 494 ; s. c. 15 John. 57. ' Haggerty v. Taylor, 10 Paige, 261. CH. III.] LIMITS OF LIABILITY. 525 dissolution, we will endeavor to investigate a variety of questions relative to the retiring partner's liability. It may be premised that contracts by specialty will of course be binding on the partners who have executed them, notwithstanding their retirement. And where a lease has been taken in the partnership name, a retiring partner, if he means to absolve himself from liability for future rent, should see that the lease is properly surrendered. Where a lease was taken by A. and B., partners, for seven years from 1827, and A. retired in 1829, and afterwards B. entered into partnership with C, it was held that, as no surrender of the lease was executed on A.'s retirement, he was still liable for rent, al- though the landlord had notice of his retirement, and received rent both from B. singly, and from B. & 0. as partners, and wrote a letter to his attorneys (which, however, was not sent), directing them to make out a lease to B. & C.^ § 540. Generally, when a bond fide dissolution has taken place, the retiring partner will not be bound by any new contract entered into by the remaining partners. ^ This doctrine was carried to so ' Graham v. Whichelo, 1 C. & M. 188. So tie retiring partner continues liable for the non-fulfilment of other executory contracts entered into before the dissolution. Whiting v. Farrand, 1 Conn. 60. "Where a firm has re- ceived merchandise to be sold on commission, but before it is all sold, one of the partners retires and the others continue the business, the retiring part- ner is liable jointly with the others, for proceeds of the merchandise subse- quently received by them. Briggs v. Briggs, 15 N. Y. (1 Smith), 471 ; Dean V. McFaul, 23 Mis. (2 Jones), 76. '^ Galliott V. P. and M. Bank, 1 M'MuUan, 209 ; Fisher v. Tucker, 1 M'Cord Gh. 172, 173i Scott v. Shipherd, 3 Vermont, 104; Bell u. Morri- son, 1 Peters, 351 ; Neal v. Hassan, 3 M'Cord, 278 ; Mitchell v. Ostrom, 2 Hill (N. Y.), 520 ; Lansing v. Gaine, 2 John. 300 ; Bank of S. Carolina v. Humphreys, 1 M'Cord, 388 ; Story Partn. § 322 ; 3 Kent Com. 63 ; Wood- ■worth V. Downer, 13 Vermont, 522 ; Draper v. Bissel, 3 M'Lean, 275 ; Bank of Port Gibson v. Baugh, 9 Smedes & Marsh. 290 ; Simmons v. Curtis, 41 ■Maine, 373 ; Milliken v. Loring, 37 Maine, 408 ; Hurst v. Hill, 8 Md. 399 ; Speake v. White, 14 Texas, 364. They cannot even renew a partnership note. National Bank v. Norton, 1 Hill (N. Y.), 572 ; Bank of S, Carolina V. Humphreys, 1 M'Cord, 388 ; Martin v. Kirk, 2 Humph. 529 ; Bowman v. Blodgett, 2 Metcalf, 309, 310; Parker w. Cousins, 2 Grattan (Virg.), 372; Stone V. Chamberlin, 20 Geo. 259. And in Virginia it has been held that one partner, after a dissolution, cannot bind the others by settling accounts with customers and allowing them credits. Kootes v. Wellford, 4 Munf. 215. See also, Woodworth v. Downer, 13 Vermont, 522. But see Murray v. 526 EIGHTS OF PARTNERS, ETC. [BOOK HI. great a length in Pindar v. Wilks,^ as to make that case extremely doubtful, though decided by a judge of great authority. There, three partners. A., B., and C, ordered goods from abroad by means of an agent, in whose name the bill of lading was made out. They afterwards dissolved partnership, and made over their prop- erty to trustees, for their creditors, leaving A. and B. to settle the affairs of the firm. The goods arrived, and were delivered to A. and B. In an action against A., B., and 0., for the freight, Gibbs, 0. J., held, that, inasmuch as an implied assumpsit for the freight did not arise until dehvery of the goods, and C. had left the partnership before the dehvery, C. was not liable for the freight. And this decision was confirmed by the Court of Common Pleas. Upon consideration of this case, it seems difficult not to think that C, by joining in the contract, incurred an inchoate responsibility which was made complete by the subsequent delivery of the goods ; and, therefore, that he ought to have borne all the consequences of his contract. § 541. Where a bond fide dissolution has taken place, the retir- ing partners are not to be bound by instruments negotiated in the name of the original firm after such dissolution, even though they Mumford, 5 Co wen, 441 ; M'Pherson v. Rathbone, 11 Wendell, 96 ; Draper V. Bissel, 3 M'Lean, 275 ; Robinson v. Taylor, 4 Barr (Penn.), 242. A note given after dissolution, by a partner having power to settle and adjust the affairs of the partnership, in settlement of an outstanding account against the firm, is not binding on the other members, and is not a discharge of such claim; Perrin v. Keene, 19 Maine, 355 ; Hamilton v. Seaman, 1 Smith (In- diana), 129 ; Chase v. Kendall, 6 Ind. 304 ; Palmer v. Dodge, 4 Ohio (n. s.), 21 ; even where he has the power to use the firm name in liquidation. Fowler v. Richardson, 3 Sneed (Tenn.), 508 ; Conklin v. Ogborn, 7 Ind. 553. Unless the party taking such note has not been legally notified of the dissolution. Lamb v. Singleton, 2 Brevard, 490 ; Stone v. Chamberlin, 20 Geo. 259 ; Merrit v. Pollys, 16 B. Monroe, 355. But one partner, even after dissolution, may indorse the note of the firm payable to himself, given before dissolution. Temple u. Seaver, 11 Gushing, 314. How far the settling partner may bind the others for money hired to pay parnership debts after a known dissolution, see Davis v. Desauque, 5 Wharton, 630. Where, after a part- nership is dissolved, a suit for a partnership debt is brought against the former partners, and one of them is held to bail, and judgment is recovered against both, and the bail are compelled to pay the amount of such judgment, they cannot recover of the other partners any part of the sum thus paid to them. Bowman v. Blodgett, 2 Metcalf, 308. '1 Marsh. 248; 5 Taunt. 612. CH. III.j LIMITS OF LIABILITY. 527 are negotiated by a partner authorized to settle the partnership concerns. 1 In Abel v. Sutton,^ the defendant and one Poynter had carried on business in partnership, under the firm of " James Sutton & Co." The partnership had been dissolved, and due notice given. It appeared that the note on which the action was brought was an accommodation note, created after the dissolution of the partnership, although it bore date before, and that the part- nership name was put on by Poynter alone, without authority from the defendant ; or that, even if it existed prior to the dissolution, it had not been put into circulation until after. The jury, under the direction of Lord Kenyon, found a verdict for the defendant. " To contend," said his Lordship, " that this liability to be bound by the acts of his partner extends to time subsequent to the disso- lution is, in my mind, a most monstrous proposition. A man, in that case, can never know when he is to be at peace, and retired from all concerns of the partnership." The same point had been treated as settled in the previous case of Kilgour v. Finlyson ; ^ in ■ Pg,rker v. Macomber, 18 Pick. 505; Sanford v. Mickles, 4 John. 224 ; Fellows V. Wyman, 33 N. Hamp. 351; Fisher v. Tucker, 1 M'Cord, 173; Foultz V. Pourie, 2 Desaus. 40; Martin v. Walton, 1 M'Cord, 16; Yale v. Fames, 1 Metcalf, 487; Martin v. Kirk, 2 Humph. 529; Woodworth v. Downer, 13 Vermont, 522; Bank of S. Carolina v. Humphreys, 1 M'Cord, 388; Loomis v. Pearson, Harper, 470; 3 Kent Com. 63; Story Partn. § 322; Dickerson v. Wheeler, 1 Humph. 51 ; M'Daniel v. Wood, 7 Missouri, 643; National Bank v. Norton, 1 Hill (N. Y.), 572; Galliott v. Planters and Mechanics Bank, 1 M'MuUan, 209 ; Humphries v. Chastain, 5 Georgia, 166. ' 3 Esp. 108. See Heath v. Sansom, 4 Barn. & Adol. 172. Where, after the dissolution of a partnership, a person, who has been a clerk in the con- cern, is employed to wind up the affairs, and in the course of such employ- ment negotiates a bill in the name of the firm, it is doubtful whether he can be sued upon the bill, not being a party to it ; and, at all events, if an action be brought against him on the bill, some proof must be given that he had no authority to negotiate such bills, or that he acted mold fide. Wilson v. Bar- throp, 2 M. & W. 863. ' 1 H. Bl. 155. In this case it appeared that Scott was indebted to the partnership of Finlyson & Co., and Finlyson & Co. indebted to Sterling. After the dissolution of the partnership, Finlyson drew a bill in the name of the firm, and indorsed it in the name of the firm, accepted by Scott, to Kil- gour. Kilgour discounted the bill by giving his promissory note for it. Fin- lyson then indorsed the note to Sterling, who discounted it, but retained the discount in discharge of the debt due to him from the firm of Finlyson & 538 EIGHTS OP PARTNERS, ETC. [BOOK III. which, though the terms of the notice of the dissolution, in the Ga- zette, were, that " all demands upon, the above firm will be paid by A. (one of the partners), who is empowered to receive and discharge debts due to the said copartnership ; " yet it was clearly admitted that A. was not thus authorized to draw or indorse bills in the name of the partnership, after the dissolution ; and that no action could be maintained on such bills. So, where the individual note of a partner payable to the firm of which he was a member, remained in the possession of such firm till it was overdue, it was decided that another partner could not, after the dissolution of the partnership, negotiate it in the partnership name, although he was authorized to settle its concerns. ^ § 542. There is no doubt, however, that a retired partner may give authority by parol to a continuing partner to indorse bUls in the partnership name, after the dissolution of the partnership.^ And where the retired partner stated that he left the efiects and securities of the firm in the hands of the continuing partner, for the purpose of winding up the concern, and that he had no objec- tion to his using the partnership name, it was held that the jury were justified ia finding that the continuing partner had authority to indorse promissory notes so left in his hands in the partnership name.^ Co. The note became due before tbe bill, and Kilgour paid Sterling the amount of the note, when due. It was admitted that Kilgour could not re- cover on the bill ; but the court also held that he could not recover in an action against the partnership for moneys paid to the use of the partnership.' Lord Loughborough said : " When this note became due, the plaintiif paid it to Sterling, but at that time no debt was owing to him from the part- nership ; the payment, therefore, of the plaintiff was not a payment to the use of the partnership. Though the money raised by discounting his note before it was due was, in fact, paid in discharge of a partnership debt, yet he cannot follow the money through all the applications of it made by Fin- lyson." ' Parker f. Maoomber, 18 Pick. 505. Some reasons were suggested by Shaw C. J., in this case, as applying with great force to restrain the nego- tiation of a note held by the firm against one of the partners, especially a note long overdue, which would not be applicable to the note of a third per- son. ' Yale V. Eames, 1 Metcalf, 486 ; Myers v. Huggins, 1 Strobhart, 473. ' Smith V. Winter, 4 Mees. & W. 454 ; Graves v. Merry, 6 Cowen, 701 ; Myers V. Huggins, 1 Strobhart, 473. The proof in such a case should be sufScient to show a special authority; Simmons v. Curtis, 41 Maine, 873. CH. III.] LIMITS OF LIABILITY. 529 In a case where, after the dissolution of a partnership easting between two, one of the partners made a promissory note signed by himself for the firm, and the other partner made a partial pay- ment on the note, this was held sufficient evidence to sustain a ver- dict in ah action against the two partners on the note.^ § 543. An acceptance' given in the name of the firm by the remaining partner after dissolution, is not binding on the retired partner,^ although the bill be dated before dissolution.^ So, an acceptance given under similar circumstances, to a person who had notice that the partnership was intended to be dissolved, can- not be enforced against the firm.* § 544. Lord Kenyon, at Nisi Prius,^ expressed a doubt whether, even if a biU were actually indorsed before the dissolu- tion, but not sent into the world until afterwards, such an indorse- ment would be vaHd. And Mr. Chancellor Kent^ states it as settled, that, " if the paper was indorsed before the dissolution, and not put into circulation until afterwards, all the partners must i:pite in putting it into circulation, in order to bind them ; " and the proposition seems to be supported by the authorities cited by him.'' But it is to be remembered, that the signature and indorse- ment are the acts which are obligatory on the makers. If, there- fore, those acts, were performed on a blank paper, stamped with a bill-stamp, before dissolution, and the bill were filled up and Such authority may be inferred from all the circumstances of the case. iSimmons v. Curtis, uhi supra ; Waite v. Foster, 33 Maine, 424 ; Yale v. Eames, 1 Metcalf, 486 ; Fellows v. Wyman, 33 N. Hamp. 386, 357. A general authority to one partner to settle the business of the firm, after a dissolution, does not authorize him to give a note in the name of the firm,' for a firm debt. Long v. Story, 10 Missouri, 636. ' Eaton V. Taylor, 10 Mass. 54. " Ex parte Liddiard, 2 M. & A. 87; 4 Dea. & Ch. 603; Tombeckbee Bank :'. Dumell, 5 Mason, 56. ■" Wrightson v. PuUan, 1 Stark. 375. * Paterson v. Zachariah, 1 Stark. 71. ' In Abel v. Sutton, 3 Esp. 108. ^ » 3 Kent Com. 63. ' Lansing v. Gaine, 2 John. 300 ; Woodford v. Dorwin, 3 Vermont, 82 ; Sanford u. Mickles, 4 John. 228; Fisher v. Tucker, 1 M'Cord Ch. 173. See Foultz v. Pourie, 2 Desaus. 40; Poignard v. Livermore, 17 Martin, 324; Tombeckbee Bank ;;. Dumell, 6 Mason, 56; National Bank v. Norton, 1 Hill (N. Y.), 572 ; Dickerson v. Wheeler, 1 Humph. 51. 45 530 EIGHTS OF PARTNERS, ETC. [bOOK III. negotiated by the remaining partners after dissolution, the original partners would nevertheless be liable on the bill, and would be estopped, as against an innocent indorsee, from saying that it was irregularly negotiated.^ This is deducible from the case of Usher V. Dauncy ; ^ in which, however, the dissolution took place by the death of one partner ; and consequently the surviving partners only, and not the representatives of the deceased, were liable in an action ; but, on the principles of that case, a retinng partner would be held Uable under similar circumstances. The facts were as follows : The defendants, together with Frederic Dauncey, had traded under the style of Daunceys, Cock & Co. ; and they had been in the habit, for the purpose of raising money, of drawing bills on H., which were discounted through the medium of a bill- broker. These bills were annually drawn, and indorsed in blank, and filled up with dates and sums, as the urgencies of business required. The bill, which was the subject of the action, had been drawn and indorsed in blank by Frederic Dauncey, the partner- ship firm of Daunceys, Cock & Co., in February, 1814, and given by him to a clerk, with a number of similar blanks, to be filled up for the use of the partnership. He died in March. The style of the fiirm was then changed to Daunceys & Squire. Afterwards, in April, the clerk of the defendants (not having, as he alleged, any blanks in the new firm) , fiUed up the bill in question by insert- ing the date and sum as usual. The bill was accepted by H., and discounted by the plaintiffs, who brought their action on the bUl agamst the surviving partners. At the trial. Lord EUenborough expressed his opinion, that, after the death of Frederick Dauncey, the bill might still be filled up so as to bind the survivors. The plaintiffs had a verdict which the Court of King's Bench after- wards refused to set aside. So, in a case where the individual note of a partner, made after the dissolution of the partnership, was transferred by the holder to the firm in payment of a debt, it was ruled that such note, being payable to bearer, might be legally transferred to a third person by another partner, who was author- ized to settle the concerns of the partnership.^ ' See Russell v. Langstaff, 1 Doug. 513; Snaith v. Mingay, 1 Mau. & Sel. 87. " 4 Camp. 97. ' Parker v. Maoomber, 18 Pick. 505. In this case, Shaw C. J., said : CH. III.] LIMITS OF LIABILITY. 531 § 545. The moment the partnership ceases, the partners be come tenants in common of the partnership property undisposed of from that time.-"^ They become, therefore, tenants in common of all partnership securities unindorsed, which -were not issued before the dissolution. If, therefore, it be necessary to put such securities in circulation while the accounts are unliquidated, all the late partners must join in making them negotiable .^ In the ■words of Lord Kenyon, — " If a bill is sent into circulation after the dissolution of a partnership, beyond all controversy, all the part- ners must join in the indorsement ; and one, by putting the part- nership name, cannot bind the rest." ^ And, if a bill be drawn " Being under a blank indorsement and passing by delivery, the title vested in any person or persons legally becoming holders for value. Now, we think the authority given to the two partners, the Howlands, to collect and settle the affairs of the late firm, gave them authority to receive negotia- ble notes and drafts, as a means of obtaining payments. If so, they must be deemed to have received this note, as agents to settle ; they received it in their own right, and the property vested in them. This being the case, as they would take merchandise, bank-stock, or other articles, affording the means of raising money, and getting in the debts, they had a right to dis- pose of the property, for the same purpose ; and it being a mercantile agency, each had the requisite authority. As they took the note under a blank in- dorsement, and it was in a condition to pass by a mere delivery, no indorse- ment of the firm was necessary ; and want of authority, arising from a want of legal power to make such indorsement, applicable to the case of the other note, does not apply to this.'" 18 Pick. 510. This last remark would seem to apply as well to a bill, or note, which had been indorsed before the dissolution, as such a bill or note would be " in a condition to pass by a mere delivery." ' See Murray v. Mumford, 6 Cowen, 441 ; Geortner v. Canajoharie, 2 Barbour, Sup. Ct. 625. * Sanford y.'Mickles, 4 John. 228 ; per Upham J., in Morse v. Bellows, 7 N. Hamp. 568. . ' 3 Esp. 110; Dickerson v. Wheeler, 1 Humph. 51. In Morse u. Bellows, 7 N. Hamp. 568, Mr. Justice Upham, having stated the general proposition, that a partner cannot, after the dissolution of the firm, indorse a note paya- ble to the^ firm, so as to pass the interest in it, added, — " But the reason of this is, that if he could indorse the note he might bind the firm as indorsees, which he cannot do. This objection does not exist in the assignment of a bond, and there seems to be no reason why one partner may not assign a bond after the partnership is dissolved." And see Carvick v. Vickery, Doug. 653. A partner may pay the debt of the firm after dissolution, by assigning a note due to the firm. Milliken v. Loving, 37 Maine, 408. In Adams v. 532 EieHTS OF PARTNERS, ETC. [eOOK III. by A. after the dissolution of his partnership with B., and the pro- ceeds of the bill are apphed to pay the partnership debts of A. & B., which A., on the dissolution, has assumed to pay, the holder of the bill can have no claim on B., in consequence of the particu- lar appropriation of the proceeds.^ § 546. Although one partner cannot, after a dissolution of the partnership, bind the other partners by new contracts in the name of the firm, still until the affairs of the partnership are settled, the connection may be said in a quahfied sense to continue.^ From the nature of a partnership, engagements may be contracted which cannot be fulfilled during its existence, exposed as it is to .sudden and arbitrary terminations ; and the consequence, therefore, must be, that, for the purpose of making good outstanding engagements, of taking and settling all the accounts, and converting all the prop- erty, means, and assets of the partnership, existing at the time of the dissolution, as beneficially as may be for the benefit of all who were partners, according to their respective shares and proportions, the legal interest subsists, although, for all other purposes, the partnership is actually determined.^ Thus it appears that a disso- lution is in some respects prospective only. " It leaves every part- ner," says Mr. Justice Story, " in possession of the full power to pay and collect debts due to the partnership ; to apply the part- nership funds and efiects to the discharge of their own debts ; to adjust and settle the unliquidated debts of the partnership ; to re- ceive any property belonging to the partnership ; and to make due acquittances, discharges, receipts, and acknowledgments of Bingley, 1 M. & W. 192, A. and B. being partners, C. borrowed money of the firm, and gave a promissory note for it, payable to B. only. A. knew of the loan, but it is not stated whether he knew of the security. A. and B. afterwards dissolved partnership, with notice that all persons indebted to the concern should pay their debts to A. Afterwards, B. indorsed the note to A. for valuable consideration. It was held that A. might sue C. on the note, notwithstanding that B. after indorsing it to A., fraudulently obtained a fresh security from C, under promise of delivering up the note. • Le Roy v. Johnson, 2 Peters S. C. R. 186. " 3 Kent Com. 63 ; Gow Partn. (3d ed.), 231 ; Story Partn. §§ 324-328 ; Yale V. Eames, 1 Metcalf, 487 ; Brown v. Higginbotham, 5 Leigh, 583 ; Caldwell V. Stillman, 1 Rawle, 212; Geortner v. Canajoharie, 2 Barbour, Sup. Ct. 625 ; Parker v. Phillips, 2 Gushing, 175, cited ante, § 121, note. ' Gow Partn. (3d ed.), 231. See Whiting v. Ferrand, 1 Conn. 60. CH. III.] LIMITS 0¥ LIABILITY. 533 their acts in the premises." ^ It has been held that one partner may, after dissolution, bind the firm by a waiver of demand and notice made before maturity on a note which has been indorsed by the partners in the name of the firm.^ In Morse v. Bellows,^ Mr. Justice Upham said : " There seems to be no reason why one partner may not assign a bond after the partnership is dissolved. It is immaterial in this case, as to the legal effect of the assign- ' Story Partn. § 328. The doctrine now in question seems to go to this extent, viz. . that notwithstanding dissolution, a partner has implied author- ity to bind the firm, so far as may be necessary to settle and liquidate exist- ing demands, and to complete transactions begun, but unfinished, at the time of the dissolution. See Lyon v. Haynes, 5 Man. & Gr. 541 ; Smith v. Win- ter, 4 M. & W. 461, 462 ; Butchart v. Dresser, 10 Hare, 453 ; 4 DeG., M. & G. 542; 1 Lindley Partn. 332 et seq. ^ Darling v. March, 22 Maine, 184. In this case, Shepley J., said : — " The dissolution operates as a revocation of all authority for making new contracts. It does not revoke the authority to arrange, liquidate, settle, and pay those before created. For these purposes, each member has the same power as before the dissolution. If an account existing before the dissolu- tion be presented to one of the former partners, he may decide whether it should be paid or not, even though it be a disputed claim. He may decide whether due notice had been given on negotiable paper, and may make or refuse payment accordingly. The waiver of demand and notice is but the modification of an existing liability, by dispensing with certain testimony which would otherwise be required. If one of the former partners could not dispense with the proofs, which might be required at the time of the dissolu- tion, he could not liquidate the accounts and agree upon the balances. To waive demand and notice, and to settle accounts, is but to arrange the terms upon which an existing liability shall become perfect without further proof. In doing this he does not make a new contract, but acts within the scope of a continuing authority." 22 Maine, 190. See Rootes v. Welford, 4 Munf. 215; Woodford v. Downer, 13 Vermont, 522. But where the partners, in- dorsers, have not been duly notified of the dishonor of the note, a promise by one partner, after dissolution, to pay the note, will not bind the firm. Schoneman v. Fegley, 7 Barr, 433. Where a firm has indorsed a note, one of the partners is authorized, after a dissolution, to consent to the holder's compounding with and releasing the maker, although such partner is not authorized to settle the afiairs of the firm. Union Bank v. Hall, 1 Harper, 245. In New York it is enacted by statute passed April 18th, 1838, ch. 257, that after the dissolution of a firm one or more of the partners may make a compromise with any creditor of the firm, which compromise shall Only operate to discharge the debtor making the same. But such compro- mise shall not operate to prevent the other copartners from calling on the partner making the same for his ratable portion of such debt. " 7 N. Hamp. 568. 45* 534 EIGHTS OF PARTNERS, ETC. [BOOK HI. ment, whether the partner is dead or still survives ; it would be good in either case." 1 § 547. In what has preceded, we have directed our attention to the habUity which a retiring partner may possibly incur in respect of contracts made by the remaining partners. We have likewise seen that this Hability may be avoided by proper caution. It now remains to consider by what means the retiring partner's responsi- bility for contracts made by the firm while he was a member may be discharged, either by operation of law or by special agreement with the creditor. The various degrees of liability of a retiring partner, or (as it will be seen afterwards) of a deceased partner's estate, to the creditors of the original firm, is strongly illustrated by those cases where there are cash accounts current between the firm and its customers. § 548. Generally, where divers debts are due from a person, and he pays money to his creditor, the debtor may, if he pleases, appropriate the payment to the discharge of any one or other of those debts ; if he does not appropriate it, the creditor may make an appropriation ; but if there is no appropriation by either party, and there is a current account between them, as between banker and customer, the law makes an appropriation according to the order of the items of the account, the first item on the debit side of the account being discharged or reduced by the first item on the credit side.^ These general principles were fuUy established and enforced by Sir William Grant, in Clayton's case,^ " which was a case decided upon great consideration, and is an authority of great weight." * There, the claim of Clayton against the estate of the ' A partner may lawfully assign to a creditor thereof, a demand due to the partnership, after its dissolution. Milliken v. Loring, 37 Maine, 408. ' Per Lord Lyndhurst, 4 Russ. 468 ; Gass v. Stinson, 3 Sumner, 98, 109- 113 ; U. States v. Wardwell, 5 Mason, 82, 87; M'Dowell u. Blackstone Canal Co., 5 Mason, 11 ; U. States v. Kirkpatrick, 9 Wheaton, 720, 737, 738; Cremer v. Higginson, 1 Mason, 338 ; Postmaster-General u. Furber, 4- Mason, 333 ; Chitty Cpnt. (6th Am. ed.), 752, 756, and cases cited in the notes; Story Partn. § 157. « 1 Mer. 572. See Alcott v. Strong, 9 Cushing, 323. ♦ D. Abbott J., 2 Barn. & Aid. 46. In U. States u. Wardwell, 5 Mason, 87, Mr. Justice Story said : " The doctrine of Clayton's case stands upon ir- resistible reasoning." See also the remarks of the same learned judge upon this case in Gass v. Stinson, 3 Sumner, 110, 113. CH. III.] LIMITS OF LIABILITY. 535 deceased partner, Devaynes, under an account current ■with the house of Devaynes & Co., was limited and adjusted according to ' the principles above stated. § 549. To apply these principles to cases of retiring partners. Where there is a cash account current between a firm and a cus- tomer, and the account is in favor of the latter, a retiring partner will be liable for the balance of this account at the time of his re- tirement. But if the account be continued, the balance for which the retiring partner is liable will be diminished by every payment which is made by the new firm, supposing such payments not to be appropriated to the discharge of any specific item ; because, in this case, it is the first item on the debit side of the account which is discharged or reduced by the first item on the credit side.^ In the case of Brooke v. Enderby,^ Enderby was partner with Gil- pin, in the business of woollen-draper, army-clothier, and army- agent, for the term of ten years. The plaintiff, Brooke, a lieuten- ant-colonel in the army, employed Gilpin as his agent, and hkewise kept a running account with Gilpin, as his banker ; Gilpin from time to time receiving the pay and allowances, and also the divi- dends due to the plaintiff on stock and other moneys on his ac- count. Gilpin carried on business in his own name only. Ender- by never interfered with the business, and was unknown to the plaintiff as a partner with Gilpin, until after the bankruptcy of Gilpm. After the 24th September, 1817, the day on which the partnership of Gilpin & Enderby expired by effluxion of time, and until Gilpin's bankruptcy, the dealings between Brooke and Gilpin were continued in the same manner as before, and the account be- tween them was kept as before ; no rest being made, nor balance struck in the account, from the 1st July, 1816, down to the bank- ruptcy of Gilpin. There was at all times a considerable balance due to Brooke. After the bankruptcy of Gilpin, Brooke brought his action against the partners, to recover the amount due to him ; to which action Gilpin pleaded his certificate, and Enderby pleaded the general issue, and paid £1,773 9s. id. into court. In calcu- lating this sum, Enderby sought credit for all sums paid by Gilpin to the plaintiff after the 24th September, 1817, without givmg ' Fail-child v. Holly, 10 Conn. 175. * 4 Moore, 501 ; 2 Brod. & Bing. 70. 536 RIGHTS OF PARTNERS, ETC. [BOOK III. credit for any sums received after that day by Gilpin, on account of the plaintiff. The Court of Common Pleas, on the authority of Clayton's case, held this mode of ealculation right ; and, as Enderby had paid into court more than the amount of what was due to the plaintiff at the expiration of the partnership, they gave judgment of nonsuit. § 550. But it is to be remarked, that, in stating the principle of payment which is now imder our consideration. Sir William Grant apphed his observations to those accounts only which are in the na- ture of a hanldng account. In Clayton's case, which is the foun- dation of all the modem decisions on this subject, he says : " This is the case of a banking account, where all the sums paid in form one blended fund, the parts of which have no longer any distinct existence. There is no room for any other appropriation than that which arises from the order in which the receipts and payments take place, and are carried into the account. Presumably it is the sum first paid in that is first drawn out. It is the first item on the debit side of the account that is discharged or reduced by the first item on the credit side. The appropriation is made by the very act of setting the two items against each other. Upon that prin- ciple all accounts current are settled, and particularly cash ac- counts." Now it may be inferred from these observations, that in accounts current of a different nature, where there is room for ap- propriation other than that which arises from the order of the re- ceipts and payments, such other appropriation wiU be deemed necessary in order to reduce the retiring partner's debt. Suppose, for instance, as in the case of Newmarch v. Clay,^ that goods are regularly furnished to a firm for which they as regularly pay by hills, and that an account is kept of the goods furnished, and the bUls paid. In such case, if a partner retire, and the accounts go on as before, the bUls drawn after his retirement will not, like money payments, go in discharge of the debt due from him on this account current, unless such bills be specifically appropriated to that purpose ; because the bills so drawn are the property of the new firm, 'and axe primd facie appropriated to the payment of the debts of that firm. § 551. The above principle was assumed in the case of New- 14 East, 239. CH. III.] LIMITS OF LIABILITY. 537 march v. Clay, wtere the only question was, -ffhether there was sufficient evidence of the appropriation to discharge the retiring partner. The plaintiffi brought their action for goods sold and de- livered, against Clay and W. and T. Lumb. It appeared that Clay had been a secret partner with the Lumbs, and that this secret partnership was dissolved by consent on the 1st December, 1808 ; after which the business was carried on by the Lumbs only. The goods had been uniformly furnished at a credit of six months on bills. By the account, as produced at the trial, it appeared that the amount of goods delivered, up to the time of the dissolu- tion, was £2Q1 19s. 10c?., and that the first item on that side of the account, after the dissolution, was, — "1809, May 26, To goods at do. (i. e. at six months credit), due 26th November, £52 12s." The amount of payments up to the time of the dis- solution was £130, and the items next foUowmg on that side of the account were, " 1809, March 25, By bill, £65," " January 16, By bill, £100" (which bills were dishonored); and then, — " December 1, By bills, £141 Is." It appeared by the date of the dishonored bills, that Clay was interested in them ; they would clearly, therefore, if good, have been applicable to the discharge of the £261 19s. lOd. It was proved that the payments con- tained on the credit side of the account were aU paid without any express appropriation at the time ; and even when the last biUs for £141 Is. were received, there was no specific agreement that that sum was to be applied in part discharge of the dishonored and re- turned bills of £65 and £100 ; but these latter were in fact de- livered up at the time. Under these circumstances, the question was, whether the last item of credit for £141 Is. should be added to the other sum of £130, and appKed in discharge of the £261 19s. lOd. (in which case the plaintiffs would be overpaid by the new partnership to the amount of £9 Is. 2c?.), or whether it should be apphed in discharge of the £52 12s., as well as to the £261 19s. lOcif. (in which case there would be due to the plain- tiffs £43 10s. 10c?). It was urged on behalf of the defendant Clay, that the act of taking up the dishonored bills, upon the pay- ment of the bills for £141 Is., which sum was more than suffi- cient to cover all former debts, was evidence of an applied appro- priation of the latter bills to the purposes intended to have been answered by the former ; and that Clay therefore was entitled to the benefit of such appropriation. And the Court of King's Bench 538 EIGHTS OF PARTNERS, ETC. [eOOK III. were of that opinion. " There might," observed Lord Ellen- borough, " be a special application of a payment made, arising out of the nature of the transaction, though not expressed at the time in terms by the party making it ; and here the payment of the bills for £141 Is. was evidenced by the conduct of the parties to have been made for the purpose of taking up the antecedently dishonored bills, in the discharge of which the defendant Clay was interested ; for, upon receiving this payment, the dishonored bills were delivered up." In the preceding case, if the bills for £141 Is. had not been specifically appropriated to that purpose, they would not have been applied in discharge of the retiring partner's debt. On the contrary, inasmuch as they were the property of the new partnership, they would have been considered as applicar ble to the discharge of the debts of that partnership only. In the same manner, where a sum of money can be deemed as the spe- cific property of the new partnership, it will be applicable to the discharge of the debts of that partnership only. In the case of Thompson v. Brown,^ the plaintiff brought an action against Brown and Weston for goods sold and delivered. The defendants became partners in trade on the 1st January, 1824, and continued so until the 1st January, 1825. Before the partnership. Brown was indebted to the plaintifis, who were ironmongers, in the sum of £64, and, during the partnership, goods were supplied on the partnership account to the amount of £210. Early in the year 1824, Brown paid to the plaintiflF, on the general account, a check for £60 ; and, after the dissolution, £150 was paid, expressly for the partnership debt, by Weston, Brown having become insolvent. It waa doubtful, on the evidence, whether the check was the prop- erty of the partnership, or the sole property of Brown ; and it was contended for the plaintifis, that, the payment (of that check) having been made without any appropriation, the defend- ants were at liberty to apply it to the first items in the account, and in that case the defendants, as partners, would still be liable for the balance of the partnership debt. Abbott, C. J. : " The general rule certainly is, that wheij money is paid generally, without • 1 Mood & Malk. 40. The new partnership, it will be perceived, arose on the accession and not the retirement of a partner ; but the principle is the same. CH. III.j LIMITS OF lilABILITT. 539 any appropriation, it ought to be applied to tlie first items in the account ; but the rule is subject to this qualification, that when there are distinct demands, one against persons in partnership, and another against one only of the partners, if the money paid be the money of the partners, the creditor is not at liberty to apply it to the payment of the debt of the individual ; that would be allow- ing the creditor to pay the debt of one person with the money of others. (^To the jury.') The question for you is, was this check the property of the partner or not ? " Verdict for the defend- ants, i § 552. To render an appropriation of payment by the act of the party valid, it must be made at the time of payment, if made by the payor,^ and within a reasonable time after payment, if made by the payee. Sir William Grant was inclined to hold, according to the principles of the civil law,^ that the appropria- tion, even if made by the payee, must be made at the time of payment. But cases might be stated, where such a rule, if strictly adhered to, would be productive of injustice ; and it is manifestly at variance with the decisions on this subject in the courts of common law.* On the other hand, those courts have been inclined to favor the creditor too much, and have in many cases " extended the proposition, that, if the debtor does not apply the payment, the creditor may make the application to what debt he pleases, much beyond its original meaning, so as in gen- eral to authorize the creditor to fiaake his election when he thinks fit." In a modern case, however, the Court of King's Bench • See Sneed v. Wiester, 2 Marsh. (Ken.), 288 ; Fairchild v. Holly, 10 Conn. 181. " It is not necessary, however, that a person owing money on two differ- ent accounts should declare the appropriation of it at the time of payment ; it is Sufficient if it can be collected from other circumstances that he intended, at the time of payment, to appropriate it to one account specifically. Shaw V. Picton, 4 Barn. & Ores. 715 ; Waters v. Tompkins, 2 C, M. & R. 723. ' Dig. lib. 46, tit. 3-, ss. 1, 3. * In Fairchild v. Holly, 10 Conn. 184, Mr. Justice Williams said, that by the civil law the creditor must make the appropriation immediately; by the common law he may take a reasonable time. Alexandria v. Patten, 4 Cranch, 317,320. But he cannot be allowed to do it after a controversy begun. la that case, both parties having omitted it, the court will make the application according to its own notions of justice. See U. States v. Kirkpatrick, 9 Wheat. 720, 737. 540 RIGHTS OF PARTNERS, ETC. [BOOK III. came to a very just decision on this important subject. Thus, in Simson v. Ingham,^ an action on a bond was brought by Bruce & Co., bankers, against the heirs and devisees of Benjamin Ingham. The bond was given by Ingham and another, bankers at Hudders- field, to the plaintiffs, their London correspondents, conditioned for remitting money to provide for bills, and for the repayment of such sums as Bruce & Co. might advance on account of persons consti- tuting the Huddersfield Bank. The damages were assessed by an arbitrator at £13,845, subject to the opinion of the court upon the follomng facts : The house of Bruce & Co. were in the habit of sending to the Huddersfield Bank monthly statements of their accounts. Benjamin Ingham died in September, 1811. The last statement sent previously to his death was for the month of Au- gust. The balance of that account was greatly in favor of Bruce & Co. No alteration in the account was made in the books of Bruce & Co. immediately on the death of Benjamin Ingham ; but, during the residue of that month and a part of October, the re- mittances made by the Huddersfield Bank, and the payments made for them by Bruce & Co., were entered in continuation of the former account. Before, however, any account was transmitted t6 the Huddersfield Bank subsequent to that -for August, Bruce & Co., in consequence of a communication with their sohcitor, opened a new account, and in that inserted all the remittances and payments made subsequent to the death of Benjamin ; and in November they transmitted to the Huddersfield Bank statements of two accounts. The first of these accounts was thus entitled : " Debtors, Messrs. B. and J. Ingham & Co. (old account), in account with Bruce & Co., creditors " ; and the first item on the debit side was the balance of August. The second account was in the same form but entitled " new account." This account be- gan on the 16th September, without any balance brought for- ward, and contained the remittances and payments made duHng that month, subsequent to the death of Benjamin, and also those made in the month of October. From this time the old and new accounts were kept separate in the books of Bruce & Co. The Huddersfield Bank did not appear to have ever objected to the accounts being kept separately by Bruce & Co., although in their 2 Barn. & Cres. 65 ; 3 Dowl. & Ryl. 249. CH. ni.J LIMITS OF LIABILITY. _ 541 OTra books they only kept one account. The arbitrator was of opinion, that, under these circumstances, the balance due on the death of Benjamin Ingham was not discharged by subsequent pay- ments by the new firm ; accordingly, after making certain allow- ances for dishonored bills, he assessed the damages at the sum above awarded, and the Court of King's Bench held the award to be right. ^ 563. In the preceding case, the court proceeded on the principle, that the entries which had been continued in the credi- tor's books immediately on the death of Ingham, not having been communicated to the debtors, were not conclusive on the creditors, and consequently that the general legal appropriation, of which such entries would otherwise have been evidence, was incomplete. It is clear from this, as also from the express opinions of the judges, that they did not consider it necessary, in order to support any alleged appropriation on the part of the creditor, that he should prove it to have been made at the time of payment. On the other hand, if payment be made to the creditor of any sum in respect of an account current, the creditor making no appropriation at the time of payment, and if after such payment the debtor and creditor continue their mutual dealings, or do any other mutual act in re- ■ spect of the same account, the creditor will be barred by such subsequent transactions from establishing an appropriation of the payment. § 554. It frequently happens, that, upon the retirement of a partner, the remaining partners undertake to pay the debts and receive the credits of the firm. This, as has been already ob- served,^ is a private regulation between the parties, which cannot be binding as between the creditors and a retiring partner without consideration. A consideration will arise in favor of the retiring partner, either if the creditor derive some benefit from this agree- ment, or the retiring partner sustain some prejudice from it on the creditor's account.^ We will endeavor to distinguish the cases in which such a consideration has been presumed in favor of the reth:ing partner from those in which he had been held Uable for the partnership debts, for want of a sufficient consideration moving to the creditor for his assent to the retiring partner's exemption. ' Ante, §§ 486-488. ' See Barker v. Blake, 11 Mass. 23, 24 ; Story Partn. § 158, and note ; ^tna Ins. Co. v. Peck, 28 Vermont, 93. 46 542 ^ EIGHTS OF PARTNERS, ETC. [BOOK III. § 555. It was held in an early case in equity, that if, after the retirement of one of two partners, their joint bond creditor leave his money in the hands of the remaining partner, and receive from him an increased rate of interest in consideration of not call- ing in the principal, this is not such an assent to the sole credit of the remaining partner as will exempt the retiring partner's residu- ary legatee from hability in respect of the bond. The decision, however, in this case depended in a great measure on the nature of the security. There was clearly not sufficient evidence of fraud in the creditor to induce a court of equity to set aside the bond ; and accordingly. Lord Chancellor Parker observed, " that the plaintiff's changing the interest did not alter the security, for still it was the bond of both." ^ § 556. The principles which we are now discussing have been adopted more decidedly in modern eases, in which the creditor has either, 1st, taken the securities of the remaining partners for a debt due from the old firm, or, 2dly, received interest from the new firm for such debt, or, 3dly, continued an account current with the new firm, apparently adopting such account. § 557. First, if, upon the retirement of a partner, the creditor of a firm take the securities of the remaining partners for his debt, this, it is conceived, will not operate as a discharge to the retiring partner, if the creditor is allowed to retain the securities given to him by the original firm.^ In the case of Bedford v. Deakin,^ the plaintiff was the holder of bills drawn by three partners. The bills were dishonored. Upon the dissolution of the partnership, Bickley, one of the partners, informed the plaintiff that an ar- rangement had been made, by which he, Bickley, was to provide for these bills, and therefore requested the plaintiff to take his separate promissory notes for the principal, interest, and expenses due. To this the plaintiff ultimately agreed, at the same time reserving strictly the security of the three partners. It was held 1 Heath v. Percival, 1 P. W. 682. " Harris v. Lindsay, 4 Wash. C. C. 271 ; Story Partn. § 158. This seems to be a question for the jury on the proof respecting the intention of the parties. Davis v. Desauque, 5 Wharton, 530 ; Mason v. Wickersham, 4 Watts & Serg. 100 ; post, § 1227. As to the acceptance of the bond of one partner for the simple contract debt of the firm, see ante, § 481, note. ' 2 Barn. & Aid. 210. CH. III.] LIMITS OF LIABILITY. 543 that tMs agreement did not operate as a satisfaction of the joint debt ; and that, although the two other partners might be ignorant of the transaction, that would make no difference in their favor, for that a creditor giving time to one of three joint debtors does not discharge the others. § 558. Again, if a person hold a copartnership bill, and, upon the retirement of one of the partners, indorse it over to the new firm for payment, at the same time expressly reserving his rights on all the parties to it, in case it should not be paid by the new firm, the retiring partner will still be liable in an action on the bin. In the case of Featherstone v. Hunt,^ it appeared that Hunt, Stab, and Preston were partners at Newfoundland, and that Hunt carried on trade separately at London. Goods were furnished by Featherstone to Hunt, Stab, & Preston, for which they gave him a biU drawn by their firm on Hunt. The bill was dishonored. Hunt afterwards retired from the firm. Featherstone indorsed the biU to the new firm of Stab & Preston, and sent it to Preston, in order, if possible, to obtain payment of it, but strictly reserving his rights on all the parties to it. Hunt also sent out an agent to set- tle his accounts with the new firm. On settling the accounts, Stab & Preston told Hunt's agent that the bill was paid, but they gave him no proof of that fact, nor was the bill produced to or seen by Hunt's agent. The Court of King's Bench held clearly, under these circumstances, that Hunt's liabihty was not dis- charged. § 559. But if, upon the retirement of a partner, a creditor of the firm give up the security which he has against them, and take in exchange a fresh security from the new firm, this will be bind- ing on the creditor, and wiU operate as a discharge to the retiring partner.^ In the case of Evans v. Drummond,^ Combrune and Drummond were partners. Goods having been furnished to the firm, a partnership bill was given for the amount. Drummond afterwards retired from the firm, with the full knowledge of the creditor. After Drummond's retirement, and when the biU be- ^ 1 Barn. & Cres. 113 ; 2 Dowl. & Ryl. 233. ' Harris v. Lindsay, 4 Wash. C. C. 98, 271 ; Anderson v. Henshaw, 2 Day, 272; Story Partn. §§ 155, 156, 158; Bernard u. Torrance, 5 Gill & John. 383 ; Isler v. Baker, 6 Humph. 85. 4 Esp. 89. 544 EIGHTS OF PARTNERS, ETC. [bOOK HI. came due, it was renewed by another bill to tbe same amount, by Combrune. It being contended tbat Drummond was still liable, Lord Kenyon said : " Is it to be endured, that, wben partners have given their acceptance, and where, perhaps, one of two partners has made provision for the bUl, the holder shall take the sole bill of the other partner, and yet hold both hable ? I am of opinion, that, when the holder chooses to do so, he discharges the other partner. Here the plaintiff has taken the bill of Combrune, after he was informed that Drummond had nothing to do with the con- cern, as he admits. It is a reliance on the sole security of Com- brune, and discharges the defendant." Verdict for the defend- ant. § 560. So in Reed v. White,^ a joint contract for goods sold was considered to be waived by the creditor taking the separate security of one of the joint contractors. An action was brought for cordage sold, against the defendants, as owners of a ship. White was the managing owner, or ship's husband. The plaintiff took White's bill for the amount, which was dishonored, and re- newed, and again dishonored. For the other defendants it was insisted that the plaintiif had discharged the other owners, who, in ignorance of this mode of dealing between the plaintiff and White, had suffered him to receive large sums of the East India Company for freight, which they would otherwise have detained. Lord EUenborough : " If the plaintiff, dealing with AYhite separately, has adopted him, he has discharged the others, and must have a verdict against him. The question is, whether it was intended as a settlement with him alone, and adopting him as the single debtor ? " A fiill special jury of merchants found for the defend- ants.^ § 561. And if the creditor, having previously no written secu- rity from the firm, take the sole security of the remaining partner for a debt due to him from the firm, that is strong evidence to show that he has accepted the sole security of the remaining partner in lieu of the joint responsibility of the firm.^ This was decided by ' 5 Esp. 122. " See post, § 1227 and notes. ' But see Smith v. Rogers, 1 7 John. 840 ; Wilson v. Jennings, 4 Dev. 90. As to the effect of-a note given by a surviving partner for a debt of the part- nership. Melane v. Spencer, 6 Iredell, 423. CH. III.] LIMITS OF LIABILITY. 545 the Court of King's Bench in the case of Thompson v. Percival,^ in which the cases of Evans v. Drummond and Reed v. White were recognized, and adopted as sound law. That was an action for goods sold and deHvered. At the trial it appeared that the two defendants, James and Charles Percival, were in partnership until the 22d of December, 1829, when an advertisement was in- serted in the London Gazette, announcing the dissolution of the partnership, and that the business would be carried on by the de- fendant James, who would receive and pay all debts. The chief part of the goods in question was delivered before the dissolution ; the other part was ordered by James Percival after the 22d of December. It did not appear that when these goods were dehv- ered the plaintiffs had had notice of the dissolution. On the dis- solution, effects were left ia the hands of James sufficient to pay the debts due from the partnership. In the beginning of 1830, the plaintiffs' collector applied for the balance to James Percival, who told him that Charles knew nothing of these transactions, and that the plaintiffs must look to him (James) alone. The plain- tiffs afterwards drew a bill on James, at three months, for the mixed amount, which was accepted by James, and dishonored ; and the plaintiffs gave him time to pay, but eventually brought an action 'against both defendants for the amount of the goods sold, and obtained a verdict. Upon these facts, the Court of King's Bench were of opinion that a new trial should be granted, for that, if the plaintiffs had expressly agreed to take the separate accept- tance of James in satisfaction of the joint debt (the proof of which had not been insisted on at the trial), such agreement amounted to a discharge of Charles ; and that the facts proved raised a ques- tion for the jury upon that point. And Denman C. J., in the course of his judgment, adverted to an argument which had been used in that and other cases, that the acceptance of a bill of ex- change by one of two debtors could not be a good satisfaction, because the creditor thereby got nothing which he had not before. In answer to this, his Lordship said that the written security, which was negotiable and transferable, was of itself something dif- ferent from what the creditor had before ; and many cases might be conceived in which the sole hability of one of two debtors might " 5 Barn. & Adol. 925 ; 3 Nev. & Man..l67. 46* 546 BIGHTS OP PARTNERS, ETC. [BOOK III. be more beneficial than the joint hability of two, either in respect of the solvency of the parties or the convenience of the remedy, as in cases of bankruptcy, or survivorship, or in various other ways ; and whether it was actually more beneficial in each particular case could not be the subject of inquiry.^ In this case the court did not think it necessary to determine whether the assent of Charles to the agreement between his brother and the plaintiff was necessary, in order to give it operation as a discharge of Charles ; because there was evidence of a delegation by Charles to James to make such an agreement, for James had the partner- ship effects left in his hands, and was to pay aU the partnership debts. § 662. The above observations of Lord Denman, so far at least as they relate to bankruptcy, seem to be borne out by the case of Ex parte Whitmore,^ in which the creditor was anxious to revert to the separate security of one partner, in preference to the joint security of two, but failed in his attempt to prove against the sep- arate estate. That was not a ease of retiring partners, but it may be mentioned as connected with the principles laid down in Thomp- son V. Percival. The facts were shortly as follows : W. S. War- wick, who traded in London, was in the habit of accepting bills drawn on him by Jackson & Co., of New York, for the purpose of meeting acceptances given by Jackson & Co., at Warwick's request, to A. & J. Warwick, of Virginia. W. S. Warwick after- wards wrote to Jackson & Co., stating that he had formed a part- nership with Claggett, and adding, " I beg you to consider all credits, advices, and instructions now in force from me as extend- ing to the firm of Warwick & Clagett. Upon the receipt hereof, you will please render your accounts with me, transferring any balances that may be either due to or from me to the new firm." This letter was afterwards confirmed by letters from Warwick & Clagett, in one of which they stated they had received from Jackson & Co. their statement of Warwick's account, which had been found correct, and that they had carried the balance due to him to new premises. They added, " We regard all subsequent operations as applying to the new firm, and have passed them ac- • And see Kirwan v. Kirwan, post, § 569. * 3 Mont. & A. 627 ; 1 Lindley Partn. 367. CH. Ill,] LIMITS OF LIABILITY. 547 cordingly." In answer to these letters, Jackson & Co. wrote a letter acknowledging the receipt of the communication from War- wick & Clagett, and adding, " We shall be very happy to culti- vate the most intimate business relations with your firm, and will gladly avail ourselves of every opportunity to influence valuable business to your good arrangement. We shall make up and trans- fer to your new firm the open accounts in joint exchange trans- actions." In pursuance of these arrangements, Jackson & Co. drew bills upon Warwick & Clagett, for the same purposes for which they had previously drawn upon Warwick, and these bills were accepted by Warwick and Clagett in the partnership name. Warwick & Clagett having afterwards become bankrupt, Jack- son & Co. were permitted by the comniissioner under the fiat to prove against the separate estate of Warwick, for the amount of all sums paid by them in discharge of acceptances given by them to A. & J. Warwick, before they received the letters of Warwick & Clagett. But the court of review reversed the decision of the commissioner, being of opinion that Jackson & Co. intended to substitute the liability of Warwick & Clagett for the separate liability of Warwick ; and that the circumstance of Jackson & Co. omitting in their letter to make express mention of bills was not sufficient to counteract their promise to open accounts in joint exchange transactions, there being no evidence of the existence of any other account than what was called a joint exchange ac- count. § 563. If the creditor of a firm agrees that the retiring partner shall be considered simply as a surety for the debts of the old part- nership, and the creditor afterwards, whether holding the partner- ship securities or otherwise, give time to the new firm for pay- ment of the debt, the retiring partner in his character of surety is thereby discharged. In Oakley v. Pasheller,^ it appeared that Sir Charles Oakley, in 1810, lent the house of Oakley & Sherrard £10,000, payable by bills to become due on the 15th October, 1817, and the 15th January, 1818. In 1814 Sherrard died, hav- ' 10 Bligh (N. s.), 548; 4 Clark & Fin. 207. As to the general doctrine of discharging the surety by giving time to the principal, see Kees v. Ber- rington, 2 Ves. 50 ; and Pitman on Principal and Surety, part 3, chap. 5 ; Burge Law of Suretyship, 203 et seq.; Chitty Cont. (6th Am. ed.), 527 et seq. and notes. 548 EIGHTS OP PAKTNERS, ETC. [BOOK HI. ing paid no portion of the debt. In June, 1815, a new partner- ship was formed ; and upon that occasion a deed was executed between the executors of Sherrard and the new partners, whereby the latter undertook for certain considerations to pay the debt. Sir Charles Oakley, having notice of this arrangement (which in the opinion of the court was held to constitute Sherrard's execu- tors sureties only for the debt), continued to deal with the new firm, and adopted them as his principal debtors. He afterwards gave time to the new house for the payment of the bills, and this indulgence was held to amount to a discharge of Sherrard's exec- utors. § 564. Secondly, if a creditor receive interest from the new firm for a debt due from the old, this is not necessarily an adoption of the new firm as his sole debtors. In Daniel v. Cross,^ where after the decease of a partner, the creditors of the old firm had received interest for their debts from the new firm, Lord Loughborough held clearly, that such receipt of interest would not discharge the estate of the deceased partner. The principle was afterwards applied to the case of a retiring partner, in the decision in Gough V. Davies.^ There, Gibbons the elder, Davies, and Gibbons the younger, were partners in the business of bankers. The plaintifi", Gough, had a considerable balance in the bank, for which he held the accountable receipts of the firm. Upon the retirement of Davies from the firm, the balance of the plaintiff's account was brought forward into the concerns of the new firm. This was done without consulting him; but he knew of the dissolution, and continued to deposit money in the bank after the new part- nership commenced, for which he had the accountable receipts of the new firm sent to him for such deposits, from time to time ; and each time a balance was struck, the interest upon the whole sum, as well that part of it which was deposited before as that part which was deposited after the new partnership was formed, was calcu- lated as -upon one aggregate sum, without distinction. Gough, at various times after the dissolution, applied for and received sev- eral sums from the new partnership, as interest, calculated as above mentioned. The new firm became bankrupts. In an action brought by Gough against Davies, to recover the amount of the > 3 Ves. 277. ' 4 Price, 200, CH. III.] LIMITS OF LIABILITY. 549 balance due at his retirement, one question left to the jury was, ■whether the plaintiff assented to the transfer of the credit from the old firm to the new ; and the jury found for the defendant, thereby establishing the assent. The Court of Exchequer, how- ever (dissentiente Garrow B.), granted a new trial, consideriug the direction wrong, and that there was not sufficient evidence of assent to be left to a jury. Graham B. : " The question left to the jury was, whether, under the circumstances, they would pre- sume that the plaintiff had adopted the new firm as his debtors, to the release and discharge of the old. It does not appear to me, with deference to the learned judge, that the case furnished suffi- cient evidence to induce the jury to come to this conclusion. Gib- bons the elder died in 1813, and the firm goes on without any alteration. No agreement is shown relating to what took place ; no settlements of accounts ; no.thing is drawn from the plaintiff's mouth to show that he released the old firm ; nothing has been adduced to make him appear to have trusted the new firm, but the mere fact that he goes on paying money to the new firm, and receiving interest. What more has he done than to say, ' I am perfectly willing to take your security for the new debt,' but I don't release the old firm. I keep their accountable receipts.' The mere circumstance of his receiving interest of the surviving partner cannot release the old firm." § 565. A recent case may be mentioned in connection with this subject.! A clerk in a brewery lent money to the partners of the house, and two of them signed an acknowledgment for the sum lent, and agreed to pay interest for it. Various changes took place in the house, in the course of which one of the partners who signed the acknowledgment retired from it. The interest was paid, from time to time, by the different firms, till the last became bankrupt. The clerk continued to serve all the different firms, and was cognizant of the different changes. It was held, notwith- standing, that he might recover the money he had advanced from the two persons who signed the acknowledgment. ■ § 566. Thirdly, where there is an account current between a firm and a creditor, and upon the retirement of a partner the creditor continues his dealings with the house, this is not neces- > Blew V. Wyatt, 5 Carr. & P. 397. 550 EIGHTS OF PARTNERS, ETC. [bOOK III. sarily an adoption by the creditor of the new firm as his sole debtors,^ although a balance has been struck, and a new account opened with the new firm, and the creditor has drawn upon the new firm, on the footing of such account.^ In David v. ElUce,^ not only did these circumstances occur, but there was strong evi- dence to show that the creditor expressly adopted the new firm as his sole debtors, and yet the Court of King's Bench held that such an adoption, especially as it appeared that the new firm consisted merely of the remaining partners, could not be presumed, but must be expressly proved. The principles, however, upon which that case was decided have, as we shall see presently, been much questioned, if not overruled, in succeeding cases. The facts were these : — " The plaintifi" was a merchant, residing in Canada. The defendants, with John Inglis, deceased, were merchants and part- ners in London, under the firm of Inglis, EUice & Co. The plaintifi" had had various dealings with that firm, prior to the 30th April, 1821. On that day, the defendant EUice retired from the firm, and a circular letter was sent to the plaintiff, giving notice of that event, and stating that the business would be continued as before by the remaining partners, " who assume the funds, and charge themselves with the liquidation of the debts of the partner- ' See Ex parte Appleby, 2 Dea. 482. In Barker v. Blake, 11 Mass. 16, it was deckled that a transfer in his ledger, by a creditor, of the balance of his account against a firm, to the private account of one of the partners, without the privity of any of them, would not conclude the creditor ; and his recharging the firm would be good to hold them. See Baring v. Crafts, 9 Metcalf, 393 ; Shaw C. J., in Averill v. Lyman, 18 Pick. 351 ; Armsby v. Farnam, 16 Pick. 818. But in a case where a promissory note was given by a partnership, and the payee afterwards took the individual note of one of the partners for the amount, and gave up the partnership note, it was held a payment of the partnership note. And although the payee afterwards received back the partnership note from the individual partner on redeliver- ing him his note, and brought an action on the partnership note, it was held that the circumstances might be proved by the other partner to defeat the ac- tion. Arnold v. Camp, 12 John. 409; s. P. Waugh v. Carriger, 1 Yerger, 31. Where, however, the separate note of one partner was given for money borrowed in his own name and on his own credit, it was held to be no fraud for him afterwards to execute the note of the firm in renewal, provided the money went into the business of the firm. Union Bank v. Eaton, 5 Humph. 499. » See Story Partn. § 156. = 5 Barn. & Ores. 196 ; 7 Dowl. & Ryl. 690. CH. III.] LIMITS OF LIABILITY. 551 ship." The plaintiff answered, — "I am favored with yours of the 10th ult., with circular of the 30th April, advising the change in your firm, which continues to have my full confidence. The accounts will be transferred as soon as I receive my account cur- rent, and an account opened for the new firm." Inglis, Ellice & Co. having been in the habit of making up their Canada accounts to the 30th June, annually, their account current with the plain- tiff was made up to the 30th June, 1821, and not to the preceding 30th April (the time of BUice's retirement). This account was transmitted to the plaintiff, at Montreal, by the new firm of Inglis & Co. ; and the plaintiff, in answer wrote as follows : " The ac- count current with your late firm is received, and, with the excep- tion of the outstanding debts of 1804, is perfectly correct, and have transferred in a new account with your present firm, whose confidence I hope I shall continue to merit." On the 3d Novem- ber, 1821, the plaintiff drew a bill for £5,000 on the new firm. In July, 1822, the new firm of IngHs & Co. made up and sent to the plaintiff the first account in their own names. In August, 1822, John Inglis died ; and thereupon Inglis & Co. suspended their payments ; and, in May, 1828, a commission of bankrupt issued against the defendants, under which they were declared bankrupts, and obtained their certificates. The plaintiff, having brought his action for money lent against the bankrupts and ElUce, obtained a verdict against the defendant Ellice for £13,162 5s. 8d., the other defendants having pleaded their bankruptcy. The sum for which the verdict passed was the balance due upon the account of the 30th June, 1821, after giving credit for all the payments made by the new firm of Inglis & Co. to the plaintiff, or on his account, without taking credit for any payments made by the plaintiff to the new firm. The case coming to be considered before the Court of King's Bench, upon an appHcation for a new trial, that court were of opinion that the verdict was properly taken for the plaintiff, and refused the application. The judgment of the court, which was dehvered by Abbott C. J., appears to have proceeded upon these considerations : first, that no benefit to the plaintiff could be pre- sumed from his adopting the change in the heading of the accounts, and drawing a bill on the new firm for part of the debt, though the bill was duly paid ; and, secondly, that it could not be presumed from the facts, that Ellice had sustained prejudice by leaving funds in the hands of his partners, which otherwise he could have with- 552 RIGHTS OF PARTNERS, ETC. [bOOK IH. drawn. That under these circumstances, no transfer of the debt could be presumed. § 567. The principles upon which the preceding judgment was founded had to a certain extent been acted upon in the previous case of Lodge v. Dicas.^ That as an action of assumpsit for work and labor, &c., against two persons who had been in partnership together as attorneys, at the time when the debt was contracted. Disputes having arisen between them, they agreed to dissolve their partnership ; and it was arranged that Rondeau, one of the part- ners, should receive the partnership debts, and discharge the plain- tiffs' demand. The plaintiffs received notice of the arrangement, by a letter from Eondeau, as follows : — " We have been arrang- ing our accounts ; and Mr. Dicas and myself have agreed that I should take the amount of your account on myself, which I will be responsible for to you." Upon receiving this letter, the plaintiffs expressly agreed to exonerate Dicas from all liability as to the partnership account, and stated that they should charge it to Ron- deau's private account, he having continued to employ them as his agents. The plaintiffs, notwithstanding this agreement, ob- tained a verdict, and the Court of King's Bench refused to grant a new trial ; Holroyd J.,, observing, that the arrangement between the partners would not deprive the plaintiffs of their original right of action unless it amounted to a satisfaction ; that, in this case, the plaintiffs gained no fresh security by having Rondeau as their debtor ; and unless it could have been shown that they were par- ties to the agreement between Dicas and Rondeau, there was no consideration whatever for the promise to have been made.^ § 568. But the two last-mentioned cases, or at least the princi- ples on which they were founded, have been greatly shaken, if not overruled, by more recent decisions, in which the courts distinctly recognized the principle, not only that the acceptance of the se- curity of one partner may be a good consideration for the discharge of the security of two,^ but also that the transfer of an account ■ » 3 Barn. & Aid. 611. '•^ See Wildes v. Fessenden, 4 Metcalf, 12. " But where an action was brought to recover from A. & B., the sum of £25, which had been placed in their hands by the plaintiff as a security for the faithful discharge of his duty to them as their servant, and the plea al- leged an agreement between A. arid B., upon dissolution of the partnership, CH. III.] LIMITS OF LIABILITY. 553 from one firm to another, witliout any fresh security being given to the creditor by the new firm, may, combined with other cir- cumstances showing an acquiescence on the part of the creditor in the change of his debtor, amount to a discharge of the old firm, or retiring partner. In Thompson v. Percival,! Denman C. J., in adverting to the latter point, said, that, in his opinion, and that of his learned brothers, there was, in David v. ElUce, abundant evi- dence to go to a jury (and upon which the court might have de- cided), of the payment of the old debt by Inglis, Ellice & Co. to the plaintiff, and a new loan to the new firm ; which might have been as well effected by a transfer of accounts by mutual consent as by actual payment of money. § 569. In the case of Kirwan v. Kirwan,^ which followed that of Thompson v. Percival, the court were of opinion, though with some expressions of doubt on the part of one of the judges, that there was no sufficient evidence of an agreement by the creditor to accept the responsibility of the new firm, in the place of the old firm ; but the court were all agreed, that, if such an agree- ment had been made out, it would have been sufficient to discharge the old firm notwithstanding no valuable consideration for it were expressly proved.^ In that case, Clement, Matthew, and Nicholas Kirwan succeeded to their father's business, which they carried on under the firm of John Kirwan & Sons, and their brother An- thony was their creditor to the extent of £12,000, for which they allowed him interest, he drawing upon them as his occasions re- quired. Changes took place in the partnership by the retirement, first of Clement, and then of Matthew, and lastly by the introduc- tion of Kelley as a new partner with Nicholas ; but throughout the whole of these changes the business was conducted in the same that A. should undertake certain debts, and retain certain servants, and B. should undertake certain other debts and retain certain other servants, and, in pursuance of this agreement, A. took upon himself to pay the £25 to the plaintiff, and retained him in his sole employ, and that the plaintiff had notice of this, and assented to such agreement and retainer by A., and, in consideration thereof, discharged B. from his promise as to the £25, it was held that the plea did not state an adequate consideration for the alteration of the plaintiflF's security. Thomas v. Shilhbeer, 1 M. & W. 124. ' Ante, § 561. ' 2 Cromp. & Mees. 617. ' See Chase v. Vaughan,:30 Maine, 412- 47 554 EIGHTS OF PARTNERS, ETC. [bOOK III. style or firm. After the retirement of Clement and Matthew, notices -were given of those events in the same Gazette, and in the notice of Clement's retirement it was stated that he left Matthew and Nicholas " to carry on the business, and liquidate the concerns of the present partnership." During the successive partnerships until the death of Anthony Kirwan which took place nearly three years after the accession of Kelly to the firm, annual accounts were rendered to him, in each of which he was credited with the balance appearing due to him from the statement of accounts for the respective preceding years ; and, after his death, similar ac- counts^ were rendered to the plaintifi", who was his widow and administratrix. Upon the accession of Kelly, there being a new capital brought into the concern, the account of Anthony Kirwan was carried from the books of the old to that of the new partner- ship, but the balance was struck annually as before. It did not appear that Anthony Kirwan ever saw the Gazette, or that he or Kelly ever expressly agreed that his debt should be transferred from Clement to Matthew and Nicholas, or to Nicholas and Kelly. The following letter, however, from the intestate to Clement Kir- wan, dated after the dissolution, was given in evidence : " Dear brother, — I received your letter yesterday. I was very well aware, that on your dissolving partnership with Mr. Nich., I had no further claim upon you." Under these circumstances, an ac- tion having been brought by the widow of the intestate against Clement, Matthew, and Nicholas, to recover the balance due, the question was, whether Clement and Matthew were discharged from their original responsibility, and the Court of Exchequer on the ground that there was not sufficient evidence of an agreement to shift the responsibility, held that they were not discharged ; but Lord Lyndhurst, in the course of the argument seemed to assent to the proposition, that a good consideration may be presumed, for accepting the security of the remaining partners in lieu of that of the original firm. And Parke B., in delivering his judgment, adhered to the doctrine laid down in Thompson v. Percival. § 670. But, in connection with this subject, the strongest case in favor of the retiring partner is that of Hart ?;. Alexander,^ in which the law laid down in the previous cases of Thompson v. ' 2 Meea. & Wels. 483. CH. III.] LIMITS OF LIABILITY. 555 Percival, and Kirwan v. Kirwan, does not seem to have been questioned by any of the learned judges, though considerable difference of opinion existed among them as to the weight of the evidence -which had been offered to show that the creditor knew of the retirement of one of the partners in the house of which he was a creditor, and had adopted the responsibility of another party in heu of that of the retiring partner. The action was brought for money lent, and the plaintiff sought to charge the defendant as a partner in the house of Alexander & Co., under the following circumstances. The plaintiff, who was in the East India Company's military service, kept a banking account with the house of Messrs. Alexander & Co., at Calcutta, between the years 1815 and 1832. The rate of interest allowed to the plain- tiff varied at different periods, ranging between the rate of £10 and £5 per cent. In 1822, and the two following years, it was £6 per cent. ; in 1825 it was reduced to £5. The plaintiff's balance uniformly increased, and in April, 1832, it amounted to £18,150, the sum for which the action was brought. In 1822^ the defendant, who was a partner in the house, retired, and Nathaniel Alexander was admitted a partner in his room. In December, 1882, the then partners became bankrupt. In defence of the action the following evidence was submitted to the jury. The defendant came from India to England in 1818, having pre- viously executed a deed by which he was to cease to be a partner in May, 1822, at the latest, and Nathaniel Alexander was to be admitted on his retirement. On the sixth May, 1822, the dissolu- tion of the firm by the defendant's retirement, and the formation of the new partnership, were announced in the Calcutta Gazette. In the same year the defendant became a candidate for the office of a director of the East India Company, and inserted thirteen times in the newspapers an address to the proprietors of East India Stock, soUciting their suffrages, and stating that all his con- nection with mercantile concerns in India had ceased ; and in 1823, he was elected a director. At this period the plaintiff (who had returned to England some time before, but at what precise time did not appear), was residing at Hythe, in Kent, and was a subscriber to a reading-room there, at which two of the newspapers in which the advertisements appeared were taken m. The plaintiff continued to receive his accounts current yearly, through the house of Fletcher, Alexander & Co., of London, the 556 EIGHTS OF PAETNERS, ETC. [BOOK III. agents of the Indian house, until the year 1831 ; the respective rates of interest charged in each year being stated in such ac- counts. In Octohar, 1831, the plaintifif, as on3 of the executors of a brother of his who had died in Persia, executed, at the oflSce of Fletcher, Alexander & Co., a power of attorney to Messrs. Young, Bracken, Ballard, Sutherland and Alexander, who then constituted the firm of Alexander & Co., to get in the property of the testator in India ; which power expressly foamed the part- ners, and described them as members of the house of Alexander & Co. And in May, 1833, the plaintiff executed another power of attorney to Mr. Fullarton, a former partner in the house of Alexander & Co., together with the members of the firm of Bag- shaw & Co. in Calcutta, " to receive of and from James Young, Thomas Bracken, George Ballard, J. C. C. Sutherland, and Nathaniel Alexander, all of Calcutta, merchants and agents, then or lately carrying on business in copartnership, under the firm of Alexander & Co.," all dividends, principal and interest, &e., &c., due to him, the plaintiff, on the balance of any account current, &c., and to vote in the choice of assignees, and prove under the estate of any bankrupts or insolvents indebted to him. Upon this evidence, the jury found a verdict for the defendant ; Lord Abinger, C. B., by whom the action was tried, having observed strongly on the foregoing circumstances as leading to the conclu- sion that the plaintiff knew of the defendant's retirement ; and his Lordship told the jury, that if the plaintiff, with knowledge of that fact, went on trading with the firm and entering into new contracts, by taking new rates of interest or otherwise, he thereby acquitted the retiring partner, and consented to take the remain- ing partners for his debtors ; and that such was. the case even though no new partner came in on the retirement of the old one. The plaintiff then moved for a new trial, but the Court of Exche- quer refused the rule ; two judges being of opinion that there was strong evidence, and a third that there was evidence to go to the jury, of the plaintiff's knowledge of the defendant's retirement. These opinions were founded principally on the circumstances un- der which the plaintiff had executed the powers of attorney, es- pecially the power of attorney to Mr. Fullarton. And Parke B., who, with Lord Abinger, thought the evidence strongly in favor of the retired partner, said that he was not only not dissatisfied with the verdict, but he thought that if, in David v. EUice, and CH. III.] LIMITS OF LIABILITY. 557 Kirwan v. Kirwan, the questiodi liad been left to the jury, instead of being determined by the court, they would have drawn the same conclusion as in the present case. " I apprehend," said his Lordship, " the law to be now settled, that if one partner goes out of a firm, and another comes in, the debts of the old firm may, by the consent of aU the three parties, — the creditor, the old firm, and the new firm, — be transferred to the new firm. In Dayid V. EUice, the retired partner was held liable ; but the court was substituted for a jury in that case, and I much doubt whether twelve merchants would have determined it as the court did."^ ' In Wildes v. Fessenden, 5 Metcalf, 1 2, many of the foregoing cases were thoroughly and ably reviewed by Mr. Justice Hubbard, in an opinion ■which contains much learning upon tljis subject See Chase v. Vaughan, 30 Maine, 412. The doctrines which seem to be established, as the effect of the numerous decisions upon this subject, are : — 1. An express agreement by the creditor to discharge a retired partner is not inoperative for want of consideration as was held in Lodge v. Dicas, 3 B. & Ad. 613, for this case has, as to this point, been overruled by Thompson ». Percival, 5 B. & Ad. 925 ; 2. An adoption by the creditor of the new firm as his debtor does not by any means necessarily deprive him of his rights against the old firm ; David V. Ellice, 5 B. & C. 196; Thompson v. Percival, 5 B. & Ad. 925 ; Heath I). Percival, 1 P. W. 682 ; Kirwan v. Kirwan, 2 Cr. & M. 617 ; Gough V. Davies, 4 Price, 200 ; Winter v. Innes, 4 M. & Cr. 101 ; 3. And it will certainly not do so if, by expressly reserving his rights against the old firm, he shows that by adopting the new firm, he did not intend to discharge the old firm. Bedford v. Deakin, 2 B. & Ad. 210; Ja- comb V. Harwood, 2 Ves. Sen. 265 ; 4. And by adopting a new firm as his debtor, a creditor cannot be re- garded as having intentionally discharged a person, who was a member of the old firm, but was not known to the creditor to be so ; Robinson v. Wil- kinson, 3 Price, 538; 5. But the fact that a creditor has taken from a continuing partner, a new security for a debt due from him and a retired partner jointly, is strong evidence of an intention to look only to the continuing partner for pay- ment; Evans v. Drummond, 4 Esp. 89 ; Keed v. White, 5 Esp. 122 ; 6. And a creditor who assents to a transfer of his debt from an old firm to a new firm, and goes on dealing with the latter for many years, making no demand for payment against the old firm, may not unfairly be inferred to have discharged the old firm. If a jury finds that he has done so, the court will not disturb the verdict ; Hart v. Alexander, 2 M. & W. 484 ; and if the question arises in equity, upon an attempt to have recourse to the estate of a deceased partner, the court will consider all the circumstances 47* 558 ElfiHTS OF PARTNERS, ETC. [BOOK III. § 571. If a firm borrow trust-moneys of whicli one of the part- ners is a trustee, a retiring partner will not be exempt from lia- bility in respect of trust-moneys, unless lie have given a consid- eration to, or received a release from, the cestui que trust, or bis agent. In the case of Dickinson v. Lockyer,^ it appeared that Lockyer was trustee under the will of Furze, and was a partner with Bence and Woodward. The partnership was indebted to the testator's estate in certain sums secured by two bonds. The executrix went to America, and left the bonds with Lockyer. The partnership was afterwards dissolved by the retirement of Bence ; Lockyer and Woodward undertaking to take the stock, and to pay all the debts. Upon that occasion the creditors were convened ; and their accounts were adjusted by their consenting to take bonds of Lockyer & Woodward, and giving up the bonds and securities of Bence, Lockyer & Woodward ; and Lockyer, without any communication with the family of Furze, delivered up the two bonds which were left in his possession to Bence, to be cancelled ; but no new security was taken in their place. At the time of the dissolution, the partnership was solvent ; and so was Lockyer in ,his private capacity. After the dissolution, the inter- est, as it accrued due upon the two bonds was remitted to Herodia Furze by Lockyer, out of the funds of Lockyer & Woodward. About seven years after Bence left the firm, Lockyer & Wood- ward became bankrupts. A bill was then filed by the adminis- trator de bonis non of the testator, and the testator's children, against the bankrupts and Bence ; praying that an account might be taken of what was due on the two bonds, and that Bence might pay what should be found due. Lord Loughborough : " Bence, being jointly bound with Lockyer and Woodward agrees with them that they shall pay this debt, and relieves himself: and, upon that consideration, he gives them his share of the fund with which this debt was to be paid. That can never be made a pay- ment. The question in this court is, whether the trustee of a bond can, without the cestui que trust, release the obligor. Now, of the case, and decline to assist the creditor if upon the whole, justice to all parties so requires. Ex parte Kendal, 17 Ves. 522-525; Oakley v. Pasheller, 4 CI. & Fin. 207 ; Brown v. Gordon, 16 Beavan, 302 ; 1 Lindley Partn. 366, 367. 1 4 Yes. 36; 1 Hov. Supp. 428. CH. III.] LIMITS OF LIABILITY. 559 Bence is debtor -with the two others under the bond, and they cannot by management among themselves destroy that security. There was no real payment of money into the hands of Lockyer, as money belonging to the estate of Furze, to be laid out accord- ing to the will ; but the three co-obligors, by a transaction be- tween themselves, agree that one shall _be discharged, and the whole security rest upon the two, without the privity of the execu- tor. But no act of Bence can affect ttiose claiming mider Furze ; for Lockyer was the proper hand to pay. It is not necessary to inquire what would have been the case if actual payment had been made, and the money was in the hands of Lockyer. It would have depended a good deal upon the authority given by the executrix to him 'to act. If the two others had actually paid their shares of the bond into the hands of Lockyer, perhaps, with aU the evidence of the confidence reposed in Lockyer, and his being trustee in the will, it would be very difficult for the court to make them answerable : but what they have done is nothing like that. By the agreement with him, they have reduced the security of the trust from the bond of the three to the personal security of the two. All the consideration was personal to Bence and Lock- yer ; not in the least affecting the estate. Therefore the rep- resentatives of Bence must account. Let an account be taken of what is due upon the two bonds ; the plaintiffs to be at liberty to prove the debt under the commission. I will not give costs. It is a very hard case. They all meant well; and if he had asked for an authority, I have no doubt he would have had it." It is observable, that Lord Loughborough, in this judgment, relies in a great measure on the circumstance that there was no specific repayment by Bence to Lockyer of his share of the bond debts in question, but only a general assignment of his interest in the part- nership effects. The same point is touched upon by Lord Ken- yon, in a case of a similar nature.^ There A. and B. were part- ners, and A. was an assignee of C, a bankrupt. A., with the privity of B., applied the money which he received as assignee, to partnership uses. B. retired, both partners being solvent ; B. assigning to A. all the partnership effects and credits ; A. under- taking all the debts. Lord Kenyon said it was not to be denied ' Smitli V. Jameson, 5 T. R. 601. 560 RIGHTS OF PARTNERS, ETC. [BOOK IH. that the money was never paid to C.'s estate ; it was said, how- ever, that it was paid by the defendant B. assigning over to the other defendant A. the unhquidated fragments of the partnership effects, the stock in trade, and the outstanding debts ; but that was not such a payment to C.'s assignees as would exonerate the defendants ; and therefore B., as well as A., was liable. § 572. Notwithstanding the last of the above cases, it may rea- sonably be concluded, that, where a firm has borrowed trust-moneys of one partner, a retiring partner, upon payment of his share of the debt, may, under certain circumstances, be exempted from responsibility on that account. But this, as Lord Loughborough observed, must depend on the authority given to the trustee, and the degree of confidence reposed in him. Partners, therefore, in borrowing trust-money of their copartners, ought to see that he has authority to lend and power to release. § 573. In concluding this section, we ought to notice a very im- portant question connected with retiring partners, namely, how far they are at liberty to retire from the firm with a knowledge of the firm's insolvency. Upon the whole, it seems clear, that if a part- ner, by right of the articles, or by permission of his copartners, retire from the firm on the very ground of its insolvency, this act, fer se, is not fraudulent, and cannot render him liable to the cred- itors of the remaining firm ; though, of course, it will be otherwise if his retirement arise from or be connected with some fraudulent agreement between himself and the remaining partners.^ § 574. In the case of Parker v. Ramsbottom,^ Parker retired from the firm, having drawn out a portion of his capital, ^under an agreement that the rest should be paid to him by instalments, with interest. At the time of his retirement, he knew of the firm's insolvency ; and this objection was made by the counsel for the assignees of the bankrupt partners. It is clear, however, that there was no fraud in the transaction ; and the judges, without adverting to the objection, permitted Parker to prove against the estate of the bankrupts. So, in a case before Sir Thomas Plumer, his Honor held clearly, that a retiring partner might receive a sum of money for his share in the concern, although both knew that the partnei*- ' Story Partn. § 163. See Marcy v. Clark, 17 Mass. 330. ' 3 Barn. & Ores. 257 ; 5 Dowl. & Ryl. 138. CH. III.] LIMITS OF LIABILITY. 561 sMp was insolvent. " Migtt not," he said, " one partner dissolve publicly his partnership -with the other, he knowing the then state of it, but having a better opinion of it, or choosing, for his own advantage, to give a sum of money if the other would convey his interest to him ? They certainly might make such an agreement, no fraud being practised or intended. The mere circumstance of the partnership being, at the time of the retirement, in such a state that their joint efiFects were not sufficient to pay their joint debts, would not, per se, be ' sufficient to invalidate a dissolution of part- nership made fairly between the partners themselves." In this case, there was no contrivance, between the bankrupt and the retiring partner to put their joint effects into a state to benefit the latter.^ § 575. But if two copartners enter into a contract for the pur- pose of defrauding their joint creditors, the one agreeing to permit the other to withdraw money out of the reach of the joint creditors, such a contract is fraudulent and invalid ; and upon this principle, as Sir Thomas Plumer observed, the case of Anderson v. Maltby ^ was decided. The facts of that case were as follows: — Erough Maltby, Thomas Maltby, and Dyer were in partnership, the share of Thomas in the capital being £6,200. In June, 1774, Dyer retired. A new partnership was then formed between Brough Maltby, Thomas Maltby, and George Maltby, under the firm of Brough Maltby & Sons. No articles of partnership were entered into ; and the books used in the partnership of Maltby & Dyer, and Maltby, Dyer and Maltby, were carried on in the new copart- nership, without any entry denoting its commencement. At the time of forming this new partnership, no additional capital was brought in by either of the parties ; but Thomas Maltby had credit ^ven to him, under the title of " Thomas Maltby's capital," for the ^ Ex parte Peake, 1 Madd. 346 ; and see Ex parte Carpenter, Mont. & M'A. 1. And it may be remarked, that it is very questionable whether an action will lie against a man for representing, contrary to the truth, that a partnership in which he is engaged is solvent. In a late case, the Court of Common Pleas avoided the decision of that point, but held, that, at all events, to support such an action, the representation must be in writing ; for, although it be made by a party as to the credit and circumstances of a firm, of which he himself is a member, it is also a representation as to the credit of " another person" within the meaning of the stat. 9 Geo. 4, c, 14, s. 6 ; Devaux v. Steinkeller, 1 Scott, N. R. 2()-2. 2 4 Bro. 423 (Perkins's ed.), note (1), 429, note (a) ; 4 Ves. jun. 244. 562 RIGHTS OF PARTNERS, ETC. [BOOK III. sum of £6,200, being what he had advanced to the partnership of Maltby & Dyer. The new partnership of Brough Maltby & Sons continued until April, 1784, when Thomas Maltby, finding the partnership in an insolvent state, retired from the concern ; but no public notice was given of the dissolution of the partnership, nor any deed of dissolution executed ; nor was any settlement made in the books, nor any valuation of the outstanding debts, but the books were continued without alteration, until the 10th July, 1786. On that day the settlement of Thomas's capital, which had been made up on the 1st July, 1784, was for the first time entered in the partnership books, and Brough Maltby and George Maltby remained in trade until the 6th May, 1788, when they stopped payment ; and on the 3d November, 1788, they became bank- rupts, and the plaintiffs were chosen assignees. During the time the partnership of Brough Maltby & Sons continued, Thomas Maltby drew out of the copartnership the sum of £3,904 15«. Id. ; and after he had retired he received from the remaining partners, on the footing of the account of the 1st July, 1784, the sum of £9,467 14s. 2d. ; he likewise claimed as a creditor under the commission the sum of £3,628 lis. Under these circumstances, the assignees of Brough Maltby and George Maltby filed their bill against Thomas, praying an account of all sums of money, secu- rities, and bills, paid to or deposited with the defendant by the partners, and received by him during the subsistence of the part- nership and since, and an account of his share at the time he re- tired ; that the payments made to him should be declared fraudu- lent ; that he should be decreed to pay his proportion of the partnership debts ; and if a surplus should remain after discharging the partnership debts, that the proof of the defendant's debt should be reduced to his share of that surplus. Lord Loughborough in an elaborate judgment, after entering minutely into every partic- ular of the case, in order to show that a fraudulent collusion existed between the partners, observed in conclusion : " The case resolves itself into a plain question, whether, in 1784, upon the 1st of July, the defendant was bond fide a creditor of the other two, then about to enter into a new partnership. If not, if all this transaction is to be void, under the color in wiiich it presents itself to me, it is an imposition, not upon the other partners only, because they were consenting, but upon the creditors, who must deal with the partner- ship of the two, contrived upon a certain foresight of hankruptcy, CH. III.] LIMITS OF LIABILITY. 563 at no very remote period (though the exact time was not certain), and managed between persons of the same family ; by which the creditors of the two have been losers exactly to the amount of what he had received. The only doubt I have is, whether I should better attain the justice of the case by directing an account of all transactions between Brough and George Maltby, from the com- mencement of their partnership, for it can go no further back, and the defendant, with an inquiry into the state of accounts of that period between them, to see whether there was any consideration whatever, upon which he could be a creditor ; for, if it was all moonshine, and there was no. property upon which any account could be made out, it is all an imposition to create a false credit to themselves, and to give him the name of a creditor, when, in fact, he was none, and a mere device to draw the money of other peo- ple from the new copartnership into his pocket. Whether this should be done in the master's office, or by discussion of an issue at law, is a point upon which I doubt. Consider which will best attain justice." His Lordship ultimately directed an account, de- claring his opinion that the settlement of the defendant's capital in the partnership of Brough Maltby & Sons, at the time of the dissolution thereof, which the defendant admitted by his answer was made up soon after he quitted the partnership, but was not entered in the partnership books till the 10th July, 1786, was not binding upon the plaintiffs, the assignees of the bankrupts ; and that the defendant, Thomas Maltby, could only be considered as a creditor of the bankrupts in respect of the effective balance of the stock of the former partnership, at the time of the dissolution thereof, transferred to the new partnership. SECTION IV. 01' THE LIABILITY OF A DECEASED PARTNER'S ESTATE. § 576. At law, upon the death of a partner, the legal remedies against him in respect of partnership contracts are extinguished, and the creditor, being precluded from suing the representatives of the deceased, can maintain an action against the surviving part- 564 EIGHTS OP PARTNERS, ETC. [bOOK III. ners only.^ In equity, on the other hand, the creditor of a part- nership may obtain payment of his debt out of the assets of the deceased partner ; though upon what principles, and under what modifications, such relief will be granted, has not been fully estab- lished till of late years. In the opinion of some learned judges, and particularly of Lord Eldon, a partnership creditor , was per- mitted to receive satisfaction for his debt out of the estate of the deceased partner, only through the medium of the equities subsist- ing between the partners themselves ;^ those equities, so far as re- gards the interest of third parties, being these : that their joint debts should be satisfied out of the joint estate ; but if that were insufficient, then, subject to the claims of their separate creditors, out of their separate estates proportionally ; and if any of them were insolvent, then out of the remaining separate estates propor- tionally. On the other hand, there was very high authority for holding that such a creditor had a right to proceed immediately against the representative of the deceased partner, upon the prin- ciple that, in the consideration of a court -of equity a partnership • debt is several as well as joint. § 577. It became important to understand which of the two principles in question was the right one, when it was considered how differently they might afiect the judgment of a court of equity with regard both to the time and manner of administering the assets of the deceased partner. If, on the one hand, the creditor was tp be considered as entitled to payment out of the deceased partner's estate, not because his contract with that partner contin- ued as a several contract, but because, that contract having ceased, he could only resort to that estate through the equities of the surviving partners, then it was clear that the creditor must wait till those equities were complete ; that is to say, until an ac- count should have been taken of the partnership transactions, and the joint estate ascertained ; and in case of the insolvency or in- sufficiency of the joint estate, then until the separate estate of ' Shaw C. J., in Burnside v. Merrick, 4 Metealf, 544 ; 3 Kent Com. 63, 64; Story Partn. §§ 361, 362 ; Gow Partn. (3(1 ed.), 172, 358 ; Burgwin v. Hostler, Taylor, 1 24 ; Barney v. Smith, 4 Harr. & John. 485 ; Murray v. Mumford, 6 Cowefi, 441 ; Grant v. Shurter, 1 Wendell, 148 ; post, §§ 580, 723. ' See Rice u. Barnard, 20 Vermont, 479, cited ante, § 125 note; Tilling- hast y. Champlin, 4 Rhode Isl. 205, 206 ; Miller v. Estell, 5 Ohio (n. s.), 5Q8. en. III.J LIMITS OF LIABILITY. 565 eacli partner should have been ascertained, and all the separate creditors paid. On the other hand, if, upon the decease of a partner, the creditor was to be considered a several as well as a joint creditor of the firm, it followed as a consequence, that he was to receive his satisfaction immediately out of the estate of the de- ceased partner, and, perhaps, even pari passu with the separate creditors. § 578. When the first edition of this treatise was published, the weight of authority seemed to be in favor of the former of these two opinions ; but as the courts have since upheld the latter, it becomes unnecessary to notice those cases upon which the ex- ploded doctrine appears. to rest.^ Perhaps, however, an exception may be made in favor of the case of Gray v. Chiswell,^ as show- ing the principle which Lord Eldon conceived to be applicable to this subject. In that case, a bill was filed by the separate cred- itors of Chiswell, the late partner of Nantes, against the execu- trix and heir at law of Chiswell, for an account. The joint cred- itors of Chiswell & Nantes, who had proved their debts under a commission of banlanipt against Nantes, as surviving partner, went in ^ under an order, and proved their debts before the master. They then insisted upon their right to come in pari passu with the separate creditors of Chiswell against his separate estate. It was admitted that the joint estate was insolvent, and would pay only an inconsiderable dividend ; and that |;he surviving partner having brought into the firm an inconsiderable sum, upon a final adjustment the joint estate would be greatly indebted to the sepa- rate estate. Upon the argument of the question, many authorities were cited in favor of the joint creditors, in which the court had rectified the joint bonds of partners by construing them several as well as joint, so as to constitute the bond creditor a separate creditor on the estate of the deceased partner. On the other hand, it wag contended that these were all cases in which the bond had been made joint through fraud or mistake.* Lord Eldon : " Why, if ' Lane v. Williams, 2 Vern. 292; Jaoomb v. Ilarwood, 2 Vez. 265; Han- kcy V. Garrett, 1 Ves. jun. 236; Ex parte Williams, 11 Ves. 3; Ex parte Kendall, 17 Ves. 519; Campbell v. MuUett, 2 Swanst. 576. ' 9 Ves. 118. ' By consent. * See Simpson v. Vaughan, 2 Vez. 101, cited 2 Atk. 31 ; Thomas w. 48 566 EiaHTS OF PAETNEES, ETC. [BOOK IH. the equity of the case gives the joint creditors as good a right as in bankruptcy, are they to have all this benefit before the separate creditors are satisfied ? The cases of mistake, &c., differ in re- spect of the intention of the transaction, the intention origiiially to constitute a legal demand against the deceased man as well as the survivor. • The decree goes upon the intention. What is now de- sired, not only does not effectuate the intention as conceived in law, but goes beyond it, as acted upon in equity. The intention implied in equity is only, that if the estates are insolvent, then the remedy is to be had against the deceased partner. But is the benefit of that to be had against those who have a separate credit upon each ? That has never been said. In the cases that have been referred to, the court says, the security should be according to the form in which it was originally intended ; that the creditor had originally a right at law to be considered a separate creditor, provided he had the security intended ; and then the court has always said, a decree for such an equitable creditor is equal to a judgment at law. But there is this distinction, that you are there pressing for a creditor that which he could have enforced against the testator suing him alone at law, if the security had been rec- tified, and he had been alive ; for the court would during his life have rectified the bond. He is not, therefore, put in a better sit- uation than he would have been in, if he had sued in the life of the debtor. But here you are giving him a suit against the assets of Chiswell alone, when he could not have sued Chiswell alone in his life. This, therefore, seems to go further than any other case ; and, I think, will not do. It is extremely difficult to say upon what the rule in bankruptcy is founded. But if the court aim at equahty, it is extraordinary to say, they shall have a better rem- edy in consequence of his death than if he had lived ; and when, by reason of his death, the remedy -at law is gone." His Lord- ship afterwards said, that, having thought very anxiously upon this case, his opinion was, that the separate creditors must take the separate estate, and the joint creditors the surplus ; and the decree was framed accordingly. § 579. It may perhaps be said, that the case of Gray v. Chis- Frazer, 3 Ves. 399 ; Burn v. Burn, 3 Ves. 573 ; Bishop v. Church, 2 Vez. sen. 100, 371. CH. III.] LIMITS OP LIABILITY. 567 well is not an express authority in favor of the opinion wMch has been ascribed to Lord Eldon, and that the decision in that case might be supported consistently with the principle that a partner- ship contract is several as well as joint ; the case in question merely deciding, that, although the partnership creditor may be admitted in equity to receive payment of his debt out of the estate of the deceased partner, he must nevertheless, by analogy to the rule in bankruptcy, be postponed to the separate creditors of the deceased partner. The answer to this argument appears to be, that Lord Eldon's decision, as reported, does not rest on those grounds alone ; his language, both in that and other cases,^ show- ing clearly, that in his opinion the remedy of a partnership cred- itor against the deceased partner's estate was not immediate, but depended on the state of the account between the deceased and surviving partners. § 580. But, whatever may have been the opinion of Lord Eldon upon this important subject, it is now established beyond contro-r versy, that, in the consideration of courts of equity, a partnership debt is several as well as joint ; ^ and that, upon the death of a partner, the joint creditor has a right in equity to proceed imme- diately against the representative of the deceased partner for pay- ment out of his separate estate, without reference to the question whether the joint estate is solvent or insolvent, or to the state of accounts amongst the partners.^ ' 17 Ves. 519, D. Lord Eldon: "Where parties think proper to enter into a joint, instead of a joint and several contract, though 1 am surprised that courts of equity have not left that to its fate as a joint contract, they have, I admit, said, that there is a remedy against the assets of one deceased, if the surcioors cannot pay. That must be, however, subject to many consid- erations." " 3 Kent Com. 64; Wilder v. Keeler, 3 Paige, 167; Story Partn. § 362; IT. States v. Cushraan, 2 Sumner, 441 ; Conley v. Good, Breese, 97 ; Gow Pa,rtn. (3d ed.), 359; Story Eq. Jur. § 676. See Allen v. Wells, 22 Pick. 456. By statute in some of the States, partnership debts are several as well as joint. See McLain v. Carson, 4 Ark. 164 ; Lyons v. Hamilton, 1 How. (Miss.), 474; Fairchild v. Grand Gulf Bank, 5 id. 597; Nutt v. Hunt, 4 Smedes & M. 702 ; Griffin v. Samuel, 6 Missouri, 50 ; post, § 757. See dicta of Lord Loughborough, Stephenson v. Chiswell, 3 Ves. 566 ; Lord Brougham, Devaynes v. Noble, posf, § 581 ; Lord Mansfield, Kice v. Shute, Burr. 2611 ; De Grey C. J., Abbott v. Smith, 2 W. Bl. 947. ' It was, however, held in Alsop v. Mather, 8 Conn. 584, that the effects of a deceased partner cannot be pursued, in law or equity, while the surviv- 568 RIGHTS OF PARTNERS, ETC. [bOOK III. § 581. The great case upon this subject is that of Devaynes v. Noble,^ decided by Sir William Grant, and afterwards, upon ap- ing partner is solvent. See per Swift C. J., in Sturges v. Beach, 1 Conn. 607, 509 ; Livingston J., in Pendleton v. Phelps, 4 Day, 481 ; Assistant Vice- Chancellor Sandford, in Slatter v. Carroll, 2 Sandford Ch. 573, 579, 580. So in Van Reimsdyk v. Kane, 1 Gall. 3 71, it was hel4 that a bill to charge the executors of a deceased partner with a partnership debt, where the other partner survives, must expressly charge an insolvency of the survivor. In Hammersley v. Lambert, 2 John. Ch. 608, 509, Mr. Chancellor Kent said: "It is well settled, that relief may be had in equity against the representa- tives of a deceased partner leaving assets, if the surviving partner he insol- vent." See also Jenkins v. De Groot, 1 Caines Ca. Er. 122 ; Wilder v. Keeler, 3 Paige, 167; Sale v. Dfshman, 3 Leigh, 548; Lang v. Keppele, 1 Binn 123; Caldwell v. Stillman, 1 Rawle, 212; Horsey r. Heath, 5 Ohio, 353 Hubble V. Perrin, 3 Ohio, 287; McCulloh v. Dashiell, 1 Harr. & Gill, 96 Southard v. Lewis, 4 Dana, 148; Wardlaw v. Gray, C. W. Dudley Eq. 85 Cope V. Warner, 13 Serg. & R. 411 ; Linner v. Dare, 2 Leigh, 588 ; Philson V. Bampfield, 1 Brevard, 202. But Mr. Justice Story, in his Commentaries on Equity Jurisprudence, and also on Partnership, has declared the rule as stated in the text, and considers it as now established in its' full breadth. He remarks upon tjiis point : " The doctrine formerly held upon this subject seems to have been, that the joint creditors had no claim in equity against the estate of the deceased partner, except when the surviving partners were at the time, or subsequently became, insolvent or bankrupt. But that doc- trine has been since overturned ; and it is now held, that in equity all part- nership debts are to be deemed joint and several ; and consequently the joint creditors have in all eases a right to proceed at law against the sur- vivors, and an election also to proceed in equity against the estate of the deceased partner, whether the survivors be insolvent or bankrupt, or not. The consequence is, that the joint creditors need not now wait until the part- nership affairs are wound up, and a final adjustment thereof is made. But they may at once proceed, as upon a joint and several contract, in equity against the estate of the deceased partner ; although in such suit the surviv- ing partners must be made parties, as persons interested in taking the ac- count." Story Partn. § 362 ; 1 Story Eq. Jur. § 676. Mr. Chancellor Kent, also, in his Commentaries, states the same to be the rule. 3 Kent Com. 63, 64, note. It is provided by statute in Massachusetts, that where two or more are indebted in any joint contract, or upon a judgment founded on any such contract, and one dies, his estate shall be liable therefor, as if the contract had been joint and several. Rev. Stat. Mass. chap. 66, § 27. See Burnside V. Merrick, 4 Metcalf, 544. In Kentucky and in Indiana the representatives of a deceased partner may be sued for a partnership debt, although the other partner is alive. Maxey v. Averlll, 2 B. Monroe, 107 ; Ransom v. Pomeroy, 5 Blackf. 383. » 1 Mer. 829 ; 2 Russ. & M. 495. CH. III.] LIMITS OF LIABILITY. 569 peal from Hs decree, by Lord Brougham. By tKe decree made on the hearing of that cause, it was referred to the master to take an account of what was due, at the death of Devaynes, from the' partnership of Devaynes & Co., to the plaintiifs, and all such other persons as were creditors of the partnership at the death of Devaynes, and also of what was due, at the time of making the decree, from the partnership to such creditors ; and to inquire whether such creditors, or any and which of them, contiuued to deal with the surviving partners after the death of Devaynes, and what sums of money were paid by the surviving partners to such creditors, respectively, from the death of Devaynes to the bank- ruptcy, and what had since been received by them, respectively ; and, also, whether such creditors, or any and which of them, had, by such subsequent deahngs, released the estate of Devaynes from the pajonent of their respective debts, or what (if any thing) re- mained due in respect thereof. Under this decree the master made his separate report, dated the 15th March, 1815, in which he stated the claims of different classes of the partnership cred- itors at the death of Devaynes, and the various dealings which had since taken place between those creditors and the surviving partners ; and his opinion, as generally apphcable to all classes of the creditors, was, that they had a right to resort to the estate of Devaynes for the balance due to them at the time of his death, after deducting payments made to them by the surviving partners. The representatives of Devaynes excepted to this report, on the general ground, that, by the subsequent dealings, the creditors had released his estate, and assumed the surviving partners as their debtors. Sir William Grant overruled the exceptions. In the course of his judgment in one of the cases submitted for his opinion,^ his Honor took occasion to comment upon the general equity of the joint creditor to receive payment from the deceased partner's estate ; observing, that courts of equity had adopted the rule of the law of merchants, that a partnership contract is sev- eral as well as joint ; ^ and upon this principle his Honor in the principal case held, that the joint creditor might have immediate recourse to the estate of the deceased partner, without regard to ' Sleech's case, 1 Mer. 563. " But see M'CuUoh v. Dashiell, 1 Har. & Gill, 96. 48* 570 EiaHTS OF PARTNERS, ETC. [bOOK III. the relative position of the deceased and the surviving partners, in respect of the general accounts of the partnership. And his Honor proceeded on the same principle in the succeeding case of Sumner V. Powell.^ The exceptions to the master's report in Devaynes V. Noble having been overruled, as above stated, the representa- tives of Devaynes appealed against the decree, submitting, " that it is contrary to the principles and practice of this court to give relief to joint creditors of a partnership, in respect of their joint debts, out of the estate of the deceased copartner, in a case in which it is not alleged and proved by such joint creditors that they had exercised their legal remedy against the surviving part- ners ; or in a case in which no proof is given, by such joint credi- tors, that the joint estate of the copartners is insufficient to pay the joint debts of the partnership ; ^ or in a case in which such joint creditors seek relief against the separate estate of one copart- ner, without seeking relief against the separate estates of the other copartners."^ The appeal was twice heard by Lord Eldon. His 1 2 Mer. 37. ^ Sir H. Seton observes, that, since the above appeal, an inquiry is some- times directed as to the joint estate. In Fisher v. Farrington, the following clause formed part of the minutes of the decree : " Let the master inquire whether the joint estate of the said firm of B. (the deceased partner) and M. was, or not, sufficient for the payment of the joint debts due from the said firm at the death of the said testator : such inquiry to be without prejudice to any question as to the rights of the joint creditors, in case it shall appear, that, at the decease of the said testator, the said joint estate was sufficient for the payment of the said joint debts." Fisher v. Farrington, Seton on De- crees, 239. ' The prayer of the petition was, that the said causes might be reheard ; that the bill filed by Sir T. Baring and Sir F. Standish might be dismissed, and that the decree of 2d March, 1812, and orders, might be discharged; otherwise, that the said decree might be varied, " by directing the master to inquire and certify whether the joint estate of the said firm of Devaynes, Dawes, Noble & Co. is sufficient to pay the joint debts of that partnership. And in case the said master shall find that the said joint estate is sufficient for the payment of the said debts, then that the said bill may be dismissed with costs. And in case the said master shall find that the said joint estate is insufficient for the payment of the said debts, then that the said master may be directed to take an account of the joint estate of the said firm of Devaynes, Dawes, Noble & Co., possessed by the said defendants, Lestock Wilson, John Morris, and Joseph Down, the assignees of the said John Dawes, William Noble, Kichard Henry Crofl, and Richard Barwick ; and CH. III.] LIMITS OE LIABILITY. 571 Lordship came to no decision on the subject, though he observed, that it was too late to doubt that, in certain cases, the court would apply the assets of the pre-deceased partner ; though it was a very unsettled thing when and under what limitation the court was to apply those assets, with a view to the question of how the creditor was to be paid, regard being had to the circumstance that there were other persons who were debtoiis. The case was after- wards elaborately argued before Lord Lyndhurst, who gave no decision. Ultimately, the case was heard by Lord Brougham, who dismissed the appeal. His Lordship took the same view of the equity in question as Sir William Grant ; considering the part- nership creditor to have an absolute right, without any modificar tion, to resort to the estate of the deceased partner. In the course of his judgment, his Lordship referred to the case of Sum- ner V. Powell as materially bearing on the question then before him, and he observed that in the last-mentioned case Sir Wilham Grant had referred to the case of Devaynes v. Noble, in a way to show that it had not been lightly dealt with by his Honor, but was decided upon mature deliberation, and after a full examination of all the authorities. § 582. The case of Devaynes v. Noble, so far as relates to the subject now under discussion, was recognized and acted upon by Sir John Leach in Wilkinson v. Henderson.^ The plaintiff was a creditor of the partnership firm of Shepherd & Hartley, and. Shepherd having died, the bUl was filed by the plaintiff on behalf of himself and all other the joint creditors of Shepherd & Hartley, against the executors of Shepherd, and against Hartley, the surviving partner ; and it prayed payment of the partnership debts out of the estate of Shepherd. On the part of the defend- ants, the executors of Shepherd, it was objected, that no decree could be had for payment of the partnership debts out of the also an account of the separate estates of the said John Dawes, William Noble, Richard Croft, and Richard Barwick ; and that, in the mean time, all proceedings under the said order of the 1st day of June, 1820, and the 3d day of August, 1820 (orders for payment of the joint creditors out of the assets of Devaynes), may be suspended." ' 1 Myl. & K. 532. In this case, the observations contained in the first edition of this treatise are embodied in the speeches of the counsel on each side. 572 EIGHTS OE PARTNERS,' ETC. [bOOK III. estate of Shepherd, inasmuch as it did not appear that Hartley, the surviving partner, was insolvent ; but per Sir John Leach : " All the authorities establish that, in the consideration of a court of equity, a partnership debt is several as well as joint. The doubts upon the present question seem to have arisen from the general principle, that the joint estate is the first fund for the pay- ment of the joint debts, and that, the joint estate vesting in the surviving partner, the joint creditor, upon equitable considera- tions, ought to resort to the surviving partner before he seeks sat- isfaction from the assets of the deceased partner. It is admitted, that if the surviving partner prove to be unable to pay the whole debt, the joint creditor may then obtain full satisfaction from the assets of the deceased partner. The real question, then, is, whether the joint creditor shall be compelled to pursue the sur- viving partner in the first instance, and shall not be permitted to resort to the assets of the deceased partner until it is established that full satisfaction cannot be obtained from the surviving part- ner ; or whether the joint creditor may, in the first instance, resort to the assets of the deceased partner, leaving it to the personal representatives of the deceased partner to take proper measures for recovering what, if any thing, shall appear upon the partnership accounts to be due from the surviving partner to the estate of the deceased partner. Considering that the estate of the deceased partner is at all events hable to the full satisfaction of the creditors, and must first or last be answerable for the failure of the surviving partner ; that no additional charge is thrown upon the assets of the deceased partner by the resort to them in the first instance, and that great inconvenience and expense might otherwise be occasioned to the joint creditors ; and, further, that according to the two decisions in Sleech's case, in the cause of Devaynes v. Noble, the creditor was permitted to charge the sep- arate estate of the deceased partner, which in equity was not primarily liable, as between the partners, without first having re- sort to dividends, which might be obtained by proof under the commission against the surviving partner, I am of opinion that the plaintiff is entitled in this case to a decree for the benefit of him- self, and aU other joint creditors, for the payment of his debt out of the assets of Shepherd, the deceased partner. § 583. " The principles upon which the case of WilMnson v. Henderson was decided were carried to the very fullest extent CH. III.] LIMITS OF LIABILITY. 573 in that of Thorpe v. Jackson,' in which it was held that every joint loan, whether contracted in relation to mercantile transac- tions or not, is in equity to be deemed joint and Several. In that case, several persons who did not appear to be partners in trade, contracted a loan on a joint banking account with the Northern & Central Bank. One of the joint debtors, Edmund Hamer, hav- ing died, a biU was filed by the bank against his personal repre- sentatives, and against the surviving joint debtors, praying an account and payment of what might be found due on the banking account out of Hamer's assets. Only one of the surviving joint debtors was alleged to be insolvent, and no rehef was prayed against any of them. On demurrer to the bill by Hamer's execu- tors, it was argued on their behalf that no such equity as that alleged by the bill existed, as against the estate of a deceased joint debtor, who had not been a partner in trade ; the rule as to ■ the severalty of a partnership contract having arisen entirely from the lex mercatoria. That if, however, such an equity did exist, it could not be administered until all the surviving joint debtors had been shown to be insolvent, and that AVilkinson v. Henderson, in which the contrary had been decided, was at variance with all the authorities. But Mr. Baron Alderson overruled the demurrer: his Lordship, after adverting to the observation of Lord Eldon, that a man who has chosen to take the joint contract of several, though at law his security is wearing out as each of his debtors dies, yet in equity may resort to the assets of a deceased debtor, observed, that in this proposition he could find no trace of the dis- tinction set up in the course of the argument that such debt must be a mercantile debt incurred by joint traders ; nor could he con- ceive why it should^be so, though the question had most frequently arisen in such cases." " It is said," added his Lordship, " that in Sleech's case Sir W. Grant has decided upon the distinction now contended for. I do not apprehend this to have been the case. He says, indeed, that by the mercajntile law a partnership contract was several as well as joint ; and then he adds that this may prob- ably be the reason why courts of equity have considered joint contracts of this, sort (that is, contracts joint in form), as stand- ing on a difierent footing from others. I conceive, therefore, that > 2 You. & Coll. 553 ; and see Braithwaite v. Britain, 1 Keen, 206. 574 RIGHTS OP PARTNERS, ETC. [BOOK III. partnership trading debts are only one, and that the most frequent case of the general rule, which is, that wherever a court of equity sees that in a contract joint in form the real intention of the par- ties is that it shall be joint and several, it will give effect to such intention. Now, I think that a contract for a loan of money, giving to the creditor the benefit of the security of several per- sons, is of that description. Here is a loan of money by bankers to certain persons, their joint customers. Is it not obviously the intention of both parties that the property of all should be respon- sible for the money thus obtained ? In the case of Simpson v. Vaughan, Lord Hardwicke, upon this obvious intention, corrected the mistake in the joint bond. Then the question arises whether this equity exists until after all the surviving contractors have been found incapable of paying the amount. I think that ques- tion concluded by the case of Wilkinson v. Henderson, to the reasons of which I fully accede." § 584. We ought not to conclude this subject without advert- ing to the question, whether, when a partnership creditor has obtained a decree in equity for payment of his debt out of the estate of the deceased partner, he is entitled to receive payment pari passu with the separate creditors of that partner. If this point were decided on principle alone, and without reference to any supposed analogy between the practice in the courts of equity and the practice in bankruptcy, it seems clear that the partner- ship creditor, as resting on his separate contract, would have a right to come in competition with the separate creditors. ^ On the ' Dalghren v. Duncan, 7 Smedes & Marsh. 280. See Newman v. Bag- ley, 16 Pick. 570; Allen v. Wells, 22 Pick. 450. In Grosvenor v. Austin, 6 Ohio, 103, it was decided that the separate estate of a deceased member of an insolvent firm is to be distributed pro rata among the creditors of the partnership and his own private creditors. In this case there was no joint estate-, s. p. Sumner v. Ilampson, 8 Ohio, .')28. See Story Partn. § 363. InMcCulloch V. Dashiell, 1 Harr. & Gill, 96, Archer J., said: "It is not altogether so easy to perceive why, when there is no joint fund and no sol- vent partner, the joint creditor should thereby acquire the equitable right of coming in with the separate creditors, pari passu, upon a fund in no manner benefited by the creation of his debt. Such, however, is the settled and established rule, as we are enabled to collect it both in bankruptcy and in equity." " We are disposed to adopt the ancient rule, as more consonant to equity and justice, that the joint creditors can only look to the surplus after CH. III.] LIMITS OB LIABILITY. 575 other hand, the cases of Gray v. Chiswell,^ and Cowell v. Sikes,^ tend to show, that, by analogy to the rule in bankruptcy, the partnership creditor will in such case be postponed to the separate creditors, unless there be no joint estate. In Thorpe v. Jackson,^ the joint creditors did not attempt to compete with the separate creditors. § 585. The principle, that a joint loan is to be considered in equity as joint and several, might seem to lead to the conclusion, that where joint debtors, not being partners in trade, have entered into a joint bond or joint covenant, for payment of their debt, a court of equity would rectify the instrument by construing it several, although there might be no evidence of fraud or mistake in framing it. No general proposition, however, on this subject, can be maintained ; because the fact of joint debtors giving a joint security might, under some circumstances, rebut the presumption of their several liability in equity.* Probably in deciding on a case of this nature, the courts would be disposed to inquire whether the instrument had been executed at the time when the debt was contracted, or had been given as a security for a bygone debt ; for on these circumstances might depend the question, whether the debt was or was not measured by the strict terms of the covenant. § 586. But where partners in trade enter into a joint security for the payment of moneys due from the partnership, courts of the payment of the separate debts." In this case there were joint funds, though very inconsiderable. See Simmons v. Tongue, 3 Bland, 356. See also, upon this point, Gow Partn. (3d cd.) 359, 360 ; Bell v. Newman, 5 Serg. & R. 78 ; Woddrop v. Ward, 3 Desaus. 203 ; Hall v. Hall, 2 M'Cord, Ch. 302; Sperry's Estate, 1 Ash. 347; Story Partn. § 363 and notes; 3 Kent Com. 64, 65, and notes. The representatives of a deceased partner, who have to pay the whole partnership debt, will be substituted in the place of the creditor, In order to recover from the survivors his portion of what they had paid. Sells v. Hubbell, 2 John. Ch. 397 ; Dalghrent). Duncan, 7 Sriiedes & Marsh. 280. But if the surviving partner alleges that a balance was due to him from the deceased, as much or more than his representatives have been obliged to pay, an account must be taken before a court of equity will enforce a claim for contribution. Sells v. Hubbell, 2 John. Ch. 397. ' Ante, § 578. ' 2 Russ. 191. = 2 You. & Coll. 559. * See Sumner v. Powell, infra. 576 RISHTS OF PARTNERS, ETC. [BOOK III. equity wlH rectify the instrument by construing it several as -well as joint ; the obligation to pay, independently of the instrument, being several as well as joint, and the courts presuming that it'was the intention of the parties to carry that obligation into full force. If it were otherwise, the instrument would be the means of dimin- ishing the security of the creditor. § 587. This mode of dealing with joint instruments executed by partners has long been applied to the case of partnership notes,^ upon the ground that, though the instrument was joint, the debt was the debt of each partner. Where, however, the partnership debt has been secured by the joint bond of the partners, courts of equity, in rectifying the bond, have taken into their consideration not merely the presumed nature of the debt, but the fact of posi- tive mistake or fraud in framing the instrument. The authorities, however, seem clearly to establish that all joint securities entered into by partners on the partnership account, whether under seal or otherwise, and although there may be no evidence of mistake or fraud in framing the instrument, will in equity be considered sev- eral as well as joint, and will be rectified accordingly. Thus, in Simpson v. Vaughan,^ where a bill was brought by the executor of the obligee of a bond given by two joint debtors for the purpose of having payment out of the estate of one of the debtors, Lord Hard- wicke, though he adverted to the fact of mistake in drawing up the bond, also took notice that the debt arose from the contract itself ; and that if there was any defect in the contract, the court would resort to what was the principal intention of the parties, that they should be severally and jointly bound. And upon these con- siderations his Lordship rectified the instrument. Again, in Bishop V. Church,^ where money was borrowed by partners on their joint bonds, although Lord Hardwicke doubted at first whether it sufficiently appeared that the bonds were intended to be separate as well as joint, yet, when he found that the money had been bor- rowed in the course of trade as partners, he declared the bonds valid as against the heir and executor of the deceased partner. And the principles of these decisions have been recognized and approved in succeeding cases.* ' Lane v. Williams, 2 Vern. 292 ; Jacomb v. Harwood, 2 Vez. sen. 265. ' 2 Atk. SI ; 2 Vez. sen. 101 ; and see Primrose v. Bromley, 1 Atk. 89. ' 2 Vez. sen. 100, 371. . , i * Orr V. Chase, 1 Mer. 729 ; Thorpe v. Jackson, supra. 1 Lindley Partn. CH. III.] LIMITS OF LIABILITY. 577 § 588. But although, in rectifying joint securities given by partners in trade, courts of equity would look to the fact of the obhgors being partners as evidence of their intention to be severally bound, yet it by no means follows that every joint instrument ex- ecuted by partners in relation to the partnership transactions shall be considered several as well as joint. In Sumner v. Powell,^ one of several partners died. Instead of winding up the affairs of the partnership by taking a general account, and satisfying all the claims upon the firm, his executor, S., and the surviving partners entered into an arrangement by which the former received what was estimated to be his testator's share of the joint estate, he releasing to the other partners all interest in the residue. S. likewise re- ceived from the surviving partners a joint covenant of indemnity against the debts of the old partnership. W., one of the surviv- ing partners, afterwards died, and the others became bankrupt. S. having been compelled to pay a partnership debt, insisted that he had a right to be repaid out of W.'s estate, and that to enforce this demand, the joint covenant of indemnity ought to be con- strued several. But Sir William Grant held the contrary, and dismissed the plaintiff's bill, though without costs. " When the obligation," observed his Honor, " exists only by virtue of the covenant, its extent can be measured only by the words in which it is conceived. A partnership debt has been treated in eqmty as the several debt of each partner ; though at law it is only the joint debt of all. But there all have had a benefit from the money advanced or the credit given, and the obhgation to pay exists in- dependently of any instrument by which the debt may have been secured. So, where a joint bond has, in equity, been considered as several, there has been a credit previously given to the different persons who have entered into the obhgation. It was not the bond that first created the liability to pay. But, in this case, the cove- nant is purely matter of arbitrary convention, growing out of no antecedent Uabihty in all or any of the covenantors to do what they have thereby undertaken. Why was Mr. Sumner's share of the partnership estate to remain unaffected by any claims by which 295; Richardson v. Horton, 6 Beavan, 185; Jones v. Beach, 2 De G., Me. & G. 886 ; Other v. Iveson, 3 Drew, 177; Clarke v. Bickers, 14 Sim. 639 ; Wilmer v. Currie, 2 De G. & Sm. 347. » 2 Mer. 30. 49 578 EIGHTS OF PARTNERS, ETC. [bOOK III. that estate might affcer?rards be diminished ? There was no equity that entitled him tci demand from the other partners an engage- ipent to that effect. But they are contented to give him a cove- nant of indemnity. As jt is only a joint covenant that is given, how can I say that it is any thing more than, a joint covenant tj^at was meant to be "given ? It is not attempted to be shown that there was any mistake in drawing the deed, or that there was any agreement for a covenant of a different sort. There is nothing but the coyeoaut itself by which its intended extent cam be ascer- tained. There is no ground, therefore, on which a court of equity C3.H give it any other than its legal operation and effect." § 689. It is obvious from what has preceded, that the partner- ship creditor has a right to receive payment of his debt out of the assets of the deceased partner, to the full amount of his demand against the original firm ; ^ and that although the demand may arise from a fraud to which the deceased was no party .^ In Vul- hamy V. Noble ,^ stock was transferred to a partner in a banking- house, by way of security for money borrowed of the firm, by one of their customers. The debt was subsequently discharged ; but, by consent, the stock was not re-transferred. The stock was after- wards fraudulently disposed of. Then one of the partners died, and after his decease the remaining partners became bankrupt. Lprd Eldon held the creditor entitled to have the remaining stock transferred to him ; to receive the residue of his debt, if possible, . Qut of the estate of the bankrupt partners ; and to go against the deceased partner's estate for the deficiency. " It cannot," said Lord Eldon, *' be made a question that a deceased partner's estate must remain liable in equity until the debts which affected him at the time of his death have been fully discharged. There are vari- ous ways in which the discharge way take place, but discharged they must be before his liability ceases." * See Hutchinson v. Smith, 7 Paige, 26 ; Bowden v. Schatzell, 1 Bailey, Bq. 360; Robb n. Stevens, 1 Clarke, 191. ' Oldaker v. Lavender, 5 Sim. 239. » 3 Mer. 593 ; and, see Clayton's case, 1 Mer. 572 ; Ward's case, id. 624 ; HowUOTi'? case, id. 616. Where stock has been misapplied in the manner 9bQVe (Q^ntion^d, the creditor may elect to consider the proceeds of the stock as a debt due from the deceased partner's estate, or to have the stock specir fically replaced. Baring's case, 1 Mer. 611. CH. in.] LIMITS OF LtABILITT. 579 § 590. It seems not to have been expressly determined, as be- tween the surviving partner and the representatives of the deceased partner, and liice ver^d, to what extent the acts or admissions of these parties respectively shall operate against the other, so as to take a contract made with the partnership in the lifetime of the deceased partner out of the statute of iimitations. It is appM- hended, however, that the strict rule of law on which the cases of Atkins V. Tredgold and Slater v. Lawson^ depended; and by trhich an admission by a joint contractor or his representatives has no effect against the statute after the joint contract has been Sev- ered by death, will not apply in the case now under consideration. In Braithwaite v. Britain ^ the bill was filed by a creditor of a banking firm against the representatives of John Britain, deceased, who was a partner in the bank, and against the surviving partners, praying for an account and payment of the plaintiff's deposits. John Britain died in March, 1824, and the bill was not filed tiU April, 1833 ; but it appeared the plaintiff received from the sur- viving partners several small sums on account in the course of the years 1S27, 1828, and 1829. It was contended that these pay- ments would not take the case out of the statute of limitations as against John Britain's estate, and the cases at law which have been already noticed were cited in support of that proposition. Lord Langdale, M. R., however, seems to have dissented from that proposition, though he declined to decide the case, except upon its special cirdumstances. He said : " On this occasion, it is not necessary to determine the effect of the statute in barring claims against the estate of a deceased partner, in cases not attended by the peculiar circumstainces belonging to this case. But, cOnsideif- ing that in cases of this kind the creditor of a partnership has a right to avail himself, not only of the nature of the contract, but also of the equities subsisting between the parties ; that the sur- viving partners may, as to past transactions (in respect to which they are subject to liability in common with the estate of the de- ceased partner), be not unreasonably considered as acting not only for themselves, but also on account of the estate of the de- ceased partner ; that the demand was clearly kept up against the surviving partners ; that one of the surviving partners was one ' See ante, § 427. " 1 Keen, 206. 580 KIGHTS OF PAKTNEES, ETC. [bOOK III. of the executors of the deceased partner, acting as such, and also one of the legatees of the interest of the deceased partner in the concern, and that the testator had made charges on his real estate for the payment of his debts ; I think that the case, considering all its circumstances, does not fall within the operation of the stat- utOj and is not governed by the legal consideration on which the cases of Atkins v. Tredgold and Slater v. Lawson were decided." § 591. In Winter v. Innes,^ Lord Cottenham, in adverting to this point, said : " When the simple case shall occur of the repre- sentatives of a deceased partner setting up the statute of limita- tions against a claim by a creditor of the firm, it will be to be con- sidered whether such a defence can prevail whilst the surviving partner continues liable, and the estate of the deceased partner continues liable to contribution at the suit of the surviving partner." If the equity of the creditor to go against the estate of the de- ceased partner is founded upon the equity of the surviving partner against that estate, it would seem that the equity of the creditor ought not to be barred so long as the equity of the surviving part- ner continues, as that would be to create that circuity which it is the object of the rule to prevent. § 592. In a recent case,^ where a partner died, having ap- pointed one of his partners one of the executors of his will, and after his decease, the busmess was carried on by the surviving partners, the name of the deceased partner being still retained in the business, and the bill stated that 0. B. Roe (one of the sur- viving partners) was the principal acting executor of Sir R. Bas- sett (the deceased partner), and that, in the payments of interest on sums deposited before the decease of Sir R. Bassett, he had acted and joined as such executor, and had over and over again stated to the plaintiffs, and generally to the customers of the bank, that he was such executor, and the bill then charged that Sir R. Bassett was the principal partner in the said firm, and that after his death the fact of his name being continued in the said firm, and the fact of C. B. Roe being his principal acting executor, were notorious throughout the Isle of Wight, and contributed much to the credit of the said banking business ; and that after the de- » 4 Myl. & Cr. 111. ^ Way V. Bassettt 10 Jurist, 89 ; V. C. Wigrain. CH. III.] LIMITS OF LIABILITY. 581 cease ojf Sir tl. Bassett the plaintiffs gave credit to the bank, both in respeist of the matters aforesaid, and on the supposition and be- lief that the estate of Sir R. Bassett continued liable after his death, and in the belief of the statements that C. B. Roe repre- sented both him and his estate ; Sir James Wigram V. C, said : " One question is, whether the surviving partners of the firm could, by any acts of theirs, keep alive the debt claimed by the plaintiffs against the estate of their deceased partner. Sir R. Bassett. I think that question must be governed by the decisions of Atkins v. Tredgold,^ Slater v. Lawson,^ Ault v. Goodrich,^ and that the acts of the surviving partners of the banking firm had not the effect of keeping alive the plaintiffs' claim, as against the real and personal estate of Sir Richard Bassett. A second question made in argu' ment was, whether the acts done by the surviving partners, or rather, at the bank, were or were not to be taken as the acts of the executors of Sir Richard Bassett, regard being had to the fact, that one of the executors was a partner in the firm. Upon this point, my opinion is, as I stated at the close of the argument, that insomuch as the acts done by the surviving partners at the bank were such as they were bound to do, and which, at law, they might have been compelled to do, those acts are not such as I can treat as the acts of the executor of Sir Richard Bassett. The third question is, whether the plaintiffs can enforce the debt against Sir Richard Bassett's estate, by reason of any equity subsisting between the surviving partners of Sir Richard Bassett and his estate ; and this depends in the first instance upon the form of the pleadings, which I have carefully read, with a view to this ques- tion. In order that the plaintiffs may have such an equity, it is necessary that the partnership accounts should be taken, for the plaintiffs can only be entitled to stand in the place of the surviving partners of Sir Richard. The pleadings, however, are so framed, as not only not to raise the question, but to avoid it, for the pur- pose of showing that the plaintiffs are compelled, and do claim to be entitled, according to the case of Wilkinson v. Henderson,* to sue the separate estate of Sir Richard, and not to seek relief against his estate through the equity of the surviving partners ; and it is ' 2 Barn. & Cres. 23. » 1 Barn. & Adol. 397. ' 4 Kuss. 430. « 1 Myl. & K. 582. 49* 582 EIGHTS OF PARTNERS, ETC. [BOOK ni. impossible to read the pleadings without seeing that this was ad- visedly done, with reference to the fact, that, instead of Sir Rich- ard Bassett being indebted to his partners, the latter were indebted to himjn respect to partnership dealings. This appears to me also to answer the arguments founded upon the language of Lord Langdale in Braithwaite v. Britain,^ and of Lord Cottenham in Winter v. Innes,^ if surviving partners might, as undoubtedly they might, both at law and in equity, plead the statute of limitations in bar to a claim of the creditors of the firm, and that, , whether the partnership accounts had or had not been settled, as between themselves and the retired partner, or the estate of a deceased partner, it appears to me impossible to contend with success that the estate of a deceased partner is not entitled to the same defence, only because the partnership accounts have not been taken. If I were to go the whole length of the plaintiffs' argument on this point, it would appear to me irresistibly to follow, that the statute of lim- itations could never be pleaded in equity, in bar to a debt claimed to be due from a dissolved partnership, as long as the accounts re- mained unsettled. I am satisfied that neither Lord Langdale, nor Lord Cottenham, intended to decide any such abstract proposition." § 593. Let us now proceed to consider, by what means and by what degrees the estate of the deceased partner may be relieved or discharged from the partnership debts due at his death, by the subsequent deahng of the creditors with the surviving partners. And here it may be premised, that the estate of the deceased partner has this advantage over that of a retiring partner, that, in order to free it from future liability, it is not necessary to give no- tice to the creditors of the dissolution of the firm as to such de- ceased partner.^ Hence a court of equity will not restrain the surviving partners from using the name of a deceased partner in the new firm.* There is, however, an exception to this rule re- garding notice, in the case where one of the surviving partners is executor of the deceased partner. It seems that in such case, in order to exonerate the testator's estate, due notice ought to be given to the creditors of the firm of the testator's death, because the executor partner has power to bind such estate.^ > 1 Keen, 206. ^ 4 Myl. & Cr. 108. ' Ante, §§ 113, 120, 538. • Webster v. Webster, 3 Swanst. 490, n. » VuUiamy v. Noble, 3 Mer. 614 ; and see Whale v. Knight, 4 T. K. 625. CH. III.] LIMITS OF LIABILITY. 583 § 594. In a recent case,^ Vice-Chancellor Wigram held, that ■when money was deposited with a banking firm, and one of the partners died, and appointed another of the partners his executor, subsequent payments of interest by the bank, even under its orig- inal name or firm, -were not to be deemed payments by the exec- utor of the deceased partner in his character of executor, and would not keep alive the debt as against the real or personal estate of the deceased partner^ so as to prevent the statute of limitations from barring the same. § 595. The same acts of the creditor which operate in discharge of the retiring partner will be equally efiectual in favor of the ier ceased partner's estate. Therefore, if, in respect of his claim on the original partnership, the creditor take the joint security of the new firm, at the same time rehnquishing the securities of the old firm, and a fortiori, if there be express evidence of his receiving a consideration for abandoning his original rights, the deceased partner's estate will be absolved from liability on account of the debt. § 596. On the other hand, the taking the separate security of the surviving partner will not,^ per se, be evidence of an inten- tion to rehnquish the remedies against the original firm, more es- pecially where the original securities are retained. This position seems clearly established by the case of Jacomb v. Harwood,^ though, in fact, the decision proceeded on another ground.* Gib- son and Sutton were partners in the trade of scriveners and bankers. The plaintifis each held a promissory note of Gibson and Sutton. Gibson died. For three years after his death, Sut- ton continued to pay interest on the notes. After that, the two plaintifis separately called on Sutton for a further security than those bare notes ; and therefore judgment was entered up in an ac- ' Way V. Bassett, 10 Jurist, 89 ; 15 Law J. 1. * Ante, § 557. ' 2 Vez. 265. ' Sutton had been appointed executor of Gibson, and in that character had, for the purpose of satisfj'ing the judgment, mortgaged part of a lease- hold estate, which was the separate property of tjibson. The bill prayed for a sale of such mortgaged premises, and payment to the plaintiffs of their principal, interest, and costs ; and Sir John Strange decreed according to the prayer of the bill, considering that such mortgage by the executor part- ner was valid, and ought to be enforced in favor of the partnership creditors. 584 EISHTS OP PABTNERS, ETC. [BOOK III. tion against him, not as an executor of Gibson, but as a surviving partner, for a partnership debt. That judgment was defeasanced by an instrument signed by the plaintiiFs as to their respective de- mands, agreeing that no execution should be taken on either of these judgments until such a time. In that agreement it was par- ticularly inserted that these judgments thus obtained by the two plaintiffs should not hinder either of them from any remedy they might be entitled to in a court of equity against Gibson's estate or effects, if they were not otherwise paid or dischargedi Sir John Strange : " If these judgments were obtained against him as sur- viving partner on foundation of a suit in the life of the two part- ners, no doubt but that will be, at law, an extinguishment of any remedy the party might have on the notes in a court of law, for transit in rem Judicatam : it would be the same in the case of a bond, had that been given instead of a judgment ; it would be at law an extinguishment of the simple contract debt, yet it would be a partnership debt on the judgment still.^ But this appears to be an action against him as surviving partner ; and therefore I do not know (though it may be an extinguishment of the demand on the notes in any action against him or them) whether this may be set up as a variation of the security, — that the partnership is discharged (as it certainly is as to any action on the notes), and that it is not a partnership debt. I do not see why I am not to consider it still as a partnership debt, only bettered by the security being converted to a judgment from a common note. The plain^ tiffs were originally entitled to these sums on the note ; one partner dies, the other is sued as a partner, and judgment obtained against him : I should strongly inchne to think, that, notwithstanding that judgment, it still continues a partnership debt, being obtained as surviving partner." § 597. And where no fresh security is taken from the surviving partner for a partnership debt, the motives of the creditor in con- tinuing his dealings with the surviving partner will be taken into consideration before it can be decided that such subsequent deal- ings amount to the acceptance of the sole security of the surviving partner in the room of the joint security of the firm. In Winter ' See Ward v. Motter, 2 Rob. (Virg.), 551 ; Watson v. Owens, 1 Kich. (S. C), 111 ; ante, § 481 and note, and post, Book 3, ch. 6, sec. 7. OH. III.] LIMITS OF LIABILITY. 5H5 V. Innes,^ it appeared that Mr. "Winter, for some years previous and up to the time of his death, carried on the business of a West Indi^ merchant, in partnership with John Innes. At the death of Winter, which happened in 1824, a sum of £37,748 was due from the partnership to Alexander Baillie, who did not at that time call for payment of his debt, but continued to deal with Innes until 1833, when Innes became bankrupt. The bill having been filed by persons claiming under Winter, for the purpose of having the partnership accounts taken, one question in the cause was, whether by reason of the transaction between Baillie and the surviving part- ner Innes, the debt of £37,748 was to be considered as remaining a partnership debt, so as to entitle BaiUie to receive payment out of the estate of Winter. It appeared that BaiUie was mduced so to leave his property in the hands of the house, partly, as it seemed, from kindness towards Innes, but principally from a desire not to injure the interests of the family of Winter, who was his friend. It was also shown that Baillie always looked to the, settle- ment of Winter's affairs, and the realization of his property, as the means by which, and the time at which his debt was to be paid ; Innes, in soliciting his forbearance, continually urging that, if payment of the debt was insisted upon, a forced and premature sale of the property would be the necessary consequence, from which much injury would arise to the family. Lord Cottenham, in giving judgment in the cause, said, that, without the evidence which has just been stated, the case would be simply that of con- tinuing the account with the surviving partner without requiring payment of the balance for eight years and three months, namely, from November, 1824, the time of Winter's death, to February, 1833, the time of Innes's bankruptcy ; but that this evidence was very important upon the question, whether the creditor had sub- stituted the individual credit of the surviving partner for the joint liability of the firm. That in this case there was not only no evi- dence of any intention to abandon the original claim against the partnership,' and to adopt the individual responsibihty of the sur- viving partner in its stead, but the total absence of any object or consideration for so doing ; and conclusive evidence that the principal object of the forbearance was not to press upon or preju- 1 4 Myl. & Cr. 101. 6R6 RIGHTS OF PARTNERS, ETC. [BOOK III. dice the estate of the deceased, of whose will the creditoi' was himself a trustee and executor, though he did not prove. That under these circumstances it would be extraordinary if any author- ities could be found to show that the remedy against the deceased partner's estate was gone. His Lordship then, after adverting to some of the cases at law,^ in which a new security had been given to the creditor by the continuing partner, and yet it had been left to the jury to say whether it was given in satisfactiort of the orig- inal joint debt, proceeded to observe, that here there was no new security, and no evidence of any intention to release the estate of Mr. Winter, but the contrary ; and therefore, if the cases in equity against the estates of deceased partners were to be regu- lated by the same principles as governed courts of law upon the retirement of partners, there could be no doubt of the right con- clusion in the present case. His Lordship ultimately declared that the debt in question was to be considered as still due aiid owiog from the partnership, and not to have been assumed by John Innes, so as to discharge the estate of the testator. The conclusion to be drawn from this case is, that where a person con- tinues to deal with a surviving partner, but receives no consider- ation for accepting that partner's sole security, and has an object in retaining his money in the house independent of any advantage accruing to himself, that person is not to be taken as having re- linquished the original security of the house. And it seems clear that his receiving interest from the surviving partner for the debt would not discharge the estate of the deceased partner.^ § 598. In cash accounts current, the balance due to the cred- itor at the death of a partner will be diminished by the subsequent payments made by the new firm to the creditors. We have al- ready, in the case of retiring partners, had occasion to examine this mode of calculating the reduction of the joint creditors' debts under accounts current, and therefore a very short notice of this subject will here suffice. § 599. In the case of Devaynes v. Noble,^ so frequently re- ferred to, Devaynes, Dawes, Noble, Croft, and Barwick, were bankers and partners, under the firm of Devaynes, Dawes, Noble ' See Thompson v. Percival, ante, § 561, » Daniel v. Cross, 8 Ves. 277. " 17 Ves. 514; 1 Mer. 529. CH. Ill,] LIMITS OP LIABILITY. 587 & Co. ; Devaynes died, and from that period the surviving part- ners continued to carry on business as before, under the same firm, without opening any new books, or making any rest in their accounts ; and the accounts between them and the representa- tives of their deceased partner were not made up when the sur- viving partners became bankrupts. A commission of bankrupt having issued against them, a bill was filed by certain joint cred- itors of the firm of Devaynes & Co. on behalf of themselves and all other such creditors, for an account of the assets of Devaynes, and for a decree to admit the joint creditors to have the benefit of his assets after his separate debts were paid, and praying that the dividend under the commission might be ordered to be postponed until after the decree should have been had in the cause. Upon the hearing of certain exceptions to the master's report in this cause, the claims of the several creditors, being various in their nature, were distributed in various classes. With regard to those creditors who had running accouiits with the firm as their bankers, the main question was, how far the balance due to them at De- vayne's death was afiected by the subsequent payments made to them by the new firm. Whether such subsequent payments, in default of any specific appropriation at the time of payment by either debtor or creditor, could be applied in the gradual dis- charge of such balance, or whether the creditor had power, at any time after payment, to make a specific appropriation, so as to leave the entire balance due at Devaynes's death undischarged, and still payable out of his assets. Sir William Grant, as we have already mentioned,^ held, that in the absence of any spe- cific appropriation by either debtor or creditor at the time of pay- ment, the several sums paid by the surviving partners in the course of the account were to go in discharge of the balance due at the death of Devaynes. § 600. We will select two of the cases in Devaynes v. Noble, as illustrative of Sir William Grant's judgment ; in one of which it was held, that the equity of the creditor against the deceased partner's estate was defeated in part ; in the other, that it was defeated in toto by the subsequent deahngs of the creditors with the new firm. First, va. Sleech's case, — representing that class > Ante, § 548. 5S8 EIGHTS OF PAKTNEES, ETC. [BOOK III. of claimsmts against the estate of Devaynes who ^vere creditors of the house at the. death of Deraynes, and who, afterwards continued to deal with the surviving partners, by drawing out, but not pay- ing in, — it was held that the equity of the creditors against De- vaynes's estate was defeated in proportion to the sums drawn out, but remained in full force as to the residue. It was likewise held, in the same case, that the creditor's claim was not barred by the circumstance of her having received from the surviving partners a part of her debt, and having taken no step for the recovery of the remainder in the interval between Devaynes's death and the bank- ruptcy, a period of about eight months. ^ Secondly, in Clayton's case, upon the same principle, the equity was defeated in toto. Clayton represented that class of claimants who, after the death of Devaynes, continued to deal with the surviving partners, both by drawing out and paying in money, payments being made by the surviving partners before they received any money of the creditors ; and the balance,- varying from time to time, sometimes increased and sometimes diminished, but, upon the whole, con- siderably increased by the subsequent transactions. At the death of Devaynes, Clayton's cash balance in the hands of the partner- ship amounted to £1,713 and a fraction. After the death of Devaynes, and before Clayton paid in any further sums to his account with the bankers, he drew out of the house sums to the amount of £1,260, thereby reducing his cash balance to £453 and a fraction. From this time to the bankruptcy, Clayton both paid in and drew out considerable sums ; but his payments were so much larger than his receipts, that, at the time of the bank- ruptcy, his cash balance, in the hands of the surviving partners, ' In , Hammersley v. Lambert, 2 John. Ch. 511, Mr. Chancellor Kent re- marked, that the case of Devaynes v. Noble " fully established the doctrine, that neither delay nor lapse of time, nor dealing with the survivor, nor call- ing for and receiving part of the debt from the survivor, amounts to a waiver, or bar of the claim upon the assets of the deceased. It is in equity a joint and several debt, and, as Lord Parker observed in one of the cases, the, assets of the deceased muKt he at slake, until the . bond he paid." See Sale V. Dishman, 3 Leigh, 548 ; Gow Partn. (3d ed.), 359 ; Cope v. Warner, 13 Serg. & R. 411. In. Eishar d. Tucker, 1 M'Cord, Ch. 1 73, Mr. Chancel- lor Waties declared it as his opinion, that the rule laid down by Mr. Chan- cellor Kent in Hammersley v. Lambert is not authorized in its extent by either cases or principles. CH. III.] LIMITS OF LIABILITY, 5S9 exceeded £1,713, the amount of the cash balance at Devaynes's death. By the amount of the dividends received since the bank- ruptcy (those dividends being apportioned to the whole debt proved under the commission), the balance of .£1,713 would be ' reduced to £1,171 and a fraction ; and it was this last sum which Clayton claimed against Devaynes's estate. But, in con- sequence of the decision in Miss Sleech's case, that claim was abandoned to the whole extent of the cash balance at Devaynes's death above £453, the sum to which it had been reduced by drafts upon the house previous to any fresh payments made to it ; and that which was now claimed was the last-inentioned sum of £453, minus its proportion of the dividends. It was contended on the part of Clayton, that he was entitled to go against De- vaynes's estate for a proportion of this £458, on the grounds, that he, as payer of such sum, had a right to appropriate it, at any time he pleased, to the account of the old partnership ; and consequently, that although, since his balance was reduced to £453, he had drawn out several sums exceeding that amount, yet those sums were not to be set against the £453, but against the sums which he had subsequently paid in. But Sir William Grant was of opinion, that those sums should go in discharge of the £453 ; holding therefore, that Clayton had no claim against Devaynes's estate. It will be perceived, that in this important case of Devaynes v. Noble, all the transactions after the death of Devaynes were with the survivors of the firm only, and not with the survivors conjointly with any new partner in the room of Devaynes. But the latter state of circumstances would accord- ing to some opinions, have made no difference ; and the new part- ner, in the absence of express evidence to the contrary, would have been taken to have adopted the account current.^ § 601. It remains to consider what degree of liability attaches on a deceased partner's estate, in case, under some authority given him for that purpose, he directs, by his will, that his execu- tors shall continue the trade in copartnership with the surviving partners. It is clear, on general principles, that if the testator limits the extent of his assets to be employed in the partnership • Pemberton v. Oakes, i Kuss. 154; but see post, Book 3, ch. 4, s. ad finem 1. 50 590 RIGHTS OF PARTNERS, ETC. [bOOK III. trade, such limit can in no way affect the creditors of the partner- ship at the time of ,his death. It should seem, however, that any unnecessary delay on the part of such creditors to assert their rights would materially affect them. For, as Lord Eldon ob- seryed, they have the power and the means of calling forth, after the testator's death, the whole of his property in discharge of their demands, and if they do not put an end to that relation, (i. e. between the executor and surviving partner), but permit the representative to act, they have, perhaps, no more reason to complain of a decision more limited than that of Lord Kenyon,^ than they would have, if, by their own conduct, they permitted part of the assets to go to the hands of persons from whom they could not draw them.^ § 602. But with regard to the creditors of the new partnership formed by the survivors and executors of the deceased partner, they have no claim upon the general assets of the testator, but only upon such assets as are directed by the will to be employed in the partnership trade.^ The reason is, that, in addition to the security of the assets directed to be employed in the trade, such creditors have likewise the individual security of the executor, who is liable, in respect of their debts, not only to the extent of all his own property, but also in his person ; * and may be also pro- ceeded against as a bankrupt, though he is but a trustee." These creditors therefore, without resorting to the general assets of the testator, possess the full security which exists in ordinary transac- tions of debtor and creditor. Moreover, if, as Lord Eldon ob- served, the question is to be determined upon the convenience, it is not so inconvenient to say that those who deal with the executor must take notice that the testator's responsibility is limited by the ' Hankej v. Hammock, Buck, 211, in which the general assets of the tes- tator were made liable. ' 10 Ves. 120. • See Cutbush v. Cutbnsh, 1 Bear. 184; Williamson v. Naylor, 3 You. & Coll. 208. In Burwell v. Mandeville, 2 How. (U. S.), 560, it was held that a partner may by his will provide for a continuance of the partnership after his death, and in making this provision he may bind his whole estate, or only that part of it already embarked in the partnership. See also Pitkin v. Pit- kin, 7 Conn. 307. ' Alsop V. Mather, 8 Conn. 587 ; Story Partn. § 70. » 10 Ves. 120; Wightman v. Townroe, 1 Man. & Sel. 412. CH. III.] LIMITS OF LIABILITY. 591 authority given to the executor, as to say, on the other hand, that the executor, being authorized to carry on that trade, making from day to day a great yariety of engagements, or entering int% one great and important engagement, but also authorized by the will to do many other acts (which he must equally do, in a due administration under the will, wherever, for the benefit of one child, the trade is directed to be carried on), all the other objects of the will must, at any distance of time, be considered, to the extent of the property they take, security for the creditors on the trade. The case of Ex parte Garland,^ though not a case of part- nership, clearly illustrates the principles now under consideration. There the testator directed that his trade of a miller, and the farming business then carried on by him, should be carried on by his wife Margaret, his executrix ; that the profits should be ap- plied for her own use, and for the maintenance and education of her children ; that the stock should be valued ; that a sum not exceeding £600 should be paid to her by his trustees, to enable her to carry on the business ; and that she should give notes of hand for the .£600, and the amount of the valuation. She re- ceived the £600, and £1,351 for the valuation, and gave her notes of hand. But she alsp received from the trustees £768 12«. 4id., out of the testator's general assets. Upon the bank- ruptcy of Margaret, it was held that the trustees might prove for tie £768 12s. 4d. § 603. Upon the same principles it was held clearly, in a more recent case,^ that if an executor, who is directed to carry on his testator's partnership, exceed his authority, by employing the as- sets in the trade to an extent not warranted by the will, and the surviving partner and the executor become bankrupt, the ex- cess of the assets so employed may be proved by the executor under their commission. An executor carrying on his testator's trade pledges to the creditors of that trade his own responsibility.^ That the consequences of this rule of law are frequently very hard upon him has already incidentally appeared. But, as Lord EWon ' 10 Ves. 110. This case was much relied upon in Burwell v. Mande- ville, 2 How. (U. S.), 560. " Ex parte Richardson, Buck, 201. ' Per Sir John Leach, Buck, 209 ; Alsop v. Mather, 8 Conn. 587 ; Story Partn. § 70 ; Thompson v. Brown, 4 John. Ch. 628. i 592 EIGHTS' 01" PARTNERS, ETC. [bOOK IH. has observed, he places himself in that situation by his own choice ; judging for himself whether it is fit and safe to enter into that sit-' Ration, and contract that sort of responsibiUty.^ § 604. The responsibility of the executor is not altered by the circumstance that he does not continue the trade for his own ben- efit, but only for the benefit of an infant child of a deceased part- ner. A., B., and C, carried on the trade of malsters in copart- nership, under the firm of A. & Co. A. died, leaying an infant daughter. After his death, A.'s executors continued his share of the property in the trade for the benefit of the infant; and the trade was thenceforward carried on by B. and C, together with the executors, for several years, but under the same firm of A. & Co. Bills were drawn and accepted, and large quantities of bar- ley bought in the course of the trade, which were manufactured into malt for sale, and every other act was done which was neces- sary to carry on the trade of malsters. In making up the ac- counts, the executors divided the profit and loss of the business with the other partners, but carried on the business solely for the benefit of the infant, charging her, in their account as executors, with the loss, giving her credit for the profits of the trade, and taking no part of the profits to their own use. The business was managed by B. ; and it did not appear that the executors ever interfered, except in settling the accounts. It was held that the executors were liable upon a bill drawn upon A. & Co. for the ac^ commodation of the partnership, and paid in discharge of a part- nership debt.2 § 605. But where the administrators of a deceased partner, lond fide, permitted the surviving partner to sell the stock in the usual course of the trade, for the joint benefit of himself and the estate of the intestate, they were held not to be responsible to the creditors of the deceased partner's estate for any loss to that estate ; although they might thereby render themselves personally liable for debts contracted by their assumed partner.^ Where, however, 1 10 Ves. 119 ; Ex parte Holdsworth, 1 M. D. & D. 475 ; 1 Lindley Partn. 868, 869 ; Hutton v. Kossiter, 7 De G. Mac. & G. 12. ^ Wightman v. Towuroe, 1 Mau. & Sel. 412 ; Ex parte Marks, 1 D. & C- 499. A court of equity will sometimes appoint a person to carry on a trade for the benefit of an infant partner. Thompson v. Brown, 4 John. Ch. 627. ' Thompson v. Brown, 4 John. Ch. 619. CH. III.] LIMITS OF LIABILITY. 593 such administrators put assets, which were in their hands and un- der their control, into the hands of the surviving partner to trade with, without security, and those assets were lost, they were held chargeable with the loss.^ SECTION V. OF THE EXTINCTION OF LIABILITIES. § 606. Having seen in what manner the estates of a retiring and of a deceased partner may be relieved from their respective liabil- ities, let us shortly consider how the estate of the whole firm may be discharged by the act of one or more of the partners. This, it is apprehended, can only be done by release or satisfaction ; but, in either case, the act of release or satisfaction, as between the creditor and one partner, will enure to the benefit of the firm.^ Thus, where A. and B. are bound jointly and severally to C, a release to one is a release of the debt to both.^ Now, a learned writer observes, that doubtless a release wiU have operation upon a debt due from a partnership by simple contract as well as by specialty ; and that, where a creditor receives only part of his de- mand from one partner upon a biU of exchange, or for goods sold, he may come upon the others for the residue ; but if he seals a •Ibid. " American Bank v. Doolittle, 14 Pick. 126 ; Goodnow v. Smith, 18 Pick. 4l6; Tuckerman v. Newhall, 17 Mass. 581 ; Wiggin «. Tudor, 23 Pick. 444; Ward V. Johnson, 13 Mass. 151 ; U. States v. Thompson, 1 Gilpin, 614; Bunson v. Kincaid, 3 Pennsylv. 57; Willings v. Consequa, Peters, C. C. 301 ; Clagett v. Salmon, 5 Gill & John. 314. But if one of several joint obligors be discharged by operation of law, without the consent of the obligee, and by no act of his, it will not take away his remedy against the other obligor. Ward v. Johnson, 13 Mass. 152; Robertson v. Smith, 18 John. 459 ; Tooker v. Bennett, 3 Gaines, 4 ; Hosack v. Rogers, 8 Paige, 229 ; Townsend v. Riddle, 2 N. Hamp. 449. ' Hammon v. Roll, March, 202; Nedham's case, 8 Rep. 136; Bower r. Swadlin, 1 Atk. 294 ; Co. Litt. 232, a. ; Collins v. Prosser, 1 Barn. & Cres. 682. To a plea of a release by one of two joint obligors the plaintiff can- not reply, that the release was given upon the undertaking on the part of the other obligor (defendant) not to be released. Cocks v. Nash, 9 Bing. 341. 50* 594 RIGHTS OF PARTNERS, ETC. [bOOK III. release to one, whatever sum may still be due to him, he is barred as against each and all of them.^ In order, however, to give an instrument of discharge this effect, it must be a technical release' under seal.^ It has been decided, that if, upon the dissolution of a partnership, the joint creditors execute a composition deed to that partner who winds up the affairs of the partnership, such deed is in the nature of a release, and will discharge the other partner from his Uability for the joint debts.^ § 607. But a release given to one of two partners may, by means of recitals and provisos, be limited in its operation to that one part- ner only ; and may even leave that partner open to actions on ac- count of his copartner. Thus, in Solly v. Forbes,* an action was brought against the defendants Forbes & EUerman for money paid, &c. Forbes pleaded the general issue. Ellerman pleaded the general issue, a release, and set-off. The release was ex- pressed to be made between the plaintiffs of the one part, and the defendants Forbes & Ellerman of the other ; and recited, amongst other things, that there were various transactions of business be- tween Forbes & Ellerman and the plaintiffs ; and that, upon the balance of accounts between the two houses, Forbes & Ellerman stood indebted to the plaintiffs, as copartners in trade, in a consid- erable sum of money, the whole of which was then due and owing ; and that Ellerman had offered to the plaintifis to pay them the ' Wats. Partn. 227. So, if a creditor receives payment of part of his debt from a surety, such payment alone will not operate as a discharge to the cosurety ; for if the latter be compelled to pay more than his share, he ■will still have his right of contribution ; but if the creditor, on receiving such part payment, discharge the surety from his whole liability, that is a discharge to the co-surety. Nicholson y. Revill, 4 Adol. & Ell. 675 ; Mayhew v. Crick- ett, 2 Swanst. 192. But subsequent consent may revive the liability of the surety without a fresh consideration. Ibid. And see Smith v. Winter, 4 Mee. & W. 454. ' Shaw V. Pratt, 22 Pick. 305 ; Walker v. McCulloch, 4 Greenl. 421 ; Har- rison V. Close, 2 John. 449 ; Rowley v. Stoddard, 7 John. 209 ; De Zeng v. Bailey, 9 Wendell, 336 ; Catskill Bank v. Messenger, 9 Cowen, 37 ; Shotwell v. Miller, Coxe, 81 ; Andrus v. Andrus, 1 Boot, 72 ; Luntu. Stevens, 24 Maine, 534. A parol agreement to release one partner does not operate to discharge a debt as against the other. Evans v. Carey, 29 Alabama, 99. « Ex parte Slater, 6 Ves. 14G. * 4 Moore, 448 ; 2 Brod. & Bing. 38. See the remarks of Mr. Chief Jus- tice Shaw in Wiggin v. Tudor, 23 Pick. 444, 445. CH. III.] LIMITS OP LIABILITY. 595 sum of £3,000, upon haying such a release from the plaintiffs as thereinafter contained ; the release then witnessed, that, for valu- able considerations (money and promissory notes to the amount of £3,000), the plaintiffs remised, released, and forever discharged Ellerman, his executors, administrators, and assigns, from all ac- tions, suits, debts, sum and sums of money, claims, demands, &c., in law and in equity, which the plaintiffs then had or might have against Ellerman, his executors, administrators, or assigns, by rea- son of any matter, cause, or thing whatsoever relating to the prem- ises, from the beginning of the world to the day of the date of those presents, except and subject nevertheless to the provisos, declarations, or agreements thereiuafter contained. Provided al- ways, &c., that those presents, or any thing therein contained, should not release, or be construed to release, or in any manner to prejudice and affect any claims or demands which the plaintiffs, or either of them, ever had or might have upon or against Forbes, either separately, or as a partner with Ellerman, or upon or against the joint estate or effects of Forbes & Ellerman, in respect of the debt so due from Forbes & Ellerman to the plaintiffs, or any part of such joint estate or effects, whether the same should be in the hands of or recoverable from Forbes & Ellerman, or either of them, or any other person or persons whomsoever. Provided also, nevertheless, &c., that it should be lawful for the plaintiffs, from time to time, when and as they should be thereto advised, to com- mence and prosecute any actions, suits, or other proceedings, either at law or in equity, against Ellerman jointly with Forbes, or against Ellerman, his executors, administrators, and assigns, separately, for the purpose of recovering or compelling, or of ena- bling the plaintiffs to recover or compel, payment or satisfaction of the debt so due and owing from Forbes & Ellerman to the plain- tiffs as aforesaid, either by or out of any the joint estate or effects of Forbes & Ellerman, or by or from Forbes, his executors, admin- istrators, or assigns, or his separate estate, and effects. The plain- tiffs by their rephcation averring that the action was brought to compel payment of the moneys due to them from Forbes & EUer- man, either out of the joint estate of Forbes & Ellerman, or from Forbes or his separate estate, the defendant Ellerman demurred to the replication, and in support of the demurrer it was contended, amongst other things, that the provisos in this release were void, as being repugnant to the nature of the instrument. But the 596 EIGHTS OF PARTNERS, ETC. [BOOK HI. Court of Common Pleas, after taking time to consider tte case, overruled the demurrer, being of opinion that the release, as set forth, was no bar to the action. Dallas C. J., said that no doubt could be entertained that it was meant to release Ellerman as to person and effects, but not Forbes ; and, therefore, to retain against Ellerman every right and remedy necessary to enforce pay- ment from Forbes ; that it was expressly provided and declared, that it should be lawful for the plaintiffs to commence and prose- cute any action against Ellerman jointly with Forbes for the re- covery of the joint debt ; that this was a joint action for the recovery of such debt, and therefore an action expressly and in direct terms authorized by the deed of release itself. § 608. Although a release to one partner is generally a release to all, yet a covenant not to sue one of several partners will not operate as a release to the others, because the use of such an in- strument evidences an intention on the part of the covenantor to avoid the legal effects of a release as to copartners.-^ In Hutton V. Eyre,2 the plaintiff and defendant had been partners. In August, 1809, they entered into a deed to dissolve the partnership as from the 1st January then next, in which deed it was cove- nanted that neither of them should, after the signing of the deed and before the 1st of January, purchase any goods in the name of the firm of Hutton & Eyre. The notice of dissolution did not appear in the Gazette till the 24th of January, 1810. On the 27th October, 1810, the defendant executed an assignment of all his property to trustees for the benefit of his creditors ; in consid- eration of which the creditors covenanted with the defendant not to sue him on account of any debt due to them from him ; and that in case they did sue him, the deed of assignment should be a sufficient release and discharge for him. Between the time of ' Walker v. MoCuUoch, 4 Ureenl. 421 ; Rowley v. Stoddard, 7 John. 207 ; Bank of Chenango v. Osgood, 4 Wendell, 607 ; Chandler v. Herrick, 19 John. 129; Couch v. Mills, 21 Wendell, 424 ; Goodnow v. Smith, 18 Pick. 416 ; Shed u. Pierce, 17 Mass. 628; McLellan v. Cumberland Bank, 24 Maine, 566 ; Catskill Bank v. Messenger, 9 Cowen, 37 ; Brown v. Marsh, 7 Verm. 327 ; Mason v. Joaett, 2 Dana, 107 ; Walmsley u. Cooper, 11 Ad. & El. 216. Such a covenant does not operate as a release of the debt as to either of the partners ; so that the original indebtedness remains unchanged at law. Hosack v. Rogers, 8 Paige, 229. * 1 Marsh. 603. CH. III.J LIMITS OF LIABILITY. 597 executing tlie deed of dissolution, and the 1st of January, 1810, the defendant contracted different debts in the name of Hutton & Eyre. The assignees having paid only a small dividend, the plaintiff was obhged to pay the deficiency, to recover which he brought his action and obtained a verdict against the defendant. A question was then raised for the defendant, as to whether the action was maintainable, it being contended that the deed of com- position operated as a release, not only to the defendant, but also to the plaintiff, as the defendant's partner ; and therefore that the plaintiff was under no obligation to pay the remainder of the debts, and had consequently paid them in his own wrong. The Court of Common Pleas held that the action was maintainable. Gibbs, C. J. : " In a case like the present, it ii impossible to contend that, by a covenant not to sue the defendant, it was the intention of the covenantors to release the plaintiff, who was able to pay what his partner might be deficient in. It would have been an easier and a shorter method to have given a release, than to make this cove- nant. The only reason, therefore, for their adopting this course was that they did not choose to execute a release to the defendant, because that would also have operated as a release to the plaintiff; whereas, they considered that a bare covenant not to sue the de- fendant would not extend to his partner. As, therefore, the terms of the covenant do not require such a construction, and as such a construction would be manifestly against the intention of the par- ties, we are decidedly of opinion that it ought not to be suffered so to operate." § 609. Payment by one of several partners on their joint ac- count is payment by all.^ Such payment enures by law to the discharge of all, whether made before or after the dissolution.^ 1 Innes v. Stephenson, 2 Mood. & Malk. 145. See Campbell v. Matthews, 6 Wendell, 551. Where two partners are defendants, and both are arrested on a joint ca. sa. for the amount of the damages, and one is discharged on giving a promissory note to the plaintiff, payable by instalments, this oper- ates as a discharge to the other. Ballam v. Price, 2 Moore, 235. And see Foster v. Jackson, Hob. 59. And if the plaintiff consent to discharge one of several defendants taken on a joint ca. sa. he cannot afterwards retake him, or any of the others. Clerk v. Clement, 6 T. K. 525 ; Gould v. Gould, 4 N. Hamp. 173; Abel v. Forgue, 1 Root, 502. See Basset v. Salter, 2 Mod. 136 ; Blackburn v. Stupart, 2 East, 243 ; Tanner v. Hague, 7 T. R. 420. ' Per Shaw C. J., in Averill v. Lyman, 18 Pick. 351. 598 EIGHTS OP PARTNERS, ETC. [bOOK III. And wliere two houses are partners in a particular transaction, payment by one house .on account of that transaction is payment by both.^ Paymenb by one of the obligors in a joint and several bond is payment by all,^ 1 Cheap M. Craraond, 4 Barn. & Aid. 663. ^ Bac, Abr. Obligation, D. 4. CHAPTER IV. OF THE RIGHTS OF PARTNERS AGAINST THIRD PERSONS. § 610. The contract of partnerahip cannot give new rights to an individual.^ On the contrary, it seems clear that there are certain rights which persons might possess as individuals, but •which they would lose when united in a body as partners. For instance, although it has been said that partners might be very fit to conduct the office and business of executors, especially where money, is to be collected in one country and remitted to another, yet, in the same case in which this remark was made, it was held clearly, and with great justice, that a firm which had been ap- pointed executors had no claim, in the same manner as individual executors, upon the residue undisposed of by the wiU.^ ' But see 6 Kep. 1. Solicitors, by reason of their peculiar business, pos- sess some privileges, and are affected with some disabilities which do hot appertain to other partners. But this is entirely for the benefit of their clients. Thus, where a partnership has expired by effluxion of time, and, in a suit for an account, &c., a receiver has been appointed before decree, the court will not compel the defendant, the former managing partner, to deliver up to the receiver, for the purpose of making out bills of costs, partnership books and accounts which have remained in his hands, and title-deeds be- longing to a third party, which came into the possession of the copartners as solicitors, such defendant offering the receiver free access thereto, and to assist in making out the bills. Dacie v. John, M'Clel. 206. On the other hand, solicitors in partnership cannot dissolve their partnership, as against their client, without his consent, so as to enable the retiring partner as dis- charged to act against him. Cholmondeley v. Clinton, 19 Ves. 273. On the same principles, where one of two solicitors, who were partners, became bankrupt, and the assignees excluded the other from interfering with the affairs of the partnership ; the court nevertheless refused to order the as- signees to deliver to him the papers belonging to the clients of the firm. Davidson v. Napier, 1 Sim. 297. ' De Mazar v. Pybus, 4 Ves. 644. This difference, between the right of individual executors, and of partners, executors, to the residue undisposed 600 RIGHTS OF PARTNERS, ETC. [BOOK III. § 611. It frequently, however, happens, that, under the express provisions of certain acts of Parliament, the rights of partners are especially provided for. Hence, by the statute law, persons trad- ing jointly are more advantageously situated with respect to the payment of duties than if they each traded separately.^ Again, also, by statute, partners may equally with individuals sue out a fiat upon a petitioning creditor's debt of £100.^ And, even where a statute does not contain provisions in favor of partners, the restrictions which it imposes on the sole trader may possibly not affect him in the situation of partner. Thus, in Kaynard v. Chase,^ the provisions of the stat. 5 Eliz. c. 4, which restrained all persons from using a trade unless they had been apprenticed to it for seven years, were held not to extend to any partner who was not a working partner ; for it was the policy of the act to have trades carried on with skill, and this construction was not contrary ■ to that policy. § 612. We have seen,* that, where partners have contracted with third persons, they cannot, by their own acts alone, alter the extent of their liability, or acquire any new rights, at variance with the contract into which they have entered. It is true that their power to convert joint into separate property, and vice versd, the interests of different classes of their creditors may, in the event of their bankruptcy, be changed or even annihilated ; but this state of things arises, not from any right which the partners have against their creditors, but because the fiat is a general execution - for all the creditors who avail themselves of it, and it is a rule of convenience that the distribution shall take place according to the several interests and equities of the partners a.s amongst them- selves. The only points, therefore, which demand our considera- tion in the present chapter are, — 1. The limits of the rights of partners, under contracts with third persons ; and, 2, the extinc- tion of the rights of partners, by the acts of their copartners. of, does not exist in the United States, where the residue undisposed of is universally distributable among the next of kin. 1 Jarman Wills (Am. ed.), 67, note (5) and cases cited; 2 Story Eq. Jur. § 1208. ' 11 Geo. 4 & 1 Will. 4, 0. 64, =. 10 ; and 1 & 2 Will. 4, c. 32, s. 21. ^ 6 Geo. 4, c. 16, sect. 15 ; 1 & 2Vict. 110, sect. 8. ' 1 Burr. 2 ; 2 Wils. 40. But these provisions of the statute of Eliz. are repealed by. 54 Geo. 3, c. 96. * Ante, § 886. CH. IV.] KIOHTS OF PARTNERS. 601 SECTION I. OP THE LIMITS OF EIGHTS. § 613. The rights of partners, under a particular contract, must be measured by the express terms of the contract, whether it be contained in an instrument under seal or a written agreement without seal ; or whether it exists only by parol. Such contract, therefore, as we shall see in a variety of instances, wUl extend only to the partners named, or such as are comprehended in a well-known general name at the time of the contract. Where, however, the instrument is not under seal, evidence may be given that the contract was subsequently enlarged, so as to embrace in- coming partners, or to give a new right to remaining partners, according to circumstances.-' § 614. Let us first consider the limits of the rights of partners under sealed contracts. Where a bond is given to a firm, without any provision for a change taking place in the firm, the rights of the partners under this bond will cease, as to all future matters, upon the incoming, retirement, or death of a partner. The first case which establishes this doctrine is that of Wright v. Russell,^ which is relied upon by Lord Kenyon in Myers v. Edge, his Lord- ship saying, — "I very much approve of the case cited from Wil- son." To be sure, in Wright v. Russell the obhgee was sole, and afterwards took a partner, but the principles established by that case are equally applicable to co-obligees. It was an action of debt on a bond conditioned for the faithful service of one W. Baird, as broad clerk to the plaintiff, a brewer. The defence set up by the second plea was, that the plaintiff was a sole trader at the making of the bond, and so continued till the 26th of December, ' See Carruthers v. Sheddon, 6 Taunt. 15 ; Bass v. Cline, 4 M. & S. 13 ; Stubbs V. Sargon, 2 Keen, 25.5; 3 M. & Or. 307; Latouch v. Waley, Hayes & .Jones (Ir. Ex.), 43. ^ 3 Wils. 532 ; 2 W. Bl. 934. See Burge, Suretyship, 69 et seq. ; Dry v. Davy, 10 Adol. & Ell. 30 ; Spurs v. Houston, 4 Bligh, 515 ; Story Partn. § 250. " ^ 51 602 EIGHTS OF PARTNERS, ETC. [BOOK III. 1771, and no longer ; and the service intended by the condition was only meant to be performed while he continued sole and with- out a partner ; that the plaintiff, on the 26th of December, 1771, entered into partnership with one Delafield, which still contin- ued ; that Baird quitted the service of Wright when he ceased to be a Sole trader, and then entered into the service of Wright & Delafield; and that he behaved faithfully during his service of Wright while sole. The plaintiff replied, that Baird was never discharged from his office either by him or his copartner, and as- signed a breach of trust, by embezzlement, in August, 1772. The Court of Common Pleas, however, held the plea to be good, and gave judgment for the defendant. De Grey C. J. : " The law is, that the surety shall not be bound beyond the scope of his engage- ment, as understood at the time he entered into it : where there is the least difference between the condition and the breach as- signed, the surety will not be bound. Here Wright takes a clerk, when sole, with security for his good behavior in his service ; he then, by his own act, takes in a partner. From that moment the suretyship is at an end. If there is one, there may be twenty, part- ners taken in. Is the surety liable, if Baird disobeys the orders of any one of those partners ? Is Baird to be subject to all the obli- gations that arise from his new service, and the surety answerable for all ? Or can the surety be called upon to insure the money of all the partners ? Certainly not." ^ A different decision was a,fter- wards given in the case of Barclay v. Lucas,^ where Lord Mansfield is reported to have held such bonds to be undertakings rather to the house than to the individual partners of it, and therefore not to be discharged by any change of partners. The facts of that ease were similar to those of Wright v. Russell, except that the bond was originally given to the plaintifis, who were partners, and not to an individual ; and recited that the plaintiffs, at the recommen- dation of the obligors, had agreed to take one P. J. into their ser- vice and employ, as a clerk, in their shop and counting-house ; and Mr. Justice Willis placed considerable reliance on this recital, ' Upon the same principle, it has been held, that, where the obligor of an indemnity bond takes a partner, with the knowledge of the obligee, the surety is released. Bellairs v. Ebsworth, 3 Camp. 53. See also London Assurance Co. v. Bold, 6 Adol. & Ell. (n. 8.), 514. ' 1 T. R. 291. CH. IV.] RIGHTS OF PARTNERS. 603 as shomng that the service was to be performed in the shop and counting-house and not to the plaintiffs. § 615. But the case of Barclay v. Lucas seems to be no longer law, and Lord Mansfield himself decided otherwise, in Barker v. Parker.i In that case he held, that a bond, with condition that a clerk should serve faithfully, and account for all money, &c., to the obligee and his executors, did not make the obligor liable for "the money received by the clerk in the service of the executors of such obligee, who continued the business, and retained him in the same employment. But Lord Mansfield observed, that there was a material distinction between such a case and that of Barclay v. Lucas, in which the same trade was carried on by the original masters in the same manner, and the only difference was the intro- duction of a new partner. § 616. Siace Lord Mansfield's time, the courts have adhered entirely to the principles of Wright v. Russell. Thus, in the case of Strange v. Lee,^ a bond was entered into by one Blyth, and the defendant Lee conditioned for the payment by the co-obligors, their executors, &c., to Walwyn, Strange & Co., bankers, or either of them, of all sums of money which should become due to them from Blyth, for money advanced, &c. Walwyn died.^ The Court of King's Bench held, that, upon this event, the obligation ceased, and did not cover advances made to Blyth after that period ; and that, therefore, the surviving partners of Walwyn could not bring an action on the bond, in respect of such advances. Lord Ellen- borough: "The court will no doubt construe the words of the obligation according to the intent of the parties, to be collected from them ; but the question is, what that intent was. The de- fendant's obUgation is to pay all sums due to them, on account of their advances to Blyth. Now, who are ' them ' but the persons before named, amongst whom is James Walwyn, who constituted the banking-house, and with whom the defendant contracted ? The words will admit of no other meaning ; and, indeed, with respect to any intent which parties entering into contracts of this nature may be supposed to have, it may make a very material difference M T. R. 287. ' 3 East, 334. ' A new partner was taken into the firm on Walwyn's death, but nothing turns upon this fact in Lord EUenborough's judgment. 604 EIGHTS OF PARTNERS, ETC. [BOOK lU. 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 rehes, will not agree to advance money improvidently. The char acters^ there- fore, of the several partners may form a material ingredient in the judgment of the obligor upon entering into such an engagement. I consider this question concluded by the cases of Arlington v. Merrick,^ Wright v. Russell, and Barker v. Parker." § 617. So, where a firm of bankers, five in number, took a bond conditioned for the repayment " to them of any money ad- vanced by them five, or any or either of them," it was held that this bond did not extend to sums advanced by the survivors, after the death of one of them. " The words of the condition," said Mansfield 0. J., " again and again refer to the obHgees' capacity of bankers ; they were bankers only as they were partners in the banking-house, as it is called ; and this security is conditioned to pay any money advanced by them five, or any or either of them." Taking those last words by themselves, it might at first be con- ceived, that, if any of the five advanced money, this bond should secure it ; but the words are afterwards explained, where it is seen that the money is to be paid to the five. Now it could never be intended that money advanced by one of them should be repaid to the five ; and this shows that the words " advanced by them, or any or either of them," must be confined in their meaning to money advanced by any or either of them, in their capacity of bankers, on behalf of all the five.^ So, conversely, where one firm of bankers took from another firm of bankers, namely, A. & B., a bond conditioned for the repayment of all ' 2 Saund. 412 ; Burge, Suretyship, 64. In Arlington v. Merrick, it was held that the condition of the bond should be restrained by the recital. There the terms of the condition were indefinite, and those of the recital definite. In the case of Strange v. Lee, stated in the text, there was no material dif- ference between the recital and the condition. In all cases, the apparent intention of the parties, and not any invariable rule of law, will govern the construction of the instrument. See Sanson v. Bell, 2 Camp. 39 ; and see 2 Wms. Saund. p. 415 a, note (c). * Weston V. Barton, 4 Taunt. 673. And see Thomas v. Da Costa, 2 Moore, 386 ; Ex parte Watson, 19 Vea. 459. CH. IV.] RIGHTS OF PARTNERS. 605 sums of money for which they, A. & B., or either of them, should draw upon the obligees by means of bills, it was held that this bond did not extend to a bill drawn by B. after the death of A.^ So, where the condition of a bond recited that the Chancellor, Masters, and Scholars of the University of Cambridge, had ap- pointed A., B. & C, their agents, for the sale of books printed at the University Press ; and that the defendant had offered to enter into a bond with them as surety ; and it was conditioned by such bond, that if the said A., B. & C, and the survivors and survivor of them, and such other person and persons as should or might at any time or times thereafter, in partnership with them or either of them, act as agent or agents of the said Chancellor, &c., or their successors, for the sale of books as aforesaid, did and should duly account to the said Chancellor, &c., for all books de- livered or sent to them, or any or either of them, for sale as afore- said, and should pay all moneys which should become payable to the said Chancellor, &c., in respect of such sale, then the obliga- tion should be void ; it was held, that by the retirement of 0. from the partnership of A., B., & C, the defendant, as their surety, was discharged from aU further liability on this bond.^ Agreeably to the principles of Strange v. Lee, and the other various cases just cited, where a bond was given to certain persons and their successors as Governors of the Society of Musicians, conditioned for the good behavior of their collector, and the society was subse- quently incorporated, and after that period the collector committed a fraud, it was held that the society had no longer any remedy under the bond, because of the utter change in their constitution.^ § 618. The principles of these decisions have been acted upon in courts of equity. Thus, in Pemberton v. Oakes,* B. Stokes, Pemberton, and Gr. Stokes, by an indenture of the 4th of Janu- ary, 1802, covenanted jointly and severally with Harding, Oakes & Willington, their executors, administrators, and assigns, that they, B. Stokes, Pemberton, and G. Stokes, or some or one of them, or some or one of their heirs, &c., would pay to Harding, Oakes & Willington, or to the survivors or survivor of them, or to ' Simson v. Cooke, 1 Bing. 452. ^ University of Cambridge v. Baldwin, 5 Mees. & Wels. 580. ' Dance v. Girdler, 1 N. K. 94. * 4 Kuss. 154. 51* 606 EIGHTS OF PARTNERS, ETC. [bOOK III. the executors, &c., of such survivor, upon demand, all sums of money, not exceeding £20,000, which then were, or should at any time thereafter, before and until the 19th of February, 1807, become due and owing from B. Stokes to Harding, Oakes & Willington, or to the survivors or survivor of them, or to the executors or administrators of such survivor, either for principal money then already lent or advanced, or thereafter, within the time aforesaid, to be lent and advanced ; or for interest then due or to become due thereon ; or for money then already paid or lent, or thereafter, within the time aforesaid, to be paid or lent by Hardiag, Oakes & WilUngton, or the survivors or survivor of them, or the executors or administrators of such survivor, to B. Stokes, or to his order, or for his use, &c. Harding died in March, 1802, having, by virtue of a power reserved to him in the partnership articles, bequeathed his share of the business to his executors, in trust for his children. The business was accord- ingly carried on by the executors, conjointly with Oakes and Wilhngton. It was contended, that, by the introduction of the executors into the firm, no new partnership was created, and there- fore that the indenture of January, 1802, was a security for moneys advanced to B. Stokes, by Oakes, Willington, and the executors of Harding. But Lord Lyndhurst held clearly, that the partnership with the executors was a new partnership, and therefore that the instrument did not extend to moneys advanced by such new partnership, as it could not apply to advances made by a firm consisting of Oakes, Willington, and another person, who was not a member of the firm on the 4th of January, 1802. § 619. If an instrument be made to partners, their heirs and assigns, for the purpose, by mortgage or otherwise, of securing debts due or to become due to them, and afterwards a nominal partner is introduced into the firm, and, after his accession, fur- ther advances are made by the firm to the debtor, it may be a' question how far such subsequent advances are secured by the deed, and whether any distinction is to be drawn between this case and the preceding, from the circumstance of the incoming partner bemg only nominal. In a case where, after such acces- sion by a nominal partner and subsequent advances, the firm be- came bankrupt, it was contended that the assignees had a right to repayment, in respect of such subsequent advances, on the ground that, had the firm remaiaed solvent, they might have CH. IV.] EIGHTS OF PARTNERS. 607 maintained an action for tie advances, exactly as if there were no nominal partner. Lord Eldon treated the point as doubtful, observing that the assignees would have great difficulty in sup- porting an action ; but there was authority enough, if they chose to try it. He added, that if this could be established as an equi- table demand, contradistinguished from a legal demand, they would find it very difficult to make out a case under these cir- cumstances, without filing a biU.^ § 620. But a bond or other instrument, may be drawn, so as to make the obhgor or covenantor answerable, not only ip the present, but to all future partners in the house.^ Hence, in a bond, it is usual to word the condition thus : " That A. B. shall well and truly pay to the said 0. D., B. F., and Gr. H., or any of them, associated or not with any other person or persons, in the same or any other firm, the amount of all such sums as the said A. B. shall draw on (or, as at any time hereafter shall be due from the said A. B. to), the said C. D., E. F., and G-. H., or any of them, associated or not, as aforesaid." ^ § 621. In the preceding cases, the bonds were uniformly given to the existing partners by their respective names. But where a bond is given to a firm, by the name which it has used for many years, without alteration, evidence may be admitted to prove to what individuals, trading under that name, the bond was given. Consequently, those partners to whom the bond was in fact given may recover in an a See Story Partn. § 253 and note. ' Ante, § 468. ' Per HuUock B., 1 You. & Jerv. 366. CH. IV.] EIGHTS OF PARTNERS. 621 a Court of law will not set aside such release unless fraud be clearly established.^ In this case, the partner who released the action had agreed, by the partnership deed, not to interfere in the receipt or payment of the partnership debts ; and this cir- cumstance alone was not deemed sufficient to make the release fraudulent. But where the release is attended with clear circum- stances of fraud, the court will set it aside.^ § 637. It is, however, to be remarked, that the power of one partner to give a release in these cases arises rather from the gen- eral practice in actions at law, than from the privileges of partner- ship. For it has been laid down generally, that one plaintiff may release a cause of action brought by two.^ Where one of several partners gives a partnership bill, and undertakes to the acceptor to provide for it when due, this is in the nature of a release to the acceptor of any action which might have been brought by the partnership on the bill.* So, where one of several partners takes an acceptance for a debt previously due to the firm, this is giving time to the debtor, although the bill be drawn in the name of this partner only ; and the firm cannot sue the debtor for the original debt, until the bill has arrived at maturity, and been dishonored." § 638. Payment to one partner is payment to the firm.® ' Arton V. Booth, 4 Moore, 192; Furnival v. Weston, 7 Moore, 356; Phillips V. Clagett, 11 M. & W. 84. " Barker v. Richardson, 1 You. & Jerv. 365 ; and see Legh v. Legh, 1 Bos. & Pull. 447 ; Jones v. Herbert, 7 Taunt. 471 ; Mountstephen v. Brooke, 1 Chit. 391; Aspinall v. The London & N. W. Rail Co., 11 Hare, 325; Phillips V. Clagett, 11 M. & W. 84. In Eastman v. Wright, 6 Pick. 323, Morton J., remarked that the courts in Massachusetts have never exercised this power, which exists in England, of setting aside a fraudulent release of an action by a co-plaintiff". He added, — " The release may be avoided if fraudulent, but the question of fraud can only be tried by jury." See Loring V. Brackett, 3 Pick. 403. If one partner or joint contractor releases the action to the injury of the others, they may have a remedy against him in an action on the case. Per Morton J., in Eastman v. Wright, 6 Pick. 323 ; Wilson V. Mower, 5 Mass. 411. ' Per Dallas C. J., 4 Moore, 494. See Ruddock's case, 6 Rep. 256: Anon., 3 Mod. 109 ; Hackett v. Heme, 3 Mod. 135. ' Richmond v. Heapy, 1 Stark. 202 ; Sparrow v. Chisman, 9 Barn. & Cres. 241 ; 4 Man. & Ryl. 206 ; Story Partn. § 237. ' Tomlins v. Lawrence, 3 Moore & Payne, 555 ; Story Partn. § 252. ' Anon. 12 Mod; 446 ; D. Tindal C. J., 3 Moore & Payne, 555 ; Duff v. 622 RIGHTS OP PARTNERS, ETC. [BOOK III. Where, therefore, upon the dissolution of a partnership, an agent was appointed by both partners to receive the partnership debts, and one of the debtors promised to pay his debt to the agent, but before any payment, one of the partners countermanded the authority which had been given, and required the money to be paid to himself, which was done, — the Court of King's Bench held this to be a valid payment ; observing that, under the ar- rangement made by the partners, payment to the agent might have been a good discharge, without barring either of the partners from their right to receive the money.i And in King v. Smith,^ Lord Tenterden held, that, after a dissolution of partnership between two partners, either partner may receive a debt due to the firm, notwithstanding a stipulation in the deed of dissolution that one shall receive all the debts.^ His Lordship therefore ruled, that to an action brought by B. against C, on a bill drawn by B., and accepted by C, after the dissolution of the partnership of A. and B., but for a debt due from C, to that partnership, it was no answer for C. to say, that, by the term of the dissolution, A. only was to receive the debts of the firm. In a late case,* A., being entitled to a sum of £4,500, charged on real estate, and payable at a future time, assigned the £4,500 to B. and C, who were banters and copartners, to secure moneys to be advanced by them, or either of them, to A. C. survived B. It was held, that as the security was made to B. and C. jointly, C. was capable of giving a discharge for the whole of the sums advanced, and that B.'s representatives were not necessary parties to the conveyance of the real estate on which the £4,600 was charged. § 639. If a debtor of a partnership, instead of paying what he owes, gives one of the partners authority to receive moneys on his account, in confidence that they will be applied in satisfaction of his debt, retainer of these moneys by the partner receiving them is equivalent to payment." But where a person is indebted to a East India Company, 15 Ves. 198 ; Yandes v. Lafavour, 2 Blackf. 871 ; Gregg V. James, Breese, 167. ' Bristow V. Taylor, 6 Mau. & Sel. 156 ; 2 Stark. 50 ; but see Henderson V. Wild, 2 Camp. 561. 2 4 Carr. & Payne, 108. ' Morse v. Bellows, 7 N. Hamp. 568, per Upham, J. * Brasier v. Hudson, 9 Sim. 1. ' Per Sir John Leach, 1 Russ. & Myl. 191 ; Taml. 332. CH. lY.] EIGHTS OF PARTNERS. 623 firm, and also separately to one of the partners, payment to that partner is not payment to the firm, unless the money be specifi- cally appropriated to such purpose. In a late case, one of two partners, solicitors, after the dissolution of the partnership, re- ceived the rents of a debtor to the firm, and retained out of them the amount of the debt ; and he stated that he did this on an un- derstanding that the debtor should have credit for the sum so re- tained ; and that he considered the debt to have been satisfied by these moneys, but no account had been settled between him and the debtor ; — Lord Brougham held, that, as against the other partner, the debt to the partnership was not to be considered as satisfied.^ § 640. A judgment taken by one of two joint creditors does not extinguish the debt, unless it be clearly taken with the concur- rence of both. Where, therefore, previously to the dissolution of the partnership, one of two partners took a warrant of attorney to himself alone from a debtor to the firm, and afterwards, with no- tice of the debtor's insolvency, entered up judgment, levied execu- tion on the debtor's goods, and received several sums of money from the sale of those goods, and died, — it was held that this act of the deceased partner did not extinguish the debt as a joint debt, there being no evidence that the surviving partner had extin- guished his power to receive ; consequently, that the latter was liable to repay to the assignees of the debtor the money so received by the deceased partner.^ § 641. Where two houses are partners in a particular transac- tion, payment to one house, on account of that transaction, is pay- ment to both. So, where two houses have a common partner, payment of a bill of exchange indorsed from one house to the other is in law payment to both ; and, although one house is de- prived of the benefit of such payment, it cannot sue the acceptor. In Jacaud v. French,^ Blair and Jacaud were partners in Dublin, and Jacaud and Gordon were partners in London. The firm of Jacaud & Gordon shipped goods, effected insurances, accepted bills, and transacted other the aSairs of the firm of Blair & Jacaud ; • Pritchard v. Draper, 1 Russ. & Myl. 191. ' Biggs I). Fellows, 8 Barn. & Cres. 402 ; 2 Man. & Ryl. 450. ' 12 East, 317. 624 RIGHTS OF PARTNERS, ETC. [BOOK III. and the firm of Blair & Jacaud from time to time made remittances to the firm of Jacaud & Gordon, to cover or answer their advances and acceptances. Farrell drew a bill upon French, payable to the order of Farrell, which was accepted by French, who indorsed it to Blair & Jacaud, who indorsed and remitted it to Jacaud & Gordon, the latter being under acceptances for Blair & Jacaud to a large amount. Before the bill became due, Farrell paid to the house of Blair & Jacaud several acceptances and notes, for the express and specific purpose of liquidating and providing thereout for the due payment of the bill in question. It was also agreed between Blair, on the part of the house of Blair & Jacaud, and Farrell, that in case the bill should not be paid when due, it should be returned and dehvered up to Farrell. The house of Blair & Jacaud applied to their own use the notes and acceptances so received from Farrell, and failed to take up the biU of exchange, and gave no notice to the house of Jacaud & Gordon of the de- posit or payment so made by Farrell. Under these circumstances, the question was, whether Jacaud & Gordon could recover the amount m an action against the acceptor, French ; and the Court of King's Bench held they could not. " It is impossible," said Lord Ellenborough, " to sever the individuality of the person. Jacaud, being a partner with Blair, must be considered as having, together with Blair, received money from the drawers to take up this very bill. How, then, can he, because he is also partner with Gordon in another house, be permitted to contravene his own act, and sue upon this bill, which has been already satisfied as to him ? If A. and B., partners, receive money to apply to a particular purpose, A. and C, in another partnership, can never be permit- ted to contravene the receipt of it for that purpose, and apply it to another." CHAPTER V, OF ACTIONS BY PAKTNERS. § 642. From -wtat lias been said in the preceding chapter rela- tive to the rights of partners against third persons, it is clear that, generally speaking, they possess, as a Ibody, the same power as individuals have of enforcing those rights by action. In some re- spects, however, the power of partners to sue in an action ex con- tractu is not coextensive with that of individuals. That power, we have seen,^ may possibly, be lost by the death or accession of a partner. So, also, where the same person is member of two differ- ent firms, an action of assumpsit cannot be. brought by one firm against the other ; for in such case, the same person would be both plaintiff and defendant in the same action ; and it is a rule of law, that a man cannot sue himself.^ In the case of Mainwaring v. Newman,^ A., B., and C. were partners, and C, D., and E. were partners. E. drew a promissory note in favor of C, D., and E., which was indorsed by them to A., B., & 0. To an action of assumpsit by A., B., and C, against D., as oae of the indorsers, v ' Ante, chap. 4, sec. 1. = Bosanquet v. Wray, 6 Taunt. 598 ; Westcott v. Price, Wright, 220 ; Griffith V. Chew, 8 Serg. & K. 20 ; Moffatt v. Van Millingen, 2 Bos. & Pull. 124; Eastman v. Wright, 6 Pick. 320,321 ; Grahams. Harris, 5 Gill & John. 487 ; Portland Bank v. Hyde, 2 Fairf. 196 ; De Tastet v. Shaw, 1 Barn. & Aid. 664 ; Burley v. Harris, 8 N. Hamp. 235; Kogers v. Kogers, 5~ IredeU, Eq. 31 ; Denny v. Metcalf, 28 Maine, 389. The same rule extends to cases of foreign attachment. A plaintiff cannot summon himself, nor can several plaintiffs summon one of their own number, as a trustee, in the process of foreign attachment. Belknap v. Gibbens and trustee, 13 Metcalf, 471. So if the plaintiff brings an action against two persons as partners, and sum- mons as trustees one of the defendants and two others as partners in another concern, they cannot be holden as trustees, but must be discharged. Denny V. Metcalf, 28 Maine, 389. ' 2 Bos. & Pull. 120; and see Jacaud v. French, ante, § 641. 53 626- KMHTS OF PARTNERS, ETC. [BOOK UI. D. pleaded in bar, that C, one of the plaintiflFs, was liable as an indorser, together with D. ; and the plea was held good on special demurrer.^ So, also, after the death of the common partner, on general principles, one firm cannot sue the other for a debt due in his lifetime, but they may upon transactions which have taken place subsequent to his decease.^ § 643. There is another particular in which the right of part- ners to sue in actions ex contractw appears to be limited. We have ^een that the firm is not bound by biUs or acceptances given in the name of the firm for the separate debt of one partner, noi* generally by the fraud of any of its members, when the party deal- ing with such members is imphcated in the fraud. But it seems clear, that the equity to which the defrauded partners are entitled in this case cannot be supported in a court of law, when the part- ^ The holder of a promissory note, being a member of a firm who are the first indorsers thereon, cannot maintain an action on the note, agairfst a subsequent indorser. Decreet v. Burt, 7 Gushing, 551. ° Bosanquet v. Wvay, ' supra ; Burley v. Harris, 8 N. Hamp. 235. But in reference to a case supposed, of a note given by one member of a firm, pay- able to his firm, indorsed and put into circulation atid taken by a third party in the due course of business, Shaw C. J., in Parker v. Macomber, 18 Pick, 509, remarked : " I beg to be understood as not intending to express an opinion, that, where; a note is given by one member of a firm, payable to his firm, they may not indorse it and negotiate and put it into circulation, and that a party taking it in due course of business cannot maintain an action ■ on it, on the supposed objection, that in its origin it was payable to a firm, of which he was a member, and which firm could have maintained no action against him on the note. The reason why no action could be maintained in that case is a mere technical one, namely, that a man cannot be plaintiff and defendant in the same action ; but wbere the technical impediment is removed by an actual indorsement and negotiation, made whilst the author- ity so to indorse in the name of the firm continues, the holder may claim a valid title through such indorsement of the firm." Babcock v. Stone, 3 M'Lean, 172. " It is well settled that a note made by a partnership to one of its own members, or his order, when indorsed, will enable the indorsee to maintain an action upon it. It is the promise of all to the order or appointee of one; and when the appointment is made by an indorsement, it is a valid contract with the indorsee." Shaw C. J. in Thayer v. Buffum, 11 Met- calf, 398; Pitcher v. Barrows, 17 Pick. 361 ; Smith v. Lusher, 5' Cowen, 688 ; Blake v. Wheadon, 2 Hayw. 199 ; Davis v. Briggs, 39 Maine, 304. A note, so given by the partnership before dissolution, may be indorsed by the partner to whom it is made payable, even after dissolution. Temple v. Seaver, 11 Oushing, 814. CH. v.] ACTIONS BY PARTNERS. 627 ners appear as plaintiffs ; for, appearing as plaintiffs, they must join with them the fraudulent partner; and if, as Lord Ellen- borough observed, they rely on his strength, they must also abide by his acts ; ^ or, in other -words, suffer by his fraud. They are, therefore, placed in a dilemma, 'which makes their suit at law a nullity.2 In Jones v. Yates,^ Sykes and Bury being partners Sykes fraudulently gave the bills of the partnership in discharge of his separate debt. He likewise applied part of the partnership funds to the same purpose. One question was, whether the part- ners could' recover the amount of the bills and of the money in a court of law ; namely, by bringing trover for the bills and assump- sit for the money. And the Court of King's Bench held that they could not. " We are not aware," said Lord Tenterden, " of any instance"in which a person has been allowed, as plaiatiff in a court of law to rescind his own act, on the ground that such act was a fraud on some other person ; whether the party seeking to do this has sued in his own name only, or jointly with. such other person. It was well observed,, on behalf of the defendants, that where one of two persons, who have a joint right of action, dies, the right then rests in their survivor; so that, in this case (if it be held that Sykes and IBury may sue), if Bury had died before Sykes, Sykes might have sued alone, and thus, for his own benefit, have avoided his own act, by alleging his own misconduct. The de- frauded partner may perhaps have a remedy in equity, by a suit in his own name, against his partner and the person with whom the fraud was committed. Such a suit is free from the inconsis- tency of a party suing on the ground of his own misconduct. There is a great difference between this case and that of an action brought against two or more partners, on a bill of exchange ' Richmond v. Heapy, 1 Stark. 204. ' See Hower v. Wood, 11 Gushing, 62. ' 9 Barn. & Ores. 532. The case of Jones v. Yates, was -relied upon in Greeley v. Wyeth, 10 N. Hamp. 15, where it was held that if one partner, with the knowledge of his copartner, makes a special contract to perform labor, or sell goods of the partnership, and take pay in specific articles, for his own use, and the contract is executed by the parties who make it, an action cannot be maintained in the name of the partners to recover the value of the goods so sold or labor performed, on the ground that the partner had no authority to make such contract. See Gordon v. Ellis, 7 Man. & Grang. 807 ; Biggs v. Lawrence, 3 T. K. 454. 628 EIGHTS OF PARTNERS, ETC. [BOOK III. fraudulently made or accepted by one partner in tke name of the others, and delivered by such partner to a plaintiff, in discharge of his own private debt. In the latter case, the defence is not the defence of the fraudulent party, but of the defrauded and in- jured party. The latter may, without any inconsistency, be per- mitted to say in a court of law, that although the partner may for many purposes bind him, yet that he has no authority to do so by accepting a bill in the name of the firm for his own private debt. The party to a fraud, he who profits by it, shall not be allowed to create an obligation in another by his own misconduct, and make that misconduct the foundation of an action at law." ^ ' " Tf," says Mr. Lindley, " the conduct of one of the firm were always im- putable to the firm upon recognized principles of agency, the rule precluding the firm from suing by reason of the conduct of one of its members would be open to no objection, and would be perfectly consistent with mercantile notions. But the rule goes much further than this, and has been carried to an extent, which can scarcely be considered satisfactory, although its con- formity with established technicalities is not perhaps to be disputed." " It is laid down, as a general principle of law, that what a person has no right to do himself, he cannot acquire a right to delay associating others with him. See Solomons v. Nissen, 2 T. R. 674 ; Brandon o. Scott, 7 Ell. & B. 234. Thus it being a rule that a trustee cannot claim from his cestui que trust com- pensation for trouble, or loss of time in the execution of the trust, it has been held that if one of a firm of solicitors is a trustee, and the firm acts as solic- itors in the matter of the trust, the firm cannot claim payment for its ser- vices ; the disability of one of its members thus extending to them all. See Broughton v. Broughtou, 2 Sm. & G. 422 ; 3 De G., M. & G. 160 ; Christo- phers V. White, 10 Beavan, 523 ; Collins v. Carey, 2 Beavan, 128 ; Matthi- son V. Clark, 3 Drew. 3. So if one member of a firm is guilty of a fraud in entering into a contract on behalf of the firm, his fraud may be relied on as a defence to an action on the contract brought by him and his copartners ; for their innocence does not purge his guilt. See Kilby v. Wilson, Ry. & Moody, 178 ; Biggs v. Lawrence, 3 T. R. 464 ; Sparrow v. Chisman, 9 B. & C. 241. These cases were not decided on the ground that the act of the one partner is imputable to the firm ; and the principle governing them is ap- plied where the circumstances are such as to exclude the doctrine of agency. For example, a partner pledges partnership property, and in so doing clearly acts beyond the limits of his authority, still, as he cannot dispute the validity of his own act, he and his copartners cannot recover the property so pledged by any action at law. Brownrigg v. Rae, 5 Exch. 489. So although a partner has no right to pay his own separate debt by setting off against it a debt due from his creditor to the Srm, yet if he actually agrees that such set- off shall be made, and it is made accordingly, he and his copartners cannot CH. v.] ACTIONS BY PAETNEES. 629 § 644. The case of Jones v. Yates seems to overrule a preced- ing case before Lord Ellenborongh, upon this particular point. In the case adverted to, it was held, that, after a dissolution of part- nership between A. and B., and notice in the Gazette that all debts due to the partnership should be paid to B., A. having conclusively- given to a debtor-of the firm a receipt dated anterior to the disso- lution, the receipt was void, and an action might still be maintained against the debtor in the names of A. and B} On the authority, of Jones V. Yates, it appears that such an action is not main- tainable ; but possibly, under the same circumstances, it would now be held that the action might be maintained by B. alone.^ An assignment by one partner to the other of his interest in all the partnership demands is good in equity, and gives to the as- ■ signee the right to use the name of the assignor to enable him to collect for his own use any debts due to them jointly at the time ; afterwards in an action recover tlie debt due to tlie firm. See Wallace v. Kelsall, 7 M. & W. 264 ; Gordon v. Ellis, 7 Man. & Gr. 607. This doctrine has been carried so far, that even where the partner whose conduct is relied upon as an answer to an action by the firm is dead, the surviving partners have been held not entitled to sue. Ex parte Bell, 1 M. & S. 751." " Again the right of set-ofi" which might be pleadable to an action brought by one partner, is not pleadable to an action by him and his copartners. See Gordon v. Ellis, 2 Com. B. 821, nor if one partner covenants not to sue for a partnership debt, will this preclude him from joining his copart- ners in an action for the recovery of that debt. See Walmsley v. Cooper, 11 Adol. & El. 216." " It is certainly difficult to reconcile all the decisions npon this subject. All the cases establishing the rule in question were de- cided before pleas and replications on equitable grounds were allowed at law. How far they would be acted on if an equitable replication were pleaded, it is impossible to say. The writer, however, ventures to submit, that the application of the rule is only justifiable when the conduct of the one partner can be regarded as the conduct of the firm, in accordance with the established doctrines of the law of agency." 1 Lindley Partn. 168-171. See Purdy v. Powers, 6 Barr, 492 ; Cram v. Cadwell, 5 Cbwen, 498 ; Ever- ingham v. Ensworth, 7 Wendell, 326 ; Brewster v. Mott, 4 Scam. 378. * Henderson v. Wild, 2 Camp. 561 ; Lunt v. Stevens, 24 Maine, 534 ; Farrar u. Hutchinson, 9 Adol. & Ellis, 641. A receipt, however, does not preclude the person giving it from showing that the money therein expressed to be received was not in fact received, nor does it discharge the debt. On these grounds the cases above referred to are considered distinguishable from those establishing the rule above noticed. 1 Lindley Partn. 170, 171. ^ See Evans v. Silverlock, 1 Peake, 31. 53* 630 EIGHTS OF PARTNERS, ETC. [BOOK III. and the discharge of the .assignor, given afterwards -without con- sideration, will not discharge an action brought in the name of both.i § 645. Persons engaged in an illegal partnership cannot main- tain an action on any contract arising out of their deahngs as partners. The illegality of the partnership ought to be pleaded specially ,2 but if it appear from the plauitiff's own case at the .trial, it will, it is apprehended, be ground of nonsuit. Where the partnership is legal, the partners cannot recover upon an illegal contract, although such contract, at the time it was, made, was known only to one of the members of the firm.^ § 646. Persons who may legally be partners in foreign coun- tries, as, for instance, husband and wife, are not permitted to sue as partners in this country. If they have recourse to an English- ' tribunal, they must place such a plaintiff before that tribunal as can by the laws of this country be permitted to sue.* So, con- versely, partners trading abroad, in such mode as to constitute a partnership here, may sue here as partners for consignments sent to this country, though they cannot sue as partners at the place of trading, by reason of the particular law of that place.^ For in the words of Heath J., " In construing contracts, we must be governed by the laws of the country in which they are made ; for all contracts have a reference to such laws. But when we ' Lunt V. Stevens, 24 Maine, 534. See Burley v. Harris, 8 N. Harnp. 283. But in Kussell v. Swan, 16 Mass. 314, it was held that one partner cannot assign to his copartner his share of a debt due to the partnership (which is not assignable at law), so as to enable the assignee to sustain an • action in his own name alone. See Horbach v. Huej', 4 Watts, 455 ; Allen V. White, Minor, 365; Dob v. Halsey, 16 John. 34. The assignee may, however, sustain an action in his own name, in such case, if the debtor knowing of the assignment, promise to pay the demand ; and a promise of ' this character may be implied from the acts of the debtor, as well as ex- pressly proved. Burger v. Collins, 7 Harr. & John. 213. See Chitty Cont. (10th Am. ed.), 133, 134. 2 Keg. Gen. H, T. 1834 ; Morse v. Wilson, 4 T. K. 853. ' Biggs V. Lawrence, 3 T. R. 454. * Cosio V. De Bernales, Kyan & Moody, 102 ; s. c. 1 Carr. & P. 266 ; 11 Eng. Com. Law R. 387 and note. See the observations of Mr. Justice Story on this point, Story Partn. § 239. ^ Shaw V. Harvey, 1 Mood. & Malic. 526. See Dutch West India Coni- pany v. Van Moses, 1 Str. 612. CH. v.] ACTIONS- BY PARTNERS. 631 come to remedies, it is another thing ; they must be pursued by the means which the law points out where the party resides. The laws of the country where the contract was made can only have a reference to the nature of the contract, not to the mode of en- forcing it." 1 § 647. If one of two partners be resident and carry on t^ade in an enemy's country, a joint contract entered into with the firm cannot be enforced by the other partner, because his copartner, residing under the allegiance and protection of a hostile state for all commercial purposes, is to be considered, to aU civil purposes, as much an alien enemy as if he were born there .^ A state of war suspends all commercial intercoiirse between the belhgerents, and shuts their courts against all suits and proceedings, and all ' Melan v. Due de Pitz-James, 1 Bos. & Pull. 138. The opinion of Mr. Justice Heath has been adopted in the recent cases of the British Linen Company v. Drummond, 10 Barn. & Ores. 903, and De la Vega v. Vianna, 1 Barn. & Adol. 284 ; Ex parte Chevalier, 1 Mont. & A. 345 ; and Trimbey V. Vignier, 1 Bing. N. C. 151. In De la Vega v. Vianna, it was decided that one foreigner may arrest another in England for a debt ivhich accrued in the foreign country while both resided there, though the law of that country does not allow arrest for debt. The opinions, likewise, of Huber and Voet, which are cited in the last-mentioned case, support the general doc- trine, that this remedy should be pursued according to the law of the coun- try where the debtor resides. The latter author, however, observes, that in some places, upon the arrest of one foreigner by another, it was the practice to remit them to their own courts, if both parties were of the same domicil, and the defendant asked such relief. By the law of France, a foreigner may be sued in the French courts by a Frenchman ; or, vice versa, a Frenchman may be sued there by a foreigner, in respect of contracts arising in a foreign country. See Code Civil, arts. 14, 15. But, except in commercial or crim- inal matters, it should seem that one foreigner cannot effectually sue another in the French courts, unless by consent of the defendant. And, even then, in the words of M. Kogron, " Si ces deux Strangers consent«nt h, @tre juges par les tribunaux Fran<;ais, ceux-ci prononcent plutot comme arbitres que comme juges ; car ils n'ont pas une veritable jurisdiction sur ces strangers." Code Civil, par Rogron, 14. It may be remarked, that the opinion of Lord Loughborough, in Talleyrand v. Boulanger, 3 Ves. 447, which seems to coin- cide with the law of France as just stated, is completely overruled by the case of De la Vega v. Vianna, cited above. See further, on this subject, Story Conflict of Laws, p. 300 ; Ex parte Pollard, 3 Mont. & A. 340. = Gow Partn. (3d ed.), 121 ; Story Partn. § 240 ; McConnel v. Hector, 3 Bos. & Pull. 113; Griswold v. Waddington, 16 John. 438 ; The Julia, 8 Cranch, 181. 632 EIGHTS OF PAKTNEKS, ETC. [bOOK III. claims of persons who have acquired and retain a hostile charac- ter.^ But the legal right of partners is not aifected by the resi- dence merely of one of the merQbers of the firm in a hostile country, if such residence be unconnected with an adherence to the enemy .^ § 648. The rights of partners to sue in respect of partnership transactions are affected by the bankruptcy of one or more of them. For, in that case, they cannot generally maintain an action ex contractu, without joining the assignees of the bankrupt as plaintiffs.^ Likewise, if one partner in an adventure buy goods for the adventure and become a bankrupt, and his vendor, without notice of the partnership, stop the goods in traimtu, the solvent partner is then tenant in common of the goods with the vendor, and cannot sue the latter for them in an action of trover.* Having made these general observations on the rights of part- ners to sue in an action, let us proceed to examine the several most material points connected with the action itself. SECTION I. OF THE PAKTIKS TO AN ACTION KX CJONTRACTU. \ 649. In an action against a stranger to enforce a contract made with the firm where there has not been any severance of ia- terest, all who were partners at the time of the contract must join as plaintiffs.^ The reason given is, that where the interest is joint, if several were to bring actions for one and the same cause, the ^ Story PaS'tn. § 240. ' Gow Partn. (3d ed.), 121 ; Roberts v. Hardy, 3 Mau. & Sel.'533. See De Tastet u. Taylor, 4 Taunt. 233. ' See the next section.. ♦ Salomons v. Nissen, 2 T. K 674. * Mont. Partn. 59 ; Lambert's case, Godbolt, 244; Cabell v. Vaughan, 1 Saund. 291, b, n. 4; Gow Partn. (3d ed.), 125, 126; Story Partn. § 241 ; Dob V. Halsey, 16 Jobn. 34; Coffee v. Eastland, Cooke, 159; Wilson v. Wallace, 8 Serg. & K. 53 ; U. States v. Kennan, 1 Peters, 168 ; Halliday V. Doggett, 6 Pick. 359 ; Gould v. Gould, 6 Wendell, 264 ; Wright v. Post, 3 Conn. 142; Hewes v. Bayley, 20 Pick. 96. OH. v.] ACTIONS BY PARTNERS. 633 court would be in doubt for wliich of them to give judgment.^ Hence, when the. contract is under seal, all the partners cove- nantees must join ; and, as their legal interest is joint, it matters not ■ though the covenant be in terms joint and several.^ Hence, also, ' Per Lord Kenyon, Anderson v. Martindale, 1 East, 497. AVhere mon- eys are paid out of a joint fund, the joint owners of the fund^should sue jointly for the money paid. In Osborne v. Efarper, 5 East, 225, the two plaintiffs and the defendant had been partners ; and, after the dissolution of the partnership, the defendant drew a bill in their joint names. The other parties to the bill were ignorant of the dissolution. The holder brought an action against the three quondam partners. Harper pleaded his bankruptcy, and a nolle prosequi was entered as to him, but against the two plaifitiffs a . verdict passed for £1,156. The two plaintiffs were ilever partners after the dissolution before mentioned ; but their attorney proved that he had dis- charged the whole demand, £1,156, at the request of both plaintiffs. On an affidavit being produced (by directipn of the court) that the attorney ad- vanced the money on the joint credit of both the plaintiffs, the court held that it was a joint fund from which the payment was made, and a joint action was therefore maintainable. And, conversely, a promise to pay by partners is a promise to pay out of a joint fund, although they agree to pay equally out of their own private cash ; and they must be sued jointly upon such promise. Byers v. Dovey, 1 H. Bl. 236. So, where moneys when recovered will be the joint property of the parties who bring the action, they are rightly joined as plaintiffs, whether they are partners or not. Bond v. Pittard, 3 Mee. & W. 357. But in respect of a:separate fund, a separate action must be brought. Thus, in Brand v. Boulcott, 3 B. & P. 235, the plaintiffs and defendant had been joint assignees under a bankruptcy. The solicitor's bill was £208 ; each of the plaintiffs paid him £104, and brought a joint action against the defendant, the other assignee, for his share. But Lord Alvanley nonsuited the plaintiffs, on the ground that each should have brought a sep- arate action ; and on motion for a new trial, the Court of Common Pleas were of the same opinion. See Doremus v. Selden, 19 John. 213 ; Smith v. Hicks, 1_ Wendell, 202; Gould v. Gould, 8 Cowen, 168; s. c. 6 Wendell, 263 ; Boggs V. Curtin, 10 Serg. & R. 211. However, in a case in which the plaintiffs brought their action to recover a sum of money paid by the plain- tiffs as bail in error for the defendants, to make up which sum each of the plaintiffs had advanced his share, Burrough J., fuled, that, as the payment was made in one sum and as a joint payment, a joint action was maintainable. May V. May, 1 Carr. & Payne, 44. ' Anderson v. Martindale, supra ; and see Eooleston v. Clipsham, Saund. 153 ; 1 Chit. PI. (10th Am. ed.), 8 and notes. It is a well settled principle, that covenants shall not be construed to be joint or several from the particu- lar language in which they may be conceived, but shall be measured and moulded according to the interest of the covenantees ; and, although in terms 634 RIGHTS OF PARTNERS, ETC. [BOOK III. when the contract is in the form of a negotiable security, all the partners payees must join ; and where, by the terms of the con- tract, a note given to the firm is to be a continuing security throughout all the changes of the house, if the note be not indorsed to any of the successive new firms, the original payees must join as plaintiffs, although some may have retired from the partnership.^ § 650. But generally, in all contracts, by parol or otherwise, they only who were partners at the time of the contract must join ; and therefore a person who enters the partnership after the com- pletion of the contract cannot be made a plaintiff unless the debtor admit him as a creditor, and it be agreed between the parties that the contract with the old firm shall be extinguished, and a contract with the new firm substituted.^ But, under the latter supposition, the incoming partner may join as plaintiff. Thus, where A. was indebted to B., and C. became a partner with B., and A. con- tracted a further debt with both, and then settled an account with both, as well upon what was due to B. before his partnership with C, as upon the debt contracted afterwards ; it was held that B. and C. might join in an action against A. on an account stated.^ § 651. Where partners have entered into contracts in writing, whether under seal or otherwise, generally, they alone who are included in such contracts are entitled to sue upon them. The rule, however, is confined within stricter limits in the case of ■ deeds, than in that of instruments not under seal. Thus, in an action by partners on a deed, those members alone can be made plaintiffs who are parties to the deed, although the deed may have been executed for the benefit of the whole firm.* By an indenture the covenant may import to be joint, yet, where the interest is several, so shall the covenant be construed. Piatt on Covenants, 122; Ehle w. Purdy, 6 Wendell, 629 ; Chitty Cont. (10th Am. ed.), 120, 121. ^ Pease v. Hirst, 10 Barn. &"Cres. 122 ; Twopenny v. Young, 3 Barn. & Cres. 208 ; 5 Dowl. & Ryl. 259. = Welsford v. Wood, 1 Esp. 182. See Story Partn. § 254. . ' Moore v. Hill, 2 Peake, 11 ; Armsby v. Farnam, 16 Pick. 318. Under ■what circumstances a debt is assignable at law appears from Tatlock v. Hai:- ris, 3 T. R. 180; Wilson v. Coupland, '5 Barn. & Aid. 228; Farlie v. Den- ton, 8 Barn. & Cres. 395, and the cases cited in the last-mentioned case. See also Com. Dig. Action on the Case upon Assumpsit (B. 3) ; 1 Chitty PI. (10th Am. ed.), 15, notes, 16, notes ; Chitty Cont. (10th Am. ed.), 131, el seq. ' Ex parte Peele, 6 Ves. 604 ; Ex parte Williams, Buck, 13 ; Harrison v. CH. v.] ACTIONS BY PARTNERS. 635 made by A. of one part, and the several other persons whose hands and seals were set and subscribed, being creditors of A., of the other part, A. covenanted with the said several creditors parties thereto, their and each and every of their respective partners, &c., that he would pay to the said several creditors, or their respective partners, &c., certain sums in discharge of their several debts, by way of instalment. B., of the firm of B. & C, who were creditors of A., subscribed the indenture in the name and firm of himself and partner, and set his seal thereto. Default having been made in payment of the instalments, B. alone brought his action on the covenant against A., and the declaration was held good on de- murrer. " The defendant," observed Lord EUenborough, " is an executing party, and he covenants to pay to the several parties or their partners, and he has not done so. No other than one who is a party to the deed can have a right to sue upon it ; the right of suit is constituted by the deed ; and here the other party is not a party to it." ^ In the case just cited, it appeared by the ierms of the deed, that those creditors alone were parties " whose hands and seals were set and subscribed thereto ; " therefore, a person not signing and sealing was not a party, and could not have joined in the action. But, generally, where a person is named as a party to a covenant, and assents to it, he may afterwards join in an ac- tion on the covenant, although he did not seal.^ § 652. In cases of this nature, where the partners resort to a higher security for their debt than that of assumpsit, they must abide by such security ; ^ and, therefore, when only part of a firm Fitzhenry, 3 Esp. 238. See Berkeley v. Hardy, 5 Barn. & Ores. 355 ; 8 Dowl. & Kyi. 102 ; Story Partn. § 244. » Metcalf w. Kycroft, 6 JMau. & Sel. 75. See D. Littledale J., 10 Barn. & ■Cres. 127. ' Vernon v. Jeffries, Str. 1146; Clement v. Henley, 2 Koll. Abr. Fait (F.),pl.2. ' Chit. PI. Assumpsit. The general rule seems to be, that -where the con- tract, which is the foundation of the action, is contained in a deed, the deed must be declared v(po° j although, without the existence of any deed, the facts of the case would have, supported a general action of debt or indebitatus assumpsit. Evans v. Bennet, 1 Camp. 303, note. See Atty v. Parish, 1 N. R. 104. There is no case, where, the interest being the soma as that secured by the deed, it has been ho\flen,tha,t assumpsit will lie. Per Lord EUenbo- rough, Schack V. Antony, 1 IVJau. & Sel. 574. See Lefevre i;. Boyle, 3 Barn. & Adol. 877. 636 RIGHTS OF PARTNERS, ETC. [bOOK III. are parties to the higher security, the entire firm cannot be made plaintiffs in any action for the recovery of the debt. It may be observed, however, that all joint covenantees or obligees who may sue, must sue.^ But a declaration by those parties only who sealed would probably hold good, if it averred, and the fact were that the others who had not sealed had also refused their assent.^ § 653. But although contracts contained in a deed can only be enforced by those who are parties to the deed, yet written con- tracts, not under seal, may be enforced at law by those for whose benefit they are made, as well as those whose names appear upon the face of the contract. In the words of Mr. Justice Bayley, it has frequently been decided, that if a party enters into a contract in his own name for the benefit of others, either he may be sued because he entered into the contract, or those persons for whom he entered into it may be sued ; and, e converso, the agent may sue, or the parties for whose benefit the contract is effected may sue.^ Therefore an action may be maintained by all the partners on a guaranty given in terms to one only, if given for the benefit of all,* or it may be maintained by that partner alone to whom it is given.^ § 654. On these principles, likewise, an action on a policy of insurance may be brought by either the person in whose name, or the person on whose account, the policy was effected.^ Still it seems that, to enable a party whose name is not inserted in a policy, but on whose account it has been effected, to sustain an action on it, the policy should be so framed that by its terms it may embrace his interest.'' Although the person whose name is 1 Scott V. Godwin, 1 Bos. & Pull. 67. = Petrie v. Bury, 3 Barn. & Ores. 354 ; 5 Dowl. & Kyi. 152. , ' Hall V. Smith, 2 Dowl. & Ryl. 527 ; Marchington v. Vernon, 1 Bos. & Pull. 101; Dunlap's Paley's Agency, 361 and notes and cases cited; Halli- day V. Doggett, 6 Pick. 3S9. * Garrett v. Handley, ante, § 680 ; Alexander v. Barker, id. ; Story Partn. § 242 ; Gow Partn. (3d ed.) 122, 123. » 4 Barn. & Ores. 666 ; but see, contra, per Coleridge J., 2 P. & D. 251. • Grove v. Dubois, 1 T. R. 112; Gumming v. Forrester, 1 Mau. & Sel. 497; Hagedorn v. Oliverson, 2 Mau. & Sel. 426 ; D. Bayley J., 4 Barn. & Ores. 666. ' Pinney v. Bedford Commercial Ins. Co. 8 Metcalf, 348. In this case it was held that when a part-owner of a vessel or its outfits effects insurance CH. v.] ACTIONS BY PAKTNERS. 637 used in the policy be inserted jointly -with another, the action may be brought in his name separately, if the joint interest be slated in the declaration.^ Likewise, where a pohcy is effected in the names of A. and B., but A. only is interested, the action may be brought in his name separately, his separate interest being stated in the declaration.^ § 655. These principles, however, are not to be extended to bills of exchange and promissory notes ; as the proper persons to sue on such securities are they whose names appear thereon as payees, or special indorsees. In a late case, a person gave his promissory note to the partners of a banking-house. These part- ners retired from the house, and various changes took place in the members of the firm. Upon every change the note was handed over to the new firm, and it was evidently intended to be a continuing necessity. Upon none of these occasions, how- ever, was the note indorsed to the new firm. After the retire- ment of the original payees, an action was brought on the note in their names, without joining the new partners. It was contended, that such d,ction was improperly brought ; that the note was con- sidered by all parties to be for the benefit of the new house ; and, therefore, that the persons who were partners at the time of bringing the action ought to sue. But Bayley J. said, that it seemed to him that the action had been rightly brought in the thereon in his own name only, and nothing in the policy shows that the interest of any other person is secured thereby, an action on the policy can- not be mainta,ined in the names of all the owners, upon parol evidence that such part-owner was their agent for procuring insurance, and that his agency and their ownership were known to the underwriters, and that the underwriters agreed to insure for them all, and that it was the intention of all the parties, in making the "policy to cover the interest of all the owners. And Dewey J. in this case remarked, that " the appropriate form of the policy in such cases is, ' for himself and other owners,' or ' for whom it may concern,' or other words indicating that the insurance is to embrace an in- terest beyond that of the party in whose name the policy is issued. Such words, or equivalent ones, being introduced into the policy, the rules of law then authorize extrinsic evidence as to the persons who are parties in inter- est, -and who may enforce their claims upon such policy, though not particu- larly named therein." See Pearson v. Lord, 6 Mass. 84 ; Graves v. Boston Marine Ins. Co. 2 Crancli, 419; Murray u. Columbian Ins. Co. 11 John. 302; Turner v. Burrows, 5 Wendell, 541. '■ Cosaok V. Wells; 1 Chit. PL 5. ' Marsh V. Kobinson, 4 Esp. 98. 54 638 RIGHTS OF PARTNERS, ETC. [BOOK III. names of the members of the firm to whom the note was given. If the note had been indorsed to the new firm, then the action must have been brought in the names of the indorsees ; but not having been so indorsed, the action was properly brought in the names of the original payees, for the benefit of the parties inter- ested. And Littledale J. observed, that, although all the securi- ties belonging to the old firm were handed over to the new firm, still the persons entitled to the legal interest in those securities must sue upon them.^ Where, however, a bill is indorsed to a firm in blank, all or any of the members may sue, as an indorse- ment in blank conveys a joint right of action to as many as sue on the bill, or a separate right of action to him who aloAe sues.^ In cases where some only of a firm are parties to a written instru- ment, and sue alone upon it without joiniag their copartners, the defendant is estopped from saying that there are other joint con- tractors who ought to have been plaintiffs.^ § 656. An agreement between the partners cannot vary their right of action against third persons.* Hence it has been ob- served, that the ostensible members of a firm cannot, by agree- ment, give authority to any one of them to bring an action in his name against strangers.^ So, it has been ruled, that if a firm admit a new member, upon an agreement that he shall be deemed ' Pease v. Hirst, 10 Barn. & Cres. 122. See Ex parte Greening, 13 Ves. 206 ; M'Neillage v. HoUoway, 1 Barn. & Aid. 218 ; M'Gregor v. Cleveland, 6 Wendell, 475. " Per Lord EUenborough, Ord v. Portal, 3 Camp. 239. See Attwood v. Kattenbury, 6 Moore, 570; Fletcher v. Dana, 4 Blackf. 378. If several persons, not partners in business, separately indorse, for the accommodation of the drawer, a bill of exchange which has been previously indorsed by another person, and, on the bill being dishonored, pay the party who has discounted it in equal proportions, they may strike out their own indorse- ments, and bring a joint action against such previous indorser, to recover the amount of the bill. Low v. Copestake, 8 C^rr. & Payne, 300. One partner may sustain an action, in his individual capacity, against the maker of a note which he has indorsed in the partnership name to himself. Burn- ham V. Whittier, 5 N. Hamp. 334 ; Kirby it. Cogswell, 1 Gaines, 505. ' See Kieran v. Sanders, 6 Ad. & Ell. 515. * See Clark v. Howe, 23 Maine, 560 ; Fortune v. Brazier, 10 Alabama, 790 ; 1 Lindley Partn. 168. ^ Kadenhurst v. Bates, 3 Bing. 470; 11 Moore, 421. See Davies v. Hawkins, 3 Mau. & Sel. 487; Puller v. Roe, 1 Peake, 260; Horbach' u. Huey, 4 Watts, 455. CH. v.] ACTIONS BY PARTNERS. 639 a partner from a previous day, aia action for a debt contracted with the partnership before the day when the new member was actually admitted must be instituted in the name of the old firm.^ On the other hand, if persons hold themselves out as partners to the world, and a person contracts with them in that character, they have a right to bring a joint action against him ; aiid he can- not defend the action on, the ground that the plaintiffs are not partners inter se.^ ' § 657. In the case of a deed, when the legal interest and cause of action of the covenantees are several, each may sue separately for his particular damage, although the words of the covenant are joint only.^ So, in the case of a simple contract, made with one of several partners acting for the firm, if the per- son who contracts should afterwards treat the joiftt contract as several, each member of the firm will then be enabled to sue him, severally.* Thus, where three persons had employed the defend- ant to sell some timber for them, in which they were jointly con- cerned, and the defendant paid two of them theb exact proportion, for which they respectively gave him their receipt, and the third brought his action for the remainder, being his share, it being objected that this was a joint employment by three, and that one alone could not bring his action. Lord Mansfield overruled the objection, and held that, there having been a severance, one alone might sue.^ So, where the action was for the use and occupa- tion of a house, and it appeared that the house was the properly of six several tenants in common, to all of whom, except the plaintiff, the defendant had paid his rent, and this action was for his share of the whole rent, it was objected that one tenant in common alone could not bring this action, but that all ought to • Wilsford V. Wood, 1 Esp. 182 ; 2 Greenl. Ev. § 478. ; ^ Bond V. Pittard, 3 Mee. & W. 357. See, however, the remarks of Mr. Lindley upon this position. 1 Lindley Partu. 391. But the real partners may sue alone; see post, § 663. ' 1 Chit. PI. (10th Am. ed.), 10, and cases' in note ; 1 Saund. 153 ; Ehle v. Purdy, 6 Wendell, 629. * Baker v. Jewell, 6 Mass. 460 ; Austin v. Walsh, 2 Mass. 401 ; Bunn i-. Morris, 3 Caines, 54 ; Blair v. Snover, 5 Halst. 153. See Hall v. Leigh, 8 Cranch, 50 ; Gould v. Gould, 6 Wendell, 263. • « Garret v. Taylor, 1 Esp. 117. 640 EIGHTS OF PARTNERS, ETC. [bOOK III. join ; but .Lord Mansfield overruled the objection, and the plain- tiff recovered.^ § 658. Sometimes the joint action of partners is severed by dissolution. Where, on the dissolution of partnership betweeij A. and B., it is agreed that A. shall receive some of the partner- ship debts, and B. others, it has been ruled that each may main- tain separate actions for the debts to be. received by each respec- tively.^ So, where a partnership between two persons in trade had been dissolved, and one of them carried on business after- wards solely on his own account, but in the names of himself and former partner, it was held that he might maintain assumpsit alone for goods sold and delivered to the defendant during the existence of the partnership. But in this case Lord Tenterden observed, that if the defendant had had a set-off or counter de- mand originating in transactions between himself and the part- nership, then it would have been necessary to include the other partner as a plaintiff in the action.^ So, in some cases where the partnership is dissolved by bankruptcy, the solvent partner may sue alone, without joining the assignees of the bankrupt.'* § 659. A partner must sue severally, by reason of an office or appointment enjoyed by him, but which, being of a personal na- ture, is not shared by his copartner. Thus, for the more speedy delivery of cattle taken by way of distress, the stat. 1 Philip & Mary, c. 12, provides, that the sheriff shall make at least four deputies in each county, dwelling not above twelve miles from each other, for the sole purpose of malsing replevins. By the terms of this statute, it seems clear that the office so constituted is of a personal nature. Therefore it has been held that a replevin clerk,- who is a partner in an attorney's firm, must sue alone for the expenses of preparing a replevin bond, although it be prepared at the office of the firm.^ Where attorneys, who are in partner- ship, are admitted of different courts, it seems to be unsettled whether they can maintain a joint action for business done in one court, though under a joint retainer. Yet it seems clear, except, ' Kirkman v. Newstead, 1 Esp. 117. ' Evans v. Silverlock, 1 Peake, 31. » Atkinson u. Laing, 1 Dowl; &Ryl. N. P. C. 16. • Vide post, § 665. ' Brandon v. Hubbard, 4 Moore, 367 ; 2 Brod. & Bing. 11. CH. V.J ACTIONS BY PAETNERS. 641 perhaps, wliere the business has been transacted in chancery, that such an action may be maintained.^ And, at all events, any ob- jection to such an action, arising from the statute 2 Geo. 2, c. 23, must be the subject of a special plea, and cannot be made availar ' ble under non assumpsit? § 660. It is not necessary that a dormant partner should join with the ostensible partners of a firm, in an action against a per- son vho dealt only with the ostensible partners.^ And in one case, where an action was brought by M., a bookseller, against a printer, for not insuring a book of travels, and it appeared that several other booksellers had shares in the work, it was held that, as they had not contracted with the defendant, and M. was the only ostensible man, he was the only proper plaintiff.* On the other hand, where one of several part-owners of a vessel con- tracted for the sale of some whale-oil, it was held that all the part- owners might sue the purchaser, although, at the time of the con- tract, the purchaser did not know that other persons had any interest in the transaction. And it being objected, that, under these circumstances, the defendant might be deprived of his right of set-off, the court said, that the statutes of set-off did not pre- vent the action from being maintainable in the names of all the parties interested.^ The defendant may set off a debt due from the ostensible partner only in such a case.^ And where money 1 Hill V. Sydney, 7 Ad. & Ell. 956 ; Arden v. Tucker, 4 Barn. & Adol. 817; Vincent v. Holt, 4 Taunl. 582. ' Hill V. Sydney, ub\ supra. ' Leveck v. Shaftoe, 1 Esp. 468; Lloyd v. Archbowle, 2 Taunt. 324; Mitchell V. Dall, 2 Harr. & Gill, 159, 171; Clarkson v. Carter, 3 Cowen, 84 ; Clark v. Miller, 4 Wendell, 628 ; Boardman v. Keeler, 2 Vermont, 65 ; Hillaker v. Loop, 5 id. IIG ; Lapham v. Green, 9 id. 407 ; Morton v. Webb, 7 id; 123 ; Lord v. Baldwin, 6 Pick. 352 ; Woodi). O'Kelly, 8 Cushing,406 ; Barstow v. Gray, 3 Greenl. 409 ; Wilson v. Wallace, 8 Serg. & R. 55 ; Con- ley u. Good, Breese, 97; Gow Partn. (3d ed.), 128; Story Partn. § 241; Hawley v, Cramer, 4 Cowen, 717; 2 Greenl. Ev. § 478; Ward v. Levin- ston, 7 Blackf. 258; Monroe v. Ezzell, 11 Alabama, 603. * Mawman v. Gillett, cited in Lloyd v. Archbowle, 2 Taunt. 324. ' Skinner v. Stocks, 4 Barn. & Aid. 437. ° Ibid.; Hillaker v. Loop, 5 Vermont, 116; Lapham v. Green, 9 Ver- mont, 407; Lord v. Baldwin, 6 Pick. 352; Beach v. Hayward, 10 Ohio, 455 ; Ward v. Leveston, 7 Blackf. 258. A right of set-off in such case is provided by statute in Massachusetts, Rev. Stat. ch. 96, § 9 ; and see Rod- 54* 642 RIGHTS OF PARTNERS, ETC. [BOOK III. has been lent by a partner, under circumstances^ from -vvliicli it may be inferred that it was lent by the firm, which inference, it is conceived, will arise if all the partners but the lender are dormant, all the partners may sue.^ § 661. Upon thewhole, where there are ostensible and dormant partners engaged in general trade, it seems to be optional whether the dormant partners shall or shall not join.^ In one case. Lord Tenterden treated the point as doubtful. A contract had been entered into for five years by A., who had a dormant partner'B. After A.'s retirement, B. became the ostensible trader, and car- ried on the business by himself. He then brought an action for a breach of the contract which had been entered into with A. during, the partnership. The Court of King's Bench held, that he had no right to do so after the dissolution of the partnership ; but Lord Tenterden said, that it was unnecessary to decide whether, if A. had continued in the partnership till the expiration of the five years during which the contract made by him was to continue in force, the action in the joint names of him and his partner might not have been maintained.^ § 662. Generally, a nominal partner need not join as a co- plaintifi" in an action on a contract made by the firm. As he has no real interest, there seems to be no necessity for his joining, as a party, in any partnership suit, although there is no doubt that he may so join.* On the contrary, he may be called as a witness for the plaintiffs ;^ though in such case the plaintiffs must show clearly, at the trial, that the nominal partner had no interest whatever in the concern.^ In a case where an attorney carried well V. Kedge, 1 Carr. & Payne, 220 ; Cothay v. Fennell, 10 Barn. & Cres. 671 ; Rose v. Murchie, 2 Ceill, 409. ' See ante, § 630. ^ Hillaker v. Loop, 5 Vermont, 116; Lapham v. Green, 9 Vermont, -407 ; Morton V. Webb, 7 Vermont, 123. But see Secjor v. Keller, 4 Duer (N. Y.), 416. ' Kobson V. Drummond, 2 Barn. & Adol. 303. « Story Partn. § 241; Gow Partn. (3d ed.), 128, 129. See- Bernard ». Wilcox, 2 Jolin. Ca. 374 ; Allen v. White, Minor, 365; Dob v. Halsey, 16 John. 34. ' Parsons v. Crosby, 5 Esp. 199 ; Davenport v. Rackstraw, 1 Carr. & Payne, 89 ; Glosspp v. Colman, 1 Stark. 23 ; 2 Greenl. Ev. § 478. » Teed v. Elworthy, 14 East, 210; Chitty PI. (10th Am. ed.), 12; 2 Greenl. Ev. §478. CH. V.J ACTIONS BY PARTNERS. 643 on business under the finn of " A. & Son," and the son was not in fact a partner,' but acted as a clerk to his father, with a salary, it was held clearly that A. might maintain an action in his own name alone for business done as an attorney. And Parke J., ob- served, that a party with whom the contract was actually made might sue, without joining others with whom it was apparently made.' § 663. Where, however, an action is brought by the firm on a bill of exchange, drawn in the names of the real and nominal partners, as representing the style of the firm, in such case the nominal partners should join as plaintifis; In a case where an action on such a bill was brought by the real partner only, the nominal partner being in fact a clerk, having no share in the profits, but only a fixed salary. Lord EUenborough- nonsuited the plaintifi". And it is to be remarked, that his Lordship's observa- tions on this occasion seem apphcable to all cases of nominal partnership. " There being such a person as Hughes (the clerk), I am clearly of opinion that he ought to have been joined as a partner. He is to be considered in all respects a partner, as between himself and the rest of the world. Persons in trade had better be very cautious how they add a fictitious name to their firm, for the purpose of gaining credit. But where the name of a real person is inserted, with his own consent, it mat- ters not what agreement there may be between him and those who share the profit and loss. They are equally responsible, and the contract of one is the contract of all. In this case, the declaration states that the defendant promised to pay the money specified in the bill to the plaintiff jointly with another person. The variance is fatal." ^ § 664. An infant partner must, it seems, join in an action by the firm for recovery of a debt due to the firm, for this mode of suing gives the defendants an opportunity of setting off against a debt contracted with the firm, any demand upon it contracted with the infant in the name of the partnership.^ ' Kell V. Nainby, 10 Barn. & Cres. 20. ^ Guidon v. Robson, 2 Camp. 302. ' Teed v. Elworthy, 14 East, 210; D. Bayley J., Goode v. Harrison, 5 Barn. & Aid. 157., See Story Partn. § 255. Perhaps it should be said, that the infant ought to join for the sake of conformity. The reason given, 644 EIGHTS OP PARTNERS, ETC. [BOOK III. § 665. Generally, when one partner becomes bankrupt, the solvent partner must sue jointly with the assignees of the bank- rupt partner, on contracts made with, the partnership;^ and if the assignees refuse to join in the action, the solvent partner may use their names .^ It foUows, that if, after the bankruptcy of one partner, all the partners sue, the bankruptcy may be pleaded in bar of the action.^ It has been held, however, that money paid to the defendant's use by a solvent partner, out of his separate property, after the bankruptcy of his copartner, in pursuance of a contract made before the bankruptcy, may be sued for in the name of the solvent partner only, without joining the assignees of the bankrupt partner.* § 666. When one or more of several obligees, covenantees, partners, or others having a joint legal interest in the contract, dies, the action must be brought in the name of the survivor ; ^ in the text, which is warranted by the authorities referred to, seems incon- sistent with the notion, that the contract of an infant for purposes of trade is void, which is the doctrine laid down in Thornton v. lUingworth, 2 B. & C. 826. Bayley J., there says : " In the case of an infant, a contract made for goods for the purposes of trade is absolutely void, not voidable only. The law considers it against good policy that he shouid be allowed to bind him- self by such contracts. If he makes a promise after he comes of age, that binds him, on the ground of his taking upon himself a new liability, upon a moral consideration existing before ; it does not make it a legal debt from the time of making the bargain." There is, however, considerable differ- ence of opinion on the nature and effect of an infant's contract in these cases. See the judgment of Best J., in Goode v. Harrison, 5 Barn. & Aid. 157 ; 2 Kent Com. 234-236 ; Chitty Cont. (6th Am. ed.), 152-156, and notes ; Whitney v. Dutch, 14 Mass. 457. ' Thomason v. Fr'ere, 10 East, 418 ; per Kent, Chancellor, in Murray v. Murray, 5 John. Ch. 70; Chitty PI. (10th Am. ed.), 24; post, Book 4, chap. 3, sec. 4. A suit may be brought in New York, in the name of a foreign bankrupt, and he may be joined with the assignees of a copartner who is a bankrupt in this country. Bird v. Caritat, 2 John. 342. But the foreign assignees cannot sue in their own names. Id. 345. ° Whitehead v. Hughes, 2 Cromp. & Mees. 318 ; 4 TyrwL. 92. But the assignees may stay the proceedings till he gives security for costs. Ibid. " Eckhardt v. Wilson, 8 T. R. 140. See Bird v. Pierpont, 1 John. 118. * Thacker v. Shepherd, 2 Chit. 652. * Davis !/. Church, 1 Watts & S. 240 ; Clark v. Howe, 23 Maine, 560 ; Peters v. Davis, 7 Mass. 257 ; Chitty PI. (10th Am. ed.), 19 ; Gow Partn. (3d ed.), 131 ; Wallace v. Fitzsimons, 1 Dall. 248 ; McCarty v. Nixon, 2 Dall. 65, note ; Barney v. Smith, 4 Harr. & John. 485 ; Smyth v. Hawthorn, CH. v.] ACTIONS BY PARTNERS. , 645 and the executor or administrator of the deceased cannot be joined ; ^ and when the last survivor dies, his executors or admin- istrators alone can sue, and the personal representatives of the partner who first died cannot be joined.^ If a plaintiff die pend- ing the a.ction,'the writ or action shall not be thereby abated, but, such death being suggested on the record, the action shall proceed at the suit of the surviving plaintiff or plaintiffs.^ § 667. In all cases of contract, if it appears on the face of the pleadings that there are other obligees, covenantees, or parties to the contract, who ought to be, but are not, joined in the action, it is fatal on demurrer, or on motion in arrest of judgment, or on error.* If the objection does not appear on the face of the pleadings, the defendant may avail himself of it, by plea in abate- 3 Rawle, 355. On the death of one partner, the surviving partner is en- titled to all the choses in action and other evidences of debt belonging to the firm. They must be collected in his name ; and he is entitled to the exclu- sive custody and control of them ; the books of account are incident to the debts or choses in action ; and whoever is entitled to the one is, of course, to the other. The right of action, in relation to all partnership demands, is transferred to the surviving partner. Murray v. Mumford, 6 Cowen, 441 ; Barney v. Smith, 4 Harr. & John. 485 ; Yale v. Eames, 1 Metoalf, 487. After the death of an ostensible partner, a surviving dormant partner may sue alone on a partnership contract. Beach v. Hayward, 10 Ohio, 455. But see Johnson v. Ames, 6 Pick. 330, 334. In a suit by a surviving partner to recover a debt due to the partnership, itis not necessary that he should aver the death of his former partner. But the fact of the .death must be proved, whether alleged or not, Ledden v. Colby, 14 N. Hamp. 33. In Louisiana, the surviving partner does not possess the right, until he is authorized by the Court of Probate, to sue alone for, or to receive, partnership debts. Flower v. O'Conner, 7 Louisiana, 194; Connelly w. Cheevers, 16 Curry (Louis.), 30. . ''Chihy PI. (10th Am. ed.), 10; Hall v. HuffamT2 Lev. 188; Eemp u. Andrews, Carth. 179 ; Webber v. Tyvell, 2 Saund. 122; Martin v. Crompe, 1 Lord Raym. 340 ; Com. Dig. tit. Merchant, (D). ^ Chitty PI. (10th Am. ed.), 19; Childress v. Emory, 8 Wheaton, 669 ; Gow Partn. (3d ed.) 132. » 8 & 9 Will. 3, c. 71, s. 7. * Chitty PI. (10th Am. ed.), 13; Gow Partn. (3d ed.), 134; Baker v. Jewell, 6 Mass. 460; Dob v. Halsey, 16 John. 34 ; Parker C. J., in Thomp- son V. Hoskins, 11 Mass. 420. But sirice the statutes of Massachusetts have authorized amendments by changing the parties to actions, a defendant may object, at the trial, to a misjoinder of plaintiffs, or he will be held to have waived the objection. Dodge o. Wilkinson, 3 Metcalf, 292. 646 EIGHTS OF PARTNERS, ETC. [BOOK III. ment, or as a ground of nonsuit at the trial, upon plea of, the gen- eral issue.^ It-has been sometimes held, that if a defendant in an action, brought against him by one partner only, on a partnership contract, pays money into court, although only upon a general in- debitatus count, this is an admission that he is content to treat the contract as made with the plaintifi" only, and that the plaintiff in such case is not to be nonsuited.^ But this doctrine seems now to be overruled.^ In case of misjoinder or the joinder of more persons than those who are interested in the suit, the plaintiffs wiU be nonsuited.* But the misnomer of one of several plaintiffs can- not be taken advantage of by the defendant by plea in abatement, though he has a right to amend the declaration at the costs of the plaintiffs.^ SECTION II. OF THE PARTIES TO AN ACTION EX DELICTO. § 668. Where there is a joint damage, or an injury is com- mitted to the joint property of a partnership, all the partners ought to join as plaintiffs ; ® and the rule extends to actions for • Gow Partn.,(3d ed.), 126; Dob v. Halsey, 16 John. 34; Coffee v. East- land, Cooke, 159 ; Gould v. Gould, 6 Wendell, 264 ; Wright v. Post, 3 Conn. 142; Jordan v. Wilkins, 3 Wash. C. C. 110; Kinsman v. Dallam, 5 Monroe, 384; Mitchell v. Dall, 2 Harr.'& Gill, 171. Where the action is brought on a bill of exchange, the general issue cannot be pleaded. Keg. Gen. H. T. 1834. ° Walker v. Kawson, Moody & Rob. 250 ; and see 1 Barn. & Adol. 673. ' Kingman v. Robins, 5 Mee. & Wels. 94. * Wilsford V. Wood, 1 Esp. 182. See Brandon v. Hubbard, 4 Moore, 367 ; 2 Brod. & Bing. 11. » 8 & 4 Will. 4, c. 42, s. 11 ; Jowett v. Charnock, 6 Mau. & Sel. 45. See Clerk of Taunton Market v. Keinberley, 2 W. Bl. 1120. ° Bac. Abr. Joint-Tenant, (K.) ; Co. Litt. 198, a. ; Sedgworth v. Overend, 7 T. R. 279 ; Bloxam v. Hubbard, 5 East, 407 ; J. S. Saund. Plead. & Ev. tit. Partners, (1). See Story Partn. § 256 ; Glover v. Austin, 6 Pick. 209 ; Walker v. Fitz, 24 Pick. 194. In a case where partners sued the defendants for falsely and fraudulently recommending an insolvent person as worthy of credit, whereby the plaintiffs were induced to trust him with goods, Parker CH. v.] ACTIONS BY PARTNERS. 647 words spoken of the partners in the way of their trade.^ And with regard to these latter actions it has been said that if a. co- partnership be Hbelled, and the libel contains something which particularly affects the character of one of the firm, adjoint action may be maintained against the HbeUer, who would have less reason to complain of such proceedings, than he would have if each partner brought a separate action for the injury done to the firm.^ § 669. These observations apply to cases where the injury, more or less, is done to the whole firm. But. if, by any possibility, the injury be done to some only of the firm, they who are injured may bring a joint action for the injury ; for tort is in its nature joint and several, and in the case supposed it is to a certain extent several. Hence it has been ruled, that if a person collude with one partner to injure the others, those others can maintain a joint action against the person so colluding ; and the special damage may be laid as their joint damage, although they may have no joint fund, independent of the general fund of the partnership.^ And where words imputing insolvency in trade are spoken of one of the partners in a firm, such individual partner may maintain an action for slander, and recover damages for the injury done to him ; and C. J., said : " The first objection is, that the plaintifis cannot by law unite in the action, the injury being several, and each entitled to his separate dam- ages. If the premises were true, the conclusion would be .just. But the subject-matter of the injury is the joint property of the plaintifis. If it had been taken from them by force or surreptitiously, they would necessarily have joined in trover, or trespass, or replevin ; and no reason can be ofiered why they should not join in this action, the object of which is to recover the value of the joint property from those by whose means it has been lost. They are jointly interested in the damages ; and if they might have sued separately, which is doubtful, it is their right to sue together; and it is for the advantage of the defendants that they should unite, as by their union the costs of one action are saved." Patten u. Gurney, 17 Mass. 185. See Med- bury V. Watson, 6 Metcalf, 246, 257, 258. Where thgre is a dormant part- ner, he may be joined in an action for taking the goods of the partnership. Robinson u. Mansfield, 13 Pick. 139. ' Cook V. Batchelor, 3 Bos. & Pull. 150 ; Story Partn. § 257 ; Bromage v. Prosser, 4 Barn.& Ores. 247; 6 Dowl. & Ryl. 296 ; Chitty PI. (10th Am. ed.), 64. See Robinson v. Marchant, 7 Adol. & Ell. (n. 8.), 918. ' Per Best C. J., 3 Bing. 456; Parker C. J., in Patten v. Gurney, 17 Mass. 185 ; post, § 680. ' Longman V. Pole, 1 Moody & Malk. 223. 648 EIGHTS OF PARTNERS, ETC. [bOOK III. it is not necessarily to be considered as an injury to the partner- ship, for which a joint action only can be maintained.' § 670. When one partner dies, the action must be brought in the name of the survivor, without joining the personal representa- tive of the deceased. Therefore, where trover was brought by the survivor of three partners, for the recovery of partnership goods, it was held not to be a' good objection in bar of the action, " that the plaintiff and the deceased partners were joint merchants, and that they were possessed of these goods as merchants, and iha.t, by the law of the land, there is no survivoi'ship between joint merchants," because the action must necessarily survive, though the interest doth not.^ §671. In actions in form ea; delicto, and yrhich are not for breach of contract, if a party who ought to join be omitted, the objection can only be taken by plea in abatement,^ or by way of apportionment of the damages on the trial ; and the defendant cannot, as in actions in form ex contractu, have the benefit of a nonsuit, or demur, or move in arrest of judgment, or support a writ of error, though it appear upon the face of the declaration, or other pleading of the plaintiff, that there is another party who ought to have joined.* On the other hand, it should seem, that, where the action is substantially and necessarily founded on a con- tract, the form of it in tort will not prevent the plaintiff from being nonsuited for the non-joinder of other persons inter- ested.^ ' Harris v. Bevington, 8 Carr. & Payne, 708 ; Robinson i'. Marchant, 7 Adol. & Ell. (n. s.), 918. ''.Kemp V. Andrews, Carth. 170. ^ See Gibson v. Stevens, 7 N. Hamp. 358, per Parker J. * 1 Chitty PI, (lOth Am. ed.), 66 ; Cabell v. Vanghan, 1 Saund. 291 g. ; Nelthorpe w. Dorrington, 2 Lev. 113; Blackburn v. Graves, 1 Mod. 102; Coryton v. Lithbye, 2 Saund. 116 ; Thompson v. Haskins, 11 Mass. 419; Wilson V. Gamble, 9 N. Hamp. 74 ; Converse v. Symmes, 10 Mass. (Rand's ed.), 379, note (a) ; Bradisli v. Schenck, 8 John. 151 ; Hall v. Adams, 1 Aiken, 166 ; Bell v. Layman,' 1 Monroe, 40; Wheelwright v. Depeyster, I John. 471 ; Gow Partn. (3d ed.), 136. Formerly, if one of two tenants in common brought an action, and disclosed that title in his declaration, it was ground to arrest the judgment. Hamon d. White, Sir W. Jones, 142. But see Lord Kenyon's observations on that case, in Addison v. Overend, 6 T. R. 766 ; and Lord EUenborough's, in Bloxam v. Hubbard, 5 East, 407. » 1 Saund. 291, k. [c] CH. v.] ACTIONS BY PABTNEBS. 649 § 672. If one of several part-owners of a chattel sue alone for a'tort, and the defendant do not plead in abatement, the other par(>owners may afterwards sue jointly, and perhaps severally, for the injury to their undivided shares ; and the defendant can- not plead in abatement to the latter action.^ In the cases re- ferred to, the chattel was wholly destroyed. But it may be laid down generally, that, subject to a plea in abatement, persons who are jointly interested in a chattel, and who have made a joint demand of it, may, notwithstanding, maintain separate actions of trover in respect of it, against a person who unjustly de- tains it? SECTION III. OF THE DECLARATION. § 673. There is little to be said on the form of the declaration. The plaintiffs must be described as carrying on trade under the name and firm of A., B. & Co., if such be the fact ; but it seems that any other additions, not bearing on the merits of the case, will be considered surplusage, and need not be proved.^ The omission in the declaration of the names or surnames of any of the plaintiffs was formerly ground of nonsuit,* but probably this rule will receive some qualification.^ • Addison v. Overend, 6 T. R. 762 ; Sedgwortli v. Overend, 7 T. B. 279v ^ Bleaden v. Hancock, 4 Carr. & P. 152. ^ Aguttar V. Moses, 2 Stark. 499. But it seems not to be necessary to. describe the defendants as partners. Tarlton v. Herbert, 4 Alabama, 359-.- See Davis v. Abbott, 2 M'Lean, 29. * Longridge v. Brewer, 1 Bing. 143. A firm cannot sue by its style alone. Roberts v. Rowan, 2 Harr. 314; Davis v. Hubbard, 4 Blackf. 60; Hughes V. Walker, 4 Blackf. 50 ; Crandall v. Denny, 1 Penn. 137 ; Seely v. Schenck,. id. 75 ; Bentley v. Smith, 3 Gaines, 1 70 ; Burns v. Hall, 2 Penn. 984 ; Tom- linson u. Burke, 5 Halst. 295 ; Norcross v. Clark, 15 Maine, 80 ; Livingston V. Harvey, 10 Ind. 218. But in an action by partners of the same surnama it is not error if it is not added to every Christian name. Chance v. Cham- bers, 1 Penn. 384. See 3 &-,4 Will. 4, c. 42, s. 11. ^ In Connecticut a suit n^ay be commenced by or against partners in the- name of the company, and the names of the partners may be inserted by 55 650 EIGHTS OF PARTNERS, ETC. [bOOK III. § 674. Where a surviving partner sues on a contract made with the partnership, the fact of his being surviving should appear on the face of the declaration.^ Although, however, he should expressly declare as surviving partner, he may in- clude in his declaration a count for a debt due to him in his own right.2 And he may unite demands due to him as the surviving partner of two firms.^ A surviving partner, although suing in respect of a partnership transaction, should sue in his own right, and not as a survivor when the cause of action did not arise be- tween the partnership and the person sued. Thus, A. and B. were partners. R. owed a sum of money to the firm of A. & B. ; A. died ; R.'s trustees then paid the money to X. It was held, that in an action against X., for money had received, B. ought to sue in his own right, and not as surviving partner of A. And BuUer J. said, not only that the action was properly brought, but that it could not have been brought in any other form.* When the surviving partner sues on a bill of exchange, indorsed to the firm in blank, it is not necessary for him to state that he sues as surviving partner ; for an indorsement in blank of a bill of ex- change conveys a joint right of action to as many as sue on the bill, or a separate right of action to him who alone sues.^ § 675. The joint interest in the subject of the action should ap- pear in the declaration. In an action on a guaranty, addressed to one of two partners, but made for the benefit of both, the dec- laration may state that the promises were made to both.^ In an action to recover the amount of goods supplied by a partnership, amendment within the first three days of the court. Stat. Conn. 1838, p. 77. In Virginia it has been held that a declaration in behalf of a partner- ship, by the name of the firm, without mentioning the names of the part- ners, is good after a verdict for the plaintiff on the general issue. Pate v. Bacon, 6 Munf. 219 ; Totty v. Donald, 4 Munf. 430; Barnet v. Watson, 1 Wash. 3 72. See Porter v. Creson, 10 Serg. & R. 257. ' Jell V. Douglas, 4 Barn. & Aid. 374 ; Israel v. SImonds, 2 Stark. 356 ; per Spencer J. in Holmes u. D'Carap, 1 John. 36 ; Gow Partn. (3d ed.), 131 ; Pickens v. Garnet, 2 Bay, 543; Hill v. M'Neil, 6 Porter, 29. 2 Slipper I). Stidstone, 5 T. R. 493 ; 1 Esp. 47 ; Gow Partn. (3d ed.), 132. ' Stafford v. Gold, 9 Pick. 533. * Smith V. Barrow, T. R. 476 ' Ord V. Portal, 3 Camp. 239. See Atwood r. Rattenbury, 6 Moore, 579. ° Walton V. Dodson, 3 Carr. & P. 162. CH. v.] ACTIONS BT PARTNERS. 651 the goods must be accurately described as belonging to the part- nership. Where the goods were described as the goods of A., and it was proved that, at the time the cause of action accrued, A. had a partner, B., who died before the action was brought, the variance was held to be fatal, although A. declared in his own name only, and not as surviving partner.^ § 676. Joint owners of property, insured for their joint use, and on their joint account, must in a declaration on the policy, aver their interest to be joint. They cannot recover upon a count averring the interest to be in one of them only.^ Thus, in Bell v. Ansley,^ the declaration was upon a policy of insurance, and the interest was averred to be in John Bell ; and the pohcy was stated to be made to and for the use and benefit, and on the account, of the said John Bell. The persons really interested were John Bell and his brother William Bell, and the policy was really made for their joint use and benefit, and on their joint account ; and the question was, whether, where several are jointly interested, and a policy is made on their joint account, it is sufficient to state that one of them was interested, and that the poUcy was made on his account ; and the Court of King's Bench were of opinion that it is not. Lord Ellenborough said, that though an action upon a pohcy might be brought in the name of the person who effected it, though he were not the person actually interested, yet the persons interested were so far looked upon as parties to the suit, that the declarations of any of them were admissible in evidence against the plaintiff; and what would be a defence against them was, in many instances, a defence against the plaintiff; and with a view to apprise the underwriter, whose declarations it might be material for him to be prepared to prove, and whose case he was to meet, he ought to be truly informed by the record for whose interest, and on whose behalf, the policy was made. That it certainly was material, also, in point of public policy and convenience, that a disclosure of the true interest meant to be covered by the policy should be made, in order to exclude the property of enemies from the benefit of British insurance ; and that, since the stat. 19 Geo. ' Ditehburn v. Spracklin, 5 Esp. 31. ^ Graves v. Boston Marine Ins. Co. 2 Cranoh, 419. ' 16 East, 141. 652 EIGHTS OF PARTNERS, ETC. [BOOK IH. 2, c. 3T, it had always been the practice to state the interest ac- cording to the truth. § 677. Lord Ellenborough, in the preceding case, took pains to distinguish it from the case of Page v. Fry,^ decided by the Court of Common Pleas. There the declaration averred " that certain persons, using trade and commerce tinder the style and firm of Messrs. Hyde & Hobbs, were at the time of loading the said corn on board the said ship as aforesaid, and at the titae of subscribing the said writing or policy of insurance, and from thenceforth until the time of the loss hereinafter mentioned, interested in the said corn to a large amount, to wit, to the amount of all the money ever insured thereon ; and that the said writing or policy of assur- ance so made in the name of the plaintiff was made to and for the use, risk, benefit, and account of them, the said Messrs. Hyde & Hobbs, to wit, at, &c." It appeared at the trial, that Hyde & Hobbs had, through the agency of the plauitiff, purchased a certain quantity of corn on their own account ; that on the 27th December, 1798, they informed the plaintiff by letter, that, think- ing the engagement might perhaps be too large for themselves, they had offered another house, of the name of Hacks, a joint concern in the corn, which the latter had accepted ; and at the same time directed the plaintiff to effect an insurance on the cargo, which he accordingly did, on the 28th January, 1799. The in- voices were made out to Hyde and Hobbs, and payment for the cargo was made by them. Upon this evidence, the Court of Common Pleas decided that the plaintiff had a sufiicient interest throughout the entirety of this cargo, notwithstanding other per- sons had a beneficial interest in a part, to support the averment in this declaration. Judging, however, from the language of Lord Ellenborough m Bell v. Ansley, the correctness' of this decision seems questionable.^ § 678. But although it is necessary that the real interest 1 2 Bos. & Pull. 240. ^ And it seems that the case of Perehard v. Whitmore, 2 Bos. & Pull. 155, n., could not now be supported. There a declaration on a policy was held good, which stated " that A. and B., until and at the time of the loss; were interested," &c. Whereas, after the insurance, but before the loss, C. was introduced as a partner with A. and B., and became interested in the goods. See Hughes, 467 ; and see Rhind v. Wilkinson,' 4 Taunt. 237. CH. V.J ACTIONS BY PARTNERS. 653 should appear on the declaration, it is sufficient to state " that A., B., C. and D., or some or one of them, were or was inter- ested," &c., and " that the insurance was made for the use and benefit, and on the account, of the person or persons so inter- ested." ^ And an averment that A., B., C, D., and certain persons trading under the firm of E. & Co. were interested, is sufficient on motion in arrest of judgment, whatever efiect the uncertain description of the persons in the firm might have on special demurrer.^ And where A. and B., trading under the firm of A. & Co., engaged in an adventure, and afterwards received C. and D. as sharers therein, and a policy was effected on account of A. & Co. ; in an action on the policy, it was left to the jury whether, under the words A. & Co., A. and B. only, or whether all the adventurers were included.^ It is not necessary to specify in what proportion several persons are interested.* In an action on a policy by the assured, an allegation that the policy has been effected for the plaintiff by A., B. and C. will be satisfied by proof that it was effected by the firm of A. & B., there being in fact two firms which have two members in common.^ § 679. Partners may bring an action for a libel against them in respect of their business, without showing the proportion of their respective shares, or setting out special damage. In Forster V. Lawson,^ the declaration charged the defendant with having libelled the plaintiffs, who were bankers and copartners, by pub- fishing of them that they had stopped payment. The defendants demurred to the declaration, and in support of the demurrer, it was contended that the plaintiffs could not join in an action of tort, unless they disclosed a joint interest and joint damage, and that a recovery in this action would be no bar to a separate action by each of the partners for his share in the alleged damage. But the court overruled the demurrer, observing, that it was difficult to see how there could be any separate damage ; the business ' Reg. Gen. Hil. T. 1834, Assumpsit, 4. ' Wright V. Welbie, 1 Chit. 49. See Mellish v. Bell, 15 East, 4. ' Carruthers v. Shedden, 1 Marsh. 416. * Ibid. ' Dickson v. Lodge, 1 Stark. 227. ' 3 Bing. 453 ; U Moore, 360. See Coryton v. Lithebye, 2 Saund||116, a ; Ward v. Smith, 4 Carr. & P. 302. 55* 654 RIGHTS OF PARTNERS, ETC. [eOOK III. injured was the joint business, and the libel only affected the plaintiffs through their business. That, as to proportions of in- terest in each partner, it was a matter with which the defendant had nothing to do. Any compensation they might recover would belong to them generally, and it was nothing to the defendant how it might be divided among them. § 680. In connection with this subject, we may observe that it was ruled in a late case, that, in a joint action by two partners for a libel, damages cannot be given for an injury to their private feelings, but only for such injury as they may have sustained in their joint trade or business. ^ Where two persons bring a joint action for maliciously holding them to bail, the complaint in the declaration must be confined to the expenses they were jointly put to in procuring their liberty.^ SECTION IV. OF PLEAS IN BAK. § 681. The defendant must plead specially, in bar of an action by copartners, all matters in confession and avoidance of the con- tract ; and where the action is brought on a bill of exchange or promissory note, he must always plead specially. Thus, in an action on a covenant contained in partnership articles, the defend- ant may crave oyer of the articles, and plead the illegality of the partnership.^ So, in an action of debt on a bond, by one partner against another, the defendant may crave oyer of the bond, and plead that the condition was a usurious contract of partnership.* Again, to an action on a bill of exchange by partners, the defend- ant, if he wishes to set up a partnership between himself and the plaintiffs, should plead in bar that the promises were made by him jointly with one of the plaintiffs ; ^ though in other cases, it is ap- ' Haythorn v. Lawson, 3 Carr. & P. 190; Story Partn. § 257. ' Collins V. Barrett, 3 Bing. 456, cited. ' Lees V. Smith, 7 T. E. 338. %Iorse V. Wilson, 4 T. R. 353. ^ Mainwaring v. Newman, 2 Bos. & Pull. 120 ; Reg. Gen. H. T. 1834. CH. V.J ACTIONS BY PARTNERS. 655 prehended that he might give this in evidence under the general issue.' § 682. Again, the defendant may plead in bar the bankruptcy of one of the copartners.^ So, probably, he might plead in bar that one of them is an alien enemy, or attainted of felony.^ If the action be brought on a specialty, and sometimes even in assumpsit the defendant may plead a release by one partner ; but a release , by one partner of all actions " on his own account " will not be a sufiScient bar to the action.* And if A; be bound to B. and C, solvend' the moiety to B., and the other to C, the release of one shall not prejudice the other ; and if there are several covenants in the same deed, one covenantee will not be bound by a release given by the others.^ § 683. It may here be remarked, that, to an action on a bond, a plea that the debt has been assigned is bad ; for an assignment of a chose in action is, at law, no discharge of an obligation. Therefore, to an action of debt on a bond entered into by the de- fendant, W., as surety for J. S., to secure the amount of his over- drawings on the plaintiffs, a plea was held bad which stated, that, after the making of the bond, the partnership of the obligees was dissolved, and a new partnership formed, by the retiring of one of the old partners and admitting a new partner ; that with the new partnership, W., with the privity of the retired partner, kept an account, and that at the time of the dissolution a balance was due from W. but not demanded by the partnership, but on the contrary that the plaintiffs agreed that it should be, and that it was trans- ferred to the account between W. and the new partnership.^ § 684. Where tender has been made to any of the partners, it 1 Post, § 691. ^ Eckhardt v. Wilson, 8 T. R. 140. See Bird v. Pierpont, 1 John. 118. ' Bac. Abr. Abatement (N.) ; Com. Dig. Abatement (K.) ; Co. Litt. 128, b. ; Bullock v. Dodds, 2 Barn. & Aid. 258 ; Harmer v. Kingston, 3 Camp. 153. * Stokes V. Stokes, 1 Ventr. 35 ; Lev. 272 ; 2 Keb. 630. A bond given by one of several partners, to a debtor of the firm, to pay the debt and save the debtor harmless from the same, cannot be pleaded or given in evidence as a release, In an action by the firm against the debtor. Emerson v. Baylies, 19 Pick. 55. * Moore, 64; see Wats. Partn. 226. » Parker v. Wise, 6 Mau. & Sel. 239. 656 UIGHTS OF PARTNERS, ETC. [bOOK HI. may like-wise be pleaded in bar of an action by the firm ; but such tender should be described as made to the firm. Where A., B. and C, had a joint demand, and C. had a separate demand on D., and D. offered A. to pay him both the debts, which A. refused, "without objecting to the form of the tender, on account of his be- ing entitled only to the joint demand ; it was held, that D. might plead this tender in bar of an action on the joint demand, and should state it as a tender to A., B. and C.^ Where a libel has been pubhshed against partners in a matter connected with their joint trade, and one is more especially damaged, it seems that a verdict, recovered-in a joint action by all the partners, could not be pleaded in bar of a separate action against the same defendant by the part- ner more particularly aggrieved.^ If the action be brought within six years after the cause of action has accrued, the defendant may plead the statute of limitations, although one partner may have been abroad within the interval.^ SECTION V. OF THE EVIDENCE. § 685. In actions by partners to recover a partnership demand, unless the contract which is the foundation of the action has been expressly made with all the members of the firm,* or unless the action be brought on a bill indorsed in blank, in which case no joint interest need be proved,^ it will be incumbent on the plaintiffs to prove that they all were partners at the time of the contract ; ^ ' Douglas II. Patrick, 3 T. R. 683. ° Foster v. Lawson, 11 Moore, 360. " Perry v. Jackson, 4 T. R. 516. * Evans v. Mann, Cowp. 569. Pleading the general issue to an action brought by two persons, alleging themselves to be partners under a particu- lar name, admits the existence of some partnership of that name ; still, it must be proved that the plaintiffs were the persons composing that partner- ship at the time the contract was made. Norcross v. Clark, 15 Maine, 80. ' Ord V. Portal, 3 Camp. 239 ; 2 Greenl. Ev. § 478. " Camden v. Anderson, 5 T. R. 709 ; 2 Greenl. Ev. § 478.' This will not be dispensed with though the defendant pleads the general issue. Where an action is brought by two persons, alleging themselves to be partners under CH. v.] ACTIONS BY PAETNEKS. 657 otherwise, as we have seen, they will be nonsuited.^ Thus, in an action on a bill made payable or indorsed specially to the firm, the promise being only to pay a certain firm, strict evidence must be given that the firm consists of the persons who are plaintiffs.^ And if a note be payable to a firm of A., B. & Co., and A. B. and C. D. sue thereon, they must prove that they were the com- ponent members of the firm at the time the note was given.^ And even when a bill is indorsed to a firm in blank, it has been held that, under special circumstances, they who sue upon the bill must show that they are the persons constituting the firm to which it is indorsed. Thus, where a bill of exchange was, by the direction of the payee, indorsed in blank, and delivered to A., B. & Co., bankers, on account of the estate of an insolvent, which was vested in trustees for the benefit of his creditors. Lord EUenbor- ough held that A. and B., two of the members of the firm and also trustees, could not, conjointly with a third trustee, not a mem- ber of the firm, maintain an action against the indorser without some evidence of the transfer of the bill to them as trustees by the firm, by delivery or otherwise. The court at the same time observed, that, had it not been for the evidence of the particular transfer to A., B. & Co., an indorsement in blank might have en- titled the parties who brought the action to recover.* Generally, however, where a bill is indorsed to a firm in blank, it is not nec- essary that all the members should sue ; and therefore, if they sue separately, it is unnecessary that they should prove their part- nership.^ § 686. Partnerships are usually proved by the oral testimony a particular name, pleading the general issue doen not admit that the plain- tiifs were the persons composing that partnership when the contract declared on was made ; although it is an admission of the existence of some partnership of that name. Norcross v. Clark, 15 Maine, 80. See Ardley v. Russell, 1 Browne, 145. * Ante,% 667. «■ ° Oni u. Portal, supra; M'Gregor v. Cleveland, 5 Wendell, 475 ; Ege v. Kyle, 2 Watts, 222 ; Teller v. Muir, 2 Penn. 749. See Smith v. Hunt, 2 Stewart, 222. ' Waters v. Paynter, Chitty Bills, 389. * Machell V. Kinneai-, 1 Stark. 490. ' Ord u. Portal, 3 Camp. 239; Atwood v. Rattenbury, 6 Moore, 579. See ante, §§ 655, 674. 658 RIGHTS OF PAKTNBES, ETC. [BOOK III. of clerks or other agents or persons who know that the alleged partners have actually carried on business in partnership ; ^ and it it is unnecessary to produce any deed or other agreement by which the copartnership has been constituted.'^ And, if a witness called by the partner to prove the partnership is unable at the moment to specify the several names of the partners, a number of names, containing those of the partners among others, may be suggested to him for the assistance of his memory.^ § 687. We have already noticed that a mere nominal partner, having no interest in the partnership, is a competent witness for the plaintiffs to prove a contract made between the defendant and the plaintiffs, in the joint names of the plaintiffs and the nominal partner.* And it has been held that a person who has purchased from the plaintiff an interest in the contract on which the action is brought is a competent witness to prove the contract.^ By reason ' 2 Greenl. Ev. § 479. In a suit by partners their partnership may be proved by persons who have dune business vifith them as partners ; and if it be shown that they were doing business as partners before and after the time of the date of an instrument on which they sue, this is proper evidence to be left to the jury to establish the fact that they were so at that time. Gilbert V. Whidden, 20 Maine, 367. It was further held, in the same case, that if in transacting business the plaintiffs spoke of each other as partners in con- nection with their business, such declarations may be given in evidence in their favor, to prove their partnership. This the court said would be " no otherwise creating evidence for themselves, than is done by other acts, indi- cating the connection. If they had entered into partnership by deed, that would be creating evidence, made expressly for that purpose, and yet it is admissible to prove the fact." But where such declarations of the alleged partners are unaccompanied by acts, and unconnected with any of their dec- larations proved by the other party, they are inadmissible in their own favor. Phillips v. Purington, 15 Maine, 425. In a suit by Timothy Gilbert and Henry Safford, testimony that the deponent know II. SafFord as the partner of Timothy Gilbert is competent evidence to go to the jury to prove the identity. Gilbert v. Whidden, 20 Maine, 3G7. ^ Aldersan v. Clay, 1 Stark. 40G ; Widdefield v. Widdefield, 2 Binn. 245 ; Bryer v. Weston, 16 Maine, 20 1 ; Forbes «. Davison, 11 Vermont, 660. But see Bonaffe o. Fenner, 6 Smedes & Marsh. 212, eked post, § 769, in note. * Accero v. Petroni, 1 Stark. 100; 1 Greenl. Ev. § 435 ; 2 id. § 479. * Ante, § 662 ; Parsons;;. Crosby, 5 Esp. 199 ; Glossop o. Colman, 1 Stark. 25. ' Mawman v. Gillett, 2 Taunt. 325, n. See Barstow v. Gray, 3 Greenl. 409. In an action against a certificated conveyancer for negligence in mana"- CH. V.J ACTIONS BY PAETNERS. 659 I also of the necessity of the thing, a broker who is to have a share of the profits, or who is to have all he can get beyond a certain sum, is a good witness for the principal in an action brought by the latter for goods sold and delivered.^ But, in general, a co- partner with the plaintiff cannot be admitted as a witness to prove the contract, not only for reasons connected with the pleadings, but also on the ground of interest.^ And it appears, that he can- not be rendered competent by the provisions of the statute 3 & 4 Will. 4, c. 42, that statute not applying to partners.^ It has even been held, that in an action on a charter-party, a person who is a partner with the plaintiffs, though not one of the registered owners, is not a competent witness for the plaintiffs, unless cross releases are executed between him and them.* A dormant partner is a competent witness for his copartner, in an action by the latter, if he releases his interest in the subject of the suit.^ But in an ac- tion brought by a surviving partner, as such, the widow of the deceased partner is not a competent witness for him, her testimony going to increase the fund, of which she is entitled to a distributive share. ^ Nor will a release from her to him of all her interest in the particular claim render her competent.'^ ing the purchase of an annuity for the plaintiff, a joint purchaser is a compe- tent witness for the plaintiff. Rothery v. Howard, 2 Stark. 68. 1 Benjamin v. Porteus, 2 H. Bl. 590; Dunlap's Pale.y's Agency, 319, 320, 358, 359, and notes ; Vanderburg v. Hull, 20 Wendell, 70. See Curcier v. Pennouk, 14 Serg. & E. 51 ; Pewtress v. M'Cullum, cited Tamlyn, Law of Ev. 283. 2 Black V. Marvin, 2 Penn. 138 ; Bill v. Porter, 9 Conn. 23.. ' Jackson v. Galloway, 8 Carr. & Payne, 480. And see Jesus Coll. v. Gibbs, 1 You. & Coll. 155; Braithwaite v. Coleman, 2 Harrison's Index, 1046 ; see post, chap. 6, sec. 8. By 3 & 4 Will. 4, c. 42, s. 26, if any witness be objected to as incompetent, on the ground that the verdict or judgment in the action in which it shall be proposed to examine him would be admis- sible in evidence for or against him, such witness shall, nevertheless, be ex- amined ; but in that case a verdict or judgment in that action in favor of the party on whose behalf he shall have been examined shall not be admissible in evidence for him, or any one claiming under him ; nor shall a verdict or judgment against the party on whose behalf he shall have been examined be admissible in evidence against him or any one claiming under him. * Jackson v. Galloway, supra; 1 Greenl. Ev. § 427. * Clarkson v. Carter, 3 Cowen, 84 ; 2 Greenl. Ev. § 486. See Barstow v. Gray, 3 Greenl. 409 ; Crucier v. Pennock, 14 Serg. & R. 51. * Allen V. Blanchardj 9 Cowen, 631. ■< Ibid. 660 RIGHTS OF PARTNERS, ETC. [bOOK III. § 688. Evidence of the partnership having been given, the dec- laration of one partner is evidence against another partner,^ and will be good ground of defence at the trial ; and this even thoiigh such declaration goes to a denial of the joint right of action, the partnership being conclusively admitted by the form of action.^ Therefore, where a contract was made by one of several partners in his individual capacity, who at the time declared that the sub- ject-matter of the contract was his property alone, it was held that this declaration was evidence agamst the other partners, and that a joint action by the firm was not maintainable.^ So, where it ap- peared on the record that the agreement, out of which the cause of action arose, was made by the plaintiff on behalf of himself and other proprietors, it was held that declarations made by one of such proprietors were admissible evidence on the part of the de^ fendants.* So in an action brought by copartners, one of the plaintiffs, being wilhng to do so, was permitted to give evidence for the defendant, and thereby to defeat the action ; for it was said, that, if his declaration before action brought was available against his copartner, it must be equally available at the trial.^ On the same principles, if, upon the dissolution of the partnership of A. and B., it was agreed that A. shall receive some of the partner- ship debts, and B. others, in an action by B. against a debtor of the firm, A. may be called to prove that he has received payment from the defendant, according to the agreement.^ ' Kobson V. Curtis, 1 Stark. 78 ; 1 Greenl. Ev. §§ 172, 174. " 1 Greenl. Ev. § 177. ' Lucas V. De la Cour, 1 Mauls & Sel. 249. » Kemble v. Farren, 3 Carr. & Payne, 623. ' Norden v. Williamson, 1 Taunt. 378 ; Moddewell v. Keever, 8 Watts & S. 63. See 1 Phil. Ev. (Covven & Hill's ed.), 72 and note, where it is said that the case of Norden v. Williamson appears to be the only authority as to the admissibility of one co-plaintiflF against another. This case was named in Schermerhorn v. Suhermerhorn, 1 Wendell, 1 25. The case of The Su- pervisors of Chenango v. Birdsall, 4 Wendell, 453, 457, seems to be directly opposed to Norden v. Williamson. See 2 Phil. Ev., Cowen and Hill's notes, 142, note (129). As to the admissibility of parties to the record, see 2 Daniell Ch. Pr. (Perkins's ed), 1035, 1036, and notes; Bull v. Strong, 8 Metcalf, 8, 10 ; Commonwealth v. Marsh, 10 Pick. 57 ; Fox v. Whitney, 16 Mass. 121 ; Supervisors, &c. v. Birdsall, and Schermerhorn u. Schermerhorn, ubi supra ; post, §§ 787-796, and notes. ° Evans v. Silverlock, 1 Peake, 31. See Austin v. Walsh, 2 Mass. 401. CH. v.] ACTIONS BY PARTNERS. 661 § 689. In an action of assumpsit or debt brought by partners, the defendant may give in evidence a release by one of them. Where an action was brought by several partners, as indorsees of a promissory note, against the defendant as indorser, and it ap- peared in evidence that one of the partners had discharged a prior indorser by a deed of composition, it was held that such deed operated as a release to the defendant.^ A receipt signed by one partner may likewise be given in evidence in defence to an action by the firm. But as a receipt is on\j prima facie evidence of payment, the partners may rebut that evidence by showing that it was fraudulently given by their co-plaintiff.^ § 690. Where the defence is, that the partnership of the plaintiffs was dissolved before the cause of action accrued, and, therefore, that there is a misjoinder, the defendant may put in evidence the Gazette containing, a notice to that effect, or he may put in a written notice signed by the parties. It has been ruled, that a notice of the latter kind, drawn up for the purpose of being inserted in the Gazette, is sufficient evidence of dissolution for all purposes against the parties signing, and that no objection, can be raised in such case as to the mode of dissolution, inasmuch as the partnership will be presumed to have been dissolved by competent means.^ It must be observed, however, that, for the purposes of evidence just mentioned, instructions for advertising the dissolu- tion, written in the form of an agreement, and signed by the par- ties, require an agreement stamp,* though a notice of dissolution,, in the Gazette may be given in evidence without a stamp.^ § 691. Where an action of assumpsit, other than on a bill c^f exchange or promissory note, is brought by A. against B., the- latter may, under the plea of non assumpsit, give evidence that the subject-matter of the action has arisen out of partnership So A. migTit be called to prove that he had received payment contrary to the terms of the agreement, and the defendant would be discharged. See 4 Carr. & Payne, 108. '■ Ellison V. DezeU, 1 Selw. N. P. 364 ; Gow Partn. (3d ed.), 60, 61. ^ Farrar v. Hutchinson, 1 Per. & D. 437; Brown v. Lawrence, 5 Conn. 397 ; Gow Partn. (3d ed.), 61 ; Gram v. Cadwell, 5 Cowen, 489 ^ Evering- ham V. Ensworth, 7 Wendell, 326. « Doe V. Miles, 4 Camp. 373. ■ * May V. Smith, 1 Esp. 282. ^ Jenkins v. Blizard, 1 Stairk. 420. 56 662 RIGHTS OF PARTNERS, ETC. [BOOK III. transactions between A. and B., and thereupon the plaintiff may be nonsuited. 1 Where the defence is that the promises were made to the plaintiff jointly with C, the defendant may call upon C. to prove this defence.^ § 692. As to evidence in actions of tort by partners, there is httle to be said. It is obvious, however, that, in an action by partners for a tort, it must be made clear to the jury that the tort affected the plaintiffs jointly. In Solomons v. Medex,^ the decla- ration alleged that the defendant spoke of and concerning the plaintiffs, in their trade, these words : " You (meaning the said partners), have bought a pearl necklace, which was stolen from me, for less than one seventh of the value. WiU you give up the necklace, otherwise I will take you to Bow Street ? " It ap- peared that the three plaintiffs carried on business in partnership as silversmiths, and that the words were spoken by the defendant in their shop, and addressed to J. S. (one of the plaintiffs), alone, the other plaintiffs not being present. Lord Ellenborough held this evidence insufficient to support the declaration, and nonsuited the plaintiffs. JSECTION VI. OF INDICTMENTS BT PAKTNKES. § 693. ATew remarks relative to indictments by partners should not be omitted. By the 7 Geo. 4, c. 64, s. 14, it is enacted, " That in any indictment or information for any felony or misde- meanor, wherein it shall be requisite to state the ownership of any property whatsoever, whether real or personal, which shall belong to, or be in the possession of, more than one person, whether such persons be partners in trade, joint tenants, parceners, or tenants in conmaon, it shall be sufficient to name one of such persons, and ^ Pearson v. Skelton, 1 Mees. & Wels. 504 ; Worrall v. Grayson, 1 Mees. & Wels. 1G6. ^ Davies u. Evans, 6 Carr. & Payne, 619. So, in a case where several sue as partners, one of tlie plaintiffs, consenting to be sworn as a witness, is competent for the defendant, although his copartners may object to him. Cunningham v. Carpenter, 10 Alabama, 109. 2 1 Stark. 181. See Gow Partn. (3d ed), 117, 118. CH. v.] ACTIONS BY PARTNERS. 663 to state such property to belong to the person so named, and an- other or others, as the case may be ; and whenever, in any indicts ment or information for any felony or misdemeanor, it shall be necessary to mention, for any purpose whatsoever, any partners, joint tenants, parceners, or tenants in common, it shall be sufficient to describe them in the manner aforesaid ; and this provision shall be construed to extend to all joint-stock companies and trustees." But although it is not necessary to name all the partners, yet, where there are other partners, that fact should appear in the in- dictment, otherwise the prisoner must be acquitted. ^ § 694. It is not necessary that the property of the thing taken should be the strict legal property of the partners. Thus, in Scott's case,2 a father and son carried on business as farmers ; the son died intestate, and his wife shortly after. The father then carried on the business, for the joint benefit of himself and his grandchildren, his son's next of kin. Some of the sheep were stolen, and were laid as the property of the father and his son's children, and it was held to be rightly laid. And actual posses- sion is sufficient. D. and C. were partners. C. died intestate, leaving a widow and children. From the time of his death, the widow acted as partner with D., and attended the business in the shop. Some time after C.'s death, goods were stolen. A descrip- tion of them in the indictment, as the goods of D. and the widow, was held correct.* § 695. By the 7 & 8 Geo. 4, c. 29, s. 47, founded on 39 Geo. 3, c. 85, it is enacted, " That if any clerk or servant, &c., shall receive or take into his possession any chattel, money, or valuable security, for, or in the name, or on account of his master, and shall fraudulently embezzle the same, every such offender shall be deemed to have feloniously stolen the same from his master, although such chattel, &c., was not received into the possession of such master otherwise than by the actual possession of his clerk, servant," &c. Now, as a servant in the employment of A. and B., who are partners, is the servant of each, it has been held, that if he embezzle the private money of one, he may be charged, under the above enactment, as the servant of that individual part- » See Arch. Peel's Acts, 11. ' Kuss. & Kyan Cr. Ca. 13. ' Rex vi Gaby, Russ. & Ryan, 178. * Rex v. Leech, 3 Stark. 70. CHAPTER VI. OF ACTIONS AGAINST PARTNERS. SECTION I. OF PROCESS. § 696. All personal actions in the superior courts of law must now be commenced by writ of summons.^ The ordinary process by which this writ is followed is simply that which is necessary to compel an appearance, or serviceable process ; but it may also be the foundation, in certain cases, of bailable process. First, of process to compel an appearance. The form of the writ of sum- mons is contained in the statute 2 Will. 4, c. 39, and requires the defendant, within eight days of service of it, to enter an appear- ance ; or, on default thereof, to take notice that the plaintiff may cause an appearance to be entered for him, and proceed to judg- ment and execution. The words used in the form of the writ, as prescribed by the act of Parliament, are, " may cause an appear- ance to be entered for you ; " and the word " you," in the case of several defendants, has been held equivalent to " you-and each of you." 2 § 697. It seems that each of the defendants should be served personally with a copy of this writ.^ But it may be remarked, ' Stat. 1 & 2 Vict. c. 110, s. 2. But see some special exceptions men- tioned in Arch. Pr. Book 1, edit. Cliitty. 2 Enp;Iehearf v. Eyre, 2 Dowl. Pr. C. 145. ^ Arch. Pr. vol. 1, p. 117 ; Tidd Pr. 169. A notice of suit given to one partner is not sufficient to bind the others. Demoss v. Brewster, 4 Smedes & Marsh. 661 ; Pittman v. Planters' Bank, 1 How. (Miss.), 527. But see CH. VI.] ACTIONS AGAINST PARTNERS. 665 that before the Uniformity of Process Act,^ a writ of venire fa- cias ad respondendum served on one of several partners at the counting-house of the firm, with copies left for the absent partners as service on them, was held to be a sufficient service ; ^ though a venire issued against one of several partners who was abroad, for a separate debt, could not be served at the counting-house of the partnership.^ If the defendant, or, in case of several defendants, if all of them be not served with the copy of the writ of sum- mons within four calendar months from the day of the date of it, the plaintiff may continue the writ by and sue out an alias writ of summons, and after that a pluries, as the case may require, until the defendant, or all the defendants, be served.'* § 698. It has been said, that, if an action be brought against several partners, one may enter an appearance for the rest, which may in its consequences, lead to judgment against all.^ But one Devall V. Burbridge, 6 Watts & S. 529. A partner cannot acknowledge service of a writ for his former partner, after a dissolution of the partner- ship, where the writ is sued out against both on a partnership liability. De- naott V. Swaim, 5 Stew. & Port. 293. And service of process upon one partner of a firm, after a dissolution, will not authorize a judgment against all the partners. Duncan v. Tombeckbee Bank, 4 Porter, 181. > 2 Will. 4, c. 39. ' Dwerryhouse v. Graham, 3 Price, 266. ' ' Petty V. Smith, 2 You. & Jerv. 111. * Archb. 114 ; Christie v. Walker, 8 Moore, 33. * Per Dampier, arg. Harrison v. Jackson, 7 T. E. 207. In a Pennsyl- vania case an appearance by one partner for himself and all his copartners was held to be a good appearance, it being an act consistent with the gen- eral authority of a partner. Taylor v. Coryell, 12 Serg. & K. 243. See Hills V. Ross, 3 Ball. 331. So, in Vermont, it was held that, when a suit is commenced against a firm, one of the partners has power to employ an at- torney to attend to the suit on the part of the defendants ; and an appear- ance in the suit entered by the attorney thus employed, will be binding and conclusive upon the other partners. Bennett v. Stickney, 17 Vermont, 53 1 ; Spalding v. Swift, cited 17 Vermont, 533. But it was held in South Caro- lina that one partner cannot, after the termination of the partnership, au- thorize an appesirance for another. Haslet v. Street, 2 M'Cord, 310 Loomis V. Pearson, Harper, 470. And in Massachusetts it has been de- cided, that, even during the continuance of the partnership, one partner has no implied power to enter an appearance in a suit, except for the part- nership, and cannot, by such appearance, bind a partner, personally and individually, who is not within the jurisdiction, and has not been served 56* 666 EIGHTS OV PARTNERS, ETC. [bOOK III. partner cannot be compelled to enter an appearance,^ or, where the process is bailable, to give bailfor his copartners. Therefore, if any of the copartners, though resident in England, either ab- scond, or, for other reasons, cannot be made to appear to the writ of summons, the plaintififrmust issue a writ of distringas against them. § 699. The writ of distringas is authorized by the statute 2 Will. 4, c. 39, by which it is enacted, that, in case it shall be made appear by aflSdavit, to the satisfaction of the court out of which the process issued, or, in vacation of any judge of any of the superior courts, that any defendant has not . been personally served with the writ of summons, and has not, according to the exigency thereof, appeared to the action, and cannot be compelled so to do without some more efficacious process, then it shall be lawful for such court or judge to order a writ of distringas to be issued, directed to the sheriff of the county wherein the dwelling- house or place of abode of such defendant shall be situate, or to the sheriff of any other county, or to any other officer to be named by such court or judge, in order to compel the appearance of such defendant. The act then, after providing for the form of the writ, directs that the writ, with the notice attached, or a copy thereof, shall be served on such defendant, if he can be met with, or if not, shall be left at the place where such distringas shall be executed ; and that a true copy of every such writ and notice shall be delivered together therewith to the sheriff or other officer, to whom such writ shall be directed ; and that every such writ shall be made returnable on some day in term, not being less than fifteen days after the teste thereof, and shall bear teste on the day of the issuing thereof, whether in term or in vacation. A notice is subscribed to this writ, stating, that in default of the defend- ant's appearance within eight days after the return of the writ, the plaintiff will cause an appearance to be entered for him, and proceed thereon to judgment and execution ; but if it is the plain- tiff's intention to proceed to outlawry, the notice specifies that, in default of appearance before mentioned, the plaintiff will cause proceedings to be taken to outlaw the defendant. with process. Phelps v. Brewer, 9 Gushing, 390. See D'Arey v. Ketchum, 11 Howard (U. S.), 165. » Haslet V. Street, 2 M'Cord, 310. CH. VI.] ACTIONS AGAINST PAKTNEKS. 667 § 700. The act whidi has been referred to ^ further provides, that, if the writ of distringas shall be returned non est inventus and nulla bona, and the party suing out such writ shall not intend to proceed to outlawry or waiver according to the authority there- ' inafter given, and any defendant against whom such a writ of dis- tringas issued shall not appear at or within eight days inclusive after the return thereof, and it shall be made appear by affidavit, to the satisfaction of the court or judge, that due and proper means were taken and used to serve and execute such writ of distringas, it shall be lawful for such court or judge to authorize the party suing out such writ to enter an appearance for such de- fendant, and to proceed thereon to judgment and execution. § 701. It is further enacted,^ that, upon the return of non est inventus and nulla bona, as to any defendant against whom such writ of distringas as herein before mentioned shall have issued, whether such distringas shall have issued against such defendant only, or against such defendant and any other person or persons, it shall be lawful to proceed to outlaw or waive such defendant by writs of exigi facias and proclamation, and otherwise, in such and the same manner as might, at the time of passing the statute, be lawfully done upon the return of non est inventus to a pluries writ of capais ad respondendum, issued after an original writ : Pro- vided, that every such writ of exigent proclamation, and other writ, subsequent to the writ of distringas, shall be made retumar ble on a day certain in term, &c. It appears, therefore, from this act, that the distringas issues for one of two purposes ; either to compel an immediate appearance, or to compel an appearance by a more circuitous mode, namely, by process of outlawry,^ and the notice affixed to the writ should state which of these proceed- ings the plaintiff means to take ; for an order for the distringas will not be granted in the alternative, to compel an appearance, or to proceed to outlawry.* § 702. If a defendant be abroad, it has been held to be nuga- tory to issue a common distringas, to compel his appearance, and therefore, in such case, outlawry will be the only process.^ There- ' Sec. 3. " Sec. 5. ^ See per Lord Alvanley, Morely v. Strombom, 3 Bos. & Pull. 254.' * Eraser v. Case, 9 Bing. 464 ; 2 Moore & Scott, § 702. ' Sampson v. Lord Graves, 2 Dowl. Pr. C. 10; Partridge v. Wallbank, 2 Mees. & Wels. 893. 668 EIGHTS OF PARTNERS, ETC. [BOOK III. fore, in an action against partners, where one partner is abroad, and the others refuse to enter an appearance for him, and the plalntifiF is desirous to compel his appearance, he should issuea distringas, with a view to his outlawry, and if the sheriff return non est inventus and nulla bona as to him, the plaintiff may pro- ceed in the outlawry, and, indeed, must do so ; for it seems that, till the outlawry is completed, he cannot pursue his action.^ But unless the plaintiff is desirous to compel the appearance of the partner resident abroad, it should seem that he may proceed solely against those who are resident in England.^ For by the stat. 3 & 4 Will. 4, c. 42, s. 8, the defendant to an action cannot plead the non-joinder of a co-defendant in abatement, unless it is stated in the plea that the defendant whose name is omitted is resident within the jurisdiction, and an affidavit be filed verifying the plea, and stating with convenient certainty the place of residence. If the defendant is not abroad, although not forthpoming, a distringas for outlawry will not be allowed.^ ' 1 Tidd Prao. 424 ; Sheppard v. Bailie, 6 T. R. 327. ^ A separate action may be maintained in Maine against one of two joint promisors, if the other have neither domicil nor property in that State. Den- nett !). Chick, 2 Greenl. 191. So in Massachusetts, where several defend- ants are sufed on a joint contract, and sortie of them are out of the State, having no usual place of abode within the State, at which a summons might be left, the plaintiff" may cause his writ to be served on those within the State, and proceed only against them for the breach of contract by all. Tap- pan V. Bruin, 5 Mass. 193. In this case, Parsons C. J., said : '' It has been an immemorial practice in the service of a writ sued on contract against two or more defendants, if some of the defendants are without the jurisdic- tion of the Commonwealth, so that their bodies cannot be arrested, and hav- ing no usual place of abode within the State, at which the summons may be left, to cause the writ to be served on the defendants within the State, and to proceed only against them for the breach of the contract by all the de- fendants." " From the frequency of the circumstance of joint debtors hav- ing been found to live in different States, this practice is exceedingly con- venient ; and no injustice is done, because, if judgment had been recovered against all the debtors, the plaintiff" might have satisfied it out of the defend- ants against whom it is in fact recovered. This practice originated from necessity, as no mode of service is provided by our laws upon a debtor with- out the State, who has no place of abode or property within it." See, also, Call V. Hagger, 8 Mass. 423. Provision is made for such cases by Mass. Eev. Stat, eh. 92, § 12. See Southmayd v. Backus, 3 Conn. 474 ; Wilson V. Niles, 2 Hall (N. Y.), 3.'58 ; Parker v. Danforth, 16 Mass. 299. ' Eraser v. Case, 9 Bing. 464. CH. VI.J ACTIONS AGAINST PARTNERS. 669 § 703. The separate property of one partner cannot be dis- trained to compel the appearafice of the other. And where an action had been commenced against two partners, one of whom resided abroad, and the other, who was resident here, appeared for himself only, the Court of Common Pleas set aside a distrin- gas and subsequent proceedings thereon against the latter defend- ant, and ordered the issues levied upon his separate property to be restored. § 704. As to hcdlahle process, it has been already stated that all personal actions must now be commenced by a writ of sum- mons. The writ of capias, therefore, as a means of commencing the action, is now abolished,^ and no person can be arrested on mesne process in any inferior court, or in any superior court, ex- cept in the manner provided for by the 3d section of the stat. 1 & 2 Vict. c. 110. By that enactment, however, a new writ of capias is provided under certain circumstances, and by virtue of such writ the defendant may be arrested and held to bail, at any time after the commencement of the suit, and before final judg- ment.^ § 705. The 3d section of the statute 1 & 2 Vict. c. 110, enacts that if a plaintiff in any action in any of her Majesty's superior courts of law at Westminster, in which the defendant is now liable to arrest, whether upon the order of a judge, or without such order,^ shall by the affidavit of himself, or of some other person, show to the satisfaction of a judge of one of the said superior courts, that such plaintiff has a cause of action against the defend- ant or defendants, to the amount of £20, or upwards, or has sus- tained damage to that amount, and that there is probable cause for ' Except in cases under the 85th section of the stat. 1 & 2 Vict c. 110. See Chit. Archb., vol. 1, p. 461. ^ Sect. 5. ' As to the cause of action for which an arrest is allowed, in general, see Tidd Prac. c. 10. Before the stat. 1 Vict. 110, where there was a certain debt to the amount of £20, or damajjes to that amount, which might be re- duced to a certainty, as in assumpsit or covenant for the payment of money, the defendant might be arrested, as a matter of course, on an affidavit shortly stating the cause of action. Tidd, 171 ; 3 Black. Com. 292. But where the damages were uncertain, as in assumpsit or covenant to indemnify, &c., or in actions for a tori or trespass, trover or detinue, there could be no arrest without a special order of the court or a judge. Id. 670 RIGHTS OF PARTNERS, ETC. [BOOK III. believing that the defendant or any one or more of the defendants is or are about to quit England unless he or they be forthwith ap- prehended, it shall be lawful for such judge, by a special order, to direct that such defendant or defendants so about to quit England, shaU be held to bail for such sum as such judge shall think fit, not exceeding the amount of the debt or damages ; and thereupon it shall be lawful for such plaintiff within the time which shall be ex- pressed in such order, but not afterwards, to sue out one or more writ or writs of capias into one or more different counties, as the case may require, against any such defendant so directed to be held to bail, which writ of capias shall be in the form contained in the schedule to this act annexed, and shall bear date on the day on which the same shall be issued. § 706. And the 4th section enacts, that the sheriff, or other oflScer to whom any such writ of capias shall be directed, shall, within one calendar month after the date thereof, including the day of such date, but not afterwards, proceed to arrest the de- fendant thereupon ; and such defendant, when so arrested, shall remain in custody until he shall have given a bail-bond to the sheriff, or shall have made a deposit of the sum indorsed on such writ of capias, together with £10 for costs, according to the present practice of the said superior courts, and all subsequent proceedings as to the putting in and perfecting special bail, or of making deposit and payment of money into court, instead of put- ting in and perfecting special bail, shall be according to the like practice of the said superior courts, or as near thereto as the cir- cumstances of the case will admit. § 707. It would be foreign to the object of this treatise to enter minutely into the various points of practice which bear upon the subject now adverted to ; but it may be remarked that rnany of the decisions in reference to bailable process before the statute of 1 Vict. c. 110, will still be applicable to cases arising under that statute. The following observations are therefore made on this hypothesis. The affidavit of debt on which the process is founded should correspond with the declaration, both in the statement of the number of plaintiffs and defendants, i and of the nature of the debt.2 Where one of three defendants was held to bail on an affi- ' Turner r. Portall, 2 N. R. 231 ; Forbes v. Phillips, id. 98. ' Ch. Arch., vol. 1, p. 495. Affidavit to hold to bail for money lent by the CH. VI.] ACTIONS AGAINST PARTNERS. 671 davit of a debt due from the three defendants, as surviving part- ners of G., and the declaration was for a debt due from the three defendants in their own right, without saying that they were the surviving partners of G., the rule for entering an exoneretur on the bail-piece was made absolute, though the court refused to set aside the proceedings for irregularity .^ It wiQ be perceived, that the judge's order to hold to bail may be. made against as many of the defendants as he thinks fit ; but there is nothing in the form of the writ of capias to show that the. defendants who are not to be arrested are to be mentioned in it. It is suggested, however, by the writer of an excellent work on Practice, that it is safer to mention them for the purpose of identifying the bailable proceed- ings with those in the action, and to prevent the discharge of bail by a variance in the description of the action in which they be- come bound for the defendant.^ § 708. The Christian name of the defendant ought generally to be stated in the writ,^ otherwise the proceedings may, on motion, he set aside for irregularity.* But in actions on bills of exchange and other written instruments, the initials of the Christian names of the parties may be used in all the proceedings, if the initials are used in the instruments themselves.^ So, also, in some cases, it is sufficient to show that due diligence has been used to obtain the true name of the defendant.® And a misnomer may be cured by altering the writ, and getting it resealed before the return ; and where process is sued out against four defendants, one of whom is misnamed, it may be served upon the three whose names plaintiff and his late copartners, C. and D., held insufficient, inasmuch as it did not state that they were dead. Morrall v. Parker, 3 Mees. & W. 65. ' Spalding v. Mure, 6 T. R. 363. "^ 1 Arch. Pr. 514 (edit. Chitty). ' V. Snow, 1 Chit. 398; Toinlin v. Preston, id.; Taylor v. Kuther- man, 6 Moore, 264 ; Lake v. Silk, 3 Bing. 296. But m an action against partners having the same surname, it is not error if the surname is not added to every Christian name. Chance v. Chambers, 1 Pennsylv. 384. * But see Newcomb v. Peck, 17 Vermont, 302, where, in an action on a judgment against two partners, in which judgment the Christian name of one of them was omitted, the court held that such judgment could not be consid- ered void, but that an action might be sustained against him on it averring his identity. 5 Stat. 3 & 4 Will. 4, c. 42, s. 12. « Keg. Gen. H. T., 2 Will. 4, r. 32. 672 EIGHTS OF PARTNERS, ETC. [bOOK III. are right ; and if the name of the other be afterwards altered, and the writ resealed, it is good against all.^ Moreover, the de- fendants themselves may, by their own acts, waive the irregularity arising from the omission of their Christian names in the writ ; as, for instance, by afterwards signing a regular bail-bond.^ § 709. In cases of contract, if the plaintiff hold two defendants to bail on a joint writ, and declare against them severally, the court will set aside the declaration and subsequent proceedings for irregularity.^ But it has been held, that, in non-bailable process on writ against two, a declaration against one only is ■ good.* In tort^ a party suing out bailable process jointly against several may separately declare against one of them,^ provided he drops his proceedings altogether against the others.^ § 710. Where the process is bailable, and all are arrested un- der it, if the defendants do not appear according to the exigency of the writ, after bail to the sheriff has been given, the plaintiff may either take an assignment of the bail-bond, and proceed thereon against the defendants and their bail to the sheriff, or he may proceed against the sheriff himself, to compel him to return the writ, and bring the bodies of the defendants.'^ If the bail- below be sufficient, it is usual for the plaintiff to take an assign- ment of the bail-bond.^ § 711. In an action on the bail-bond by the assignee, the dec- laration must show clearly the assignee's title to sue ; it must therefore state the writ in the original action, the arrest, the bail- bond with the condition to appear, the breach of condition, and the assignment of the plaintiff.^ The writ, in the original action, should be stated accurately ; but it seems that a variance between ' Anon., 1 Chit. 398. ' Kingston v. Llewellyn, 1 Brod. & Bing. 529 ; 4 Moore, 317. ' Tiikl Pi-ac. 149 ; Chapman v. Eland, 2 N. R. 82 ; Woodeook v. Kilby, 1 Mees. & VV. 41 ; Bollotti v. Barella, 4 Dowl. Pr. C. 719. * Evans u. Whitehead, 2 Man. & Ryl. 367. At least, this distinction ex- isted before the late statutes. Whether it still exists may not be quite cer- tain. ' Wilson V. Edwards, 3 Barn. & Cres. 734 ; 5 Dowl. & Kyi. 622. « Caldwell V. Blake, 3 Dowk Pr. C. 656. ' Tidd, Prac. 297. » Ibid. » See " Forms," 2 Chit. 452, &c. CH. VI.] ACTIONS AGAINST PARTNERS. 673 the actual writ and that stated in the declaration will not be fatal, if either is sufficient to warrant the arrest.^ SECTION II. OP THE PARTIES TO ACTIONS EX CONTRACTU. § 712. In an action brought against a partnership firm, on a partnership contract, not in writing, all those who were partners at the time of the contract ought to be joined as defendants.^ For a contract, when made with partners, is originally a joint con- tract, though it may be separate as to its effects ; and a creditor, being party to the contract, is bound both by law and conscience to do all that is necessary to effectuate the contract.^ So, also, in an action against partners on a joint bond, or joint covenant, al- though they alone can be- sued who are parties to the instrument,* yet all the co-obligors or co-covenantors should be made defend- § 713. But the omissioS of a party as co-defendant in these cases is not ground of nonsuit, and can only be taken advantage of by plea La abatement, verified by affidavit ; unless it appear on the face of the declaration, or some other pleading of the plaintiff, that the party omitted jointly contracted and is still living, and also, as it is conceived, is resident within the jurisdiction ; ^ in ' Hendray v. Spencer, 1 T. R. 238. » Bristow V. James, 7 T. K. 257 ; Byers v. Dobie, 1 H. Bl. 236 ; Ditchburn f. Spracklin, 5 Esp. 31 ; 1 Chit. PI. (10th Am. ed.), 41, 42 ; post, § 719, note. Notwithstanding agreement between partners to the contrary. Lodge v. Dicas, 3 Barn. & Aid. 611. ' Per De Grey C. J., Abbot v. Smith, 2 W. Bl. 947. If one partner sells goods and makes a special warranty, the purchaser may maintain an action on the warranty against such partner without joining his copartner. Clark V. Holmes, 3 John. 148. * Shack V. Anthony, 1 Mau. & Sel. 574. Per Lord Tenterden, Lefevre v. Boyle, 3 Barn. & Adol. 877 ; Beckham v. Knight, 4 Bing. N. C. 243. See Beckham v. Drake, 9 Mees. & W. 79 ; 11 Mees. & W. 315 ; 1 Lindley Partn. 272, 273. » Horner ». Moore, 5 Burr. 2611 ; Vernon v. Jeffries, 2 Str. 1146. ' In 1 Saund. 291 c. note (4), it is stated as a general- principle, that, un- less those facts which are absolutely necessary to be averred by the defend- 57 674 EIGHTS OF PARTNERS, ETC. [BOOK III. TrMch case the defendant may demur or move in arrest of judg- ment, or sustain a writ of error.^ If, except under tte circum- stances just mentioned, the defendant does not plead the non- joinder in abatement, it is a waiver of the objection. For he ought not, as Lord Mansfield observed, to be permitted to lie by, and put the defendant to the delay and expense of a trial, and then set up a plea not founded ia the merits of the case, but on the form of the proceeding.^ Nor is he entitled even to a plea in abatement, where the contract on which he is sued was entered into in fraud of his copartners.^ It seems scarcely necessary to observe, that, al- though the plaintifi" may sue one of several joint debtors separately, leaving the defendant to plead in abatement, he has no right to sue all the parties separately for one and the same demand.* § 714. The necessity of pleading the non-joinder of the defend- ants in abatement seems to have been acknowledged in the case of joint bonds or deeds, from the 28th of Henry 6 down to the present time." The well-known case of Whelpdalp^ was in ac- cordance with this doctrine. There the plaintiff had declared on a bond made by the defendant, to which the defendant pleaded non est factum ; the jury found. that the bond was a joint bond made by the defendant and another to the plaintiff ; and upon this special verdict it was adjudged by the court that the plaintiff should recover, " because, when two men are jointly bound in one bond, although neither of them is bound by himself, yet ant in his plea be admitted by the plaintiflfin his declaration or other plead- ing, the action cannot, in the case above mentioned, be abated. If so, it ought to appear in the declaration, not only that the co-defendant is living, but that he is within the jurisdiction. See 2 & 3 Will. 4, c. 42, s. 8, and see •post, see. 6. ^ 1 Chit. PI. (10th Am. ed.), 44, 45, and eases cited in notes. See Coffee V. Eastland, Cooke, 159; Ziele o. Campbell, 2 John. Cas. 382; Brown v. Belcher, 1 Wash. C. C. 9; Barry & Foyles, 1 Peters, 316; Bradley v. Camp, Kirby, 87. "" Rice V. Shute, 5 Burr. 2611 ; 2 W. Bl. 695. ^ Hudson V. Robinson, 4 Mau. & Sel. 475. * Came v. Legh, 6 Barn. & Cres. 124; 9 Dowl. & Ryl. 126. 5 Y. B. 28 Hen. 6, 3 a, pi. 11 ; Y. B. Mich. 35 Hen. 6, pi. 38 ; Bro. Briefe, 37. " 5 Rep. 110. See Stead v. Mohun, Cro. Jac. 152 ; Cabell v. Vaughan, 1 Saund. 299, 2 Keb. 525; Ascue and HoUingsworth's case, Cro. Eliz.494; Sayer v. Chaytor, Lutw, 695. CH. VI.] ACTIONS AGAINST PARTNERS. 675 neither of them can say that the bond is not his deed, for he has sealed and delivered it, and each of them is bound in the whole. But in this case he might have pleaded in abatement of the writ." § 715. The rule of law so applied to joint bonds has, since the case of Rice w. Shute, been extended to all joint contracts; not only to mere parol contracts made with partners, in which ease the plaintiff may not know accurately all the parties with whom he dealt, but to written contracts, in which the parties who may be sued appear on the face of the paper, and are therefore known to the pMntiff. In such case, so long as the plaintiff does not de- clare jointly, the defect can only be pleaded in abatement ; and in default of such plea, the joint contract may be given in evidence of the sepa,rate contract declared on. Thus, in Germain v. Fred- erick,^ assumpsit was brought against the defendant solely, for goods sold to him, and delivered on board the Lord Macartney. At the trial, the plaintiff failed in his parol proof, and then pro- duced the following note, written by the defendant : " Gravesend, March 29. Twenty carts on board the Lord Macartney, by order of H. Frederick and Capt. Neale." The plaintiff was nonsuited. In support thereof it was said, that the declaration stated it to be a contract of the defendant alone, but the proof was of a joint contract. On the other side it was said, that the objection was only ^ood if the fact had been pleaded in abatement. The court stopped the argument, and made the rule absolute for a new trial ; observing tfeat the. contract proved was the same as that laid, and the case was precisely that of Rice v.jShute. § 716- So, in Dixon v. Bowman,^ which was " an action against two defendants- on a promissory note made by them jointly and severally; in evidence it appeared that a third person had also signed the note. Aston J., held this a variance, but the court granted a new trial." So, in Evans v. Lewis,^ which was an action against the defendant as drawer of a bill of exchange. On More assumpsit pleaded, it appeared in evidence at the trial that the bill was drawn by the defendant and another jointly. It was objected, that there was a difference between the bill proved and the bill declared upon ; and the judge inclined to that opinion, ' 1 Wms. Saund. 291 c. ' I Wms. Saund. 291 d. ' Ibid.; Wilson v. Raddall, Gow, 161. 676 EIGHTS OF PARTNERS, ETC. [BOOK IH. but permitted the cause to proceed, Tvitli liberty for tbe defendant to move for a new trial. A yerdict being found for the plaintiff, a' rule was obtained to show cause why it should not be set aside. On showing cause, the court was clearly of opinion that there was no variance between the bill of exchange proved and that which was declared upon ; but the defendant should have pleaded in abatement, that another person drew the bUl jointly with the de- fendant, who is stiU alive. So, where a declaration against the acceptors of a bill of exchange stated the bill to be drawn upoii and accepted by three persons, and it was proved to have been drawn upon and accepted by three jointly with a fourth, it was held that this was no variance. ^ § 717. But though, subject to a plea in abatement, a separate contract may be declared on, and a joint one given in evidence, it will be error if a joint contract is set forth in the declaration, and any of ,those who joined in the contract are omitted as defendants or some reason is not assigned why they cannot be included, such as that they are dead, or are outlawed, or have become bankrupt. There a difference appears upon the face of the record ; the plain- tiff himself shows that another ought to be joined ; and as It would be absurd to call upon the defendant to plead facts which are al- ready admitted, no plea in abatement is necessary ; but the omis- sion may be taken advantage of by demurrer, in arrest of judg- ment, or upon a writ of error. Thus, in Horner v. Moore,^ which was debt on a joint bond against one obligor, to which the defend- ant phaded non est factum, and the jury found it to be the deed of both, judgment was arrested, because it appeared on the face of the declaration that both had sealed the obligation, and both obligors were living. § 718. The case just cited is usually considered to sanction the opinion, that, to enable the defendant, to take advantage of the non-joinder of other defendants, otherwise than by plea in abate- ment, the declaration should in some manner expressly show that the parties omitted are living, as well as that they sealed. But though this has been laid down by writers of great authority,^ it ought to be noticed that the contrary opinion has been held in ar- ' Mountstephen v. Brooke, 1 Barn. & Aid. 224. 2 Cited in Rice v. Shute, 5 Burr. 2614. ' 1 Wms. Saund. 291 c; 1 Chitty, PI. 46 (6th ed.) CH. VI.] ACTIONS AGAINST PARTNERS. 677 gument on the ground that where it appears, by the plaintifif's own showing, that there is a co-oWigor not sued, the presumption is that the co-obligor is still alive, unless the plaintiff will rebut the presumption he himself has raised, by showing that he is dead ; and it has been contended that, as to this point, the case of Horner v. Moore must be a mistake ; for that the iact of the co- obligor being aUve could not appear on the declaration.^ Sup- posing this opinion to be correct, the case of The King v. Young appears to have been rightly decided. That case, according to one report of it,^ was scire facias against two defendants, stating that they and two other persons (not averring such two other per- sons to be living), by bond sealed with their seals, became jointly and severally bound to the king in £4,000, and stating non-per- formance, &c. ; the court were of opinion, that, as abatable matter appeared on the scire facias, it was not necessary for the defend- ant to plead in abatement, and they gave judgment that the scire facias should be quashed. But although, from the pleadings of the plaititiff, it may possibly be presumed, in favor of the defend- ant who is sued, that another person who ought to be a co-defend- ant is -still alive, yet in no case can it be presumed that such other person has sealed the bond. An express averment must be made of the fact, on one side or the other.* § 719. The non-joinder of a dormant partner as co-defendant cannot even be pleaded in abatement where the plaintiff has no means of knowing of the partnership ; for if I deal with A., he cannot, in reference to that transaction, say there is a contract be- tween him and B., of whom I know nothing, thus compelling me to be a joint creditor of those two, whose joint property may be scarcely any thing, and not the sole creditor of the only man I knew-* If the creditor at the time of the contract was ignorant ' Per Marryatt, arg. Kex v. Chapman, 3 Anstr. 818. See also, Blackwell p. Ashton, Aleyn, 21 ; South v. Tanner, 2 Taunt. 254, and Wats. Partn. 438. ' 6 T. R. 769. In 2 Anstr. 448, it is said to have been a scire facias on a recognizance, not on a bmid. See 1 Wms. Saund. 291, and note (c). ' Cabell V. Vaughan, 1 Saund. 291, note ((). But proof of a party's sig- nature is presumptive evidence of his having sealed. Grellier v. Neale, 1 Peake, 145 ; Fasset v. Brown, id. 23. ♦ Ex parte Norfolk, 19 Ves. 455; Baldwin v. Ritchie, 1 Stark. 338 ; Doo 57* 678 RIGHTS OF PAETNEKS, ETC. [bOOK III. that his debtor had a dormant partner, he may at his option, sue the debtor separately or jointly with the dormant partner.^ But if he was not ignorant of that fact, he ought regularly to make the dormant partner a co-defendant with the ostensible partner. If he does not, and the non-joinder is objected to, it will be left to the jury to say with what parties the contract was intended to be made.^ In De Mautort v. Saunders,^ an action was brought on a bill of exchange, drawn upon two persons in London by the name of Saunders, Brothers & Co. It was pleaded in abatement, that the promises were made by two other persons named in the plea, jointly with the defendants ; and the defendants proved that the two other persons named in the plea were partners with them, and resided at the Mauritius, where the bill was drawn, and where the plaintiff also resided. Lord Tenterden told the jury, that it was clearly established in proof that all the four persons were in part- nership together, though it did not appear that the fact of such partnership was known to any person at the Mauritius ; that it was a question for them, upon the evidence, whether the holder of the bill might reasonably have considered that the defendants alone constituted the house of Saunders, Brothers & Co. ; if he had reasonable ground so to think, then he must be taken to have con- tracted with them alone, and in that case the verdict ought to be for the plaintiff; but if they thought that any circumstance, such as the addition of the words " and Co.," ought to have induced him to think that there were other partners, then the verdict should be for the defendants. The jury found for the plaintiff; and upon a motion for a new trial, the Court of King's Bench re- V. Chippenden, Abbott," Shipping, 76 ; Grellier v. Neale, 1 Peake, 146 ; Ex parte Hamper, 17 Ves. 412; Robinson v. Wilkinson, 3 Price, 538; Gow Partn. (3d ed.), 178 ; Jacljson v. Alexander, 8 Texas, 109. * Ex parte Layton, 6 Ves. 438 ; Cleveland y. Woodward, 15 Vermont, 302.; Story Partn. § 241. The same rule has been applied in cases where the partnership was known to many, but unknown to the particular creditor, who had contracted with one member of the firm on his individual credit. Blin V. Pierce, 20 Vermont, 25 ; Hagar v. Stone, 20 Vermont, 106 ; Curtis V. Belknap, 21 Vermont, 433. " MuUett V. Hook, 1 Mood. & Malk. 88 ; Stansfield v. Levy, 3 Stark. 8 ; Gow Partn. (3ded.), 178, 179. * 1 Barn. & Adol. 396, overruling Dubois v. Ludert, 1 Marsh. 248; see Bonfield i\ Smith, 12 Mees. & W. 405. CH. VI.] ACTIONS AGAINST PARTNERS. 679 fused the rule, and held the direction to the jury to be right. A dormant partner may be sued alone, unless he plead the partner- ship in abatement.^ Where a contract in ■writing is entered into by the ostensible partners of a firm only, -without the dormant partner, the party contracted with may still sue the dormant part- ner on it although no allusion is made to him in it.^ § 720. If one partner was an infant at the time of the con- tract, and has not, since the attainment of his majority and before the commencement of the action,^ ratified the contract by some writing with his signature affixed,* he ought not by the law as held in England to be made a co-defendant. For if he be joined in the action, and plead his infancy, the plaintiff cannot, accord- ing to the Enghsh cases, enter a nolle prosequi as to him, and proceed against the other, as is allowed by the statute in cases of bankruptcy ; but he must discontinue the action, and com- mence a new action against the adult defendant, he being the sole contracting party, according to the legal effect of such a contract.^ But a different rule prevails in Maine, New York, and Massachu- setts, where it is held, that if several are sued and one of them pleads infancy, the plaintiff may enter a nolle prosequi against the infant, and proceed to judgment against the other defendants.^ ' Per Lord Kenyon, Saville v. Robinson, 4 T. K. 720. ° Beckham v. Drake, 9 Mees. & W. 79 ; 11 Mees. & W. 315, overruling Beekham v. Knight, 4 Bing. N. C. 243. Drake, Knight & Sturgey, were in partnership as type-founders, but Drake was a secret partner. A written agreement relative to the partnership business was entered into between the plaintiff and Knight & Sturgey, and for a breach of this agreement by them this action was brought. Drake's name did not appear in the agreement ; he did not sign it, nor when the contract was made was he known to the plaintiff to be a partner. It was nevertheless held that all three partners were liable jointly for a breach of the agreement, inasmuch as the agree- ment was clearly entered into by the firm, and Drake, like any other undis- closed principal,: was liable to be sued aa soon as his existence was discov- ered. Beckham v. Drake, uhi supra. ' Thornton v. lUingworth, 2 Barn. & Cres. 824 ; 4 Dowl. & Kyi. 545. But see Ex parte Henderson, 4 Ves. 164. * 9 Geo. 4, c. 14, s. 5. ' Chandler v. Parkes, 3 Esp. 76 ; Jaffray v. Frebain, 5 Esp. 47. ' Hartness v. Thompson, 5 John. 160 ; Woodward v. Newhall, 1 Pick. 500; Cutts V. Gordon, 13 Maine, 474 ; Tappan v. Abbott, cited in 1 Pick. 502. This rule was alluded to with approbation in Judson v. Gibbons, 5 680 EIGHTS OP PARTNERS, ETC. [BOOK III. So also, the plaintiff may enter a nolle prosequi against one of several defendants, wlio gives his infancy in evidence at the trial under the general issue, or if the plaintiff does not enter a nolle prosequi, the jury may find a verdict for the infant and for the plaintiff against the other defendants.^ In Virginia, an action ■was brought on a promissory note made in the name of a firm, one of the members of which was an infant, against the adult partner alone, and it was held that the action was badly brought, the act of the infant being voidable only and not void.^ § 721. But in England it is held, that if the plaintiff omit to sue the infant partner, then, although the defendant may plead the non-joinder of his copartner in abatement, such plea will not prevail, if the plaintiff reply that the defendant omitted is an in- fant.^ Therefore it has been held, that if one of two partners is an infant, the holder of a bill accepted by both partners may declare on it as accepted by the adult only in the name of both ; Wendell, 228, 229. See Morton v. Croghan, 20 John. 106 ; Tuttle v. Cooper, 10 Pick. 288, 291, 292. * Cutts V. Gordon, 13 Maine, 474 ; Hartness v. Thompson, 5 John. 160. " Walmsley v. Lindenberger, 2 Rand. 478. See Cutts v. Gordon, 13 Maine, 479. In Hartness v. Thompson, 5 John. 162; Van Ness J., re- marked : " Suppose, in case of a joint note made by several, one of whom is an infant, the plaintiff should bring an action on it against adults only, it- appears impossible to maintain the action in any other way than by showing the infancy of the party not sued. If this be so it may be asked, whether it would not be unprecedented to allow the plaintiffs to take advantage of the infancy of one of the parties to the contract for the express purpose of enforcing it against the others ; and whether such a procedure would not be in direct violation of the principle before alluded to, that infancy is the personal privilege of the infant, and one of which he only can avail himselfl" Similar observations were made by Parker C. J., in Woodward v. Newhall, 1 Pick. 502, and he also remarked : " The plaintiff may not, and probably would not, know, in many instances, that one of the contractors is a minor ; and if he did, to commence his suit against one, and aver that the other was a minor, wtuld be a questionable course, for non constat that advantage would be taken of his minority, and the other defendant might plead in abate- ment that the promise was made by two ; and if the plaintiff could be per- mitted to reply the infancy of the other, it would at least.be unusual to require of him to disparage his own contract" An adult defendant cannot .plead in abatement the infancy of a co-defendant. Hallam v. Mumford, 1 Root, 58. See Van Bramer D.Cooper, 2 John. 279. " Gibbs V. Merrill, Taunt. 307 ; Chandler v. Parkes, supra. . CH. VI.] ACTIONS AGAINST PARTNERS. 681 and if the defendant pleads in abatement that the other partner ought to be sued, the plaintifiF may reply his infancy, which is no departure, and the action may proceed.^ In these cases it is to be observed, that infancy is the proper reply, and that the plain- tiff cannot reply that the promise was made by the adult defend- ant sblely, and not by him and the infant jointly.^ If an infant partner be made a co-defendant in an action of assumpsit or debt, and intend to resist the action on the ground of infancy, he must, under the English rules, plead his infancy specially.^ § 722. Where one partner his become bankrupt, and obtained his certificate, it is not necessary to make him a co-defendant ; for if the non-joinder of him as defendant be pleaded in abate- ment, the plaintiff may reply that he has been discharged by bankrujptcy and certificate ; * and the same sort of replication will be admissible if the party omitted has been discharged under the Insolvent Act.® But if the bankrupt have not obtained his certifi- cate, he should be joined as a co-defendant.^ § 723. If one of several partners die, the action must be brought against the survivors J And if the executor of the de- ceased partner be sued, he must plead the survivorship in bar.^ Upon the death of the last surviving partner, an action on the ' Burgess v. Merrill, 4 Taunt. 468. ' Chandler v. Parkes, supra. ' Reg. Gen. H. T. 1834, Assumpsit, 3; Debl, 3. * Stat. 3 & 4 Will. 4, c. 42, s. 9. See Tuttle v. Cooper, 10 Pick. 291, 292. ' Stat. 3 & 4 Will. 4, c. 42, s. 9. » 1 Chitty PI. (10th Am. ed.), 53 ; Voorhis v. Child, 17 N. Y. (3 Smith), 354. ' Richards v. Heather, 1 Barn. & Aid. 29 ; Gow Partn. (3d ed.), 172 ; Given V. Albert, 1 Watts & S. 333 ; Osgood v. Spencer, 2 Harr. & Gill, 133; Grant!). Shurter, 1 Wendell, 148; 3 Kent Com. 63, 64; Story Partn. §§ 361, 362 ; Barney v. Smith, 2 Harr. & John. 485 ; Murray v. Mumford, 6 Cowen, 441 ; ante, §§ 576, 580, note; Roosvelt v. M'Dowell, 1 Kelly, 489. In Pennsylvania, where there is no court of chancery, if the surviv- ing partner is a certificated bankrupt, the action may be brought against the executor of the deceased partner. Lang v. Keppele, 1 Binn. 123. ' Postan V. Stanway, 5 East, 261 ; Godson v. Good, 6 Taunt. 587; Beg. Gen. H. T. 1834, Assumpsit, 3. But see, contra, Osgood v. Spencer, 2 Harr. & Gill, 133 ; 1 Chitty PL (10th Am. ed.), 50 ; and Grant v. Shurter, 1 Wendell, 148. 682 EIGHTS OF PAETNBES, ETC. [BOOK III. partnership account must be brought against his executors only, without joining the executors of the other partners.^ If a part- ner defendant die pending the action, the writ or action shall not be thereby abated, but, such death being suggested on the record, the action shall proceed against the surviving defendant or defend- ants.2 § 724. Oh the outlawry of one of several partners, the action must be proceeded in against that defendant only who appears.^ But the outlawry does not alter the right as it originally stood. Therefore, where the plaintiff brought an action against two de- fendants, and proceeded to outlawry against one, and went on with the action against the other, who died after interlocutory and before final judgment, it was held that he could not have a scire facias against the administrator of the deceased partner ; for, not- withstanding the outlawry, the action remained joint, and there- fore survived against the other defendant.* § 725. If too many persons be made defendants, and the objec- tion appear on the pleadings, either of the defendants may demur, move in arrest of judgment, or support a writ of error ; and if the objection do not appear upon the pleadings, the plaintiff may be nonsuited iipon the trial, if he fail in proving a joint contract either in law ^ or in fact ; ® for though in actions for torts one defendant may be found guilty and the other acquitted, yet in joint actions for the breach of contracts, whether they be framed in assumpsit, covenant, debt, or case, a verdict or judgment cannot in general be given against one defendant without the other ; ^ and where ' Calder v. Kutherford, 1 Brod. & Bing. 302; 7 Moore, 158. ^ 8 & 9 Will. 3,0.11, s. 7. ' Guy V. Goddard, 1 Keb. 642; 1 Sid. 173. In the above analogous cases, where, on account of one partner's deatli, or his discharge on the ground of some personal defence, judgment for a partnership debt is ren- dered against a single partner, the demand does not lose its character of a partnership debt, but still remains a charge on the partnership property. Gay V. Johnson, 32 N. Hamp. 167 ; Hutchinson v. Smith, 7 Paige, 26, 33 ; French v. Lovejoy, 12 N. Hamp. 456 ; Elliott v. Stevens, 38 N. Hamp. 311. ♦ Fort V. Oliver, 1 Mau. & Sel. 242. ' Noke V. Ingham, 1 Wils. 89 ; Eliot v. Morgan, 7 Carr. & P. 334. • Shirreff w. Wilks, 1 East, 48; Robertson v. Smith, 18 John. 459. ' 1 Chitty PI. (10th Am. ed.), 44 ; Cooper v. Whitehouse, 6 Carr. & P. 595. CH. VI.] ACTIONS AGAINST PARTNERS. 683 there are several defendants, the nonsuit of the plaintiff is for the benefit of all.^ Where, in an action upon contract against three, two of the defendants were defaulted, and the third pleaded that he did not contract jointly with the others, and, upon issue joined, a verdict and judgment were rendered in his favor, the plaintiff was not allowed to take judgment against the other defendants, who were defaulted.^ § 726. It is, however, enacted by the 10th section of the stat. 3 & 4 Will. 4, c. 42, that in all cases in which, after a plea in abatement, the plaintiff shall, without having proceeded to trial upon an issue thereon, commence another action against the de- fendant or defendants in the action in which such plea in abate- ment shall have been pleaded, and the person or persons named in such plea in abatement as~joint contractors ; if it shall appear by the pleadings in such subsequent action, or on the evidence at the trial thereof, that all the original defendants are liable, but that any or more of the persons named in such plea in abatement, or any subsequent plea in abatement, ai-e not liable as a contracting party or parties, the plaintiff shall nevertheless be entitled to judgment, or to a verdict and judgment, as the case may be, against the other defendant or defendants who shall appear to be liable ; and every defendant who is not so liable shall have judgment, and shall be entitled to his costs as against the plaintifis, who shall be al- lowed the same as costs in the cause against the defendant or de- fendants who shall have so pleaded in abatement the non-joinder of such person ; provided that any such defendant, who shall have so pleaded in abatement, shall be at liberty on the trial to adduce evi- dence of the liability of the defendants named by him ia such plea ' Blake's case, 1 Sid. 378. * Tuttle V. Cooper, 10 Pick. 281. In this case, Shaw C. J., said: "We take the general rule of practice to be settled, that in an action ex contractu against several, it must appear on the face of the pleadings that their con- tract was joint, and that fact must be. proved on the trial. And if the fact do not appear upon the pleadings, the plaintiff may be nonsuited at the trial, if he fail of proving a joint contract ; or if the evidence is proper to be submitted to the jury, they will be instructed, that if the evidence is insuffi- cient to establish a joint contract, the defendants will be entitled to a ver- dict." See Cutts v. Gordon, 13 Maine, 478 ; Redington v. Farrar, 5 Greenl. 379 ; Hartness v. Thompson, 5 John. 160 ; Anderson v. Henshaw, 2 Day, 272. 684 EIGHTS OF PARTNERS, ETC. [bOOK III. in abatepient. It may also be remarked, that if several persons are sued as partners, who are not all partners, and they pay money into court in respect of the contract on which they are sued, they are estopped by such payment from taking any objec- tion for. misjoinder at the trial.^ SECTION III. OF PARTIES TO ACTIONS EX DELICTO. § 727. If several partners jointly commit a tort, the plaintiff has his election to sue all or any of the parties ; because a tort is in its nature the separate act of each individual ; therefore, in actions ex delicto, such as trespass, trover, case for malfeasance, and the like, against one only, for a tort committed by several, he cannot plead it either in abatement or in bar, or give it in evidence on the general issue. A plea in abatement can only be where reg- ularly all the parties ought to be joined, and not where the plaintiff may join them all or not, at his election.^ Therefore, to an action on the case against several part-owners of a ship, for the neglir gence of their servant in running down a ship of the plaintiff's, laden with sugar, Avhereby the sugar was lost, it was held clearly, that the defendants could not plead in abatement that there were other part-owners not joined in the suit.^ It has been said, that if the plaintiff himself shows in his declaration, or other pleading, that the tort was jointly done by the defendant and A. B., the ac- tion shall abate ; * but Mr. Sergeant Williams observes, that there is no good ground for this distinction.^ § 728. Actions against common carriers, for a breach of duty in their capacity of carriers, may be either laid in case charging them with a breach of duty imposed by the custom of the realm, ' Baveiiscroft v. Wise, 1 C. M. & R. 203. But see ante, § 667. ' 1 Wms. Saund. 291 e; Wats. Partn. 424; Rich v. Piildngton, Carth. 171; Child v. Sand, id. 294, 1 Salk. 32; Sutton v. Clarke, 6 Taunt. 29;. NicoU V. Glennie, 1 Mau. & Sel. 588 ; Morrow v. Belcher, 4 Barn. & Cres. 704. But see Wallis u. Savil, Lutw. 41. ' Mitchell V. Parbut, 5 T. R. 649. * Brickhead v. Archbishop of York, Hob. 199. 5 1 Wms. Saund. 291 f. CH. VI.] ACTIONS AGAINST PARTNERS. 685 the breach being in such case considered as a tort, or they may be laid in assumpdt, the breach being then considered as a breach of contract. Both of these modes of declaring have been estab- lished by prbcedent, but as all actions of this nature involve con- siderations of contract, they will be the subject of discussion in the ensuing section. § 729. What has been said regarding the joinder of one or more defendants in tort does not apply to actions which concern real property. For where there are several owners or persons chargeable as joint tenants, or tenants in common, in respect of their real property, though the action.be in form ex delicto, they should aU be made defendants, or the party who is sued alone may plead in abatement. ^ § 730. There are various torts which in legal consideration may be committed by several, and for which a joint action may be supported against all the parties. Thus, an action lies against partners for falsely and fraudulently representing an insolvent person as worthy of credit, whereby the plaintiff was induced to trust him with goods and suffered a loss.^ But if several persons be made defendants jointly, where the tart could not in point of law be joint, they may demur ; and if a verdict be taken against all, the judgment may be arrested or reversed on a writ of error ; but the objection may be remedied by the plaintiff's taking a ver- dict against one only, or, if several damages be assessed, against each, by entering a nolle prosequi as to one after the verdict, and before judgment.^ There cannot, however, be a nonsuit as to onfr, and a verdict against the others.* SECTION IV. OF THE PARTIES TO ACTIONS EX QUASI CONTRACTU. § 731. It may, perhaps, be laid down, — 1. That in all actions ex quasi cordractu, except against common carriers for breach ^ 1 Wms. Saund. 291 f. ; Bro. Action on the Case, 32 ; 1 Saund. 291 ; Low V. Mumford, 14 John. 426 ; Sumner v. Tileston, 4 Pick. 308. ^ Patten v. Gurney, 17 Mass. 182. » 1 Chit. PI. (10th Am. ed.), 86. * Revett V. Browne, 2 Moore & Paj-ne, 18. 58 686 EIGHTS OP PARTNERS, ETC. [BOOK IH. of their duty as carriers, the same rules are applicable, in regard to the parties to be made defendants, as in actions ex contractu. 2. That these rules are appUcable' to actions agaiiist common carriers, 'vrhen the declaration states a special contract, 3. That, otherwise an action against a coinmon carrier is to be considered as entirely laid in tort, and attended with aU the consequences of an action in tort ; it being an ancient action, founded on the custom of the realm, against a public servant, for the breach of his pubhc duty.-^ \ 732. In regard to actions against common carriers, it was held in a series of decisions, that if the declaration was grounded on contract, and not on tort, though the contract as stated was only general and arising by imphcation, the action. must be con- sidered as in the nature of an action ex contractu, and therefore liable to a plea in abatement, if aU the joint contractors were not sued. Thus, in Boson v. Sandford,^ the plaintiff declared;,— " That whereas, on the 10th of May, 1685, the plaintiff had, at London, delivered and laden, on board the ship^ called, &c., whereof the defendants were then and there owners (in which said ship the goods and wares of persons requiring the carriage thereof were commonly carried and transported for reasonable freight and salary) , divers goods and wares of the said plaintiff, to wit, &c., in good order and well conditioned, to be safely trans- ported, &c., for a reasonable freight and salary by the - plaintiff to the defendants, for such carriage thereof, to be paid ; and the said defendants, the same goods, &c., then and there had and received, and then to transport and carry, in form aforesaid, did undertake ; nevertheless the defendants, not regarding their duty in this behalf, fraudulently intending to injure, &c., the said goods and wares, in such good order and condition as they were at the; time of the delivery and lading thereof on board the aforesaid ship, to the said plaintiff did not deliver ; but the same goods, &c., so improvidently and negligently did place, carry, and keep in the said ship, in the said voyage, that by the default of the defend- ants and their servants, &c., the said goods, by the sea-water • See Gould PI. 205. " 2 Show. 478 ; 1 Show. 101. ' ' Ship-owners may be common carriers. Morse v. Slue, 1 Ventr. 190; 2 Lev. 69. The contrary is said arguendo, i Chit. 2. CH. VI.] ACTIONS AGAINST PAETNERS. 687 coming into the said ship were spoiled and damnified." To this declaration the defendants pleaded not guilty ; and upon special verdict found, — "that there was a master of a vessel who acted, that the goods were delivered to him and lost, and that the defendants were proprietors, and that here are others not named," &c., — the court gave judgment for the defendants, all the judges agreeing that the action, though in form ex delicto, was grounded in contract, and that the other parties ought to have been named ; that the declaration was, that the defendants swper se susceperunt; and that it was the same as if it had been said stiver se assump- serunt, in consideration of a promise to pay the hire, that the goods should be safe carried. § 733. So in Powell v. Layton,^ the declaration stated, that the plaintiff, " at the special instance and request of the said de- fendant, had caused to be delivered to the said defendant divers goods, to wit, &c., to be carried and conveyed by him, the said defendant, on board, &c., to be delivered in the like good order, and well conditioned, all and every the dangers and iaccidents of the seas and of navigation, &c., excepted, unto order, for certain freight to be therefore paid to the said defendant ; and although the said defendant took and received the said goodf, &c., and although the dangers, &c., did not prevent, &c., yet the said de- fendant not regarding his duty, did not, &c., carry, convey, and dehver the said goods, or any part thereof, according to his said duty, but wholly failed and neglected so to do, and so carelessly* and negligently, &c., that the goods were lost." The defendant pleaded in abatement the non-joinder of the other persons who were his partners, and jointly interested in the vessel, and, upon demurrer, the court gave judgment for the defendant ; Mansfield C. J., observing, that, although the word suscepit was not used in the declaration, yet the nature of the charge was, that the defend- ant agreed to carry the goods to Sicily, and had failed in the per- formance of his agreement. In Max v. Roberts,^ the point in the cause was decided on the same principle, although the question airose in a different shape. There, the declaration stated that the defendants were owners of a ship, and that the goods were shipped 1 2 N. R. 370 ; Tuttle v. Cooper, 10 Pick. 283, 284. « 2 N. R. 365 ; Tuttle v. Cooper, 10 Pick. 284-287. 688 EIGHTS OF PARTNEES, ETC. [eOOK III. on account of the plaintiff, to be carried, &e. On the trial, he failed in proving that the defendant Roberts, and the eight other defendants, were part-owners ; by his evidence he affected the eight only. The court gave judgment qf nonsuit. § 734. But the doctrine contained in the foregoing cases, unless any of them be considered to involve special contracts,-'^ must now, if applicable in any case, be confined to carriers by water ; for with respect to carriers by land, unless a special contract appear on the declaration, it is unnecessary for the plaintiff to sue all the carriers. For by the statute 11 Geo. 4 & 1 Will. 4, c. 68, sects. 5 & 6, any one or more mail-contractors, stage-coach proprietors, or common carriers by land for hire, shall be liable to be sued by his, her, or their name or names only; and that no action or suit commenced to recover damages for loss or injury to any parcel, package, or person, shall abate for the want of joining any co-pro- prietor or copartner in such mail, stage-coach, or other public con- veyance by land for hire. Provided that nothing in the act shall extend, or be construed to annul, or in any wise affect, any special contract for the conveyance of goods. § 735. And, independently of the statute just referred to, the inclination of the courts, at present, seems to be, to consider actions against common carriers as laid in tort, unless the declarer tion state very strictly a case of contract. This observation is, of course, applicable to all common carriers, whether by land or by water. In Ansell v. Waterhouse,^ the declaration charged the defendant as proprietor of a common stage-coach for carrying pas- sengers from London to Manchester for hire, and that he received M. A. as a passenger to be safely carried from Manchester to Liverpool for a certain fare, and, by reason thereof, ought care- ' Lord Ellenborou{;h considered the contract in Powell v. Layton to be of a special nature. " The ship," he said, " was neither alleged to be a com- mon ship, nor the defendant to be a common carrier. The declaration, moreover, referred to terms of express contract, for it alleged that the goods were to be delivered, all dangers and accidents of the seas and of navigation of whatever kind excepted ; which exception could only have subsisted by virtue of an express contract." 6 Mau. & Sel. 339. ' 6 Mau. & Sel. 385 ; 2 Chit. 1. It seems that in an action on the case against stage-coach proprietors, for an injury from mismanagement in driv- ing the coach, the proprietors and the coachman may be sued jointly. Whit- amore v. VVaterhouse, 4 Carr. & Payne, 385, CH. VI.] ACTIONS AGAINST PARTNERS. 689 fully to have conveyed her ; yet the defendant, not regarding his duty, conducted himself so carelessly,. that, by the negligence of him and his servants, and for want of due care and attention to his duty, the coach was overturned, whereby M. A. was injured. The defendant pleaded in abatement the non-joinder of the other proprietors as co-defendants, but the Court of King's Bench held that the plea was not sustainable. Lord EUenborough observed, that there was not a word in the declaration sounding in contract, and that there was nothing to oust the plaintiff of the benefit of declaring on the custom with all the consequences. That the practice of declaring against common carriers on the custom of the realm was as ancient as the law itself, and was uniformly adopted until somewhere about the time of Dale v. Hall ; ^ since then, it has been usual not to declare in this form, but in contract-; yet the modem use did not supersede, although it had supplanted, the former practice of declaring in tort. That the advantage of proceeding on the custom of the realm was, that the plaintiff might sue one or more of several tort-feazors, as in tort all the parties need not be joined. In the case of Bretherton v. Wood,^ the cause of action and the declaration were nearly the same as in the preceding case. The defendants, however, pleaded not guilty, and the jury having found all guilty except two, judgment was entered up accordingly. A writ of error was then brought, aver- ring that judgment should have been given either against all or for all the defendants ; but the court affirmed the judgment, hold- ing that the declaration in this case was laid in tort. § 736. Again, in the late case of Pozzi v. Shipton,^ the declara- tion contained no words of contract, but, on the other hand, it did not expressly aver that the defendants were carriers. The Court of King's Bench, however, were of opinion that the declaration might be read as founded on the general custom of the realm, and, consequently, that a verdict which had been obtained against one defendant and in favor of the other was maintainable. The dec- laration, which was in case, stated that the plaintiff deUvered to the defendants, and they accepted and received from him, goods. • 1 Wils. 281. " 6 Moore, 141 ; 3 Brod. & Bing. 52. ' 8 Adol. & Ell. 963 ; 1 Per. & D. 4. 58* 690 EIGHTS OP PARTNERS, ETC. [BOOK III. to be taken care of and conveyed by the defendants from Liver- pool to Birmingham, and there delivered to A., for the plaintiff, for reasonable reward to the defendants in that behalf ; and there- upon it became the duty of the defendants to take due care of such goods while they so had the charge thereof for the purpose aforesaid ; and to take due and reasonable care in and about the conveyance and delivery thereof as aforesaid ; yet the defendants, not regarding their duty, &c., did not, nor would take due care, &c., and that the goods were injured, to the plaintiff's damage. At the trial it was proved satisfactorily, that the defendant, against whom the verdict was obtained was a common carrier, and it was not objected at the time, that proof of an express contract was necessary in order to sustain the declaration. Under these circum- stances, the Court of King's Bench refused to disturb the verdict, observing, that as the language of the declaration was consistent with the action, being founded on the general custom, and as there were no words of express contract, the court after verdict was bound to read it as founded on the custom ; and that it was not then necessary to say whether the want of an express averment that the defendants were common carriers for hire would have 4)een good on special demurrer. § 737. However, as to actions ex quasi contractu against part- ners, other than those which we have just noticed, it seems most consistent with principle, and most agreeable with the tenor of modem authorities, that they should be considered as actions ex contractu, and that the form of the action is not to vary the right of defence.^ The case of Govett v. Radnidge,^ which is at vari- ance with this doctrine, appears to be no longer law. That was an action against three, wherein the plaintiff declared that they had the loading of a hogshead of the plaintiff's, for a certaid reward to be paid to one of them, and a certain other reward to the other two, and that the defendants so negligently conducted themselves in the loading, &c., that the hogshead was damaged ; and it was held that the gist of the action was the tort, and not the contract out of which it arose ; and, therefore, that on the plea of not guilty, the two being acquitted, judgment might be had against the third, who was found guilty. But this case has been expressly > 1 Chit. PI. 36, note (6). ' 3 East, 62. CH. VI.] ACTIONS AGAINST PARTNERS. 691 disapproved of ; ^ and Lord Ellenborough, who delivered the judg- ment of the court in Govett v. Radnidge, seems himself on a sub- sequent occasion to have doubted its authority.^ In Weal v. King,^ the declaration stated that the plaintiff bargained with the defendants for certain lambs as sound lambs, and then alleged a deceit to have been effected on him by means of a warranty made by the defendants upon a joint sale to him of both of the lambs, their joint property ; it was held that the action, though laid in tort, was founded on the joint contract alleged ; and, therefore, that the plaintiff could not recover upon proof of sale and war- ranty by one only, as of his separate property. § 738. It is to be observed, that, in the case just cited, an ex- press joint contract appeared on the face of the declaration, and, indeed, the allegation of a jomt contract of sale was not only mar terial, but essentially necessary to the joint warranty alleged upon record to have been made with the supposed sellers. It might, perhaps, be a question, whether, if an action on the case were brought against several defendants, in a matter where there is no action by the custom of the realm, and no express or particular contract was stated on the declaration, such an action would be considered as laid in tort or in contract ; but, upon the whole, it is conceived that the court would look to the real nature of the case, without reference to the form of the declaration ; and would hold the action to be attended with the consequences of tort or contract, according as tort or contract was the essence of the actual trans- action between the parties.* SECTION V. OF THE DECLARATION. § 739. In bailable process, the plaintiff, before the stat. 1 & 2 Vict. c. 110,^ could not declare against one defendant sepa- 1 2 N. R. 372. ' 12 East, 454 ; Walcott v. Canfield, 3 Conn. 198. ' 12 East, 432. * See and consider Jennings v. Eundall, 8 T. E. 335 ; Green v. Green- bank, 2 Marsh. 485 ; Marzetti v. Williams, 1 Barn. & Adol. 415 ; Burnett v Lynch, 5 Bain. & Cres. 589 ; Newberry v. Colvin, 7 Bing. 190. ' See ante, § 707 et seq. 692 EIGHTS OF PARTNERS, ETC. [BOOK III. rately, upon joint process and aifidavit to hold to bail against two, even though they were sued upon a joint and separate promissory note ; * and the rule was the same, although the party not de- clared against was out of the jurisdiction of the court ; ^ but, in process not bailable, if the writ were joint and the declaration several, it was not irregular.^ And since the above-mentioned act, it would seem that any palpable difference between the bailable proceedings and the main proceedings in the action will not be al- lowed.^ We have seen, that, under a contract made with the firm, all the partners inust be sijed ; ^ but that, where a separate security- is given for the joint contract, either the party giving the security may be sued separately, or all the partners may be sued jointly.^ In this last case, if it be intended to sue all the partners, the security must be abandoned, and the declaration must be con- fined to money counts against aU the partners.' i § 740. Upon the death of a partner, the plaintiff may, in his declaration against the survivmg partner, include a demand against him as a survivor, with a demand against him as if he were solely liable.^ An action, also, on the partnership account may be maintained against the survivor, without describing him as such ; ^ for if both had been alive, and one only had been sued, it would, as we have seen, have been no defence upon the general issue, but only on a plea in abatement. Therefore, it has been held, that ' Lewen v. Smith, 4 East, 489. ' Thompson v. Cotter, 1 Mau. & Sel. 85. ' Stables v. Ashley, 1 Bos. & Pull. 49 ; Evans v. Whitehead, ante, § 709. * 1 Chis. Archb. Pr. 514. An agi-eement to stay- " proceedings " in the action includes bailable proceedings. Ball v. Stanley, 4 Jurist, 561. ' Ante, § 712. But by Mississippi Stat. 1836, declaring the contracts of partners to be joint and several, the rule of pleading thereto is materially changed ; it is not necessary in suing in assumpsit on such contracts to allege a partnership, and the plaintiff may declare against any one or more of the partners. Nutt v. Hunt, 4 Smedes & Marsh. 702. So in other cases where such contracts are made joint and several by statute, see ante, § 580, note; post, § 757, in note. » Ante, §§ 474, 481. ' Emly V. Lye, ante, § 475 ; Denton v. Rodie, ante, § 482. » Golding V. Vaughan, 2 Chit. 436. ' 1 Chit. PI. (10th Am. ed.), 50 and notes ; Raborg v. Bank of Columbia, 1 Harr & Gill, 231 ; Goelet v. M'Kinstry, 1 John. Cas. 405 ; Grant v. Shurter, 1 Wendell, 151. CH. VI.] ACTIONS AGAINST PARTNERS. 693 under a declaration charging the defendant in his own right only, the plaintiff may recover one demand due from the defendant indi- vidually, and another due from him as surviving partner.^ § 741. But although in a declaration against the surviving part- ner, it is not absolutely necessary to state the survivorship, yet Lord EUenborough observed that it would be more convenient in all eases where a debt accrues from a surviving partner to declare against him accordingly, because it is more convenient to make the forms of declaration subservient to the information of the party charged ; ^ and it is certainly more usual to declare on a contract with the deceased partner and the survivors, rather than with the survivors alone .^ And where A. was co-executor with B., and B. copartner with C, and B. paid into the firm money received by him as co-executor ; upon the death of B. a declaration in assump- sit for this money was held bad, in which A. declared in his own right, and not as surviving executor, against C. in his own right, and not as the surviving copartner.* § 742. In an action against two defendants, of whom one only appears, or is in custody, the plaintiff may proceed to outlawry against the other, and may then declare against the one who has appeared alone, stating the outlawry of the other in the commence- ment of the declaration.^ In such case, it is not enough to allege that the party was in due manner outlawed, without adding that he was outlawed in that suit.^ But an allegation, that a co-de- fendant was, by due course of law, outlawed .at the suit of the plaintiff in this plea and suit, is sufficient^ without a prout patet per recordumJ , § 743. The omission of one of several joint contractors as a defendant in assumpsit being matter of abatement only, if it be ' Richards v. Heather, 1 Barn. & Aid. 29, overruling, upon this point, Spalding v. Mure, 6 T. K. 363. ' See note (5) on preceding page. " Per Le Blanc J., 2 Mau. & Sel. 25. In an action for money paid, a declaration on an implied promise by all the partners is not supported by proof of payment of money for the surviving partners after the death of the other partners. Tom v. Goodrich, 2 John. 214. * Fitzgerald v. Boehm, 6 Moore, 332. ' 2 Chit. Archb. Pr. 934. * Saunderson v. Hudson, 3 East, 144. ' M'Michael v. Johnson, 7 East, 60. 694 EIGHTS OF PARTNERS, ETC. [bOOK III. not so pleaded, the action proceeds as if the promise had been made exclusively by the party sued on the record.^ Therefore, where one of two partners becomes bankrupt, and obtains his cer- tificate, and an action is brought against his solvent partner alone, a declaration in which counts upon a promise by the defendant and another, since become a bankrupt and Certificated, are joined with counts on promises by the defendant solely, since the other became a bankrupt, will stand good, if the defendant omit to plead the joint contract in abatement.^ SECTION VI. OF PLEAS IN ABATEMENT. § 744. Pleas in abatement to the writ are so termed rather from their effect than from their being strictly such pleas ; for, as oyer of the writ can be no longer craved, no objection can be taken ' Per Gibbs C. J., Hawkins u. Ramsbottom, 6 Taunt. 179 ; see ante, §§ 713-717. " Hawkins v. Ramsbottom, 6 Taunt. 179. But, joer Gibbs C. J.: "I say nothing on the question what would be the case, if, before a judge at Nisi Prius, the plaintiff had offered evidence applicable to both demands." Where a declaration in assumpsit contains only the money counts, under the general issue, it is not a variance for the plaintiff to give in evidence a prom- issory note made payable to him by a firm of which the defendant was a partner. Neal v. Fisher, 2 Har. & Gill, 274. Where one partner binds himself, his heirs, &c., by a bond, and signs it in his own name for the com- pany, a declaration in debt against the company, charging that such part- ner, for the company, bound "himself and his heirs," &c., without containing any further averments, is insufficient to maintain the action against the com- pany. Shelton v. Pollock, 1 Hen. & Manf. 423 ; Garland v. Davidson, 3 Munf. 189. In a suit against three persons, two of whom are alleged to be partners, a note signed by one in his proper name, and by the second in the name of his firm, may be given in evidence in support of a count on a note alleged to be made by the defendants, their own proper hands bein" there- unto subscribed. Porter v. Cumings, 7 Wendell, 172. On proof of the partnership, such note may be given in evidence under the money counts. Ibid. And it seems such note is admissible in evidence in an action against both partners under a count on the note, although there be no averment of partnership in the declaration. At all events, it is proper evidence under the count for money lent. Mack v. Spencer, 4 Wendell, 411. CH. VI.] ACTIONS AGAINST PAETNEKS. 695 by plea to matter which is merely contained in the writ ; but if the mistake in the writ be carried also into the declaration, or rather if the declaration, which is presumed to correspond- with the writ,, be incorrect in respect of. some intrinsic matter, it is then open to the defendant to plead an abatement to the writ, and there is no plea to the declaration but in bar.' We have seen in what cases the non-joinder of partners as co-defendants ought to be taken advantage of by plea in abatement.? It may hea-e be added that the misnomer of one partner, who is sued jointly with others, can no longer be made available by plea in abatement ; but that the defendant who is misnamed may cause the declaration to be amended at the plaintiiF's costs, by inserting the right name.^ § 745. As these pleas delay the trial of the merits of the action, the greatest accuracy and precision are required in framing them. They should be certain in every intent, and be pleaded without any repugnancy ; and must in general give the plaintiff a better writ.* It has, therefore, been laid down, that if A. plead a part- nership between himself and B., and, after issue joined, a partner- ship is proved between A., B., and C, this is conclusive against the defendant.* And it has been decided that a plea in abate- ment, that the defendant jointly with sixteen others contracted, imports that the defendant jointly with sixteen others and no more contracted, and that if more did contract, the plea is bad.^ And where, before the passing of the act which requires an affidavit as to the parties' residences,^ the defendant pleaded the non-joinder of four others as jointly Uable with himself, and refused upon ap- plication to give their residences and additions unless the action were discontinued, the court made the rule absolute for the defend- ant to deliver such particulars, or in default thereof for setting aside the plea.^ Moreover, although a defendant may plead in abatement to part of a writ or declaration, and demur or plead in • Chit. PI. 390. " Ante, § 713 et seq. ' Stat, a & 4 Will. 4, c. 42, § 11. « 1 Chit. PI. 395. ' Per De Grey C. J., 2 W. Bl. 947. * Godson V. Good, 6 Tannt. 507. ' See note (5) on next page. ' Taylor v. Harris, 4 Barn. & Aid. 93 ; see Newton v. Verbeke, 1 You. & Jerv. 257. 696 RIGHTS OF PARTNERS, ETC. [BOOK III. bar to the residue ; ^ yet a plea -which professes to be an answer to the whole declaration, but which in fact is an answer to part only, is bad. Therefore, where, on a writ of debt for a certain sum, the plaintiff declared in the first count for part of it as bor- rowed by the defendant of the plaintiff, and in a second count for the residue of the sum for interest of money lent by the plain- tiff to the defendant, and the defendant pleaded in abatement of the writ, that " the said sum of money in the said writ mentioned, and thereby supposed to be borrowed from the plaintiff," was bor- rowed by defendant and others, and not by the defendant sepa- rately ; the court, on demurrer, held the plea bad, because it an- swered only the cause of action mentioned in the first count.^ § 746. A plea in abatement for the non-joinder of a party who should be a defendant must aver that the party omitted is still living,^ and that he is a resident within the jurisdiction of the court.* It is not necessary to state in the plea where the party is living, no venue being required to such plea ; ^ but his place of residence must be stated with convenient certainty in the affidavit verifying such a plea.^ The plea must conclude, as it also usually commences, by praying judgment of the writ and declaration,'^ and that the same may be quashed. And in a plea of non-joinder to the whole of the action, it is sufficient to plead in abatement of the Writ only, and not of the declaration also ; but where it is intended to plead in abatement of part of the writ, and the cause of abate- ment arises from some of the counts of the declaration, the defend- ant must plead in abatement of both.^ Under the 4 Anne, c. 16, an affidavit must be added to every plea in abatement. By the 11th section of that statute it is enacted, that no dilatory plea shall be received in any court of record, unless the party offering ' Godfrey's case, 11 Kep. 45 b. ^ Harries v. Jameson, 5 T. K. 553. " Saund. 291 a, note (2). < Stat. 3 & 4 Will. 4, c. 42, § 8. See Dennett v. Chick, 2 Greenl. 191. ' Neale v. De Garay, 7 T. R. 243. « Stat. 3 & 4 Will. 4, c. 42, § 8. The plea should also show that the party omitted was one of the company when the contract, on which the action is grounded, was executed. Ainsworth jj. Dyer, 2 Koot, 202. ' Atwood V. Davis, 1 Barn. & Aid. 1 72. ' 2 Saund. 210 c, note (1) ; Powell v. FuUarton, 2 Bos. & Pull. 420, where see the precedent. CH. VI.] ACTIONS AGAINST PARTNERS. 697 such plea do by affidavit prove tte truth thereof, or show some probable matter to the court to induce them' to beheve that the fact of such dilatory' plea is true. § 747. Where the aon-joinder of one of several defendants is truly pleaded, the plaintiff cannot be allowed to amend, even for the purpose of saving the statute of limitations.^ If the plea be true, the plaintiff must enter a. 'Cassetur, and, unless barred by the statute he may commence a fresh action.^ He, however, may reply, that the party omitted has been discharged by bankruptcy and certificate, or under an act for the relief of insolvent debtors.® § 748. If the plea be insufficient in point of law, the plainitiff may demur generally ; * but it is more advisable to demur spe- cially, where the plea is merely informal.^ If on demurrer to a plea in abatement, or a replication thereto, judgment be given for the plaintiff, it is generally only interlocutory that the defendant answer over ; ^ but where the plea in abatement improperly com- mences or concludes in bar, the judgment may be final.'' If the judgment be for the defendant, it is that the writ be quashed ; * but without the defendant prays a particular and proper judgment in abatement, the court are not bound to give the proper judg- ment upon the whole record, as they would be in the case of pleas in bar.^ The party who succeeds on the demurrer is entitled to his costs.io § 749. If the plea be untrue in fact, the plaintiff should re- plevy.^^ Thus, in assumpsit, the plaintiff may reply to a plea of ' Roberts v. Bate, 6 Adol. & Ell. 778 ; contra, Lakiu v. Watson, 2 Cromp. and Mees. 685. « 1 Chit. PI. 402. = Stat. 3 & 4 Will. 4, c. 42, § 34. ' Mitchell V. Tarbut, 5 T. R. 549 ; Lloyd v. Williams, 2 Mau. & Sel. 484 ; Rex. V. Shafcspeare, 10 East, 83. ' 1 Chit. PI. 404. ' 2 Saund. 210, n. 3 ; Bowen v. Shapcott, 1 East, 542 ; Lloyd v. Williams, 2 Mau. & Sel. 484 ; Wade v. Stiff, 2 Moore & Payne, 26 ; Com. Dig. Abate- ment (L 14). ' Nowlan v. Geddes, 1 East, 634. ' Bac. Abr. Abatement (P). ' Per Lord EUenborough, 10 East, 87. '» Stat. 3 & 4 Will. 4, c. 42, § 34. " 1 Chit. PI. 402 ; Gibbs v. Merrill, 3 Taunt. 307. 59 698 EIGHTS OF PARTNERS, ETC. [bOOK HI. non-joinder, that the defendant undertook solely to pay, &c.,i and thereupon issue may be joined.^ Upon the trial of this issue, in a case where the action had been brought for goods sold and de- livered, it was held that the defendant clearly established his plea in abatement, by showing that a partnership existed between him- self and others, and that the bill of particulars delivered by the plaintiff contained some items furiisshed by the partnership, though it contained others furnished by the defendant alone.^ On the other hand, when the defendant, in support of his plea, has shown that a partnership existed at the time of the contract, the plaintiff may invahdate this evidence, by showing that the contract was several. Therefore, where, in an action of assumpsit, the de- fendant pleaded that the promise was made jointly by himself and two others, who were alive ; and after the defendant -had proved that he had two partners, the plaintiff produced several letters from him, signed in his own name, in which he promised to pay the debt in question, without making any mention of his co- partners, who were in fact, resident in America — Lord EUenbo- rough held the letters conclusive evidence that the debt was due "from the defendant individually, and not from the partnership, and the plaintiff had a verdict for the amount of his demand.* And where an action was brought against one defendant, who pleaded a similar plea, it was held that an account kept by the defendant only, in a pass-book between him and the plaintiff, at the bankers ' Young V. Bairner, 1 Esp. 103; and see Ewer d. Andrews, 3 Barn. & Cres. 146. " Where the plea is, that the promises were made jointly with A., and the repUcation, that they were not made jointly with A., on the trial of this issue the defendant begins. Fowler v. Coster, 3 Carr. & Payne, 463. But "see, contra, Robey v. Howard, 2 Stark. 556, where Abbott C. J. said that the plaintiff ought to begin, since, at all events, it was incumbent on him to prove his damages. See also, Hare v. Munn, 1 Mood. & Malk. 241. There, an action for money lent was brought against one of the members of a club, and the defendant pleaded in abatement the non-joinder of one hundred and siity-three persons, members of the club. The plaintiff's evidence being stated to be, that he had refused to lend the money on the credit of the club, and that the defendants had thereupon consented to make themselves personally liable. Lord Tenterden allowed the plaintiff's counsel to begin. But, in this case, the defendant's counsel did not object. » Colson V. Selby, 1 Esp. 452. * Murray v. Somerville, 2 Camp. 99, n. CH. VI.] ACTIONS AGAINST PARTNERS. 699 of the former, was strong evidence to show that the credit was given to the defendant alone.^ In like manner, the plaintiff may support his case imder this issue by showing that the defendant has made himself separately liable for a demand originally joint.^ § 750. If the issue be found against the defendant, final judg- ment shall be against him for the delay ; ^ but if the defendant is able to prove his plea, the plaintiff may be nonsuited,* and the defendant is entitled tb costs.' We have already seen inciden- tally,^ that it may be advisable for a plaintiff, after a plea in abate- ment for non-joinder of defendants, not to proceed to trial on an issue thereon, but to commence a fresh action against the defend- ants named in the plea, together with the original defendants. In cases of this nature, the proper commencement of the declaration is set forth in the general rules of Hilary Term, 1834.'^ SECTION VII. OP PLEAS IN BAK. § 751. Partners may plead in bar of an action against them all such matters as arise from the joint nature of their obligations ; and it may here be remarked, that, since the rules of Hilary Term, 1834, a special plea will be necessary in a great variety of cases where formerly a plea of the general issue would have sufficed. Thus, in actions upon bills of exchange and promissory notes, a plea of non assumpsit is no longer admissible. In such actions a plea of denial must traverse some matter of fact, as the drawing, or making, or indorsing, or accepting, &c. And where the plea of non assumpsit is admissible, it operates only as a denial in fact of the express contract or promise alleged, or the facts from which the contract or promise may be implied. All matters in confession ' Robey v. Howard, 2 Stark. 555. " Ex parte Ross, Buck, 125. » Com. Dig. Abatement, (I. 15) ; 1 East, 544. * Colson V. Selby, supra. ' Garland v. Exton, 1 Lord Raymond, 992 ; and see 1 Salk. 194. • Anle, §§ 725, 726. ' Rule 20. 700 EISHTS OF PAKTNBKS, ETC. [BOOK III. and avoidance, both in assumpsit and debt, must be specially pleaded ; that is to say, not only matters by way of discharge, but those which show the transaction to be either void or voidable in point of law, on the ground of fraud or otherwise ; as, for instance, infancy, coverture, release, payment, performance, illegality of consideration, drawing, &c., bills by way of accommodation, set- off, mutual credit, &c. And, although in actions of debt on sim- ple contract, except on bills of exchange and promissory notes, the defendant may plead " that he never was indebted in manner and form as in the declaration alleged ; " this operates only in the same manner as the plea of 7wn assumpsit in indebitatus assump- sit ; and the plea of nil debet is not allowed in any action. To this may be added, that, in debt on specialty or covenant, the plea of nan est factum operates only as a denial of the execution of the deed in point of fact. Having made these preliminary remarks, it may be necessary to mention some points of pleading more par- ticularly referable to the situation of partners. § 752. We have seen that a release to one of several partners enures to the benefit of all.^ A release, therefore, to one of sev- eral partners may be pleaded in bar of an action of debt against JJie firm, either on a joint,^ or joint and several bond.^ It may also be pleaded in bar of an action of assumpsit^ But if the defendant plead a release, and the release is in fact limited in its operation, and not inconsistent with the plaintiff's right to sue the 4efendant for a particular purpose, the plaintiff may crave oyer of the release, and aver in his replication that he^is suing for the purposes stated in the release.^ § 753. Where the obhgee has covenanted with a sole obligor '- Ante, § 606. « Com. Dig. Pleader (2 W. 30) ; Vin. Abr. Release, G. (a) ; Co. Litt. 232, a, even although the obligee release to one, " provided that the other shall not take the benefit of it." Litt. Rep. 190. But this seems very ques- tionable. ' Com. Dig. Pleader (2 W. 30) ; Clayton v. Kynaston, Salk. 574 ; D. Holroyd J., Burleigh v. Stott, 2 Man. & Kyi. 93. Where a covenant is joint and several, a release of the action to one shall not be a bar as to the other. Com. Dig. Pleader (2 V. 11) ; 2 Salk. 574. Sed qu. ' Solly V. Fqrbes, ante, § 607. ' Ibid. And see Payler v. Homersham, 4 Mau. & Sel. 423 ; Simons v. Johnson, 3 Barn. & Adol. 175. CH. VI.] ACTIONS AGAINST PARTNERS. 701 not to sue Mm ; there, to prevent circuity of action, the covenant may be pleaded qua a release to an action on the bond.i But a distinction is taken between a covenant not to sue a sole obligor, and a covenant not to sue one of several obligors.^ Thus, if A. is bound to B. and B. covenants never to put the bond in suit against A., if afterwards B. sue on the bond, A. may plead the covenant by way of release. But if A. and B. be jointly and severally bound to C. in a sum certain, and C. covenants with A. not to sue him, that shall not be a release, but a covenant only ; because he covenants only not to sue A., but does not covenant not to sue B., for the covenant is not a release in its nature, but only by construction, to avoid circuity of action. He may sue the other, because he might, without this covenant, sue one of them without the other. ^ And the case of Lacy v. Kynaston was followed in that of Dean v. ^^Tewhall,* before Lord Kenyon, where it was held, that, to an action against one of two obligors in a joiat bond, the defendant could not plead, by way of release, a covenant by the plaintiff not to sue his co-obligor. It follows, from these cases, that if, after a covenant not to sue one partner, the plaintiff enforces judgment against all, the covenantee must bring his action on his covenant, for he cannot plead the covenant in bar.^ § 754. Payment by one of two partners may be pleaded aa payment by both. So a tender by one of two partners may be pleaded as a tender by both. But, after a tender of what is due • Ayliff V. Scrimshire, 1 Show. 46 ; Smith v. Mapleback, 1 T. 446. So, in an action upon a promissory note of a partnership, against the surviving partner, it was held, that an indenture, by which the plaintifif and the de- ceased partner and another person had covenanted to indemnify the sur- viving partner against all debts due from the partnership, and against all actions brought against him by reason of such debts, was a bar to the action. Whitakcr v. Salisbury, 15 Pick. 534. " Button V. Eyre, 1 Marsh. 608 ; D. Holroyd J., Thomas v. Courtnay, 1 Barn. & Aid. 8 ; ante, § 608 and cases in note. ' Lacy V. Kynaston, 12 Mod. 551 ; 1 Lord Raymond, 690. A deed inter partes cannot operate as a release to strangers. Storer v. Gordon, 3 Mau. & Sel. 308. ' 8 T. R. 168. ' See 1 Marsh. 608 ; Dowes v. Jeffries, And. 307 ; Turner v. Davies, 2 Wms. Saund. 150, note 2. 59* 702 RIGHTS OF PARTNERS, ETC. [bOOK III. from two persons on a joint contract, a subsequent application to one of them is sufficient to support a replication to a plea of ten- der, that the plaintiff subsequently demanded payment from the defendants.^ § 755. A former recovery for the same debt may be pleaded by partners, though the recovery was against one only. But it must be shown by the plea, that the plaintiff took the fruits of tihat recovery in satisfaction of the joint debt. Therefore, where one of three joint covenantors gave a bill of exchange for part of a debt secured by the covenant, on which bill judgment was re- covered, such judgment was held to be no bar to an action of covenant against the three ; the defendants, though they averred in their plea that the bill was given for payment and in satisfac- tion of the debt, omitting to aver that the bill had been accepted as satisfaction, or had in fact produced satisfaction.^ § 756. Where an action is brought against some of the part- ners of a firm, and the defendants recover a verdict, and after^ wards a new action is brought against the other partners for the same demand, they may plea^d the former judgment in answer to the action ; because otherwise, if a verdict should be recovered against the latter partners, they might call on their copartners for contribution, and the latter would thus be made circuitously to pay the plaintiffs, after having obtained a verdict in the action bjrought directly against them.s § 757. Where a debt is several as well as joint, as in the case of a joint and several bond or promissory note, judgment recovered against one of the joint debtors will be no bar to an action against the other.* But where the debt is joint only, a judgment against ' Peirse v. Bowles, 1 Stark. 321. ' Drake v. Mitchell, 3 East, 251 ; and see Higgen&'s case, 6 Kep. 46 a ; Ashbrooke v- Snape, Cro. Eliz. 240 ; Ward v. Motter, 2 Rob. (Virg.), 545. ' See arg. Wilson v. Hirst, 4 Barn. & Adol. 763 ; Cowen J. in Pierce ». Kearney, 5 Hill (N. Y.), 93. But see per Bronson J. in s. c. 5 Hill (N. Y.), 86. * See United States v. Cushman, 2 Sumner, 310; Trafton v. United States, 3 Story C. C. 646 ; Simonds v. Center, 6 Mass. 18 ; Gratz v. Stump, Cooke, 494 ; M'Mahon v. Murphy, 1 Bailey, 535 ; King v. Hoare, 13 Mees. & W. 494; Lechmere v. Fletcher, 1 Crorap. & Mees. 623 ; Higgens's case, 6 Co. Rep 44-46 ; 1 Lindley Partn. 368 ; Ex parte Christie, Mon. & Bl. 352. "In such case," Mr. Justice Wilde observed, in Ward v. Johnson, 13 Mass. CH. VI.] ACTIONS AGAINST PARTNERS. 703 one joiut contractor would be a bar to an action against another ; because the latter might plead that he made no promise except with the former.^ So, where there are dormant partners in a 151, "the separate judgments amount in substance to the same as a joint judgment against all the promisors. In both cases, each defendant is liable for the whole debt, and payment by one will discharge the others." In Trafton v. The United States, 3 Story C. C. 646, Mr. Justice Story pro- ceeded further, and held that, where a contract is both joint and several, a judgment against both contractors is not a bar to a several action against either one of them ; and a several judgment against either is not a bar to a joint judgment against both. See also, to the same effect. United States v. Cushman, 2 Sumner, 426. But see Ex parte Eowlandson, 3 P. Wms. 405 ; Cabell V. Vaughan, 1 Saund. 291 f. ; King v. Hobbs, Yelverton, 26, 27, and Mr. Metcalf's note (1). In some of the States, all partnership contracts are joint and several by statute. See How. & Hutch. (Miss.) Laws, ch. 45, § 29, p. 595. In Alabama, an action may be prosecuted against any one or more of several partners jointly liable. Laws of Ala. (1823), p. 449. See McLain V. Carson, 4 Ark. 164 ; Lyons v. Hamilton, 1 How. (Miss.), 474 ; Fairchild Vi Grand Gulf Bank, 5 id. 597 ; Ante, § 580, note. '■ King V. Hoare, 13 Mees. & W. 494 ; Maule J., in Bell v. Bankes, 3 Man. & Gr. 267; Bayley J., in Lechmere v. Fletcher, 1 Cromp. & Mees. 634; Story J., in United States v. Cushman, 2 Sumner, 437-441 ; Tralflon v. United States, 3 Story C. C. 646. In this last case, Mr. Justice Story said : " If the demand be founded on a joint contract, it is certainly merged and barred in the judgment as to the first contractor sued; and if so merged and barred, it would seem equally barred as to the other, since no joint suit can be maintained thereon ; and it would seem to follow, that the contract, being an entirety, and merged or extinguished by the judgment as to one, might be gone as to the other by operation of law. If the latter were sued alone, he migfit, even as a matter of pleading, insist that the contract was joint, and therefore both contractors ought to be joined. If sued jointly, there could be no judgment obtained against the parties jointly, because the contract as to one would be gone by the merger ; and the suit must be good and maintainable as to all the defendants, or not at all." 3 Story C. C. 651. In Pierce v. Kearney, 5 Hill (N. Y.), 86, Bronson J., remarking on this point, said : " The original security becomes merged and extinguished by the higher security obtained through the judgment. The. effect of the re- covery, as it respects a further remedy against all the parties, does not turn upon the inquiry whether the merits of the claim have been determined, and so are res acljudicatce, hut upon the fact, that, by electing to proceed against one, the party has elected to change his security.'' See also. Ward v. John- son, 13 Mass. 151, 152. In King v. Hoare, above cited, Parke B., noticed the case of Sheehy v. Mandeville, 6 Cranch, 253, and remarked, that the reasoning of Marshall C. J., in that case is not satisfactory. He also noticed the case of Ward v. Johnson, 13 Mass. 148. In Maine, it has been held 704 RIGHTS OF PARTNERS, ETC. [BOOK IIT. firm, and that fact being unknown to the plaintiff, he brings his action against the ostensible partner or partners, upon a cause of action on which the whole firm are liable, and recovers a judg- ment, which is unsatisfied, this may be pleaded in bar to a subse- quent suit upon the same cause of action, in which he joins the ostensible and dormant partners as defendants.^ But proof in that a judgment in another State against one of two joint promisors, with- out satisfaction, is no bar to an action in Maine against the other upon the original contract. Dennett v. Chick, 2 Greenl. 191 ; 1 Lindley Partn. 368; Ex parte Waterfall, 4 De G. & S. 199; Bank of Australasia v. Nias, 16 Queen B. 717. ^ Robertson u. Smith, 18 John. 459 ; Ward w. Johnson, 13 Mass. 148; Smith V. Black, 9 Serg. & R. 142 ; Moale v. Hollins, 11 Gill & John., 11 ; Willings V. Consequa, 1 Peters C. C. 306 ; Anderson v. Levan, 1 Watts & S. 334. In Robertson u. Smith, Robertson brought an action of assumpsit against Smith and Soulden, as partners under the firm of Soulden, Smith & Co., and makers of a promissory note, and recovered a judgment, which was un- satisfied ; and afterwards discovering that two other persons were also part- ners in the firm at the time the note was given, he brought an action against the four as makers of the same note, and the court held that the judgment recovered against two of the defendants on the note was a bar to the subse- quent suit against the four defendants for the same cause of action. Spencer C. J., in this case (18 John. 481, 482) remarked: "The plaintiff has already a judgment upon these notes against two of the defendants, and may proceed to execution. In the present suit, the same defendants are made parties, and necessarily so, and in this suit also, if the plaintiff can recover, there must be judgment against them ; so that with regard to two of the defendants there will be on the records of this court two distinct judg- ments for the same debt. In the former, the separate property of both the defendants will be liable to be taken and sold on execution, and in the latter,' the joint property of all the present defendants. This is certainly an anomaly in the law, and is inconsistent with all my nations of a correct and regular judicial proceeding." He added, — "Whether the court would not allow the plaintiff to move to vacate the former judgment is a different question.'' That such an application would be refused, see Nichols v. Auguera, 2 Miles, 290. In Moale v. Hollins, 11 Gill & John. 41, a decision was made similar to that in Robertson v. Smith, upon a like state of facts. In Ward v. Johnson, 13 Mass. 148, the plaintiff declared in assumpsit against Henry Johnson and Thomas Johnson, as merchants and copartners in trade under the firm and style of Henry Johnson, upon their promissory note, subscribed by said Henry by their said style of partnership, and in their behalf. It appeared that the plaintiff, being ignorant of the liability of Thomas Johnson, had brought a former action on the same note against Henry Johnson alone, and had recovered judgment against him, which judg- ment was unsatisfied. The defendants pleaded the former judgment, and CH. TI.] ACTIONS AGAINST PARTNERS. 705 bankruptcy against the estate of one partner in respect of a part- nership debt is not equivalent to a judgment, and does not pre- the court held it a good bar. The court, in giving judgment, said : " By the recovery of judgment in assumpsit, the contract is merged, and the form of action is changed ; a higher security for the debt being substituted. The contract, therefore, as it respects Henry Johnson must be considered as merged in the former recovery against him. No instance has been found, and we apprehend none can be found, of two judgments being held good against the same person for the same cause of action." " And we know of no principle of law which can authorize us to give separate judgments in an action on a joint contract." The same point was raised in Smith v. Black, 9 Serg. & R. 142. Duncan J., said : " The case is this. John Black, the defendant in error, sold certain goods to Nathan Smith, one of the plaintiffs in error, and took his note, which he put in suit and prosecuted to judgment, on which, however, he has obtained no satisfaction. Afterwards, supposing Newberry Smith, the other plaintiff in error, to be a secret partner, he in- stituted this action against both. It is to be taken for granted, that, when the goods were sold, the note given, and judgment obtained, the fact of Newberry being a dormant and secret partner was unknown to the defend- ant in error ; and that the goods, for which the note was given, were bought on account of the partnership. If the action can be supported, it excites our wonder that, in a matter which must so frequently have occurred, no trace of the doctrine is to- be found in the works of any author, nor prece- dent in any book of reports ; and this silence, though it is not conclusive, yet affords cogent proof against the action." " In my humble judgment, as it is without precedent to support it, except one solitary decision, so it is without legal foundation to rest upon.'' He here refers to the case of Sheehy v. Mandeville, cited below. The second suit in Smith v. Black was brought on the note, and the declaration also contained counts for the goods sold, which were the consideration of the note. There are, however, some cases which seem to hold a contrary doctrine. In Sheehy v. Mandeville, 6 Cranch, 253, the plaintiff Sheehy sold goods to Robert B. Jamesson, and took his note for the amount, which he put in suit and prosecuted to a judgment. Afterwards, supposing Joseph Mandeville to be a secret partner, he instituted a suit against Mandeville and Jamesson. The declaration contained three counts ; the first upon the note, charging it to have been made by the defendants under the firm and style of Robert B. Jamesson ; the second and third counts were for goods and merchandise sold and delivered to the defendants, trading under the film of Robert B. Jamesson. It appeared that Jamesson had been discharged under an act of Congress for the relief of insolvent debtors within the District of Columbia, and no further proceedings were had against him. The defendant Mande- ville, who alone appeared, pleaded two pleas in bar. The first went to the whole declaration, but the second applied to the first count only, and pleaded the judgment obtained upon the note against Jamesson in bar. The 706 EI&HTS OF PARTNERS, ETC. [bOOK III. elude the proving creditor from afterwards suing the solvent part- ners, and recovering from them what he may have failed to obtain in the bankruptcy.^ plaintiff demurred specially to these pleas. The court were of opinion that, upon the pleadings, the several suit and judgment against Jamesson were no bar to the joint action against Mandeville and Jamesson upon the same note, and gave judgment for the plaintiff on the first count. The reasoning of Marshall C. J., in the above case, was met with great force by Spencer C. J., in the above case of Robertson v. Smith. Mr. Justice Cowen, speak- ing of Sheehy v. Mandeville in Pierce v. Kearney, 5 Hill (N. Y.), 94, said: " I do not notice the opposite case of Sheehy v. Mandeville, which is an obvious departure both from principle and authority." Mr. Justice Wilde suggests grounds arising out of the discharge of Jamesson, stated above, upon which the decision in Sheehy v. Mandeville may be supported, without trenching on the principles laid down by him in Ward v. Johnson, above cited. See also, as to the suggestion in reference to the effect of the dis- charge of Jamesson, Dennett v. Chick, 2 Greenl. 193, 194 ; Ward v. Mot- ter, 2 Rob. (Virg.), 566. In Ward v. Hotter, 2 Rob. (Virg.), 559, 560, Baldwin J., suggested that the decision in the case of Sheehy v. Mandeville was misapprehended by Spencer C. J., in Robertson v. Smith. He said : " The separate judgment was not in that case, as he," Spencer C. J., " sup- poses, on a joint, but on a separate contract ; both declarations, it is true, were on the same note, but the first treated it as a separate promise (as it was in point of fact), and the last as a joint promise; and the court, being warranted by the structure of the declaration in the last case, in regarding it in that action as a joint promise, held that the first recovery on the sep- arate promise was no bar to the second action on the joint promise." These suggestions by no means reconcile the cases. In Watson v. Owens, 1 Rich- ardson (S. C), 111, a creditor took the note of the ostensible partner for goods sold to the firm. He then sued the ostensible partner on the note, and recovered judgment, which was unsatisfied. Afterwards discovering that there was a dormant partner, the creditor commenced an action for the goods sold, which were the consideration of the note. The court held, that this action was not barred by the judgment on the note. They said : " The note was not an extinguishment of the account, unless so received, and it is plain," they added, " if the note did not extinguish the account, the judg- ment on the note did not, for the judgment merged only the notfe." Similar suggestions were made in Brozee o. Poyntz, 3 B. Monroe, 178; Scott u. Colmesnil, 7 J. J. Marsh. 415. In Maine, it has been decided that, if one of two joint promisors have neither property nor domicil within the State, a separate action may be sustained against the other, and he cannot plead in ' Whitwell V. Perrin, 4 Com. B. (n. s.), 412 ; Bottomley v. Nuttall, 5 Com. B. (n. 8.), 122. CH. VI.] ACTIONS AGAINST PARTNERS. 707 § 758. Another matter which the partners may now plead in bar of an action, and which indeed they must plead,i although formerly they might have given it in evidence under the general bar a judgment recovered in another State against his co-promisor upon the original contract. Dennett v. Chick, 2 Greenl. 191. This case, in some respects, very much resembles Sheehy v. Mandeville. See Rev. Stat. Mass., oh. 92, § 13. In Anderson v. Levan, 1 Watts & S. 339, Huston J., said: " The case of Sheehy v. Mandeville was cited and relied upon by the court below, and for myself I could wish that case had never been overruled. There is something so unfair in a man receiving the profits of a concern for years, and, if misfortune happens, concealing his interest and leaving third persons to bear the loss, that I think its justice might have supported it." He, however, admits that it has been repeatedly overruled, and yields to the current authority against it. In Penny v. Martin, 4 John. Ch. 566, a ques- tion arose, whether a creditor, who has sued the ostensible partners in a firm and recovered judgment against them, which remained unsatisfied, and had afterwards discovered that there were dormant partners jointly interested in the transaction, out of which the creditor's right of action arose, could obtain relief in equity against such dormant partners, and the Chancellor (Kent) held that he had no jurisdiction to afford relief in such a case. He however, though he suggested the point, gave no opinion whether the creditor had or had not lost his remedy at law. See also, to the point that equity can give no relief in such a case, Willings v. Consequa, 1 Peters C. C. 306 ; Smith V. Black, 9 Serg. & R. 144. The doctrine as stated in the text appears to be well supported by the authorities cited to sustain it. In the complexity caused by the state of the pleadings in Sheehy v. Mandeville, the general question under consideration seems hardly to have been distinctly presented, or at least not necessarily adjudicated ; and those cases which hold a doctrine contrary to the text upon the strength of it have not sufficient support to stand upon. In United States V. Cushman, 2 Sumner, 438, Mr. Justice Story noticed the case of Sheehy v. Mandeville, without questioning his authority. But in Trafton v. The United States, 3 Story C. C. 646, 651, the same learned judge, speak- ing of that case, said that for years he had great doubts as to the propriety of that decision. " If, however," he added,-" the present case were precisely identical with that of Sheehy v. Mandeville, I should deem my judicial opinion bound by it, and should follow it without question. But," he further . added, " there is this distinction between the two cases, that there," in Sheehy v. Mandeville, " the bar was not set up by the judgment debtor who was sued in the second suit ; here he does set it up and rely upon it ; and the identity of the contract and demand in both is admitted by the parties." See Brozee v. Poyntz, 3 B. Monroe, 178 ; Gibbs v. Bryant, 1 Pick. 121 ; Pierce v. Kearney, 5 Hill (N. Y.), 86 ; Moss v. McCuUough, 5 id. 135, 136; Peters v. Sanford, 1 Denio, 224. ' Graham v. Partridge, 5 Dowl. Pr. C. 108. 708 RIGHTS OF PARTNERS, ETC. [BOOK III. issue, is that of sel^off. As the rules of law regardiag set-off are equally applicable, whether the action be brought by or against partners, the observations which follow are directed to either of these cases. § 759. At the common law, if the plaintiff was indebted to the defendant in as much or even more than the defendant owed to him, yet the defendant had not any method of setting off such debt in the action brought by the plaintiff for the recovery of his debt.^ To obviate this inconvenience, and to prevent circuity of action or a bill in equity, it was enacted by statute 2 Greo. 2, c. 22, s. 13, that, " where there are mutual debts between the plaintiff and de- fendant, or if either party sue or be sued as executor or adminis- trator, where there are mutual debts between the testator or intestate and either party, one debt may be set against the other." This was made perpetual by '8 Geo. 2, c. 24, s. 4 ; and to remove any doubt as to whether debts of a different nature could be set off, it was further enacted by that act, that " mutual debts may be set against each other, notwithstanding that such debts are deemed in law to be of a different nature, unless in cases where either of the said debts shall accrue by reason of a penalty con- tained in any bond or specialty ; and in all cases where either the debt for which the action hath been or shall be brought, or the debt intended to be set against the same, hath accrued, or shall accrue, by reason of any such penalty, the debt intended to be set off shall be pleaded in bar, in which plea shall be shown how much is truly and justly due on either side ; and in case the plaintiff shall recover in such action or suit, judgment shall be entered for no more than shall appear to be truly and justly due to him, after one debt being set against the other as aforesaid." ^ § 760. It is observable from the words of the statutes, that the demand, as well of the plaintiff as of the defendant, must be a debt, and a set-off is not allowed in action for torts, as upon the case, trespass, replevin, or detinue.^ The only actions on which a set- off is allowed are assumpsit, debt and covenant for the non-pay- ' Selwyn N. P. 573. See also, D. Littledale J., May v. Brown, 3 Barn. & Cres. 134. ^ See Stowers v. Barnard, 15 Pick. 221 ; Rev. Stat. Mass. ch. 96. ' Chitty PL 486 ; Bull. N. P. 181 ; M'Donald v. Neilson, 2 Cowen, 189 ; Keeler v. Adams, 3 Caines, 84 ; Sherman v. Ballow, 8 Cowen, 304. CH. vl] actions against partners. 709 ment of money ; ^ and it has been laid down, that debts, to be set off, must be such as an indebitatus asswmpsit Tvill lie for ; and that uncertain damages or an unliquidated demand cannot be made the subject of a set-off.^ § 761. As mutual debts only can be set off against each other, the debts sought to be recovered and those sought to be set off must be due in the same right. A joint debt, therefore, cannot be set off against a separate debt, nor a separate debt against a joint one.^ Thus, in an action on a policy, effected by the plaintiff in his own name, but in which others are interested with him, the defendant cannot set off a debt due to him from the plaintiff only.* So, in an action by the solvent partner and the assignees of a bankrupt partner, to recover moneys paid by the latter after his bankruptcy, the defendant cannot set off a demand which he has against the firm to a larger amount.^ § 762. But demands which are essentially, though not perhaps specifically or in point of form, joint, may be set off against each other. Thus, if a person give a note to his bankers for a debt due to them, and they afterwards indorse it to one of their members as his separate property, in an action by such indorsee against the ' 1 Chitty PI. 486 ; Bull. N. P. 181. * Per Asburst and Aston Js., Rowland v. Strickland, Cowp. 56 ; Gordon V. Browne, 2 John. 150 ; Burgess v. Tucker, 5 id. 105 ; Hepburn v. Hoag, 6 Cowen, 613. ' Tidd Prac. 717; J. S. Saund. PI. tit. Set-off; M'Gillivray v. Simson, 2 Carr. & Payne, 320; Jones v. Fleming, 7 Barn. & Cres. 217 ; Vose v. Phil- brook, 3 Story C. C. 345-348 ; Walker v. Leighton, 11 Mass. 40 ; Eev. Stat. Mass. ch. 96, § 8 ; Warren v. Wells, 1 Metcalf, 80 ; Watson v. Heusel, 7 Watts, 344 ; Ladue v. Hart, 4 Wendell, 583 ; Gram v. Cadwell, 5 Cowen, 489 ; Palmer v. Green, 6 Conn. 14 ; Scott v. Trent, 1 Wash. 77; Armistead V. Butler, 1 Hen. & Munf. 176 ; Howard v. Warfield, 4 Harr. & M'Hen. 21 ; Powrie v. Fletcher, 2 Bay, 146 ; Francis v. Kand, 7 Conn. 221 ; Kitchie v. Moore, 5 Munf. 388 ; Elder v. Lusswell, 2 Blaokf. 349 ; Wasson v. Gould, 3 Blackf. 19; M'Kinney v. Bellows, 3 Blaokf. 31 ; Gregg v. James, Breese, 107; Porter v. Neckervis, 4 Band. 359 ; Ross v. Knight, 4 N. Hamp. 236 ; Grafton Bank v. Woodward, 5 N. Hamp. 308 ; Woods v. Carlisle, 6 N. Hamp. 27 ; Wrenshall v. Cook, 7 Watts, 464 ; Emerson v. Baylies, 19 Pick. 59, 60. * Grant v. Royal Exchange Ass. Co., 5 Mau. & Sel. 439. ' Thomason v. Frere, 10 East, 427; Stanniforth v. Fellowes, 1 Marsh. 184. 60 ''10 RIGHTS OF PARTNERS, ETC. [BOOK III. maker, the latter may set off any debt due to him from his bank- ers against the demand on the note ; for here the demands were originally joint and mutual, and are not altered by the private arrangement of the partners.^ So, money due for advances made by bankers to a customer, upon a bond given by the customer to one of the partners, in trust for the rest, may be set off against a debt from the firm.^ And, clearly, although a mere nominal part- ner contract a debt, yet, if it be contracted in the partnership name, such debt may be set off in an action by the firm.^ § 763. A similar observation may be apphed to demands which are essentially separate. Thus, if a firm be carried on in the name of only one person, in an action by the firm the defendant may set off a separate debt from that person against the debt for ■which he is sued.* So, if a factor who sells goods for a fia-m under a del credere commission sells them as his own, and the buyer knows nothing of the owners, he may set off a debt due to him from the factor against the demand of the owners of the goods.* So, likewise, an obligee on a joint bond, executed by one obligor only, may set off the bond debt in an action brought against him by the executing obligor.^ § 764. And although joint demands cannot ordinarily be set off against separate demands, or vice versa, yet, where there is an ex- press agreement between a person dealing with a firm, that the debts severally due from the members of the firm to that person shall be set off agaiast any demands which the firm may jointly have on him, it has been held that such agreement will, be bind- 1 Puller V. Roe, 1 Peake, 197. " Cross V. Smith, 1 Mau. & Sel. 545. In bankruptcy it has been held, that, under certain circumstances, distinct banking-houses, having some members in common, may set off the amount of the bankrupt's notes in their hands against the amount of all their respective notes in the bankrupt's hands. Ex parte Huokey, 1 Madd. 577. ' Teed v. Elworthy, 14 East, 213. See Booth v. Hodgson, 6 T. R. 405. * Stacey w. Decey, 1 Esp. 469; 7 T. R. 361 ; Lord v. Baldwin, 6 Pick. 348, 352; Lapham v. Green, 9 Vermont, 407; Hillaker v. Lood, 5 id. 116; Eev. Stat. Mass. c. 96, § 9 ; Piatt v. Halen, 23 Wendell, 456 ; Gow Partn. (3d ed.), 138 and note ; Rose v. Murchie, 2 Call, 409. » George v. Claggett, 7 T. R. 859. " Fletcher v. Dyche, 2 T. R. 32 ; and see Elliott v. Davis, 2 Bos. k Pull. 338. CH. VI.] ACTIONS AGAINST PARTNERS. 711 ing.^ Where the action is brought by a surviving partner, the defendant may set off a debt due from the plaintiff as surviving partner against a debt due from himself to the plaintiff in his own right.^ And, conversely, a debt due to a defendant as surviv- ing partner may be set off against a demand on him in his own right.^ § 764 a. So in a suit by a surviving partner, to recover a debt due to the firm, the defendant may set off a debt due to him from the surviving partner alone.* A judgment debt due from A. and others, in an action of trespass, may be set off against a judgment debt due to A. from the plaintiff.^ § 765. The courts of common law will, upon motion, in some cases, order opposite demands arising upon judgments to be set off against each other, although the parties to the different records are not the same.® Thus, in Mitchell v. Oldfield,^ the plaintiff recov- ered a judgment against the defendant, but the defendant having also recovered in another action against the plaintiff and another, obtained a rule to show cause why the debt and costs in the latter should not be set off against the judgment in the former action ; and although it was objected that these joint and separate debts could not be set off under the statute, the court nevertheless made the rule absolute, on the defendant undertaking that the bill of the plaintiff's attorney^ should be satisfied, and on his entering a remittitwr in the cause in which he was plaintiff. Lord Kenyon " Kinnersley v. Hossack, 2 Taunt. 128; Lovell v. Whitridge, 1 M'Cord, 7. See Everingbam v. Ensworth, 7 Wendell, 326. * French v. Andrade, 6 T. R. 582 ; Header v. Soott, 4 Vermont, 26 ; Header v. Leslie, 2 id. 569 ; per Gibson J., in Wain v. Hewes, 5 Serg. & R. 470 ; Gow Partn. (3d ed.), 139. ' Slipper V. Slidstone, 5 T. R. 493 ; Lewis v. Culbertson, 11 Serg. & R. 48 ; Cowden v. Elliott, 2 Hissouri, 60. See Hogg v. Ashe, Cam. & Nor. 3 ; White V. Union Ins. Co., 1 Nott & M'Cord, 556. In an action by a surviving dormant partner, the defendant may set off a debt due from the firm. Beach V. Hayward, 10 Ohio, 455. ' Holbrook v. Lackey, 13 Hetcalf, 132. ' Bourne v. Bennett, 4 Bing. 423 ; 1 Moore & Payne, 141. " Mont Partn. 87 ; Warren v. Wells, 1 Hetcalf, 80. ' 4 T. R. 123. 8 See Reg. Gen. 93, Hil. T. 1832; Porter v. Lane, 8 John. 357 ; Cole v. Grant, 2 Caines, 105 ; Ocean Ins. Co. v. Rider, 22 Pick. 210 ; Dunklee v. Locke, 13 Hass. 525. 712 ElfiHTS OF PARTNERS, ETC. [bOOK III. said, that this did not depend on the statutes of set-off, but on the general jurisdiction of the court over the suitors in it ; that it -was an equitable part of their jurisdiction, and had been frequently ex- ercised. So, in another case, where an action was brought against three defendants, one of whom had recovered a judgment in a former action against the plaintiff, it was held that the judg- ment iQ the former action might be set off against the judgment in the latter.^ It is to be observed, that in the former of these two cases it appeared that the plaintiff against whom the set-off was allowed had absconded ; and in the latter an affidavit was made by the defendant, that the plaintiff appeared to be insolvent, that his goods were all distrained for rent, and that he was not to be met with. But where a judgment had been recovered by A. against B. and C, and afterwards a judgment was recovered against A. by the assignees of B. under an insolvent debtor's act, the court refused, upon the application of A., to set off the former judgment against the latter, on the ground that, in this case, the interests of third persons intervened. And Lord Ellenborough expressed a strong disinclination to extend the power of setting off debts, on general grounds of equity, beyond the line which the legislature had thought proper to mark out.^ , § 766. If one of the partners is an infant, we have seen that he may plead his infancy ; ^ or he may give it in evidence under the general issue.^ To an action brought against two persons on their joint and several covenant, one of the covenantors cannot plead the infancy of the other .^ § 767. If one of the partners is a hankrwpt, he cannot give this in evidence under the general issue ; ^ but if the act of bank- ruptcy took place before the suit commenced, he may plead his bankruptcy generally, under the 126th section of the statute. The plaintiff may then enter a nolle prosequi as to him, and pro- ' Dennie v. Elliot, 2 H. Bl. 587. ' Doe V. Darnton, 3 East, 149; and see Hewitt v. Pigott, 8 Bing. 61; Hathaway v. Russell, 16 Mass. 473 ; M'Fadden v. Erwin, 2 Whart. 37. > Ante, § 721. *"Hartness v. Thompson, 5 John. 159 ; Cutts v. Gordon, 13 Maine, 474. * Gillow V. Lillie, 1 Bing. N. C. 695; Hallam v. Mumford, 1 Root, 58; Van Bramer v. Cooper, 2 John. 279. " Gowland v. Warren, 1 Camp. 363. CH. VI.] ACTIONS AGAINST PARTNERS. 713 ceed against the others.^ If, however, the bankruptcy took place after the suit commenced, he must plead his bankruptcy and cer- tificate specially.^ And if the certificate were not obtained until after plea pleaded, he must plead his bankruptcy and certificate specially ^Mi's darrien continuance? In such cases the plaintiff may enter a nolle prosequi as to the bankrupt and proceed against the rest ; but he cannot at Nisi Prius, upon a plea of bankruptcy puis darrien continuance, hj one of two defendants, confess the plea to be true, and go on with the case as to the other defend- ant.* § 768. We have seen that if a joint tort be committed, the plain- tiff may, at his election, sue all or any of the tort-feazors.^ But if divers commit a trespass, though this be joint or several at the election of him to whom the wrong is done, yet, if he releases to one of them, all shall be discharged, because his own deed shall be taken most strongly against himself.^ Hence, if trespass be brought against three, and judgment given against one, and the plaintiff enter a nolle prosequi against the other two, if the nolle prosequi be before judgment, it will discharge the whole action. So, if judgment had been against all three, and the plaintiff had entered a nolle prosequi against the two ; for nonsuit, or release, or other discharge of one, discharges the rest.'^ So, where, in trover against two, one pleaded not guilty, and a verdict was found against him, ' Noke V. Ingham, 1 Wils. 89. But bankruptcy is no bar to an action of trover. Parker v. Norton, 6 T. K. 695. ^ Arch. i. L. 271. ' Todd V. Maxfield, 6 Barn. & Cres. 105 ; Steph. PI. 89. But see Humph- reys t». Knight, 4 Moore & Payne, 375 ; 6 Bing. 572. * Pascall V. Horsley, 3 Carr. & Payne, 372. In an action brought in the State of Massachusetts, by a citizen of New York, against one of two part- ners, on a partnership note dated and payable in the latter State, it was shown, that, from the time when the note was made until the action was brought, the defendant was a citizen of Massachusetts, and his partner a citizen of New York, and that the partnership business was carried on in both States, and under the same firm. The defendant had been disch£|,rged under the insolvent law of New York, of April 12th, 1813, enacted before the making of the note, and this was held not to be a bar to the action. Agnew V. Piatt, 15 Pick. 417. ' Ante, § 727. « Co. Litt. 232 ; Bac. Abr. Release (G). ' Parker v. Lawrence, Hob. 70. 60* 714 RIGHTS OF PARTNBES, ETC. [BOOK III. and the otlier pleaded a release, and a verdict was found for him ; on a motion for judgment against him who was found guilty, it was • denied, because, the trover being joint, a release of all actions dis- charged both.i In general, when the defence is in its nature joint, several defendants may join in the same plea, or they may sever ; and one defendant may plead in abatement, another in bar, and the other may demur ; ^ and in tert one may plead not guilty, and the other a justification.^ If the defendants plead severally, the plaintifi" may demur to one plea, and join issue on the other.* SECTION vin. OP THE EVIDENCE. § 769. It is essential, in an action ex contractu against part- ners, that there should be sufficient evidence to affect all the de- fendants ; ^ for, if the plaintiff fail to fix any one of them, he will be nonsuited.^ We have already investigated the circumstances which constitute the legal evidence of the existence of a partner- ship ; we have likewise examined the various liabilities which at- tend the connection between partners ; it now remains to consider ia what manner and by what witnesses evidence of the partnership 1 Kiffin V. Willis, 4 Mod. 379. "> 1 Chit. Pi. 480 ; Com. Dig. Pleader (2 A. 3). = 1 Chit. PI. 482 ; Com. Dig. Pleader (2 A. 3). * Com. Dig. Pleader (E. 35). In an action of book-debt against two .part- ners, one of them pleaded the statute of limitations in bar, -which plea was adjudged to be insufficient ; the other pleaded the general issue, and, a ver- dict being found for the latter defendant on the general issue, final judgment was rendered in favor of both to recover their costs. Anderson v. Henshaw, 2 Day, 272. See Tuttle v. Cooper, 10 Pick. 281. ^ In assumpsit the fact of partnership is put in issue by the plea of non as- sumpsit. Tomlinson v. CoUett, 3 Blackf. 436. See Ardley v. Russell, 1 Browne, 145. But in Mississippi, if a person, sued as partner on an open account, pleads the general issue, instead of denying the partnership on oath as the statute of that State requires, he thereby admits the partnership. Jameson v. Franklin, 6 How. (Miss.) 376. ' Young V. Hunter, 4 Taunt. 582; Noke v. Ingham, 1 Wils. 89 ; Cooper V. Whitehouse, 6 Carr. & Payne, 545. CH. VI.] ACTIONS AGAINST PAETNERS. 715 may be establislied. In order to charge persons as partners, the utmost strictness of proof of the partnership is not required.^ It is sufficient to show that they have acted as partners, and that by their habit and course of dealing, conduct and declarations, they have induced those with whom they have dealt to consider them as partners.^ Hence, if it appear that two persons have in many instances traded jointly, that will he primd facie evidence of a general partnership, particularly if the instances of joint dealing greatly outweigh the instances of separate dealing. In a case where A. and B had dealt as partners in two transactions only, it was urged that this would raise such a strong presumption of a general partnership as to 'dispense with proof that the particular debt sought to be recovered was contracted on the joint account. Lord Ellenborough appears to have held otherwise ; but he said. ' See Scott v. Blood, 16 Maine, 193; Joseph v. Fisher, 3 Scam. 138; Tomlinson v. CoUett, 3 Blackf. 436 ; Bryer v. Weston, 4 Shepley, 261 ; Dixon V. Hood, 7 Missouri, 414; King v. Ham, 4 id. 275 ; Welsh v. Speak- man, 8 Watts & Serg. 257 ; Chapman v. Wilson, 1 Robinson, 267 ; Farr v. Wheeler, 20 N. Hamp. 569 ; State v. Wiggin, 20 N. Hamp. 449. But in Bonaffee v. Fenner, 6 Smedes & Marsh. 212, it was held, that where part- ners, when sued, seek to establish the existence of the partnership, they must produce the letters of partnership, or give a legal excuse for their non-pro- duction, before the partnership can be proved by other evidence. '^ See 3 Stark. Ev. 1070 ; 2 Greenl. Ev. § 483 ; Evans v. Curtis, 2 Carr. & Payne, 296 ; Weston C. J., in Ellis v. Jameson, 17 Maine, 238 ; Welsh v. Speakman, 8 Watts & Serg. 257; Forbes v. Davison, 11 Vermont, 660; M'Neill V. Reynolds, 9 Alabama, 313; Gilpin v. Temple, 4 Harr. 190. Advertisements, prospectuses, &e., containing the names of the alleged part- ners, Lake v. Argyll, 6 Q. B. 471 ; Bourne v. Freeth, 9 B. & C. 632 ; Maudsley v. De Blanc, 2 C. & P. 409, note ; Reynell v. Lewis, 15 M. & W. 517 ; Wood V. Argyll, 6 Man. & Gr. 928 ; Ex parte Matthews, 3 Ves. & B. 125, names over doors, Williams v. Keats, 2 Stark. 290, and on carts, Stables v. Eley, 1 Carr. & P. 614, answers in chancery containing admis- sions, Studdy V. Saunders, 2 D. & Ry. 347 ; Grant v. Jackson, 1 Peake, 268, bills to customers, circulars, invoices containing the names of the alleged partners, Young v. Axtell, 2 H. Black. 242 ; Norton v. Seymour, 3 Com. B. 792, letters and memoranda, showing an intention to give a person a share of profits, coupled with evidence that such intention was acted on, Heyhoe V. Burge, 9 Com. B. 431, releases executed by all the alleged partners. Gib- bons V. Wilcox, 2 Stark. 43, use of property by several jointly. Weaver v. Prentice, 1 Esp. 369, are among the kinds of evidence usually resorted to for the purpose of proving the existence of an alleged partnership or quasi- partnership. 1 Lindley Partn. 91, 92. 716 EIGHTS OF PAETNEES, ETC. [BOOK ni. that, had the instances of joint dealing preponderated, he thought the onus would have been upon the defendants to have shown that there was not a general partnership.^ § 770. Where a plaintiff is provided with ample evidence of the acts or dealings of the defendants as partners, it will be un- necessary for him to prove the execution of a deed of partner- ship by the defendants. Therefore, where an action for goods sold and delivered was brought against a, person, as being a mem- ber of the company to whom they were supplied, it was held sufS- cient for the plaintiff, although the company was established by deed, to prove by oral testimony that a company existed under a certain denomination, and that the defendant had attended several meetings of the society, and had acted as chairman:^ So the partnership may be proved by entries made by the partners in the books of the firm.? Even if a deed be produced to prove that the defendants are in partnership, third persons may object to its being read, if the reading be prejudicial to their interests. Thus, in an action of assumpsit against the acceptors of a bill of ex- change, in order to prove the Kability of some of the defendants as partners, in a firm called the'" Fox-hill Stone Pipe Company," the plaintiff's counsel called a witness to produce a deed of com- position, executed between the defendants and the " Middlesex Water- Works Company," for the purpose of showing that the. defendants were all executing parties to the deed, as members of the firm on whose behalf the bill of exchange was accepted. The ' Newnham v. Tetherington, Eoss V. & P. 134, ed. Harrison; Etheridge V. Binney, 9 Pick. 272 ; 2 Greenl. Ev. § 483 ; Lewis v. Post, 1 Alabama, 65 ; Holriles v. Porter, 39 Maine, 157 ; Chase v. Stevens, 19 N. Hamp. 465. The signature of a joint note by two persons is no evidence of a partnership be- tween them. Hopkins v. Smith, 11 John. 161. * Alderson v. Clay, 1 Stark. 405 ; Bryer v. Weston, 16 Maine, 261 ; 2 Greenl. Ev. § 483 ; Widdifield v. Widdifield, 2 Binu. 249 ; Allen v. Rostain, 11 Serg. & E. 862 ; Griffin v. Doe, 12 Alabania, 783. = 2 Greenl. Ev. § 483 ; Richter v. Selin, 8 Serg. & E. 425 ; Champlin v. Tilley, 3 Day, 306 ; Hill v. Manchester Waterw. Co. 2 Nott & M'Cord, 573 ; Tucker v. Peaslee, 36 N. Hamp. 178 ; Walden v. Sherburne, 15 John. 409, See Moyes v. Brumaux, 3 Yates, 30 ; Thommon v. Kalbach, 12 Serg. & E. 238. But entries made in the partnership books by the party appointed to liquidate the concerns of the firm, after its dissolution, are no evidence against the other partner. M'Micken v. Ficklin, 11 Curry (Louis.), 311. CH. VI.] ACTIONS AGAINST PARTNERS. 717 witness 77110 was attorney to the Middlesex Water- Works Com- pany, produced the deed, but objected on behalf of his clients, that it ought not to be read, inasmuch as it contained matters which might be prejudicial to their interests ; that there had been disputes between the two companies ; and the deed, if read, might be prejudicial to the Middlesex Water-Works Company in their proceedings against the other parties in chancery. And the court allowed the objection. " I cannot," said Lord Tenter- den, " order the witness to produce the deed, if he informs me that the disclosure of its contents may prejudice his clients ; and I can draw no distinction between this and the ordinary case, where a third party is called upon to produce the title-deeds of his estate, and who may object to the disclosure of his title." ^. Where assumpsit was brought against partners on a written agree- ment to underlet premises, which agreement was signed in their name and style of H. C. & Co., parol proof that the defendants were in partnership under the firm of H. C. & Co., and that they had been frequently seen on the premises, was held to be sufficient without showing in whose handwriting the agreement was signed, the attesting witness being absent.^ § 771. A partnership between A. and B. may be proved by parol evidence that bills drawn upon A. were accepted by B. under certain circumstances, provided there have been one inva- riable course of dealing between the parties to these bills, accord- ing to which they were drawai and accepted. To use the words of Lord Ellenborough, — " Parol evidence may be received of one invariable mode of dealing between parties by means of bills of exchange. If the mode of dealing varies, the bills must be pro- duced, otherwise we should be receiving parol evidence of an indi- vidual written instrument, which is not admitted. But where bills are sworn to be always drawn and accepted in the same firm, I think the course of deahng so estabhshed may be proved by the parol examination of a witness, for the purpose of showing in what relation the parties stood to each other." ^ In proving a partner- 1 Harris v. HiU, Dowl. & Ryl. N. P. C. 17 ; 3 Stark. 140. " Evans v. Curtis, 2 Carr. & Payne, 296. ' Spencer v. Billing, 3 Camp. 310; Guidon v. Kobson, 2 Camp. 302; Duncan v. Hill, 2 Brod. & Bingh. 682 ; Gurney v. Evans, 3 H. & N. 122. 718 EIGHTS OF PARTNERS, ETC. [BOOK III. ship from the acts of the parties in the conduct of their business, a witness may be asked whether one defendant has interfered in the busiaess of the other ; and the question cannot be objected to as a leading question.^ § 772. The plaintiff, in order to prove the partnership of the defendants, cannot produce the answer to a bill in chancery filed by one partner against the other, if the latter object to the pro- duction. For there would be the same objection to the admission of this evidence at law, as to the admission of the answer of one defendant against that of another defendant in equity .^ Thus, in an action against certain partners as the acceptors of a bill of ex- change, it was held that the plaintiff xould not produce in evidence the answer of one partner to a bill in equity filed by the other, in order to prove the continuance of the partnership until the time of the acceptance, the partner who filed the bill insisting that the partnership had been dissolved before that time.^ On the other hand, in an action against partners, where there is no dispute be- tween them as to the existence of the partnership, the office copy of an answer to a bill filed by one against the others for an ac- count is admissible evidence to establish the partnership, without producing the original. And in the case where this was decided, it was likewise held, that, in order to prove the identity of the de- fendants, the clerk of their solicitor was a competent witness to that fact, though he knew nothing of the defendants but from his intercourse with them professionally in the conduct of the suit in chancery.* § 773. The record of an issue to try the fact of partnership has been admitted as evidence of that fact, in an action against cer- tain persons as partners. An action was brought against L. and M. as partners, for goods sold and delivered. L. suffered judg- ment to go by default, but M., who denied the partnership, plead- ' Nichols V. Dowding, 1 Stark. 406. ^ See Wych v. Meal, 3 P. W. 310 ; 2 Daniell Ch. Pr. (Perkins's ed,), 981, 982, and notes. In a suit in equity against partners, the answer of one of them cannot be read in evidence against the others. Parker v. Morrell, 2 Ph. 453 ; Dale v. Hamilton, 5 Hare, 393. « Booth V. Quin, 7 Price, 193. ' Studdy V. Sanders, 2 Uowl. & Kyi. 347. See Hennell v. Lyon, 1 Barn. & Aid. 182. CH. VI.J ACTIONS AGAINST PAETNEKS. 719 ed non assumpsit. It appeared that L. had formerly filed a bill in the Exchequer against M. for an account, and charging him as his partner, and, upon that cause being heard, an issue was di- rected to try " whether L. and M. were partners at any or what time." The issue was tried, and a verdict found, " that a part, nership had subsisted between L. and M. from the 29th Septem- ber, 1791, to the 22d January, 1793." And now, in this action, the plaintiff offered in evidence the record of that verdict, in order to prove that L. and M. were partners when the goods were delivered, namely, in November, 1792 ; and Lord Kenyon held that it was admissible and conclusive evidence of a subsisting partnership at the time of the goods being sold.^ Eut an able writer has questioned the propriety of this decision. After having laid it down as a general rule that a verdict shall not be used as evidence against a man, where an opposite verdict would not have been evidence for him, or in other words, that the benefit to be derived from the verdict must be mutual, he observes, as to the verdict in this case, first, that there was no mutuality ; and, sec- ondly, that it might have been obtained on the evidence of the party who afterwards took advantage of it. He therefore ques- tions how far the record would be evidence of the fact, as against the defendant who denied the partnership, though, as against the other, the whole proceedings in the Exchequer suit would operate by way of admission.^ In accordance with the above suggestion, it was decided, in Burgess v. Lane,^ that a verdict and judgment thereon are not admissible evidence of a partnership, even where that fact was expressly put in issue by the pleadings, unless the action in which such evidence is offered is between loth the par- ties to the former suit.* But the record of a former judgment ' Whately v. Menheim, 2 Esp. 608. ' Stark. Et., vol. 1, p. 195 ; vol. 3, p. 1074. ' 3 Greenl. 165. See Ellis v. Jameson, 17 Maine, 237. In this last ease the court say : " The plaintiff cannot avail himself of a judgment, as such, by which he would not have been bound." ' In the above case two persons, Lane and Leadbetter, were sued, as part- ners. Lane was defaulted. Leadbetter pleaded the general issue, and also that he was not a partner with Lane. One Norris was offered as a witness by the plaintiff, to prove the partnership. He was objected to, on the ground that he had similar claims with those of the plaintiff against the de- fendant, and that the defendant Leadbetter would be concluded by the ver- 720 EIGHTS OP PARTNERS, ETC. [BOOK III. rendered by default against certain persons, alleged to be partners, is competent evidence, in a suit against thein as partners by a dif- ferent plaintiff/ to show that they have held themselves out as partners, and therefore tending to prove a partnership.^ § 774. A declaration or admission by a person that he is a part- ner is evidence against him, and will, as far as he is concerned, be evidence of the existence of the partnership.^ Therefore, words uttered, or letters written, in the course of commercial transac- tions, are constantly received in evidence to charge the speaker or writer as a partner,* or as having delegated powers to his copart- ner in relation to the partnership concern.^ diet in this case on the question of partnership, should it be found against him. But the court held the witness competent. Where, however, the fact, sought to be established by the plaintiffs in a suit is the existence of a co- partnership between the defendants, under a certain name, a judgment re- covered by the same plaintiffs against the same defendants, as copartners, under such name, on a note given at the same time with the note in suit, is admissible though not conclusive evidence of that fact. Button v. Wood- man, 9 Gushing, 255. ' Cragin v. Carleton, 21 Maine, 492 ; Fogg v. Greene, 16 Maine, 282 ; Ellis V. Jameson, 17 Maine, 235. In this last case the court, by Weston C. J., said : " Upon adverting to the writs and judgments objected to, which are made part of the case, it appears that they were all rendered by de- fault. The defendants were charged as partners, acting as such under a certain partnership name. The default is a statute admission of the fact. In these suits the alleged partners, being charged as partners by legal pro- cess, admit the fact, and suffer judgment to go against them by default. It is not easy to conceive by what more positive act they could hold themselves out to the world as partners, or could more explicitly justify others in deal- ing with them as such. Had they contested the fact, and it had been found or adjudged against them, it would not have been evidence which could have been used by others." The case of Burgess v. Lane was noticed, and its authority admitted, in Ellis v. Jameson, but the recordof the judgment, &c., was admitted in the latter case upon the grounds stated, which did not exist in Burgess v. Lane. ^ Eogg V. Greene, 16 Maine, 282 ; Ellis v. Jameson, 17 Maine, 235. ' De Berkom v. Smith, 1 Esp. 29 ; Gibbons v. Wilcox, 2 Stark. 43 Parker v. Barker, 3 Moore, 226 ; Shott v. Strealfield, 2 Mood. & Malk. 9 Whitford V. Tutin, 6 Carr. & Payne, 228 ; Jennings v. Estes, 16 Maine, 323 Johnston u. Warder, 3 Watts, 101 ; M'Pherson v. Kathbone, 7 Wendell, 216. See Anderson v. Levan, 1 Watts & S. 334; Haughey v. Stri^ler, 2 Watts & S. 411. * Ibid. Even if the communications be made to the attorney of the de- ' Thicknesse v. Bromilow, 2 Cromp. & Jerv. 525. CH. VI.] ACTIONS AGAINST PARTNERS. 721 § 775. Where a person is charged as having held himself out as a partner, a "syitness may be called to show that he, the -witness, r,eported the defendant a partner, in consequence of a statement or admission made to the witness in the defendant's presence.^ And, upon the same principle, an entry made according to the statute, at the excise-office, by one partner in the names of himself and copartners, as dealers in beer, is primd fade evidence of a part- nership against the party making it.^ In an action against sev- eral partners, if all are outlawed but one, the plaintiff will be en- titled to a verdict against that one, upon his admission that he was in partnership with the others, such admission being evidence against him of the promise of all the defendants.^ Of course, if an admission of partnership can be proved against all the defend- ants, all are liable upon that admission alone. .Where, in as- sumpsit against several partners, the question of partnership being doubtful upon the plaintiff's evidence, the defendants went into their case, and, in order to render a witness competent, produced a release executed by all of them, it was held that this document, though exhibited on the voir dire, was in evidence for all purposes, and was alone sufficient to establish the fact of partnership.* § 776. But the act, admission, or declaration of one partner is not evidence to prove the partnership against the other defendants.^ fendants, they ■will be evidence against the latter, if made previous to the action, and not for the purpose of defending it. Williams v. Mudie, 1 Carr. & Payne, 158. ' Shott V. Strealfield, Mood. & Kob. 8. " Ellis V. Watson, 2 Stark. 453. " Sangster v. Mazarredo, 1 Stark. 161. ' Gibbons v Wjlcox, 2 Stark. 43. * Whitney v. Ferris, 10 John. 66 ; Tuttle v. Cooper, 5 Pick. 414 ; Jen- nings V. Estes, 16 Maine, 323 ; Nelson v. Lloyd, 9 Watts, 22 ; M'Pherson v. Rathbone, 7 Wendell, 216 ; Kobbins v. Willard, 6 Pick. 464 ; Bridge v. Gray, 14 Pick. 61 ; Jewett v. Stevens, 6 N. Hamp. 82 ; Ostrom v. Jacobs, 9 Metcalf, 457; Whitney v. Sterling, 14 John. 215 ; Mitchell v. Koulstone, 2 Hall (N. Y.), 351 ; Grafton Bank v. Moore, 13 N. Hamp. 99 ; Welsh v. Speakman, 8 Watts & Serg. 257; Nelson v. Lloyd, 9 Watts, 22; Gilpin v. Temple, 4 Harr. 190 ; Lea v. Guice, 13 Smedes & Marsh. 656 ; Evans v. Corriell, 1 Iowa (Greene), 25. Contra, Evans v. Drummond, 4 Esp. 89 ; Heath v. Sansom, 4 Barn. & Adol. 176. In a suit against surviving part- ners, to recover the amount of a note given by a deceased partner in his single name, his declarations, that the transactions for which the note was 61 722 EIGHTS OF PASTNBES, ETC. [bOOK III. Where the question was, -whether A., who resided in England, was a partner with B., who resided in Spain, it was held to be no eyidence of the fact, to show that B. had long traded at S., in Spain, under the firm of A. & B., and that A. for a long time re- sided there, and there was no other person of that name.^ In like manner, an affidavit for the registry of a ship made by A., stating that A. and B. are the owners, is not evidence of that fact as against B.^ A fortiori, the act of third persons is no evidence to charge the defendants as partners, unless it can be proved that the defendants recognize such act. Therefore, to charge two persons as joint purchasers of a cart, an entry of such cart in the tax-gath- erer's book is not evidence, unless it be shown that the parties authorized the entry .^ § 777. But if, in an action against three as partners, two have acknowledged the existence of articles of copartnership, which the third, on due notice, refuses to produce on trial, the jury will be warranted in finding the fact of partnership upon this evidence alone.* Greneral reputation is not admissible in evidence in aid of other testimony, to prove a partnership. ^ given were for the partnership business, and that it was a company note, are not admissible in evidence, if there be no evidence aliunde that those trans- actions were for the partnership. Ostrom v. Jacobs, 9 Metoalf, 454. Evi- dence of statements and declarations, which would be admissible only upon an asumption of the existence of a copartnership, is incompetent to prove such copartnership. Dutton v. Woodman, 9 Gushing, 255. ' Burgue v. De Tastet, 3 Sterls. 53. ^ Tinkler v. Walpole, 1 East, 226 ; Flower v. Young, 3 Camp. 240 ; Smith V. Fuge, id. 456. " Weaver v. Prentice, 1 Esp. 369. See Strother v. Willan, 4 Camp. 24 ; Eraser v. Hopkins, 2 Taunt. 5. * 2 Greenl. Ev. § 484 ; Whitney v. Sterling, 14 John. 215. ^ Scott V. Blood, 16 Maine, 192. In this case an elaborate opinion is given on this point. Smith v. Griffiths, 3 Hill (N. Y.), 333 ; Hicks v. Cram, 1 7 Vermont, 448 ; Brown v. Crandall, 1 1 Conn. 92 ; Grafton Bank v. Moore, 13 N. Hamp. 99; Goddard u. Pratt, 16 Pick. 412; Pitcher k. Barrow, 17 Pick. 361 ; Halliday v. M'Dougal, 20 Wendell, 81 ; Lockbridge v. Wilson, 7 Missouri, 560 ; Carter v. Douglass, 2 Alabama, 499 ; Joseph v. Fisher, 3 Scammon, 137 ; Earl v. Hurd, 5 Blackf. 248. But see, contra, Whitney v. Sterling, 14 John. 215; Gowan v. Jackson, 20 John. 176; Halliday v. M'Dougal, 22 Wendell, 264. See also, Allen v. Rostain, 11 Serg, & R. 362 ; Bernard v. Torrance, 5 Gill & John. 383 ; Brander v. Ferriday, 16 Louis. R. 296 ; 2 Greenl. Ev. § 483 ; Bryden v. Taylor, 2 Harr. & John. 400, CH. VI.] ACTIONS AGAINST PARTNERS. 723 ' § 778. It may here be observed, that whatever is evidence to prove a person a partner in an action brought against him in that character is likewise evidence for the same purpose on the trial of a plea in abatement for non-joinder of parties as defendants. Hence, on a plea in abatement for the non-joinder of A. B. as a defendant, his declarations, made before the action was brought, are evidence in support of the plea.^ It may be remarked, that under this plea the plaintiff may find it necessary to give evidence of dissolution.^ § 779. As soon as evidence of the partnership is established, the acts, admissions, and declarations, of one partner, in matters Kelating to the affairs of the partnership, will be eviflence against the firm.^ In this respect the partners are to be considered as one person, and therefore the rule will hold good, although the partner making the admission or declaration is not a party to the record. At first Lord Kenyon was inclined to doubt this doctrine, but he afterwards held that in an action against one partner, for money paid to his use, the admission of the debt by another part- ner was evidence against the defendant.* He likewise ruled, on another occasion, that if a nolle prosequi be entered as to one Where the inquiry is whether the plaintiff knew that the defendant was a partner, evidence that it was not generally known in the place where the . partnership was carried on that he was a partner is admissible. And gen- eral evidence that he was known as a partner is also admissible under such circumstances. Bernard v. Torrance, 5 Gill & John. 383 ; 2 Greenl. Ev. §483. ' Clay V. Langston, 1 Mood. & Malk. 45. See 2 Greenl. Ev. § 484 and note. The acts and declarations of a defendant, sued as a partner, but on whom the writ had not been served, were allowed to be given in evidence to prove him. to be a partner, in Grafton Bank u. Moore, 14 N. Hamp. 142. See Whitney v. Ferris, 10 John. 66 ; Jennings v. Estes, 16 Maine, 323. ' See ante, section 6. ' See D. Lord Kenyon, Grant v. Jackson, 1 Peake, 203 ; Smith v. Pick- ering, id. 69; Odioru v. Maxcy, 15 Mass. 44, and 13 id. 182; Martin v. Koot, 17 Mass. 227; 1 Greenl. Ev. § 174 and notes; 1 Phil. Ev. (Cowen & Hill's ed.), 92; 2 id. 170 et seq. and cases cited; Allen v. Owens, 2 Speers, 170 ; Lea v. Guloe, 13 Smedes & Marsh. 656. And this is true though the partner making the declaration is a dormant partner. Kaskaskia Bridge Co. V. Shannon, 1 Gilman, 15. As to the declarations of one joint trespasser, see post, § 801. * Thwaites v. Richardson, 1 Peake, 16. ; 724 EIGHTS OP PARTNERS, ETC. [BOOK in. defendant wto pleads his bankruptcy, an admission made by Mm before he obtains his certificate is evidence against the other de^ fendants.^ § 780. Evpn where the partnership has been dissolved, we have seen that an admission made by one of the quondam partners may be binding on the rest.^ But there seems reason to contend that statements by partners in the shape of admissions should be re- ceived with greater caution after the dissolution than during the continuance of the partnership, because the change in the situation of the parties may very materially affect the motives for making declarations concerning the contracts of the partnership. Upon considerations of this nature, it seems to have been held, in aa action of debt on a joint bond, that the admission made by a de- fendant, in a suit filed against him after action brought, was not receivable against the co-defendant to the action.^ Where a change has taken place in the constitution of a firm by the retire- ment of some of its members, and the accession of other persons in their room, a letter written by the agent of the new firm, who was not the agent of the old firm, cannot be read as an admission against the retired members of the old firm, even where no notice was given of their retirement.* § 781. We have already seen in what cases a firm is bound by ^ Grant v. Jackson, 1 Peake, 203 ; Boyce v. Walton, 3 J. J. Marsh. 498, fiOO ; Howard v. Cobb, 3 Day, 309 ; 1 Phil. Ev. (Cowen & Hill's ed.), 92, 93. ' Ante, § 423. In Vinal v. Burrill, 16 Pick. 406, Putnam J., said : " The confessions of one partner, after the dissolution of the partnership, in relation to the concerns of the partnership, are competent, though not conclusive evidence against a copartner, the joint contract being proved aliunde." But see 2 Phil. Ev. (Cowen & Hill's notes), 173, 174, and cases cited. This po- sition is denied by many courts in this country. See Walker v. Duberry, 1 Marsh. (Ken.), 189 ; Hackley v. Patrick, 3 John. 536 ; Walden v. Sher- burne, 15 id. 409 ; Shelton v. Cocke, 3 Munf. 191 ; Hopkins v. Banks, 7 Cowen, 650; Simonton v. Boucher, 2 Wash. C. C. 473; Clark v. Gleason, 9 Cowen, 57 ; Baker v. Stackpole, id. 420, 434 ; Chardon v. Calder, 2 Const. K. 685 ; Ward v. Howell, 5 Harr. & John. 60 ; and cases cited, ante, § 423, in note. 2 Sullivan v. Evans, 2 Huds. & Bro. 461, Diss. Bushe C. J. * Jones V. Sheares, 4 Ad. & Ell. 832. In this case the retiring partners were dormant as to the world in general, but not as to the party who con- tracted with them. CH. VI.] ACTIONS AGAINST PARTNERS. 725 the contracts of its individual partners.^ To recapitulate the evi- dence of such contracts would, therefore, be needless. But it may be observed, that the contract upon which the parties are sued must be shown, expressly or impliedly, to have been made for the joint benefit -of all.^ Though, as we have already seen, if in an action against one of several partners, the defendant neglect to plead the non-joinder of his copartners in abatement, a joint con- tract may be given in evidence of the separate contract stated in the declaration.^ In- an action against several defendants, after the dissolution of their partnership by the indorsee of a bill of ex- change purporting to have been drawn by the partners, and to bear date previous to the dissolution, the date of the bill, untU the contrary be shown, must be taken to be the date of the drawing of it; consequently, all the defendants, primd facie, will be liable, and it will not be necessary for the plaintiff to prove that the bill was drawn and indorsed before the dissolution.* § 782. A defendant who is sued in respect of any contract as a partner, and who intends to give in evidence that he was not a partner at the time the contract was made,^ should, for that pur- pose, prove a previous dissolution. However, his subsequent ac- knowledgment that he was a partner, if in fact he were not so, wiU not render him hable to be sued at law by virtue of the original contract ; though if, in addition to his acknowledgment, he give a bill as a security for that transaction, this raises a new contract, upon which he may be sued.® § 783. It will not be necessary to recapitulate the various ' Ante, Book 3, chap. 1. ■^ If a man and his partner are separately sued for some demand, and both employ the same attorney, it seems clear that the attorney cannot sue the partners jointly for the amount of his bill. Hellings v. Gregory, 1 Carr. & Payne, 627. ' See ante, § 715. * Anderson v. Weston, 3 Jur. 105. * Ellis V. Watson, 2 Stark. ■153. Where this defence is offered to an action against partners on a bill of exchange, a subsequent bill trf exchange may be given as auxiliary evidence of the continuation of the partnership ; and that although the subsequent bill be declared on : provided the plaintiff, by the terms of his particular, confine his right to recover to the first bill only. Duncan v. Hill, 2 Brod. & Bing. 682 ; 5 Moore, 567. ' Saville v. Robertson, 4 T. R. 120. 61* 726 EIGHTS OF PARTNERS, ETC. [bOOK III. defences wMch may be set up by a person charged as a partner, but we may shortly observe, that the defendant may prove a dis- claimer of the alleged contract, and that he gave notice to the plaintifif that he would not be answerable.^ He may likewise give evidence that he was not a partner in the particular trade in which the transaction took place, and that the plaintiff knew that circumstance.^ Or he may disprove the partnership altogether, which he may do without denying that he was engaged in the con- tract as servant or agent,^ and it is immaterial to a defendant who denies the joint contract that his co-defendant has admitted it by suffering judgment to go against him by default.* § 784. In some cases, however, a defendant may be estopped from saying that there was no partnership. .Thus, in an action by the indorsee against the acceptor of a bill of exchange, pur- porting to be drawn by a firm consisting of several persons, if the declaration aver that certain persons using that firm drew the bill, but the evidence is that the drawer of the bill trades singly under that firm, and that he has no partner, this is not a variance of which the defendant can take advantage, because, by accepting the bm, he is estopped from saying that it was improperly drawn.^ So, where a biU is drawn by the firm upon and accepted by one of its members, in an action by the payee against the drawers, the defendants are estopped from setting up as a defence any irregularity in the drawing. Under such circumstances, proof that the bill was accepted is sufficient evidence of its having been regularly drawn.* § 785. Where the partnership of the defendant is not disputed, ' Ante, § 388. ' Jones V. Hunter, Dan. & Lloyd, 215. In this case, the non-liability in respect of the particular trade was attempted to be proved by parol ; but the evidence was not admitted, there being a rough sketch in ■writing of the terms of the partnership, which had been assented to by the parties, though not signed by them, and only made with a view to future articles. ' Birt V. Hood, 1 Esp. 20. * Eliot V. Morgan, 7 Carr. & Payne, 334. " Bass V. Clive, 4 Camp. 78 ; Wilde v. Keep, 6 Carr. & Payne, 235. In a late case, Littledale J. reprobated the introduction of the doctrine of estoppel into transactions taking effect by the usage and custom of mer- chants. See Holdsworth v. Hunter, 10 Barn. & Cres. 455. ° Porthouse v. Parker, 1 Camp. 82. CH. VI.] ACTIONS AGAINST PARTNERS. 727 and the plaintiff, in order to fix him with the contract, gives evi- dence of the declaration or admission of the defendant's copart- ners, he may show that such declarations or admissions had no reference to the partnership. Thus^ if he belong to a society of persons who are both partners and part-owners, he may give evi- dence that the admission in question did not relate to a subject of partnership, but of part-ownership ; in which case the admission of one is not binding on the others.^ Again, he may show that the admission had reference to a contract made prior to his be- coming a partner ; for, before he can be affected by such admis- sion, his responsibility must be proved ; it cannot be presumed.^ And he may in some cases show that such admission arose from mistake ; and mistakes in the extent or nature of the interest of particular individuals not unfrequehtly arise in cases of partner- ship in particular adventures. § 786. An instance of the line of defence last adverted to occurred in Ridgway v. Phihp.® The plaintiff contracted with one Brown, the patentee of a draining machine, for the erection of one of those machines on the plaintiff's lands ia Cambridge- shire. The draft agreement being drawn up in the name of Brown & Co., the plaintiff asked Brown what other persons be- sides himself composed the firm, upon which Brown wrote on the back of the draft, " John Broadhurst, Esq., and Dr. Wilson Philip." The contract being broken, the plaintiff brought his action for the breach against Philip and Broadhurst ; but pre- viously to the action, his son called on the defendant Broadhurst, and asked him whether Brown was correct in making the indorse- ment upon the draft of the agreement, to which Broadhurst re- plied in the afiSrmative, and stated that he had bought his original interest from the other defendant. Dr. Philip. In order further to fix Broadhurst as a partner, evidence was given at the trial, that, while the engine was in progress, he attended very fre- quently at the manufactory to inquire how it was going on, and that he gave advice and made suggestions with regard to its con- struction. In answer to this evidence, an agreement or license ' Jaggers v. Binning, 1 Stark. 64. » Catt V. Howard, 3 Stark. 3. » 1 Cr., M. & Ros. 415. 728 EIGHTS OF PARTNERS, ETC. [BOOK III. from Brown and the other parties interested in the patent to Broadhurst, was given in evidence on the part of the latter, authorizing Broadhurst to use the patent for the erecting of en- gines in certain parts of Cornwall only, and it was contended that the admissions of Broadhurst were to be taken with refer- ence to the interest which he thus possessed in the invention, and not to any participation either in the patent generally, or in the particular transaction in question. Graselee J. who tried the ac- tion, left it to the jury to say whether Broadhurst, at the time he' made the admission, was under a mistake ; and whether the acts he was proved to have done did or did not afford a sufficient ground for supposing it to be a mistake ; and with regard to those acts, he left it to the jury to say whether they were referable to a partnership in the patent in general, or in this particular transac- tion. The jury found a verdict for the defendants, on the ground that Broadhurst was not a partner ; and the Court of Exchequer refused to grant a new trial. § 787. The plaintiff, in an action against partners, may call one of the partners to prove his case, if the partner so called be not a party to the record, and if upon the whole it be to his interest to defeat the plaintiff's claim.^ Such a witness may even prove the partnership. Thus, in an action of assumpsit for goods sold and dehvered to a steam yacht company, to which the general issue was pleaded, a witness, who was called by the plaintiff to prove that the defendant had a share in the concern, was held competent, although he admitted on the voir dire that he himself was jointly liable. " If the plaintiff recovers," ob- served Littledale J., " the defendant will have contribution. If he fails, he may sue the witness for the whole, and the latter may then claim contribution from the defendant. To this it is answered, that in such an action he might not be able to establish that the defendant was a partner. But it must be remembered that the admission of the witness was the only proof of his own liability ; it was, therefore, only reasonable to take the whole ' Tappan ». Bailey, 4 Metoalf, 529. But in Taylor v. Henderson, 1 7 Serg. & R. 453, it was held that the plaintiff cannot, by omitting to sum- mon one of a firm, make such member a witness for him. And see Norman V. Norman, 2 Yates, 154 ; Purviance v. Dryden, 3 Serg. & R. 402 ; Bill v. Porter, 9 Con. 23 ; Cummins v. Coffin, 7 Iredell, 196. CH. VI.] ACTIONS AGAINST PARTNERS. 729 of his evidence together, and that showed the defendant to be jointly hable."^ So, in an action brought to charge A. as a partner in a trading company, a witness, who was proved to be a shareholder by other evidence than his own, and, therefore, might a fortiori be considered interested in increasing the number of , partners, was, nevertheless held competent to prove that A. was a partner.^ § 788. When the partnership is proved or admitted, the plain- tiff may, in like manner, but with the same restrictions, call one of the partners to prove other parts of his case.^ Thus, in assumjpsit ' Blackett v. Weir, 5 Barn. & Cres. 385 ; 8 Dowl. & Eyl. 142 ; Contra, Latham v. Eenniston, 13 N. Hamp. 203. ' Hall V. Curzon, 9 Barn. & Cres. 646 ; Gibbs v. Bryant, 1 Pick. 118. In Luckett V. Graham, -which was an action against one of three obligors, a co- obligor was allowe'd to be a witness to prove the execution of the bond by the defendant. 1 Str. 35. But in Marquand v. Webb, 16 John. 89, it was held, that in an action for repairs done to a vessel, against one part-owner, who neglected to plead the non-joinder of the others in abatement, another part-owner is not an admissible witness for the plaintiff to prove the owner- ship of the defendant ; for, although he would be liable as an owner to the plaintiff in case he failed, or if he succeeded would be answerable to the de- fendant for contribution, yet he has an interest, by charging the defendant (a verdict against whom would be evidence of his joint ownership), to increase the number of part-owners, and thus diminish the amount of contribution or loss, which he would otherwise himself be obliged to sustain. So in Pierce V. Kearney, 5 Hill (N. Y.), 82, it was held by Nelson C. J., that where the dispute is whether the defendant ever contracted the debt for which the suit is brought, one claiming to be a co-contractor with him is not a compe- tent witness for the plaintiff. See the remarks in this last case upon Mar- quand V. Webb. This subject was much discussed in Latham v. Kenniston, 13 N. Hamp. 203, and the court there came to the conclusion that in an ac- tion upon a promissory note instituted against two persons as partners, one of them upon whom the writ was not served, and who signed his own name and that of the other to the note as partners, is not a competent witness for the plaintiff, to prove the existence of a partnership between himself and the defendant ; this decision did not proceed upon the ground that the witness was interested in the result of that action, but upon the ground that a judgment against the defendant in such case would, in an action by him against the witness to recover the money paid by the defendant be prima facie evidence for the witness, of the existence of a partnership between him and the defendant. ' See Van Keimsdyk v. Kane, 1 Gallison, 630 ; Van Zant v. Kay, 2 Humph. 106. 730 RIGHTS OF PARTNERS, ETC. [BOOK III. on an attorney's bill, where the charges were for business done for two persons (partners), and one only was sued, and there was no plea in abatement, it was ruled that the other mighl; be called as a witness for the plaintiff.^ So, upon a plea in abatement, that the promises were made jointly with A. B. and others, and issue joined thereon ; it was ruled that A. B. was a competent witness for the plaintiff; for even if the plaintiff were to succeed in this action, A. B. would still be liable to contribution to the defendants in case they could prove that he was really a partner.^ Upon the same principle, in an action of assumpsit for the non-delivery of goods, and for money had and received, the defendant having pleaded in abatement that the promises were made jointly with A. and B., and not by the defendant alone ; it was held that A. was a competent witness for the plaintiff, to prove that the defend- ant was not authorized by the partners to make the contract, and that he received the money to his own use. In this case, the plaintiff having obtained a verdict, Lord Ellenborough said that the defendant was not thereby precluded from suing the other partners for contribution, provided he could establish by evidence his claim against them as partners. The record in this action would not operate as an estoppel against him on that occasion ; he might resort to other evidence and prove them jointly partners in the transaction. If this were so, it was indifferent to the witness which way the verdict went. If, indeed, it should turn out that he was a partner, the verdict in favor of this plaintiff would rather be prejudicial to him, for he would then be liable to contribution, increased by the costs. In one way, therefore, the verdict would be indifferent, in the other prejudicial.^ So in Tappan v. Bailey,* where one gave a note as agent of a joint-stock company, of which he was a member, and a suit was brought thereon against other members of the company, he was held to be a competent witness to prove his authority as agent, and also to prove other facts nec- essary to support the action.^ ' 'Fawcett v. Wrathall, 3 Carr. & Payne, 305. ^ Cossham v. Goldney, 2 Stark. 414. ' Hudson V. Robinson, 4 Mau. & Sel. 476. * 4 Metcalf, 529. " In Tappan v. Bailey, Shaw C. J., remarked: " The ground of objection to the witness is, that having assumed to act and make this note in the name CH. VI.J ACTIONS AGAINST PARTNERS. 731 § 789. If the witness has an interest inclining him to each of the parties, so as upon the whole to make him indifferent, he will be competent to give evidence for either party.i Thus, in En- action against one of two joint makers of a promissory note, it was held that T. S., the other joint maker, might prove the defend- ant's signature to the note. The reason given was, that if the plaintiffs recovered against the defendant, T. S. would be liable to him for contribution ; or if they failed in this action, they might resort to T. S. for the whole, and then T. S. would be entitled to contribution from the defendant, so that either way T. S. stood in- different.2 So, where one partner drew a bill in the partnership firm, and gave it in payment to a separate creditor in discharge of his own debt, the Court of King's Bench held that, in an action by such creditor against the acceptor, either of the partners might be called, on the part of the defendant, to prove that the partner who drew the bill had no authority to draw it in the name of the firm ; and that the bankruptcy of the partners would not vary the question as to the competency of the witness.^ In this case the partner who drew the bill would have been Uable to the plaintiff to the amount of his debt, if the plaintiff had failed in the action ; and if the plaintiff had succeeded, he would have been liable to and by the authority of the company, if he was not so authorized, he was personally bound by the contract, so that charging the company would tend to relieve him from that responsibility. This is obviously an interest in the question only, because the judgment in this case, on whichever side it may be given, could not be given in evidence in a suit against him. Besides, by the general rule, an agent is competent to prove the authority under which he acted, and the acts done under it. As a member of the company, the witness is called to testify against his interest, because it is to charge the company with a debt, to the payment of which he will be liable to con- tribute." ' 1 Phil. Ev. 68 ; 1 Greenl. Ev. §§ 391, 399, 420 ; Marquand v. Webb, 16 John. 89. ' York V. Blott, 5 Mau. & Sel. 71. In an action against one of three makers of a joint and several promissory note, another of the makers was called as a witness, who stated on the voin dire, that he had signed the note only as a surety for the defendant. It was held that he was a competent witness to prove the making of the note by the latter. Page v. Thomas, 4 Jurist, 724. ' Kidley v. Taylor, 13 East, 175. See Robertson v. Mills, 2 Harr. & Gill, 98. 732 RIGHTS OF PARTNERS, ETC. [BOOK III. the defendant, the acceptor ; and with respect to the other- part- ner, though he would have been liable to the defendant if the • plamtiff recovered, he would have had his remedy over against his joint partner.^ § 790. In a recent case, where an action was brought agaiost the maker of certain notes which had been indorsed bj A. in the firm of A. & Co. to the plaintiffs, as a security for advances made to A. by the plaintiffs, it seems not to have been questioned that the plaintiffs might call B. to prove the indorsement to the plain- tiffs, although B. had been a partner in the firm of A. & Co., and had given A. authority to indorse these notes for the purpose of winding up the concerns of the partnership.^ § 791. Where a partner is a defendant on the record, that fact alone, in the opinion of many judges, has been an objection to his being called as witness for the plaintiff.^ In Manti;. Mainwaring, Burrough J., is reported to have said : " The general rule is, that no party to an action can be examined but by consent ; and all the parties to the record must consent ; and without such consent rwne can be called. In this case the co-defendants objected to the examination of a defendant in behalf of the plauitiff, and therefore the witness is properly rejected." But it is to be ob- served, that such consent has not always been thought neces- sary ; '^ and, in the leading cases on this subject, as much stress ' 1 Phil. Ev. 69. = Smith V. Winter, 4 Mees. & "W. 454. * Dallas J., and Burrough J., 8 Taunt. 141 ; Abbott C. J., 5 Barn. & Ores. 387 ; Supervisors of Chenango v. Birdsall, 4 Wendell, 453, 457 ; Schermer- horn V. Schermerhorn, 1 Wendell, 119; Mauran v. Lamb, 7 Cowen, 174, 177 ; Hopkins v. Banks, id. 650 ; Frear v. Evertson, 20 John. 142 ; 1 Greenl. Ev. §§ 329, 330; 2 Phil. Ev. Cowen & Hill's notes, 134, 135, note (122); Coghill V. Coghill, 2 Hen. & Munf. 482-484 ; De Wolf u. Johnson, 10 Wheat. 367. In Bull v. Strong, 8 Metcalf, 10, Mr. Justice Dewey remarked, that the weight of authority in Massachusetts is strongly in favor of excluding one who is a party to the record as a witness for that cause under all cir- cumstances, though the only objection to his admissibility is that he is such party to the record ; but he added, that " the question is one on which there has not been an entire uniformity of decision." See Commonwealth u. Marsh, 10 Pick. 57 ; Fox v. Whitney, 16 Mass. 121 ; Columbia Manuf. Co. V. Dutch, 13 Pick. 125; Chaffee u. Jones, 19 Pick. 260; Bradlee v. Neal, 16 Pick. 501. * Norden v. Williamson, 1 Taunt. 378 ; Doe v. Green, 4 Esp. 198. CH. VI.] ACTIONS AGAINST PARTNERS. 733 seems to have been laid on the circumstance of the witness being interested, as on that of his being a party to the record. Thus, in Brown v. Brown,i which was an action on a joint contract against two defendants, one having suffered judgment by default, it was held that he was not a competent witness for the plaintiff to prove that the other defendant was a party to the contract ; for if the plaintiff should succeed, he would be entitled to contribution from the co-defendant, and if the plaintiff should fail, he himself would be liable to the whole demand. And the same observation is ap- plicable to the case of Mant v. Mainwaring,^ where it was held, that a release from the plaintiff to the defendant under these cir- cumstances would not render him a competent witness for the plaintiff. § 792. The foregoing observations were written before the author had seen the case of Worrall v. Jones,^ which seems to settle the question. That was an action of debt on a bond con- ditioned for the payment of rent to the plaintiff, brought agaiast three persons, two of whom suffered judgment by default ; the third pleaded that the tenancy under the agreement ceased in March, 1816, up to which time all rent had been paid. At the trial, one of the defendants, who had suffered judgment by default, was called to prove that the tenancy under the agreement con- tinued till 1829. His testimony beiog objected to, the point was reserved for the opinion of the Court of Common Pleas, who de- cided that he was a competent witness. " No case," said Tindall C. J., " has been cited, nor can any be found, in which a witness has been refused, upon the objection in the abstract, that he was a party to the suit ; on the contrary, many have been brought forward in which parties to the suit, who have suffered judgment by default, have been admitted as witnesses against their own in- terest, and the only inquiry seems to have been, in a majority of the cases, whether the party called was interested in the event or not ; and the admission or rejection of the witness has depended on the result of this inquiry. We think, therefore, where the party to the suit who has suffered judgment by default, waives the ' 4 Taunt. 752. " 8 Taunt. 139 ; 2 Moore, 9. ' 7 Bing. 395; 5 Moore & Payne, 241. 62 734 EIGHTS OF PARTNERS, ETC. [bOOK UI. objection and consents to be examined, and is called against his own interest, there is no ground either on principle or authority for rejecting him.^ § 793. In an action ex contractu against one or more partners, a copartner cannot be admitted as a witness for the defendants,^ though he is not sued.^ For he has a direct interest in defeating the action, inasmuch as in the event of its succeeding he is hable to contribution both for the money recovered and the costs.* And he cannot be rendered competent by the provisions of the stat. 3 & 4 Will. 4, c. 42, s. 26,° for the reasons which will be stated hereafter.^ And though one partner or joint contractor may have paid his share of the principal sum due, yet, if any part of the interest remains unpaid, he is directly interested as to that ; 5" and such direct advantage is not counterbalanced by the contingency of an action being brought against him in the event of the failure of the existing action. And even if the party proposed to be examined has retired from the partnership, it is not enough to show ' See Gilbert's Law of Evidence, 130 (4tli ed.). In Pipe v. Steele, 2 Adol. & Ellis (n. s.), 733, one of two joint defendants in an action on a contract had suffered jiidgment by default, and it was held that he might, if not otherwise interested in procuring a verdict for the plaintiff, be called by him as a witness against the other defendant. See T\Tiitehead v. Bank of Pitts- burg, 2 Watts & S. 172. " Van Zant v. Kay, 2 Humph. 106 ; Collins v. Flowers, 1 How. (Miss.), 26. ' Bill V. Porter, 9 Conn. 23 ; Waggoner v. Gray, 2 Hen. & Munf. 603 ; Cummins w. Coffin, 7 Iredell, 196. But in an action against two partners on a note signed with the name of the firm, one only was arrested ; it was held that the other partner was a competent witness to prove that the note was given by himself, for his separate debt to the plaintiff, and that when he signed the note he informed the plaintiff that he was not authorized to sign the partnership name. Kobertsou v. Mills, 2 Harr. & Gill, 98 ; Van Zant v. Kay, 2 Humph. 106. In an action against the administrators of a deceased partner, the surviving partner is a competent witness to prove the partner- ship ; for by proving a fact which defeats the plaintiff's action, he still re- mains liable, and cannot be benefited by such failure to recover. Grant v. Shurter, 1 Wendell, 151. * Phil. Ev. 71 ; Bac. Abr. Evidence, (B.) ; Co. Litt. 6 ; Young v. Bairner, 1 Esp. 103. ' See ante, § 687. ' Post, § 806. ' Slegg V. Phillips, 4 Adol. & Ellis, 852. CH. VI.] ACTIONS AGAINST PARTNERS. 735 that the debt due to the plaintiffs whilst the defendant was a part- ner has primd fade been discharged by the operation of the rule in Clayton's case ; because the payments -which give occasion to the application of the rule are not conclusive evidence of discharge, but evidence of appropriation only, and liable to be rebutted by other evidence.^ § 794. The general rule is to be adhered to, although in many cases the evidence of a partner so called might in some degree tend to onerate himself. Thus, in an action of assumpsit for goods sold and delivered, the plaintiff having proved the sale of the goods to the defendant and to one J. S., who were partners in trade. Lord Kenyon held that J. S. could not be a witness for the defendant, to prove that the goods were sold to himself, and that the defendant was not concerned in the purchase except as his servant ; for, said Lord Kenyon, by discharging the defendant, he benefits himself; as otherwise he will be hable to pay a share of the costs to be recovered by the plaintiff.^ So, in an action against a. part-owner for work and labor, &c., in painting a ship, to which the defendant pleaded in abatement that there were other part- owners not joined, and the plaintiff replied that the defendant had undertaken solely to pay, it was held that the defendant could not call the master, who was also a part-owner, to prove that he or- dered the work to be done ; ^ and, generally, on the plea of abate- ment of the non-joinder of other joint contractors, one of the parties named in the plea is not a competent witness for the defendant.* Again, in an action against B. to recover the price of goods sold and delivered to him, it was held clearly that A. was not a compe- tent witness to prove that he was in partnership with B., and that the goods were delivered on the partnership account, in liquidation of a debt previously due to the firm from the seller. Probably there was no other witness, or the partnership ought to have been ' Wilson V. Hirst, 4 Barn. & Adol. 760. ' Goodacre v. Breame, 1 Peake, 175 ; Hall v. Rex, 6 Bing. 181. Upon the principles upon which this class of cases has been decided, it has been held that the joint acceptor of a bill of exchange is not competent to prove a set-off in an action by the holder against the drawer. Mainwaring o. Myt- ton, 1 Stark. 83. ' Young V. Bairner, 1 Esp. 103. » Hare v. Munn, 1 Mood. & Malk. 241 ; Spaulding v. Smith, 1 Fairf. 363. 736 EIGHTS OF PARTNERS, ETC. [BOOK III. pleaded in abatement. The ground of the decision was, that, if the seller had recovered a verdict against B., vrhich he might have, done but for the testimony of A., the latter would be liable to con- tribution.i In an action on a joint contract against two defend- ants, where one let judgment go by default, Lord Kenyon refused to admit him as a witness for the other defendant to negative the contract ; for, if negatived as to one, it fails as to the other, and the plaintiff could not make use of the judgment by default against him.^ So, where an action was brought upon a contract alleged to be joint, and one of the defendants was defaulted, and the other proceeded to trial, it was held that the defaulted party was not a competent witness for the other to prove that the contract was not joint. 3 Dewey J., remarked, that the plaintiff put his case upon the joint promise of both of the defendants, and he must recover against both or neither ; and this notwithstanding the default of one of the defendants.* And he added : " Strong, the proposed witness, by whom Herrick, the other defendant, offers to show that this was not a joint contract, is directly interested in establishing that fact J for if this be found by the jury, a judgment may be en- tered against the plaintiff, as well in favor of Strong as of Herrick. It presents a case of direct interest, and the testimony is therefore incompetent." So, in an action against one of two joint contrac- tors. Lord Denman refused to admit the other joint contractor to prove that the consideration for the contract was illegal ; for if the contract was proved illegal as against one, it might similarly, in a subsequent action, be proved illegal as against the other, and so both might get rid of the liability altogether ; and this ruHng was confirmed by the Court of King's Bench.^ ^ 795. But where one of several defendants is deprived of all interest in the event of the action, he may be examined as a wit- ness for the co-defendants.® Thus, if upon the retirement of a ' Evans v. Yeatherd, 9 Moore, 272; 2 Bing. 133. ' Brown V. Fox, 1 Phil. Ev. 78. ' Bull V. Strong, 8 Metcalf, 8. But see Gooden v. Morrow, 8 Alabama, 486. * Tuttle V. Cooper, 10 Pick. 281 ; Columbia Manuf. Co. v. Dutch, 13 Pick. 125 ; Pipe«. Steele, 2 Adol. & Ell. (n. s.), 736, per Lord Denman C. J. » Slegg V. Phillips, 4 Adol. & Ell. 852. " Smith V. Allen, 18 John. 245 ; Anderson v. Snow, 8 Alabama, 504, CH. VI.] ACTIONS AGAINST PARTNERS. 737 partner mutual releases of all demands are executed between him and remaining partners, the retiring partner may, though the accounts between him and his late partners are still unsettled, be examined on their behalf in an action brought against them to recover a balance in which the retiring partner was interested.^ So, where several persons have agreed to bear equally the expenses of a joint undertaking, not a partnership in trade, in an action brought against one of them, another of the contractors is a com- petent witness for the defendant, if released by him, though the rest do not join in the release.^ But a general release, by one of two partners sued, of all claims against a third partner not sued, biads the releaser only, and, consequently, does not extin- guish the interest of such partner, so as to render him a competent witness for the defendants.^ § 796. Again, if one of several partners, defendants, plead his bankruptcy, and the plaintiff enter a nolle prosequi as to him, he may give evidence for the other defendants.* Therefore, in an action against A. and B., on a bill drawn and indorsed in the name of the firm, B. having pleaded his bankruptcy, and a nolle prosequi having been entered as to him, he was allowed, in de- fence of A. to give evidence that he had indorsed the biU to the plaintiff without A.'s privity, in discharge of his separate debt.^ So, where A. and B. were partners, and C. accepted an accommodation bUl drawn in their name, and to an action against A. and B. the latter pleaded his bankruptcy, and a nolle prosequi was entered as to him, it was held, that, as A. was, imder the circumstances, barred of all claim upon B. for contri- bution in the event of the plaintiff's success, B. was therefore disinterested, and might be called to prove that the bill was accepted for his own accommodation only, and not that of A.^ • Wilson V. Hurst, 4 Barn. & Adol. 760 ; Birkett v. Wood, 4 Jurist, 745; overruling upon this point Cheyne v. Koops, 4 Esp. 112. See Young V. Bairner, 1 Esp. 103 ; Black v. Marvin, 2 Penn. 138 ; M'Coy v. Lightner, 2 Watts, 347; Culbertson v. Alexander, 5 Watts, 496. ' Duke V. Pownall, 1 Mood. & Malk. 430. ' Bill V. Porter, 9 Conn. 23. • 16 East, 171 ; Dans. & Lloyd, 216. = 7 Green v. Deakin, 2 Stark. 347. See Robertson v. Mills, 2 Harr. & Gill, 98. • Moody V. King, 2 Barn. & Ores. 558 ; 4 Dowl. & Kyi. 30. In this case 62* 738 RIGHTS OF PARTNERS, ETC. [BOOK III. So, where A. and B. were sued on a bill of exchange accepted by them while in partnership, and B. pleaded his bankruptcy and certificate, and the plaintiff entered a nolle prosequi as to him, it was held, that, as A. was not only entitled but under an obli- gation to prove, and as the certificate was therefore a bar to any action for contribution, it followed that B., who had released his interest in the surplus of his effects, was a competent witness for A.i But it seems that a bankrupt partner, even after a nolle prosequi, cannot be called for the purpose of upsetting the action on a point of form ; as for instance, by disproving his partnership with other defendants at the time of the contract, the latter being really liable on the merits.^ & 797. In the same manner, where a nolle prosequi is not entered, but a verdict is given for that defendant who pleads his bankruptcy, he may be admitted as a witness for the co-defend- ants. It appears, indeed, that Lord Kenyon refused to permit a verdict to be entered for a defendant, in order to obtain his evidence under such circumstances, his Lordship observing, that in case of a verdict for the plaintiff, the bankrupt was liable to the costs of the action, and was therefore interested in the event.^ But the general rule appears to be, that where the debt is barred by the certificate, the costs, as accessory to the debt, are like- wise barred, even though they may not be provable under the fiat.* Lord Kenyon's objection, therefore, appears to be no longer in force ; and hence, in cases of this nature, the jury may be directed to find a verdict for the bankrupt defendant, and he may then be admitted as a witness for the co-defendants.^ It has been held however, that this is entirely at the discretion of the bill was drawn a day or two after the partnership had ceased as between the partners themselves, and the court seems to have laid some stress on this circumstance ; but it was immaterial, as the 49 Geo. 3, c. 121, § 8, extended to partners as well as sureties. , ' Aflalo V. Fourdrinier, 6 Bing. 306 ; 3 Moore & Payne, 743 ; Butcher v. Forman, 6 Hill (N. Y.), 583. * Jones V. Hunter, Dans. & Lloyd, 215. » Eaven v. Dunning, 3 Esp. 283. * Ex parte Poucher, 1 Glyn & Jam. 384, and see the cases there cited ; but see 4 Bing. 57. " Bate V. Russell, 1 Mood. & Malk. 333. The witness had a release from the co-defendants, ex majori caulela. CH. VI.] ACTIONS AGAINST PARTNBES. 739 the judge ; and that although, upon issue joined, it may be clear from the evidence that the defendant who has pleaded his bank- ruptcy, must have a verdict in his favor, yet he is not entitled to have that verdict recorded in the middle of the cause, in order that he may be called as a witness for the co-defendants.^ Where three of several defendants suffered judgment by default, it was held that one of the three was a competent witness to produce, on behalf of the fourth, the partnership deed under which the four had been acting in their dealings with the plaintiff.^ § 798. A copartner of the defendant may likewise be examined in his behalf, hy consent of the plaintiff. But in a case where a defendant pleaded the non-joinder of his copartner in abatement, and by consent of the plaintiff, called his copartner to prove the plea, and upon examination, the copartner denied the partnership, it was held, that although the defendant might caU other wit- nesses to prove that fact, yet he could not offer in evidence his copartner's admission of the partnership contained in an answer in chancery, as, by that mode of proceeding, he discredited his own witness.^ § 799. Where the plaintiff wishes to object to the testimony of a witness, on the ground of his being a copartner with the defendant, he should ask the witness, on the voir dire, whether he is not a partner.* If he deny the partnership, it will be com- petent to the plaintiff to examine other witnesses in order to establish the partnership, if he thinks that such evidence will have weight with the jury.^ But in order to deprive the defendant of a witnesSj on the grounds just stated, a partnership must be satis- factorily ^rowet^. Therefore, where, to an action against a per- son as a trader, the defence was, that the business was carried on by A., and not by the defendant, and that the defendant only worked in A.'s shop as a servant, it was ruled that the plaintiff ' Emmett v. Bradley, 1 Moore, 332 ; Currie v. Child, 3 Camp. 283 ; Car- penter V. Jones, 1 Mood. & Malk. 198. But see Bate v. Russell, 1 Mood. & Malk. 833. " CoUey V. Smith, 4 Bing. N. C. 285 ; 5 Scott, 700. ~ » Ewer V. Ambrose, 3 Barn. & Cres. 746 ; 5 Dowl. & Ryl. 629. * Cheyne v. Koops, 4 Esp. 112. ' See Ewer v. Ambrose, ante, § 798, and 1 Phil. Ev. 131. Formerly, it was held that he could not resort to loth methods to establish the partner- ship. 10 Mod. 151 ; Ambler, 593. 740 RIGHTS OP PARTNERS, ETC. [BOOK III. could not, merely by suggesting a partnership between A. and tbe defendant, deprive the defendant of A.'s testimony to this fact.i § 800. In an action against several for a joint tort, it is not necessary that the evidence should affect all the defendants ; some may be found guilty, and others acquitted.^ But in a case where the plaintiff had proved all the defendants guilty of a joint tres- pass, and then proved a second trespass against three only, expect- ing afterwards to implicate all in this second trespass, it was held that he had, by so doing, elected to waive the first, and therefore, being unable to bring home the second trespass against more than the three, the others were acquitted ; and it was held that they should be acquitted before the three went into their defence.^ § 801. It seems to be scarcely settled how far, in actions of tort, the declarations of one defendant are to be received in evi- dence against another.* In the King v. Hardwick,^ Lord Ellen- borough observed, that when a joint trespass has been estabhshed, the declaration of one defendant as to the motives and circum- stances of the trespass will be evidence against all who are proved to have combined together for the same object. 'But the doctrine contained in this dictum appears to be laid down too broadly ; and a learned writer conceives that such declarations are only admissi- ble as have been made with reference to a concerted plan, and in pursuance of a common olject.^ And this opinion has been adopt- ed in a subsequent case. An action was brought against several defendants for placing the flap of a cellar, for the purpose of un- loading wine, so negligently, that it fell upon the plaintiff, and in- jured his leg. One of the defendants having suffered judgment by default, a statement made by him was offered in evidence, not only against himself, but also against the other defendants ; and ' Birt V. Hood, I Esp. 20. ^ Niehol V. Glennie, 1 Mau. & Sel. 588 ; Holroyd v. Breare, 4 Barn. & Aid. 700. To find all guilty in trover, a joint conversion by all must be proved. 2 Phil. Ev. tit. Trover. ' Wynne y. Anderson, 3 Carr. & Payne, 596. * In Wilkinson v. Root, Wright, 606, it was held that the declarations of a partner are not evidence against his copartner as to frauds and torts. ^ 11 East, 385. « 1 Phil. Ev. 96. CH. VI.] ACTIONS AGAINST PARTNERS. 741 the King v. Hardwick was cited. Tindal C. J. : " The statement is, no doubt, evidence for one purpose against the person himself, because the jury have to say what damage has been sustained ; but the plaintiff wishes to go further. It seems to me, the author- ity reUed on on both sides applies to a case where there is a com- mon object to be furthered ; but here there was no common object ; it is mere negligence. You must make the parties joint agents for one common object, before you can make the declarations of one who has suffered judgment by default evidence against the others." His Lordship then directed the jury that they were not at liberty to make use of the admission as against the other de- fendants.i But where a joint trespass has been proved to have been wilfully committed by several defendants, then it appears that a declaration made by one of the defendants relative to that trespass is evidence against all. Accordingly, in a late case, where three defendants had jointly imprisoned the plaintiff, the declaration of one of the defendants, made some weeks after, in the absence of the others, tending to show that the imprisonment arose from malice, was ruled to be admissible in evidence, in an action for false imprisonment brought against all three. ^ § 802. We have seen that, if a joint tort be committed by sev- eral partners, the plaintiff has his election to sue all or any of them.^ In trespass, if one whom the plaintiff, designed to make use of as a witness be by mistake made a defendant, the court will, on motion, give leave to omit him, and have his name struck out of the record, even after issue joined ; for the plaintiff can in no case examine a defendant, though nothing be proved against him.* But in trespass, one who suffers judgment by default, is not a competent witness for the plaintiff.^ In an information for a misdemeanor, the plaintiff may enter a nolle prosequi as to one defendant, and then examine him.* § 803. But a partieeps criminis, who is not made a defendant, may be a witness for the plaintiff, although left out of the declara- ^ Daniels v. Potter, 4 Carr. & Payne, 262 ; 1 Mood. & Malk. 501. ' Wright V. Court, 2 Carr. & Payne, 232. 5 Ante, § 727., * Bull. N. P. 285. ' Chapman v. Graves, 2 Camp. 333, n. « Bull. N. P. 285. 742 RIGHTS OF PARTNERS, ETC. [BOOK III. tion for that purpose. ^ It is remarkable that it should be so, as such witnesses are open to a strong objection in point of interest ; for in an action of trespass, a recovery against one of several co- trespassers is a bar to an action against the others. Yet, as Lord Tenterden observed, scarcely a circuit passes without an instance of a person who has committed a trespass being called to prove that he did it by the command of the defendant.^ However, the circumstances under which a witness is so called mightily lessen his credit.^ § 804. It has been ruled that a defendant in an action of tro- ver, who suffers judgment by default, may be a witness for the oo-defendants, as he is not liable to the costs of the issue tried against the other, and is not himself released, whatever may be the event of that issue.* Moreover, if a material witness for a defendant in ejectment is made a co-defendant, and lets judgment go by default, or consents to let a verdict be given against him, he may be a witness for another defendant." In an action of re- plevin against a broker, it has been ruled that a person who at the time of the distress was in partnership with the broker is a com- petent witness for him.^ § 805. If in tort any person be arbitrarily made a defendant, to prevent his testimony, the plaintiff shall not prevail by that artifice ; but the defendant against whom nothing is proved shall be sworn notwithstanding, for he does not swear in his own justifi- cation, but in justification of another. However, this rule is only to be understood where there is no manner of evidence against the defendant ; for if there be, his guilt or innocence must wait ' Ibid. 286. " 5 Barn. & Cres. 387. " Bull. N. P. 286. ' Ward V. Haydon, 2 Esp. 553. See 8. c. 2 Peaks, 126. In a note to the latter report, it is observed that the decision in this case is doubtful, in- asmueh as Lord Kenyon supposed that the witness was only liable to costs down to the time of signing the interlocutory judgment, and no further ; but that the practice is to tax the whole costs jointly against both defendants, so that a witness who has suffered judgment by default, as in the principal case, is most materially interested in absolving the other defendant from his liability. ' Dormer v. Fortescue, Bull. N. P. 285. ° Duncan v. Meikleham, 3 Carr. & Payne, 1 72. CH. VI.] ACTIONS AGAINST PARTNERS. 743 the event of the verdict.^ If there be no case whatever against him, it seems, according to some authorities, to be in the discre- tion of the judge whether the jury shall in the middle of the cause acquit him, in order to make him a witness for the other defendants.^ And it has been ruled that he has no right to be acquitted for such purpose, until all the other evidence for the defendants is finished.^ § 806. We may conclude this section by referring to the stat. 3 & 4 Will. 4, c. 42, sect. 26, which renders certain witnesses competent, who would otherwise be rejected on the ground of interest. That statute, " in order to render the rejection of wit- nesses on the ground of interest less frequent," enacts, " that if any witness shall be objected to as incompetent, on the ground that the verdict or judgment in the action, in which it shall be proposed to examine him, would be admissible in evidence for or against him, such witness shall nevertheless be examined ; but in that case a verdict or judgment in the action, in favor of the party on whose behalf he shall have been examined, shall not be admissible in evidence for him, or any one claiming under him ; "nor shall a verdict or judgment against the party on whose behalf he shall have been examined be admissible in evidence against him, or any one claiming under him." And by section 27, " the name of every witness objected to as incompetent, on the ground that such verdict or judgment would be admissible in evidence for or against him, shall at the trial be indorsed on the record or document on which the trial shall be had, together with the name of the party on whose behalf he was examined, by some oflScer of the court, at'the request of either party, and shall be afterwards entered on the record of the judgment ; and such indorsement or entry shall be sufficient evidence that such witness was examined in any subsequent proceeding in which the verdict or judgment shall be offered in evidence." The effect of this enactment is to make the witness competent where his only interest is that the verdict or judgment may be used for or against him.* Where he has a direct interest in the subject-matter of the action, or the ' Bull. N. P. 285. ° Davis V. Living, Holt, 275 ; Bouser v, Curtis, 3 Carr. & Payne, 597, n. ' Wright V. Paulin, Ky. & Mood. 128. But see post, last note to § 810. * Per Parke B., 2 Mees. & Wels. 421. 744 BISHTS 01" PARTNERS, ETC. [bOOK III. result of tte suit, or where he may afterwards proceed, or be pro- ceeded against, without the production of the verdict or judg- ment, the statute does not apply.^ It seems clear, therefore, that in most, if not all, the cases which have been mentioned, in which the witness was held incompetent,^ and which, with but few excep- tions, were decided before the passing of this act, the witness could not have been rendered competent by his name being in- dorsed on the record. SECTION IX. OF NONSUIT, VERDICT, COSTS. § 807. The plaintiff will be nonsuited if he is unable to make out his case, either for want of evidence or want of law. If it be clear that in point of law, the action will not lie, the judge at Nisi Prius will direct a nonsuit, although the objection appear on the record, and might be taken advantage of by motion in arrest of judgment, or on a writ of error.^ There is this advantage attend- ing a nonsuit, that the plaintiff, though subject to the payment of costs, may afterwards bring another action for the same cause, which he cannot do after verdict against him.* § 808. In actions against partners, we have seen that the plain- tiff may be nonsuited for the misjoinder of defendants.^ Also, upon the trial of a plea in abatement, he may be nonsuited in case the plea be proved. Where all the defendants join issue, the plaintiff, if nonsuited as to one, must be nonsuited as to all.^ And if the plaintiff neglect to bring the issue to trial, any one of the defendants may obtain a rule for judgment as in case of a nonsuit.'^ ' Bowman v. Willis, 3 Bing. N. C. 671 ; Green v. Warburton, 1 Mood. & Kob. 106. 2 Ante, § 794. *2TiddPrac. 8G7. ' 2 Tidd Prac. 868. * Ante, § 725. " Blake's case, 1 Sid. 378. ' Jones V. Gibson, 5 Barn. &' Ores. 768 ; 14 Geo. 2, c. 17. But the rule must be entitled in the cause against all the defendants. Temple v. Hamil- ton, Smith & Batty, 27. CH. VI.] ACTIONS AGAINST PAKTNBKS. 745 And if the plaintiff enter a nolle prosequi as to one, he may be nonsuited as to the other.^ If one defendant suffer judgment by default, the plaintiff, upon trial of issue joined by the other defend- ant, may elect to be nonsuited. " Judgment by default," observed Lord Tenterden, " is either by non sum informatus, or nil dicit. In the former case, the defendant's attorney, having appeared, says that he is not informed of any answer to be given to the action. In the latter, the defendant himself appears, but says nothiog in bar or preclusion thereof, and the judgment proceeds : ' Whereby the said A. B. remains undefended, wherefore the plaintiff ought to recover his damages.' It is, therefore, not inconsistent for a plaintiff, who has obtained such a judgment against one of several defendants, to say that he will not further prosecute his suit against another defendant." ^ It follows from this, that where, in an ac- tion of assumpsit, one of two defendants suffers judgment by default, the other is entitled to judgment as in case of a nonsuit, for not proceeding to trial.^ § 809. On the trial of an action ex contractu,, where several are defendants, the jury must find a verdict against all, or for all.* But on the trial of an action for a joint tort, the jury may find some guilty and acquit others. Thus, in trover or trespass, several may be joined, yet one only be found guilty ; ° there can- not, however, be a nonsuit as to one, and a verdict against the others.^ In all cases, it is necessary that it should be shown by the verdict that the jury have taken into consideration the point in issue. Therefore, where in assumpsit the defendant pleaded that the promises were made by him jointly with another, and issue was taken upon that fact, and the jury found by their verdict that the defendant promised, without stating whether he promised alone or jointly with another, it was held that this verdict was bad, because it did not distinctly pronounce upon the issue.' •M'lver V. Humble, 16 East, 109. But see, contra, in case of a nolle pro- sequi against an infant partner, ante, § 720. 2 Murphy V. Donlan, 5 Barn. & Ores. 178 ; 7 Dowl. & Kyi. 619. ' Stuart V. Rogers, 4 Mees. & Wels. 649. * Porter V. Harris, 1 Lev. 63. ' Nichol V. Glennie, 1 Mau. & Sel. 588 ; Holroyd v. Breare, 4 Barn. & Aid. 700 ; Sutton v. Clarke, 6 Taunt. 29. " Kevett V. Brown, 2 Moore & Payne, 18. ' Bishop V. Kaye, 3 Barn. & Aid. 6051 63 746 EIGHTS 01" PARTNERS, ETC. [bOOK III. § 810. On a verdict for the plaintiff, the jury should regularly assess the damages. In an action against several defendants, if some of them let judgment go by default, and others plead to issue, there ought to be a special venire, as well to try the issue as to inquire of the damages, — tarn ad triandwm quam ad in- ^uirmdum ; and the jury who try the issue shall assess the dam- ages against aU the defendants.^ In actions upon contract, as covenant, assumpsit, &c., the plea of one defendant, for the most part, enures to the benefit of aU ; for, the contract being entire, the plaintiff must succeed upon it against all or none ; and there- fore, if the plaintiff fail at the trial upon the plea of one of the defendants, he cannot have judgment or damages against the others, who let judgment go by default.^ But in actions of tort, as trespass, &c., where the wrong is joint and several, the dis- tinction seems to be this, that where the plea of one of the de- fendants is such as shows that the plaintiff could have no cause of action against any of them, there, if this plea be found against the plaintiff, it shall operate to the benefit of all the defendants, and the plaintiff cannot have judgment or damages against them who let judgment go by default ; but where the plea merely operates in discharge of the party pleading it, there it shall not operate to the benefit of the other defendants, but, notwithstanding' such plea be found against the plaintiff, he may have judgment and damages against the other defendants.^ If some of the defend- ants demur, and others plead to issue, the jury who try the issue shall assess the damages against all the defendants.* If the de- fendants sever in pleading, the jury who try the first issue shall assess damages against all with a cesset executio. • In trespass, if the defendants join in pleading, and the jury find them all jointly guilty, they cannot assess several damages ; on the other hand, if they find some guilty and acquit others, they can only assess dam- ages against them who are found guilty .^ > 11 Kep. 5. ' Porter v. Harris, 1 Lev. 63 ; Hannay v. Smith, 3 T. R. 662. » 2 Tidd Prac. 895. * 2 Tidd Prac. 895. ' Ibid. 896. A defendant in an action of tort is entitled to be acquitted immediately after the close of the plaintiffs case, if there is no evidence against him. He is not bound to wait the issue of the cause generally. Child V. Chamberlain, 6 Carr. & Payne, 213. But see ante, § 805. CH. VI.] ACTIONS AGAINST PARTNERS. 747 § 811. The plaintiff -viho succeeds has primd fade a right to costs in all cases where he was entitled to damages antecedent to, or by the provisions of, the statute of Gloucester ; ^ as in assmnp- sit, covenant, debt on contract, case, trover, trespass, replevin, ejectment, &c. However, by the provisions of the stat. 43 Eliz. c. 6, if in a personal action, " not being for any title or interest of lands, nor concerning the freehold or inheritance of any lands, nor for any battery," it shall be certified by the judge that the debt or damages therein do not amount to 40s., the plaintiff shall have no more costs than damages, but less, at the discretion of the court. This statute has been holden to apply to all personal actions not specially excepted from it,^ and the judge may certify, although one of the defendants suffer judgment by default.^ § 812. By the 4 Jac. 1, c. 3, the defendant is entitled to costs on a nonsuit or verdict in his favor, in aU cases where the plain- tiff would have been entitled to them if he had obtained judg- ment.* He is, likewise, under the provisions of other acts,^ enti- tled to costs, either upon judgment of non pros, against the plain- tiff for not declaring, — or upon judgment in his own favor on de- murrer, — or in case the plaintiff does not recover the sum for which the defendant was, without probable cause, arrested, § 813. The defendant is hkewise, in certain eases, entitled to costs under the 8 Eliz. c. 2, s. 2, upon the discontinuance of the action by the plaintiff ; and in tort, where there is no contribution between several defendants for costs, this enactment has been held to extend to the case of nolle prosequi. Thus, where in trespass against two defendants, one of them suffered judgment by default,, and a writ of inquiry was executed as against him, and the plain^ tiff entered a nolle prosequi as to the other, the Court of Common Pleas held that the latter was entitled to costs.^ On the other hand, where, in assumpsit against two defendants, one of them > 6 Ed. 1, c. 1, s. 2. « Dand v. Sexton, 3 T. R. 37. ' Harris v. Duncan, 2 Adol. & Ell. 158 ; 4 Nev. & M. 63. * But this statute does not extend to actions brought by executors or ad- ministrators. ' 13 Car. 2, stat. 2, c. 2 ; 8 & 9 Will. 3, c. 11 ; 43 Geo. 3, c. 46 ; 3 & 4 Will. 4, c. 42. ° Jackson v. Chambers, 8 Taunt. 463. 748 EIGHTS OF PARTNERS, ETC. [BOOK III. pleaded his bankruptcy, and the plaintiff entered a Twlle prosequi as to him, and proceeded to trial and obtained a verdict against the other defendant, who pleaded the general issue, the Court of King's Bench held that the former was not entitled to costs.^ Now, however, by the stat. 3 & 4 Will. 4, c. 42, s. 32,^ where several persons shall be made defendants in any personal action, and any one or more of them shall have a nolle prosequi entered as to him or them, or upon the trial of such action shall have a verdict pass for him or them, every such person shaU h^ve judg- ment for and recover his reasonable costs, unless the judge certify that there was a reasonable cause for making him a defendant. § 814. On the authority of the several statutes to which refer- ence has been made, the courts have by a general rule estabhshed that no costs shall be allowed on taxation to the plaintiff, on any counts on which he has not succeeded, and that the costs of all issues found for the defendant shall be deducted from the plain- tiff's costs.^ Hence, where in trespass a plaintiff failed against one of two defendants, and succeeded against the other, the suc- cessful defendant's costs were set off against the plaintiff's costs, without regard to the alleged lien of the plaintiff's attorney under Reg. Gen., H. T., 2 Will. 4, the attorney being substantially the plaintiff.* So, where several defendants were sued in trespass, and a verdict was found for the plaintiff on some of the issues against some of the defendants, and against him on aU the other issues, the plaintiff was held entitled to the balance only of the costs, after deduction of all the costs of all the defendants ; ^ and where there are several defendants, and one of them gets a ver- dict, he will be entitled to all his separate costs, and also primd fade to an aliquot portion of the joint costs of the defence, unless the master is of opinion that a smaller portion should be allowed.^ § 815. When one of several defendants lets judgment go by default, and the other pleads a plea which goes to the whole decla- ration, and shows that the plaiutiff had no cause of action, if this ' Harewood v. Matthews, 2 Tidd Prac. 981. i" And see 8 & 9 Will. 3, c. n. ' Reg. Gen. 74, H. T. 1832. * Pocock V. O'Shaunessy, 6 Adol. & Ell. 867. ' Starling v. Cozens, 2 C, M. & il. 445 ; 1 Gale, 159. • Griffiths f. Jones, 4 Dowl. Pr. C. 159. OH. VI.] ACTIONS AGAINST PARTNERS. 749 plea be found for tlie defendant who pleaded it, lie shall have costs ; and, being an absolute bar, the other defendant shall have the beijefit of it, and not pay costs to the plaintiff. But when the plea does not go to the whole, but is merely in discharge of the party pleading it, then the other party shall not have the benefit of that plea, whether it be found for or against the plaintiff.^ Where there are several defendants who succeed in the action, the plain- tiff may pay the costs to which of them he pleases. It is usual to tax the costs to the defendants jointly, leaving the distribution to themselves.^ If the defendants fail, each of them is answerable for the whole costs .^ § 816. It has been already observed, that a plaintiff cannot sue more than one joint debt or separately for the same demand.* In a case where separate actions were brpught against several persons for the same debt, who (if at all) were joiatly Uable, the defendant in one action having paid the debt and costs in that action, the Court of King's Bench stayed the proceedings in the others, with- out costs." We have already seen in what manner the costs shall be adjusted in a fresh action commenced after plea in abatement,® and also in what cases the debt and costs in one action may be set off against those in another.^ SECTION X. OF EXECUTION. § 817. When a joint judgment has been given against several defendants, partners, the execution, which must agree with the judgment as to the parties, must also be jomt ; ^ for .upon judg- ' Per Bayley J., Baylis v. Dynely, 2 Chit. 153 ; and see 2 Tidd Prac. 986, and the cases there cited. ' Per Bayley J., Dickins v. Jarvis, 5 Barn. & Cres. 631. See Smith v. Campball, 4 Moore & Payne, 469. » Bull. N. P. 335. * Ante, § 713. ' Game v. Legh, 6 Barn. & Cres. 124 ; 9 Dowl. & Ryl. 126. » Ante, § 726. ' Ante, § 765. » Penoyer v. Brace, 1 Lord Raymond, 244 ; 2 Wms. Saund. 72 i ; Clerk 17. Clement, 6 T. K. 526. 63* 750 EIGHTS OF PARTNERS, ETC. [BOOK III. ment against two, a separate capias cannot issue against each,^ nor a capias against one, and an elegit against another.^ But though all are sued jointly, and a joint execution taken out, yet it may be executed against one only ; for each is answerable for the whole, and not merely for his proportional part, and equity must be called in to make the rest contribute.^ Moreover, if any of the defendants in a personal action die within a year after judg- ment, joint execution on the footing of this judgment may be had against the survivors.* \ 818. In a joint action against partners, the sheriff may take in execution both joint and separate effects.^ Therefore, if there are any effects of either partner, and the sheriff return nvlla lona, an action will lie against him. And if the plaintiff declare against the sheriff for a false return of nulla bona to a fieri facias against the goods of A. and B., alleging that " although A. and B. had ' Clerk V. Clement, 6 T. R. 525. ^ Roll. Abr. 88 ; Bac. Abr. Execution, (G). ' Per De Grey C. J., 2 W. Bl. 947 ; and^ee D. Lord Eldon, 6 Ves. 119; Herries v. Jameson, 5 T. R. 556 ; WooUey v. Kelly, 1 Barn. & Cres. 68. * Penoyer v. Brace, 1 Lord Raymond, 244 ; 1 Salk. 319. ' Per Lord Eldon, 6 Ves. 126. So, the separate property of each mem- ber of a partnership is liable to be attached for the debts due from the part- nership ; Allen V. Wells, 22 Pick. 450; Newman v. Bagley, 16 Pick. 572; per Wilde J., and having been thus attached, in Massachusetts, the lien acquired is not to be defeated by a subsequent attachment by his separate creditor. Allen y. Wells, 22 Pick. 450. But in New Hampshire a different rule prevails. Crockett v. Grain, 33 N. Hamp. 542. In this latter State the sep- arate creditors of an individual partner are entitled to a priority in respect to the separate property of such individual partners. Jarvis v. Brooks, 3 Foster (N. H.), 136. In this case it was held, that where land of one part- ner is set off in execution for a debt due from the partnership, and after- wards the same land is set off in execution, for a separate debt of the part- ner, the separate creditor of the individual partner will hold the land. See Benson v. Ela, 35 N. Hamp. 402. In this last case Sawyer J., said : " The credit p;iven to the partnership upon which the joint debt arose is considered as having contributed to augment the partership funds, and that givsen to the individual member, upon which the separate debt arose, as having added to his separate estate." In Jarvis v. Brooks, ubi supra, Perley J. said : " The cases cited for the plaintiff show that the preponderance of authority, in this country, is in favor of allowing the separate creditor his preference over his debtor's separate property." See Murrill v. Neill, 8 Howard (U. S.), 414 ; North River Bank v. Stewart, 4 Bradford (N. Y.), 254 ; Ganson v. Lath- rop, 25 Barbour, 455. CH. VI.] ACTIONS AGAINST PARTNERS. 751 goods within his bailiwick, &c., yet defendant," &c. ; this allega- tion is sustained, though the plaintiff do not prove that B. had any goods ; for such allegation is severable, the legal effect of it being that both or either of them had goods.-^ § 819. A plaintiff suing out execution for debt, damages, or costs, may at his election have a fieri facias, capias ad satisfa- ciendum, or elegit against the goods, person, or lands of the party chargeable.^ Or he may have several writs of the same sort run- ning at the same time, in order to take the defendant or his goods in different countries. If nulla bona be returned to a fieri facias, or non inventus to a capias ad satisfaciendum, or nihil to an elegit, the party may afterwards sue out another writ of the same or a different species. He may likewise abandon one writ of execution before it is executed, and sue out another of a different sort. But where the sheriff has taken goods in execution under & fieri facias, the plaintiff cannot sue out a capias ad satisfaciendum till the fieri facias has been returned, though he should have withdrawn his executioti under it.^ Execution by capias ad satisfaciendum is a satisfaction of the debt.* § 820. In a case where the plaintiff obtained judgment against two defendants, and sued out two several writs of testatum fieri facias at the same time into different counties, and the sheriff under each of them took possession of the goods of one of the de- fendants ; it appearing that the plaintiff's object was merely to obtain payment of his debt, and that he was willing to aUow the defendants the full benefit of all moneys levied under the writ in one county, before he would call on the sheriff to return the writ, issued into the other, the Court of Exchequer refused to put the plaintiff to his election which of the waits he would proceed under, and also refused to set aside the other for irregularity.^ § 821. We have devoted a separate section to the subject of execution against partners for their joint debts, in order more con- venientry to consider another matter of some importance, but ^ Jones V. Clayton, i Mau. & Sel. 349. ^ Bac. Ab. Execution, (D) ; stat. 1 Vict. c. 110, s. 11. ' Miller u. Parnell, 2 Marsh. 78. * See Harbert's ease, 3 Rep. 12 a, note (c), ed. Thomas & Fraser; Ellis Dr. & Cr. c. 13 ; 2 Tidd Prac. tit. Execution. ' Cooper V. Roe, Tidd Pr. (9th ed.), 995. 752 EIGHTS OF PARTNEKS, ETC. [BOOK III. which is involved in much obscurity, namely, execution by a sep- arate creditor against the joint effects. This point may be consid- ered with reference to, — 1. The mode of seiziag and sale by the sheriff. 2. The interest passed by such seizure and sale. 3. The remedies for the solvent partner against the effect of the execution.^ § 822. First, then, by the law of England, the creditor of any one partner may take in execution that partner's interest in all the tangible property of the partnership.^ He is to sell for such 1 See 3 Kent Com. 65 and note; Story Partn. §§ 261-264,311; Gow Partn. (3 ed.), 203-208. ^ Per Lord Alvanley, 3 Bos. & Pull. 289 ; Douglass v. Winslow, 20 Maine, 92, per Weston C. J. ; Moody v. Payne, 2 John. Ch. 548 ; Story Partn. § 261. See Morrison v. Blodgett, 8 N. Hamp. 252, 253 ; Lyndon i;. Gorham, 1 Gall. 368, 369 ; Jarvis v. Hyer, 4 Dev. 367; Wiles v. Maddox, 26 Mis. (5 Jones), 77. The execution may be levied upon the whole of the tangible goods and effects of the partnership, or upon a part thereof. Story Partn. § 311. In those States where attachments on mesne process are allowed, a creditor of one partner may attach that partner's interest in the goods of the firm. Douglas v. Winslow, 20 Maine, 89 ; Pierce v. Jaekson, 6 Mass. 242 ; Burgess v. Atkins, 5 Blackf. 337. See Schatzill v. Bolton, 2 M'Cord, 478. Mr. Chief Justice Weston, in Douglas v. Winslow, 20 Maine, 92, 93, after having stated that a separate creditor may attach the interest of one partner in the goods of the firm, added : " This right has been repeatedly exercised ; and has never been defeated, so far as the cases have come to our. knowledge, unless in behalf of partnership creditors. In the case of Pierce v. Jackson, 6 Mass. 242, Parsons C. J., says : ' A creditor of one of the firm has a right to attach the partnership effects against all creditors whose demand is not upon the company.' The existence of the right, and its exercise subject to the superior rights of the partnership creditors, are assumed in the case of the Commercial Bank v. Wilkins, 9 Greenl. 28. It may be inconvenient to other partners to have their operations thus broken in upon, and partner- ships virtually dissolved for the benefit of separate creditors ; but it is a hazard to which they are necessarily subjected, when they unite in business with others, encumbered with separate debts. In Allen v. Wells, 22 Pick. 450, the superior claims of partnership creditors are discussed andiadmitted, but the right of a separate creditor to attach, when he is not thereby brought in conflict with them, is conceded. Were the law otherwise, a wide door would be open to delay and defraud creditors. A man with funds to a very large amount, half of which is due to others, has nothing to do but to invest them in a partnership, and he may thus set his creditors at defiance, or oblige them to wait until the partnership concerns are liquidated and closed by the slow process of a court of equity." In Dow t7. Sayward, 12 N. Hamp. 276, 277, Mr. Justice Upham remarked: "In the case of Morrison v. Blod- gett, 8 N. Hamp. 238, is a very elaborate examination of this question by CH. VI.] ACTIONS AGAINST PARTNERS. 753 interest as the defendant has as partner, not for the degree of right -which he may be found to have on the winding up of the Mr. Chief Justice Parker, and the opinion of the court is strongly intimated, that a general attachment of the interest of a partner in a firm may be made ; though it is suggested, that, in order to make the attachment avail- able by obtaining a true knowledge of the extent of the partnership interest, it might be expedient or necessary to summon the other parties as trustees. We are unable now to see any better course than was there suggested. There seems to be no good reason for giving up the process of attachment at law in such cases, as it would probably in this mode be rendered equally as effectual and prompt as any other means of securing the interest of the debtor that might be devised. If a process in chancery should be deemed more effectual, still it might be desirable also to retain a right of attachment at law." Dow v. Sayward, 14 N. Hamp. 9. See Hill v. Wiggin, 11 Foster (N. H.), 292; Page v. Carpenter, 10 N. Hamp. 77; Kobbins v. Cooper, 6 John. Oh. 186 ; Ex parte Smith, 16 John. 102; Morgan v. Watmough, 5 Wharton, 125. In Tappan v. Blaisdell, 5 N. Hamp. 193, which was a case of an attach- ment, it was said by Richardson C. J., to be " well settled, that partnership property cannot be holden to pay the separate debt of an individual part- ner, until all the partnership debts are paid. All that can be taken is the interest of the debtor in the firm ; not the partnership effects themselves, but the right of the partner to a share of the surplus that may remain after all the debts are paid." See Pierce u. Jackson, 6 Mass. 242, 243 ; Ex parte Smith, 16 John. 106. In Morrison v. Blodgett, 8 N. Hamp. 238, which was also a case of an attachment, it was held that a sheriff, upon a demand against one partner, for his private debt, cannot seize the goods and exclude the other partners from the possession. See Hill v. Wiggin, 11 Foster (N. H.), 292. But in Vermont, at law, the creditors of a firm have no pref- erence over the creditors of each partner in attaching the property of the firm ; the property of the partners is attached in that State as if they were tenants in common. Washburn v. Bank of Bellows Falls, 19 Vermont, 278 ; Bardwell v. Perry, id. 292 ;. Clark v. Lyman, 8 Verm. 20 ; Keed v. Shep- hardson, 2 Verm. 120; and in this last case it was held that the interest of one partner in the goods of the firm cannot be attached with effect without taking the goods. Still, in equity, in Vermont, partnership creditors are entitled to a preference over separate creditors, out of the partnership assets of an insolvent firm, notwithstanding the separate creditors had first at- tached those assets. Washburn v. Bank of Bellows Falls, and Bardwell v Perry, ubi supra. Mr. Justice Redfield, in these two cases, has discussed this subject with great learning and extraordinary ability. Even at law in other States this right of attaching partnership property for separate debts is subject to the paramount claims of the creditors of the firm, and it cannot prevail against a subsequent attachment of the partnership goods by a partnership creditor. Pierce v. Jackson, 6 Mass. 242 ; Tappan v. 754 RIGHTS OP PAKTNBRS, ETC. [bOOK III. affairs, otherwise the sale might be postponed for an indefinite time.^ And it is laid down by Lord Holt, that, in an action Blaisdell, 5 N. Hamp. 190; Brewster v. Hammet, 4 Conn. 543; Phillips Vi Bridge, 11 Mass. 249, 250 ; Smith v. Barker, 1 Fairf. 258 ; Allen v. Wells, 22 Pick. 455; Newman v. Bagley, 16 Pick. 572; Trowbridge v. Cushman, 24 Pick. 310 ; Crockett v. Grain, 33 N. Hamp. 542. And it has been held that the mere insolvency of the partnership is sufficient to defeat an attach- ment made by a creditor of one of the firm, although the partnership credi- tors have commenced no action for the recovery of their debts. Commercial Bank w. Wilkins, 9 Greenl. 28. See Rice v. Austin, 17 Mass. 206, 207; Pierce v. Jackson, 6 Mass. 243, 244 ; Tappan v. Blaisdell, 5 N. Hamp. 193 ; ' Per Lord Denman, 4 Adol. & Ell. 131. Mr. Justice Dewey, in Allen V. Wells, 22 Pick. 452, 453, remarked, that, "by the rules of law as formerly held in England, the sheriff, under an execution against one of two co-part- ners, took the partnership effects and sold the moiety of the debtor, treating the property as if owned by tenants in common. Haydon v. Haydon, 1 Salk. 392 ; Jackey v. Butler, 2 Ld. Raym. 871 ; Lyndon v. Gorham, 1 Gall. 368, 369; Morrison v. Blodgett, 8 N. Hamp. 245. But the principle is now well settled in England, both at law aod in equity, that a separate creditor can only take and sell the interest of the debtor in the partnership property, being his share upon a division of the surplus, after discharging all demands upon the copartnership. Fox v. Hanbury, Cowp. 445 ; Taylor v. Fields, 4 Ves. 396, Sumner's ed., note (b). The same fluctuation in the rule as to partnership property has existed in the United States. The rule of selling the moiety of the separate debtor in the partnership property, on an execu- tion, for his private debts, formerly prevailed in several of the States of the Union, but the latter decisions have changed the rule, and that now gener- ally adopted is in accordance with the one prevailing in England, and which has been already mentioned." Mr. Chancellor Kent states the rule to be, that " partnership effects cannot be taken by attachment, or sold on execu- tion, to satisfy a creditor of one of the partners only, except it be to the ex- tent of the interest of such separate partner in the effects, after settlement of all accounts. The sale is made subject to the partnership debts, and is in effect only a sale of the undefined surplus interest of the partner defend- ant, after the partnership debts are paid." He cites numerous English and American authorities in support of this rule, and adds, in note : " The doc- trine of moieties is now exploded, and the creditors under execution or pro- cess of foreign attachment, or assignees of a partner, or purchasers on sher- iffs' sales, can take only the interest of the debtor in the partnership funds, subject to the accounts of the partnership. That interest, and not the part- nership effects, is sold, and that interest is merely the share found to belong to the debtor upon an adjustment in equity of the partnership accounts." In support of this doctrine, see Story Partn. § 261 ; Witter v. Richards, 10 Conn. 27, 41, per Williams J.; Filley v. Phelps, 18 Conn. 294 ; Dutton v. CH. VI.] ACTIONS AGAINST PARTNERS. 755 against one of two partners, the sheriff must seize all the goods, because the moieties are undivided ; for if he seize but a moiety. Lyndon v. Gorham, 1 Gall. 268, 269; Crockett v. Grain, 33 N. Hamp. 542. But in cases of dormant partnership the creditor of the ostensible partner, and who gave him credit as a single individual, is not to be postponed in his attachment upon the stock in trade to another creditor, who may subse- quently attach the same stock for a debt created equally upon the same credit, though such other creditor should have discovered a concealed part- ner and set up his claim as a partnership creditor ; French v. Chase, 6 Greenl. 166; Lord ». Baldwin, 6 Pick. 348; and in Cammack v. John- son, 1 Green Ch. 164, it was said that it makes no difference whether the Morrison, 17 Ves. 193 ; Church v. Knox, 2 Conn. 523 ; Putnam J., in Rice V. Austin, 17 Mass. 206, 207; Mellen C. J., in Commercial Bank v. Wilkins, 9 Greenl. 33-38 ; Douglas v. Winslow, 20 Maine, 89 ; Ex parte Smith, 16 John. 102 ; Moody v. Payne, 2 John. Ch. 548; Lyndon v. Gorham, 1 Gall. 367 ; Fisk v. Herrick, 6 Mass. 271 ; Smith v. Barker, 1 Fairf. 458 ; Wilson V. Conine, 2 John. 28, per Kent C. J.; Gibson v. Stevens, 7 N. Hamp. 352 ; per Parker J., in Morrison v. Blodgett, 8 N. Hamp. 244-254 ; Pierce v. Jackson, 6 Mass. 242 ; Winston v. Ewing, 1 Alabama (n. s.), 129; Scrug- ham V. Carter, 12 Wendell, 131 ; Doner v. Stauflfer, 1 Penn. 198 ; Barber v. Hartford Bank, 9 Conn. 407 ; Brewster v. Hammet, 4 Conn. 540 ; Bobbins V. Cooper, 6 John. Ch. 186 ; Kodriguez v. Hefferman, 6 John. Ch. 417 ; NicoU V. Mumford, 4 John. Ch. 522; Cammack v. Johnson, 1 Green Ch. 163; Tappan v. Blaisdell, 5 N. Hamp. 19S, per Richardson C. J.; Page v. Car- penter, ION. Hamp. 81, per Parker C.J. ; U. States ;;. Hack, 8 Peters, 271 ; Gilmore v. N. Amer. Land Co., 1 Peters, 460 ; Mobley v. Lombat, 7 How. (Miss.), 318 ; Sitler v. Walker, Freeman Ch. (Miss.), 77 ; Greene v. Greene, 1 Ohio, 535 ; Place v. Sweetzer, 16 Ohio, 142 ; Tredwell v. Eoscoe, 3 Dev. 50 ; Mr. Gow (Partn. 3d ed., 205) says : " The levy under the execution transfers no part of the joint property ; it merely gives a right to an ac- count." So Mr. Justice Story Partn. § 262. See Morrison v. Blodgett, 8 N. Hamp. 253, 254, per Parker J. This account extends, not only to the debts due from the partnership, but also to the debts due from the individual partner to the partneAhip. Gow Partn. (3d ed.), 205, ?06 ; Story Partn. §§ 261, 262; Fisk u. Herrick, 6 Mass. ,271. But it was held, in a case in Georgia, that a creditor, who had obtained judgment against one partner in his individual capacity, which judgment was anterior to the partnership, has the right to levy on the partnership elfects, and to sell his debtor's interest therein, without reference to the claims of the creditors of the firm ; such judgment, being by the laws of Georgia a lien on all the property of the debtor; which he'had at the time of the signing thereof, or which he might thereiafter acquire, supersedes the claims of all subsequent creditors. Ex parte Stebbins & Mason, K. M. Charlt. 77. See also Keed v. Shepardson, 2 Vermont, 120. 756 ElflHTS OF PARTNERS, ETC. [bO0K III. and sell that, the other will have a right to a moiety of that moiety, but he must seize the whole, and sell a moiety thereof debt, for which the ostensible partner alone is sued, was contracted by the debtor on the partnership account, or on his individual account, and the same may be implied from the reasoning of the court in Lord v. Baldwin ; but neither in that case nor in French v. Chase did the facts call for such a decision ; and the contrary was expressly decided in Witter v. Kichards, 10 Conn. 37, where, in the case of a dormant partnership, those who were in fact creditors of the partnership were allowed to take precedence of a prior attachment m£^de by a creditor of the ostensible partner, whose debt had no reference to the partnership business. Where two persons are con- ducting business in such manner that they may be holden as partners to third persons, dealing with them as such, but where as between themselves no partnership in fact exists, goods purchased by one in his own name and with his own funds, and put into the business, cannot be taken by attach- ment and holden to pay a private debt of the other, contracted in his own name, and entirely unconnected with the business. Allen ii. Dunn, 15 Maine, 292. . A debtor to the partnership cannot be holden as trustee in a process of foreign attachment against him, in which an individual partner is principal defendant, unless it is made to appear that such partner has an interest in the partnership effects, after an adjustment of the partnership accounts and payment of the partnership debts. Fisk v. Herrick, 6 Mass. 271 ; Church V. Knox, 2 Conn. 514 ; Barber u. Hartford Bank, 9 Conn. 407 ; Lyndon v. Gorham, 1 Gall. 367; Mobley v. Lombat, 7 How. (Miss.) 318. In Pennsyl- vania and South Carolina, the practice in foreign attachment is peculiar ; on the attachment of a debt, a part, proportionate to the partner's interest in the concern, is adjudged to the creditor, subject in South Carolina to a re- funding bond; M'Carty v. Emlen, 2 Yeates, 190 ; 2 Dallas, 277; Schatzill v. Bolton, 2 M'Cord, 479 ; s. c. 3 M'Cord, 33 ; Knox v. Schepler, 2 Hill (S. Car.), 595 ; and on the attachment of chattels in the possession of the gar- nishee, the whole are seized, as on a common law execution. Morgan v. Wat- mough, 5 Wharton, 125. In Fiskw. Herrick, 7 Mass. 271, 272, it is said by the court, that, in order to ascertain the state of the partnership accounts, " a creditor, who wishes to apply to the payment of his debt a debt due to ,the partnership, by this mode of attachment, ought also to summon as a trus- tee one of the partners, as well knowing the state of the aflfairs of the part- nership ; and if on his examination it shall appear that the principal has an interest in the partnership effects after their debts are all paid, that interest may be considered as effects or credits of the principal, and may be secured by the attachment." This interest will not be presumed without evidence of the state of the accounts. Fisk v. Herrick, 6 Mass. 271, 272; Church v. Knox, 2 Conn. 514. This same method of ascertaining the state of the partnership accounts by summoning another partner as trustee in such case was suggested by Mr. Justice Story in Lyndon v. Gorham, 1 Gall. 370. See CH. VI.] ACTIONS AGAINST PARTNERS. 757 undivided.^ So, in a case of replevin, it was argued for the plain- tiffs that they were partners, and the defendant took the goods of also the observations of Parker C. J., on this last point in Hawes v. Lang- ton, 8 Pick. 70, 71. As to the burden of proving an interest in the individ- ual debtol" partner, see, further, 26 Am. Jurist, 66, 67. In Johnson v. King, 6 Humph.' 233, it was held that an execution creditor of one member of a firm is not entitled to judgment in a proceeding by garnishment against a debtor to the partnership. But see Schatzill v. Bolton, 2 M'Cord, 478. ^ Heydon v. Heydon, 1 Salk. 392. In Johnson v. Evans, 7 Man. & Granger, 240, 249, 250, Tindal C. J., said : " It is undoubtedly true, that, in order to make, and for the purpose of inaking, the execution effectual against the share of the debtor partner in the joint property, the sheriff must seize the whole, the shares of the two partners being undivided." " Such seizure of the whole, it is obvious, arises ^from the necessity of the case ; just as, if a man purchases an individual moiety of a chattel that is in- divisible, he cannot in any way take possession of that moiety without tak- ing possession of the whole. But neither in the one case nor in the other does such taking possession of the whole convey any interest or property whatever in the other part-owner's share." " In any way of considering the case, the seizure of the whole, which is made of necessity, leaves the property of the solvent partner, and the possession also, which follows the property in chattels, just where it was before, that is, in the solvent part- ner." See Mersereau v. Norton, 15 John. 180 ; Reed v. Howard, 2 Met- calf, 39, 49; Walsh u. Adams, 3 Denio, 125. In Barrall v. Acker, on error, 23 Wendell, 606, the Chancellor, in behalf of the court, declared that the interest of one of the partners in partnership property may be levied on and. sold under execution at law, and before the sale the sheriff may take a Joint possession with the other members of the firm. The authorities and doctrine on this subject were elaborately discussed by Mr. Justice Cowen, in Phillips V. Cook, 24 Wendell, 389 ; and the court decided, that, on an execution at law against one of two partners, the sheriff might lawfully seize, not merely the moiety, but the corpus of the joint estate, or the whole or so much of the entire partnership effects as might be necessaiy to satisfy the execution, and sell the interest of the defendant partner therein, and de- liver the property sold to the purchaser. The purchaser becomes thereby a tenant in common with the other partner, and if he purchases with notice of the partnership, he takes the subject to an account between the partners, and to the equitable claims of the partnership creditors. The same doctrine, as to the seizure of the whole of the joint estate, was stated with approbation in Birdseye v. Ray, 4 Hill (N. Y.), 161, ^nd Nelson C. J., added: " The custody of the sheriff appears to be as effectual for all the purposes of a sale as in the case of the seizure of separate property." See Waddell v. Cook, 2 Hill (N. Y.), 47, and note (a) ; Mersereau v. Norton, 15 John. 179; Scrugham v. Carter, 12 Wendell, 131 ; Morgan v. Watmough, 5 Whart. 125. Again, in Moore v. Sample, 8 Ala. (n. s.) 819, it was held that the 64 758 EIGHTS OF PARTNERS, ETC. [bOOK III. both of them ; to which it was answered, that he must take the goods of both to levy out the moiety of one partner.^ On the sheriff, on execution against A., might levy on the goods of the firm of A. & B., and take exclusive possession, and sell the interest of A. therein, and this proceeding could be arrested only by equitable interposition. In Reed v. Howard, 2 Metcalf, 39, Dewey J., remarked: "An officer, who attaches the interest of one part-owner in chattels, is authorized, as against the other part-owners, to take possession of the chattels and retain it (unless security be given as hereafter mentioned) during the dependency of the attachment, although on the levy of the execution he sells only the share or interest of the judgment debtor, and the purchaser acquires no other-right than that of part-owner. Practical inconveniences occasionally result from the exercise of this right of attachment and tajcing the exclusive possession of property held by tenants in common, in an action against a part-owner, but they are incident to this species of title to property. These evils are, to a great ex- tent, obviated by the Kev. Stat, of Mass., ch. 90, §§ 73, 74, requiring the officer, in cases where any personal property belonging to two or more per- sons is attached in any suit against one or more of the part-owners thereof, to deliver the property to the other part-owner upon his request, and upon his giving to the officer sufficient bonds to restore the same, or pay the ap- praised value thereof, pr to satisfy any judgment that may be recovered in the suit on which said property is attached. This provision is made for the benefit of the other part-owner, and if he neglects to avail himself thereof the property must remain in the hands and custody of the officer." In Crop- per V. Coburn, 2 Curtis C. C. 471, Mr. Justice Curtis, referring to the above statute of Massachusetts, said : " I think it extremely doubtful whether this statute can be made to apply to attachments of copartnership property." On the other hand, in Morrison v. Blodgett, 8 N. Hamp. 238, it was de- cided that the sheriff, upon a demand against one partner, for his private debt, cannot seize the goods of the partnership, and exclude the other part- ners from the possession. In Gibson v. Stevens, 7 N. Hamp. 3.52, it was said, by Parker J., that " the specific property of a partnership cannot law- fully be taken and sold to satisfy the private debts of one of the partners. His creditor can have no greater right than the debtor has himself individu- ally, which is a right to a share of the surplus." See also id., pp. 357, 358. In Tappan v. Blaisdell, 5 N. Hamp. 193, Richardson C. J., said : " All that can be taken is the interest of the debtor in the firm ; not the partnership ' Harriot v. Shaw, Com. Rep. 277; Scrugham v. Carter, 12 Wendell, 131 ; Phillips v. Cook, 24 Wendell, 389. This last was an action of trespass brought by the assignees of an insolvent partner against the sheriff, for de- livering the property of the partnership to the purchaser upon a sale on an execution against one partner, and it was held that it did not lie in such a case. See also White v. Woodward, 8 B. Monroe, 484, 485 ; Newhall v. Buckingham, 14 Illinois, 405. CH. VI.] AQTIONS AQAINST PARTNERS. 759 other hand, upon judgme^nt against one of two partners, and execu- tion against the partnership effects, although the sheriff may seize, yet he cannot sell, more than a moiety : for the property of the other moiety, is not affected by the judgment, nor by the execu- tion.i If the sheriff sells the entire property under an execution effects themselves, hut the right of the partner to a share of the surplus that may remain after all the debts are paid." In Smith's case, 16 John. 106, the court, after saying that the separate creditor takes the share of his debtor in the same manner as the debtor himself had it, and subject to the rights of the other partner, added : " The sheriff, therefore, does not seize the part- nership effects thenjselves, for the other partner has a right to retain them for the payment of the partnership debts." See id., note (c) ; Moody v. Payne, 2 John. Ch. 548; Cram v. French, 1 Wendell, 313, per Savage C. J.; Dow V. Sayward, 12 N. Hamp. 176. Mr. Justice Story (Story Partn. § 261), after having quoted the proposi- tion of Lord Holt, laid down in the text, adds : " It would, perhaps, be more accurate (at least according to modern notions on this subject) to say that the sheriff may seize, and should seize, the interest of the separate part- ner in the property of the partnership ; and that, and that alone, he is at liberty to sell upon the execution. What that interest is, or may be, it is impossible to ascertain in many cases until the final adjustment of all the partnership concerns. Yet courts of law have said, that the sheriff may go on to sell that interest under the execution, however inconvenient it may be, and the purchaser at the sale must be content to take such an interest therein, as a tenant in common with the other partners, as the partner himself had therein." Again he says : " Strictly, indeed, and properly speaking, the sale does not, at least in the view of a court of equity, transfer any part of the joint property to the purchaser, so as to entitle him exclusively to take it or withhold it from the other partners, for that would be to place him in a better situation than the execution partner himself, in relation to the property." Story Partn. § 262. See Sitler v. Walker, Freeman Ch. (Miss.), 77. In Burton v. Green, 3 Carr. & Payne, 308, which was an action against the sheriff for a false return of nulla bona to a writ oi fieri facias sued out against T. C, it was proved that T. C. had one third share in a colliery, and there were goods and fixtures belonging jointly^ to him and his two partners to more than three times the amount to be levied under the execution, alid it was contended, on the part of the plaintiff, that the sheriff should have levied on this joint property to the extent of one third. One ground of defence was, that partnership property could not be seized under a writ o( fieri facias sued out against one partner only. It was not necessary, under the circum- stances of the case, to enter further into this- subject ; but the case of Heydon v. Heydon, seems to render such a defence untenable. ' Jackey r. Butler, 2 Lord Raymond, 871 ; per Tindal C. J., in Johnson V. Evans, 7 Mann. & Grang. 250. 760 EIGHTS OF PARTNERS, ETC. [BOOK III. against one cotenant or partner, he will be a trespasser.^ From these cases it follows, that although, ordinarily, when. goods are seized by the sheriff, they cannot be again seized, and if sold under a second seizure the sale is void, yet, if A. and B. are partners, and the sheriff seize the joint effects for a separate debt of A., he cannot afterwards return nulla bona in an action for a separate debt of B. ; and if he make such return, an action will lie against him.^ Under a judgment against one partner, the way in which the sheriff executes the writ in practice is by making a bill of sale of the actual interest.^ § 823. It follows, upon the principles above stated, that if the sheriff seizes goods in the apparent possession of A., in order to discharge A.'s debt, he has no right to rehef imder the Inter- pleader Act,* on the mere ground that B. claims a partnership in those goods ; because that act applies only to conflicting claims by persons having adverse titles, and we have seen that, for the purpose of sale by the sheriff, B., though a partner with, A., is not deemed- to have any title to A.'s share. If, however, the execution creditor dispute the partnership, that is a case for the protection of the sheriff under the Underpleader Act.^ § 824. Secondly, as to the interest passed by the seizure and sale. As soon as the goods are taken in execution, the partner- ship in the goods so taken is at an end ; and the creditor (not the sheriff), becomes tenant in common with the other partner."* ■ The » Melville v. Brown, 15 Mass. 82 ; Waddell v. Cook, 2 Hill (N. Y.), 47. See Walker v. Fitz, 24 Pick. 194 ; Wilson v. Conine, 2 John. 280; Lyn- don V. Gorham, 1 Gall. 370. The ground of the doctrine stated in the text is, that the sheriff acting under legal authority, an abuse of process renders him a trespasser ah initio. Waddell v. Cook, 2 Hill (N. Y.), 49 ; Melville t!. Brown, 15 Mass. 82. But see Mersereau v. Norton, 15 John. 180. ' Backhurst v. Clinkard, 1 Show. 173 ; per Tindal C. J., in Johnson v. Evans, 7 Mann. & Grang. 250, 251. « 2 Ves. & Bea. 301 ; Wiles v. Maddox, 26 Mis. (5 Jones), 77; Raskins V. Everett, 4 Sneed (Tenn.), 531. * Stat. 1 & 2 Will. 4, c. 58, s. 6. ' Holmes v. Mentz, 4 Adol. & Ell. 127. ' D. D. Lord Hardwicke, 2 Swanst. 587 ; Lord Alvanley, -S Bos. & Pull. 289 ; Lord Tenterden, 3 Carr. & Payne, 309 ; per Tindal C. J. in Johnson V. Evans, 7 Mann. & Grang. 250, 251. The doctrine of the text relative to the legal relations created between the parties by the seizure of the goods of the partnership is very much doubted by the writer of an able article on CH. VI.J ' ACTIONS AGAINST PAKTNBKS. 761 sheriff, however, has a special property in the goods,i may there- fore maintain trespass or trover for them^ against all persons, save perhaps the copartner or cotenant,'' and may be considered as a legal agent for the sale. When the goods are sold, the ven- dee will be tenant in common with the other partner.* § 825. Thirdly, as to the relief of the solvent partner against the effect of the execution. It is laid down by Lord Hardwicke, and is clearly consistent with all the doctrines of partnership, that if a creditor of one partner takes out execution against the part- nership effects, he can only have the undivided share of his debtor ; and must take it in the same manner as the debtor him- self had it, and subject to the rights of the other partner.^ The question then is, in what manner the rights of the other jpartner may be ascertained, and it seems that an account for that purpose this subject in 26 Amer. Jurist, 75-78. He maintains that neither of the authorities cited supports the position in question. It seems to be perfectly dear, that the sheriff' acquires only a special property by the seizure, and the judgment creditor none at all ; and that the general property remains in the judgment debtor until the sale. Ayer v, Aden, Yelverton, 44, Mr. Met- calf 's note (2), and cases cited. ^ 1 Story Partn. § 263. ^ Gilbert Executions, 15 ; 2 Wms. Saund. 47. » Per Nelson. C. J. in Birdseye «, Ray, 4 Hill (N.. Y.), 161. * Per Lord Holt, 1 Salk. 392 ; Denman C- J- in Garbett v. Veale, 5 Adol. & Ellis (N. s.), 414; Story Partn. §§ 261, 263, 311; Phillips u. Cook, 24 Wendell, 393. If the levy and sale be made of a part only of the partner- ship goods and effects, then the purchaser becomes tenant in common of that part; if of the whole, then of the entirety. Story Partn. § 311. ' Skip V. Harwood, Cowp. 451 ; ante, § 822, note; Swift C. J. in Church V. Knox, 2 Conn. 516, 517. So, upon an extent against one of several part- ners for a separate debt, the crown has no right to retain more than that partner's share of the partnership property. Eex v. Sanderson, 1 Wight- wick, 50; Kex -v. Kock, 2 Price, 198; D. Hullock B., Rex v. Hodge, 13 Price, 551 ; United States v. Hack, 8 Peters, 271. However, where part- nership property is seized under an extent, for a debt due from one of the firm, who, on taking the accounts, is indebted to the partnership, the court will not on motion grant an amoveas manus without a previous reference to the remembrancer. Rex v. Rock, supra. But where an officer attaches and takes possession of personal property of a firm in Massachusetts on a writ against one partner who has no equitable interest in such property, he is a trespasser. Cropper v. Colsurn, 2 Curtis C. C. 465. See Blanchard t!. Coolidge, 22 Pick. 155 ; Peck v. Fisher, 7 Gushing, 386. 64* ' 762 EIGHTS OF PARTNERS, ETC. [BOOK HI. may be taken at law, that is to say in the Court of King's Bench, as well as in equity. § 826. We have seen that in ordinary cases, under an execu- tion against partnership effects for a separate debt, the sheriff sells the undivided share of the debtor, without reference to the part- nership account.^ But, to use Lord Eldon's words, it is difficult to maintain this to be an equitable proceeding, if indeed a due proceeding at law, that a creditor of one of two partners should, without any attention to the rights of the partners themselves, take one half of a chattel belonging to them, as if it were per- fectly clear that the interest of each was an equal moiety. On the other hand, it may be represented that the world cannot know what is the distinct interest of each ; and, therefore, it is better that the apparent interest of each should be considered as his actual interest.2 § 827. But whatever be the merits or demerits of this mode of execution, when the proceeding is unopposed by the solvent partners, if ceases to be common justice when the latter demand that an account shall be taken of the partnership, that the interest of the .debtor partner shall be ascertained, and that his interest alone shall go in discharge of his separate debts. In order to meet cases of this nature, the Coiirt of King's Bench has some- times directed an account between the parties, professing to sell only the actual interest of the debtor partner in the goods taken in execution. This practice began with Lord Mansfield, in the case of Eddie v. Davidson.^ There the defendant Davidson was partner with one Bernie, against whom' a commission of bankrupt had issued ; but, before the bankruptcy, the plaintiff had sued out execution on a bond of the defendant's for £700, and the sheriff had levied on the partnership effects. Bernie's assignees ob- tained this rule to show cause why the sheriff should not pay them a moiety of the money arising from the sale of the goods so taken in execution, upon an affidavit of Bernie's that he was entitled to an equal share of the partnership effects, as partner with David- ' See ante, § 822, notes. " 17 Ves;206. ►' Doug. 650. Befpre this period, it was laid down by Lord Holt, that the debtor's copartner had no remedy at law otherwise than by retaking the goods if he could. Pope v. Uaman, Comb. 217. CH. TI.] ACTIONS AGAINST PARTNERS. 763 son. The plaintiff's affidavit, on showing cause, denied that Ber- nie had an equal share in the partnership effects, and stated that he had embezzled the joint stock to a considerable amount. The court directed that it should be referred to the master, to take an account of the share, of the partnership effects to which Bernie was entitled ; and that the sheriff should pay a part of the money levied, equal to the amount of such share, to the assignees. The equity administered in this case was clearly incomplete, if the intention was merely to ascertain the gross share of the bankrupt partner, deducting for embezzlements, and to pay his assignees the amount of that share out of the money levied. Mr. Justice Chambre seems to have thought that the decision depended in a great measure on the circumstance, that both parties consented to the sale and account.' No objection, he says, was made to the sale by the party applying, or to the account by the party levy- ing.^ But this position seems doubtful ; and in a subsequent case before Lord Kenyon, a similar account was taken, without the consent of the parties.^ § 828. Upon the whole, these cases seem to be the foundation of various observations to be met with in «Lord Eldon's judgments, in all of which he expresses an unfavorable opinion of the accounts so taken at law. " If the courts of law," he says, " have followed courts of equity in giving execution against partnership effects, I desire to have it understood that they do not appear to me to adhere to the principle, when they suppose that the interest can be sold before it has been ascertained what is the subject of sale and purchase. Courts of law have repeatedly laid down that they will sell the actual interest of the partner, professing to execute the equities between the parties, but forgetting that a court of equity ascertained previously what was to be sold. How can a court of law ascertain what is the interest to be sold, and what the equities depending upon an account of all the concerns of the partners for years ? " * ' See per Lord Denman C. J. in Garbett v. Veale, 5 Adol. & Ellis (n. s.), 414. ^ 3 Bos. & Pull. 288 ; and see Mr. Sergeant Frere's note,. Doug. 650. ' At least without their real consent. See the case as stated by Best Serg. in Parker w.. Pistor, 3 Bos. & Pull. 288. * Waters v. Taylor, 2 Ves. & Bea. 301. " How utterly inadequate," saya 764 EIGHTS OE PARTNERS, ETC. [bQOK HI. § 829. The difficulties .in taking these accounts at law, Bo fre^ quently mentioned by Lord Eldon, occurred also to Lord Alvan- ley. Accordingly, on the authority of two cases decided by the latter learned judge, the Court of Common Pleas seems to have declined entertaining accounts of this nature. In the former of these cases a fieri facias had issued against one of several part- ners, and that court would not, at the request of the partnership creditors, delay the execution of the writ until an account should be taken of the partnership property. They observed that it was a. very plain case at law, and that all the difficulties were to be encountered in equity.^ In the other case,^ a rale had been ob- tained, calling on the plaintiff to show cause why it should not be referred to the prothonotary to inquire if the defendant had any, and what, interest in the effects and premises seized by the sheriff, under an execution at the suit of the plaintiff. The application was made by all the copartners of the defendant, in mmiber twenty-five, who stated that the defendant was indebted to the concern in more than the amount of his share. But the court dis- charged the rule, and Lord Alvanley expressed a hope that this would be the last application to that court of a similar nature. § 830. Upon the whole, where the partnership has not long been established, or where the concern is so small that the greater part of its effects have been taken in execution, so that what re- mains may be easily valued, there seems no sound reason why the accounta under such execution should not be taken at law. On the contrary, where the partnership has been carried on for a series of years, its business branching out in various directions, perhaps to all quarters of the globe, its property and its debts not only increasing in magnitude, but assuming different shapes, ac- cording to the modes in which the former is invested, and the form or circumstances in which the, latter are contracted, — there it seems clear, that, if an execution for a separate debt should occur of so extensive a nature that the solvent partners are compelled to Mr. Justice Story, " a court of law is to furnish suitable means for taking such an account needs hardly to be suggested." Story Partn. § 262. See also, Barker v. Goodair, 11 Ves. 78; Young v. Keighly, 15 Ves. 557; But- ton V. Morison, 17 Ves. 206 ; In re Wait, 1 Jao. & Wal^. 605, ' Parker v. Pistor, 3 Bos. & Pull. 288. " Chapman v. Koops, 3 Bos. & Pull. 289. CH. VI.] ACTIONS AGAINST PARTNERS. 765 resist it, they must resort for relief to a court of equity ; " equity having the means of taking the comphcated accounts of the part- nership, and reducing the concern into that state in which the property would be divisible as a clear surplus." ^ § 831. Where, therefore, the separate creditor of one partner has taken partnership goods in execution, in discharge of his sepa- rate debt, the other partners may file their bill against the cred- itor, the debtor partner, and the sheriff, praying a general account of the partnership, and payment of what is due to them, and that the creditor and the sheriff" may be restrained from proceeding under the execution, and selling the stock and effects ; and a court of equity will give relief accordingly. ^ If, in cases of this nature, ' See the observations of a learned writer on these remarks of Mr. CoU- yer, in 26 Amer. Jurist,. 62, 63. = Story Partn. § 264. See 1 Madd. Ch. 131 ; Eden Injunct. 31 ; Bevan V. Lewis, 1 Sim. 376; Lowndes v. Taylor, 1 Madd. 423; Newell v. Town- send, 6 Sim. 419. Same relief in favor of the assignees of bankrupt part- ners. Taylor v. Field, Wats. Partn. 100; 15 Ves. 669; 4 Ves. 396. But in Moody v. Payne, 2 John. Ch. 548, Mr. Chancellor Kent refused to enjoin an execution and sale in such a case, until the partnership accounts were taken and liquidated. He said: "I do not know that this court has ever undertaken lo stop an execution at law, in such a case, until the partnership accounts have been taken ; and it would be too much for me to assume it without precedent. The principle would go to stay executions at law, in every case, against the partnership property of one partner, who owed sepa- rate debts, until the disclosure and liquidation of the concerns of the part- nership. This would. produce inconceivable delay and embarrassment, in respect to the separate creditors. If those creditors can sell only subject to the joint creditors, there is no harm in suflFering them to go on at law ; and if any sacrifice of the interest of the separate partner is madej by reason of the uncertainty, it affects only that partner who does not here raise the objection." Id. 549. Mr. Justice Story says this does not seem to be a sufficient ground upon which such an injunction should be denied. Story Partn. § 264. And he concludes that the decision of Mr. Chancellor Kent in Moody v. Payne is not founded on the true result of the English decis- ions. Ibid. See Cammack v. Johnston, 1 Green (N. J.), 1'63. And in 3 Kent Com. 65, in note, the learned Chancellor says that the more fit and suitable rule of practice would seem to be, to have the adjustment of the partnership accounts precede the sale ; " but," he adds, " the current of the authorities, as I read them, is the other way, and they are emphatically so in New York." See Phillips u. Cook, 24 Wendell, 359. In Morrison v. Blod- gett, 8 N. Hamp. 252, 253, Mr. Justice Parker remarked: "There is, un- doubtedly, a difficulty in making a sale of the entire interest of one partner ''66 RIGHTS OE PAUTNBRS, ETC. [bOOK III. execution be executed before an injunction can be obtained, tbe court will stay the money in the hands of the sheriff. For this purpose, also, the sheriff should be made a party to the suit in equity, by original bill, if the money were in his hands at tibe time the injunction issued ; and by supplemental bill, if, at that period, they were yet to be converted into money. ^ At any rate, he should be made a party if he acts in a manner hostile to the inter- ests of the plaintiffs.2 § 832. Where partnership goods have been seized for a sepa- rate debt, and it is doubtful whether they ought to be sold, the debtor's copartners objecting to the sale, it has been said to be the safest course for the sheriff to put some person in possession of the defendant's share as vendee, leaving him and the parties inter- ested to contest the matter in equity, where a bill might be filed stating that he had taken possession of the property, and pray- ing that it might not be disposed of until all the claims were arranged.^ This course was commended, and said to furnish the only iadequate remedy in such a case, by Williams J., in Witter v. Eichards.* upon execution, witbout the aid of equity in taking an account before the; sale, because, ordinarily, it cannot be known until an account is taken what is the value of the interest to be sold. But this difficulty cannot change the right of the creditor to have the interest of his debtor, whatever it may be, appropriated to the payment of his debt ; and although, in the usual course of sales on execution, at law, no time can be given for such account after a seizure upon the execution, it is generally for the interest of both creditor and debtor that the full value should be obtained upon such sale, and this part of the matter may perhaps be well left to their superintendence and management. Moody v. Payne, 2 John. Ch. 548. If the interest of the debtor partner only is to be sold, there can be no reason why equity should interfere by way of injunction to restrain the sale, on account of the interest of the other partners." See Brewster v. Hammet, 4 Conn. 540 ; Sitler v. Walker, Freeman Ch, (Miss.), 77. • Franklyn v. Thomas, 3 Mer. 235 ; Hawkshaw v. Parkins, 2 Swanst.'549. ^ Ibid.; and consider Axe v. Clarke, 2 Dick. 549 ; 3 Mer. 234. ' Parker v. Pistor, 3 Bos. & Pull. 288. ' ' 10 Conn. 43. Where it is admitted that a partner has no interest in the property of the firm, which can pass by a sale, a court of equity will enjoin the levy of an execution against such partner, upon the partnership prop- erty ; and this although the bill does not pray for a dissolution. Cropper v. Coburn, 2 Curtis C. C. 465. CHAPTER vn. OF SUITS IN EQUITY BY AND AGAINST PARTNERS. § 8311. It is obvious that the subject of suits in equity by partners can involve but little that is not incident to suits by indi- viduals. One instance of a bill peculiar to paiiiners is, where the majority of the firn^ seek to restrain execution against the partner- ship effects, for the separate debt of one partner.^ § 834. Where a bill is filed by partners to enforce a partner- ship demand, all the partners must be pai-ties to the suit,^ unless they are so numerous that it would be inconvenient to join them, in which case the biU may be filed by some of them on behalf of themselves and all others the partners.^ If any of the partners die, it may be doubted whether it is necessary to make the per- sonal representative of the deceased a party,* and it is evident that there are cases in which that course has not been adopted,^ and perhaps it may be stated that in an ordinary case it is not necessary to take this course.^ Where, however, A. & B. de- posited with a firm, of which A. was a member," the title-deeds of an' estate of which they were joint owners, as a security fftr a debt due from them to the firm, and A. died intestate, it was held that A.'s personal representative was a necessary party to a bill ' See ante, § 831. = 1 Daniell Ch. Pr. (Perkins's ed), 240 and notes; Story Eq. PI. §§ 167- 169. « Small V. Atwood, 1 You. 407; 1 Daniel Ch. Pr. (Perkins's ed), 241 in note, 290-292 ;' Stofy Eq. PL § 115 ; Taylor v. Salmon, 4 Myl. &'Craig, 134 ; Wendell v. Van Rensselear, 1 John. Ch. 349. And see Chancey v. May, Prac. Ch. 592; Cockburn v. Thompson, 16 Ves. 321. * Story Eq. PI. §167, note. " Norris v. Kennedy, 11 Ves. 565. ' See Slater v. Wheeler, 9 Sim. 156 ; Scholefield v. Heafield, 7 Sim. 667. 768 EIGHTS OF PARTNERS, ETC. [BOOK III. filed by the sumTing partners of the firm against B. and the heir of A., for a sale of the estate.^ § 835. Where an action is brought against some only of the members of a partnership, all the members may file a bill of dis- covery in aid of the defence to the action at law, if the bill allege that the parties omitted in the record of the action were out of the jurisdiction when the action was brought.^ § 836. A bill may be sustained against partners in respect of mutual unsettled accounts between them and any particular cred- itor, or to enforce the execution of a trust deed entered into be- tween them and their creditors generally, or any particular class of creditors ; or for the specific performance of contracts entered into by the partners jointly ; or to compel the partners to inter- plead in cases where they have delivered goods to a bailee, and subsequently dispute amongst themselves as to the ownetship of those goods.^ Other instances of suits in equity against partners wiU occur to the mind of the learned reader. § 837. Where a bill is filed against partners for an account and payment in respect of mutual deaUngs and transactions with the plaintiff, it must appear updn the bill specifically that the dealings and transactions were mutual, for it is not sufiicient to charge that fact generally.* And where the bUl is brought against the mem- bers of successive partnerships, it must appear that the mutual deahngs have been carried on through all the partnerships ; other- wise the biU is demurrable.^ § 838. Where the bill is filed against partners to enforce the execution of a deed of trust, a few of the creditors will be per- mitted to sue on behalf of themselves and the other creditors named in the deed.^ Where both joint and separate creditors are parties to a composition deed, the bill may be filed either by the .joint or the separate creditors, or some of both. In a case where A. and B. were partners, and a bill was filed by some separate ' Scholefield v. Heafield, supra; Story Eq. PI. § 167. ^ Darthez v. Lee, 2 You. & Coll. 12. ' On this last point, Pearson v. Garden, 2 Kuss. & Myl. 606. * Frietas v. Dos Santos, 1 You. & Jerv. 574. 5 Jones V. Maund, 3 You. & Coll. 347. ' Story Eq. PI. § 102; 2 Yez. sen. 113 ; Newton v. Earl of Egmont, 4 Sim. 574. CH. VII.] SUITS IN EQUITY AGAINST PARTNERS. 769 creditors of B., on behalf of themselves and all other the joint and separate creditors of A. and B., to carry the trusts of a creditors' deed into execution ; it being objected that one at least of each class of creditors ought to hare been brought before the court, Sir John Leach overruled the objection, observing that it was not necessary to make a joint creditor of A. and B., or a separate creditor of A., a party to the suit ; and that the plaintiff, being a separate creditor of B., was entitled to represent aU who claimed under this deed, although they did not claim in the same order.^ In suits of this nature the creditors who file the bill must allege that they do so on behalf of themselves and the other creditors.^ They must likewise allege that the other creditors are numerous, unless that fact appear by some other means on the face of the bm.3 § 839. Where a bill is filed against partners, the general rule is, that aU the individual members of the firm should be made de- fendants. So also, in a suit against partners for specific perform- ance of an agreement, they who were parties to the agreement must be made defendants, although some may have since parted with their interest hi the subject-matter of the agreement. As where three partners agreed in writing to grant a lease of a house to A., and upon the dissolution of their partnership it was settled amongst them that the house should belong solely to F., one of the partners, and A. agreed to become tenant to F. alone, the biU for specific performance of the agreement was properly filed against all.* § 840. But the rule as to joinder of parties will not be enforced in all cases. Thus, a person claiming against a numerous part- nership or club may, if he be not a partner, file a biU against a few of the partners or members only ; * but it should seem that ' Weld V. Bonham, 2 Sim. & Stu. 91 ; 1 Daniell Ch. Pr. (Perkins's ed.), 285. ' Leigh V. Thomas, 2 Vez. 313; Boddy v. Kent, 1 Mer. 361 ; 1 Daniell, Ch. Pr. (Perkins's ed,), 291, 292, 410. » 2 Sim. & Stu. 93 ; Story Eq. PI. 95. ' Van V. Corpe, 3 Myl. & K. 269. " Baldwin v. Lawrence, 2 Sim. & Stu. 26 ; Meaux v. Maltby, 2 Swanst. 277 ; Adair v. New Eiver Company, 11 Ves. 429 ; 1 Daniell Ch. Pr. (Per- kins's ed.), 319-322 ; the grounds of this are stated p. 321. 65 770 RIGHTS OF PARTNERS, ETC. [BOOK III. the bill must allege that the defendants are sued as representing the whole body,^ and perhaps also, that the plaintiff is unable to discover who are the other partners.^ This latter allegation, how- ever, it is conceived, wiU be unnecessary where the society against which the bill is filed contracts by means of a committee.^ And where one partner is resident abroad, the bill may be filed against him who is resident here, the absence of the other partner being accounted for and proved.* And in such case, the partner before the court will be liable to pay the whole of the joint de- mand.® This rule, however, is to be taken with the qualification, that it can be carried into effect without manifest injustice to the absent partner.^ Where a person claims a derivative interest from one of several partners or co-adventurers, it is unnecessary to make him a party to a suit against the partners ; as, for in- stance, a dredger of oysters, who receives from the boat-owners wages proportioned to the number of oysters taken.'' § 841. When one of the partners becomes bankrupt or dies, his assignees,^ executors, or trustees must be made defendants. It wiU not generally be necessary tc make persons claiming wnd&r the executors or trustees parties to the suit ; but it has been laid down, that persons having specific charges on the trust property are in many cases necessary parties.^ In the case of Baring v. ' Lanchester v. Thompson, 5 Madd. 12. ^ Cullen V. Duke of Queensbury, 1 Bro. C. C. 101 ; Meaux v. Maltby, supra; Fenn v. Craig, 3 You. & Coll. 216. ' Cousins V. Smith, 13 Ves. 544. See Van Vechten v. Terry, 2 John. Ch. 197. * Cowslad V. Celey, Free. Ch. 83 ; Weymouth v. Boyer, 1 Ves. 416 ; 1 Daniell Ch. Pr. (Perkins's ed.), 234, 298 ; Story Eq. PI. § 78 ; Vose v. Philbrook, 3 Story C. C. 346, 347 ; Williams v. Donaghe, 1 Randolph, 300 ; Towle V. Pierce, 12 Metcalf, 329. = Darwent v. Walton, 2 Atk. 510; 1 Daniell Ch. Pr. 234 ; Story Eq. PI. §82. " Story Eq. PI. §§ 78, 81, 82 ; Vose v. Philbrook, 3 Story C. C. 346, 347 ; Milligan v. Milledge, 3 Cranch, 220. ' Perrott v. Bryant, 2 You. & Coll. 61. See Grozier v. Atwood, 4 Pick. 234 ; Baxter v. Kodman, 3 Pick. 435. ' But of course, if an uncertificated bankrupt enter into partnership, the creditors of that partnership have no equity against his assignees. Everett V. Backhouse, 10 Ves. 94. » Mitf. 170. And see Oldaker v. Lavender, 6 Sim,. 243. CH. VII.] SUITS IN EQUITY AGAINST PARTNERS. 771 Noble ,1 the trustees (who were likewise the executors), under the wUl of Devaynes, the assignees of the surviving partners of Devaynes, and the cestui que trusts under the will of Devaynes, were made defendants. In Wilkinson v. Henderson,^ in' which the suit was brought by a joint creditor on behalf of himself and all other joint creditors of a partnership, for satisfaction of their debts out of the deceased partner's assets. Sir John Leach held that the surviving partner was properly made a defendant, though no decree could be had against him ; he being interested to con- test the demand of the plaintiff; and this decision was followed by Mr. Baron Alderson, in Thorpe v. Jackson,^ which was not a case of trading partnership, but of joint contractors only ; and in Vose V. PhUbrook,* Mr. Justice Story assumed it as a settled doctrine that, in cases of partnership, where a bill in equity is brought to recover a debt out of the estate of a deceased partner, the surviv- ing partners are necessary and proper parties ; " for," he said, " they have an interest in taking the accounts." § 842. Where the biU states the same case against all the part- ners, and one of them demurs for want of equity, and his demurrer is allowed, it seems clear that the other partners may plead this matter in bar of the suit.^ In a suit by a creditor against the rep- resentatives of a deceased partner and the assignees of the surviv- ing partner, proving fraud in those whom the defendants represent, the plaintiff will be allowed his costs ; which will be apportioned between the estate of the deceased partner, and that of the bank- rupt.* § 843. Upon the death of a partner his separate creditor may institute a suit for the administration of that partner's assets, with- out reference to the joint trade, and consequently without making the surviving partners parties to the suit. And where the testator • 1 Mer. 530. " 1 Myl. & K. 589. ' 2 You. & Coll. 553 ; Vose v. Philbrook, 3 Story C. C. 346, 347 ; Burwell V. Mandeville, 2 How. (U. S.), 560, 575. But see Slater v. Wheeler, 9 Sim. 456. * 3 Story C. C. 346. ' Tarleton». Hornby, 1 You. & Coll. 333 ; Attorney-General v. Cradock, 8 Sim. 466. ' Vulliamy v. Ifoble, 3 Mer. 621. 772 EIGHTS OF PARTNERS, ETC. [BOOK IH. has appointed no executor, and the next of kin of such partner are unable or refuse to act in the administration of his estate, his sep- arate creditor may have recourse to a bill against the surviving partners for an account of the partnership dealings, and for pay- ment of the debts of aU the creditors ; provided he offer by his bill to put himself in the situation and submit to the liabilities of the deceased partner.^ The plaintiff, however, under such cir- cumstances, ought to procure from the Ecclesiastical Court a lim- ited administration for the purpose of substantiating proceedings in chancery .2 § 844. But even where the deceased partner has appointed an executor, his separate creditor or residuary legatee may, in cer- tain cases, make the surviving partners of the testator parties to a suit filed by such separate creditor or legatees, for the adminis- tration of the testator's assets.^ This may be done either where there has been collusion between the executor and the surviving partner, or where the surviving partner has in his hands specifio assets of the testator ; in which latter case the bill need not charge any collusion between the executor and surviving part- ner.* In Newland v. Champion,^ Lord Hardwicke made an ob- servation, from which it might be inferred that bills of this nature might be sustained in aU cases, though collusion between the executor and surviving partner was neither charged nor proved ; for he said that such bills were allowed, in order that the plaintiff "might have an account of the testator's personal estate entire." But in a late case,^ Lord Langdale M. E.. was disinclined to sanc- ' Burroughs v. Elton, 11 Ves. 29. Lord Eldon, considering tlie great ad- vantages under which the plaintiff stood, as between himself and the defend- ant, at first hesitated whether he should not insist upon the plaintiff giving security to answer the result of the account; but, finding no precedent of such a proceeding, he did not adopt this course. See Story Eq. PI. § 1 78 and notes ; Butts v. Genung, 5 Paige, 254. " Cawthorne v. Chalie, 2 Sim. & Stu. 129. ' Davies v. Davies, 2 Kean, 534 ; Law v. Law, 2 Coll. 41 ; Travis vl ' Milne, 9 Hare, 141 ; Stainton v. The Carson Co., 18 Beavan, 146 ; 1 Lind- ley Partn. 889. * Gedge w; Traill, 1 Euss. & Myl. 281, n. ; Bowsher v. Watkins, id. 277 ; Cropper v. Knapman, 2 You. & Coll. 338 ; 1 Daniell Ch. Pr. (Perkins's ed.), 374, 375; Story Eq. PI. § 178 and notes; and see Seeley w. Boehm, infra. "■ 1 Vez. 106. ' " Davies v. Davies, 2 Keen, 534. CH. VII.] SUITS IN EQUITY AGAINST PARTNEES. 773 tion this doctrine, and said that the case of Bowsher v. Watkins, which was supposed to establish that general proposition, had been, in some degree, misunderstood, and was determined very much on its special circumstances.^ Where, however, the surviving part- ner is himself one of the executors, it seems clear that, in a suit for the administration of his testator's assets, the partnership ac- counts may be taken although no coUusion be charged between him and his co-executor;^ though it should appear that the mas- ters will refuse to take such accounts, unless they are specially directed so to do by the decree or a supplemental bill, or unless a petition be filed, in order to supply such omission.^ § 845. Where a bill is filed against partners, all must answer the bill, either jointly or separately ; and, a fortiori, if they have commenced an action against the plaintiff in equity, all must answer a bill filed to restrain that action.* In one case,^ even though one of the partners was abroad, the court refused to dis- solve an injunction till all the defendants had answered. The bill was filed against two partners for an account, and an injunction to restrain proceedings at law. The common injunction was obtained for want of answer. An answer having been put in, exceptions were taken, some of which were allowed. One of the partners, who was resident in England, then filed a further answer, admit- ting the facts stated in the bill on which the exceptions were founded ; but the other partner, being abroad, did not put in a further answer. The defendant, who had filed a further answer, moved to dissolve the injunction on the ground that he had ad- mitted the facts covered by the exceptions ; and that, even if his answer did not bind his partner, yet the plaintiff could not obtain from the other defendant more than the same admission of the facts charged by him, which, it was insisted, did not entitle him to an injunction. Alexander 0. B. refused the application, though he beUeved the merits to be with the defendants ; thinking that to adopt a contrary course would be the means of letting in a very • See Story Eq. PI. § 178 and notes; Travis u. Milne, 9 Hare, Ul ; 1 Lindley Partn. 805. ' Cropper v. Knapman, supra. ' Ibid.; Woolley w. Gordon, 1 Taml. 11. ' Kilby V. Stanton, 2 You. & Jerv. 77. " Prince v. Haydin, 3 You. & Jerv. 190. 65* 774 EIGHTS OF PARTNERS, ETC. [BOOK HI. objectionable practice. Considerable doubt, however, has been thrown upon this case by the observations of Lord Abinger 0. B. in Bowles v. Orr.^ And it is clear, that in chancery, where some of the partners only have answered, they may move to dissolve an injunction obtained against them all ; but, in that case, the plaintiff may read affidavits in opposition to the motion.^ § 846. We may conclude this chapter by observing, that, in a case where the bill was filed by an annuity creditor of G. against his executrix, who lived in Scotland, her attorneys to collect the property in England, and the partners in a house of agency, who, it was alleged, had considerable funds of the testator in their hands, and the partners put in a joint and several answer ; it was doubted by Sir Thomas Plumer whether one of the partners, who had ceased to act in the business, could be compelled to look into the partnership accounts in order to state the result of them as to particular matter which the acting partner had transacted.^ Ac- cording to a late decision, a partner, resident in England, of a house carrying on business abroad is not bound to set forth in his answer a schedule of books, &c., relating to and in the custody of the foreign house.* • 1 Tou. & Coll. 475. In Freeland v. Royall, 2 Hen. & Mumf. 575, it was held that the answer of one partner in the name of both would be deemed suflBcient, where the plaintiff has filed a general replication, and has taken no steps to compel an answer from the other partner. ■' Naylor v. Wellington, 8 Sim. 396. See 3 Daniell Ch. Pr. (Perkins's ed. 1823 and note). ' Seeley v. Boehm, 2 Madd. 176. * Martineau v. Cox, 2 You. & Coll. 638. BOOK THE FOURTH. OF THE BANKRUPTCY OF PAKTNERS. CHAPTER I. OP THE CAUSES AND CONSEQUENCES OF THE BANKRUPTCY. § 847. All the partners in a firm may become bankrupt to- gether, or some, or one only, may become bankrupt, while the others remain solvent.^ To constitute two or more partners bank- rupts, there must be evidence of joint trading. But it is sufii- cient if a person is proved to have acknowledged himself partner with a trader, and to have given directions in the concern, though no act of buying or selhng during the time of the partnership can be established.^ And, under peculiar circumstances, a person may be considered in the light of a joint trader even after a dis- solution; for, in one casfe,^ a commission of bankrupt was sus- tained against a partnership on a debt contracted many years after dissolution, the sale of the partnership goods having been continued. § 848. They only of the partners who have actually committed acts of bankruptcy are to be deemed bankrupts.* Where one of ' Wats. Partn. 243. ' Parker w. Barker, 1 Brod. & Bing. 9. ' Tarlton v. Backhouse, 2 Swanst. 571 ; Ex parte Tarle'ton, 19 Ves. 404. But in this case, either the retiring partner could not have given legal notice of his retirement, or there must have been some outstanding debts of the partnership. * Allan V. Hartley, 4 Doug. 20 ; Co. B. L. 9 ; Hogg v. Bridges, 2 Moore) 122. 776 BANKRUPTCY OF PARTNERS. [BOOK IV. two partners in a bank, -who alone resided at it, ordered it to be shut up, and absented himself from it ; and the bank stopped pay- ment ; this was holden to be evidence of an act of bankruptcy by the resident partner only.^ So, where one partner went abroad for the purpose of transacting his business, but not of avoiding his creditors, and the other partner contracted a debt in the part- nership name and afterwards committed an act of bankruptcy, and the clerk of the firm went to the partner abroad and communi- cated to him the insolvent state of the house, upon which the ab- sentee partner said he should not return, — this was held not to be a sufficient act of bankruptcy to support a joint commission ; the court principally adverting to the difficulty of ascertaining the date of the act of bankruptcy.^ § 849. On the other hand, where two partners carried on busi- ness together, but under different names and in different places, namely, at Manchester and London, and one partner resided at each place, and the London partner, being upon a visit for a few days at Manchester, occasionally attended the counting-house there, and both partners, afraid of an arrest, left the house pri- vately, and carried the account-books with them, this was ruled to be an act of bankruptcy in both.^ And where two traders in partnership left their shop, and. told their shopman that they did so for the purpose of getting some bills discounted, and directed him to say they were not in the way, or to make some excuse for them, in case a creditor should call ; and a creditor did call on that and following day, when they were both at home, and desired to see the one or the other of them, and the shopman without further authority denied them ; and they were afterwards informed of the circumstance, and did not object, — it was held that the jury were warranted in concluding that they absented themselves from their shop with intent to delay their creditors.* ' Mills V. Bennett, 2 Mau. & Sel. 556 ; Ex parte Mavor, 19 Ves. 543. = Ex parte Mutrie, 5 Ves. 576. ' Spencer v. Billing, 3 Camp. 312. * Capper v. Desanges, 3 Moore, 4; Deffle i'. Desanges, 8 Taunt. 671 ; Ex parte Gardner, 1 Ves. & Bea. 77. A general order for denial, with other circumstances showing that a man begins to keep his house with intent to ^elay his creditors, is sufficient to make him a bankrupt, without any positive denial of a creditor. Harvey d. Ramsbottom, 1 Barn. & Cres. 55. CH. I.] CAUSES AND CONSEQUENCES. 777 § 850. A conveyance by a firm of all their stock in trade, debts, and effects, for the benefit of their creditors, though -without the concurrence of every creditor, both joint and separate, is an act of bankruptcy by the firm.^ So, a conveyance by partners of their property in trust for their creditors, with a proviso to be void if all the creditors for above £20 should not execute it, or a commission of bankruptcy should issue -within a certain time, is an act of bank- ruptcy ; 2 but a conveyance for that purpose, -where the deed is joint arid not several, and one partner alone executes, is not an act of bankruptcy even in that partner.^ § 851. When an entire firm has committed an act or acts of bankruptcy, any joint creditor having a legal, not an equitable, debt to the amount of £100, may sue out a joint fiat against them. A separate creditor cannot sue out a joint fiat.* A cred- itor of the -whole firm may, under the present law,^ sue out a joint fiat against some of the members.® He may likewise sue out a separate fiat against any one of the partners of the firm indebted to him, who has committed an act of bankruptcy.' And where there is a major firm including a minor, the two firms carrying on distinct trades, a creditor Of the minor firm may sustain a. fiat against the minor firm only. At least, it has been held that such a fiat is good at law, though it is not within the 16th section of the statute.^ It has been ruled, that even a partner may sue out a fiat against his copartner, if his debt have not arisen from the part- nership.^ And it seems clear that where the partnership has been ' Eckhardt v. Wilson, 8 T. R. 140. ' Button V. Morrison, 17 Ves. 200. ' Ibid. * 6 Geo. 4, c. 16, s. 15; Arch. B. L. 274 ; Prosser v. Smith, Holt, 442. ' Overruling Streatfield v. Halliday, 5 T. K. 779 ; Ex parte Henderson, 4 Ves. 163, &c. " By the 6 Geo. 4, c. 16, s. 16, any creditor or creditors, whose debt or debts is or are sufficient to entitle him or them to petition for a commission against all the partners of any firm, may petition for a commission against one or more partners of such firm ; and every commission issued upon such petition shall.be valid, although it does not include all the partners of the firm. ' Crisp V. Perritt, Willes, 467 ; Smith v. Oriel, 1 East, 368. ' Ex parte Chambers, 2 Mont'. & A. 440 ; Bernasconi v. Fairbrother, id. 441. " Windham v. Paterson, 1 Stark. 144 ; Ex parte Notley, 1 Mont. & A. 778 BANKRUPTCY OF PARTNERS. [BOOK IV. dissolved, and the solyent partner lias paid all the debts, he may sustain a fiat against his copartner.^ The right to a fiat, is, in a qualified sense, a legal right, like that of an action ; and, as courts of justice have no concern with the motives of parties who assert a legal right, a fiat will be sustained, although one object of the pe- titioning creditor be to dissolve the partnership existing between the bankrupts, if it appear that he lond fide intends to carry on the fiat.'' But a fiat issued merely for the purpose of dissolving the partnership, or enforcing payment of a disputable partnership debt,3 is supersedable.* § 852. There are some cases in which, though a fiat agauist partners may be void at law, it will be recogmzed by the court of bankruptcy to this extent, — that the court will either refuse to annul it, or, for the purpose of sustaining it, will go the length of removiug out of the way a prior legal fiat. Thus, at law, a fiat in bankruptcy, issued against an infant, is not merely void- able, but void.^ But where an infant partner has taken an active part in the business of his partnership, and has induced persons to give him credit as a party of full age, the court of bankruptcy will not annul the fiat in his behalf, but leave bim to his remedy at law.^ However, the mere circumstance that his name was used in the firm is not a sufiBcient ground for dismissing his petition to have the fiat annulled.^ Again, notwithstanding that a joint fiat against partners, one of whom has been attainted of felony^ may be void at law, yet it may be a question whether the court 46 ; Ex parte Gray, 2 Mont. & A. 283. But a fiat may be supported on a petitioning creditor's debt, which is composed partly of a partnership debt, if the remainder is in itself sufficient. Ex parte Kichardson, 3 D. & C. 244. In West V. Skip, one partner sued out a commission against his copartner on a partnership debt. ^ Ex parte Nokes, Mont. Partn. 62, App. See Antram v. Chase, 15 East, 209. " Ex parte Wilbran, 5 Madd. 1 ; Ex parte White, 2 Mont. & A. 114 ; Ex parte Parkes, 3 Dea. 31. ' Ex parte Hall, 3 Dea. 405. » Ex parte Christie, Mont. & Bligh, 314. '• 9 Bing. 365. See Ex parte Addison, 3 Dea. 54. = Ex parte Watson, 16 Ves. 265 ; Ex parte Bates, 2 M. D. & D. 337 ; Ex parte Unity Banking Assoc. 4 Jurist (n. s.), 1257. ' Ex parte Lees, 1 Dea. 705. CH. I.] CAUSES AND CONSEQUENCES. 779 of bankruptcy would not permit the felon to be included in a joint fiat -wbere complicated matters of account are involved.^ The cases in wliich- the court will sustain a joint fiat, notwith- standing its invalidity at law, will be noticed in a subsequent chapter.^ § 853. Under a joint bankruptcy, not only the joint but the separate property also passes to the assignees.® Under a joint commission against father (tenant for life) and son (tenant in tail), it was held that the assignees took an estate for the life of the father with a base fee in remainder, determinable on the failure of the estate tail.* Under a separate bankruptcy, all the separate property, and such part of the joint property as the bankrupt himself would be entitled to, passes to his assignees.^ Under a separate bankruptcy, the assignees become tenants in common with the solvent partners, or their representatives, and hold the bankrupt's undivided share of the partnership effects, from the time of the act of bankruptcy, subject to the rights of the solvent partners;^ and where the assignees have got possession of the partnership funds, the solvent partners cannot call them out of their hands. They are ia law equally entitled to the possession.^ The assignees under a separate bankruptcy have a right to the share, not only of the partnership effects remaining in specie, but of the profits of adventures outstanding at the time of the bank- ruptcy." They are likewise entitled to the outstanding instalments due from the solvent partner for his admission into the partnership ;^ ' Ex parte Addison, supra. ' See post, chap. 3, sec. 7. ' Ex parte Cooke, 2 P. "W. 500 ; Ex parte Baudier, 1 Atk. 98 ; Hague V. Kolleston, 4 Burr. 2174. See Gow Partn. (3d ed.), 299; Harrison v. Sterry, 5 Cranch, 239 ; Wharton v. Fisher, 2 Serg. & E. 178. * Jervis v. Tayleur, 3 Barn. & Aid. 557. \ Horsey's case, 3 P. W. 23 ; Eddie v. Davidson, Doug. 627 ; Bolton v. Puller, 1 Bos. &. Pull. 539 ; Barker v. Goodair, 11 Ves. 85. ' West V. Skip, 1 Vez. 232 ; Fox v. Hanbury, Cowp. 445 ; Taylor u. Field, 4 Ves. 396; Smith v. Stokes, 1 East, 363; Smith v. Oriel, 1 East, 368 ; Murray v. Murray, 5 John. Ch. 60 ; Story Partn. § 337 ; 3 Kent Com. 68, 59 ; Gow Partn. (2d ed.), 298, 299, 305 ; Parker v. Muggridge, 2 Story C. C. 346, 347. ' Murray v. Murray, 5 John. Ch. 60, 70. ' Ante, § 323. ' Akhurst V. Jackson, 1 Swanst. 85. 780 BANKRUPTCX 05 PARTNERS. [bOOK IV. as also to a stare of the profits of the trade carried on after the bankruptcy by the solvent partner, with the capital of the original partnership.^ It has, however, been laid down by Lord Tenterden as a general principle of law, that, if one partner becomes a bank- rupt, his assignees can obtain no share of the partnership effects, until they first satisfy all that is due from him to the partnership ; ^ which opinion is in accordance with the general rule just stated, that they hold the bankrupt's share of the partnership effects suh- jeet to the rights of the solvent partners. Hence, where certain part-owners of ships were likewise engaged as partners in adven- tures, and the practice was to divide the produce of tie adventure in shares, but no partner's share was delivered to him till his share of the disbursements was paid ; upon the bankruptcy of one of the partners, it was held that his assignees could not maintain trover against the other partners for his share of the produce of an ad- venture, till his share of the disbursements had been discharged.^ § 854. The assignees of a bankrupt partner are not in the situ- ation of copartners with those who remain solvent, for the pur- poses of carrying on the trade, though they may be considered as copartners for the purpose of winding up the concern. However, if no account be entered into immediately, aad the solvent partners continue to trade with the capital of the original partnership (which is equivalent to the assignees continuing the trade with the solvent partners), it cannot be objected to a bill brought by the assignees for a share of the profits of the continued business, that they did not, as soon as possible, call upon the solvent partners to account; for the obligation to settle the partnership accounts is not more imperative on the part of the assignees, than upon the ' Ante, § 325. It has been inferred, arguendo, that assignees filing a bill for an account of profits made by the solvent partners after the bankruptcy- render themselves personally liable for the losses. See 15 Ves. 221. ^ 8 Barn. & Cres. 618 ; Goss v. Dufresnoy, Davies B. L. 371. ' Holderness v. Shackels, 8 Barn. & Cres. 612 ; 3 Man. & Rj-l. 95. In this case it appeared that the bankrupt's share had been weighed out, and placed separately in the warehouse in casks marked with his initials. But Lord Tenterden observed, that this was not an absolute appropriation of the cask and its contents to the bankrupt, but only a qualified appropriation, enabling him to take the goods, unless notice was given that his share qf the disbursements had not been paid. CH. I.] CAUSES AND CONSEQUENCES. 781 solvent partners.^ And even with regard to trading by the as- signees, Lord Eldon has said that the proposition -would be rash, that there can be no case in which they could trade with consent of the creditors, or of the creditors and the bankrupt together. If they had the consent of all persons interested, he did not think that other persons with whom they might deal could make the ob- jection. The duty was not as between them and the other persons, who were not properly to be termed remaining or surviving part- ners ; the destruction of one being, unless it was otherwise provided, a dissolution of the whole partnership.^ § 855. As the obhgation imphed among partners is, that they are to use the joint property for the benefit of aU whose property it is,^ and as the assignees of a bankrupt partner stand precisely in his situation, it is clear that, when such a course is beneficial to the bankrupt's estate, and he has not been bound by stipulation, the assignees may insist upon a sale of the whole property.* But the assignees have no right to sell any part of the joint effects, where no necessity for the sale exists, and the solvent partners are able and willing to account for the share of the bankrupt partner, and to indemnify them against the joint creditors. Accordingly, upon a bin filed, and an affidavit at the instance of a solvent partner, to restrain the assignees of a bankrupt from selling the joint effects, an injunction has been allowed.^ § 856. The whole of the bankm,pt's property vests in the as- signees absolutely, so as to give them precisely the same rights and remedies, with relation to it, as if the property vested in them in their own right individually. They have the same remedies I ' 15 Ves. 228. '^ 15 Ves. 227. ^ Ante,% 179. * Crawshay v. Collins, 15 Ves. 218 ; 2 Hor. Supp. 403. ' Allen V. Kilbre, 4 Madd. 464. In this case, the bill contained no offer to pay the joint creditors, though it offered to account for the share of the bankrupt partner. Ergo qumre. In Ex parte Montgomery, 1 Glyn & Jam, 338, which was an application by creditors to restrain the assignees from a sale of the bankrupt's effects, on the ground of suspicious circumstances in the intended mode of sale, Lord Eldon thought the court could not interfere, as the assignees acted at their own risk, and on their own responsibility, and they, and not the court, were to be the judges of the propriety and expedi- ency of the sale. But see Ex parte Figes, 1 Glyn & Jam. 122. 66 782 BANKRUPTCY OF PAETNBKS. [BOOK IV. by action for the recovery of debts due to the bankrupt, and for all civil injuries ■with respect to property wMcli has passed to them under the bankruptcy, that the bankrupt would have had, if no fiat had been sued out against him.^ Hence, when the bankruptcy is separate, the solvent partners must join with the assignees in an action for the recovery of joint debts, or application must be made to the Lord Chancellor, under the 6 Geo. 4, c. 16, s. 89, for leave to prosecute the action in their names, jointly with those of the assignees. § 857. Under a joint bankruptcy, the administration of the bankrupt's estate, both joint and separate, takes place in the bankruptcy.^ In the case of a separate commission, it was for- merly the custom to administer the separate estate in the bank- ruptcy, and the joint estate in a suit in equity, instituted by the joint creditors against the assignees and solvent partners ; but Lord Loughborough observed, that the consequence of this rule was, that what he ordered one day sitting in bankruptcy, he for- bade the next day sitting in chancery, it being quite of course to stop the dividend on the joint estate, upon a bill filed. His Lord- ship, accordingly, adverting to the needless expense of a chancery suit in almost every case, altered the rule ; and the result is, that, under a separate fiat of bankruptcy, the other partners remaining solvent, an account is directed of the joint estate (in the absence even of the other partners, when abroad), and the whole account is taken in the bankruptcy.^ It should be remarked, however, that there is an exception to this practice in the case of a mine.* ' See Archb. B. L. 245. See post, chap. 3, sec. 4. If upon the dissolu- tion of the partnership between two persons, solicitoi^ of the bankrupt, it is agreed that the remaining partner shall pay the partnership debts, and the assignees of the bankrupt, with notice of this agreement, continue to employ the remaining partner, the court of bankruptcy will not, on the application of the assignees, interfere to charge the retiring partner. Ex parte Gould, 2 Mont. & A. 48. " Ord. Loughborough, 8th March, 1794. ' Ex parte Eltoq, 2 Ves. 242 ; Button v. Morrison, 17 Ves. 209 ; Barker v.. Goodair, 11 Ves. 85 ; Ex parte Farlow, 1 Kose, 421. But in taking the account, the court of bankruptcy has not jurisdiction to order the solvent partner to deliver up the partnership books; Ex parte Finch, 1 D. & C. 274 ; though the assignees have a right to inspect them. * Post, Book 5, chap. 3. CH. I.] CAUSES AND CONSEQUENCES. 783 § 858. With regard to the debts provable under a fiat against partners, Uttle need be said as connected with the particular sub- ject of partnership. It may be observed, however, that where one partner becomes a bankrupt, and is indebted to his copartner, the solvent partner must prove such debt under the fiat, or it wiU be barred by the bankrupt's certificate.^ For, by the 6 Geo. 4, c. 16, s. 52, " any person who, at the issuing of the commission (JiaC), shall be surety or liable for any debt of the bankrupt, if he shah have paid the debt, or any part thereof, in discharge of the whole debt (although he may have paid the same after the comnussion issued), shall be entitled to prove his demand as a debt under the commission." On the construction of the statute, in this respect, the case of Wood v. Dodgson^ was decided. Upon the dissolution of partnership between three partners, two of the three assigned to the other aU their shares in the partner- ship debts and effects, and the other covenanted to pay all debts then due from the partnership, and to indemnify the two from the payment of the same, and from all actions and costs by reason of* the non-payment of the same. The remaining partner became a bankrupt, and a commission issued against him, under which he obtained his certificate. Afterwards, the holder of a bill accepted by the three partners, and due before the dissolution of the part- nership, sued the two, and they were obliged to pay the bill. It was held that the certificate might be pleaded in discharge of an action brought by the two against the other, upon his covenant. It may be deduced from the case of Wood v. Dodgson, what in- deed has been decided by a subsequent case,^ that the certificate under a separate bankruptcy is a bar to all actions for contribu- tion by the bankrupt's copartners ; and, generally, the certificate under a joint or separate bankruptcy discharges the bankrupt from all his debts, both joint and separate.'' ' But he cannot do so in competition with creditors. See^osi, chap. 2, sec. 9. ' 2 Mau. & Sel. 195. ' Afflalo v: rourdrinier, 6 Bing. 306 ; 3 Moore & P. 743 ; Butcher v. Forman, 6 Hill (N. Y.), 583. • Horsey's case, 3 P. Wms. 23 ; Ex parte Yale, id. 24, n. ; TwisS v. Mas- sey, 1 Atk. 67 ; Howard v. Poole, Davies, 451, 2 Str. 995 ; Wickes v. Stra- han, 2 Str. 1143. But see 2 Mau. & Sel. 26. 784 BANKRUPTCY OF PARTNERS. [BOOK IV. § 859. A bankrupt partner's ieertificate is no bar to an action against Ms copartner, for, by tbe 6 Geo. 4, c. 16, s. 121, no such, certificate stall release or discbarge any person wbo was partner with such bankrupt at the time of his bankruptcy, who was then jointly bound, or had made any joint contract with such bankrupt.^ In the same manner, signing the certificate of the surviving partner does not release the estate of the deceased partner.^ § 860. We shall now proceed to make a few observations on the efiect of the bankruptcy of one partner on the dealings of the firm. And, first, as to its efiect upon the acts of the solvent part- ner. The acts of a solvent partner bon See Story Partn. § 327. ' 4 Barn. & Adol. 633 ; and see Ex parte Robinson, 1 Mont. & A. 18 ; infra, § 865. ' Post, § 874. * 1 East, 368. CH. I.] CAUSES AND CONSEQUENCES. 787 observed, it is not stated negatively that the solvent partner had not notice; on the contrary, it is rather to be inferred that he had, as the case states that the commission against the bankrupt partner had issued before the transfer was made. But it seems clear, that the solvent partner's knowledge of the fact makes no diflference ; the legal right cannot result from the absence of knowledge. § 864. Neither can notice to the creditor of the bankruptcy of one partner affect transactions of this nature, where it is clear that no fraudulent preference was intended. In Harvey v. Crickett, one of 'the partners became bankrupt on the 17th May. Before the 22d the defendants had notice that a considerable number of the bankrupt's notes had been refused payment, and on that day they were informed by a son of K., the solvent partner, that H., the other partner, had absconded, but that his father was per- fectly solvent, unless transactions of which he was ignorant came to hght. The arrangement respecting the bill ^ was entered into on the same day ; and K.'s son, who acted for him on this occa- sion, dictated the form of the bill. But the reason for making it payable to K. alone was, because he thought that every thing de- volved on him upon H.'s absconding. Upon these facts the judges held that there was a bond fide payment, and no fraud ; Abbott J., said, that if this power had been exercised with a view of giving a fraudulent preference, it would have led to a different conclu- sion ; but fraud was not stated and could not be intended. As far as any intendment could be made, he should infer the contrary ; for it seemed that K., supposing he was of abiUty to discharge all the partnership debts, went on as long as he could, until he found his hopes disappointed. And Holroyd J., observed, that it was not stated that it was in the contemplation of K., or of the defend- ants, that K. would become a bankrupt, which would have been a material fact to distinguish this from the other cases. § 865. And in Ex parte Robinson,^ which was decided in a great measure on the authority of Harvey v. Crickett, both the creditor and the solvent partner had knowledge of the bankruptcy of the copartner. There the creditor, who was under acceptances ' Ante, § 861. » X Mont. & A. 18 ; overruling Ex parte Ellis, Mont. & B. 249. 788 BANKRUPTCY OP PARTNERS. [BOOK IV. for the firm of H. & W., as a security for their acceptances, drew , three bills of exchange on the firm, which were accepted by W., the solvent partner, and dehvered by him to the creditor, who indorsed them over for value to a person who had no notice of the bankruptcy. Upon the subsequent bankruptcy of the solvent partner, the indorsee petitioned for liberty to prove against the joint estate, and Lord Brougham C, allowed the proof. Now in this case it was not absolutely necessary to adopt the decision in Harvey v. Crickett, because the indorsee, under the circumstances before stated, had a title of his own, independent of that of the creditor ; ^ but Lord Brougham said that the principles of Harvey V. Crickett stood unshaken by any subsequent decision, and that they were applicable to the case before him. § 866. But if there be reasonable evidence of fraudulent pre- ference, the creditor will not be permitted to avail himself of part- nership property transferred to him by the solvent partner after the bankruptcy of the copartner. In another case,^ which arose out of the bankruptcy of Harvey & Co., the court were of opinion that there was sufficient evidence to show that, if the creditors were not clearly and distinctly cognizant of the fact of the bank- ruptcy of H., they had very strong reason to suspect his insolvency, which they said was quite sufficient to put the case of the creditors out of court. Probably, under the circumstances, it might be pre- sumed that the creditors had notice of the falling state of the house altogether.^ The facts of that case were shortly as follows : H. & Co. were in partnership as bankers in the country, and R. & Co., were their London agents. H. drew a bill upon the defendant D. for a vahd consideration, which was duly accepted. The bill, having been placed with E,. & Co., got back into the hands of H. & Co. without having been negotiated by the London bankers. H. & Co. applied to R. & Co. for advances, which apphcation was agreed to, but a security required. H. & Co. were prepared to give securities, amongst which was the bill in question. On the 17th May, which was subsequent to the proposition for an advance, but before the deposit of the bill, H. committed an act of bank- ' See Lacy v. Woolcott, ante, § 447. ' Ratnsbottom v. Duck, 1 Mont. Partn. 135, App., where see a valuable note on this subject (2 M.). = See Biggs v. Fellows, 8 Baru. & Cres. 402 ; 2 Man. & Ryl. 450. CH. I.] CAUSES AND CONSEQUENCES. 789 raptcy. On the 23d May the bill was deposited with E. & Co., as a security for the advances they had made. A separate com- mission of bankruptcy issued against H. ; R. & Co. then brought their action as indorsees against the defendant, but were non- suited ; and a motion to set aside the nonsuit and for a new trial was refused. § 867. In the case just stated, the court relied much upon the circumstance of the knowledge of R. & Co. of the bankruptcy of H. ; observing, that their decision against the motion did not pre- clude the party from another action, and submitting the evidence of the party's ignorance of the bankruptcy of H. to another jury ; but that it was too much to say, that the plaintiffs were not ac- quainted with the bankruptcy of H. on the 23d May. It seems clear, however, that, though the creditor's knowledge of the bank- ruptcy of one partner may go far towards establishing a fraudulent preference in contemplation of the bankruptcy of the other, it is by no means conclusive of that fact. § 868. It is to be observed, that when the solvent partner dis- poses of the partnership effects after the bankruptcy of his copart- ner, he conveys the entire interest of aU the quondam partners therein, and not his ovm interest merely. For, upon the principle that the partnership remains for the purpose of winding up the concern, the^MS disponendi of the solvent partner cannot be affected by the bankruptcy of his copartner. Therefore, if one of two partners become bankrupt, his assignees cannot recover a moiety of the moneys paid by the solvent partner on the partnership ac- count, after the bankruptcy.^ § 869. But the power vested in the solvent partner under the circumstances, and for the purposes just stated, does not give him any right, after the bankruptcy of his copartner, to dispose of the partnership property by deed, or to negotiate bUls and notes in the name of the firm. The execution of both partners being necessary to a deed, it follows, that if both join in a deed after the bank- ruptcy of one, the deed, subject to the provisions of the 2 & 3 Vict. c. 29,2 ig gQQJi Qjjjy fQj. ^ moiety .3 It has even been held, that ' Harvey v. Crickett, 5 Mau. & Sel. 336 ; Smith v. Oriel, 1 East, 363. « See;)os<, §872. » Shep. Touch. 71. 790 BANKRUPTCY OP PARTNBES. ' [BOOK IV. the mere deposit of a lease as a security for a debt after the bank- ruptcy of one partner is good only for a moiety, the other moiety being vestedyin the assignees of the bankrupt partner.^ With re- gard, also, to bills of exchange, — they cannot, after the bank- ruptcy of one partner, be negotiated by the solvent partner in the name of the firm. Thus, if a partnership biU existing at the time of the bankruptcy, be afterwards put into circulation, it must be indorsed, not by the solvent partner alone, but by him jointly with the assignees of the bankrupt.^ So, if the solvent partner draw a bill in the partnership name after the bankruptcy of his copartner, in an action against the acceptor, the indorsees cannot declare on it as the bill of the firm, but as the separate bill of the solvent part- ner.3 And when a bill is delivered to two partners for the special purpose of being discounted, and, after the bankruptcy of one, is indorsed over by the other partner to the bankers of the firm, in liquidation of advances made by the firm, it seems doubtful whether the bankers, though without notice of the original trust, can maintain an action on such bill against the person who so de- livered it to the partnership. " In such case," said Lord Ellen- borough, " the question is, whether a party, without a knowledge of the trust, has acquired interest beyond that of the trustees ? " In the ease where this question arose, the plaintifis were allowed to recover, with liberty to the defendants to argue the point ; but no motion for that purpose was made.* § 870. And although, with the exceptions just stated, it appears to be competent for a solvent partner, after the bankruptcy of his copartner, to dispose land fide of the partnership effects, because, in so doing, he may be considered, to a certain extent, as aiding the administration of such effects ; yet, on the other hand, as in such case the whole account is taken in the bankruptcy, and the joint estate applied as if all had become bankrupts ; and as, both in bankruptcy and in the administration of assets, the court has done more upon principles of convenience than as standing upon legal reasoning,® it seems to follow that the solvent partner might ^ Whitwell V. Thompson, 1 Esp. 70. Sed. qu.; and see Mont. Partn. 134, notes. 2 Abel V. Sutton, 3 Esp. 108. " Kamsbottom v. Lewis, 1 Camp. 179. See ante, § 541. * Ramsbottom v. Cator, 1 Stark. 228. » 17"Ves. 211. CH. I.J CAUSES AND CONSEQUENCES. • 791 be enjoined from such proceedings if the same were injmious to the assignees ; ^ in the same manner as it has been decided that the assignees may be enjoined from the sale of the effects, -where the sale is injurious to the solvent partner, and the latter mil ac- count for the bankrupt's share.^ § 871. It now remains to consider the effect of the acts of the bankrupt partner on the dealings of the firm. The general rule is, that if one of several partners commit an act of bankruptcy, though it will not prevent the solvent partner from disposing of partnership property bond fide for partnership debts, yet it is a dissolution of partnership as between the solvent and bankrupt partners, and destroys the agency of the bankrupt partner, and therefore no disposition of partnership property by the bankrupt partner can be binding.^ That was decided in the case bf Thomason v. Frere,* in which it was held that two partners, who had committed acts of bankruptcy, could not, by indorsement of a bill of exchange belonging to the partnership, bind their own as- signees or the partner who has remained solvent. § 872. Formerly, aU the acts of the bankrupt partner were avoided, from the day of his bankruptcy, by virtue of the relation in the statutes.* But by the 2 & 3 Vict. c. 29, s. 1, all contracts, dealings, and transactions, by and with any bankrupt, really and bond fide made and entered into before the date and issuing of the fiat against him, shall be deemed valid, notwithstanding any prior act of bankruptcy by such bankrupt committed, provided the per- son or persons so deahng with such bankrupt had not, at the time of such contract, dealing, or transaction notice of any prior act of bankruptcy by him committed. This enactment is intended to enlarge the provisions of ^he stat. 6 Geo. 4, c. 16, s. 81, and 2 Vict. c. 11, s. 12, which refer more especially to conveyances by bankrupts. It is clear, therefore, that conveyances by bankrupts are within the scope of the new enactment. • Story Partn. § 341, and note. ' Ante, § 855. ' Per Bayley B., 1 Cromp. & Mees. 529 ; Story Partn. §§ 339, 340 ; 3 Kent Com. 58, 59. * 10 East, 418. And see Burt v. Moult, 1 Cromp. & Mees. 525. " Per Lord Mansfield, Fox v. Hanbury, Cowp. 445. The relation to the act of bankruptcy was confined to an act subsequent to the petitioning creditor's debt. Ex parte Birkett, 2 Rose, 71. 792 BANKRUPTCY OF PARTNERS. [BOOK IV. § 873. By Stat. 6 Geo. 4, c. 16, s. 82, aM payments ^ really and bond fide, made, or -which shall hereafter be ■ made, by any bank- rupt, or by any person on his behalf, before the date and issuing of the commission against such bankrupt to any creditor of such bankrupt (such payment not being a fraudulent preference of such creditor), shall be deemed valid, notwithstanding any prior act of bankruptcy by such bankrupt committed ; and such creditor shall not be liable to refund the same to the assignees of such bank- rupt, provided the person so dealing with the said bankrupt had not, at the time of such payment by or to such bankrupt, notice of any act of bankruptcy by such bankrupt committed. It was contended in Craven v. Edmondson,^ that, under the 82d section of the bankrupt act, payment of a partnership debt by one of two partners after his bankruptcy, but before the bankruptcy of his copartners, was good, although the creditor had notice of the act of bankruptcy. The grounds of the argument were, that the payment having been made to the creditor for a debt due from both the bankrupts, the notice of an act of bankruptcy, in order to invalidate the payment, ought to be notice of an act committed by both such bankrupts ; moreover that the payment, although made by the bankrupt partner, was made by him as agent for the solvent partner. But the court held clearly that such payments were not protected by the statute, and that the bankruptcy of one partner destroyed his agency for his copartner. In some cases, however, with a view to the protection of innocent third persons, the agency of the bankrupt partner has been held not to be de- stroyed by his bankruptcy.^ § 874. How far an act of bankruptcy committed by one partner shall affect an execution subsequently issued against the partner- ship effects, is a question which seems to require express decision.* By the stat. 2 & 3 Vict. c. 29, which enlarges the prior enact- 1 As the payment must be bona fide, a payment in any mercantile dealings out of the ordinary course of trade would not satisfy the terms of the act; as, for instance, a payment for goods before they are delivered. See Deac. B. L. 676 ; Bishop v. Crawshay, 3 Barn. & Cres. 415. ^ 6 Bing. 734 ; 4 Moore & P. 622. See Dickson v. Cass, 1 Barn. & Adol. 343 ; Ex parte M'Gae, ante, § 623. ' Lacy V. Woolcott, ante, § 447. « See Story Partn. § 340. CH. I.] CAUSES AND CONSEQUENCES. 793 ment of 6 Geo. 4, c. 16, s. 81, all executions against the lands and tenements, goods . and chattels, of a bankrupt, lond fide exe- cuted or levied before the date and issuing of the fiat, are to be deemed valid, notwithstanding a prior act of bankruptcy, provided the person at whose suit such execution shall have issued had no notice of the act of bankruptcy at the time of executing or levy- ing the execution. This enactment, though it clearly embraces executions against the partnership effects, where all the partners have committed acts of bankruptcy, does not seem to meet the objections raised by Lord Eldon to the validity of joint executions after the bankruptcy of one partner. Lord Eldon has held clearly, that where there is a bankrupt and a solvent partner, it is not competent for execution creditors to disappoint the arrangement made in bankruptcy for the equal distribution of the partnership property.^ And the grounds for this opinion appear to have been, that an execution levied on the partnership effects is overreached even at law by a previous act of bankruptcy committed by one partner. Therefore, where a bill was filed by the assignees of a bankrupt partner, for an injunction against a joint creditor, who had, after the bankruptcy, though before the commission, attached the partnership goods in the Lord Mayor's Court, and obtained judgment on the attachment, Lord Eldon granted the injunction, upon the principle that a separate commission severs the joint ten- ancy, and vests the bankrupt partner's shaire of the joint property in the assignees, by relation to the act of bankruptcy ; and that the action and attachment in the case before him were at variance with that principle, the issue averring the effects to be the joint property of the partners? So in a subsequent case, in which a similar order was made,^ Lord Eldon is reported to have said, that ' 3 Mer. 283. ^ Barker v. Goodair, 11 Ves. 78. ' Button V. Morrison, 17 Ves. 193. In one part of his judgment, in this case, Lord Eldon seems to lay some stress upon the circumstance of the commission being " of even dale with the verdicts ; " and in another part he says : " The question is, what is the effect of the commission, the attach- ments under -which verdicts of even date were obtained, and the preceding act of bankruptcy ? " It might be inferred from these expressions that he thought, if the commission had not issued until after the return of the ver- dict, the execution would have been available. But, in the very same judg- ment, he says : " There was no actual execution under the attachments at 67 794 BANKRUPTCY OP PAETNEES. [bOOK IV. if, after an execution against one partner, a commission of bank- rupt issues against him upon an act of bankruptcy antecedent to the execution executed, whatever may have been taken under the execution becomes by relation the property of his assignees, to be apphed among all the joint creditors, exactly as the application is made in bankruptcy. And in a still later case Lord Bldon acted upon this opinion ; holding that joint creditors, who had taken joint effects in execution after an act of bankruptcy by one of the partners, could not retain them against the assignees under a separate commission afterwards issued by another joint creditor against that partner.^ § 875. The judgment of Lord Eldon in these cases is certainly in accordance with the strict legal principles, that, upon a commis- sion of bankrupt issuing against one partner, the interest of the bankrupt ceases, and the solvent partners become tenants in com- mon with the assignees of the partnership effects, by relation to the act of bankruptcy ; and therefore, that an execution levied against the effects of the partners, after such bankruptcy, is void. But perhaps it may be doubted whether this state of the law is conso- nant with strict justice. It seems to bear hard upon a creditor who has used due diligence, and has without fraud obtained execution for his debt. It may here be remarked, that, in Bristow v. Potts,^ Lord Loughborough held an opinion directly at variance with Lord Eldon, and decided that the assignees of one of two joint debtors had no equity to obtain an injunction against creditors who had attached the joint estate. It must be admitted, however, with ref- erence to the principles just stated, that Lord Loughborough's con- clusion, in effect that the creditors of the two debtors should have execution against what was no longer partnership property, was, to use Lord's Eldon's words, " a difficult conclusion." § 876. The obstacles which arise to a joint creditor bringing a joint action, after an act of bankruptcy by one of the joint debtors, will not be remedied by his taking out a separate execution against the solvent partner, unless execution be levied against that part- ner's separate estate. If he levy execution upon the joint estate, the time the commission issued, and if there had been, it was immaterial ; '' and the latter dictum is confirmed by his decision in Wait's case, infra. ' In re Wait, 1 Jao. & Walk. 605. » 11 Ves. 81, note (b). CH. I.] CAUSES AND CONSEQUENCES. 795 taking wbat lie conceives to be the solvent partner's share, he can only hold it subject to all the partnership dealings.^ And it is clear that a joint creditor, bringing an action against three per- sons in partnership, after an act of bankruptcy, committed by one, caimot take out execution against the property of the two remain- ing partners. " Admitting," said Lord Eldon, " that he could, what is it that he can take ? Is it more than what wiU appear to be property of the two, after an account of the estate of the three, and the joint demands upon them ? " ^ § 877. It is necessary to notice in this place the case of Brick- wood V. Miller,^ in which a joint creditor, who had attached part- nership property in the West Indies, after an act of bankruptcy committed by one of the partners, was held entitled to retain what he had attached, to the extent of satisfying his joint debts, and liable to account only for the overplus. In the course of his elab- orate judgment of this case. Sir William Grant seems to throw some doubt on the decisions in Barker v. Goodair, and Dutton v. Morrison ; but he rests his judgment on the fact, that the partner- ship in the principal case was ia the West Indies ; and he argued that it was impossible to tell a creditor, that, because he happened to reside in England, and his debt had been contracted there, he should not be allowed to take such remedies against his foreign debtor as the law of the debtor's country might permit.* ' Ex parte Ruffin, 6 Ves. 119 ; West v. Skip, 1 Vez. 240. 2 17 Ves. 211. ' 3 Mer. 279. * See Story Conf. Laws, § 422. It has been decided in Massachusetts, that an assignment by commissioners of bankruptcy in a foreign country does not operate a legal transfer of the bankrupt's property in that State, as against a creditor of the bankrupt subsequently attaching the same. Blake V. Williams, 6 Pick. 286. And the weight of American authority on this point is decidedly in favor of this position. 2 Kent Com. 406 et seq. The courts in the United States will not subject our citizens to the inconvenience of seeking their dividends abroad, when they have the means to satisfy their demands under their own control. Ibid. 1 Harr. & M'Hen. 236 ; Milne v. Moreton, 6 Binn. 353 ;; Abraham v. Elestero, 3 Wendell, 538 ; Mervick's case, 2 Ashmead, 435 ; Johnson v. Hunt, 23 Wendell, 90, 91 ; Lord v. The Brig Watchman, Ware, 232; Fall River Iron Works v. Croade, 15 Pick. 11 ; Fox V. Adams, 5 Greenl. 245 ; Saunders v. Williams, 5 N. Hamp. 213 ; Og- den V. Saunders, 12 Wheat. 213. Agnew y. Piatt, 15 Pick. 417, was an action in the State of Massachusetts, brought by a citizen of New York 796 BANKEUPTOY OF PARTNERS. [BOOK IV. § 878. Upon the whole, with the exception of particular cases, as that of Brickwood v. Miller, there seems ground to contend, on the authority of the cases before Lord Eldon, that when one partner becomes a bankrupt, and a separate fiat issues against him, the Lord Chancellor may, on strict legal grounds, annul any execu- tion which has been levied on the partnership effects, after the act of bankruptcy committed. On the other hand when execution is levied against the partnership effects, and afterwards a joint fiat issues against the whole firm, it seems clear that the extent and validity of such execution must be the same as in cases where there is no partnership ; ^ and it will be regulated by the stat. 2 & 3 Vict. c. 29, the provisions of which have been already noticed. § 879. We ought not to conclude this chapter without observ- ing, that, until a man has actually become a bankrupt, and a fiat has been taken out against him, he may sue his debtors. There- fore, before the 6 Geo. 4, c. 16, there was some peril in paying a man who was known to be insolvent, though not a bankrupt. For instance, in Prickett v. Down,^ two partners stopped payment, and a commission of bankruptcy issued against one. It was held that a debtor of the firm, who knew of the stoppage, could not refuse to pay his debt, on the ground that the other partner might have committed an act of bankruptcy, in which case Ms assignees might call upon the debtor to account for the money a second time. But now, by the 6 Geo. 4, c. 16, s. 82, all payments^ to a bankrupt are protected, provided the debtor had not, at the time of such payment, notice of an act of bankruptcy by such bankrupt committed. The protection, therefore, to the debtor ceases only after the notice of his creditor's hanJcruptcy. In this case, if the against one of two partners, on a partnership note dated and payable in New York, and it appeared that, from the time the note ivas made until the action was brought, the defendant was a citizen of Massachusetts, and his partner a citizen of New York, and that the partnership business was cai-ried on in both States and under the same firm ; the defendant had been discharged under the insolvent law of New York, of April 12, 1813, enacted before the making of the note ; and this was held not to be a bar to the action. ' But see the judgment In re Wait, 1 Jac. & Walk. 610. = 3 Camp. 131. ' This enactment is now extended to all contracts, dealings and transac- tions by and with any bankrupt. See 2 & 3 Vict. o. 29. CH. I.] CAUSES AND CONSEQUENCES. 797 bankrupt, before a fiat issued, require payment of his debt, it will be prudent for the debtor to wait till he is compelled by suit to discharge it. For payments enforced by coercion of law are valid against the assignees, in case a fiat be afterwards sued out.^ 1 Eden B. L. 266 ; Mont. Partn. 248. 67* CHAPTER II. OF THE ADMINISTRATION IN BANKRUPTCY. SECTION L OP JOINT AND SEPARATE ESTATE. § 880. In the words of Eyre C. J., — " If all the partners be- come bankrupts, all the joint and all the separate property will vest in the assignees, whether the comnussions are joint or several. If a separate commission issue against one partner, his assignees will take all his separate property, and all his interest in the joint property ; if a joint commission issues against all, the assignees will take all the joint property and all the separate property of each individual partner." ^ Now, as the rule of distribution in bankruptcy is this, " that the joint estate shall be applied to the joint debts, the separate to the separate debts, and the^ surplus of each reciprocally to the creditors remaining On the other," ^ it will ' Bolton V. Puller, 1 Bos. & Pull. 539. ' Per Lord Loughborough, Ex parte Elton, 3 Ves. 242 ; post, sec. 3 ; Story Partn. § 376; Dewey J., in Somerset Potters Works v. Minot, 10 Gushing, 601. In Massachusetts, the same rule is adopted by statute enact- ment, and very strictly adhered to. Somerset Potters Works v. Minot, 10 Gushing, 592 ; Purple v. Cook, 4 Gray, 120 ; Baker's case, 8 Gushing, 109 ; Howe V. Lawrence, 9 Gushing, 553. Real estate of one partner, attached by creditors of the partnership before the commencement of proceedings in insolvency against them, and taken on execution by the assignee in insol- vency of such partner and of the partnership after an order that the attach- ment should survive, and permission granted to the assignee to proceed with the suit in which it was made, under statute 1841, c. 124, § 5, is to be deemed part of the separate estate of such partner, and distributed among his sep- arate creditors. Purple v. Cook, 4 Gray, 120. Under the stat. 1838, c. 163, § 21, of Massachusetts, the assignees of the firm cannot prove against the separ- CH. II.] ADMINISTRATION. 799 be of the utmost importance to consider what is joint and what separate estate. Joirit estate is that in which the partners are jointly interested for the purposes of the partnership, at the time of the bankruptcy.^ Separate estate is that in which the partners are each separately interested at the time of the bankruptcy.^ It is not unusual to confine the term separate estate to that part of a partner's property which is unconnected with the partnership. But it may be applied to property used for the purposes of a part- nership, if belonging to one or more partners, to the exclusion of the rest.^ We propose to use the term separate property in this more extended sense. § 881. The partners may, by their articles, agree as to what shall be joint and what separate estate. So they may, duruig the continuance of the partnership, convert joint into separate estate, and vice versd.^ Therefore, the original agreements, or the sub- sequent acts of the partners during the partnership, provided they be bond fide, and so far as they are not controlled by the statute of bankrupts, will be regarded in the distribution of the partner- ship assets under the bankruptcy. § 882. Hence, first, whatever was made joint estate by the agreement of the partners is joint estate under the bankruptcy. Therefore, where a partnership is dissolved, and one of the part- ners is left in possession of the partnership stock, for the purpose, not of carrying on the trade, but of paying the debts and winding up the concerns of the partnership ; as the partnership continues for this particular' purpose, it follows that, if the remaining part- ner become, bankrupt, the stock so remaining in his hands is still the joint property of the partnership, and distributable ac- cordingly.^ § 883. Nor will the distribution, in this particular case, be in any manner affected by that section of the statute of bankrupts ate estate of either partner, any supposed indebtedness to the firm from such partner before the insolvency. Somerset Potters Works v. Minot, 10 Gush- ing, 592. ' Story Partn. § 372. "■ Ibid. ' See Ex Parte Hamper, 17 Ves. 404 ; Story Partn. § 372. * See ante, § 174; Story Partn. § 372. • Story Partn. §372. 800 BANKRUPTCY OP PARTNERS. [BOOK IV. which enacts that goods, 'which, by consent of the true owner, are in the order and disposition of the bankrupt, as the reputed owner thereof, at the time of his bankruptcy, shall be distributable amongst his creditors. ^ The reason is, that the remaining partner is in the situation of trustee for the continuing partner ; and it has long been settled, that property held by the bankrupt in trust is not within the act.^ " A mere dissolution," observed Lord El- don, " does no more than declare that the partnership is not to be carried on any further, except for winding up the affairs ; and he who has actual possession has it clothed with a trust for the other, to apply the property to the debts ; and that will qualify the na- tui'e of his possession, so that it cannot be said he has the sole possession of the specific effects or the debts, to bring it within the operation of the statute." ^ However, in a late case, where one of four partners died, and the surviving partners compromised and ob- tained securities for a debt due to the original firm, and became bankrupt, it was held that the securities were, by reputed owner- ship, distributable among the creditors of the three.* § 884. An ostensible partner, retiring from a firm, and wishing to avoid the consequences of conversion which may possibly arise from leaving the partnership property in the hands of the remain- ing partner, ought to assign by deed the partnership effects, either ' By Stat. 6 Geo. 4, c. 16, s. 72, it is enacted, "that if any bankiupt, at the time he becomes bankrupt, shall, by consent and permission of the trae owner thereof, have in his possession, order, or disposition any goods or chattels whereof he was reputed owner, or whereof he had taken upon him the sale, alteration, or disposition as owner, the commissioners shall have power to sell and dispose of the same for the benefit of the creditors under the commission ; provided that nothing herein contained shfiU invalidate or affect any transfer or assignment of any ship or vessel," &c. ' Winch V. Keely, 1 T. R. 619; Copeman v. Gallant, 1 P. Wms. 314; Ex parte Flyn, 1 Atk. 185. See Howard ». Jemmett, .3 Burr. 1368; Ex parte Martin, 19 Ves. 491 ; Ex parte Bacon, 3 Madd. 28; Ex parte Cope- land, 2 Mont. & A. 177. But this does not apply to an unlawful trust; as where by the rules of a company no person could hold more than two shares, and the bankrupt was trustee of two shares for a person who already had his full number ; in which case it was held that the shares in the hands of the bankrupt passed to his assignees. Ex parte Watkins, 2 Mont. & A. 348 ; s. c. (nont. Ex parte Burbidge), 1 Dea. 131. ' 11 Ves. 6. * Ex parte Taylor, Mont. 240. CH. II.] ADMINISTRATION. 801 to the remaining partner, or to some other trustee, upon trust, to pay and satisfy the outstanding debts of the partnership, and to pay over the remainder to the partners, according to their re- spective shares ; and he should, of course, take care that the dis- solution of the partnership is properly notified in the Gazette, and, for his further securiiy, it should be stated in such notice that the remaining partner undertakes to pay the debts and wind up the affairs of the partnership. § 885. A dormant partner retiring from the firm is subject to greater difficulties. As " the object of the statute is to remedy the mischief arising from a trader holding out a delusive responsi- biUty to the world, by appearing to be possessed of a stock in trade, or of other valuable articles, which are the subjects of sale and immediate transfer," ^ it seems to foUow that the trust which is exercised by the remaining partner over the partnership effects ought to be notorious to the world, in order to take the case out of the operation of the statute. Accordingly, if, upon the disso- lution of a dormant partnership, the joint property be left in the possession, order, and disposition of the ostensible partner, upon the bankruptcy of the latter, the whole, including the dormant partner's share, will pass to his assignees. Therefore, where A. and B. were partners, but the whole of the business was carried on by and in the name of A., B. never appearing to the world as a partner ; and at the dissolution of the partnership by effluxion of time, all the partnership stock and effects, by agreement be- tween them, were left in A.'s hands, who was to receive and pay all the debts due to and from the concern, and to repay by instal- ments the capital brought in by B. ; A. having continued to carry on the business as before for a year and a half, when he became bankrupt, — it was held that all the partnership property and effects so left in A.'s hands, and also, the debts due to the con- cern, passed to his assignees, being in the order and disposition of the bankrupt, as reputed owner, within the intent and meaning of the statute.^ § 886. In the case of Ex parte Enderby, just cited, although it was understood between the parties that A. was to pay the part- ' Deacon's Bankrupt Laws, Vol. I. p. 403. ' Ex parte Enderby, 2 Barn. & Ores. 389 ; 3 Dowl. & Eyl. 686. 802 BANKRUPTCY OF PAKTNEKS. [BOOK IV. nership debts, yet no express assignment was made of the partner- ship stock and effects upon special trust for ttat purpose. Sup- pose, therefore, B. to be a dormant partner with A., and that, previously to his retirement, B. bond fide assigns all his interest in the partnership stock and effects to A., upon trust, to pay all the partnership debts, and subject thereto, upon trusty to repay B. his share of the residue, — that, on the day of B.'s retirement, there is enough joint property to pay the partnership debts, and that, within a month after B.'s retirement, A. becomes a bank- rupt, — ,would the share of B., so assigned upon special trust, pass to the assignees of A. ? It seems, notwithstanding the severity of the doctrine as it affects B., that the question must be an- swered in the affirmative.^ For, in the case supposed, the danger is that the bankrupt may contract separate debts on the credit of the partnership, which, without the aid of the statute, would be left unpaid.^ § 887. This point, to be sure, was scarcely settled by the overruling^ of the case of Coldwell v. Gregory, which had been decided in favor of the dormant partner, because there the trust did not extend over the whole property assigned ; the agreement being, that the partnership should be dissolved, that a certain specified part of the joint prpperty should belong to the dormant partner, the remainder to the ostensible partner, and that the lat- ter should pay the partnership debts. But the question has been settled by other cases,* from which it may be clearly inferred, that, if a person who has a dormant partner becomes bankrupt during the continuance of the partner ship, the dormant partner's share of the partnership property is to be considered in the bank- rupt's order and disposition, as reputed owner, and consequently as passing to his assignees. It may be concluded, therefore, that the dormant partner's share in the hands of a remaining partner who becomes bankrupt, must vest in his assignees, though as- signed to the remaining partner, in trust for the creditors of the partnership. * See Ex parte Dyster, 2 Rose, 256 ; Ex parte Barrow, id. 252. ^ See the observations of Best J., 2 Barn. & Ores. 412. > D. Bayley J., 3 Dowl. & Ryl. 758. * Smith V. Watson, 2 Barn. & Ores. 401 ; 3 Dowl. & Ryl. 751 ; Ex parte Chuck, Mont. 364 ; 8 Bing. 469. CH. II.] ADMINISTRATION. 803 § 888. In cases where the general rule now under discussion is held to be qualified by the doctrine of reputed ownership, the consequences will be most material to the creditors. Thus, where A. and B., being partners, take a dormant partner, C, and upon his accession all the personal chattels and debts of the old partnership are expressly assigned to the new partnership, here, notwithstanding the express agreement that this property shall be the joint property of the three, the creditors of the old partner- ship have a right to prove against the joint property of the part- nership pari passu with the creditors of that partnership, because here the original partners retain the order and disposition of the goods, as reputed owners, and their creditors have a right of pay- ment under the express terms of the statute, independently of any rule in bankruptcy.^ . But, even in this case, it has been laid down, that the new creditors have a better right, upon principle, than the old creditors ; because the new creditors have trusted the firm on the faith of their apparent funds, including the capital of the dormant partner ; whereas the old creditors have not trusted them on the faith of those funds, but have only forborne to sue them upon the faith of their apparent stability. And, upon these con- siderations, the court in cases of this nature holds that the credi- tors of the apparent partners, though they have a right, by force of the statute, to prove against the joint estate of the actual part- nership, yet shall not exclude the creditors of the actual partner- ship from sharing in such proof. § 889. Secondly, whatever was made separate estate by agree- ment amongst the partners, and does not consist of goods and chattels in ^eii: reputed owner sJdp, is separate estate under the bankruptcy. In the case of Smith v. Smith, the leading facts of which have been already stated,^ the partners agreed that certain freehold and copyhold estates, which were from time to time purchased by one of the partners with the partnership funds, should, although the rents were carried to the partnership account, be considered as the separate property of the purchaser, the latter being deemed a debtor of the firm for the purchase-money. A joint commission of bankrupt having issued against the partners, Ex parte Chuck, 8 Bjng. 470. Ante, § 159. 804 BANKRUPTCY OP PARTNERS. [BOOK IV. the real estate was held to be separate, according to the terms of the agreement; and therefore, although distributable among the separate creditors of that partner to whom it belonged, yet clearly chargeable with his wife's dower. ,So, hi a case^ where A., hav- ing carried on the busuiess of a soap-maker, took B. into partner- ship, and upon this it was agreed between them that a leasehold manufactory, in which the business was carried on, should remain the separate property of A. ; upon the bankruptcy of the firm, there was no question that, if the effects had not been destroyed before the bankruptcy, the proceeds of the manufactory would have been distributable as the separate property of A. § 890. To what extent and under what circumstances goods and chattels may be deemed in the order and disposition of the partners, or some of them, without being in the reputed owner- ship of the firm, is a question of some nicety .^ In Ex parte Hare,^ certain household furniture, which belonged to one of the partners, was used in the house where they conducted their busi- ness, and treated as partnership property ; and the court of re- view held that it was distributable as joint estate, and not as the separate estate of the partner to whom it belonged ; but, from the contradictory reports of this case it is impossible to tell whether the court considered it to be in the reputed ownership of the firm. It may be collected, however, from both reports, that the court did not consider it necessary to resort to the doctrine of reputed ownership, in order to decide that case. § 891. Thirdly, whatever was made separate estate by agree- ment amongst the partners, but is comprehended under the term ^ Ex parte Smith, 3 Madd. 63 ; Buck, 149. ^ "It is," says Mr. Gow (Partn. 3d ed. 272), "the principle of discoun- tenancing fictitious credit, and its concomitant frauds, which the statute " respecting reputed ownership in cases of bankruptcy " enforces ; indeed, there can be no other just ground on which one man's debts are to be paid with the property of another. In furtherance of this principle, it has uni- formly been held that such a possession as is calculated to give a delusive credit is a reputed possession within the meaning of the statute. When, therefore, the fact of reputed ownership is settled, the application of the statute is easy ; for from the reputed ownership false credit arises ; from that false credit arises the mischief, and to that mischief the remedy of the statute applies." See Story Partn. § 400. » 2 Mont. & A. 478 ; 1 Dea. 16. CH. II.] ADMINISTRATION. 805 " gbods or chattels in the possession, order, and disposition of the copartnesrship, or whereof they were reputed owners at the time they became bankrupt," ^ is joint estate under the bankruptcy. Thus, in the case of Ex parte Smith, which we have just cited, it was agreed that the utensils, as well as the manufactory, should remain the separate property of A. ; but, although the opinion of the court was otherwise as to the manufactory, yet as to the uten- sUs there seemed to be no doubt that, if they had not been de- stroyed before the bankruptcy, they would have been distributable as joint property, by virtue of the statute. Again, A., B. and C. were partners ; C. was interested in the profits, but had no share in the capital, which belonged exclusively to A. and B. A joint commission having issued against A., B. and C, the property of A. and B. was distributed under the commission, as the joint prop- erty of A., B. & C.^ Again, A. and his son B. being partners, A., in consideration as expressed by the assignment, of natural love and affection to B., assigned to him certain ships used in the trade, which were thereupon registered in the sole name of B. The capital of the business having been advanced by A. solely, it was contended for his separate creditors, that the proceeds of the vessels included in the assignment ought to be declared part of his separate estate, he having assigned them without sufficient con- sideration. But the commissioners certifying, that the ships were in the order and disposition of the bankrupts at the date and suing forth of the commission. Lord Eldon made an order confirming the certificate, and declaring the ships in question to be part of the joint estate of A. and B.^ ' See ante, § 883, in note. ° Ex parte Hunter, 2 Rose, 382; Ex parte Jackson, 1 Ves. 131. 'Ex parte Burn, 1 Jac. & Walk. 378; Ex parte Jones, 4 Mau. & Sel. 450, overruling Ex parte Yellop, 15 Ves. 60, and Ex parte Houghton, 17 Ves. 252. See also, Kobinson v. M'Donnell, 5 Mau. & Sel. 228; Hay v. Eairliairn, 2 Barn. & Aid. 193; Monkhouse v. Hay, 2 Brod. & Bing. 114; Kirkley v. Hodgson; 1 Barn. & Ores. 680. In which case it was held, that where the ship was mortgaged, but remained in the order and disposition of the mortgagor, upon his bankruptcy it passed to his assignees, whether the ship was registered in the name of the mortgagor or the mortgagee. But now, by the 6 Geo. 4, c. 110, s. 46, mortgagees are protected under such cir- cumstances, provided the transfer shall have been duly registered accord- ing to the provisions of that act 68 806 BANKRUPTCY OF PARTNERS. [BOOK IV. § 892. We may here mention, as referable to the rule above stated, the case of Horn v. Baker,^ in which, upon the dissolution of a partnership between A., B. and C, and the creation of a new partnership between C. and J., it was agreed that certain leasehold premises, vats and stills, and utensils of trade, in which A. had the sole iaterest, should be enjoyed by C. and J. for the purposes of their partnership, under covenants for payment of an annuity to A. for his life, for keeping the vats, stills, and utensils in proper repair, and for delivering them up at the expiration of the leases, if not purchased, with a proviso for reentry by A. in case of non- payment of the annuity. C. and J. became bankrupt, and it was held that such of the vats, stiUs, &c., as were affixed to the free- hold, remained A.'s separate property, but such as were not so affixed were in the order and disposition of C. and J., as reputed owners thereof. § 893. But, in order to make the separate chattels of one part- ner distributable as joint property, they must have been in the possession, order, or disposition of the partnership at the time of the hanhrwptcy. Therefore, where it was agreed between A. and B., partners, that the utensils of the trade should remain the sep- _' 9 East, 215. Where a person erects fixtures on tLe land ■which he occupies for the purposes of his trade, and mortgages his interest in the land, together with the fixtures, and then becomes bankrupt, such of the fixtures as are annexed to the freehold will pass to the mortgagee, and such as are not so annexed ■will pass to the assignees of the bankrupt, as reputed owner, unless there be any evidence of a custom to hire chattels of this last description, in ■which case the presumption of reputed ownership will be rebutted. Horn v. Baker, supra; Ex parte Wilson, 2 Mont. & A. 71. This rule will not be altered by the fact of the mortgage being made by several persons in partnership, one of whom has the legal interest in the freehold ; for in such case the legal owner mortgages both on his own ac- count and as agent of the firm. Ex parte Lloyd, 1 Mont. & A. 513. The difficulty in these cases seems to consist in determining what is an annexation to the freehold. Compare the observation of Erskine C. J., 1 Mont. & A. 514, with those of Lord Lyndhurst in Trappes ti. Harter, 2 C. & M. 180, 181. Where the fixture cannot be removed without injury to the buildiho' to which it is attached, it is clearly to be considered as annexed to the freehold. On the other land, even if it be not so incorporated with the building as to make it irremovable by the tenant, on the ground of destructive waste, it may be considered of such a permanent nature as to be free from the oper- ation of the rule as to reputed ownership. CH. II.] ADMINISTEATION. 807 arate property of A., and they were afterwards, but before tte bankruptcy of the partners, destroyed by fire, it was held that the raoney coming to the assignees for the insurance of the utensils was distributable among the separate creditors of A.^ So, where A., one of the part-owners of a ship, insured his share of the ship and cargo, and the ship was lost, and A. afterwards became bankrupt, it was held that the money coming to the assignees for the insurance was the separate property of A.^ § 894. Fourthly, whatever has \ie&D. converted into separate estate, and is no longer in the order and disposition of the patt- nership, is separate estate under the bankruptcy. Therefore, if, upon the dissolution of a partnership, the retiring partner bond fide assigns all his interest in the stock and effects to the remain- ing partner, who afterwards becomes bankrupt, so much of the partnership stock so assigned as remains in specie wUl vest in the assignees of the bankrupt as his separate property, and will be distributable accordingly.^ The reason of this is, that, while the partnership is solvent and going on, the creditors of the firm have no equity, strictly speaking, against the effects of the partuership. Neither have they any lien on the partnership effects for their debts.* The leading case on this subject is Ex parte Rufiin.^ ' Ex parte Smith, 3 Madd. 63. 2 Ex parte Parry, 5 Ves. 575 ; Ex parte Browne, 6 Veg. 136. ^ Rankin v. Jones, 2 Jones Eq. (N. C), 169 ; Sage v. Chollar, 21 Bar- bour (N. Y.), 596 ; Bullitt v. Meth. Epis. Church, 26 Penn. State, 108 ; Howe V. Lawrence, 9 Gushing, 553. * Story Partn. §§ 358, 360 ; 3 Kent Com. 65 ; Ex parte Euffin, 6 Ves. (Sumner's ed.), 119, note (a) and cases cited; Parish v. Lewis, Freeman Ch. (Miss.), 299 ; Clement v. Foster, 3 Iredell Eq. 213 ; Bigelow J. in Howe V. Lawrence, 9 Gushing, 558 ; Baker's Appeal, 21 Penn. State, 76 ; ante, §125, note. But it has been held in New Hampshire that if partners sell their stock in trade, in order that the proceeds may be applied by the purchaser to pay file separate debt of one partner, instead of going to pay the partnership debts, the sale is void as to creditors of the firm. Person v. Monroe, 1 Fos- ter (N. H.), 462. This decision is not, however, put upon the ground that the partnership creditors have any lien upon the partnership effects, but it is put upon the general rule, that the funds of the partnership must be first ' e.Ves. 119 ; and see Ex parte Freeman, Buck, 471 ; Ex parte Fry, 1 Glyn & Jam. 96. > 803 BANKRUPTCY OF PARTNERS, [bOOK IV. There, Thomas Cooper and James Cooper were partners. By articles, dated the 3d November, 1798, the partnership was dis- solved, and the buildings, premises, stock ia trade, deeds, and effects were assigned to James Cooper by Thomas Cooper, who retired from the trade. The parties likewise covenanted to abide by a valuation to be made of the partnership property ; and James Cooper covenanted to pay the partnership debts then due, and to indemnify Thomas Cooper against them. A bond for £3,000, the calculated value of the partoership property assigned, was given to Thomas Cooper by James Cooper and his father, as surety. In pursuance of the covenant, the partnership property, consisting of leases, the premises where the trade had been car- ried on, stock, implements, outstanding debts, and other effects, were valued by arbitrators at £2,030, after charging all the pairt- nership debts then due. All the joint creditors knew of the dis- solution and the assignment of the property ; advertisements were published ; and James Cooper, after the dissolution, received many debts due to the partnership, but paid more on account of the partnership. He paid the interest of the bond regularly, and intended to pay the principal, when due. A commission of bank- rupt afterwards issued against him. Upon a petition by the joint creditors, stating these facts, and praying that the partnership effects remaining in specie might be sold, and that the outstanding debts might be accounted joint estate. Lord Eldon dismissed the petition. After having adverted to the general principle of cred- itors having no primary lien on the partnership effects, but only either a demand at law, created by legal process, or a demand in equity or in bankruptcy, arising from the equity of the part- ners amongst themselves, he said: "A lond fide transmutation of partnership property is understood to be the act of men act- ing fairly, winding up the concern, and binds the creditors ; and, therefore, the court always lets the arrangements be as they stood, applied to discharge the partnership debts ; from which it is argued that a sale made to defeat the operation of this rule is a fraud upon the partner- ship creditors, as much if the sale is made to pay the individual debt of a partner, as if it were made to secure the property to the benefit of the debtor himself The rule acted upon in Ferson v. Monroe, supra, seems to have been sanctioned by Mr- Justice Bigelow in Howe v. Lawrence, 9 Gushing, 558. CH. II.] ADMINISTRATION. not at the time of the commission, but of the act of bankruptcy.^ Thomas Cooper is admitted to be solvent. He certainly has no such equity, as if the partnership had been dissolved by bank- ruptcy, death, effluxion of time, or any other circumstance not his own act. But he dissolves the partnership a year and a half ago ; and, instead of calling upon these effects, according to his equity at the dissolution, to pay the partnership debts, he assigns his interest to the other, to deal as he thinks fit with the property, to act with the world respecting it, desiring only a bond to pay a given value in three or four years. Therefore, he or his execu- tors could not sue. If it was necessary for the creditors to oper- ate their reUef through his equity, he has no equity. The assign- ment was not made subject to the payment of the debts, but in consideration of a covenant, leaving no duty upon the property, but attaching a personal obligation upon the assignee to pay the debts ; the creditors, therefore, cannot rest upon the equity of the partner going out." The case of Ex parte Fell ^ was similar to the foregoing. There, A. and two others being partners, A. retired, and due notice was given of the dissolution of the part- nership. Upon his retirement, A., by deed, assigned his share of the stock, &c., to the remaining partners, ia consideration of a' certain sum ; and the remaining partners covenanted to indem- nify him against the partnership debts. The remaining partners became bankrupt. A., having been arrested by creditors of the old partnership, petitioned that the specific stock and debts of the old partnership might be applied in satisfaction of the cred- itors of that partnership, in preference to the creditors of the new firm. But Lord Eldon dismissed the petition, being of opin- ion that this case fell precisely within the same rule as Ex parte Kuffin. § 895. In order to convert joint into separate property, It is not necessary, in the case of goods in specie, that there should be a deed of assignment to the remaining partner. It appears fhat deUvery of the goods, coupled with due notice that the partnership is dissolved, and that the remaining partner wiU pay the debts of the firm, is sufficient evidence of an agreement to change the , .' Howe t». Lawrence, 9 Gushing, 553 ; Allen v. Centre Valley Co. 21 Conn. 130, 137 ; Ferson v. Monroe, 1 Foster (N. H.), 462, 469. 2 10 Ves. 347. 68* 810 BANKRUPTCY OF PARTNERS. [BOOK IV. ownership.^ la Ex parte WilliamSj^ Shepherd and Smith, who were in partnership as Hnen-drapers, dissolved their partnership on the 5th of September, 1803 ; inserting a notice in the London Gazette on the 25th of November, in that year, stating that the partnership was dissolved by mutual consent on the 5th of Septem- ber last, and that all debts due from the partnership were to be paid and would be discharged by Shepherd. On the 24th of December following, a commission of bankrupt issued against Shepherd, when it was ascertained, upon inquiry, that effects to a considerable amount, belonging to the partners at the dissolution of the partnership, were remaining in specie, and that several out- standing debts to the partnership were still remaining due. The commissioners having refused to include any part of such specific effects, as forming part of the joint estate, a petition was presented to the Lord Chancellor, praying an account, and that such effects might be declared to form part of the joint estate. But Lord El- don dismissed the petition. " The creditors," he said, " are not injured by the agreement of the partners to dissolve the partner- ship, and that from that time what was joint property shall become the separate property of one, notice of the dissolution being given; as either a consideration is paid, or, which for this purpose is equal to consideration, a covenant is entered into to pay the debts and in- demnify the retiring partner, so conceived as not to leave any lien upon the property. The question, then, here is, whether the contract for dissolution has left the equities of the partners attaching upon the possession. .If it is competent to partners to say those equities shall no longer exist, inquiry is necessary to ascertain whether, by the bargain for the dissolution, that which was the property of all has become the property of one. In Ex parte Ruffin there could be no doubt upon that ; a legal instrument being produced, the legal effect of which was such as I have stated. That case was no more than that a bankruptcy happening a considerable time after the execution of the deed, the effects came to be considered' the separate effects of the trader in whose hands they were left ; and the other was only to come in as a creditor. Upon the facts of this case, there is distinct evidence to an agreement that the joint effects should be considered separate effects ; and that fact calls See Story Partn. § 401. » u Ves. 3. CH. n.] ADMINISTRATION. 811 upon me to declare the conclusion of law, that these are separate effects." § 896. But, in order to make the conversion of joint into sep- arate property complete, every requisite of transmission must be attended to, according to the nature of the property assigned. Therefore, debts due to a partnership, whether by bond or simple contract, will not be converted into separate property of some or one of the partners, unless due notice be given to the debtor of the conversion ; for, until notice be given to the debtor, the debt re- mains in the order and disposition of the creditor, and is still pay- able to him, whether or not he has parted with his security.^ The case of Ex parte Monro ,^ may be mentioned in connection with this subject, although there the assignment was made of a debt due to a sole creditor only. A., the obligee of a bond, being indebted to B., as a security for his debt, assigned to him, by writing, the bond debt, and also delivered the bond into his possession ; but notice of the assignment of the bond debt was not given to the obligor. A. having become bankrupt, his assignees, under an ar- rangement with B., sued the obligor on the bond, and recovered the amount due. B. then petitioned to have the money so recov- ered paid in liquidation of his debt, as far as it would extend, and to be allowed to prove the residue under the commission. But Sir John Leach dismissed the petition, being of opinion that the debtor, having had no notice of the transaction, the bond debt, even after the delivery of the bond, was left in the ordering and disposition of the bankrupt. Did the dehvery of the bond by the bankrupt take away the power to receive the debt ? and if the obligor had, bond fide paid the debt to the bankrupt, could the petitioner have called upon him to repay it? Certainly not; and if an action had been brought on the bond against the obligor, he might have discharged it by way of set-off, in respect of any dealings with the bankrupt, without notice of the assignment.^ In the preceding ' See the judgment of Lord Chief Baron Parker, Ryall v. Rowles, 1 Vez. 367 ; also Jones v. Gibbons, 9 Ves. 410 ; and the opinion of the commission- ers in Ex parte Williams, H Ves. 3. See also, Ex parte Gibson, 2 Mont. & A. 10, 2 Sim. 257 ; tx parte Leaf, 1 Dea. 176 ; Story Partn. § 403. ' Buck, 300. ' But, of course, where a creditor has assigned a debt due to him to a third person, and notice of the assignment has been given to the debtor, pay- 812 BANKRUPTCY OF PARTNERS. [BOOK IV. case, B., the assignee of the debt, was a stranger ; but, had he been a partner with A., the decision must have rested on the same principles. § 897. In two subsequent cases,^ where it appeared that, upon the retirement of some of the members of a firm, they assigned the debts due to a partnership, consisting of simple contract debts, to the remaining partner, who covenanted to discharge all the debts owing by the partnership ; and, accorduigly, notice was given in the London Gazette of the dissolution of the partnership, and that debts due to the partnership would be received by the remaining partner, — it was held that such notice in the Ga- zette was not sufficient notice to the debtors of the assignment of their debts ; that the assignment was therefore incomplete ; and that, consequently, upon the subsequent issuing of a joint commis- sion against the members of the original firm, the debts so defec- tively assigned were still to be considered the property of the original partnership, and distributable accordingly. § 898. And, generally, in the assignment of the partnership effects, of whatever description, every term of the contract must be satisfied before the conversion can be deemed complete.^ Therefore, where a retiring partner by agreement in writing, as- signed all the stock, debts, &c., to the remaining partner who agreed to pay a debt owing by the retiring partner, and also to pay him an annuity, for the due payment of which the agreement recited that the father of the retiring partner, who was not a ment must be made to the assignee ; for quod jussu alterius solvitur pro eo est quasi ipsi solutum esset. Pothier, treating of this subject, says : " Celui h qui le creancier a cede sa crdance, h quelque titre que ce soit, soit de vente, soit de donation, soit de legs, en devient le creancier par la signification qu'il fait au d^biteur de son titre de cession ; ou par I'acceptation voluntaire que le debiteur fait du transport; et par consequent le paiement qui lui est fait est valable. Au contraire, I'ancien creancier eesse de I'etre par cette sig- nification que le cessionaire fait au debiteur, ou par I'acceptation du trans- port; et le paiement qui seroit fait depuis k I'ancien creancier ne seroit pas valable." Pothier, Tr. des Oblig., pt. 3, Ch. 2, art. 2, s. 1. And see more on this subject, in Cod. lib. 48, tit. 3, see. 4 ; also. Dig. lib. 46, tit. 3, ss. 12, 34, 51, 96, &c.; Code Civil, par Kogron, art. 1249 el seq.; Du Paiement avec Subrogation. ' Ex parte Burton, 1 Glyn & Jam. 20?; Ex parte Ushborne, id. 358. ' See Story Partn. § 402. CH. II.] ADMINISTRATION. 813 party thereto, would be security, — it was held, that, this being but an executory agreement and the father refusing to become security, the partnership ■ stock, &c., was not thereby transferred to the remaining partner.^ So, where, after a dissolution ^and assignment of the partnership effects to one of the partners, a bill was filed by the retiring party against the other, alleging fraud in the non-performance of the articles of dissolution, and praying an injunction and receiver, which were ordered, it was held, upon a subsequent bankruptcy, that such interference of the court, arising from the non-performance of the articles, restored the property t6 its original character as joint property; unless the plaintiff in equity had, by his conduct between the time of his obtaining the injunction and the bankruptcy, rendered nugatory the effect of such interference. And upon that an inquiry was directed.^ So where, upon the dissolution of the partnership of A. and B., father and son, the agreement was, that all matters respecting the final adjustment of the partnership should be settled by arbitration, and, until B. should be otherwise adequately provided for, his father, who continued the business, should allow him a third part of the profits, Lord Eldon said that the property which had be- longed to them, and the transfer and assignment of it by the one to the other, were matters still dependent upon arbitration, and as such rendering it difficult for the father to say that the property was his ; though, in case of the bankruptcy of the latter, it might be distributable as his, on the ground of its being stock left in his order and disposition by his son, a dormant partner.^ § 899. In the case just cited. A., the father, after the dissolu- tion of the partnership with the son, entered into partnership with another person, C, carrying into that new partnership the remain- ing stock of the old concern, and blending it with the stock of A. and C. ; they, in the course of their dealings and transactions, in- troducing new stock, and intermixing it with the old as the visible property of A. and C. A. and B. afterwards having become 1 Ex parte Wheeler, Buck, 25. But see Young v. Keighly, 15 Ves. 558, where the agreement to convert separate into joint property was only in part performed, yet the court treated the conversion as complete. The point, though noticed by the master, was not made the subject of argument. ^ Ex parte Kowlandson, 1 Rose, 416. ' Ex parte Barrow, 2 Rose, 252. See ante, §§ 885, 886. 814 BANKRUPTCY OF PARTNERS. [bOOK IV. bankrupts, and the assignees under their commission having pos- sessed themselves of all the joint effects of A. and C, to an amount more than suflBcient to satisfy the joint creditors of that firm, and C. having relinquished his claim to the surplus. Lord Eldon held that the surplus was the separate property of A., and not the joint property of A. and B. § 900. In Ex parte Gibson,' it was made a question, whether an agreement, on the dissolution of a partnership, to assign the partnership property in consideration of £50 paid, and five bills for £100 each, was executed or executory, the bills not amount- ing to payment, but merely to security ; but the court of review held, that though the giving the bills was security and not pay- ment, yet the agreement was not therefore executory, because it was clear that the parties considered the payment of the X50 and the delivery of the biUs as being all that was required to be done to fulfil the agreement and complete the transfer. The court therefore declared that the stock in trade of the original partners became that of the remaining partners on the day of the dissolu- tion. In this last-mentioned case, one of the judges. Sir George Eose, expressed a doubt whether, if the property had been real instead of movable, the bills would not have given the retiring partner a lien on the real estate. Upon the principles upon which this particular case was decided, it is difficult to see how the nature of the property could have made any difference. Unquestionably, however, in similar cases in which real estate has been involved, the vendor has been held entitled to such a lien.^ § 901. In some cases the conversion, though absolute, may be liable to be defeated on the happening of a certain event. If the event happen before the bankruptcy of the party to whom the partnership property is assigned, all the parties interested in it wiU be remitted to their original rights ; the bankrupt being trustee of the interest which thus arises. If, on the other hand, the event happen after the bankruptcy, the bankrupt being at his bankruptcy the true owner of the property, his assignees will take it subject to his liabilities. It follows, that in both cases the equitable rights of the parties entitled under the conversion will prevail against 2 Mont. & A. 4 ; Ex parte Clarkson, 4 D. & C. 56. Ex parte Feake,post, § 902 ; Grant v. Mills, 2 Ves. & Bea. 306. OH. II.] ADMINISTRATION. 815 what otherwise might be the bankrupt's right by reputed, owner- ship ; for, on the one hand, we have already seen that a trust is not affected by the 72d section of the statute, and, on the other hand, to give effect to that section, the bankrupt must be the ap- parent, but not the true, owner of the property of which he has the disposition. These observations seem to be warranted by the case of Ex parte Pemberton.^ There Pemberton and others, as executors of Samuel Pemberton, were in partnership with George and Thomas Stokes.- Upon their retirement from the partnership, of which notice was given in the Gazette, the executors executed a deed of even date with the notice, whereby in consideration of i649,600, they assigned to George Stokes and Thomas Stokes all their share in the partnership stock and debts, and gave a power of attorney to recover the debts. George Stokes and Thomas Stokes covenanted to pay the .£49,600 by instalments of £3,000, " at the times therein mentioned, and it was provided, that if any instalment were unpaid for thirty days, the executors might enter and distrain on the partnership premises ; and that if any instal- ments were unpaid during sixty days, then that the executors might reenter on the whole late partnership estates and property, and on such reentry the deed was to become void. And George Stokes and Thomas Stokes covenanted that, on such reentry, they would, on demand, re-assign the whole partnership premises to the executors, on trust to sell the same, and pay the £49,600, or so much as might be then due. Due notice of this assignment was given to the debtors of the partnership. Thomas Stokes after- wards retired, and George Stokes became bankrupt. Default being made in payment of the instalments, the question was, whether a debt due to the firm of Pemberton & Stokes belonged to Pemberton or the assignees of George Stokes. At the first hearing of the petition, it was assumed that the default occurred after the bankruptcy, but it turned out otherwise, and accordingly the court of review granted a second hearing. The court, how- * ever, was of opinion, that in either case the result was the same ; for that, on the former supposition, George Stokes was the real owner, subject to a condition in the deed, under which he might be called on to reassign, and that on non-performance of the condi- . • 2 Mont. & A. 548 ; 1 Dea. 44. 816 BANKRUPTCY OF PARTNERS. [bOOK IV. tion his assignees became subject to his habilities, the rule as to reputed o-vraership not applying to a case where the bankrupt is real owner;' and that, on the latter ' supposition, George and Thomas Stokes became the owners, in trust for the executors ; in which case, also, in the event of their bankruptcy, the doctrme of reputed ownership would not apply .^ § 902. The effect of conversion of joint into separate estate wiU not be altered by the circumstance, that, at the time it took place, the partners knew that the firm was insolvent ; for, as we have already seen,^ a conversion under such circumstances is not neces- sarily a fraud upon creditors.^ A. and B. being partners, B., who was aware of or suspected the insolvency of the firm, was permitted to retire. Upon his retirement, he conveyed all his interest in the real estate of the partnership to A., who gave his ■ drafts for the amount of the purchase-money. The drafts were afterwards^ dishonored, and A. ultimately became bankrupt. It was held, that, under the conveyance, the joint property of A. and B. became the separate property of A., and consequently that B. had a lien upon it for the amount of the purchase-money due to him.* § 903. In all cases the validity of the contract between the partners for the conversion of the property must depend on the ■bona fides of the transaction. Thus, though in Ex parte Ruffin the remaining partner was for a year and a half treated by the world as a sole trader, which certainly made the case more strong in favor of the assignees, yet in a subsequent case, in which a similar question arose, a similar judgment was given, although the , dissolution took place only a week before the bankruptcy, the con- version having been made bond fide.^ ^ 904. From what has preceded, it appears that the creditor of ' The case of Horn v. Baker, ante, § 892, was cited' in argument in the principal case in support of the reputed ownership ; but there, it will be perceived, the assignment was not absolute. " Ante, § 573. ' Howe V. Lawrence, 9 Gushing, 557, 558, ^cr Bigelow J. * Ex parte Peake, 1 Madd. 346. * Semhle, Ex parte Snow, 1 Co. B. L. 511. Compare D. Lord Eldon, Ex parte Williams, 11 Ves. 3 ; D. arg. Jlomilly, &c. Ex parte Fell, 10 Ves. 347; Howe V. Lawr-ence, 9 Cushing, 553, 558 ; Allen v. Center Valley Co., 21 Conn. 130, 137; Ferson v. Monroe, 1 Foster (N. H.), 462. CH. II.] ADMINISTRATION. 817 a partnersMp has no control over the partnership property, so as to prevent the conversion of joint into separate estate, or vice versd?- But when a partnership is dissolved, and the partnership effects are assigned absolutely to the remaining partner, who cov- enants to pay the partnership debts, the partnership creditor may accept the remaining partner as his separate debtor ; ^ and in that case, upon the subsequent bankruptcy of the remaining partner, such creditor will enjoy all the rights of a separate creditor of the remaining partner. § 905. But, of course, the joint creditor's acceptance of the remaining partner as his separate debtor comes too late after the bankruptcy of the latter. In such case, the joint creditor must abide by the contract of conversion made by his debtors. "I agree," said Sir John Leach, " that it may be some hardship upon joint creditors, that the joint stock, to which they may have spe- cially given credit, should, by the deaUng of their debtors with each other, be thus converted into separate estate. That hardship would have been avoided, if it could have been held that where, upon a dissolution, one of two partners is to become the sole owner of the joiat stock, and it is a part of the consideration that he shall pay the joint debts, such joint stock shall not in bankruptcy be considered as actually converted into his separate estate, unless he has paid the joint debts. But the case of Ex parte Kuffin, and the other cases of that class which followed it, have estab- lished that the legal principle which converts the joint estate into the separate estate by the mere force of the contract, is too strong for this equity." ^ SECTION II. or JOINT AND SEPAKATE DEBTS. § 906. Separate debts are those for which the creditor can have his remedy at law, not against the whole firm, but against that ' See Story Partn. § 358. ^ See the observations of Lord Denman, ante, § 561. " Ex parte Freeman, Buck, 471. 69 818 BANKRUPTCY OF PAKTNBRS. [BOOK IV. partner only who contracted them ; joint debts are those for which an action, if brought, must be brought against all the partners constituting the firm.^ In all cases, therefore, when a partner becomes hable for a debt contracted by his copartner, a joint debt is created, and the creditor is a joint creditor of the firm. § 907. As the various liabilities of partners have been already considered, it would be needless to recapitulate them here, or to show in what manner they give rise to what in bankruptcy are termed joint debts. Nevertheless, there are one or two important points connected with the subject of joint and separate debts, but unconnected with the general question of liability, which deserve our consideration in this place. Thus, upon the bankruptcy either of a firm or of an individual partner, one question may arise, whether certain debts, which were originally separate, have been converted into joint debts, or vice versd ; and, again, another question may arise, whether those debts have been converted, with or without extinguishment of the original duty or obligation. The importance of the latter as well as the former question is obvious. For where a debt is converted with extinguishment, it is on the hypothesis that the creditor has received a consideration for the change ; here, therefore, he can only rely on his debt ac- cording to its new quality, and consequently is entitled to only one mode of proof. But where a debt is converted without ex- tinguishment, the creditor can take advantage of it, according either to its old or its new quality ; he may consider it either as a joint or separate debt, and consequently will be entitled to an elec- tion of proof? § 908. It is evident, from these considerations, that the conver- sion of a debt without extinguishment is upon the whole beneficial to the creditor.^ Where, therefore, a debt has been converted, and the creditor seeks the benefit of his old security, he must prove that such security has not been extinguished. On the other hand, where the creditor conceives his debt to have been con- verted, and seeks the benefit of his new security, he must prove a sufficient conversion. Here, therefore, are two points for our • Arch. B. L., Book 1, chap. 2 ; and see the judgment of Lord Eldon, in Ex parte Williams, Buck, 13. ' Post, sec. 5. « Story Partn. § 369. CH. II.] ADMINISTRATION. 819 consideration : 1. What amounts to an extinguishment of the original obligation. 2. What is a sufficient conversion. § 909. With regard to the first point, if the separate creditor of a partnership take a partnership bill in full discharge of his claim, the separate debt is thus converted into a joint debt, and the original remedy extinguished. But if the evidence goes to • sho-w that the bill is given, not in discharge of, but by way of col- lateral security for the original debt, in such case the original rem- edy is not lost.^ § 910. In Ex parte Seddon,^ the petitioners had sold goods to one of the bankrupts, which were paid for by a joint note, and a receipt was given by the petitioners as for money paid, not express- ing the payment to be made in the manner it really was. The question was, whether the petitioners had not accepted the security of the joint note in full satisfaction of the debt, so as to preclude their coming on the separate estate. Lord Thurlow: "To be sure, on the face of the note it is a joint debt ; but the question is, whether the creditor may not maintain his debt for the goods sold and delivered ; that is, does the note extinguish the debt ? If it had been a bond given instead of the note, it would clearly have done so ; ^ but the note was no payment ; * and then, as to the re- ceipt, if it had remained unexplained, it would have been evidence of the debt being paid ; but, when it appears how the receipt hap- pened to be given, it is not conclusive.^ I think this may be proved as a separate debt." 1 See D. Rose J., 3 Mont. & A. 643 ; Story Partn. § 370. In some of the United States, it is held that the giving of a negotiable promissory note is prima facie evidence of payment of a -simple contract debt for which it is given ; in others, it is held that such note is not to be regarded as payment un- less expressly so agreed. See Chitty Cont. (6th Am. ed.), 767, note (1), and cases cited ; Eeed v. Upton, 10 Pick. 525 ; Watkins v. Hill, 8 Pick. 522 ; Des- cadillas v. Harris, 8 Greenl. 298 ; Peter v. Beverly, 10 Peters, 567 ; Bill v. Porter, 9 Conn. 23; Elliott v. Sleeper, 2 N.-Hamp. 525 ; Wallace v. Agry, 4 Mason, 142; Geizer v. Kersher, 4 Gill & John. 305 ; James v. Hackly, 16 John. 277; post, § 1227 and notes. " 2 Cox, 49. ' See ante, § 481, in note. * See ante, § 909, note. ' Upon this subject, see Scaife v. Jackson, 5 Dowl. & Ryl. 37 ; 3 Barn. & Cres. 421; ante, § 689; Bottomley v. Nuttall, 5 Com. B. (n. S.), 122; Whitwell V. Perrin, 4 Com. B. (n. 8.), 412 ; 1 Lindley Partn. 367. 820 BANKRUPTCY OE PAETNEKS. [BOOK IV. § 911. Again, in Ex parte Lobb,^ where separate creditors had taken a joint security, it was held that the original deht was not thereby extinguished. The peculiar circumstances of this case rendered the question of extinguishment or no extinguishment somewhat doubtful ; and Lord Eldon accordingly made the order • with some hesitation. The case was this : A. and B. were part- ners. The petitioners sold goods to them separately. The goods were delivered to each separately ; debited in the books so ; and the transactions were entirely separate. There were some joint debts, but to a small amount, due to the petitioners. A. came to the petitioners for the purpose of settling his accounts and paying his debts ; and at the same time he expressed a desire to settle and pay the bill due from B., and every other matter of account between the petitioners and them. The petitioners, at his request, as the easiest mode, made out one general balance-sheet of the debts due jointly as well as separately ; upon which a considerable balance was due to the petitioners. A. undertook to settle with his partner ; and the petitioners with each other ; and by the de- sire of A. a bill at two months was drawn upon him and B. for the balance. Before the bill was due, A. and B. became bankrupt. The petitioners appUed to prove their original debts against the separate estates. Lord Eldon said, clearly, that they must give up the bill ; and that being admitted, his Lordship made the order ; observing, that the point, whether by taking the joint security they were not concluded, might bear argument ; but he thought they might resort to their original debts. The case of Ex parte Mein- hertzhagen^ may be referred to the same principle. There A. deposited Virginian bonds with his agent B., who pledged them for a debt of his own. Afterwards B., at the request of A., agreed to give him credit on the security of the bonds to the amount of £10,000, for which sum A. drew bills of exchange on B. On the day the bills were drawn, B. took C. into partnership, and the bills were accepted by B. & 0. A. had subsequent dealings with B. & C. Upon the bankruptcy of B. & C, it was held, notwith- standing the joint acceptance and the subsequent dealings, that A. might prove the amount of the bonds against the separate estate ofB. 7 Ves. 592. 2 3 j)g^_ ^q^^ CH. II,J ADMINISTRATION. 821 § 912. Again, in Ex parte Roxby,' a joint creditor of a firm having taken the separate draft of one of the solvent partners, petitioned to prove against the joint estate. But Lord Erskine refused the proof, until it should he ascertained that the original debt had not been extinguished. His Lordship said that the ques- tion was, whether the bill was given as a collateral security, or in discharge of the debt ; as to which fact an affidavit must be made. Again, in Ex parte Hodgkuison,^ the question was, whether, there being an acknowledged joint debt at one time, it was gone by the joint creditors taking a separate security, namely a bill drawn by * one of the bankrupts, but which had never been paid. Lord El- don was of opinion that the bUl had been taken as a mode of sat- isfying the debt, but not in discharge of it, and that, the bill not having been paid when due, the so taking it went for nothing ; consequently, that the creditors were still entitled to prove against the joint estate. Again, in Ex parte Hay,^ the joint and several bond creditor of a firm was deemed not to have deserted his sev- eral security, by subsequently taking a bill indorsed to him by the firm in part satisfaction of his debt. § 913. To proceed to the other point which we proposed to consider, namely, what amounts to a sufficient conversion. The best evidence of conversion is an instrument in writing in the hands of the creditor, giAring him a separate security for his joiat debt, or a joint security for his separate debt. But if the instru- ment impose terms upon the creditor, he must show that he has complied with those terms, if he seeks the benefit of the conver- sion given him by the instrument.* In Ex parte Fairlie,^ three persons in partnership covenanted jointly and severally with Fair- lie & Co., their bankers and joint creditors, that they, the debt- ors, or some or one of them, should and would on demand well and truly pay to the creditors, or the survivors or survivor, &c., every sum and sums of money, loss, costs, charges, damages and expenses for which provision was made by the indenture, "but any debt existing previous to such demand should be and remain a debt in like manner as if no covenant had been entered into for payment thereof, such covenant being intended only as an addi- ' 1 Mont. Partn. 203. ^ 3 Coop. 101. ' 15 Ves. 4. t See Story Partn. § 370. » Mont. 17. 69* 822 EAKKRUPTCT OF PARTNERS. [BOOK IV. . tional or collateral security." The deed containing this covenant was a conveyance to the creditors of the real estates of one of the partners, upon trust to sell and repay themselves out of the pro- duce. The estates were sold, and the produce applied towards satisfaction of the debt, but no demand was ever made in pursu- ance of the covenant. Upon the bankruptcy of the covenantors, the creditors petitioned to prove against the separate estates of the bankrupts. Sir Lancelot Shadwell, however, dismissed the petition with costs, observing, that it was intended by the parties that an actual demand should be made. Some distinct act was necessary to create a separate debt ; and the parties had stipu- lated that it should be on demand. In this case the transac- tions between the parties were not equivalent to a demand. Upon appeal to Lord Lyndhurst, this decision was affirmed, though with- out costs. His Lordship, referring to the words, " any debt existing previous to such demand should be and remain a debt in like manner as if no covenant had been entered into for the pay- ment thereof," said, that from these words it appeared that an alteration was to be effected in the situation and liability of the parties by the demand, which must of course, therefore, mean an actual demand. He was of opinion, therefore, that the debt con- tinued a joint debt, in its original form, until an actual demand was made, and then, upon that actual demand being made, it' became a debt under the covenant. § 914. When the creditor has no instrument to produce as evidence of conversion, but it is certain that a conversion took place as between his debtors ; then, in order to obtaiu the benefit of such conversion, it will be sufficient if he prove that, before the bankruptcy he assented to such conversion, or, in other words, that he accepted the new debtor or debtors in the place of the old. Shght evidence of acceptance is sufficient, but some evidence of this kind is certainly required.-' In Ex parte Slater,^ the execu- tion by joint creditors of the composition deed of a remaining partner, together with receipt of the composition, was held to be an election of him as their sole debtor, and they were not allowed to prove under a subsequent commission against the retiring part- ' See Colt V. Wilder, 1 Edwards Ch. 484.' 2 6 Ves. 146. But it may be said that the decision turned on the deed being in the nature of a release. CH. II.] ADMINISTRATION. 828 ner. In Ex parte Clo-wes,^ several persons being in partnership together and some of them being members of a minor partnership, agreed to consolidate various debts which were due from them separately, and to consider them as the debts of the general part- nership. The creditors, under these circumstances, were allowed to prove their debts as joint debts. It is true, that, in this case, no evidence appears to have been given of express consent by the creditors to the arrangement of the partners. But, as some years elapsed between the arrangement and the bankruptcy, and as nothing is said which leads to a contrary supposition, the consent of the creditors to the conversion may perhaps be presumed. Lord Eldon, speaking of this case, observed, that it turned upon the peculiar circumstances ; that, when the general partnership agreed to take upon them the demands on the individuals and the other partnership, one term implied was that their creditors should consent to be creditors of the general partnership only.^ § 915. In a late case on this subject, the court of review had no hesitation in holding tha,t a conversion had taken place of a separate into a joint debt, although the separate debt was secured by bond, and the joint debt was simply the debt of the partner- ship, of which the obligor was a member. In this case the debt consisted of trust money under the tnarriage settlement of H., which had been advanced to H. on the security of his bond. The money was afterwards, with notice to the trustees, applied to the purposes of the partnership in which he was engaged ; and an entry to that effect was made in the partnership books under the head of " The Trustees of Mrs. H." Upon the bankruptcy of the part- ners, the court of review, under these cii-cumstances, held that there had been a sufficient assent on the part of the trustees to the conversion of the debt, and they were allowed to prove the amount against the joint estate of the bankrupts.^ § 91.6. On this subject of assent, Lord Eldon's opinion may be gathered from his observations in the cases of Ex parte Peele * and Ex parte Williams.^ In the former of these cases, it was 1 2 Bro. 595 ; 1 Co. B. L. 260. " Ex parte Bonbonus, 8 Ves. 546. ' Ex parte Kedie, 2 D. & C. 321 ; and see Ex parte Hill, 1 Dea. 123. * Ante, § 522. , ' Buck, 13. 824 BANKRUPTCY OF PAETNBRS. [BOOK IV. scarcely necessary to advert to the questioa of assent by tlie creditor to the consolidating of the debts, as it was a disputed point whether the partners themselves had agreed to consolidate them. But in the latter, where- a separate creditor sought proof as a joint creditor, by virtue of an arrangement between two partners for the conversion of separate into joint debts. Lord El- don required evidence of assent by the creditor to such arrange- ment before such proof could be allowed. In this case, A., a trader, being indebted to several persons, entered into partnership with B., and brought his stock in trade into the partnership. By the partnership deed, it was agreed that the joint trade should pay the creditors of A. named in the schedule. A. and B. entered into partnership upon the terms mentioned in the deed, and in pursuance thereof many of the creditors of A., whose debts were scheduled, were paid by the partnership. A joint commission hav- ing issued against A. and B., the petitioner, one of the unpaid scheduled creditors prayed that he might be permitted to prove his debt and receive a dividend out of the joint estate. But, per Lord Eldon: "If it is meant to be said, on the part of the peti- tioner, that a joint action might have been maintained by the cred- itors named in the schedule against the partners, immediately upon the execution of the deed, and by force of that deed only, independent of any accession of the agreement on the part of the creditors named in the schedule, I cannot assent to the doctrine. There are some old cases upon this subject, and in one of them (reported I think by Levinz, or by one of the reporters of his time), wheri A. by deed covenanted with B., a party to it, that he. A., would pay a sum of money to C, a stranger to the deed, C. attempted to maintain an action on the covenant against A. Whatever might then have been the law, such an action could certainly not now be supported. But I agree to the proposition, that a very little will do to make out an assent to the agreement. If any of the creditors named in the schedule think they can make out such a case, they may apply on that ground to prove their debts against the joint estate." § 917. The case of Ex parte Williams seems to establish, not only the general question as to assent, but also that a creditor, seeking to take advantage of the conversion of a debt after the bankruptcy of his debtor, must show that he assented to the con- version before the bankruptcy. The same point was decided by CH. II.] ADMINISTRATION. 825 Sir John Leacli, in Ex parte Freeman.^ There the stock and effects of the partnership of Henderson & Morley -were, upon a dissolution, assigned by deed to the continuing partner, Hender- son, who covenanted to pay the joint debts. The partners having become bankrupts, the court held that the joiat creditors, not hav^ ing previous to the bankruptcy accepted the coAtinuing partner as their sole debtor, could not prove against the separate estate of such continuing partner. Sir John Leach : " It is not alleged that the joint creditors in any manner adopted Henderson as their separate debtor ; and the question simply is, whether the covenant of Henderson with Morley to pay the joint debts, without any concurrence on the part of the joint creditors, before the bank- ruptcy, does ijpso facto, in the case of bankruptcy, convert these joint creditors into separate creditors of Henderson, either abso- lutely or at their option. It is admitted that, if bankruptcy were out of the question, the joint creditor could not sustain an action at law against Henderson alone, upon the same naked effect of the covenant. My first difficulty is to apprehend the distinction in this respect between bankruptcy and no bankruptcy. I cannot apprehend how the fact of bankruptcy makes a man my creditor who does not otherwise sustain that character. I have always considered it to be essential to proof, that the bankrupt should be indebted to the party proving at and before the bankruptcy. The engagement of one partner with the other to pay the debts of the firm can, as to the creditors of the firm, be considered only as a proposal that he is willing to become their sole debtor. If they accede to this proposal before the bankruptcy, then a contract to that effect is concluded, and under the bankruptcy they are his separate creditors. But their acceptance of him as their separate debtor after the bankruptcy, comes too late, for he is then inca- pable of contract. For these reasons, I am of opinion that the petitioners cannot be considered as separate creditors of Hendei*- son." This case of Ex parte Freeman seems to be consistent with most of those on the same subject that preceded it. It was, however, overruled by Lord Eldon. Nevertheless, as the grounds of Lord Eldon's decision do not appear, and as Sir John Leach decided the subsequent case of Ex parte Fry ^ in the same man- 1 Buck, 471. 2 1 Glyn & Jam. 96. 826 BANKRUPTCY OF PARTNERS. [bOOK IV. ner, there seems just reason to suppose, notwithstanding the ohser- yations of a learned writer,^ that the case of Ex parte Freeman was rightly decided. § 918. In the last two cases, the agreement between the pai^ ners for conversion of their debts was contained in a deed inter paries. It is true, therefore, that in each case the creditors, as being strangers to it, had no remedy at law under the deed.^ It is apprehended, however, that these decisions did not turn merely on the circumstance of the creditors not having shown their assent by executing the deed, but on their not having given any assent ; that, in bankruptcy, the question of the conversion must depend - on the assent, in whatever manner the assent is evidenced ; that, although there be a deed, bare assent will be sufficient, though it would be insufficient at law ; and that where there is no deed, assent will be necessary,^ although perhaps it might be unneces- sary at law.* The latter proposition is borne out by the case of Ex parte Hitchcock.^ There, A. gave his guaranty for the pay- ment of certain bills accepted by B. Afterwards, A. and B. became partners. They paid part of the bills, and solicited the creditor's indulgence as to the remainder. Their solicitations, which were by writing, received no answer from the creditor, but he took no hostile proceedings against them. Upon the bank- ■ ruptcy of A. and B., it was held that there was not sufficient evidence of assent by the creditor to the conversion of the debt into a joint debt, to enable him to prove against the joint estate. But a debt may be treated by the creditor as joint or several, in all cases where it has been converted by the fraud of the debtor partner and his copartners.^ § 919. Judgment of outlawry against two of three joint debtors does not make the debt a separate one as against the third debtor ; '^ nor does a separate execution, taken out against one of several partners, for a joint debt, convert that debt into a separate debt.^ • 1 Mont. Partn. 117. ' Barford v. Stuekey, 5 Moore, 23 ; and see the cases cited, Buck, 15, note (a). « Ex parte Hunter, 1 Atk. 223. * See the observations of Bayley J., 2 Dowl. & Eyl. 527. ' 3 Dea. 507. « See post, § 5 . ' Ex parte Dunlop, Buck. 253. ' Ex parte Stanborough, 5 Madd. 89. CH. II.J ADMINISTRATION. 827 SECTION III. OF PROOF IN GENERAL. § 920. In the words of Lord Hardwicke, — " Joint creditors, as they gave credit to the joint estate, have first their demand on the joint estate ; and separate creditors, as they gave credit to the separate estate, h&YQ first their demand on the separate estate." ^ Again, in the words of Lord King,^ — " It is settled, and is a resolution of convenience, that the joint creditors shall be first paid out of the partnership or joint estate, and the separate credi- tors out of the separate estate of each partner ; and if there be a surplus of the joint estate, besides what wUl pay the joint credi- tors, the same shall be applied to pay the separate creditors ; and if there be on the other hand, a surplus of the separate estate, beyond what will satisfy the separate creditors, it shall go to sup- ply any deficiency that may remain as to the joint creditors." ^ ' Twiss jj. Massey, 1 Atk. 67. The character of the debt is to be re- garded, and not the persons, who are defendants in an action or judgment upon it. Ante, § 724, in note. 2 Ex parte Cooke, 2 P. Wms. 500; '- ■ ' Story Partn. §§ 376-378 ; 3 Kent Com. 64, 65 ; Murray v. Murray, 5 John. Ch. 74 ; Gow Partfl. (3d ed.), 313. See Woodrop v. Price, 2 Desaus. 203 ; McCuUoeh v. Dashiell, 1 Harr. & Gill, 96 ; Egberts v. Wood, 3 Paige, 527 ; Wilder v. Keeler, 3 Paige, 167 ; Hutchinson v. Smith, 7 Paige, 26 ; Jackson v. Cornell, 1 Sandford Ch. 348 ; Murrill «. Neill, 8 Howard (U. S.), 414; North Kiver Bank u. Stewart, 4 Bradf. (N. Y.), 254 ; Ganson v. Lathrop, 25 Barb. (N. Y.), 455 ; Somerset Potters' Works v. Minot, 10 Gushing, 592, 601. This rule was adopted in the Bankrupt Law of the Uni- ted States, Aug. 19, 1841,5 U. S. Stat, at Large, 440, 448, § 14. See in Matter of Marwick, per Ware J., Dist. Ct. U. States, Portland, Maine, May, 1845, in Bankruptcy, 8 Law Rep. 169-171. So in the insolvent law of Massachusetts, 1838, ch. 163, § 21^ Mr. Justice Story says, in reference to this rule, that " it now stands as much, if not more, upon the general ground of authority, and the maxim stare decisis, than upon the ground of any equitable reasoning ; " Story Partn. § 377 ; and he concludes, that " it is not perhaps, too much to say, that it rests on a foundation as questionable, and as unsatisfactory as any rale in the whole system of our jurisprudence." Still, he admits, that it is not now to be disturbed, as it would not be easy to 828 BANKRUPTCY OP PARTNERS. [BOOK IV. This rule was afterwards deviated from by Lord Thurlow,^ but re- stored by Lord Loughborough,^ and followed by Lord Eldon.^ It appears, therefore, that putting out of the question the equitable right which either class of creditors has upon the surplus of either estate after payment of the other class of creditors, the joint cred- itors can only prove and receive dividends as against the joint estate, and the separate creditors as against the separate estate.* § 921. The rule has occasionally been productive of hardship. Thus, in Ex parte Jackson,^ W., a trader, died indebted to J., substitute any other rule that would work with perfect equality and equity. Story Partn. § 382. Mr. Chancellor Kent on the other hand, remarks, that, for his part, he feels no hostility to the rule, and thinks that it is, upon the whole, reasonable and just. 3- Kent Com. 65, in note. In Jackson v. Cornell, 1 Sandford Ch. 348, a case in equity, it was said that the rule of equity is uniform and stringent, that the property of a part- nership shall be applied to the partnership debts, to the exclusion of the creditors of the individual members of the firm ; and the creditors of the latter are to be first paid out of the separate effects of their debtor. Pro- ceeding upon this principle, the court decided that a general assignment of his separate property, made by an insolvent partner, which prefers the cred- itors of the firm, to the exclusion of his own, is fraudulent and void as to the latter ; and it was further said, in the same case, that an assignment by a partnership, preferring the creditors of the individual partners to those of the firm, would be invalid against the latter on the same principles. See also Wilder v. Keeler, 3 Paige, 167; Egberts v. Wood, 3 Paige, 517 ; Payne V. Matthews, 6 Paige, 19 ; Hutchinson v. Smith, 7 Paige, 26 ; Kobb v. Stephens, 1 Clarke Ch. 195 ; Bogert v. Haight, 9 Paige, 297 ; Wakeman v. Grover, 4 Paige, 23, 35; s. C. 11 Wendell, 187; Deaveau v. Fowler, 2 Paige, 400 ; all of which were cited and considered in the above case of Jackson v. Cornell. But " this distinction," said Mr. Justice Hubbard, in Sparhawk v. Kussell, 10 Metcalf, 307, " as to the nature of the debts, whether joint or separate, and the distribution of estate where joint or separate, which is recognized and practised upon in the settlement of estates of living insolvents, is not recognized in the distribution of the estates of persons de- ceased." See Washburn v. Bank of Bellows Falls, 19 Vermont, 278 ; Bard- well V. Perry, id. 292. ' Ex parte Hodgson, 2 Bro. 5 ; Ex parte Paige, id. 119 ; Ex parte Flin- tum, id. 120 ; Ex parte Copland, Co. B. L, 248. ' Ex parte Elton, 3 Yes. 240 ; Ex parte Abell, 4 Ves. 837. ' Ex parte Clay, 6 Ves. 833 ; Ex parte Pinkerton, and Ex parte Nuttal, there cited; and see Button v. Morrison, 17 Ves. 206. * Ord. Loughborough, Mar. 1794, and 6 Geo. 4, c. 16, § 62. Where a creditor has proved against the wrong estate by mistake, he will be permit- ted to transfer his proof to the other. Ex parte Vining, 1 Dea. 655. ^ 1 Ves.jun. 131. CH. II.] ADMINISTKATION. 829 leaying all Ms personal property to his widow. After Us death the widow carried on the trade, and, having borrowed another sum from J., gave him a bond for the whole. Afterwards, she took into the trade her son, being a minor, and her nephew, who before was her servant. The new partners did not bring any property into the trade, nor were they to have any of the profits nor bear any loss, but the nephew received wages, as before. The partnership lasted almost two years, till a commission of bankrupt issued against the widow and nephew, but not against the son. The petition was, that J. might be at liberty to prove his debt, and receive dividends under the joiat commission. Lord Thurlow, though with great reluctance, felt himself bound to refuse the prayer of the petition, there being no fraud in the widow. § 922. The rule is the same, whether the fiat be joint or sepa- rate. When the fiat is joint, the separate creditors may, under Lord Loughborough's general order ,i prove their debts and re- ceive dividends out of the separate estate, that order directing that distinct accounts shall be kept of the joint and separate estates respectively. So, when the fiat is separate, and the as- signees get possession of the joint property, the court, upon the petition of the joint creditors, will order the assignees to keep distinct accounts of the separate and joint estate, and apply them to the payment of the separate and joint debts respectively, as when separate creditors prove under a joint fiat.^ § 923. There are, however, three exceptions to the rule that a joint creditor shall not receive dividends with the separa,te creditors : 1st. Where a joint creditor is the petitioning creditor under a separate fiat ;^ 2d. Where there is no joint estate, and . * Ord. Mar. 1794. See Ex parte Orowder, 2 Vern. 706 ; Twiss v. Mas- sey, 2 Atk. 67 ; -wliere the relief afterwards provided for by Lord Lough- borough's general order, was granted on petition. ^ Ex parte Tate, Co. B. L. 253 ; Ex parte Aspinwall, id. 256 ; Ex parte Mervey, Ex parte Hill, id. Formerly the application must have been made by bill, unless by consent. Ex parte Voguel, 1 Atk. 135 ; Hankey v. Gar- ratt, 3 Bro. 457. ' Ex parte Hall, 9 Ves. 349 ; Ex parte Ackerman, 14 Ves. 604 ; Ex parte De Tastet, 1 Eose, 10 ; Ex parte Buckle, 1 Glyn & Jam. 34. See McCuUoch V. Dashiell, 1 Harr. & Gill, 96, ^er Archer J. 70 830 BANKRUPTCY 01" PARTNERS. [BOOK IV. no solvent partner ; ^ 3d. Where there are no separate debts.^ In the first case the petitioning creditor, and in the second all the joint creditors, may prove against the separate estate pari passu with the separate creditors. In the last case as there are no separate creditors, the joint creditors will be admitted pari passu with each other, upon the separate estate.^ § 924. 1. As to the first of these exceptions. It was decided in Ex parte Crispe,* that a commission or fiat may issue against one partner for a joint debt, though an action cannot be main- tained against one, without joining the other parties ; a commis- sion being considered as an execution, and not as an action.^ Hence, a separate commission taken out by a joint creditor being in the nature of an execution for his legal debt, it follows that he is entitled to take the dividends due upon his legal proof. Where, therefore, M., being an indorsee of A., B. & Co.'s acceptances for £1,364, sued out a separate commission against A., and at the time of suing out the commission L., the person for whom A. had discounted the acceptances, had, by payments on account, reduced the debt to £420, it was held that M. was entitled to prove for the whole amoimt ; that, for all that was received above £420, M. was a trustee for L. ; and that the conunissioners could not interfere with the trust.® This exception in favor of the petition- ing creditor under a fiat against one partner is expressly reserved by the 6 Geo. 4, c. 16, s. 62, which enacts that a joint creditor shall not receive a dividend out of the separate estate, until aU ' Ex parte Kensington, 14 Ves. 447 ; McCulloch v. Dashiell, 1 Harr. & Gill, 96, per Archer J. ; Kodgers v. Meranda, 7 Ohio (sr. s.), 179. It is said by Ware J., in the matter of Marwick, Dist. Ct. U. States, Portland, Maine, May, 1845, in Bankruptcy, 8 Law Eep. 169, 171, to present a grave ques- tion for consideration, whether this exception would be allowed under the Bankrupt Law of the United States, passed Aug. 19, 1841 ; 5 U. States Stat, at Large, 440, 448, inasmuch as that law has adopted the general rule, without taking notice of any of the exceptions. ^ Ex parte Chandler, 9 Ves. 35. ' Story Partn. § 378. These exceptions are regarded by Mr. Justice Story with very little favor. Id. §§ 379-381. * 1 Atk. 133 ; Crispe v. Perritt, Willes, 467 ; Murray v. Murray, 5 John. Ch. 73. ^ See the suggestions as to this exception and the grounds of it, Story Partn. § 379. ° Ex parte De Tastet, 1 Rose, 10. CH. II.] ' ADMINISTRATION. 831 the separate creditors have been paid in full, " unless such credi- tor shall be a petitiomng creditor in a commission (^fiaf) against one member of a firm." From which also it appears that there is no exception in favor of a joint creditor taking out a commis- sion against several members, part of the whole firm. § 925. If a joint creditor sue out a joint fiat, he thereby binds himself to resort to the joint property only.^ And where a fiat is issued against a trader as "surviving partner" of another, this being deemed a joint fiat, the petitioning creditor will not be allowed to claim upon the separate property.^ "Where a joint creditor takes out a separate fiat, which is rescinded for the pur- pose of proceeding under a joint fiat against all the partners, a right will be reserved to him to elect whether he will prove as a joint creditor, or as the separate creditor of the bankrupt against whom he sued out the fiat.^ § 926. 2. To proceed to the second class of exceptions, namely, wtere there is no joint estate and no solvent partner.^ The gen- eral rule is not to be abandoned, so long as there is any joint estate, no matter how trifling.^ In one case, the fact that the joint estate consisted merely of a few outstanding debts,^ and, ia another case, that it was worth only ^65, was held to be a complete bar to an application in behalf of the joint creditors against the separate estate.^ And it seems that, where two persons dissolve their part- ' Ex parte Bolton, 2 Eose, 389 ; Story Partn. § 379. ' Ex parte Earned, 1 Glyn & Jam. 309. ' Ex parte Smith, 1 Glyn & Jam. 256 ; Ex parte Brown, 1 Eose, 433. * Story Partn. § 380; Howe v. Lawrence, 9 Gushing, 653, 559. The practice referred to in the text might seem to be repealed by the 6 Geo. 4, c. 16, § 62, which enacts, that, under a separate commission, a joint creditor, unless he be the petitioning creditor, shall not receive dividends out of the separate estate until all the separate creditors have been paid. But see sec- tion 135 of the same act. By the insolveni law of Massachusetts, St. 1838, c. 163, § 21, the separate estate of partners must be first distributed to separate creditors, although there is no solvent partner and no joint estate, to which the joint creditors can resort. Howe v. Lawrence, 9 Gushing, 553. ' Ware J., In the Matter of Marwick, Dist. Ct. U. States, May, 1845, Portland, Maine, in Bankruptcy, 8 Law Eeporter, 169, 171 ; Archer J., in McCulloh V. Dashiell, 1 Harr. & Gill, 96 ; Story Partn. § 380 ; Dewey J., in Somerset Potters Works v. Minot, 10 Gush. 600, 601. ° Ex parte Leaf, 1 Dea. 176. ' In re Lee & Armstrong, 2 Eose, 54. 832 BANKRUPTCY OF PARTNERS. ' [BOOK IV. nersMp, and the remaining trader becomes bankrupt, it is not sufficient, in order to prove that there is no joint estate, to show that on such dissolution the outgoing partner assigned to the re- maining trader his moiety of the partnership efifects.^ On the other hand. Lord Eldon has said, that, if the joint property be of such a nature, and in such a situation, that any attempt to bring it within the reach of the joint creditors must be deemed a des- perate, or, in point of 'expense, an unwarrantable attempt, that would authorize a departure from the rule.^ And it has been held that joint effects, pledged for more than their amount, are not within the rule ; the term joint effects meaning such as are under the administration of assignees to distribute.^ But if there be a joint fund, the court cannot (under the bankrupt law of the United States*), look behind the fact, to inquire how it has been produced.^ Even though it could be made to appear that the joint fund had been created by the separate creditors purchasing some of the partnership assets, actually worthless, for the purpose only of creating it, this would not prevent the operation of the general rule.^ § 927. To bring a case within exceptions of this second class, not only must there be no joint estate, but there must be no sol- vent partner, that is, no partner possessed of any available fund ; T for if there be a solvent partner, the creditor has his right of action against him.^ But this reason does not apply where the solvent partner is dead; therefore, in such case, although the deceased partner's estate may be solvent, the creditor, if there be no joint estate, may prove against the separate estate of the bankrupt.^ ' Ex parte Appleby, 2 Dea. 482. Sed qu. ' Ex parte Peaks, 2 Rose, 54. ' Ex parte Hill, 2 N. E. 191 (a) ; 1 Mont. Partn. 113, App. * Act of Congress, Aug. 19, 1841, § 14, 5 U. States Statutes at Large, 440, 448 ; repealed March 3, 1843, 5 U. States Statutes at Large, 614. * Matter of Marwick, Dist. Ct. U. States, May, 1845, Portland, Maine, in Bankruptcy, 8 Law Reporter, 169. » Ibid. ' Ex parte Janson, 3 Madd._«29 ; Buck, 227 ; Ex parte Sadler, 15 -Ves. 52; Ex parte Crosfield, 2 Mont. & A. 543; 1 Dea. 405; overruling Ex parte Pinkerton, 6 "Ves. 842, n. ; Story Partn. § 380.' * Ex parte Bauerman, 3 Dea. 476 ; Story Partn. § 380. ' Ex parte Bauerman, 3 Dea. 476. CH. 11.] ADMINISTRATION. 833 And so lie may -where his debtors are not partners in trade, but merely joint contractors, on joint promissory notes, &c.i § 928. Joint creditors who claim to prove against separate estates, on the ground of there being no joint property, must obtain an order for that purpose ; but, having obtained such order, they may select any one of the separate estates of the bank- rupts against which to prove .^ And even where the general part- nership is subdivided into distinct minor firms, the creditors of the general partnership, there being no general joint estate, may prove against the estate of an individual partner, or against one of the minor joint estates ; and in all cases the estate so bur- dened is entitled to reimbursement from the others.^ § 929. 8. The last exception to the general rule, namely, where there are no separate debts, occurs when the separate debts are so inconsiderable that the joint creditors undertake to pay them.* In such case, tlie joint creditors may prove against the separate estate.^ But a mere oflFer to pay the separate debts wUl not be sufficient, without some proof before the court as to their amount.^ Where, however, the separate debts were very small, and the joint creditors resided in Sicily, the court, without insist- ing on the usual undertaking to pay the separate creditors, gave them, in the mean time, liberty to make such proof as they might be able.'^ It may be remarked, in conclusion, that where a sep- arate fiat issues agaiast a partner who has given an equitable mortgage as a separate security for a joint debt, the court will order the security to be sold, but will not therefore permit the creditor to prove for the diflference against the separate estate of the bankrupt.^ § 930. Generally, in the event of a surplus, creditors are enti- tled to interest for their debts, from the date of the fiat.^ But ' Ex parte Bauerman, 3 Dea. 476. ^ Ex parte Willock, 2 Rose, 392. ' Ex parte Wylie, 2 Rose, 393 ; Ex parte Nolte, 2 Glyn,& Jam. 295 ; Ex parte Machell, 1 Rose, 447. * Story Partn. § 381. * Ex parte Chandler, 9 Ves. 35. ' Ex parte Taitt, 16 Ves. 193 ; and see Ex parte Hubbard, 13 Ves. 424. ' Ex parte Basarro, 1 Rose, 266. « Ex parte Loyd, 3 Mont. & A. 601 ; 3 Dea. 305. » 6 Geo. 4, c. 16, § 132 ;, Ex parte Mills, 2 Ves. 195. As to the mode of 70* 834 BANKRUPTCY OF PARTNERS. [BOOK IV, where separate creditors are paid 20s. in the pound, and there is a surplus of the separate estate, that surplus shall not go imme- diately to pay interest to the separate creditors, but shall go to make the joint creditors equal with them as to the principah^ But all creditors shall receive interest before any partner, or assignee of a partner, shall be permitted to prove.^ The sui> plus of the joint estate must be apportioned between the respec- tive estates of the partners, according to their equitable rights. Therefore, where a joint commission issued against a firm con- sisting of two partners, it was held that the separate creditors of one had a lien on the other's share of the surplus of the joint estate, in respect of a debt proved under bills drawn in the name of the firm for a separate debt, and might come in with the sep- arate creditors of such other for the deficiency.^ § 931. The apportionment is regulated on the same principle, where some of the partners are solvent. For if, upon the bank- ruptcy of one of several partners, all the joint creditors are satis- fied, and, upon a balance of accounts, the bankrupt partner is indebted to the firm, the firm are entitled to full satisfaction of the debt out of the bankrupt's share of the surplus,* and to prove against his separate estate for the deficiency.^ Lord Eldon, in reference to the case of two partners, says, — " If the surplus of the joint estate is not sufficient to pay all that is due from one partner to the other, he ought to come in with the separate cred- itors of the other." ^ § 932. Where, after the bankruptcy of one partner, all the joint debts, and all the separate debts except those between the partners themselves, have been paid, and the surplus has been calculating the interest in case of a surplus, see In re Higginbottom, 2 Glyn & Jam. 123. No interest, however, subsequent to the fiat can be charged upon the estate, directly or indirectly, except in case of a surplus. Ex parte Paton, 1 Glyn & Jam. 332. ' Ex parte Reeve, 9 Ves. 590 ; Ex parte Clarke, 4 Ves. 677 ; Ex parte Boardman, Co. B. L. 198. The rule is not altered by the present Bankrupt Act. Ex parte Minchin, 2 Glyn & Jam. 287. ' Ex parte Eeeve, supra ; Ex parte Ogle, Mont. 350. ' Ex parte King, 17 Ves. 115. See Ex parte Reid, post, § 948. * Goss V. Dufresnoy, Davies, 371 ; Richardson v. Goodwin, 2 Vern. 293. = Post, § 9. ' Ex parte Hing, supra. CH. II.] ADMINISTRATION. 835 paid over to the bankrupt partner, the solvent partner is entitled to . apply, by petition in the bankruptcy, for an account of such surplus, and for payment of his proportion of it, and the order may be made accordingly.^ If there is a surplus upon the sep- arate estate of a bankrupt, -who is a member of two firms, such surplus must be carried to each joint estate, in proportion to the amounts of the debts proved against each joint estate respec- tively.^ § 933. After their demands are finally liquidated, partners may be creditors upon each other, but not before.^ This subject ■will be treated of hereafter.* § 9,34. We have seen, that, when one partner dies, and the sur- vivors become bankrupt, the joint creditors of the deceased and surviving partners have a right to enforce payment of their debt against the deceased partner's estate.^ These creditors, therefore, have two funds to resort to ; namely, that which is to be adminis- tered under the bankruptcy of the survivors, and that of the de- ceased partner. Now, although, generally, if A. has a right to go upon two funds, and B. upon one, having both the same debtor, A. shall take payment from that fund to which he . can resort ex- clusively, that, by those means of distribution, both may be paid ; yet, where they have not the same debtor, B. can have no control over A. for this purpose.^ In the case, therefore, of the death of a parfeaer, and the bankruptcy of his survivors, it is clear that the joint creditors of the deceased and surviving partners cannot be compelled to resort to the estate of the deceased partner, for the benefit of the fund under the bankruptcy, by persons who are the creditors of the survivors only.^ Therefore, where D. & Co. were partners, and D. died, and a commission of bankrupt issued against the survivors, and a bill was filed by the joint creditors of the old firm, for an account of D.'s assets and for a decree to ad- mit them to the benefit of his assets after his separate debts should be paid ; and then a petition was presented in the bankruptcy of the new firm, by the creditors of the new firm, with a view of hav- ing D.'s assets marshalled for their benefit, and, for that purpose, » Ex parte Lanfear, 1 Rose, 442. ' Ex parte Franklyn, Buck, 332. ' Per Lord Eldon, 9 Ves. 689. ' Post,§ 972, et seq. » Ante, § 576 et seq. • Story Partn. § 364. ' Ibid. 836 BANKRUPTCY OS PARTNERS. [BOOK IV. praying that the dividen to be postponed; Lord could not be supported.^ praying that the dividend under the commission might be ordered to be postponed ; Lord Eldon held clearly that such a petition SECTION IV. OF ELECTION OF EEMEDY. § 935. By the 6 Geo. 4, c. 16, s. 59, no creditor who has brought any action or instituted any suit, against any bankrupt in respect of a demand prior to the bankruptcy, or which might have been proved as a debt under the commission against such bank- rupt, shall prove a debt under such commission, or have any claim entered upon the proceedings under such commission, without re- linquishing such action or suit.^ Hence it appears, that, in the case of a single debtor, the creditor cannot proceed both at law and under the bankruptcy, in respect of the same debt.^ But where there is more than one debtor, and the creditor takes the security of all, as he may bring actions and obtain execution against each of them severally, provided he have but one satisfac- tion, so he may prove the debt against each of them severally, imder every fiat which may be issued against them.* Or, if some • Ex parte Kendall, 17 Ves. 514. " It is not necessary that there should be a formal discontinuance of the action or suit before the plaintiff proves his debt, for the proof itself operates as a discontinuance of the action or suit ; Ex parte WooUey, 1 Rose, 394 ; 2 Ves. and Bea. 253 ; Ex parte Glover, 1 Glyn & Jam. 271 ; and therefore it has been holden, that a creditor may tender a proof or claim, and is enti- tled to have the judgment of the commissioners upon his right to prove, before he discharges the bankrupt, or discontinues the action. Ex parte Frith, 1 Glyn & Jam. 165. ' And where a creditor who is proceeding at law presents a petition to the chancellor to stay the bankrupt's certificate, and also impeaching the bankruptcy, and praying that, if it should be found valid, he might be per- mitted to prove, by so doing he brings himself within the jurisdiction of the Great Seal, and will be enjoined from continuing his proceedings at law. !Ex parte Bozannet, 1 Rose, 181 ; Ex parte Ilardenberg, id. 204. * And he may prove under every fiat to the full amount, provided he receive dividends only to the amount due to him. Ex parte Bloxham, 6 Ves. OH. n.J ADMINISTBATION. 837 remain solvent, he may prove against the bankrupts, and bring his action against each of the solvent debtors.-* Lord Hardwicke illus- trates these principles by reference to the rights of an obligee of a bond against the several obligors, and of the holder of a bill of exchange against the drawers, indorsers, and acceptors.^ Let us apply them to the case where there are two or more debtors, and those debtors are partners. § 936. It seems clear, that if a creditor take a joint and sev- eral security from a firm, for a partnership debt, and part of the firm become bankrupt, he may treat his debtors either as joint or as several debtors. In the former case, he may bring his action against all, and then the bankrupts may plead their bankruptcy, and execution may be had against the rest.^ In the latter case, he may prove his debt against the bankrupts, and bring a sepa- rate action against each of the others. But he cannot treat them as both joint and several debtors. Therefore, where A. and B., partners, gave a joint and several bond to C, and B. became a bankrupt, and C. proved the bond imder the commission against B., Lord Eldon held that C. could not, after such proof, bring his joint action against A. and B. Lord Eldon said, that though the holder of a joint and several security had it in his option either to proceed jointly or severally, yet the defendants had, in this case, elected to prove severally, by proving the bond under the commission. They were, therefore, not at liberty to bring a joint action upon it, but must proceed against the solvent partner severally.* § 937. The observations which have just been made regard- ing election of remedy have, been confined to the case of one and the selfsame debt. Where there are two debts, arising from dis- 600. See Ex parte King, Co. B. L. 168; Ex parte Lee, 1 P. W. 782 ; Ex parte Crossly, 3 Bro. 237; Ex parte Martin, 2 Rose, 87. ' Gregory v. Hurrill, 1 Bing. 324. ' Ex parte Wildman, 1 Atk. 109. ' But as to execution against joint effects, after the bankruptcy of one partner, see ante, § 874. * Bradley v. Miller, 1 Rose, 273. If, under these circumstances, an action be brought against the bankrupt conjointly with the solvent partners, the bankrupt may obtain an order to have his name struck out, or to be indemni- fiied against the costs and consequences of its remaining. Ex parte Read, 1 Rose, 460. 83B BANKRUPTCY OP PARTNERS. [BOOK IV. tinct contracts, it has been held that the creditor, having proved one under the bankruptcy, may afterward proceed at law for the other. For the act says : " That the proving or claiming a debt under a commission, by any creditor, shall be deemed an election by such creditor to take the benefit of such commission with respect to the debt so proved or claimed."^ But although there be distinct debts, the creditor cannot bring his action for the one, so as to proceed to execution after the bankruptcy, and afterwards prove for the other. For it is clear that, under the first part of section 59 of the statute of bankrupts, proof or claim by a credi- tor for a debt operates as a reliaquishment of an action previously brought for auT/ demand, even though it be distinct from the debt proved.2 § 938. It may here be remarked, that by the same section of the statute to which we have already referred, where a creditor has brought an action, or instituted a suit, against any bankrupt, in respect of a demand prior to the bankruptcy, then, " in case such bankrupt shall be in prison or custody at the suit of or detained hj such creditor, he shall not prove or claim as afore- said, without giving a suflScient authority in writing for the dis- charge of such bankrupt." 3 By the same section, also, " where ^ 6 Geo. 4, c. 16, s. 59 ; Watson v. Medex, 1 Barn. & Aid. 121 ; Harley V. Greenwood, 5 Barn. & Aid. 95 ; Bridgett v. Mills, 4 Bing. 18 ; Ex parte Glover, 1 Glyn & Jam. 270 ; Ex parte Sly, 2 Glyn & Jam. 163 ; Ex parte Edwards, 1 Mont. & M'A. 116, overruling Ex parte ScUesinger, 2 Glyn & Jam. 392. In the latter case, the Vice-Chancellor thought that a creditor by two bills, who, at the time of proving for 'one, had notice of the dishonor of the other, could not afterwards bring his action on the latter. But Lord Lyudhurst, in his able judgment in Ex parte Edwards, said, that, in the case before him, there were two distinct debts for two distinct parcels of goods, in respect of which two distinct bills were given ; and he thought the party might have proved the amount of one of the bills under the commission, and have afterwards proceeded at law for the amount of the other bill, even if he had been the holder of that bill at the time of his proof for the amount of the first. " Ex parte Glover, 1 Glyn & Jam. 270 ; Ex parte Dickson, 1 Kose, 98 ; Ex parte Hardenberg, id. 204. ' 6 Geo. 4, c. 16, s. 59. If the creditor take the bankrupt in execution after the issuing of the fiat, he will not be allowed to prove his debt, even upon the terms of delivering the bankrupt out of custody. Eor charging in execution, under such circumstances, is a conclusive election to proceed CH. n.] ADMINISTEATION. 839 any such creditor shall have brought any action or suit against such bankrupt, jointly -with any other person or persons, his rehn- quishing such an action or suit against the bankrupt shall not affect such action or suit against such other person or persons." § 939. The foregoing remarks are priacipally, perhaps solely, applicable to those cases where the debt is secured by bonds, bills, or other personal securities. But if a creditor obtain a mortgage or pledge, as a security for his debt, in such case he may retain it ; ^ or, if it be not sufficient to coyer the debt, he may give up the security and prove the whole debt,^ or have the security sold by the commissioners and prove for the difference.^ against the person. Ex parte Caton, Co. B. L. 149 ; Ex parte Warder, Ex parte Bisson, id. But although a creditor should commence an action after the issuing of the fiat, and should even proceed to judgment, if he do not proceed to execution, he will not be barred of his right of proof. Ex parte Arundel, 18 Ves. 231 ; Ex parte Cundall, 6 Ves. 446. ' See Ex parte Jackson, 5 Ves. 357 ; Ex parte Geller, 2 Madd. 262. " Ex parte Grove, 2 Atk. 105. ' Story Partn. § 389. By Lord Loughborough's order, 8th March, 1 794, it is ordered, that, upon application to the major part of the commissioners named in any commission of bankruptcy, by any person or persons claiming to be a mortgagee or mortgagees of any part of the bankrupt's estate or effects, the said commissioners shall proceed to inquire whether such person or persons is or are a mortgagee or mortgagees of any part of the bankrupt's estate or effects, and for what consideration, and under what circumstances ; and if the commissioners shall find such person or persons is or are a mort- gagee or mortgagees of any part of the bankrupt's estate or effects, and no sufficient objection shall appear to the title of such mortgagee, or to the sum claimed by him or them under such mortgage or mortgages, that the com- . missioners do then proceed to take an account of the principal, interest, and costs due upon such mortgage or mortgages, and of the rents and profits of the mortgaged premises received by such mortgagee or mortgagees, or by any other person or persons, by his, their, or any of their order, or for his, their, or any of their use, in case such mortgagee or mortgagees shall have been in possession of the mortgaged premises, or of any part thereof; and that the commissioners do then cause due notice to be given in the London Gazette, and in such other of the public papers as they shall think fit, when and where the said mortgaged premises are to be sold before them, or by public auction at any other place or places, if they shall so think fit ; and that such sale be made accordingly. And it is further ordered, that all proper parties do join in the conveyance or conveyances to the purchaser or purchasers, as the said commissioners shall direct. And it is further ordered that the moneys to arise from such sale be applied, in the first place, in pay- 840 BANKEUPTCT OF PARTNERS. [BOOK IV. SECTION V. OF ELECTION OF PROOF. § 940. Where all the partners are bankrupts, and the creditor has taken the joint and separate security of the firm for the same debt, he must elect whether he will proceed against the joint or separate estate.^ This was decided hj Lord Talbot,^ by analogy to the rule of law, that, when A. and B. are bound jointly and seyerally to J. S., if J. S. sue A. and B. severally, he cannot sue them jointly, and, on the contrary, if he sue them jointly, he can- not sue them severally, but the one action may be pleaded in abatement of the other. Even this right of election is lost if the creditor, for the purpose of having a collateral security to the joint and several bond, takes a joint warrant of attorney upon which judgment is signed. In such case, the security of the bond is merged in the higher security of the judgment.^ ment of the expenses attending such sale, and then in payment and satisfac- tion of what shall be found due to such mortgagee or mortgagees, for prin- cipal, interest, and costs ; and that the surplus of the said moneys (if any) be paid to the assignees of the estate and effects of the said bankrupt ; but in case the moneys to arise from such sale shall be insufficient to pay and satisfy what shall' be found due to such mortgagee or mor^agees, it is or- dered, that such mortgagee or mortgagees be admitted a creditor or credi- tors under such commission for such deficiency, and to receive a dividend or dividends thereon out of the bankrupt's estate or efiects, ratably, and in proportion with the rest of the creditors seeking relief under the said com- mission, but so as not to disturb any dividend or dividends thereby eilready made. See Ex parte Holwell, 7 Vin. Abr. 102 ; Ex parte Coming, Co. B. L.123 ; Ex parte Smith, 2 Eose, 64, &c. As to pledges which are within the order, see Ex parte Hillier, Co. B. L. 146 ; Ex parte Geller, 2 Madd. 262 ; Ex parte Troughton, 1 Co. B. L. 147. Equitable mortgages, although not within the meaning of the above order, may, upon petition, obtain simi- lar relief. Ex parte Payler, 16 Ves. 434 ; Ex parte Garbutt, 2 Rose, 78 ; Ex parte Hodgson, 1 Glyu & Jam. 12; Ex parte Alexander, id. 409 ; Ex parte Jennings, 2 Swanst. 360, &c. ' Story Partn. § 384; Gow Partn. (3d ed.), 286, 287. ' Ex parte Eowlandson, 3 P. W. 495. See Ex parte Bond, 1 Atk. 98 ; Ex parte Parminter, Ex parte Abingdon, and Ex parte Banks, cited id. ; and Ex parte Bevan, 10 Ves. 107. s Ex parte Christie, Mont. & Bl. 352. CH. II.] ADSIINISTRATION. 841 § 941. The rule of election, as propounded by Lord Talbot, is reprobated by Lord Eldon, who, in reference to Ex parte Row- landson, observed that he was not perfectly satisfied with that au- thority. " The reasoning," he said, " goes upon this, that a joint and separate action could liot be brought at law. But surely the distinction is, then, that, where a joint and separate bond is given, and another security several from each, there, as i/wo actions might be brought, the rule in bankruptcy should be different." ^ So, on another occasion, Lord Eldon observed, that in bankruptcy, for some reason not very intelligible, it had been said, the creditor should not have the benefit of the caution he had used. He never could see why a creditor having both a jomt and several security should not go against both estates.^ The rule, however, as laid down by Lord Talbot, is completely established.^ § 942. It makes no difference whether the joint and separate security arises from the same or different instruments.* The rule also holds if there be only one instrument ; as if there be a debt due from a partnership, and the creditor take the separate bond of one partner as a collateral security for the debt. In such case the creditor must elect against which estate he will go. So, if, after the dissolution of a partnership, the creditor obtain from the remaining partners an acceptance in the name of the original firm, and both the origiiial and remaining partners become bankrupt, the creditor may either prove against the estate of the original partners in respect of the original debt, or against that of the remaining partners in respect of the security, for the security, though void as to the original, is valid as to the remaining part- ners.^ § 943. In accordance, likewise, with this rule, if a bill be drawn by one of several partners upon the firm, or by the firm upon an individual partner, the holder of such security, if not ignorant at ' Ex parte Bevan, 9 Ves. 223. See Ex parte Vaughan, cited 3 P. W. 206. = 10 Ves. 109. See Borden v. Cuyler, 10 Gushing, 476, 477. ' "This doctrine, thus established, does not," says Mr. Justice Story, f seem to stand upon any solid ground of equity or general reasoning." Story Partn. § 385. See also id. § 386 ; Borden v. Cuyler, 10 Gushing, 476, 477.. * 9 Ves. 225. » Ex parte Liddiard, 2 Mont. & A. 87 ; 4 D. & C. 603. 71 842 BANKRUPTCY 01" PARTNERS. [BOOK IV. the time of taking it of the connection between the drawers and acceptors, must elect whether he will prove against the joint estate or against the estate of the individual partner. In Ex parte Biggji 0. drew a biU of exchange upon H. & Co., which they ac- cepted. The firm of H. & Co. consisted of C. himself, and four others. Upon the bankruptcy of H. & Co., the holders, who had proved the bill against the joint estate in respect of the accept- ance, sought to establish an additional proof against the separate estate of the drawer. The objection to the application was, that, at the time of taking the bill, the holders were not ignorant that C. was included in H. & Co. Lord Eldon refused the application, considering that, under the circumstances, the petitioners had only a right to elect ; and that they had made their election. His Lordship said : " Where the object appears to be, to give the bill a character of respectability by such distribution of the names of a partnership, the court has said that the parties to such arrange- ment shall not avail themselves of it, against their knowledge of the method in which the obligation of the firm ought regularly to be created." § 944. From this case an inference might be drawn, that, where the holder of the bills is ignorant at the time he takes them of the partnership between the drawers and acceptors, he will he entitled to double proof,^ although the holders and acceptors are not in distinct partnerships, as well as in an aggregate partner- ship. Lord Eldon also, in another case,^ appears to estabhsh this inference ; for he says, " In all the cases in which the holder has been allowed to avail himself of his security to the extent of its utmost liability, there has either been an ignorance of the union of the parties in one partnership, or a subdivision of them into distinct trading establishments." On the other hand, a learned writer seems to think that ignorance or no ignorance of the con- nection of the parties is not a question to be weighed in favor of the holder, in cases where the general partnership is not subdivided into distinct firms.* And this opinion seems to rest on a fair foun- dation ; for, in another report of Ex parte Bigg,^ it does not ap- pear that Lord Eldon laid any stress upon the circumstance of ' Kose, 37. 2 B^&post, §8. » Ex parte Bank of England, 1 Kose, 82. « Eden B. L. 183, 184. ° 1 Mont. Partn. ISO. CH. II.] ADMINISTKATION. 843 the holder's being ignorant of ihe connection between the parties to the bill. On the contrary, he is there reported to have said, that, " whatever might he the right of the holder of such bill ■with- out notice that the parties were the same, the present petitioner had such notice, and was not entitled to a double proof." Upon the whole, it may be laid down, that, where the drawers and ac- ceptors or indorsers of a bill together form a partnership, but do not also form distinct firms respectively, the holder of such bill must, in all cases, elect whether he will prove it against the joint estate, or against the separate estates of the several parties to the bill. But the case is otherwise when the drawers and acceptors or indorsers of a bill together form a partnership, and likewise form distinct firms respectively.^ § 945. When a debt has been converted with extinguishment, it is obvious that the creditor can only prove it according to its new quaJity.^ But where it has been converted without extin- guishment, the creditor may elect whether he will prove it accord- ing to its old or new quahty. Therefore, where the creditor of a partnership took a joint and several bond from a firm, and after- wards took a bill iadorsed to him by the firm in part satisfaction of his debt, and the bill was proved under a commission against the acceptor, it was held that the creditor might prove under the bond, and, consequently, might proceed against either the joint or separate estate.^ Upon the same principle, where a joint cred- itor took, as a collateral security, a draft from a solvent partner,* — and, again, where a joint creditor took a separate bill for his joint debt,^ — it was held that he might elect to prove according to the quality either of the original or the converted debt. Simi- larly, where a separate creditor took a joint note,^ — and, again, where a separate creditor took a joint bill,'' — it was held that he might elect in like manner. § 946. Where debts have been adopted or converted without ' Post, § 8. '^ See ante, § 907 et seq. ' Ex parte Hay, 15 Yes. 4 ; ante, § 912. * Ex parte Koxby, ante, § 912. ' Ex parte Hodgkinsoh, ante, § 912. ° Ex parte Seddon, ante, § 910. ' Ex parte Lobb, ante, § 911 ; Ex parte Meinhertzhagen, id. 844 BANKRUPTCY OP PARTNERS. [BOOK IV. the creditor's taking a new security, but only giving his assent to the arrangement, this is, a fortiori, a conversion without extin- guishment. And therefore, where a partnership agreed to con- solidate their separate debts, it was held that a separate creditor who had assented might elect.^ So, where the remaining partner agreed to take the joint property and pay the partnership debts, and the partnership was dissolved on these terms, and the trade was continued by the remaining partner, it was held that a joint creditor who had assented might elect.^ § 947. We have already observed, that where a debt has been converted by a debtor, by means of collusion with his (the debt- or's) copartners, the debt may be treated as joint or several.^ Therefore, where a partner held property as a trustee, and, with the knowledge of the firm, applied it to the use of the firm, it was held that the cestui que trust might prove against the joint estate, or against the separate estate of the trustee.* So, where a part- ner had money intrusted to him as assignee of a bankrupt, which, with the knowledge of his copartner, he applied to the uses of the firm, it was held that the sum so applied might be proved against the joint estate, or against the separate estate of the assignee.® But where a partner applied trust-money to the uses of the firm, without the! knowledge of his copartner, it was held that the debt did not thereby become joint, and therefore that the cestui que ' Ex parte Clowes, ante, § 914 ; Ex parte Apsey, 3 Bro. 265. As to as- sent being necessary, see ante, § 918. ' Ex parte Freeman, ante, § 917 ; Ex parte Fry, id. = Ante, § 918. * Ex parte Watson, 2 Ves. & Bea. 414 ; Ex parte Heaton, Buck, 386 ; Story Partn. § 368 ; Gow Partn. (3d ed.), 285. In such case, the copart- ners who have notice of the appropriation of the trust-money to the use of the firm become, constructively, trustees consenting to a breach of trust ; and trustees committing breach of trust are jointly and severally liable. Keble v. Thompson, 8 Bro. 112. Where A. and B., trustees, lent trust- money to a firm of which A. had been a member, B. receiving indemnity for the loan from the cestui que trusts, — upon the bankruptcy of the firm, and also of A., B. was allowed to prove the whole sum lent against the estate of the firm ; and one of the cestui que trusts, who upon coming of age, indemnified B., but did not ratify the loan, was allowed to prove her share of the trust^money against the separate estate of A. Ex parte Beilby, 1 Glyn & Jam. 167. ' Smith V. Jameson, 5 T. K. 601. CH. II.] ADMINISTRATIOiSr. 845 trust was not entitled to elect.^ Where A. employed B. •& C. as his stock-brokers, and, for the purpose of more conyenient trans- fer, allowed certain stock belon^g to him to stand in the name of B. alone, and B. without the knowledge of his copartner, sold the stock and paid the produce into the partnership funds, Sir L. Shadwell held, that, upon the bankruptcy of B. & C, A. was entitled to prove against the separate estate of B., or against the joint estate of B. and 0.^ § 948. Where a firm consisting of a dormant and an ostensible partner become bankrupts, it has been invariably held that a creditor who dealt with the ostensible partner, not knowing that he had a dormant partner, may prove either against the joint es- tate or against the separate estate of the ostensible partner.^ And where there is a joint commission against A. and B., as part- ners, but the latter is a dormant partner, and the joint creditors have resorted to the separate estate of A., thereby diminishing A.'s separate estate, and exonerating the joint estate, so as to produce a surplus of it, the separate creditors of A. have a lien upon that surplus to the extent that their funds have been dimin- ished by the election of the joint creditors.* § 949. Although it is a general rule that a creditor cannot split a demand, and prove part under the fiat, and proceed at law for the remainder ;/ yet it seems that where a demand against a part- nership is secured, as to part of it, by a joint security, and as to the rest by a joint and separate security, the creditor may prove the former part against the joint estate, and the latter part against the separate estate. In Ex parte Ladbrooke,® A., B., and C. were partners.. At the time of their bankruptcy, ^27,620 was ' Ex parte Apsey, 3 Bro. 265. = Ex parte Turner, Mont. & M'A. 255. ' Ex parte Norfolk, 19 Ves. 458; Ex parte Watson, id. 459; and see Binford v. Dommett, 4 Ves. 434 ; Ex parte Hamper, 17 Ves. 412 ; Ex parte Matthews, 3 Ves. & Bea. 125; Ex parte Hodgkinson, Coop. 101; Story Partn. § 393. See French v. Chase, 6 Greenl. 166 ; Lord v. Baldwin, 6 Pick. 348; Cammack w. Johnson, 1 Green Ch. 164; Witter v. Richards, 10 Conn. 37, cited ante, § 822, in note as to the conflicting rights of joint and separate creditors in cases of partnerships having a dormant partner. * Ex parte Eeid, 2 Kose, 84 ; Story Partn. § 393. " Ex parte Matthews, 3 Atk. 816 ; Ex parte Crinsoz, 1 Bro. 270. « 1 Glyn & Jam. 81. 71* 846 BANKRUPTCY OP PARTNERS. [BOOK IV. due from them to their bankers, on a balance of account. Such balance was covered by joint promissory notes of the bankrupts, to the extent of £18,000, and also by a mortgage of some property belongmg to A., with joint and several covenants from each of them for the payment of the whole balance. It was held that the partners were entitled to pursue the joint liability of the bankrupts on the promissory notes, to the extent of the amount of those notes ; in other words, to prove against the joint estate for £18,- 000 ; and that, with regard to the residue, after deducting the mortgage security, which fetched only £300, they were entitled to prove the ultimate remainder of £9,320 against the separate estate of A., by virtue of his several covenant. § 950. Again, A., B., C, and D., partners, gave to their bank- ers a joint and several promissory note for £2,000, to secure future advances. When the advances had amounted to £1,950,, A. executed a separate mortgage to ,the bankers, to secure that^ sum and all future advances, with a proviso, that such advances, together with the sum of £1,950, should not exceed £3,000. The advances made to the partners considerably exceeded, £3,000, and they afterwards became bankrupt. It was held, on the authority of Ex parte Ladbrooke, that the bankers, who had obtained repayment of the £3,000 by sale of the mortgage se- curity given by A., might prove the balance of the debt on the, promissory note against the separate estate of one of the other partners. In this case, it maybe remarked, that on the execution of the mortgage the promissory note was not given up to be can- celled, and, further, that the bankers, on petitioning for liberty to prove, swore that the mortgage was intended to be an additional security to the promissory note.^ § 951. Conversely, where the separate debt of one partner is secured as to part of it by the joint security of the firm as sure- ties, the creditor may prove so much of the debt as is joint against the joint estate, and the residue against the separate es- tate of the debtor. As where A., on his marriage, covenanted to pay £4,000 to the trustees of the settlement, of which £3,000 was guaranteed by A.'s firm, and entered in the books accordingly, on the bankruptcy of the firm, it was held that the trustees might ' Ex parte Bate, 3 Dea. 358. Dissentiente, Erskine C. J. CH. II.] ADMINISTRATION. 847 prove for £3,000 against the joint estate, and £1,000 against the separate estate of A.^ "Where a joint and separate creditor elects to go against the joint estate, he. has no preference over the other joint creditors, upon the surplus of the separate estate.^ SECTION VI. OF THE TIME OF ELECTION, AND WAIVEE OF PEOOF. ^ 952. In Ex parte Bond,^ Lord Hardwicke ordered, that the petitioners, who were joint and several bond creditors of the bank- rupts, should have time to look into the accounts of the bankrupt's joint and separate estates, and see which would be most beneficial for them to come upon in the first place. And it has been deter- mined that the party is entitled to defer his election until a divi- dend has been declared ; * or at least until the assignees are pos- sessed of a fund to make a dividend.^ Lord Thurlow observed : " It is said to be the constant course for a joint and, separate cred- itor to prove against both estates, and to elect at the dividend." ^ § 953. In two early cases, a creditor, who had received a divi- dend under the joint estate, was allowed to refund and claim under the separate estate ; but when these cases were decided, the law as to election of proof was scarcely settled.' Under particular circumstances, however, a waiver of proof will be allowed at this time of day ; ® and that, although the party wishing to waive his proof has received dividends under it. Thus, if the party has not had the means of knowing the state of the fimds as between which he is allowed an election of proof, under such circumstances, even though he may have received dividends from one fund, he will ' Ex parte Hill, 3 Mont. & A. 175 ; 2 Dea. 249. See Ex parte Smith, 1 Dea. 385. « Ex parte Bevan, 10 Ves. 107. See Story Partn. §§ 384-386, and note. » 1 Atk. 98. * Ex pa,rte Clowes, Co. B. L. 261 ; Ex parte Husband, 2 Glyn & Jam. 4. » Ex parte Butlin, Co. B. L. 259. ' ' Ex parte Bentley, 2 Cox, 218. ' Ex parte Rowlandson, 2 P. W. 405 ; Ex parte Bond, 1 Atk. 98. ' Ex parte Masson, 1 Rose, 159. 848 BANKRUPTCY OP PARTNERS. [BOOK IV. sometimes, upon refunding, be permitted to prove against the other. IS^o person, said Lord Alvanley, can he put to elect with- out a clear knowledge of both funds. ^ § 954. In Ex parte Bolton,^ joint creditors of A and B., part- ners, sued out a Separate commission against each. Under the commission against A., they proved against the joint estate, and received a dividend. Afterwards, under the commission against B., they proved their debt, and claimed to receive dividends agaiQst B.'s separate estate, offering to refund the dividend already received with interest ; with an affidavit, that when they received that dividend they were ignorant of their right to prove^ if they thought fit, as the separate creditors of B. Lord Eldon allowed their claim. " No determination," said his Lordship, " approaches a case Uke the present. Here are two separate commissions at the instance of the same creditor. If it were the case of one separate commission thus awarded, the creditor might say, I will take my debt out of either the joint or the separate estate; but, to get at the joint estate, there must be a special order of the Chancellor. The joint property is, therefore, reached but by circuity ; and being thus looked at, if the creditor says, I will rank under the commission as against the joint estate, and so ranking receives a dividend, say to the extent of fifteen shillings in the pound, he still remains the creditor of the solvent partner as to the five, and for that he may bring his action, or he may take out a commission ; and taking out a commission, until he completely knows, and which until then he only indirectly knows, the state of the joint accounts under that commission, he cannot be said deliberately to have elected. I think, therefore, he is entitled to reconsider his mode of proof; and, refunding the joint dividend with the interest, let the proof stand against the separate estate." The case of Ex parte Bolton has been recently followed in Ex parte Law,^ in which it was held that the receipt of a divi- dend from the separate estate of one of the bankrupts did not ex- clude the creditor from receiving a dividend from the joint estate, he being ignorant at the time of proof that he had no right to prove against both estates. ' Whistler v. Webster, 2 Ves. 371. See Wake v. Wake, 1 Ves. 335. ' 2 Rose, 389 ; Ex parte Swanzy, Buck, 7. » 3 Dea. 541. CH. II.] ADMINISTRATION. 849 § 955. But waiver of proof is not to be allowed where it will disarrange the proceedings which have already taken place in the bankruptcy. On a petition for this purpose, by persons who had proved as joint creditors, and wished to prove against the sepa- rate estates of the bankrupts, Lord Erskine made the order, but with the reservation that he would not allow any dividend of the separate estate already made to be disturbed.^ Similarly, where a creditor, seeking waiver of his proof, has signed the certificate of the bankrupt whose estate he decliues, if the waiver would afiect the certificate by reason of the great amount of the credi- tor's debt, or otherwise, then waiver will be refused. In Ex parte Borrodailes,^ the partnership of A., B., & C. had been dissolved by the retirement of A. ; upon which event it was agreed that B. and C. should take upon themselves and pay the debts, and thenceforth be entitled to the stock and effects of the old partnership. After the dissolution, the business was con- tinued by B. and C, who took possession of all the effects, and paid most of the debts of the old partnership ; and the petitioners continued to deal with them. Upon the bankruptcy of A., B., & C, the petitioners were advised to prove, and did prove, a debt of £6,927 against the joiat estate of A., B., & C, but they were not at that time aware that they could elect between the estate of A., B., & C, and the estate of B. & C. They signed the certificate of A., B., & C. The petitioners applied to with- draw their proof of £6,927 made against the joint estate of A., B., & C, and that they might prove the same against the estate of B. & C. But Lord Eldon dismissed the petition with costs. § 956. On the other hand, where the cre"ditor had signed the certificate of the bankrupt from whose estate he wished to with- draw proof, but it appeared that he had a separate debt to a small amount, for which he was entitled to sign the certificate, and that the certificate was signed by creditors sufficient in value without his signature, under these circumstances, Lord Eldon permitted the creditor to alter his proof.^ In the case just cited it was objected to the waiver of the proof, that the very next ' Ex parte Beilby, 13 Ves. 70. ' 1 Mont. Partn. 129, App. ' Ex parte Atkinson, 1 Mont. Partn. 207. 850 BANKRUPTCY OF PARTNERS. [BOOK IV. signature on the certificate after that of the petitioner was by the Bank of England for .£16,000 ; and that, as it was a general rule of the Bank not to sign unless the assignee signed, and the petitioner was an assignee, his signature must have influenced that of the Bank. Lord Eldon, however, seems not to have re- garded this objection. § 957. Nevertheless, the signature of a bankrupt's certificate by an Influential person must of necessity have considerable weight with other creditors. If, therefore, such person, after having signed the certificate, and having by his example induced others to sign, be permitted to waive his proof, it seems difficult to say that such a permission might not, in many cases, mate- rially afiect the interest of third persons. Now, it has been laid down by Sir John Leach, that, where a creditor has done acts by virtue of his proof which may afiect the interest of others, he cannot retract his proof. In the same case his honor held that the petitioners having signed the certificate might, under the cir- cumstances, have influenced others to sign, and was therefore an act afiecting the interest of others; and, accordingly, he refused to allow waiver.^ It seems clear, therefore, that, when a creditor has signed the bankrupt's certificate, and the fair pre- sumption is, that his signature has influenced that of others, he will not be permitted to waive his proof. In one case, the being a party to a petition in the character of a joint creditor was held to be an objection to waiver of proof. But Lord Eldon, on appeal, held the contrajry.^ SECTION VII. OF DOUBLE KEMBDT. § 958. Although, generally, where a creditor holds the security of the firm, and likewise that of individuals composing the firm, he must, upon the bankruptcy of some of them, elect whether he wiU consider them his joint or his separate debtors, and proceed accord- ' Ex parte Solomon, 1 Glyn & Jam. 25. ' Ex parte Husband, 5 Madd. 421 ; 2 Glyn & Jam. 4. CH. II.] ADMINISTEATION. 851 ingly ; yet this rule is not mthont exceptions. For where a cred- itor holds the security of a firm, and also of some of its members, and the latter likewise form a distinct partnership inter se, there are cases where the creditor may have a double remedy.^ Thus, where A., B., C. and D. trade under the firm of A., B. & Co., and 0. and D. are in a distinct partnership, and the firm of A., B. & Co. draw bills upon C. and D., who accept them, the holder of such bills may prove them under the bankruptcy of C. and D., and afterwards bring his action on the bills against A., B. & Co.^ So, if a creditor of A. and B. take out a commission against A., and receive a dividend under that commission out of the joint es- tate, it has been ruled that he may bring an action agauist the other partner for the residue.^ § 959. We have seen, also, that the mortgagee of a partnership, if he elects to prove under the bankruptcy, must give up his secu- rity, and prove the whole -debt, or have the security sold, and prove for the amount of the difference.* But as the rule is, that the deduction of a security is never made in bankruptcy, except when it is the property of the bankrupt, it has been held as a con- sequence of this rule, that, in the case of a separate mortgage made for a joint debt, the security may be retained, though the whole debt be proved under the commission. In Ex parte Parr,^ the petitioners were holders of bills of exchange drawn by persons at Demarara, under the firm of A., B. & Co., and accepted by C. and D., who were in the firm of A., B. & Co., but hkewise carried on a distinct partnership at Liverpool. The acceptors being unable to take them up, the petitioners resorted to the drawers, who, instead of satisfying the bills, assigned to the petitioners a plantation in South America, as a security for the balance due upon the bills, and ' Story Partn. § 387; Gow Partn. (3d ed.) 289. " Ex parte Parr, 1 Kose, 76. ' Heath v. Hall, 4 Taunt. 326 ; Young v. Hunter, 16 East, 258. * Ante, § 939 ; Story Partn. § 389. ' 1 Kose, 76. Generally speaking, in the administration of the bankrupt laws, A., a trader, and A. and B., joint traders, are considered as much dis- tinct as A & X. This appears not only from the cases mentioned in the present section, but from Ex parte Chuck, anie,% 888, from which it seems clear that A. may be reputed owner of property of which A. and B. are the real owners. See, however, an exception to this rule in the ensuing section, § 966, et seq. . 852 EANKETJPXCT OP PAETNBRS. [BOOK IV. the interest. A joiat commission of bankrupt having issued against C. and D., the petitioners applied to prove the amount of the bills and interest ; but the commissioners refused to admit their proof, ■without deducting the value of the security. A petition was then presented to the Lord Chancellor to the same, effect, and the claim of the petitioners was allowed. Loi-d Eldon : " The deduction of a security is never to be made m bankruptcy but when it is the prop- erty of the bankrupt ; it is said that it must be so considered in this case, as the house in Demarara and that in Liverpool were part- ners ; but it is quite familiar, that the same firm may be in one character drawers, and in another acceptors ; and the question, whether the mortgage is the property of the firm, must be met in another way. The commissioners must call another meeting ; the petitioners to prove without deducting their security." § 960. Again, in Ex parte Peacock,^ A. and B., partners, be- ing largely indebted to C, executed to him a joint bond to secure the amount of the sums due. As a further security to C, A. alone executed a mortgage to him of certain fi:'eehold and copyhold prem- ises.' A. died, and a commission of bankrupt issued against B., as surviving partner of A. Lord Eldon held that 0. might prove the whole debt against the joint estate of A. & B., without giving up his security on the separate estate of A. The separate estate, he said, could only be considered as security for the joint estate. So, in a more recent case, A. and B., partners, being indebted to C. m £10,000 on bills, A. alone assigned to a trustee for C. cer- tain debts and other securities belonging to A. Under these securities the sum of £8,414 was received by C.'s trustee. On the bankruptcy of A. & B., it was held that C. might prove for £10,000, without deducting the £8,414 from the proof.2 § 961. The case of Ex parte Connen,^ lately decided by the court of review, is at variance with the preceding authorities. In that case, A. and B., partners, had shares in a joint-stock bank. By the deed establishing the bank, it wa^ provided that all debts due to the company from any proprietor on any account should be the first lien and charge on the shares of such proprietor ; and 1 2 Glyn & Jam. 27 j Ex parte Bowden, 1 D. & C. 135 ; Ex parte Smytli, 3 Dea. 597. ' Ex parte Adams, 3 Mont. & A. 157 ; Ex parte Groom, 2 Dea. 265. ' 3 Dea. 201 ; 3 Mont. & A. 581. See Ex parte Bowden, 1 D. & C. 135. CH. II.] ADMINISTRATION, 853 it was declared unlawful for two or more persons to hold shares jointly. Notwithstanding this last-mentioned provision, A. and B. agreed that their shares should be partnership property, and they dealt with them accordingly, although the shares stood in their separate names. A. and B. became largely indebted to the bank on their partnership account, and afterwards became bankrupts. The bank then petitioned to prove the debt against the joint estate, without giving up or seUing the shares, or having the value deducted from the joint proof of debt ; but the court of review dismissed the petition. It appears, however, that Cross J. dis- sented from the opinions of the other judges, and it cannot be denied that his judgment is founded on very satisfactory reason- ing-^ § 962. But notwithstandiag this decision, it seems clear, upon the other authorities which have been mentioned, that a separate security by way of pledge or mortgage, for a joint demand, does not diminish the claims of the creditor as a joint creditor ; and that, consequently, his security is twofold.^ But a joint security given for a demand against the partaership does diminish the creditor's right of proof to the extent of the value of the secu- rity. Therefore, where goods in which the bankrupts were jointly interested were pledged with a creditor, to secure the payment of an acceptance of the bankrupts, and part of the proceeds were received by the creditor before he apphed to prove, it was held that he must deduct the amount so received before he could prove on the acceptance.^ And, of course, a security for a separate de- ' The other judges seemed to rely on the rule in Ex parte Eowlandson, ante, § 940, which, however, was not a case of lien. ' Where a partner gives a mortgage upon his separate property, to secure a partnership debt, he thereby becomes a surety for the firm, and is entitled to the rights and privileges of that character. His separate creditors suc- ceed to his rights and privilege as such surety. He, and his separate cred- itors, therefore, have a right to insist that the partnership property, being primarily liable, be first applied towards the payment of the debt, secured by such partner, before resort is had, for that purpose, to the separate estate of the surety. Averill v. Loucks, 6 Barbour's Supreme Court Kep. 470. Should the separate estate of the surety be first applied in payment of such debt, his separate creditors will be entitled to be subrogated to the rights of the creditor as against the partnership fund. Averill v. Loucks, ubi supra; Wilder v. Keeler, 3 Paige, 167, 170 ; Besley v. Lawrence, 11 Paige, 588. • " Ex parte Prescott, 4 D. & C. 23. 72 854 BANKRUPTCY OF PAETNEBS. [BOOK IV. mand does not extend tq secure a joint demand. Where, there- fore, a partner deposited title-deeds in his own name, as a security for any payments or guaranties which the creditor should make for that f miner, and, upon the faith of the deposit, the creditor nego- tiated and guarantied the payment of the bills of the firm ; it was held that the security was separate only, and did not extend to guarantee the creditor against his liability on the bills.^ SECTION vm. OF DOUBLE PROOF. § 963. Where the partiep to an instrument are partners, and a creditor is permitted to prove against them, according to and to the full extent of the respective liabilities, as apparent on the face of the instrument, without regard to the connection subsisting be-, tween them, such mode of proof may be designated as double proof? The leading case on this subject is Ex parte La Forrest.^ There, Corson and Gordon, partners and turpentine-manufactur- ers, entered into partnership with Whincup and Griffin, soap- manufacturers. The latter business -^as carried on under the firm of Whincup & Griffin. A joint commission issued against the four, under which they were found bankrupts ; and the as- signees possessed themselves of the joint fund of the four, and also the joint fund of Corson and Gordon, and their respective separate estates. Corson and Gordon, in their partnership firm, drew bills of exchange upon the firm of Whincup & Griffin, who accepted such bUls. The petitioners discounted many of these bills. The petitioners alleged, that, at the time of such discount, ' Ex parte Freen, 2 Glyn & Jam. 246. ' It is laid down by Mr. Cooke, in relation to double proof, tliat where the same persons are concerned in several firnis, and issue bills on which the names of the respective firms Stand as drawers, indorsers, or acceptors, a party taking such bills, conceiving them to be distinct houses of trade, may prove against each estate. Co. B. L. 261 ; Story Partn. § 388. See Borden v. Cuyler, 10 Gushing, 476. ' Co. B. L. 261. CH. II.] ADMINISTEATION. 855 they were ignorant of any partnership existing between the four, but that they considered Gorson and Gordon, the drawers, and Whiacup and Griffin, the acceptors, as two distinct firms ; and thought that they had the security of the funds of both those firms. The. petitioners applied to the commissioners to be ad- mitted to prove against the respective joint estates of Corson and Gordon, and of Whincup and Griffin ; but the commissioners re- fused, conceiving that the bills ought to be proved only against the joint estate of Whincup, Griffin, Corson, and Gordon. Lord Loughborough held, that admitting the allegation of ignorance on the part of the petitioners to be true, they were entitled to the proof which they required.^ Again, A., B., and C. were part- ners in- a cotton manufactory, and B. and C. carried on a distinct trade in partnership, as grocers. The petitioner sold goods to B. and C. as grocers, for which they remitted to him a bill drawn by A. in their favor upon one Z., and indorsed by B. and C. Z. accepted the bill, but it was protested for non-payment. The drawer, indorsers, and acceptor all became bankrupts. The peti- tioner did not know that A. had any connection in trade with B. and C. Lord Loughborough ordered that the petitioner should be at liberty to prove the amount of the biU against the joint estate of B. and C, and also against the separate estate of A., and be paid dividends upon both estates.^ Again, five persons, trading under the firm of C. & Co., drew a bill of exchange on two of the members of the copartnership, who carried on a dis- ^ His Lordship accordingly ordered the commissioners to inquire hy ex- amination of the respective parties upon oath, and otherwise, whether the petitioners, or either of them, at the time of their respectively taking the respective bills of exchange and promissory notes, in the petition mentioned, knew that Alexander Corson and James Gordon, and Whincup and Griffin, were concerned and engaged in one partnership, carried on under the firm of Whincup' & Griffin, or not. And if the petitioners knew of such part- nership, then they were to be at liberty to apply to the court, as they should be advised, for further directions ; but if the petitioners did not know of such partnership at the time of their receiving the said bills of exchange and promissory notes, of which they were respectively possessed, then such of the petitioners as did not know of such partnership were to be admitted to prove against the respective joint estates of Corson and Gordon, and of Whincup and Griffin, and to receive dividends therefrom with the other creditors. ' Ex parte Benson, Co. B. L. 263. 856 BANKRUPTCY OF PARTNERS. [BOOK IV. tinct trade as H. & G. The bill was accepted, negotiated, and, in the course of circulation, came into the hands of the petitioner, without any knowledge on his part of the connection between the parties. Upon the bankruptcy of C. and Co., the petitioner claimed to prove both against the drawers and acceptors. Lord Eldon held that the petitioner, as ignorant of the connection of the parties, was entitled to such proof.^ § 964. In all these cases, the partners, who appeared as dis- tinct parties to the bills, were also in distinct partnerships ; and yet the holders of the bills, in order to obtain double proof, were required to prove their ignorance that these distinct partnerships also formed an aggregate partnership. Nevertheless, according to a learned writer,^ Lord Eldon has determined, that, where the firms are in fact distinct, it is not material that the ignorance of the holder that the same parties were also united in one firm should be requisite, to entitle him to proof. Now, although this remark does not seem to be supported by any express authority, yet it is justified by several dicta of Lord Eldon, and by the case of Ex parte Walker,^ which is in point. There, A., a sole trader, B. and C. partners, and D., also a sole trader, engaged in a joint adventure ; and for a joint purchase of goods by them, the vendor, with a Jcnqwledge of their joint interest, received in payment a bill drawn by A. on, and accepted by, B. and C. Lord Eldon held, that on the bankruptcy of A., and of B. and C, the vendor was entitled to prove the bill against both their estates. On other oc- casions, likewise. Lord Eldon appears to have adverted to double proof, without ever referring to the ignorance of the holder of the double security, that the distinct firms constituted one general firm.* § 965. On the other hand, there is a recent case in which Sir George Rose is reported to have said, that the holder of a bill is not entitled to double proof if he knew the difierent persons whose names appear upon it to be all members of one joint firm.^ Upon the whole, it seems still open to contend, that where a bill is drawn ' Ex parte Adam, 2 Kose, 36. ' Eden, B. L. 182. And see ante, § 944. » 1 Rose, 441. * Ex parte Bonbonus, 8 Ves. 546 ; Ex parte Bank of England, 2 Rose, 83. ' 2 Dea. 261. CH. II.] ADMINISTRATION. 857 by some of the partners upon the others, or upon the whole firm, or viae versd, and the hill purports, and the fact is, that the draw- ers and acceptors likewise constitute distinct firms respectively, in such case the holder, whether ignorant or not of the aggregate connection of the parties, is entitled to pursue the contract appear- ing on the face of the bill, and to prove against both the estate of the drawers and that of the acceptors.^ § 966. But a creditor cannot be permitted to avail himself of double proof, to the extent of proving against the joint and sepsr rate estate of the same individual.^ Thus A., carrying on busi- ness on his separate account, and also in partnership with B., gave a biU of exchange drawn by himself, payable to the order of A. and B., and indorsed by them. A separate commission issued against A. ; B. died. The holder of the bills, having proved them against the separate estate of A., and having afterwards learned that distinct accounts were to be kept of the estates of A. and B., applied to be at liberty to prove against the joint estate of A. and B., ih addition to his proof against the separate estate of A. But Lord Eldon only gave him the election either to retain his present proof, or to withdraw it, and "prove against the joint estate.^ § 967. So, in Ex parte Liddell,* A., B., and C. carried on busi- ness in partnership, under the firm of A. & Co. K., in ignorance that C. was in the' firm, took from them a bill of A. & Co., drawn upon and accepted by C. A. & Co. having become bankrupts, and B. being a minor, separate commissions issued against A. and 0. Unider each of these commissions, K. proved as a joint creditor, and received a dividend out of the joint effects. He was then per- mitted by the commissioners to prove against C.'s separate estate, in respect of the acceptance. But upon a petition by the assignees of 0., praying that this proof might be expunged. Lord Eldon or- dered according to the prayer, observing, that the creditor had made a conclusive election ; that, having adopted the aggregate liability of all his debtors, he was excluded from resorting to them individually. » See Story Partn. § 388. ' Story Partn. § 388. ' Ex parte Masson, 1 Rose, 159. * 2 Rose, 34. 72* 858 BANKRUPTCY OF PAKTNBES. [bOOK IV. § 968. Again, in a case/ where A., B., aind C, partners, in- dorsed a bill over to C, who was also a distinct trader, upon their bankruptcy Lord Eldon refused to allow the Bank of England, who had discounted the bill, to prove against both estates. His Lordship said, that unless this case could stand upon the circum- stance of C. being a distinct trader, it could not stand at all ; and that circumstance resolved itself into nothing more than a resort to his separate estate, which, resorting at the same time to the joint estate, a creditor was not entitled to do in bankruptcy. The pe- titioners therefore must elect. § 969. The more modern case of Ex parte Husband ^ appears to have, been decided on the same principles. There, A. and B. being partners, the latter a dormant partner. A., on the partner- ship account, drew bills in his own name on B., who accepted them. A. and B. having become bankrupts. Lord Eldon held that the holder of these bills, who was ignorant of the partnership, was not entitled to prove them against the joint estate of A. and B., and the separate estate of B., but that he might elect to prove them against the joint estate of A. and B., or the separate estates of A. and B. "It is clear," said Lord Eldon, "that where a party takes a bill, drawn by some members of a firm, carrying on a distinct trade, on the firm, in ignorance that the drawers consti- tute part of the firm of the acceptors, proof is admitted against both the drawers and acceptors ; and it is equally clear, that a person holding a joint and separate security for the same debt is in bankruptcy bound to elect. In this case, however, the bills are accepted by the dormant partner of the partnership of A. and B., carrying on business under the name of A., and are drawn by A. in his individual name, indeed, but, as I take it on the evidence, in his name as representing the firm of the two bankrupts. It does not appear to me that this case ranges itself within that class of cases in which, contrary to the ordinary rule in bankruptcy, the holder has been allowed to pursue the contract appearing on the face of the bills, and to have double proof." ^ ' Ex parte Bank of England, 2 Rose, 82. In Ex parte Kirby, Buck, 511, this mode of proof was allowed by the commissioners, and disallowed by the Chancellor, but apparently on other grounds. 2 2 Glyn & Jam. 4. * It is to be observed, however, that a case of this nature could scarcely CH. II.] ADMINISTRATION. 859 § 970. The preceding observations were written before the case of Ex parte Moult ^ was argued before the court of review. There, Williams, Deacon & Co., were holders and indorsees for value of two bills of exchange at three months. The bills were drawn by Barrow & Co. upon, and accepted by, Johnston & Co. They were indorsed by the drawers to Geddes & Co., and by them to Radchffe & Co. Barrow & Co. were commission-agents at Man- chester, and that business was carried on by Barrow & Geddes. The firm of Johnston & Co. carried on business as warehousemen in London, and that business was conducted by Johnston & Geddes; The firm of Geddes & Co. carried on business as cotton manufac- turers at Stockport, and that business was conducted by Geddes alone. The firm of Radcliffe & Co. carried on buaness as cotton- spinners at Chester, and that business was carried on by Geddes & Radcliffe. "Williams & Co., at the time of taking the bills were ignorant that Geddes was a partner with Barrow & Co. In Sep- tember, 1828, a joint commission of bankrupt issued against Bar- row & Geddes, and in October following, a commission was sued out agaipst Johnston & Co. In November of the same year, WilUams & Co. being the holders of the two bills, proved them under Johnston & Co.'s commission, under which dividends had been declared to the amount of 2s. 8d. in the pound. In 1830, Williams & Co. proved the same bills under the commission against Barrow & Geddes ; first, against the joint estate of Bar- row & Geddes, for the whole amount ; and, secondly/, against the separate estate of Geddes for the amount minus the dividends de- clared under Johnston's commission. This proof being allowed by the commissioners, the assignees of Barrow & Geddes appealed from that decision, and prayed that Messrs. Williams & Co. might be ordered to elect before the commissioners whether they would arise again. For, in pursuance of the doctrine laid down in Smith v. Wat- son, the estate of A. would comprehend the joint chattels of A. and B., B. being a dormant partner. , ' Mont. 337 ; 1 D. & C. 44. On appeal, Mont. & Bl. 28 ; 2 Dea. & C- 419. Before the decision in Ex parte Moult had settled the law on this sub- ject, dividends had sometimes been received upon principles.at variance with that decision. In a case where seven years had elapsed since a dividend, inconsistent with Ex parte Moult, had been received, the court of review refused to order the party to refund, but made a prospective order. Ex parte Soper, 1 Mont. & A. 55 ; 4 D. & C. 569. 860 BANKRUPTCY OF PARTNERS. [BOOK IV. remain creditors of the joint estate of Barrow & Geddes, or of the separate estate of the latter. The judges of the court of re- vie-w were divided in opinion upon this important question ; Er- skine 0. J., and Rose J., being of opinion, that the double proof was inadmissible, and that the creditor must elect; the other judges, on the contrary, being in favor of the double proof. On appeal to Lord Brougham C, his Lordship, on the authority of Ex parte Husband, affirmed the judgment of the two judges who were against the' double proof. It is difficult not to think that the question agitated in Ex parte Moult was long ago virtually con- cluded, if not by many dicta and some few decisions, at least by the leading principle which guides the administration of the bank- rupt laws. But however that may be, the case of Ex parte Moult may n^ow be considered as a decisive authority on this subject. § 971. The principles of that case and Ex parte Husband have been carried still further, if possible, in a case Ex parte Chevalier.! There V. & Co. who carried on business in part- nership as merchants in the Brazils, drew a bill upon V., one of the partners, who traded on his own account ui England. The bills were made payable to the agents of the government of the Brazils, and were accepted by V- They were not paid. Process of insolvency afterwards issued against the foreign firm, and a commission issued against the English partner. It was held thalt the agent, though he might prove under the commission, yet must be restrained from receiving dividends, unless he elected not to prove under the insolvency abroad.^ SECTION IX. OP PKOOr BETWEEN PARTNERS. § 972. A debt due from one partner to another on the partner- ship account is provable under a commission against the debtor partner ; for, in this case, the creditor stands in the situation of I 1 Mont. & A. 345. ' See as to the remedy in these cases, following the law of England, ante, § 646, note. See Borden v. Cuyler, 10 Gushing, 476, 4.77. CH. II.] ADMINISTRATION. 861 " a surety, or person liable for tlie debt of the bankrupt, and -who has paid the debt." ^ The debt so provable -will bar the bankrupt partner's certificate ; but the solvent partner can only prove under certain restrictions. Thus, first, it is a settled rule that a solvent partner cannot prove under a commission against his copartner, so as to come in competition with the creditors of the partnership ; that is, he has no right to receive any portion of his debt until aU the creditors of the partnership are paid 20s. in the pound, as well as all interest due upon their respective debts subsequent to the date of the commission. The above rule is founded on this plain principle of reason and justice, namely, that a partner, who is himself hable to all the creditors of the partnership, ought not to take away any of the funds before all the creditors (to whom he is so liable), are duly paid.^ § 973. Again, a solvent partner cannot prove against his co- partner, in competition with the separate creditors, unless the joint creditors are first paid. For, if a dividend were reserved to him, on such proof, the joint creditors might be injured by the partner stopping in transitu^ the surplus of the separate estate, which would otherwise be carried over to the joint estate ; or the separate creditors might be injured by their funds being stopped prospectively, upon the faith of the partner being afterwards able to pay the joint debts.* § 974. In order to admit the proof of one partner against another, it is likewise necessary that the partnership debts should have been bond fide satisfied, either by payment of the whole or ' 6 Geo. 4, e. 16, s. 52 ; Ex parte Watson, 4 Madd. 477 ; Wood v. Dodg- son, 2 Mau. & Sel. 195 ; Afflalo v. Fourdrinier, 6 Bing. 309. The same doctrine prevails under the bankrupt law of the United States, 1841. Butcher v. Forman, 6 Hill (N. Y.), 583. ' Deac. B. L. 664 ; Ex parte Keeve, 9, Ves. 558 ; Ex parte Ogle, Mont. 351 ; Ex parte Burrell, Co. B. L. 505 ; Ex parte Broome, 1 Kose^ 69 ; Ex parte Rawson, Jac. 277 ; Ex parte Kobinson, 4 D. & C. 499 ; M'Owen v. Hunter, Drury & Walsh, 347 (Irish) ; Story Partn. §§ 390, 406 ; Gow Partn. (3d ed.), 290, 291. ' But where the solvent partner has possession of the goods, he cannot be sued by the assignees of the bankrupt partner for the bankrupt's share of the goods, until they first satisfy all that is due from him to the partner- ship. 8 Barn. & Cres. 618. « Story Partn. § 406. ^62 BANKRUPTCY OP PARTNEKS. [BOOK IV. of part in discharge of the whole. ^ Therefore, althougli there have been cases to the contrary,^ it is not sufficient, in order to enable the solvent partner to prove against the bankrupt partner, that the former should imdemnify the estate of the latter against the joint debts. This was decided in Ex parte Moore .^ There, A. and B. were in partnership as bankers at Boston, and A., B., and C, were in partnership as bankers at Spilsby. A commission of bankrupt having issued against the Boston bank, a large debt was proved against that firm by the Spilsby firm, and a dividend received thereon. After receiving these dividends, and getting in all the good debts, there was still a deficiency of assets in the Spilsby firm to the amount of £29,841 3s. M. Of this defi- ciency C, by his petition, alleged that he had already paid and secured to be paid £16,668 17s. 3c?., and had the further sum of £2,450 applicable to the same purpose. He therefore petitioned, B. being insolvent, to prove a portion of such deficiency against the estate of A. Sir John Leach having allowed the petitioner's claim, upon appeal to Lord Eldon the order was reversed. Lord Eldon : " I cannot get rid of the difficulty which the act of Par- liament has interposed. That proof may be made by a surety paying after the bankruptcy is clear ; whether he pay the whole debt, or part in discharge of the whole ; but I cannot bring myself to think that the petitioner is within either alternative, or that there has been in this case any thing more than payment of part as part only. Of what consequence is it that he has given an indemnity ? The meaning of the act clearly is, that two per- sons shall not stand upon the proceedings in respect of the same debt ; and if the indemnity have not expunged from the proceed- ings, to all substantial purposes, the name of the original creditor, then the person giving indemnity does not come within the mean- ing of the act, as a surety or person hable paying the debt, or paying part in discharge, or making an engagement which is ac- cepted in discharge of the debt. I say, that tiU indemnity is given, which is accepted by every joint creditor as a discharge of the debt, a partner never can, according to my present notion, be ' Stat. Geo. 4, c. 16, s. 52. 2 Ex parte Ogilvy, 2 Rose, 177; Ex parte Taylor, 2 Rose, 175; Ex parte Stoveld, 1 Glyn & Jam. 303. « 2 Glyn & Jam. 166. CH. II.] ADMINISTRATION. 863 considered as a person liable, paying tlie debt, or part in dis- charge of the debt, -within the meaning of the act ; and till he fills the character there designated he cannot prove." § 975. It appears, that in this case of Ex parte Moore the very fact of admitting the solvent partner's proof against the sep- arate estate would have enabled him instanter to pay all that re- mained due to the joint creditors ; ^ a circumstance which shows the strictness of the rule in question. And, in a subsequent case, it was held that a solvent partner cannot even enter a claim against the separate estate, before payment of the joint debts. In Ex parte Carter,^ one of several partners sold out stock to a large amount, and advanced the proceeds to the firm. The loans were secured by two joint bonds executed by the other partners. The lender died, and at the time of his death there was due to his es- tate the money secured by the bonds, and also a large sum upon an account current. The executors filed a bill against the surviv- ing partners for an account and a receiver ; but, pending the suit, the surviving partners became bankrupts. The executors then petitioned to prove the amount secured by the bonds, as also to enter a claim for the whole amount due to them against the sepa- rate estate of one of the partners, there being no joint estate. Sir John Leach directed the proof as prayed. Lord Eldon, however, overruled this decision, on the same grounds on which he decided Ex parte Moore. "It is clear," he said, "that the deceased partner's estate, being liable, has neither paid the whole nor part in discharge of the whole debt ; and an undertaking to pay, I was too well satisfied in Ex parte Moore, was not sufficient. Nor do I see, in principle, how the entering a claim differs from the estab- lishing a proof, since it operates just as effectually in interrupting the payment of the creditors ; and if it interrupts the payment of the creditors, it is equally an interference with their rights, whether the dividends be received by the suret;/ in the first in- stance, or paid into the bank m trust for him. To this conclusion I have been compelled to come ; nor can I conceive how the com- mencement of a suit in equity before the bankruptcy can make any difference as regards the rights of the creditors." ' See 2 Glyn & Jam. 237. ' 2 Glyn & Jam. 233. 864 BANKRUPTCY OP PAETNERS. [bOOK IV. § 976. The preceding cases were followed from tkat of Ex parte EUis.^ There, A., B., C, and D. were partners. In January, 1826, D. retired, taking a bond for what was due to him from the firm. It was agreed, however, that D.'s name should continue in the firm till the 1st January, 1827, In the middle of 1826, B. and C. retired, and gave notice of their retireinent. From this period A. conducted the business for his own benefit alone, but in the name of A. and D., and contracted various debts, for which D. became jointly accountable. In June, 1827, A. became a bankrupt. D. then apphed to prove the bond and interest, and that the commissioners might be directed to ascertain the amount of the debts for which the petitioner was liable jointly with the bankrupt, with liberty to the petitioner to enter a claim for the amount, and to prove and receive dividends- upon such debts as he should pay, or against which he should indemnify the bank- rupt's estate. But Lord Lyndhurst dismissed the petition on both points, observing, that, for the purposes of proof, the petitioner must be looked upon as a partner, since he had authorized the use of his name as such. And therefore, that, until he should pro- duce a discharge from the joint creditors, he could receive no re- lief. Upon the whole, therefore, the general rule is very strict, that no solvent partner can prove against the estate of his bank- rupt copartner, without having first bond fide discharged all the joint- debts. Moreover, as between such solvent partner and the joint creators, interest must be included in the joint debts ; and therefore no partner will be permitted to prove until interest as well as principal shall have been paid on such debts.^ § 977. But the general rule in question, like all other general rules, is quahfied in cases of necessity. Therefore, when the sol- vent partner, without his own default, is unable to procure a dis- charge from every joint creditor, as, for instance, where one of the joint creditors is a lunatic ; in such case, it seems, he will be per- mitted to prove against the separate estate upon giving security for the debt which cannot be discharged, and paying the residue of the joint debts.2 " 2 Glyn& Jam. 312. ' See Ex parte Ogle, Mont. 350. ' Ex parte Young, 3 Ves. & Bea. 33. CH. II.] ADMINISTEATION. 865 § 978. There are some cases, also, where, notwithstanding that the retiring partner has not paid all the tiemands of the partnership, he has heen permitted to prove against the joint estate, on the groimd of the joint creditors having assented to the arrangements made between the retiring and remaining partners, or being barred by length of time from objecting to the retiring partner's proof. Thus, where a partnership has been dissolved upon the terms of the retiring partner taking a security from the remaining partner for the balance due to him, and the remaining partner was treated by the joint creditors as their sole debtor, and he afterwards be- came bankrupt, it was held that the retiring partner might prove his debt against the separate estate of the bankrupt, although some of the partnership debts were unpaid.^ In this case it may be remarked that the retiring partner had been a dormant part- ner. § 979. So, where, upon the death of one of three partners, his executors carried on the trade with the surviving partners for a twelvemonth, and then dissolved the partnership, upon which occa- sion the two continuing partners gave the executors a bond to se- cure the balance due to them, .and more than six years afterwards the two became bankrupt, it was held that the executors had a right to prove the amount of the bond against the joint estate of the two continuing partners .^ § 980. Again, where a person on the eve of bankruptcy induces another by fraudulent means to become his partner, and the latter advances capital to the concern, a case might be stated where the latter would be allowed to prove the amount of the capital so advanced, 'pari passu with the separate creditors of the bankrupt. However, such proof wiU not be allowed where the person defrauded has held himself out to the world as a partner, though only for a short time. In Ex parte Broome,^ A., in consideration of a pre- mium, took B. into partnership with him, and guarantied to him a profit of £400 per annum. Shortly after the partnership began, B. ascertained that A. was insolvent, and that he had formed the partnership merely to retrieve his affairs, which were desperate. Ex parte Grazebrook, 2 D. & C. 186. Ex parte Hall, 3 Dea. 125. 1 Tartan 71 ' 1 Rose, 71 73 866 BANKEXTPTCT OF PARTNERS. [BOOK IV. B. then filed a bill for the purpose of having the partnership de- clared void on the ground of fraud. A receiver was ordered upon a motion in this suit. Afterwards A. became a bankrupt. B. petitioned to prove the premium, and receive a dividend with the other creditors of A. Lord Eldon expressed himself at first in- clined to grant the prayer of the petition provided the petitioner would abandon the suit in equity and the receiver, but took time to consider. Afterwards (observing, that, although the petitioner might have an equity to be considered as never having been a partner, yet that it was extremely difficult to say that, as to third persons, he was not a partner), his Lordship made an order, that the petitioner should be at liberty to enter a claim only for the amount of his demand, but not to prove with the separate cred- itors. § 981. The exceptions mentioned in the preceding article are of a very special nature, and can seldom occur to relax the general rule ; but, where one of several partners becomes bankrupt, being at the time of his bankruptcy indebted to the partnership, the sol- vent partner, upon discharging all the partnership debts, though after the bankruptcy, may prove pari passu with the separate creditors of the bankrupt, in respect of the debt so owing to the partnership.^ § 982. In Ex parte Younge,^ A., B., and C. being in part- nership, C. fraudulently borrowed money and drew bills in the partnership name, for his private use. C. afterwards absconded, and a commission of bankrupt was issued against him, under which he was declared a bankrupt. After the bankruptcy, A. and B. paid all the joint debts, including those so fraudulently contracted by C. Lord Eldon held that they were entitled to prove the amount of the latter debts under the commission against C, in competition with his separate creditors. " It has been objected," said his Lordship, " that the proof cannot be admitted, because thereby the solvent partners are admitted to prove in competition with their creditors. In the case, as it now stands, there is no such competition ; all the partnership creditors have been paid ; and, although they have been paid after the bankruptcy, yet the • Ex parte King, 17 Ves. 115. " 2 Kose, 40 ; 3 Ves. & Bea. 31. CH. II.J ADMINISTKATION. 867 effect is the same : the proof will not be in competition with them. The bankrupt's estate, it has been insisted, must, by the rules in bankruptcy, go exclusively to his separate creditors ; but in every fair and equitable understanding of the respective situations of the parties, are not the solvent partners to be considered as his separate creditors ? In bankruptcy, the administration of the estate is both legal and equitable. Prior to the bankruptcy, the solvent partners might have filed their bill to compel the bankrupt to pay that money which he had so misapplied ; and how is that equity shaken by the bankruptcy? Although the two solvent partners, impeded by the technical form of legal proceedings, could not have niaintained an action against the bankrupt, yet, undoubtedly, upon equitable principles, the bankrupt was a trus- tee for, and accountable to, them ; and a court of equity would have taken care to modify its equitable remedy, unshackled by the formal impediments of law. The bankruptcy, embracing equita- ble as well as legal principles, leaves that remedy unaffected." His Lordship proceeded to show that the proof was also allowable under the 49 Geo. 3, c. 121, s, 8, — now the 6 Geo. 4, c. 16, s. 62. § 988. The solvent partners paying the partnership debts may, if the separate creditors have been paid, be reimbursed the prin- cipal moneys due to them, before the separate creditors receive interest out of the surplus of the bankrupt partner's estate,' and it is no impediment to this proof by the partners, that the balance of the partnership accounts is not ascertained.^ Moreover, if more than one partner become bankrupt under similar circum- stances, the solvent partner may prove against the separate estate of each for the share of the debt which may be due by each to the partnership. § 984. Generally, if, upon the bankruptcy of one of several partners, the joint creditors are all paid in full out of the joint estate, but the balance of accounts is in favor of the solvent part- ners, the latter may be reimbursed out of the bankrupt's share of * Ex parte Rix, Mont. 237. In some cases the solvent partner may be appointed receiver of the partnership effects, and that on petition only. Ex parte Stoveld, 1 Glyn & Jam. 303. But see Ex parte Tupper, 1 Eose, , 179. " Ex parte Robinson, 4 D. & C. 499. 868 BANKRUPTCY OF PARTNERS. [BOOK IV. the partnership estate, and may prove the deficiency against his separate estate, so as not to disturb dividends already made.^ Where, therefore. A., B., and 0. were partners, and C. became bankrupt, ahd under the commission against him 17s. in the pound were paid to the joint creditors, and there was sufficient joint estate to pay the remainder, it was ordered upon the petition of A. and B., that an account should be taken of the debts respec- tively due from the partnership of A., B., and C. to the petitioners respectively ; and that the surplus, if any, of the funds of the joint estate, after paying 20s. in the pound to the joint creditors, or after retaining enough for that purpose, might be paid over to the petitioners, in or towards satisfaction of the debts that might be due and owing to them respectively ; and that in case, after such payment, any balance should remain due and owing to the petitioners respectively from the bankrupt, the petitioners might be admitted to prove as creditors against his separate estate for the amount of their respective balances with the other separate creditors of the bankrupt.^ § 985. When a partner retires from a firm, and the remaining partner covenants to indemnify him against all outstanding de- mands, upon the bankruptcy of the remaining partner, the partner who has retired may, upon payment of all partnership debts for which he was liable, prove the amount so paid as a debt under the commission.^ Nor will the right of proof be necessarily afiected by the circumstance, that the partner, at the time of his retire- ment, knew that the house was insolvent. Thus, in Ex parte Car- penter,* it appeared that, in December, 1818, A., B., C, and D. dissolved partnership as bankers, by deed, by which it was agreed that A. and B. should retire, and the business be carried on in future by 0. and D. C. and D. covenanted to indemnify A. and B. against all outstanding demands. In October, 1825, C. died, 1 See Story Partn. ■§ 407 ; Gow Partn. (3d ed.), 821. ' Ex parte Terrell, Buck, 345 ; Goss v. Dufresnoy, Davies B. L. 371. " Parker v. Kamsbottom, 3 Barn. & Ores. 257 ; 5 Dowl. & Ryl. 138 ; Gow Partn. (3d ed.), 324. And if he neglect to prove, and the bankrupt partner obtain his certificate, the certificate will be a bar to an action afterwards brought by the solvent partner on the covenant of indemnity. Wood v. Dodgson, 2 Rose, 47; 6 Geo. 4, c. 16, s. 62. * Mont. & M'A. 1. CH. II.] ADMINISTRATION. 869 and a commission issued against D. A. having been obliged to pay certain partnersMp debts which C. and D. had undertaken to indemnify him against, it was held that he might prove under the commission for the amount so paid, although he knew the firm to have been insolvent at the time of the dissolution in 1818. It appears, however, that the decision in this case would have been otherwise, if it could have been proved that the object of the bankrupt was to let the retiring partner escape ; that they looked to a bankruptcy, and were therefore indifferent as to what might happen to them- selves ; or that the whole scope of the deed was to allow the re- tiring partner to get clear of the transaction. § 986. Where a solvent partner pays all the joint debts, and proves against the separate estates of his bankrupt copartners for the respective sums each is bound to contribute, it has been a question whether, if the estate of one of the bankrupts is insuffi- cient to pay his share of the debts, the solvent partner can come against the other bankrupt's estate for his proportion of the defi- ciency, besides the original contributory proportion already proved against his estate. It was held by Sir John Leach, when Vice- Chancellor, that this could not be done ; but that the solvent partner could only prove for such sum as at the time of the hank- ruptey each partner was bound to pay or provide, on the principle that proof is equivalent to payment, without regard to the amount of the dividend, and also that proof cannot thus be mounted upon proof.^ Lord Eldon, however, on two occasions, expressed an opinion at variance with this doctrine.^ And in Ex parte Moore, ' Ex parte Watson, Buck, 449 ; Ex parte Smith, id. 492. " Ex parte Hunter, Buck, 552 ; Ex parte Moore, 2 Glyn & Jam. 172. In Peter v. Kich, Kep. in Chanc. 1 9, two out of three sureties were compelled to pay in moieties, the third being insolvent. But it is otherwise at law ; see Cowell V. Edwards, 2 Bos. & Pull. 268 ; Brown v. Lee, 6 Barn. & Ores. 689. It is said, arguendo, in Ex parte Watson, Buck, 454, that the case of Wright V. Hunter, 1 East, 20, is an authority for the proposition, that, if one partner pay more than his share of the partnership debt, he may in an action re- cover the amount so paid against any one of the other members of the firm. But in that case the defendant, though partner with the plaintiff in the ship, was also in a distinct partnership with other persons as ship's purser. The action was brought to recover moneys which the plaintiff had been compelled to pay on the purser's account. Therefore, quoad this transaction, the plain- tiff was deemed to be in the situation of an ordinary creditor of the defend 73* H70 BANKRUPTCY OF PAKTNEKS. [bOOK IV. Ms Lordship, in reference to the decisions of Sir John Leach on this subject, observed as follows : " His Honor has been pleased to say that proof is paymept. Now, with great deference, I doubt whether the expression that proof is payment, can be correctly used. If, indeed, the money were paid at the moment the proof was made, it might be a question ; but in the case of three part- ners, and one becoming a bankrupt, and another paying the whole debt, that partner's right of proving a moiety of the whole debt against the other partner would be quite clear, if it were clear that proof against, the bankrupt partner could produce nothing ; for the same equity which exists among them if they all remain solvent, must be the equity which prevails among them when they become bank- rupt ; and the difficulty of ascertaining, at the time the bankruptcy takes place, who is solvent and who is not solvent, can never inter- fere with the substantial rights of the parties. I am incHned, therefore, to agree with the case supposed by Mr. Montagu, that, if A., B., and C. are partners, and there is a deficiency of ^630,000, and 0. is wholly insolvent. A., paying the whole of such deficiency, is entitled to prove £15,000 against B., B. haviog the benefit of proof for £5,000 against C. I take it to be clear, that, if A. have two partners, and he pay more than his share, and one of his partners is insolvent, that insolvency is a mischief in which the other partner must partake, as well as he who seeks to prove." Upon the principle of the supposititious case referred to by Lord Eldon, the case of Ex parte Plowden ^ appears to have been de- cided. There, A., B., and C. being partners, A. and B. borrowed £10,000 for the firm on the mortgages of their separate estate. The firm became bankrupt, and C. was wholly insolvent. The joint creditors being all paid, and A.'s mortgaged estate having paid more than his share of the debt, it was held that his estate had a claim to contribution from B.'s, for the difierence between what B.'s estate sold for, and half the debt of £10,000. § 987. Where there are distinct firms carrying on distinct trades, but consisting partly of the same members, and one firm becomes bankrupt, the solvent firm may prove against the bank- ant, and therefore competent to be a witness against the defendant, either jointly with his copartners, or separately, the defendant not pleading in abatement. In this case the defendant did not plead in abatement. See Lord Kenyon's judgment. See also, Deacon's Bankrupt Laws, p. 670, note (1). ' 3 Mont. & A. 402 ; 2 Dea. 466. CH. n.] ADMINISTRATION. 871 rupt firm, if the estate against wHch proof is admitted is not lia- ble with that of the solvent firm to joint debts. Thus, it is laid down by Lord Eldon, that the firm of A., B., C, and D. may prove against the firm of A., B., C, and E.^ for A., B., C, and D. are not liable for any joint debts with A., B., C, and E. In the case in which this observation was made, A. and S. carried on business as saddlers in London, and A. carried on a distinct trade as a manufacturer of saddlers' ironmongery in Stafibrdshire, and the former house was indebted to the latter for goods supplied. A commission of bankrupt having issued against S. as surviving partner, it was held that A.'s executor could not prove under the commission for the amount of the goods so supplied ; for, in this case, the firm of A. & S. was hable, together with A., for the same joint debts.^ § 988. However, the qualification of the rule above stated, namely, that the estate against which the proof is admitted must not be liable with the solvent partners for joint debts, was not regarded in Ex parte Hesham.^ There A. and B. were partners with C, the bankrupt, who carried on a distinct trade, in which he had purchased goods of his firm. A. and B. petitioned to prove against C.'s estate for the amount of the goods sold. Lord Eldon allowed the claim, observing, that the case was no more than this, — one sole trader had bought articles of himself and partners, and proof must be made for that, however it might be arranged in account afterwards. It was quite different from the common ease of a partner not carrying on a distinct trade borrow- ing money. § 989. Where -there are no joint debts, a ease which can Scarcely be contemplated, the solvent partner may prove against the bankrupt partner, in competition with the creditors of the latter. In Ex parte Dodgson,^ A., tlie mother of B., lent him a sum of money, under an agreement that she should share the profits of a partnership into which he was about to enter with C. and D. By this agreement she became partner with E. to the extent of his share of the profits, but was in no respect partner in ' Ex parte Adams, 1 Rose, 305 ; Ex parte Thompson, 3 D. & C. 612 ; 1 Mont. & A. 324. " 1 Rose, 146. See Ex parte Cook, Mont. 228. " Mont. & M'A. 445. , • • 872 BANKRUPTCY OF PARTNERS. [bOOK IV. the firm of B., C, and D./ and therefore not liable to their joint creditors. B.'s share of, the profits was considerable, but it did not appear that A. & B. traded with such profits, or that there were any joint creditors of A. & B. Upon B.'s bankruptcy, A. was permitted to prove against his estate, in respect of the money lent. SECTION X. or PKOOF BETWEEN ESTATES. § 990. We have seen, that, where some of the partners are solvent, they are not permitted to prove in competition with the joint creditors, nor even in competition with the separate creditors of the bankrupt partner, unless they shall have first paid all the partnership debts. So, where all the partners become bankrupt, the general rule is, that the separate estate of one partner, shall not claim against the joint estate of the partnership, in competi- tion with the joint creditors, nor the joint estate against the sepa- rate estate, in competition with the separate creditors ; and the creditor is not considered as satisfied, until he has received inter- est on his debt.2 • See ante, §§ 8, 193. ^ Ex parte Ogle, Mont. 35X. That the claim by the separate against the joint estate is not allowed, see Ex parte Burrell, Ex parte Pine, &c., Co. B. L. 503. And as to the claim by the joint against the separate estate, see Ex parte Grill, id. 506. Until Lord Thurlow's time, the rule had been otherwise. In Ex parte Hunter, 1 Atk. 327, Lord Hardwicke was of opin- ion, that, if one of two bankrupt partners had lent money to the partner- ship, his separate creditors had a right to a dividend upon this, in common with the joint creditor. And in Ex parte Blake, Co. B. L. 503, Lord Talbot held, that, where one of two partners had, without fraud, taken out of the partnership stock more than his proportion of the partnership moneys, his estate was to be considered debtor to that of the partnership for the excess. The law, therefore, at one time certainly was, that, if the debt claimed by the partners against an individual partner, and vice versa, arose out of con- tract, the proof might be admitted. But in the case of Lodge and Fendall, if not earlier. Lord Thurlow receded from that opinion, and thought that, if the claim arose out o{ contract, the estate should be administered jointly and separately, as they were actually constituted at the time of the bankruptcy. On the other hand, it has been decided and understood, from Fordyce's case CH. n.] ADMINISTRATION. 878 § 991. There are, however, two exceptions to the foregoing rule. First, where money or effects have been fraudulently ab- stracted from one estate, and applied for the benefit of the other ; and, secondly, where some of the members of a partnership form an entirely distinct firm, carrying on a distinct trade from that of the general partnership, and where the articles of one trade have been furnished by one firm to the other.^ § 992. First, where money or effects have been fraudulently abstracted from one estate to benefit the other. Lord Eldon observed, in Ex parte Harris,^ that, since the case of Lodge and FendaU, decided by Lord Thurlow, the law had been clear, that, to make out the right to prove by the one estate or the other, it must be established that the effects, joint or separate, have been acquired by the one or the other improperly and fraudulently, or with intent to increase the separate estate of one partner to the prejudice of the other. In another case the same learned judge observed, that if one partner were to take £50,000 out of the firm, and buy real estate with it, although it would be a very hard down to the present time, that, where the debt does not arise out of contract, but out of a fraudulent breach of the obligation existing between the part- ners, there the funds so subtracted shall be considered as detached from the general partnership balance, and as a distinct debt from one estate to the other. Per Lord Eldon, 2 Rose, 41. Under the statute of Massachusetts 1838, c. 163, § 21, which provides that the joint estate shall be applied in the first instance to pay the partnership debts, and the separate funds of each partner to pay his separate debts, it has been held that the assignees of the firm cannot prove against the separate estate of either partner any sup- posed indebtedness to the firm from such partner before the insolvency. Somerset Potters Works v. Minot, 10 Gushing, 5^2. Dewey J. in this case said : " We are aware that in the English courts there have been cases where, under the peculiar equities affecting them, courts of equity have allowed a demand or debt for goods sold by a firm to one partner, to carry on his separate business, to be allowed as against his separate estate. There has been, however, great fluctuation in the opinions of the English chancel- lors on this subject, and it is at this moment somewhat uncertain to what extent this exception to the general rule is allowed. Any exception of this kind is full of embarrassment and difficulty, and is in conflict with the sim- ple and direct mode of distribution of joint and separate assets, which the statute of 1838, c. 163, has provided." See also, Harmon v. Clark, 13 Gray, 114 ; Harmon v. Hilliard, 21 Law Eep. (Boston), 112. ' Deac. B. L. 665. » 2 Ves. & Bea. 213. 874 BANKRUPTCY OF PARTNERS. [BOOK IV. case that the joint fund should thus be abstracted from the joint creditors, yet, if it was so done by contract, and not by fraud, the estate so purchased would go to the separate creditors.^ § 993. It becomes, then, material to consider what amounts to fraud in the cases which we are about to investigate. Lord Eldon, after observing that Lord Thurlow, by a fraudulent tak- ing, intended to express what he thought necessary to distinguish that from a taking by contract or loan, lays it down as a general rule, that if, in either the expressed or implied terms of an agree- ment for a partnership, there is a prohibition of the act, and it is done without the knowledge, consent, privity, or subsequent ap- probation of the other partner before the bankruptcy, and to the intent to apply partnership funds to private purposes, that is, primd facie, a fraud upon the partnership.^ Lord Eldon illus- trates these principles by the following hypothetical case. " Sup- pose," he says, " the case of a partnership between two, and, by the articles, all the money is to be paid in to their joint names at a particular bank, and they are prohibited from drawing out more than £50 a month each, for individual purposes ; that, during the month of January they mutually observed those articles by paying in ; and, on the 1st of February, one, instead of £50, draws out £550, and upon the next day a bankruptcy happens ; if it is made out that this overdrawing was for private purposes, and with- out the knowledge, consent, privity, or subsequent approbation of the other ,_ then, as it was for private purposes, and therefore must be for the increase of the individual's estate, and as it was against the covenanted rights, or rather the prohibitions affecting both, and without the knowledge, consent, privity, or subsequent appro- bation of the copartner, it is as much a fraud, within Lord Thur- low's rule, as if, according to the expression I am informed I for- merly used, he had stolen the property." § 994. However, to constitute /rawc?, for the purposes of which we have just spoken, it is not necessary that there should be a transgression of some express articles. From Lord Eldon' s words it appears that the act may be committed in breach of an implied term of an agreement. " "Whenever, in short, there has been that sort of fraud, as in Fordyce's case, and subsequent cases, ' Ex parte Emly, 1 Rose, 64. ° Ex parte Harris, 2 Ves. & Bea. 213. CH. II.] ADMINISTEATION. 875 that one partner may he represented as having stolen property (not using that term offensively), the court has said it is against con- science that his separate creditor should resist the restoration of that which the separate debtor, from whom they seek payment, has so unrighteously, against the consent of his partners, and in fraud of their contract taken out of the joint fund." ^ Fordyce's case ^ was as follows : — Neale, James, Fordyce, and Down, car- ried on the business of bankers in copartnership. In the course of their business they discounted, from time to time, bills and notes to a very large amount, which thereby became the joint property of the copartners. After the settlement of the last part- nership account, at Christmas, 1771, Fordyce took out of the house and shop sundry of the aforesaid notes and bills, belonging to the copartnership, and applied them to his own separate use. An account was made out thereof, and after making all allowances to Fordyce for bills of his own, for- cash paid by him, and for his share of- the capital stock, the balance of the bills and notes so taken away by him and applied to his own use, was agreed and admitted to be the sum of £55,504. In June, 1772, a separate commission issued against Fordyce, and shortly afterwards a joint commission issued against the firm. The assignees, under the lat- ter commission, petitioned to prove against the separate estate of Fordyce the said sum of £55,504 ; and such proof was allowed.^ § 995. But where one partner puts the other in absolute pos- session of the partnership funds, and leaves to him the sole man- agement of the partnership concern, this is primd facie an implied consent to any measure which the latter may adopt regarding the joint property ; and the joint creditors must abide by the conse- quences of such arrangement. Therefore, where Fendall was a dormant partner with Lodge, and Lodge took out money from the partnership to a considerable amount, without the knowledge of 1 3 Ves. & Bea. 34. ' Ex parte Cust, Co. B. L. 506. ' The petitioners likewise sought to enter a claim for sundry debts which had been proved under the joint commission, upon divers bills and notes which Fordyce had negotiated in the name of the firm, anS for which he had received money to his separate use. Claims were likewise set up in re- spect of other separate transactions of Fordyce. But so much of the prayer of the petition as related, to these matters was dismissed, without prejudice to any of the parties seeking relief thereupon by bill in equity. 876 BANKRUPTCY OF PAKTNEKS. [BOOK IT. Fendall, -who did not intermeddle with the partnership business, Lord Thurlow, after taking time to consider, thought he could not permit the assignees under a joint commission to prove against the separate estate of Lodge, without deciding upon a principle that must apply to all cases, and constantly occasion the taking an ac- count between the partners and the partnership in every joint bankruptcy. He said that if the affidavits had gone the length of connecting the bankruptcy with the institution of the partnership trade, and that Lodge, with a view of swindling Fendall out of his property, had got him into the trade, and then taken the effects of the partnership into his own hands, with a view to his separate creditors, it might have been different. The petition on the part of the joint creditors, to prove against the separate estate, was therefore dismissed.^ § 996. So, if one partner permit his copartner to deal with the partnership funds in a manner contrary to the express provision of the articles, any appropriation of the funds by the latter partner to his separate use must be taken to have arisen from the acqui- escence of the other. Upon their bankraptoy, therefore, no proof can be allowed between the estates in respect of such appropria- tion. In Ex parte Harris,^ the terms of the partnership of A. and B. were settled by a deed declaring, that all money belonging to the joint estate received by either of the partners should once a month at least be paid into a particular bank ; and that each might draw out £50 a month, but no more, for his individual use. A. generally received, and made payments on account of the partner- ship ; and generally paid the cash received on the partnership ac- count into his own banker's, who was not the banker of the part- nership, on his own account. B. sometimes received money on the partnership account ; and generally paid what he so received into i^e account of A. at his banker's; and occasionally both re- ceived money on the partnership account without paying it into a banker's. The partnership had no account with any other bank than that appointed by the deed. B. kept the partnership books ; and the banker's book was always open to his inspection. A. gen- erally communicated to him the partnership receipts and payments, * Ex parte Batson, Co. B. L. 505 ; and see Ex parte Assignees of Lodge and Fendall, 1 Ves.jun. 166. ' 2 Ves. & Bea. 210; 1 Kose, 129. CH. II.] ADMINISTRATION. 877 that he might make the account. The sum of .£1,082 was the balance due from A. at the time of the bankruptcy. Neither of the bankrupts was aware, until the accounts were made up by an accountant, that A. had paid less than he received.^ The certifi- cate of the commissioners, which set forth these facts, concluded by stating that A. took the sum of £1^082 from the joint estate, without the privity, contract, or subsequent approbation of B., but not with the intention to increase A.'s separate estate. The ques- tion was, whether the assignees under the joint commission should prove the .£1,082 against the separate estate of A. Lord Eldon: " This is much nearer the case of Lodge and Fendall than any that have occurred : the necessary effect of the transaction being to give the dominion over the whole fund to one ; and the other must be taken to have consented to that doiHinion. Therefore, though the non-application of this joint property, according to the articles, was without the knowledge, privity, consent, and subse- quent approbation of the partner, yet the facts, by reason, and in consequence of which that apphcation was made, were with that knowledge, consent, &c. In this view of the case, upon the facts stated, there is great difficulty in admitting the proof. If any in- quiry can be suggested, that can affect the opinion I have .ex- pressed, I will not refuse it ; but, upon these facts, I think this within the case of Lodge & Fendall." § 997. Where, in pursuance of the partnership articles, one partner is intrusted or empowered to draw bills and manage the cash concerns of the copartnership, the acquiescence of the firm in his drawing out of the partnership funds for his separate use may be established or contradicted by reference to the state of the partnership books. Therefore, where S., in pursuance of articles of partnership, took the active part and management of the concern, and drew the drafts, and kept the cash accounts; and S. without the knowledge of his copartners drew biUs and notes in the partnership name for his separate use to a large amount, and made no entry in the books of any such bills, or notes, which in the ordinary way ought to have been, — Lord Eldon held that the arrangement made by the articles was not an ' This, though a striking feature in the case, does not appear to have in- fluenced the decision. 74 878 BANKRUPTCY OF PARTNERS. [BOOK IV. acquiescence in the conduct of S., and that S. took this- property under circumstances in which, if all the partners were bankrupts, proof by the partnership against his separate estate would have been permitted.^ § 998. On the other hand, if one partner be intrusted with the entire management of the partnership concern, and he with- draw moneys for his separate use, which he duly and openly enters in the partnership books, this is not a fraud which will en- title the joint estate to prove against the separate ; otherwise, if by the entries in the books he disguises the transaction, or wholly omits and conceals it,^ or if the other partner has not access to the books.^ § 999. Where a partner has abstracted the partnership property in order to increase his separate estate, the subsequent approbation of the other partners is not to be inferred on slight grounds, and the receipt of interest by the other partners for the sum so ab- stracted is no evidence per se of subsequent approbation. In Ex parte Watkins,* A., B. and C, wore in partnership as bankers. According to the established practice of the firm, and in order that sales might bo readily made when required, it was customary to transfer into the name of one of the partners all stock purchased, by the house, as an investment for capital. Under this arrange- ment, B. having £20,000 stock standing in his name, sold it out, and applied about half to his separate use, without the knowledge of his partners. A day or two afterwards B. told 0. that he was in want of money, and had therefore taken .£10,000 Consols, part- nership stock, to his own use ; C. replied that he was sorry for it, and that B. must replace it as soon as he could. C. afterwards, finding that B. had not replaced the stock, charged him with the dividends, because he considered it necessary to get what he could. C. never considered the transaction as a loan. A joint commission having issued against the partners. Sir L. Shadwell ordered that proof should be made by the joint estate against the separate estate of B. for the value of the £10,000 stock ; his Honor being of ' Ex parte Yonge, 3 Ves. & Bea. 31. ' Per Sir J. Leach, Ex parte Smith, 1 Glyn & Jam. 74 ; Hunt v. Benson, 2 Humph. (Tenn.), 459. ' Hunt V. Benson, 2 Humph. (Tenn.), 459. * Mont. & M'A. 157. CH. II.] ADMINISTRATION. 879 opinion, that, under the circumstances stated, there was nothing like acquiescence amounting to subsequent approbation. But in Ex parte Turner,^ where A. and B.,, partners, were authorized by their articles to draw sums from time to time, not exceeding £700 a year each, from the joint funds, by way of maintenance, and A. discovered that B. had withdrawn bills to the amount of .£2,700 from the joint stock, which he had not entered in the books, but had applied to his own use ; and A., upon this discovery, remon- strated with B., who promised to replace the amount, and- the bills were accordingly entered in the books ; and subsequent to this transaction, A. relieved B.'s wife and family ; it was held by the court of review, that the fraud of B. was waived by the subsequent conduct of A. § 1000. We now come to the second class of cases in which proof between estates is allowable ; namely, where some of the members of a partnership form a distinct firm, carrying on a dis- tinct trade from that of the general partnership, and the articles of one trade are furnished by one firm to the other .^ § 1001. In the case of Shakeshaft, Stirrup, and Sahsbury,^ Lord Thurlow went upon this distinction, that where there is only one partnership, arranging different concerns belonging to them all in different ways, for the benefit of different parts of that joint con- cern, there could not be proof by part against the other part ; other- wise, if the trades were perfectly distinct.* Therefore, although on the other hand, where three partners carried on the business of cotton-manufacturers in Lancashire, and two of them had a branch establishment in London, it was held that there could not be proof by the estate of the three against that of the two ; ** yet, on the other hand, where A. and B. were partners as insurance brokers, and A. carried on a separate trade as an oil-man, in the progress of which he became indebted to the firm, the assignees of the joint estate were admitted creditors of the separate estate.^ § 1002. The trades carried on by the two firms, between the ' 1 Mont. & A. 54, ?,bl ; 4 D. & C. 169.' " Story Partn. § .394. ' (i Ves. 123, 743, 747; 1 Cox, 440. * Per Lord Eldon, 11 Ves. 414. ' E.I parte Ilargreaves, 1 Cox, 440. ' Ex parte St. Barbe, 11 Ves. 413. , 880 BANKRUPTCY OF PARTNERS. [BOOK IV. estates of which proof is admitted, must be distinct ; but it does not seem to be necessary that their callings should be diiferent, though the contrary might be inferred from the obseryation of Lord Thurlow, as stated by Lord Eldon in Ex parte St. Barbe. Thus, A,- and B. carried on the trade of wool-staplers in copartner- ship at Southwark, under the firm of A. and B., and they also carried on trade, as wool-staplers, at Leeds, under the firm of C; & Co., but C. was a servant to A. & B., receiving from them a salary. ■ The concerns were kept totally distinct from each other ; and in aE matters of trade and mutual dealings between the two houses regular accounts were opened^ and regular debits and cred- its were entered in their respective ledgers, and the same con- duct was in all respects observed as would have been the case had the proprietors of such respective concerns been different and dis- tinct persons. The firm of C. & Co. being indebted to that of A. & B., the estate of A. & B. was permitted to prove the amount against the estate of C. & Co.'^ So, in a more modem case. A., B., C, D. and E. carried on business as bankers, at York, in co- partnership ; A. B., C. and D. carried on a distinct trade in co- partnership, as bankers, at Wakefield. Debts being due from the latter firm to the former, in respect of their banking transactions, and a commission of bankrupt having issued against the firm at York, proof was allowed by the estate of the York firm against that of the Wakefield firm.^ § 1003. But although, in order to estabhsh this mode of proof, it is not necessary that the nature of the trades exercised by the two firms should be different, provided it can be shown that the two firms were really conducted on a separate account, yet it was the opinion of Lord Eldon, that in no case ought such proofs to be admitted, except the demand of the party seeking to prove arise from a dealing in respect of his distinct trade ; as, for in- stance, for articles furnished by that trade. This doctrine was laid down and acted upon in the case of Ex parte Silhtoe.^ There, six persons carried on business as bankers, and two of the six also carried on a separate business as ironmongers. The Bank of England were in the habit of discounting bills for the ironmon- ' Ex parte Johns, Co. B. L. 510. = Ex parte Castell, 2 Glyn & Jam. 124 ; Ex parte Stroud, id. 127. » 1 Glyn& Jam. 374. CH. II.] ADMINISTRATION. 881 gers, but not for the bankers ; and when the bankers were in want of money, the ironmongers raised it for them at the bank, by dis- count of the ironmongers' bills. All these six persons became bankrupts ; and, at the time of the bankruptcy, the bankers were indebted to the ironmongers, in respect of such discounts, in the sum of £8,222, It was insisted, on behalf of the assignees of the iron- mongers, that their estate, which was first applicable to the payment of debts incurred, in that trade, had been diminished to the extent of this sum of £8,222, by the assistance thus rendered to the bankers; that, therefore, the ironmongery estate ought to be considered as a creditor of the banking estate, and to receive dividends out of that estate on the sum of £8,222, pari -passu with the other bank? ing creditors of the bankers. The question first came before Sir John Leach, who was of opinion that the separate creditors were entitled to the proof they claimed ; but his decision was overruled by Lord Eldon. Lord Eldon proceeded on these principles, — ^ that the general rule in bankruptcy is, that a partner in a firm against which a commission of bankrupt issues, shall not prove a personal debt against that firm, in competition with the creditors of the firm, who are in fact,, his own creditors ; and that this genera,l rule admits of no exception, unless where the partner to whom the firm was indebted carried on a distinct trade, and the debt from the firm was in respect of that distinct trade ; that the case of two or more partners carrying on a distinct trade is the same as that of one partner carrying on a distinct trade ; and that, although in this case the separate estate of the ironmongers might have proved against the joint pstate, if the debt had accrued by a deahng in their trade as ironmongers, yet they could not prove, inasmuch as the separate debt had accrued, not by a dealing as ironmongers, but by loans of money. " W& are not," said his Lordship, " merely to consider the question whether the , two were partners as iron- mongers, but whether this is to be considered a transaction between trade and trade ; and if it be supposed that any individual of the sis had been a separate trader, coal-dealer, or corn-dealer, and had, with his separate moneys, retired a bill discounted at the Bank of England, is it to be said, that, because -he is a separate trader, therefore the retirmg of that bill is to make him a creditor to prove against the creditors of the partnership ? And if that would not entitle the individual to prove, is there any distinction between the case of one separate • trader and the case of two individuals who 74* 882 BANKRUPTCY OF PARTNERS. [BOOK IV. are separate traders in partnership ? " His Lordship, on a subse- quent day, stated that he had looked at the authorities on the point, and he found they were all cases in -which articles of one trade had been furnished to another trade ; that there was no case in which the exception had been allowed where money had been advanced to the partnership by one or more of the partners ; and that his opinion was the proof could not be maintained. § 1004. The principles laid down by Lord Eldon in Ex parte Sillitoe were acted upon by Lord Brougham in the case of Ex parte Cook.^ There, W. P. was in partnership with H. and others, as linen-drapers, at Whitechapel, and he was likewise a partner with his brother, E. P., in the trade of linen-draper, in the country. The country firm was 'carried on in the name of B. P. alone. The London firm supplied linen-drapery goods to the coun- try firm, such dealings being wholly distinct, and the same as if the London firm had dealt with any other purchaser. The Lon- don firm was afterwards dissolved, and W. P. carried on the busi- iiess at Wliitechapel on his own separate account. He continued to supply the country firm with goods precisely in the same manner as the London firm had done ; such dealings being wholly distinct, and the same as if the deahngs had been with any other purchaser or customer. A separate commission of bankrupt issued against W. P. Afterwards a joint one issued against the brothers. The question was, whether the sum of £635, due from the estate of the country firm to that of W. P., for goods supplied and money advanced, should be proved against the former estate. Lord Brougham ordered the whole debt to be proved, and dividends to be paid upon the goods sold, pari passu with the other creditors ; and for the money advanced, a dividend to be paid out of the sur- plus after payment of the general creditors. Upon the whole, therefore, the general principle to be gathered from these decisions is, that where one or more members of a firm carry on a distinct trade, proof will be admitted between the estate of the general and the particular ^vva, pari passu with the creditors, in all cases where the debt has arisen from goods furnished by one firm to the other, in a manner as if they had been utterly uncomiected in trade ; but that, except in the case of bankers, this rule will not Mont. 228. CH. II.] ADMINISTRATION. 883 be applicable -where the debt has arisen oiJy for money advanced by one firm to the other.^ § 1005. But though such is apparently the settled law on the subject, we ought not to omit to notice the doubts entertained by Sir John Leach on the doctrine as laid down by Lord Eldon in Ex parte Sillitoe, that there is no difference between the case of two or more partners carrying on a distinct trade, and the case of one partner carrying on a distinct trade. " As a general rule," said his Honor, " one partner cannot prove a personal debt against the joint firm, because the creditors of the joint firm are his cred- itors, and he would be taking from his own creditors what ought first to be apphed in payment of their debts. But where a firm of two or more partners carry on a distinct trade, the Creditors of the larger firm are not the creditors of the smaller firm ; and, consequently, when the firm of two or more prove against the larger firm they do not prove against their own creditors. Upon this reasoning, I cannot bat still doubt whether the smaller firm of . two or more is not in all cases entitled to prove against the larger firm, and whether it can make a difference that the debt due to the smaller firm is in respect of a dealing in tJie way of their dis- tinct trade, or in respect of any other dealing with the larger firm." 2 If the opinion of Sir John Leach had been adopted, it should seem that in cases of distinct firms, and all becoming bank- rupt, proof would have been admissible between each estate in re- spect of every species of money transaction,- except in one partic- ular case, — namely, where one partner, a distinct trader, sought • proof against the general partnership. But it is to be remarked, that the exception to the general rule of proof, which has been al- lowed with regard to debts arising from distinct trading, is founded on a universal principle, which, if adopted in one case, ought also to be adopted in another. This principle is the same as that which suggested the doctrine of reputed ownership.^ On the occasion on which Sir John Leach made these observations, his Honor de- • Story Partn. § 394. ' 2 Glyn & Jam. 127. It should seem that the court of reyiew adheres to the opiuion of Sir John Leaeh. See Ex parte Dawson, 3 Dea. & C. 12; but that is not an express decision on the point. ' The same principle would have warranted the double proof in Ex parte Moult, ante, § 970, bad not a positive rule in bankruptcy intervened. 884 BANKRUPTCY OP PARTNERS. [BOOK lY, cided in favor of the proof in three different cases ; but it was unnecessary to depart from any principle laid down in Ex parte Sillitoe. In the first of these cases, Ex parte Brenchley,^ the banking firm, consisting of three, claimed to prove against the dis- tilling firm, consisting of two, for advances of money made by the bankers to the distillers : one of the two distillers was not a part- ner in the banking firm ; but Sir John Leach said,, that, if he had been, the advance of money by the bankers was a suificient dealing in the yr&j of their trade. Secondly, in Ex parte Stroud,^ the debt due by the minor firm to the larger firm was in respect of the employment of the surplus moneys which the larger firm had in their hands as bankers ; Sir John Leach observed, that the profit of a banker was made by the employment of such surplus moneys, and the debt was to be considered as due to them in re- spect of a dealing in their trade. Lastly, the case of Ex parte Castell " was referred to the same principle. His Honor consid- ered that the dealing of the one firm with the other was in the way of their trade, and proof was therefore to be made by the . York firm against the Wakefield firm. § 1006. In some cases contribution will bg permitted between the joint and separate estate. As where joint creditors have been permitted under an order to go against the separate estate, or joint creditors of a dormant and visible partner have proved against the visible partner alone. So, in a case Avhere both the joint and sep- arate estates were liable to a debt to the crown, and, by process, more had been levied upon the joint estate than its proportion, con- tribution was decreed between the two estates, and it was referred to the master to settle the proportion.* SECTION XI. OF SKT-OFF. § 1007. Formerly, if a creditor of the bankrupt were also in- debted to the bankrupt, the assignees might sue him for and re- » 2 Glyn & Jam. 1 27. '2 Glyn & Jam. 127. ' Ibid., and see ante, § 1002. * Rogers v. McKcnzie, 4 Ves. 752. CH. II.] ADMINISTRATION. 885 cover the amount of the latter debt, and the creditor might prove upon the bankrupt's estate for the amount of the debt due to him. This was extremely disadvantageous to creditors, where there hap- pened to be mutual dealings between them and the bankrupt. They would have to pay the whole of the debts due by them, and receive probably but a fractional part of the debts due to them. This was remedied by the 5 Geo. 2, c. 30, s. 28, and 46 Geo. 3, c. 135, s. 3, which made the balance of the accounts between the parties the debt ia law to be proved by the creditor or recovered by the as- signees.-^ Although those statutes are now repealed, their provis- ions are contained in the stat. 6 Geo. 4, c. 16, s. 50, by which it is enacted, that " where there has been mutual credit given by the bankrupt and any other person, or where there are mutual debts between the bankrupt and any other person, the commissioners shall state the account between them, and one debt or demand may be set against another, notwithstanding any prior act of bank- ruptcy committed by such bankrupt before the credit given to, or the debt contracted by, him ; and what shall appear due on either side on the balance of such account, and no more, shall be claimed and paid on either side respectively ; ^ and every debt or demand hereby made provable against the estate of the bankrupt may also be set off in manner aforesaid against such estate ; provided the person claiming the benefit of such set-off had not, when such credit was given, notice of an act of bankruptcy ^ by such bankrupt com- mitted." § 1008. The term mutual credits imports something more than that of " mutual debts." Nevertheless, it has been held to mean such credits only as must in their nature terminate in debts.; as where a debt is due from one party, and credit given by him on the other side for a sum of money payable at a future day, and which will then become a debt ; or where there is a debt on one side, and a receipt of property, with directions to turn it into • Archb. B. L., Book 1, cli. 1, s. 7. * Provision is made for the set-off, in eases of mutual debts and credits, by the bankrupt law of the United States. 5 U. States Statutes at Large, 445, in § 5 ; Act of Congress, 1841, ch. 9. So in the insolvent law of Massachu- setts, 1838, ch. 163, § 3. ' Notice of the bankrupt's insolvency does not prevent the creditor's right of set-off. Hawkins v. Whitten, 10 Barn. & Cres. 217. 88G BANKRUPTCY OIT PARTNERS. [BOOK IV. money, on the other ; but where there is a mere deposit of prop- erty, without any authority to turn it into money, unless the de- posit be made with one who has a. general lien, no debt can ever arise out of it ; and therefore it is not a credit within the meaning of the statute.! § 1009. Mutual debts, of course, consist of a debt due from the bankrupt to the creditor, and a debt due by the creditor to the bankrupt's estate." The debt due to the bankrupt must be such as might be proved under the commission, but those debts may be set ofi' which are made provable by the bankrupt act.* With respect to the debt due by the creditor to the bankrupt's es- tate, formerly it must have been due before the act of bankruptcy on whicji the commission was founded. But, by the present stat- ute, the accounts of nmtual debts and credits, as far as regards paper and money transactions, may be brought down to the date of the fiat, and set-oif will be allowed under such accounts, unless ' Rose !'. Hart, 2 Moore, i347; Rose v. SimSj 1 Barn. & Adol. .521 ; Groom V. West, 8 Adol. & KlI. 758. Where there is a trust between the parties, that is a mutual credit within the statutes. Therefore, where three persons joined in an adventui-e to buy and sell pearls, one to advance the money and to sell the pearls, the profit and loss to be divided between the three ; upon the bankruptcy of one, the holder of the pearls was allowed to set off a debt duo by him to the bankrupt against the bankrupt's share of the pearls, although the peai-ls were not sold, nor the produce received before the bank- ruptcy. French «. Fenn, Co. B. L. 536. But mutual credit may be consti- tuted, although the parties do not mean particularly to trust each other; thus, where a bill of exchange, accepted by A., got into the hands of B., and B. bought goods of A., it was holden that there was a mutual credit between A. and B., although A. did not know that the bill was in B.'s hands. Hankey V. Smith, 3 T. U. 607, note. In these cases, what was allowed as a mutual credit was of such a nature as must terminate in a cross debt. In cases of the deposit of goods, where the creditor, as, for instance, a factor, broker, banker, &c., has a general lien, he may, independently of any statute as to set-ofl' or mutual credit, retain the goods in his possession until he has been satisfied his whole debt. But such general lien, either by express contract or usage of trade, must be well established. Ex parte Ockendon, 1 Atk. 234 ; Rose V. Hart, supra. Where a bailee is intrusted with property of a bankrupt foi? a special and limited purpose, such a transaction does not form a case of mu- tual credit within the statute. Key v. Flint, 1 Moore, 451; S Taunt. 21 ; Buchanan v. Findlay, 9 Barn. & Cres. 73S ; 4 Man. & Ryl. 593. ' Archb. B. L., Book 1, ch. 1 , s. 7. ' G Geo. 4, c. 16, b. 50, supra. en. II.] ADMINISTRATION. 887 the creditor, at the time of his cTealin^^ with the bankrupt, had no- tice of an act of bankrnptcy. The statute enacts " that all pay- ments really and hand fide, made, or ■which shall hereafter he made by any bankrupt, or by any person on his behalf, before the date and issuing of the commission against such bankrupt, to any cred- itor of such bankrupt (such payment not being a fraudulent pref- erence of such creditor), shall be deemed valid, notwithstanding any prior act of bankruptcy by such banlcrupt committed ; and all payments really and hmid fide made, or which shall be made to any bankrupt before the date and issuing of the commission against such bankrupt, shall be deemed valid, notwithstanding any prior act of bankruptcy by such bankrupt committed ; and such cred- itor shall not be liable to refund the same to the assignees of such bankrupt, provided the person so dealing with the said bankrupt had not, at the time of such payment by or to such bankrupt, no- tice of any act of bankruptcy by such bankrupt committed." ' To constitute that mutuality of debts or of credits which is required by the statute, it is necessary that the debt claimed or the credit given should be so due to or given by the party in his own right.^ § low. Generally, therefore, in bankruptcy, as well as at law, there can be no set-oif between joint and separate debts, unless otherwise provided for by Special agreement.-'' ilnd where a debt has been converted from a joint into a separate debt, it cannot be set oif against a joint debt. Thus, A. and B., partners, were creditors of C, who had also a joint demand against them. A. and B. having dissolved partnership, A., by a letter addressed to C, made himself separateZy liable to Con account of the joint ' C Geo. 4, u. 16, 0. 82, overruling Tamplin v. Digrgins, 1 Camp. .SI 2, and Kinder ii. Butlerworth, 6 Barn. & Cres. 42 ; Dowl. & Kyi. 47. In the former of these cases, bankers having accepted bills for the accommodation of a trader, and ho, after an act of bankruptcy, but before the commission, having lodged money with them to lake up the bills, it was holden that they were bound to refund this money to the assignees, and could not set it off. " Lanesborough v. Jones, 1 P. W. 320 ; Bishop v. Church, S Atk. 691 ; Ex parte Whitehead, 1 Glyn & Jam. 69. • Ex parte Riley, W. Kelynge, 24; Ex parte Christie, 10 Vea. 105 ; Ex parte Twogood, 11 Yes. .517; Kinncrsley r. Hossack, 2 Taunt. 170; Ex parte Soamas, 3 Dea. & C. 320. See Vosc v. Philbrook, 3 Story C. C. 335, 346 ; Dade v. Irwin, 2^ How. (U. S.) 383, 390, 39i ; Tucker v. Oxley, 5 Cranch, 34 ; McCulIoh v. Dashiell, 1 Harr. & Gill, 96, per Archer J. BANKRUPTCY OF PARTNERS. [bOOK IV. demand against himself and B. ; Lord Eldon held that A. was not entitled to set off against C.'s demand, though origmaUy joint,' the joint debt due from C. to A. and B.^ § 1011. But the rule in bankruptcy against the set-off of joint and separate debts is not so strict as to preclude the admission of equitable set-off in a few particular cases ; equitable set-off having prevailed long before the statute.^ " It is true," observed Lord Eldon, " that where the court does not find a natural equity going beyond the statute, the construction of the law is the same in equity as at law; but that does not affect the general doctrine upon natural equity." ^ A strong case of this dcind occurred be- fore Lord Loughborough.' There, A. and B. were partners, and indebted by joint and several bond to C. Upon A.'s retirement from, and D.'s accession to, the firm, advances were made to C. to the exact amount of his debt, out of the moneys deposited by D. for the purchase of A.'s share of the partnership. ' The bond was not given up, but A. took a separate note from 0. for the amount. B. died. Upon the bankruptcy of C, A. was allowed to set. off the money secured by the note against the money secured by the bond. The grounds of Lord Loughborough's decision ap- pear to have been, not that A. was liable for the bond debt as sur- viving partner, and, therefore, that he might set against it his separate debt on the note, but that the joint transaction had not terminated by the mere fact of A.'s taking a separate .note ; that A. had not been accepted as a separate debtor; that the' bond had not been given up ; and that the debt had been paid out of the, assets of the old partnership ; that therefore the joint debt secured by the bond might be set off against a debt which was equitably joint, though represented by a separate secmity. § 1012. Where stock, the separate property of A., is trans- ferred to bankers as a security for advances made by them to A., who likewise gives them his note for the amount, payable on a retransfer of the stock, and A. afterwards pays off the note, and substitutes the joint note of himself and son, without calling for 'Ex parte Koss, Buck, 125. ^ 2 Geo. 2, c. 22; 8 Geo. 2, c. 24; Ex parte Blagden, 19 Ves. 467; Whyte V. O'Brien, 1 Sim. & Stu. 551. See Tucker v. Oxley, 5 Cranch, 34. ' 11 Ves. 27. . . ' James v. Kynnier, 5 Ves. 108. CH. II.J ADMINISTRATION. 889 a transfer, — then, if you can show a clear and distinct series of transactions, in which both the father and son have had credit given to them, as credit was previously given to "the father only, you certainly have very strong evidence of such a case as would authorize a court of equity in • allowing a set-off as between the stock-debt due to the father, and the advances made to the father and son.^ § 1013. Another exception to the general rule occurred before Lord Erskine ; ^ but the case involved a principle totally different from that of the foregoing. There, A. and B. were indebted, as principal and surety, in a joint bond, and A. was a creditor of the obligees to an amount exceeding the bond. The obligees, who were bankers, having become bankrupt, and th^ir assignees hav- ing brought an action against A., the latter presented a petition, praying that he might be allowed to set off and to prove the bal- ance ; and Lord Erskme allowed the claim. " In this case," said his Lordship, " I am not obliged to do more than courts of equity- were in the habit of doing before the statute of set-off existed, which statute was made only to prevent circuity. Suppose the bankruptcy had not occurred. A plea of set-off could not have been put in to an action by the bankers ; but the moment they obtained judgment the petitioner would have brought an action, and, if the surety had paid the joint debt, would have repaid him by the money recovered in that action ; if the petitioner himself had paid it, he would then have been reimbursed ; and if they had paid in moieties, they would have divided it. So, the thing would have been just as if no action had been brought. Without the aid, therefore, of the extraordinary principles of fraud, which gov- erned the case of Ex parte Stephens,^ there is a clear principle tha,t decides this case, — that assignees in bankruptcy take subject to all equities attaching upon the bankrupt ; and as the condition of the bankrupts, if they had continued solvent, would, as between them and these persons, be such as I have represented, that must be the condition of the assignees." ' § 1014. In cases where the bankrupt has committed a gross fraud against his creditor, the latter wiU be allowed a set-off of ' Vulliamy v. Noble, 3 Mer. 618. ' Ex parte Hanson, 12 Ves. 346 ; 18 Vea. 233. ' See infra, § 1014. 75 890 BANKBUPTCY OF PARTNERS. ' [BOOK IV. joint and separate debts. Thus, where A. had instructed her bankers to purchase certain stock in her name, which they, con- trary to the fact, represented to have done, by making false en- tries in her book, and giving her credit for the dividends, and B., the brother of A., borrowed a sum of money of the bankers on the joint and. several promissory, note of himself and sister, Lord Eldon held that A. might set off the sum so borrowed against the debt due from the bankrupts, and might prove for the residue.^ Again, V., a customer of the banking-house of D. & Co., trans- ferred to P., a partner in that house, a sum of stock, by way of security for money borrowed of them, and gave his notes for the amount, payable on the stock being transferred to him. V. paid off these notes, and afterwards borrowed a further sum on the jomt note of himself and his son, without calling for a retransfer. P. fraudulently sold the stock, together with other stock, and ap- plied the produce to the use of the partnership. It was held, on the authority of Ex parte Stephens, that V. might set off, against the joint note of himself and son, so much of the money received by the partnership out of the sale of the stock as was equal to the amount of such joint note.^ § 1015. On a subsequent occasion,^ Lord Eldon, speaking of Ex parte Stephens, observed that the decision entirely depended on the, fraud ; and it is clear that he was anxious not to extend • this class of cases. Thus, in Ex parte Twogood,* it appeared that A. & B., of the firm of S. & Co., did, for certain considera- tions, jointly and severally covenant to pay C. the sum of £4,000, swith interest. Li April, 1803, S. & Co. stopped payment, and a separate commission issued against B. At the time of the bank- ruptcy, C. was indebted to the house, in a sum much greater than the debt due to him from A. and B. ; he, however, proved his debt and interest, amounting to £4,200, under the commission against B., and, in July, 1803, assigned it to a stranger for £5,500. A petition was then presented on the part of the cred- itors of the house, praying a set-off of the two debts, and suggest- • Ex parte Stephens, 11 Ves. 24. ' Vulljamy v. Noble, 8 Mer. 50. ' Ex parte Blagden, 19 Vea. 46. * 11 Ves. 517, overruling Ex parte Quiuten,' 3 Ves. 248, and Ex parte Edwards, 1 Atk. 100. CH. II.] ADMINISTRATION. 891 ing that the assignmemt of C.'s debt was made -without considera- tion, and with a view to obtain payment of the dividend from the separate estate of B., while C.'s debt was due to the joint estate ; and likewise suggesting that there would be a surplus of B.'s sep- arate estate, in which the creditors of the house were interested. But Lord Eldon dismissed the petition, saying that he did not deny that there was a good deal of natural equity in the proposi- tion upon which it stood ; but, pursuing it through aU its conse- quences, it would so disturb all the habitual arrangement in bank- ruptcy, that he dared not permit the set-off. § 1016. It appears, therefore, that, even on equitable grounds, except under special circumstancesj there cannot be a set-off as between joint and separate debts. Thus, in Addis v. Knight,^ a debtor by bond to the separate estate of a deceased partner was not allowed in equity to set off his bond debt, in respect of acceptances for which he had become liable to the partnership estate, and which were proved by him under a joiat commission of bankrupt. § 1017. It will be observed, that, under the 60th section of the statute, set-off is allowed between the creditor and his bank- rupt debtor, only under the proviso, " that the person claiming the benefit of such set-off had not, when such credit was given, notice of an act of bankruptcy by such bankrupt committed." Therefore, in an action brought by the assignees of certain bank- ers, it Was held, that, under this section, the defendant had no right to set off notes of such bankers, taken by him after he knew that three of the four partners constituting the banking-house had committed acts of bankruptcy .^ • 2Mer. 117. ^ Dickson i-. Cass, 1 Barn. & Adol. 343. See Craven v. Edmonson, 6 Bing.' 734. CHAPTER III. OP THE PRACTICE IN BANKKUPTCY. SECTION I. or THE PROCEEDINGS TO ADJUDICATION. § 1018. We have already noticed what are suiScient acts of bankruptcy, and what is a sufficient petitioning creditor's debt to support a joint fiat. We have likewise seen that a joint fiat can- not be supported, unless each of the partners has committed an act of bankruptcy, but that it may be supported against all or some of the members of a firm.^ Formerly, if one of the part- ners were an infant,^ or lunatic,^ or uncertificated bankrupt,* it was necessary to issue separate commissions against each, and not a joint commission against all the other partners ; but, under the present law, a joint commission or fiat may issue against such of the partners as are under no disabilities. As against these, even a joint fiat issuing against all may be made available.^ It has been before observed, that a joint creditor may take out a separ rate fiat;^ but where aU the partners have committed acts of bankruptcy, and there are no separate creditors, it seems to be irregular for a joint creditor, at the same time and for the same 1 Ante, §§ 847, 861. • Ex parte Henderson, 4 Ves. 163 ; Ex parte Liddell, 2 Eose, 34. " Ex parte Layton, 6 Ves. 434. * Ex parte Martin, 15 Ves. 114. « 6 Geo. 4, c. 16, s. 16. « Ante, § 851. CH. III.] PRACTICE. 893 debt, to proceed separately against each member of the firm, instead of proceeding jointly against all the members.^ § 1019. Where there are several partners, and the partnership property belongs to some of them, only, the others having an inter- est in the profits, but no share in the capital, a joint fiat may, nevertheless, be supported against all, their creditors taking the joint property as the promiscuous property of them all.^ But it has been doubted vrhether joint proceedings can be supported against partners, where there is no joint property. And in a case where the firm consisted of two partners only, one of whom was a dormant partner, enjoying a share of the profits, but not of the capital. Lord Eldon expressed himself uncertain whether a joint commission could be upheld, such a commission being in the na- ture of an execution against joint property, of which, in this case, there was none.^ § 1020. Bankrupts should be described in the proceedings according to their known description.* And where joint proceed- ings are had against persons who have been partners, but whose partnership is dissolved, it is necessary that, the separate descrip- tion of each since the dissolution should be added to their joint description. Therefore, where the bankrupts were described as " late of the Kent Road, coal-merchants," and it appeared that they had quitted that trade three years previously to the issuing of the commission, and had since been separately engaged in farming, the description was held insufficient, and the commission superseded.^ A commission or fiat against A., " as surviving partner of B.," is, in effect, joint.^ § 1021. Upon the opening' of a fiat, the commissioners must, at the first private meeting, take the oath prescribed by the 1 & 2 Will. 4, c. 56, s. 8. It will then be necessary to summon the * Ex parte Gardner, 1 Ves. & Bea. 74. * Ex parte Hunter, 2 Kose, 382. ' Ex parte Hamper, 17 Ves. 418. * Ex parte Beckwith, 1 Glyn & Jam. 20 ; Ex parte Horsley, 2 Madd. 11. The popular description of a bankrupt's residence is sufficient. Ex parte Wride, 2 Glyn & Jam. 99. But the omission to describe him as of the place where he actually traded is fatal. Ex parte Beadles, 2, Glyn & Jaui. 2(43. ».Ex parte Day, Mont. &M'A. 208. ' Ex parte Barued, 1 Glyn & Jam. 309. 75* ■ 894 BANKRUPTCY OF PARTNERS. [BOOK IV. ■witnesses, to admit proof of the petitioning creditor's debt, the trading, and acts of bankruptcy. The rest of the business con- sists of the adjudication, the ordering the advertisement in the Gazette, the summoning of the bankrupt, and sometimes the re- ceiving of his surrender. § 1022. The commissioners may, before adjudication, summon and compel the attendance of any person whom they shall believe capable of giving any information concerning the trading or any acts of bankruptcy committed by the persons against whom the fiat is opened. They may also require any person so summoned to produce any books, papers, deeds, writings, and other docu- ments in his custody, which may be necessary to establish such trading or acts of bankruptcy. They may likewise examine such person vivd voce?- And it seems clear, that, to aid the proof in •these cases, the production of partnership books in the custody of a solvent partner may be compelled,^ even though the partnership may have been for some time dissolved ; for the assignees of the bankrupt have the same right of inspection as the bankrupt him- self had. ^ But we have seen that the books cannot be taken per- manently out of the custody of the solvent partner.* § 1023. To the observations which have already been made regarding the petitioning creditor's debt,^ we may here add, that, by Lord Apsley's order, which provides for duly ascertaining the reality of the petitioning creditor's debt, the commissioners are desired, if it be a single commission, to inquire whether the bank- rupt was concerned in any partnership at the time of. his bank- ruptcy ; and in case the same be a joint commission, then to inquire of how long standing the partnership has been, and whether any separate commission has before issued, and be then depending, against either of the partners ; and to inquire whether the bank- rupt ever obtained a certificate under any former commission, or has been discharged under any act for the reUef of insolvent debt- ors ; and if such be the case, to certify the same separately to the Lord Chancellor, and to transmit such separate certificate to the secretary of bankrupts. 1 6 Geo. 4, c. 16, s. 24. " Ex parte Levett, 1 Glyn & Jam. 185. ' Ex parte Trueman, 1 D. & C. 464. * Ante, § 243. ' Ante, § 851. CH. III.] PRACTICE. 895 § 1024. The trading and acts of bankruptcy must be proved by -witnesses wbo attend before the commissioners, and make depo- sitions of the fact ; and this personal attendance will not be dis- pensed with without an order from the court of review.^ The petitioning creditor under a separate fiat may, in some cases, be ordered to exhibit the proceedings under that fiat, in order to aid the proof of bankruptcy under a subsequent joint fiat.^ But the act of bankruptcy must be proved as strictly under the subsequent as under the original proceedings ; and therefore, where a person had proved an act of bankruptcy against one of several partners under a separate commission, he was not permitted under a subse- quent joint commission against all the partners to prove the same act of bankruptcy by affidavit.^ § 1025. The commissioners, upon proof made before them of the petitioning creditor's debt or debts, and of the trading and act or acts of bankruptcy of the person or persons against whom such commission is issued, shall thereupon adjudge such person or per- sons bankrupt.^ But if the bankrupt dispute the adjudication, and shall, within two calendar months from the date of such adjudica- tion, present his petition for the reversal thereof to the coiirt of review, that court may proceed to hear and decide on such pe- tition ; or may, at the option of the bankrupt, and on his -finding security for costs, if required, direct an issue to try the adjudica- tion.^ § 1026. After adjudication, the commissioners may summon before them any person known or suspected to have any of the estate of the bankrupt in his possession, or who is supposed to be indebted to the baiJsrupt, or any person whom the commissioners beUeve capable of giving information concerning the person, trade, dealings, or estate of such bankrupt, or concerning any act or acts of bankruptcy committed by him, or 'any information material to the full disclosure of the deahngs of the bankrupt. They may ^ As to the death of witnesses, see 2 & 3 Will. 4, c. 114, s. 7. ^ Ex parte Harrison, 2 Glyn & Jam. 135. ' Ex parte Eowe, 2 Rose, 339. But this mode of proving the act of bank- ruptcy was opposed by the partner' against whom the separate commission had issued. See Wood's case, 1 Rose, 298. « 6 Geo. 4,0. 16, s. 24. ' 1 &2 Will. 4, c. 56, s. 17. 896 BANKRUPTCY OF PAETNEES. [BOOK IV. likewise require such person to produce any books, papers, deeds^ writings, or other documents in his custody, which may appear necessary to the verification of the deposition of such person, or, to the full disclosure of any of the matters which the commissioners are authorized to inquire into. They are also empowered, by war- rant under their hands and seals, to arrest any person refusing to attend. 1 Under this enactment, as under a similar one before mentioned,^ the commissioners, under a fiat against one partner, may compel the attendance of the solvent partner, and the produc- tion of the partnership books, in order to a full disclosure of the bankrupt's estate and circumstances. Before the 6 Geo. 4, c. 16, it was held that this could only be done upon petition.^ The com- missioners may summon the bankrupt, and may examine him upon oath touching all matters relating either to his trade, deaUngs, or estate, &c. ; * and if under a joint bankruptcy there is a dispute whether a debt is joint or separate, an issue may be directed, with a declaration that the bankrupts, or either of them, and the cred- itor, shall be examined at the trial.^ SECTION II. OF PROOFS UNDER JOINT AND SEPARATE FIATS. § 1027. The proof of debts takes place at the public meetings only. It may be made either at the two public meetings appointed for the surrender of the bankrupt,® or at any other meeting ap- pointed by the commissioners for proof of debts, " whereof, and of the purport whereof, ten days' notice shall have been given in the London Gazette." ^ Proof may now be made by affidavit.^ § 1028. The rule regarding proof by joint and separate cred- ' 6 Geo. 4, c. 16, s. 33. » Ante, § 1022. ' Ex parte Levett, 1 Glyn & Jam. 185. * 6 Geo. 4, c. 16, s. 36. ° Ex parte Williamson, Buck, 546. • 1 & 2 Will. 4, 0. 56, s. 20. ' 6 Geo. 4, e. 16, s. 46. « 1 8e 2 Will. 4, 0. 56, s. 34. CH. III.] PRACTICE. 897 iters, so far as it affects the joint and separate estates of the bank- rupts, is not altered by the form of the fiat.^ Whether the 'fiat be joint or separate, the estates must be subject to the same adminis- tration. But the form of the fiat in some degree affects the mode in ■which the creditors are permitted to reach the assets of the debtor ; for in some cases the creditor may prove under a general order ; in others, only under an order made upon petition. § 1029. Where the proceedings axe joint, the creditors, -whether separate or joint, may prove under Lord Loughborough's general order of the 8th March, 1794. By that order, " the commission- ers in a joint commission against two or more bankrupts shall be at liberty to admit the proof of any separate debt or separate debts of any one or more of such bankrupts under such joint commission ; " and it has been holden, that the creditors of a firm of three part- ners may prove their debt under a commission against another firm consisting of these three partners and others, -within the mean- ing of this order .^ By the same order, it is likewise directed, that " the commissioners under such commission shall cause distinct ac- counts to be kept of the joint estate and also of such separate estate or estates ; and that what shall be found to belong to the separate estate or estates shall be applied, in the first place, in or towards satisfaction of the debts of the respective separate cred- itors ; and in case there shall be any overplus of the joint estate, after all the joint creditors shall be paid and satisfied their whole demands, that the share or shares, interest or interests, of the bank- rupt or bankrupts, whose separate estate or estates is or are to be applied in manner before directed, if such overplus be carried to the account of his or their separate estate or estates, and be applied in or towards satisfaction of his or their separate debts ; and in case there shall be any overplus of the separate estate or estates of such bankrupt or bankrupts, after all their separate creditors shall be paid and satisfied their whole demands, that the overplus of such separate estate or estates be carried to the account of the joint estate, and be appHed in or towards satisfaction of the joint debts." § 1030. On the other hand, where separate proceedings are ' See ante, § 920. ^ Ex parte Worthington, 3 Madd. 26. 898 BANKRUPTCY OF PARTNERS. [BOOK IV. had against some or one of the partners, and the assignees get pos- session of the joint property, there is no general order applicable to the case ; but the court, upon the petition of a joint creditor, win order the assignees to keep distinct accounts of the separate and joint estate, and apply them to the payment of the separate and joint debts respectively, in the same manner as where separate creditors prove under a joint commission.^ However, a joint cred- itor may prove under a separate fiat, without any order, if there is not any joint estate or solvent partner.^ So, also, a joint creditor suing out a separate fiat may prove under that fiat against the separate estate, without any order.^ § 1(331. Where persons in trade have been connected in various partnerships, and a joint commission has been taken out against them all, an order may be made for keeping distinct accounts of the different partnerships, as well as the separate estates of each partner. Thus, A. was a trader ; A. and B. became partners ; then A., B., and C. became partners, and a joint commission is- sued against A., B., and C. It was ordered that distinct accounts should be kept of the joint estate and effects of A., B., and 0. ; of the joint estate and effects of A. and B. ; and of the separate estate and effects of each of the bankrupts ; and that each of the respective estates should be applied in satisfaction of the creditors of each, &c.* It seems, moreover, that this description of ac- counts may now be taken under Lord Loughborough's general order, and that a petition to have the accounts so taken will be dismissed with costs.^ § 1032. But when there have been various partnerships, and joint proceedings are had against one firm, in which some of the partners were not engaged, there can only be the common order ' Ex parte Tate, Co. B. L. 253 ; Ex parte Aspiiiwall, id. 256 ; Ex parte Mervey, Ex parte Hill, ibid. Formerly, the application must have been made by bill, unless by consent. Ex parte Voguel, 1 Atk. 132 ; Hankey v. Gar- rat, 3 Bro. 457. ' Ex parte Tate, Mont. Partn. 240. ' Mont. Partn. 240. And see Ex parte De Tastet, 17 Ves. 230 ; 1 Rose, 10. But where the joint creditor suing out a separate commission was him- self the commissioner, and such proof was made without order, the commis- sion was superseded at his costs. Ex parte Story, Buck, 70. * Ex parte Marlin, 2 Bro. 15 ; and see Co. B. L. 257. ' Exs parte Greea, 1 D. & C. 382. CH. m.] PRACTICE. 899 for keeping the distinct accounts of the joint and separate estate.^ Under a separate commission against a person who is a partner in two distinct firms, an order has been made for keeping distinct accounts of the two partnerships. And in a case where this oc- curred, and afterward a separate commission issued against a per- son who was partner in one of the firms only, and an order for keeping distinct accounts was obtained in the latter bankruptcy, such order was held to be impertinent.^ § 1033. Sometimes the joint and separate creditors agree to consoUdate the estates, and that all the creditors, joint as well as separate, may come in. pari passu. But the court has no author- ity to order this without the consent of all the creditors, and will never do so, except when it is impracticable to keep the accounts separate.^ And even where the creditors present at a meeting, called for that purpose, consent to it, the court will not confirm it without first referring the matter to the commissioners, to inquire if the proposed consohdation be for the benefit of the creditors generally.* If the commissioners certify in the affirmative, the creditors may petition to confirm their certificate.^ An order for consolidation has no efiect upon proofs already made ; and there- fore, if proof be made on a joint and several bond against two separate estates, a subsequent consolidation of the estates does not afiect the double proof.^ SECTION m. OF THE CHOICE AND REMOVAL OF ASSIGNEES. § 1034. All creditors who have proved debts under the com- mission, to the amount of ^10 and upwards, shall be entitled to ' Ex parte Parker, Co. B. L. 258. ' Ex parte Bolton, Buck, 11. ' Ex parte Sheppard, Mont. & B. 414 ; 3 D. & C. 190. * Ex parte Strutt, 2 Glyn & Jam. 20 ; Ex parte Part, 2 D. & C. 1. ' Without serving the assignees with the petition. Ex parte Smith, 2 Mont. & A. 60. « Ex parte Fuller, 1 Mont. & A. 222 ; 3 D. & C. 520. 900 BAKKRTJPTCT OS PARTNERS. [BOOK IV. Tote in the choice of assignees.^ The choice shall be made by the major part in value of the creditors so entitled to vote,^ and shall take place at the first of the two public meetings appointed for the surrender of the bankrupt.^ And one of the official assignees shall in all cases be an assignee of each bankrupt's estate and ef- fects, together with the assignee or assignees to be chosen by the creditors.* Under a joint fiat, none but joint creditors can vote in the choice of assignees .® And where the election has been made by separate creditors, the chancellor will order a new choice.^ It has even been holden, under a commission against three, that the joint creditors of two of them could not vote in. the choice of assignees. In this case, the creditors of the two were creditors to a consider- ably larger amount than the creditors of the three ; and the peti- tioning creditor had consented to their choice.'' Formerly, joint creditors could not vote in the choice of assignees under a sepa- rate commission.^ But now, by the 6 Geo. 4, c. 15, s. 62, in all commissions against one or more partners of a firm, any joint creditor may prove his debt under such commission, for the pur- pose of voting in the choice of assignees under such commission. § 1035. Where creditors are, in respect of their interest, un- represented under a commission, as in the case of separate cred- tors who have no right to vote in the choice of assignees under a joint commission,^ the court, in a case requiring it, will appoint a person as an agent or inspector, with ample authority to take care of their interest, and will provide for his reimbursement and in- demnity, in point of expense, out of the estate, in as full a meas- ure as if he were actually an assignee.^" Therefore, where it ap- ' 6 Geo. 4,c. 16, s. 61. ' Ibid. ' 1 & 2 Wm. 4, c. 56, s. 20. * Id. s. 22. " Ex parte Parr, 18 Ves. 70; Ex parte Hamer, 1 Kose, 321 ; Ex parte Miles, 2 Kose, 73. " Ex parte Parr, supra. ' Ex parte Jepson, 19 Ves. 224. ' Co. B. L. 269. ' See Insolvent Law of Mass. 1838, ch. 163, § 21. "> Per Lord Eldon, Ex parte Miles, 2 Rose, 70. Before the late act, this was done on behalf of joint creditors in the case of a separate commission. See Ex parte Basarri, 1 Rose, 266. CH. Iir.} PKACTICK. 901 peared that the assignee under a joint commission had no interest in the separate estates, the court, upon application, ordered a meeting of the separate creditors, with Uberty to them to appoint an inspector of the separate estates.^ And it may be stated gen- erally, that where primd facie the interest of the joint creditors appears to be adverse to that of the separate creditors, and the separate creditors offer to pay the costs of the appointment of an inspector, the court will sanction such appointment.^ But an ap- plication, that a trustee or inspector may be appointed to protect the interests of a class of creditors is premature, until after the choice of the assignees.^ § 1036. The commissioners have power to reject any person chosen assignee who shall appear to them unfit to be such as- signee ; and upon such rejection a new choice of another assignee or assignees shall be made as aforesaid.* And, generally, if an assignee be elected through fraudulent means, or misconduct himself in the execution of his trust, the court, upon the petition ©f any of the creditors, will order all the assignees to be removed.* ^ Ex parte Batson, 1 Glyn & Jam. 269. ' Ex parte Dawson, 3 D. & C. 12. ' Ex parte Simpson, 2 Rose, 337. * 6 Geo. 4, c. 16, s. 61. ' See Ex parte Shaw, 1 Glyn & Jam. 155; Ex parte Halliday, 7 Vin. Abr. 77 ; Ex parte Townsend, 15 Ves. 400. An assignee may be removed! for purchasing any part of the bankrupt's property or permitting a co-aff- signee to do so. Ex parte Reynolds, 5 Ves. 707. Also, in case an assignee shall become bankrupt, such bankrupt assignee shall be removed. Ord. Loughb. 8th March, 1794. Where an assignee under the statute of Massa- chusetts for the relief of insolvent debtors, had exercised undue influence in procuring his appointment as assignee, and his interests were adverse to those of the other creditors, and he had used improper means after his ap- pointment to secure a preference to himself for his claims against the insol- vent debtor, the court ordered that he should be removed, that the assign- ment should be revoked, that the master in chancery should call a meeting of the creditors to choose another assignee, and that the former assignee should make to the new assignee all necessary conveyances. Shelton v. \ Walker, S. J. Court, Mass., Sufiblk, May, 1847, at Boston. 76 902 BANKRUPTCY OF PARTNERS. [BOOK IV. SECTION IV. OF ACTIONS BY THE ASSIGNEES. § 1037. It has been already observed, that assignees have the same remedies by action for the recovery of debts due to the bank- rupt, and for all civil injuries with respect to property which has passed to them under the bankruptcy, as the bankrupt himself would have had, if no fiat had been sued out against him.^ It may here be added, that in matters in which no right accrues to the assignees by virtue of the bankruptcy, they can maintain no action which the bankrupt himself might not have maintained. Thus, A., B., and C. were partners, and C. and D. were partners in a distinct partnership. C. being indebted to the firm of A., B., & C, fraudulently indorsed to that firm, bills, the property of 0. and D., in the name of C. and B., in part discharge of his debt ; he likewise, in further discharge of the debt, paid money out of the funds of C. and D., to the firm of A., B., & C. The firm of A., B., & C. was dissolved, and C. and D. became bankrupt. It was held, that, as the principals could not, so neither could the assignees of C. and D. maintain an action against A. and B., either of trover for the bUls, or of assumpsit for the money misap- pUed.^ § 1038. But, in matters in which a right accrues to the as- signees, by virtue of the bankruptcy, they may maintain an action, though the bankrupt himself could not ; as, for instance, in respect of goods of the bankrupt seized in execution after an act of bank- ruptcy. Thus, subject to the limitations contained in the 108th section of the statute, if a creditor levy an execution upon goods in his debtor's possession after the debtor has committed an act of bankruptcy, and receive the produce of it from the sherifi", the debtor's assignees may recover the amount in an action for money had and received.^ And again, if any of the bankrupt's goods ' Ante, § 856. ' Jones V. Yates, 9 Barn. & Ores. 532 ; 4 Man. & Eyl. 613. " Kitchen v. Campbell, 3 Wils. 304. CH. III.] PRACTICE. 903 be taken in execution after the act of bankruptcy, and before they are seized under the commission and sold, the assignees may recover the value of them in an action of trover against the sheriff. 1- § 1039. In actions by assignees, all of them who are living must join as plaintiffs.^ Otherwise, in actions ex contractu^ the plaintifis will be nonsuited,^ or the defendant may take advantage of the defect by plea in abatement, or (if the error appear on the face of the record) by demurrer, motion in arrest of judgment, or writ of error;* but in actions ex delicto, the defendant can avail himself of the defect by plea in abatement only.^ § 1040. In an action by assignees in that character, they must, in most cases, state themselves to be such in the beginning of the declaration.^ The assignees under a joint fiat may sue for money had and received to the use of each partner ; ^ for if, as Lord EUenborough said, joint assignees could not recover the separate debts of one or more partners, there would be an end of enforcing such demands.^ But assignees under a joint fiat, when suing for a separate demand, are not obliged to describe themselves as assignees of all the bankrupts. It is sufficient if they describe themselves as assignees of that bankrupt for whose separate de- mands they sue.^ And in one case. Park J., observed that if ' Smith V. Milles, 1 T. R. 475 ; Cooper v. Chitty, 1 Burr. 20. See Hurst V. Guennop, 2 Stark. 306 ; and see on this subject, J. S. Saund. Plead., tit Bankrupt. 2 Snellgrove v. Hunt, 2 Stark. 444. » Ibid. * Archb. PI. 63. " Ibid. 53, 54. ° Winter v. Kretchman, 2 T. K. 45. Where the cause of action arose before the bankruptcy, and the bankrupt himself would have recovered, the assignees must declare as assignees, and so describe themselves. Kitchen V. Campbell, 3 Wils. 304. But if it arise after the bankruptcy ; and either ^before or after the issuing of the commission, so that the sum to be recovered would belong to the estate, they may sue and declare in their individual ca- pacity. Evans v. Mann, Cowp. 369 ; Thomas v. Rideing, Wightw. 65. ' Per Lord Alvanley, Smith v. Goddard, 3 Bos. & Pull. 465. « Scott V. Franklin, 15 East, 428. ° Ibid. ; Stonehouse v. De Sylva, 3 Campb. 399 ; Harvey v. Morgan, 2 Stark. 17. 904 BANKKCPTCT OF PARTNERS. [BOOK IV. assignees tinder a joint fiat declare for tbe separate property of one partner, they must declare as the assignees of that one.^ § 1041. Where the fiats are separate, and the same persons are appointed assignees under each, they may declare for a joint demand due to all or any number of the bankrupts, describing themselves as assignees of those bankrupts. For instance, where there was a firm of three partners, two of whom were in partner- ship with two others, and the four became bankrupts, and a joint commission being issued against them, a separate commission was afterwards awarded against the third partner in the firm of the three, under both which commissions the plaintifis were elected assignees, it was held, that inasmuch as the entire rights of the three vested in them, they might declare as their assignees.^ So, a declaration by persons " assignees of the estate, &c., of A. and •B., mid also assignees of the estate, &c., of C," for a joint debt due to A., B., and C, was held good on motion in arrest of judg- ment.^ In the preceding case, the objection arose after verdict ; and Lord Kenyon, considering that the objection could only be made on the record, observed that there was nothing upon the record to show that the plaintiffs did not claim under a joint com- mission against all the bankrupts, or under a separate commission against each, in either of which cases, the action might well be maintained. Mr. Justice BuUer, however, considered the objec- tion untenable, .whether two commissions appeared on the record or not. § 1042. But where separate proceedings are had against sev- eral partners, and different persons are appointed assignees under them, although they must all join in an action to recover a joint demand, yet they cannot sue as joint assignees, but must state their several and respective interests In the declaration ; and an error in this respect will be a ground of nonsuit. In Ray v. Da- vles,* the plaintifis A., B., and C. brought an action of trover, as assignees of the estate and effects of D., B., and F. At the trial, it appeared that three separate commissions had been issued • Hogg ii. Bridges, 8 Taunt. 202. They " may and ought " to declare as the assignees of that one. 1 Chit. PI. 1 7. ' Scott V. Pranklin, 15 East, 428. ' Streatfield v. Halliday, 3 T. R. 782. * 8 Taunt. 134 ; 2 Moore, 3. CH. III.] PRACTICE. 905 against the bankrupts, who were partners at the time of the bank- ruptcy. The first commission was against Z. and E., trading under the firm of Z. & Co., the second against D., E., and P., trading under the firm, of D. & Co., and the third was against P. alone. It further appeared, that A. and B. were assignees under the first commission, C. sole assignee under the second, and C. also sole assignee under the third. Burroughs J., before whom the cause was tried, considered the action not maintainable, and directed a nonsuit, on the ground that the action, being brought by the plaintifis as assignees generally of A., B., and C, the dec- laration should have stated with precision what interest the plain- tifis actually had. They were assignees under different commis- sions of the separate property of the bankrupts, and were not, jointly or severally, the assignees of the estate and effects of the bankrupts, as stated in the declaration. The Court of Common Pleas held the nonsuit to be right. § 1043. It has been held that the same persons, assignees under separate commissions, cannot declare in the same declaration for separate demands due to each bankrupt ; nor for joint demands, and also separate demands. In Hancock v. Haywood,' the plain- tiffs, in their original writ, described themselves as assignees of the estate and effects of L., and also assignees of E., there being no joint commission against the two ; and declared for goods sold and delivered by both the bankrupts, and also for goods sold by each of the bankrupts, and for money paid, and money had and re- ceived by the defendant to the use of each of the bankrupts, and also for money had and received to the use of the assignees, on separate counts. A verdict had been found for the plaintiffs, and damages assessed on the several counts respectively. But the Court of King's Bench were clearly of opinion, that the different rights could not be joined in the same action, but that the plain- tiff might enter up judgment on such of the counts as were for the joint debts due to both the bankrupts. § 1044. On the other hand, it has been held that assignees, under a joint commission, may declare in the same declaration for joint and separate demands. Thus, in Graham v. Mulcaster,^ the plaintiffs, in the first, second, third, and fourth counts of their dec- • 3 T. E. 433. " 4 Bing. 115 ; 12 Moore, 327. 76* 906 BANKRUPTCY OF PARTNERS. [BOOK IV. laration in assumpsit, declared, as assignees of A. and B., for debts due to A. and B. from the defendant, before their bank- ruptcy ; and in the fifth count they declared for debts due to them as assignees of B. before A. became bankrupt. On demurrer, the declaration was held to be good. Best C. J., " It has been ob- jected, that these separate causes of action ought not to have been joined in the same declaration ; I think there is no vaUdity in the objection. Under a commission of bankrupt aigaingt; partners, the joint and separate property of the partners is transferred to the same assignees, who are empowered, also, to recover and distribute, the separate as well as the joint debts of the partners; but with the distribution we have nothing to do in a court of law; there- fore, if a debt be due to A., and another to B., the assignees of A. and B. may recover both in one action. If it were otherwise, great and unnecessary expense and inconvenience would be en- tailed upon the commission." § 1045. Where two partners become bankrupt at different times, and, between the times of their respective bankruptcies, moneys of the partnership are paid, or goods of the partnership taken in exe- cution, it has been decided that their joint assignees cannot main- tain an action for the whole or any part of the amount, describing themselves as assignees of the bankrupts. Thus, where A. and B., partners, became bankrupt, and, between the times of the acts of bankruptcy committed by each, a clerk of the house paid to one of the creditors a sum of money due to him on the balance of his account with the partnership, it was held that the assignees, under a joint commission against A. and B., could not recover these sums in an action in which they declared for money had and received to the use of A. and B. before they became bankrupts, and for money had and received to their own use, as assignees of A. and B., after the bankruptcy of A. and B.^ So, where A. and B. were partners, and A. committed an act of bankruptcy, and afterwards, but be- fore the bankruptcy of B., the sheriff seized the goods which had belonged to A. and B., under an execution against them, the Court of Common Pleas held that the assignees of A. and B., under a joint commission, could not, suing as such, recover A.'s share of the property therein.^ Writers have considered it > Smith V. Goddard, 3 Bos. & Pull. 465. " Hogg V. Bridges, 2 Moore, 122 ; 8 Taunt. 200. CH. III.] PRACTICE. 907 doubtful whether any form of declaration would entitle the as- signees to recover, in cases where the cause of action arises be- tween the respective bankruptcies, in the manner we have men- tioned.^ § 1046. As a joint fiat passes all the joint and all the separate effects to the assignees, they may bring trover for the separate property of the bankrupts ; and in so doing, they may describe themselves as assignees of both partners. Where the assignees are desirous of recovering property, some of which was joint and some separate, they ought to declare both on the possession of the bankrupts, and on their own constructive possession, and the lat^ ter count will comprehend the separate property. In the case of Cock V. Tunno,^ where the assignees of two partners, bankrupts, declared on the possession of the bankrupts only, and it appeared in evidence that the greater part of the goods in question belonged to one of the partners only, before the commencement of the part- nership, and had never been brought into the partnership fund, and that the residue formed part of the joint estate, Lord Kenyon held that the plaintifis could recover the residue only ; whereas, if there had been a count on the possession of the assignees, as it was a joint commission, and as the assignment under such commission passed both joint and separate effects, the whole might have been recovered. It is, however, apprehended by a learned writer, that, in trover by assignees, a count on the possession of one bankrupt, and another on the possession of the other bankrupt, would be a misjoinder.^ § 1047. Where one partner becomes a bankrupt, the solvent partners must join with the assignees of the bankrupt, in an action to recover debts due to the firm ; as, for instance, in an action to recover property transferred by the bankrupt after the act of bank- ruptcy, a separate commission afterwards issuing against lum ; * or m an action for contribution against a third person, who was a partner with the firm in a particular adventure ; and that although the money, in respect of which contribution is sought, may have ' Gow Partn. 344. '^ Selw. N. P. 1390. '2 Wma. Saund. 470. * Thomason v. Frere, 10 East, 418. 908 BANKRUPTCY OF PARTNERS. [BOOK IV. been paid by the solvent partners only ; ' and the non-joinder will be ground of nonsuit.^ Where, however, A. and B., who^were in partnership as insurance-brokers, efifected an insurance for C, and the receipt of the premium was acknowledged in the policy at the time of efiecting the insurance, but was, in fact, paid by A. out of his separate property after B.'s bankruptcy, it was held that an action for money paid, &e., might be maintained against C. by A. alone, without joining the assignees of B.^ By the 6 Geo. 4, c. 16, s. 89, it is enacted that, " in any commission against any one or more member or members of a firm, the Lord Chancellor may, upon petition, authorize the assignees to commence or prosecute any action at law, or suit in equity, in the names of such assignees, and of the remaining partner or partners, against any debtor of the , partnership, and may obtain such judgment, decree, or order therein, as if such action or suit had been instituted with the con- sent of such partner or partners ; and if such partner or partners shall execute any release of the debt or demand for which such action or suit is instituted, such release shall be void ; provided that every such partner, if no benefit is claimed by him by virtue of the said proceedings, shall be indemnified against the payment of any costs in respect of such action or suit, and that it shall be lawful for the Lord Chancellor, upon the petition of such partner, to direct that he may receive so much of the proceeds of such ac- tion or suit as the Lord Chancellor shall think fit." Under the words of this section, a general order has been made, authorizing the assignees to bring actions, &c., in the partnership name.* § 1048. Where there is one surviving partner, who becomes bankrupt, his assignees may bring an action to recover moneys received by a person as agent for the firm, although he may have received them- on account of the separate property of the deceased partner ; for though it may be otherwise as to the rest of the world, yet the defendant is estopped by his agency from dis- puting the title of the plaintiffs.^ § 1049. Generally, in actions by the assignees to recover a ' Graham v. Robertson, 2 T. R. 282. » Ibid. ' Thacker v. Shepherd, 2 Chit. 6.52. * Ex parte Wilson, 3 Mont. & A. 219 ; 2 Dea. 387. ' Dixon V. Hamond, 2 Barn. & Aid. 310. CH. III.] PRACTICE. 909 debt, the defendant may set off any debt due to him from the bankrupt. But in an action by a solvent partner, and the as- signees of his copartner, to recover payment of a sum transferred by the bankrupt after the act of bankruptcy, the defendant cannot set off a debt due to him from the firm.^ So, also, it seems clear that in an action by the assignees under a joint commission, for money paid between the times of the bankruptcy of the two part^ ners, there cannot be a set-off of a debt due before the bankruptcy of either of the partners.^ § 1050. The assignees of a bankrupt were formerly, in aU ac- tions, obliged to substantiate their title to sue, by proving strictly all the reqidsites to support the commission ; namely, the petition- ing creditor's debt, the trading and act of bankruptcy, the issuing of the commission, and the assignment to the plaintiffs. But by the 90th section of the 6 Geo. 4, c. 16, "in any action by or against any assignee, no proof shall be required at the trial of the petitioning creditor's debt or debts, or of the trading, or act or acts of bankruptcy, respectively, unless the other party in such action shall, if defendant, at or before pleiading, and, if plaintiff, before issue joined, give notice in writing to such assignee, that he intends to dispute some, and which, of such matters." And, by the 92d section, " if the bankrupt shall not, if within the kingdom, within two calendar months', or, if out of the kingdom, withii^ twelve calendar months after the adjudication, have given notice of his intention to dispute the commission, the depositions ® taken be- fore the commissioners at the time of or previous to the adjudica- tion of the petitioning creditor's debt or debts, and of the trading, and act or acts of bankruptcy, shall be conclusive evidence of the matters therein respectively contained, in all actions at law or suits in equity, brought by the assignees for any debt, or demand for ' Thomason v. Frere, 10 East, 427 ; Stanniforth v. Fellows, 1 Marsh. 184. 2 Smith V. Goddard, 3 Bos. & Pull. 465. ' But the depositions, in order to be conclusive evidence under the statute, must show on the face of them facts which will amount to proof of the sev- eral matters required by law to constitute a good petitioning creditor's debt, trading, or act of bankruptcy ; for mere conclusions of law, drawn by the witnesses, or by the commissioners, from the facts stated, are not sufficient to support the commission. Clarke v. Askew, 1 Stark. 458 ; Kay v. Stead, 2 Stark, 200. See, on this subject, Saunders on Pleading and Evidence, tit. Bankrupt. 910 BANKRUPTCY OF PARTNERS. [BOOK IV. wMch the bankrupt might have sustained any action or suit." In an action by assignees of a bankrupt on a bill indorsed to them in blank, in payment of a debt due to the bankrupt's estate, it is not necessary for them to prove a joint interest in the bill.^ SECTION V. OF THE CERTIFICATE. § 1051. The certificate is an instrument whereby the com- missioners certify to the Lord Chancellor their adjudication, the advertisement in the Gazette, the several meetings in pursuance of it, the bankrupt's surrender and conformity, and his having passed his last examination, and made a true discovery of his estate and effects, and that the certificate has been duly signed by the creditors, both in respect of number and value. It is signed and sealed by the commissioners ; and the creditors sign a con- sent at the foot of it, — to the commissioners' signing and sealing it, to the bankrupt's having Such allowance and benefit as are given him by statute, and to his being discharged from his debts.^ By the 6 Geo. 4, c. 16, s. 122, the certificate shall be signed by four fifths in number and value of the creditors of the bankrupt, who shall have proved debts under the commission to the amount of twenty pounds or upwards, or, after six calendar months from the last examination of the bankrupt, then either by three fifths in number and value of such creditors, or by nine tenths in num- ber of such creditors, who shall thereby testify their consent to the said bankrupt's discharge as aforesaid. The effect of a bank- rupt partner's certificate in discharging his estate from liability has been already considered.^ § 1052. Under a joint fiat separate creditors shall be at liberty to assent to or dissent from the allowance of the certificate of the bankrupt or bankrupts, of whom they shall be separate creditors.* • Ord V. Portal, 3 Camp. 239 ; anle, § 655. See Rordasnz v. Leach, 1 Stark. 446. " Archb. B. L. 198. ' Ante, § 858. * Ord. Loughborough, March 8, 1794. CH. III.] PRACTICE. 911 And, under separate fiats, joint creditors may prove for the pur- pose only of voting in the choice of assignees, and of assenting to or dissenting from the certificate of such bankrupt or bankrupts.-' Where, under a separate commission, the separate debts were very small, and the joint creditors resided in Sicily, the court refused to allow the certificate till the joint creditors had had. an opportu- nity of coming in under the commission.^ In the case of a joint certificate of two partners, if one of them die before allowance, and before he have made the usual affidavit of the certificate being obtained fairly and without fraud, the court, upon petition, will permit the certificate to be advertised for allowance as to the survivor.^ When one partner becomes a bankrupt, his, certificate may be stayed upon the petition of his copartner, until the part- nership accounts are taken, where no want of dihgence is imputa- ble to the petitioner.* But where there is delay in presenting such petition, it will be dismissed with costs.^ A certificate granted under a second fiat, whether joint or separate, against the same bankrupt, may be sustained on apphcation to a court of equity, although such second commission is absolutely void at law. In these cases the court will interfere by injunction to pre- vent the production of the first commission in a court of law, and by these means will give validity to the defence under the second certificate.® SECTION VI. OF THE bankrupt's ALLOWANCE. § 1063. When a bankrupt has obtained his certificate, and a final dividend has been made, but not before, he is entitled to his allowance to be paid to him by his assignees.'' The allowance ' 6 Geo. 4, c. 16, s. 62. ' Ex parte Basarro, 1 Rose, 26S. ' Ex parte Cossart, 1 Glyn & Jam. 248 ; Ex parte Carter, 1 Mont. & A. 115 ; 3 D. 8e C. 549 ; and see Ex parte Currie, 10 Ves. 51. * Ex parte Hadley, 1 Glyn & Jam. 193. * ' Ex parte Smith, id. 195. ' Ex parte Thompson, 1 Rose, 285. See ante, § 852. ' 2 Bl. Com. 783; Ex parte Grier, 1 Atk. 207; Groom v. Potts, 6 T. 912 BANKRUPTCY OF PAETNEES. [BOOK IV. is regulated by the 128t]i section of the bankrupt act, by whicli it is enacted, " that every bankrupt who shall have obtained his certificate, if the net produce of his estate shall pay the creditors who have proved ten shillings in the pound, shall be allowed £6 per cent, out of such produce, such allowance not to exceed- four hundred pounds ; if such produce shall pay twelve shillings and sixpence in the pound, such allowance to be £7 10s. per cent., not exceeding five hundred pounds ; and if fifteen shillings in the pound, or upwards, £10 per cent., not exceeding six hundred pounds ; but if such produce shall not pay such creditors ten shil- lings in the pound, such bankrupt shall only be allowed and paid so much as the assignees and commissioners shall think fit, not exceeding £3 per cent., and three hundred pounds." § 1054. Under a joint fiat, a partner cannot have two allow- ances, the one in respect of his joint, and the other in respect of his separate estate.^ He is not even entitled to any allowance, unless a sufficient dividend have been paid on hoth estates ; for the statute provides for his allowance only in ease a sufficient dividend shall have been paid " upon the joint estate and upon the separate estate." ^ But it is immaterial out of what fund the joint estate is made up, if a sufficient dividend is paid on all the estates ; and therefore a bankrupt partner, whose separate estate has paid a sufficient dividend, will be entitled to his allowance, although the sufficiency of the dividend on the joint estate has been effected only by the contribution of the separate estates of his copartners.^ § 1055. The words of the 5 Geo. 2, c. 30, s. 7, are said to have led Lord Thurlow to the conclusion, that the right of several partners to an allowance under that statute was joint and entire : so that, if all were not entitled, none could receive any portion of R. 548 ; Ex parte Stiles, 1 Atk. 208 ; Ex parte Parry, 2 Glyn & Jam. 358 ; Ex parte Surridge, Mont. & M'A. 287; 6 Geo. 4, c. 16, s. 128. The right to the allowance vests on the payment of the dividend, and if the bankrupt be then jdead, it vests in his representatives. Ex parte Safiford, 2 Glyn & Jam. 128. ' Ex parte Bate, 1 Bro. 453. " 6 Geo. 4, c. 16, s. 129; Ex parte Goodall, 2 Glyn & Jam. 281. See also Ex parte Stiles, 1 Atk. 20/ ; Ex parte Powel, 1 Madd. 68. » Ex parte Morris, Mont. 505 ; 1 D. & C. 526. CH. III.] , PRACTICE. • 913 it.i In Ex parte Bate,^ in which he is said to have acted on this opinion, it appeared that the separate creditors of two partners, A. and B., had been paid in full, and the joint creditors had been paid 16s. in the pound ; towards which payment (supposing the joint debts to be divided in moieties), A. had contributed 12s. 6d., and B. only 3s. 6d. ; yet Lord Thurlow held that B. was entitled to share in the allowance receivable by A. It was ac- cordingly declared, that the bankrupts were entitled, under the act of Parliament, to the sum of .£300, being an allowance of £10 per cent, in respect of their joint and separate effects, and that the same ought to be divided between them, according to the proportions which the surplus of each of their separate estates, after payment of their respective separate debts, and the respec- tive moieties of their joint estate, had contributed to the payment of their joint debts. § 1056. Whatever was the true construction of former enact- ments on this subject, the present statute gives each partner a right to an allowance who has performed the conditions required by the act. The 128th section uses the words " every bankrupt," meaning, it should seem, every individual bankrupt, whether he was in partnership or not before his bankruptcy. And by the 129th section it is enacted, " that, in all joint commissions under which any partner shall have obtained his certificate, if a suffi- cient dividend shall have been paid upon the joint estate, and upon the separate estate of such partner, he shall be entitled to his allowance, although his other partner or partners may not be entitled to any allowance." It seems clear, therefore, from these two sections, that the legislature contemplated the separate pay- ment of each partner's allowance, upon the conditions stated in the 129th section, without reference to the claims of the copart- ner. Accordingly, where A., being one of three partners, had paid 20s. in the pound on his separate estate, and 12s. 6c?. in the pound had been paid on the joint estate, but on the separate estates of the two other partners a sufficient dividend had not been paid, Sir L. Shadwell held, that, under the 6 Geo. 4, c. 16, A. ^ See Ex parte Powel, supra ; Ex parte Lomas, I Mont. & A. 534 ; Ed. B. L. ch. 22. ^ Supra. 11 914 BANKRUPTCY jOF PARTNERS. . [BOOK IV. was entitled, for lus sole use, to allowance of £5 per cent., not exceeding -£400.^ The case last cited seems to sanction the proposition, that each partner who has paid a sufficient dividend on his separate estate is entitled to an allowance in respect of the whole joint estate, supposing that a sufficient dividend has been paid on that estate. But this proposition, if it has been ever approved or adopted, is no longer tenable ; for it has been de- cided, after much consideration, that under a joint and separate fiat the bankrupt's allowance is to be calculated on the amount of his separate estate, together with his share of the joint estate, and not on the gross amount of the joint estate.^ § 1057. Again, under a separate fiat against one partner, and the usual order for keeping distinct accounts, although the joint estate may have paid sufficient dividends, yet, if the dividend on the separate estate be insufficient, the bankrupt will not be entitled, to an allowance, inasmuch as the payment to the joint creditors is not a payment under the bankruptcy, but a mere mode of arrange- ment, which cannot give the bankrupt any other privileges than such as he would have been entitled to if his joint property had been distributed in a court of equity.-^ A bankrupt who pays 20s. in the pound, under a separate fiat, to his separate creditors, is not entitled to an allowance against the right which the joint creditors have to the surplus under the usual order.* SECTION VII. or THE ANNULMENT OF FIATS. § 1058. The supersedeas, which was a writ commanding the commissioners to stay and surcease all further proceedings under the commission, is now no longer necessary; for, by the 19th section of 1 & 2 Will. 4, c. 56, the Lord Chancellor may order that any fiat issued by virtue of that act shall be rescinded or an- ' Ex parte Minchin, Mont. &M'A. 135 ; Ex parte Gibbs, Mont. 105. ' Ex parte Lomas, 1 Mont. & A. 525. ' Ex parte Farlow, 1 Rose, 421. • Ex parte Holmes, 3 Yes. & Bea. 137. OH. III.] PRACTICE. 915 nulled ; and such order shall have all the force and effect of a writ of supersedeas. A fiat issued against several persons as partners may be annulled as to one, on the ground that he is not a partner, or that, being a partner, he has discharged, or •will under- take to discharge, the debts of the partnership, as well as his own separate debts.^ It may likewise be annulled as to all, on the ground that a prior fiat exists, under which they have not received their certificate ; ^ or that one of the partners has died since the "issuing of the fiat.* Many other causes for this proceeding may occur ; but a fiat cannot now be annulled on the ground that it is not directed against all the partners.* Where the court is satisfied upon affidavit, it will annul the fiat without sending the parties to a jury ; ^ but where a person petitions to have a joint fiat annulled, on the ground that he is not a partner, the court wiU not grant the prayer of the petition on his own affidavit only, but will direct an issue to try the question of partnership." § 1059. We have already observed that the court wiU not take notice of the motives which may have led to taking proceedings in bankruptcy, providing the petitioning creditor be guilty of no fraud.^ Therefore, where A. & Co., creditors of B. & Co., being displeased with the conduct of B., one of the partners of the latter house, and convinced that, if he continued in the con- cern, he would ruia it, arrested B. & Co., all of whom'put%i bail except B., and, afterwards, a commission was issued against B., by A. & Co. ; the Vice-Chancellor, after conferring with the Lord Chancellor, held that such commission should not be superseded on the mere ground that it had been taken out for the purpose of ex- pelling him from the partnership.^ The consequence of annulling a fiat, or superseding a commission, is, that every thing done under ' Ex parte Fisher, 3 Dea. 695. °- Sae post, § 1060, note. = Ex parte Green, 1 Dea. 249 ; Ex parte Norris, 3 Dea. 643. * 6 Geo. 4, c. 16, s. 16. ^ Ed. Bl. 436. ' Ex parte Matthews, 3 Ves. & Bea. 127 ; and see Ex parte Benfield, 5 Ves. 424. ' Ante, § 851. " Ex parte Wilbran, 5 Madd. 1. But see Ex parte Brown, 1 Rose, 151 ; Ex parte Gallimore^l Rose, 424 ; Ex parte Harcourt, 2 Rose, 203. 916 BANKRUPTCY OF PAETNEKS. [BOOK IV. it is made void.^_ In all cases, except where there is a compo- sition contract, the annulment of the fiat is discretionary in the Great Seal.^ In the case excepted, it is compulsory.^ , § 1060. Formerly, where there were partners, it used to be the practice to take out separate commissions against each part- ner, and a joint commission against the whole firm ; but this has long since been discontinued. In contemplation of a court of law, a joint and separate commission or fiat cannot subsist at the same time ; the second, whether it be joint or separate, being void at law.* * See per Lord Eldon, Ex parte Jackson, 8 Ves. 534. And on this prin- ciple tlie title of persons purchasing under the bankruptcy would be de- stroyed by an annulment. But this is remedied by the 6 Geo. 4, c. 16, s. 87. ' Eden B. L. 431. ' = 6 Geo. 4, c. 16, s. 133. * Eden B. L. 685. See Warner v. Barber, 8 Taunt. 176 ; 2 Moore, 71 ; 2 Rose, 432. The reason which has been given for the invalidity of a second commission against a single bankrupt, who has not received his certificate under the first, is this, — that all the property of the bankrupt vests by the assignment in the. assignees under the first commission; that he is incapable of trading; and that the subsequently acquired property being affected by the assignment, and vesting in his assignees, there is nothing to pass under a secontLcommission, and therefore it is inoperative. See Lord Hardwicke's judgment in Ex parte Proudfoot, 1 Atk. 251. See also. Ex parte Bold, Co, B. L. 12, and many other cases. On the other hand, Lord Thurlow very much doubted the invalidity of a second commission under these circumstan- ces. Ex parte Hollingsworth, Co. B. L. 12. And in Butts v. Bilke, 4 Price, 240, it was doubted by the court whether a second commission was void, or merely voidable; and they seemed to think, that, if the first commission were superseded, the second would be in force. In the late cases on this subject, the Courts of King's Bench and Common Pleas have held the second commission void to all intents and purposes. See Till v. Wilson, 7 Barn. & Ores. 690; 2 Man. & Ryl. 580; Fowler v. Coster, 10 Barn. & Cres. 427; Phillips V. Hopwood, 1 Barn. & Adol. 619; Nelson v. Cherrell, 7 Bing. 663. And in Phillips v. Hopwood, Lord Tenterden said, that the Lord Chancellor has no power under the bankrupt statutes to issue a second commission. But the opinions of the courts of common law, so far as they regard the power of the Chancellor in this matter, were expressly overruled by Lord BrouiTham in Ex parte Welsh, Mont. 276. And it has since been decided, that though it is generally of course to supersede a second fiat against an uncertificated bankrupt on the application of the assignees under the first, yet that in many cases, where convenience requires it, the first will be superseded. With re- gard to joint commissions issuing after separate commissions, they also have been uniformly held void at law ; though the reason for holding void the CH. III.] PRACTICE. 917 § 1081. But tbough a second commission is void at law,yet, in practice, joint commissions have been frequently taken out after some or all of the parties have been declared bankrupt under sep- arate commissions.^ In these cases, the court has exercised a dis- cretion of superseding or suspending the separate commission, and permitting the estate to be administered under the joint commission, by which means great expense has been saved, and the joint effects disposed of to greater advantage.^ Therefore, where there were four partners, two of whom carried on a distinct trade ; and, first, a joint commission issued against those two ; then, a joint commis- sion against the four; and, afterwards, separate commissions against the two who were not objects of the first commission ; Lord Eldon, adverting to the established law, that, strictly, the com- mission first taken out and prosecuted is the legal commission, nev- ertheless ordered that the commission against the four should be supported in preference to the joint commission against the two and the separate commissions against the two others, this mode being attended with much less expense and much less of complica- tion and difficulty.^ So, in a case where a separate commission issued against one of three partners, and afterwards a joint com- mission issued against that partner and one of his copartners,* the first commission was superseded, the court holding that it must be more convenient to administer the property under the more, exten- sive commission.^ § 1062. In general, therefore, it appears that, where there are different commissions or fiats, the court will support that which in- second commission against one person does not seem equally applicable in the case of joint and separate commissions. See Ex parte Hardoastle, 1 Cox, 387; Ex parte Martin, 15 Ves. 114. But see 6 Geo. 4,c. 16, s. 16. A commission unopened is no commission ; and therefore, in such case, the second commission will be legal and valid. Warner v. Barber, 2 Rose, 432. Generally, as to the power of the Lord Chancellor to support commissions which are void at law, see Ex parte Cridland, 2 Rose, 160. ' And where circumstances require it, a court of equity will render the secoml commission valid at law, by granting an injunction to restrain the pro- duction of the>-s«. Ex parte Thompson, 1 Rose, 285; ante, § 1052. ° Ex parte Hardcastle, 1 Cox, 397. See Murray v. Murray, 5 John. Ch. 76. ' Ex parte Rawson, 1 Ves. & Bea. 160. * Under 3 Geo. 4, c. 81, s. 8, reenacted in 6 Geo. 4, c. 16, s. 16. ' Ex parte Smith, 1 Glyn & Jam. 256. 77* 918 BANKRUPTCY OF PARTNERS. [BOOK IV. eludes all or most of the partners ; but in these cases, such subse- quent proceedings will only be upheld with a view of effecting more substantial justice.^ Moreover, as, upon the annulment -of a fiat, every thing done under it becomes void, the court will not actually annul the first fiat when sales have taken place, or sometimes when a certificate has been obtained under it ; but, in order to support such sales, and at the same time to give effect to the subsequent joint fiat, will direct the separate fiat to be impounded in the bank- rupt office, ordering, nevertheless, that the proofs, &c., under the separate fiat be transferred to the joint fiat, and that the several sales made under the first fiat be confirmed and carried into exe- cution.^ The court will hkewise, in these cases, give liberty to the commissioners under the joint fiat to review the choice of assignees, and, if necessary, to proceed to anew choice.^ § 1063. It has been the custom not to annul a separate fiat at the instance of the creditors under a joint fiat, if the joint fiat can- not be sustained.^ Nor is it a sufiicient reason for superseding a prior separate fiat for the purpose of sustaining a joint fiat, that the only witness who can prove the act of bankruptcy is kept out of the way by parties interested in the first fiat.^ Moreover, where, under the separate fiat, the bankrupt has become liable to an in- dictment for not surrendering, it has been held that the court could neither supersede it nor direct it to be deposited in the bankrupt ofiice.^ But in one case where a prosecution was instituted. Lord Eldon superseded the separate commission, upon the petition of the bankrupt; his non-surrender having arisen, not from fraud, but mistaken advice, and it appearing that he had surrendered and passed his examination under the joint commission,'^ § 1064. It has been considered as discretionary with the court to supersede the first or legal commission, whether the bankrupt '■Ex parte Crew, 16 Ves. 236 ; Ex parte Lister, 3 Dea. 516. 'Ex parte Tobin, 1 Ves. & Bea. 308; Ex parte Eawson, id. 160; Ex parte Kowlandson, 1 Rose, 416 ; Ex parte Mason, id. 423 ; Ex parte Uigby, 2 Mont. & A. 735 ; 1 Dea. 341. For an order to this effect, see Buck,.55. ' Ex parte Lister, 1 Mont. & Ch. 260. * Ex parte Roberts, 1 Madd. 72. ° Ex parte Burdekin, 1 Dea. 57. 'Ex parte Roberts, 2 Rose, 378. ' Ex parte Lavender, 18 Ves. 18. CH. III.] PRACTICE. 919 has got his certificate under it or not.^ But in cases where he has obtained it, although it has not been allowed, the court has been generally unwilling to supersede.^ Thus, in cases where there had been delay on the part of the joint creditors, as, for instance, where six months had elapsed between the issuing of the separate and the joint commission, and the bankrupt's certificate under the separate commission had been before the Chancellor for allowance, the court refused to interpose.^ But where there has been fraud under the separate commission, the circumstance of the bankrupt having obtained his certificate, or even set up in trade again, has not been regarded.'^ § 1065. Where a separate commission issued in Ireland, and afterwards a joint commission issued in this country. Lord Eldon refused to supersede the latter, at the same time observing, that the Lord Chancellor of Ireland would refuse an application to su- persede the separate commission, on account of the joint commis- sion in this country, unless he had the means of administering the affairs of the bankrupt by a joint commission under the authority of his own great seal.^ The exclusion of a separate creditor from voting in the choice of assignees under a joint commission has been no objection to superseding a prior separate commission.^ § 1066. When a separate commission, having priority, has been superseded to effect a subsequent joint one, the petitioning cred- itor in the first commission has always been entitled to his costs, to be paid out of the joint estate.^ But in a case where a joint commission issued against two of four partners, then a joint com- mission against the four, and then separate commissions against the two who were not included in the first, the costs of superseding the two latter were ordered to be paid by the petitioning creditor, he having notice of the commission against the four.^ § 1067. Where the prior sejJarate commission or fiat is taken ' Ex parte Cutten, Buck, 68. ^ Ex parte Hamper, 17 Ves. 418 ; Ex parte Levi, Buck, 75. " Ex parte Eowlandson, 1 Rose, 89 ; Ex parte Cutten, supra. * Ex parte Poole, 2 Cox, 227 ; Ex parte Gillam, id. 193. » Ex parte Cridland, 2 Rose, 164. ° Ex parte Pachelor, 2 Rose, 26. ' Ibid. " Ex parte Mason, 1 Rose, 428. 920 BANKRUPTCY OF PARTNEES. [BOOK IV. out by a joint creditor, a right -will be reserved to him to elect whether he will prove as a joint creditor, or as the separate cred- itor of the bankrupt against whom he sued out the commission.* When a separate commission has issued, and afterwards a joint commission, a court of law has exercised a species of equitable jurisdiction, when the assignees under the first commission have obtained a verdict, by ordering the money to be paid into court, until a petition to supersede the separate commission has been de- cided.^ , § 1068. In case of necessity, the petitioning creditor under a separate commission or fiat against A. may be ordered to exhibit the proceedings under that commission or fiat, in order to aid the proof of an act of bankruptcy by A., under a subsequent joint fiat against A. and B.^ And generally the proceedings under the separate commission have been ordered to form part of the pro- ceedings under the joint commission ; * the proofs under the superseded commission being directed to be received under the other.^ ' Ex parte Brown, 1 Ves. & Bea. 60 ; Ex parte Smith, 1 Glyu & Jam. 256. ' Hodgkinson v. Travers, 2 Dowl. & Ryl. 409 ; 1 Barn. & Cres. 257. * Ex parte Harrison, 2 Glyn & Jam. 135, overruling Ex parte Stones, 1 Glyn & Jam. 7. But tlie solicitor under a superseded commission has a lien on the proceedings under that commission for his bill of costs, and until payment the court cannot order him to deliver them up. Ex parte Shaw, 1 Glyn & Jam. 121. See, however, 6 Geo. 4, c. 16, § 33. * Ex parte Tobin, 1 Ves. & Bea. 308. * Ex parte Upham, 17 Ves. 242 ; and see the minutes of the order in Ex parte Mason, 1 Rose, 428. The order which contains this direction has also usually directed that the assignees under the separate commission shall account with the assignees under the joint commission for what they have possessed, having all just allowances, and retaining or receiving all their expenses, costs, and charges relative to the estate comprised in the separate commission, out of that estate ; and in case of a deficiency of the said estate to pay such expenses, the assignees to have them out of the other estates. But, for the interest of the estate, the assignees under the separate commis- sion to be at liberty, by themselves or their solicitor, to attend upon all pro- ceedings relating to the said estate, at the expense of such joint and separate estates, as shall be had under the joint commission. And the assi"ni',es un- der the separate commission to permit their names as assignees to be used by, or to join as assignees with, the assignees under the joint commission, in all matters in which it shall be necessary, in the judgment of the commis- CH. III.] PRACTICE. 921 § 1069. The foregoing observations are mainly applicable to tlie case of a joint commission or fiat issuing against all the partners, after a separate commission or fiat against one, or after a joint com- mission or fiat against some of the members. There is another case, which has Ifeen expressly provided for by the statute ; namely, where a joint commission has been sued out against some of the members, and another commission is afterwards sued out against one or more of the remaining partners.^ In such case, the two commissions may be consolidated under the 17th section of the act. By this, it is enacted, " That if, after a commission issued against two or more members of a firm, any other commission or commis- sions shall be issued against any other member or members of such firm, such other commission or commissions shall be directed to the commissioners to whom the first commission was directed ; and im- mediately after the adjudication under such other commission or commissions, the commissioners shall convey and assign all the estate, real and personal, of such bankrupt or bankrupts, to the assignees chosen in the first commission ; and, after such convey- ance, all separate proceedings under such other commission or commissions shall, without affecting the validity of the first com- mission, be annexed to and form part of the same ; provided that the Lord Chancellor may direct that such other commission or commissions be issued to any other commissioners, or that such other commission or commissions shall proceed either separately or in conjunction with the first commission." It will be perceived that this enactment applies to a prior commission or fiat issued against two members of a firm ; but if a fiat issue against one mem- ber of a firm, the practice is to direct a subsequent fiat against the other members to the commissioners under the first fiat.^ It has been said, that where the second commission is against the partners included in the first, and against others also, it would per- haps be deemed a case within the meaning of the 17th section.^ sioners under such lastmentioned commission, that their names shall be so used, or that they should so join, being indemnified, and having their costs, charges, and expenses paid, the same to be paid, in the first place, out of the estates to which guch matters relate. ' A separate fiat against a partner, included in a prior joint fiat, cannot now stand without special reason. 3 Mont. & A. 191. ^ Ex parte Blake, 2 Mont. & A. 481 ; 1 Dea. 191. » Archb. B. L. 275. 922 BANKRUPTCY OP PARTNERS. [BOOK IV. § 1070. By the 16t]i section it is enacted, that, in every com- mission against two or more persons, it shall be lawful for the Lord Chancellor to supersede such commission as to one or more of such persons, and the validity of such commission shall not be thereby aflfected as to any person as to whom such commission is not ordered to be superseded, nor shall any such person's cer- tificate be thereby afiected. Upon the construction of this sec- tion, it has been held that a joint commission, though invalid in its concoction, may be superseded as to one partner, and stand good as to the other.^ For this reason, a commission against T. C. and three others was superseded as to T. C, on the petition of the assignees under a commission previously issued against T. C. and another.^ And in a case ^ where it was argued that the 16th section of the act was intended to apply only to cases of valid commissions, and not to cases where the commission was invalid by reason of a prior commission having issued against one of the bankrupts. Sir John Leach expressed his opinion to be, that the reason of that provision in the act was for the very purpose of giving valility to the commission, which in its origin was not valid, by enabling the Lord Chancellor to supersede the commission as to such person. § 1071. However, the cases on this subject are contradictory. Thus, it has been held, that, where a joint fiat has issued against two partners on the separate debt of one of them, the annulment of the fiat as to the solvent partner will not make it good as to the other.* It has also been doubted whether, under this clause of the act, a commission can be superseded as to one of two bank- rupts, in order to give vahdity to a subsequent commission against that bankrupt, together with three others unconnected with the partnership in the first commission. In the case now alluded to, Sir Anthony Hart said that a commission had issued against two persons, which commission was not impeached, either in regard to its legal validity, or the hona fides on which it was issued. Could, ' Ex parte Bygrave, 2 Glyn & Jam. 391 ; Ex parte Watson, 3 Dea. 277. " In re Coleman, Mont. & M'A. 15. ' Burlton v. Wall, Taml. 113. But see Ex parte Wray, Mont. & M'A. 195. • Ex parte Clark, 1 Dea. & C. 544 ; and see Ex parte Watson, 3 Mont. & A. 682. CH. III.] PKACTICE. 923 then, third persons, not connected ■with the commission, and not impeaching the commission or the conduct of those who acted under it, seek to have it superseded as a matter of convenience ? This was not the common case of superseding a separate commis- sion, in order to give operation to a more extensive commission, embracing the same parties; and he could not satisfy himself that he was warranted by the statute in assuming this authority.^ § 1072. We may conclude this section by observing, that it is the duty of commissioners to proceed upon the fiat submitted to them, without reference to the existence of any other commission or fiat against the same party.^ SECTION VIII. OP COSTS. § 1073. The costs of the ordinary business done under pro- ceedings in bankruptcy are regulated by the 14th section of the 6 Geo. 4, c. 16. It is there enacted, that " the petitioning cred- itor or creditors shall, at his or their own costs, sue forth and prosecute the commission until the choice of assignees ; and the commissioners shall, at the meeting for such choice, ascertain such costs, and by writing under their hands direct the assignees (who are hereby thereto required) to reimburse such petitioning credi- tor or creditors such costs out of the first money that shall be got in under the commission ; and all bills of fees or disbursements of any solicitor or attorney employed under any commission, for busi- ness done after the choice of assignees, shall be settled by the commissioners, except that so much of such bills as contain any charge respecting any action at law, or suit in equity, shall be settled by the proper officer of the court in which such busuiess shall have been transacted, and the same, so settled, shall be paid by the assignees to such sohcitor or attorney ; provided that any ' Ex parte Burlton, 2 Glyn & Jam. 344 ; and see Lord Lyndhurst's ob- servations in the same case. " Ex parte Pryce, 2 Glyn & Jam. 161 ; Ex parte Addison, 3 Dea. 61. But see In re Chambers, 2 Dea. 494. 924 BANKRUPTCY OF PARTNERS. [BOOK IV. creditor who shall have proved to the amount of twenty pounds or upwards, if he be dissatisfied with such settlement by the commis- sioners, may have any such costs and bills settled by a master in chancery, who shall receive for such settlement, and the certificate thereof, twenty shillings and no more." The costs, therefore, to be paid by the petitioning creditor, consist of the bill of the solici- tor who sued out the commission, and the bill of the messenger, for the business done up to the choice of the assignees ; the costs to be paid by the assignees consist of the bills of the solicitor and messenger for business done subsequently to the choice of the assignees, and the costs of all actions and suits in equity by or against the assignees, and all collateral, proceedings arising from the bankruptcy.-^ § 1074. In cases where a separate commission has been super- seded to give effect to a subsequent joint one, the petitioning cred- itor under the former has usually been reimbursed his costs of the commission and supersedeas out of the joint estate.^ However, in a case where a partnership had been dissolved, and the debts and effects assigned to the remaining partner, who covenanted to 5 Mees. & Wels. 2. CH. I.] JOINT-STOCK COMPANIES. 933 raised, and that not more than 1,400 out of the 10,000 shares had been taken. The Lord Chief Baron told the jury that, without evidence that the defendant knew and assented to the works being carried on with a smaller capital than that which was originally proposed, he could not be bound by the contract of the directors ; and it was for them to say whether the works were so carried on with his knowledge and consent. The jury having, under this direction, found a verdict for the defendant, a motion was made for a new trial, but the Court of Exchequer refused the applica- tion. Lord Abinger C. B. : " The question is, whether the direc- tors were the agents of the defendants in carrying on the business with so small a capital. I thought at the trial, and am still of the same opinion, that where a prospectus is issued, and shares col- lected, for a speculation to be carried on by means of a certain capital to be raised in a certain number of shares, a subscriber is not liable in the first instance, unless the terms of the prospectus in that respect are fulfilled. But if it be shown that he knows that the directors are carrying on the undertaking with a less capital, and has acquiesced in their so doing, he may become answerable for their future contracts. In this case there was very little, if any, evidence to show that, and I am satisfied with the finding of the jury." Parke B. : "I think the case was properly left to the jury. The defendant, by taking shares in this speculation, gives authority to the directors to bind him by their contracts, in the event of the proposed number of shares being disposed of, and the proposed capital obtaiaed. The secretary who gives the order to the tradesman is the party primarily liable ; the directors also, who gave the order to the secretary, may be liable. A third party may become liable, if it can be shown that he has authorized the act of the directors in making the contract. But by proving the defendant to be an original subscriber, unless the proposed capital is raised, no such authority is shown." Alderson B. : " The authority given by the subscribers to the directors is a con- ditional one, depending on the terms of the prospectus being ful- filled. In this case, that condition has not been fulfilled, and therefore the defendant is not bound by the contract of the di-^ rectors." ^ ' But it will be different if there is evidence to show that the subscriber 934 PARTICULAR PARTNERSHIPS, [BOOK V. § 1085. There are other cases upon this subject -which it will he unnecessary to notice, except in the shortest possible manner. In Nockels v. Crosby ^ the point in issue was between the sub- scribers themselves, and not between the subscribers and third persons ; but the leaning of the court was in favor of the doctrine which has just been considered. In Bourne v. Freeth ^ the pro- spectus indicated that a partnership was to be established at a future time, subject to certain conditions, one of which was, that the subscribers were to pay in their subscriptions to certain bank- ers, ui such proportions as might be called for. The speculation faUed. It was held that a person who had signed the prospectus, but who never paid his subscription, was not entitled to a share of the profits, and therefore not an actual partner. In Dickinson v. Valpy ^ the evidence was, that a person applied to the secretary of the company for thirty shares, which were appropriated to him, and upon which he paid the bankers of the company an instal- ment of £5 per share, and took scrip receipts. He afterwards took these scrip receipts to the company's house, where there was a meeting of the directors, and paid a second instalment of >£10 per share, and signed a deed, which, however, was not produced. He subsequently attended a general meeting of the shareholders. The court were strongly of opinion that there was not sufficient evidence to go to the jury that he was actually a partner. These cases are much less severe upon persons taking shares in joint- stock companies, than were others of a similar nature decided in the Common Pleas soon after the year 1825. Since the case of Fox V. Clifton, that of Perring v. Hone, and others of a like com- plexion, may be considered as overruled.* expressly authorized the directors to proceed with the smaller amount of capital. Tredwen v. Bourne, 6 Mees. & Wels. 461 ; 4 Jur. 747. So, where the complete formation of the company does not depend on the condition of the whole number of shares being subscribed for, no such condition appear- ing in the articles. Tappan v. Bailey, 4 Metcalf, S3 5. But see Sandford v. Handy, 25 Wendell, 475, and s. c. 23 Wendell, 260. See, as to corpora- tions, Salem Mill Dam Corp. v. Ropes, 6 Pick. 23 ; s. c. 9 Pick. 187 ; Cen- tral Tump. Corp. y. Valentine, 10 Pick. 142. 1 3 Barn. & Cres. 814; 5 Dowl. & Ryl. 751. 2 9 Barn. Si: Cres. 632 ; 4 Man. & Kyi. 512. s 10 Barn. & Cres. 123 ; Lloyd & Welsby, 6. * The result of the above cases is said to be, that, in a scheme for a com- CH. I.] JOINT-STOCK COMPANIES. 935 § 1086. Whether the company turn out successful or otherwise, if the shareholders neglect to perform the conditions which enable him to share the profits, he is not to be considered an actual part- ner. On the other hand, to charge a person as an actual partner in any company, it is not necessary to show that he executed the deed of settlement, if it can be proved from his letters or admis- sions that he was a partner according to the terms of that deed.^ And, a fortiori, if he can be shown to have done acts of manage- ment, more especially if he became a director, he will be deemed an actual partner, and chargeable accordingly .^ In such case, it is not necessary to show that the individual sought to be charged actually signed any contract. If he consented to be a director, or belonged to the board of management, he is responsible for the proceedings of the board. ^ Signing the deed of settlement is conclusive evidence of partnership against those who sign it,* and they will be considered as partners from the time of the pay- ment of their respective deposits." § 1087. Again, as we have already noticed, a man will become chargeable as a partner in a joint-stock company, by holding him- self out to the world in that character. There is but little to dis- tinguish the evidence in these cases from that by which a man may be charged as an ordinary partner. On this point, however, some few matters may here be noted, as more particularly appli- cable to the present subject. For, without question, they who appear aa the active framers or carriers on of a company, they pany which has not advanced to completion, that is, which has not arrived at the point held out by the promoters or provisional directors to the sub- scribers as the starting point, — which point may be stated to be, in England, under the late acts, complete registration and incorporation respectively, — there is no partnership existing quoad strangers, and therefore that the sub- scribers or allottees are not liable for debts incurred to strangers in the name of the company merely qua subscribers or allottees, where they have not expressly authorized the directors to proceed with a smaller or incomplete subscription or capital, and where they have not in any Way held themselves out as personally responsible. Bisset Partn. 254 ; 10 Jurist, 319. • Harvey v. Kay, 9 Barn. & Cres. 356. " Doubleday v. Muskett, 7 Bing. 118. ' Per Bosanquet J., id. « See Bird v. Aston, 6 Bing. 786, 788, cited ; D. Tindall C. J., Fox v. Clifton, Id. 800; Shep. Touch. 71. " Lawler v. Kershaw, ,1 Mood. & Malk. 93. 936 PARTICULAR PARTNERSHIPS. [BOOK V. ■who canvass for subscriptions, who call the meetings, who hire the premises, who take pains to show the world that they are the con- ductors of the concern, must be looked upon as actual partners, and be made liable accordingly. Still, even here, there are some niceties of distinction. For it seems that the doing of some few of these acts, without a general activity in the business, will not render a man a partner. The being present at a meeting where premises are proposed to be hired for carrying on the company, which premises are afterwards hired, and even, in addition to this, the soliciting other persons to become members of the company, wiU not, it seems, make a man a partner, if he did no other acts of partnership.^ On the other hand, in a case where it was proved that A. B. had contributed to the funds of a building society, and had been present at a meeting of the society, and party to a reso- lution that certain houses should be built, it was held that this made him hable in an action for work done in building those houses, without proof that he had any actual interest in them, or in the land on which they were built.^ § 1088. Signing a prospectus of a future company does not make a man a partner to the world. Thus, in Bourne v. Freeth,^ the prospectus of a company, after stating that the legislature had authorized the distilluig of whiskey in England, proceeded as fol- lows : " The conditions upon which this establishment is formed are, first, they pledge themselves they will distij nothing but the purest malt spirit, in the smallest stills that government will license, and on the same plan practised in the Highlands of Scofe land, for which purpose an eminent distiller from Inverness-shire will be engaged ; secondly, the concern will be divided into twenty shares of <£100 each, which are transferable, five of which belong to Sir W. FairUe, Bart., the founder of the works, the other fifteen subscribers to pay in their subscriptions to Messrs. Moss & Co., bankers, Liverpool, in such proportions as may be called for ; thirdly, the concern to be under the management of a committee of three of the subscribers, to be chosen annually, upon the 10th of October ; fourthly, regular books to be kept, which shall be open for the inspection of any of the subscribers, and a division • Bourne v. Freetli, 9 Barn. & Ores. 632 ; 4 Man. & Ryl. 512. ^ Braithwaite v. Skofield, 9 Barn. & Cres. 401. ' Supra, §§ 1085, 1087. CH. I.] JOINT-STOCK COMPANIES. 937 of the profits made twice a year, at Lady-day and Michaelmas ; fifthly, £10 per cent, to be paid into the bank on or before the first of June next." It was held, that this prospectus imported' only that a company was to be formed, not that it was actually formed ; and that a person who signed it, did not, by so doing, hold himself out to the world as partner, and, consequently, was not liable in an action for goods sold and delivered to the company. In this case, Bayley J., observed, that the plaintifis, when they saw the defendant's name to the prospectus, had no right to infer, from the terms of it, that he had become a partner at the time when he signed it ; they ought, before they dehvered goods on his credit, to have inquired whether he had become a partner subse- quently, and, if they had so inquired, they would have found that he had not. § 1089.' Again, in order to charge a person successfdlly with having held himself out as a partner, the act on which the party is so charged must appear to have been voluntary. In Fox v. Clifton,^ it was sought to charge the defendants with having held "themselves out as partners, not merely by reason of their having paid deposits, but because their names, together with those of others who had paid deposits, had been entered in a book at the counting-house, which book was shown to the plaintiff by the sec- retary of the company, upon the plaintiff's apphcation to know their names. But Tindal 0. J., held that the communication of this book was no act done by the defendants themselves, or by their authority or permission, so as to make them nominal or ostensible partners. There was no evidence, he said, that the defendants knew of the existence of any copy of the fist at the counting-house, still less, any evidence that such list was made up or shown to any one with their permission or knowledge. The holding one's self out to the world as a partner, as contra-dis- tinguished from the actual relation of partnership, imported at least the voluntary act of the party so holding himself out. It im- plied the lending his name to the partnership, and was altogether incompatible with the want of knowledge that his name had been so used. § 1090'. The subject of the liability Of promoters and provisional directors to third persons may here be considered. This liabiUty ' Ante, § 1083. 79 938 PAUTICULAR PARTNERSHIPS. [BOOK V. may be determined from the fact of appearing in the character of a promoter or director, and exercising some degree of personal superintendence in the formation of a company. Thus, in Double- day V. Muskett,! the defendants were appointed directors of a joint-stock company for supplying the town of Brighton with water, attended meetings of the directors, and accepted and paid the first instalment upon shares required to qualify them to act as •directors. The resolutions entered iato at the first formation of the company, and the prospectus subsequently issued, stated that an act of Parliament would be appUed for to regulate and estabhsh the company. After the defendants had ceased to attend meet- ings of the company, the directors advertised for tenders for the excavation of reservoirs, and employed the plaintiff to do the nec- essary works. It was held that the defendants (they once having accepted the office of directors, and not having since done any, act to divest themselves of the responsibility attached to that charac- ter), were hable to the plaintiff for the work done by him, although they were not actually parties to the contract, and although no act of ParUament for -incorporating the company had been ob- tained. And in Maudslay v. Le Blanc,^ it was held that a person was liable for an engineer's bill, although it was not proved that he had executed a deed as a director, or was present at the meet- ing at which the order was given, but his name appeared as a director iii a printed prospectus, and he had attended at subse- quent meetings, and also inspected the works while they were in progress. § 1091. But if it can be shown that the plaintiffs agreed to look to some particular fund for payment, and that the committee were to be without personal liability, this will have an effect in removing the liability from the provisional committee.^ In Woods v. Duke of Argyll,* it appeared that both the defendants, the Duke of Argyll and Sir James Cockbum, had signed an agreement to take shares in. a company which was proposed to be formed under the name of the British- American Association for Emigration and Col- onization ; but one condition of that agreement was, that a deposit of £5 was to be paid when shares to the amount of £50,000 had been subscribed for. The proposed amount was never realized, 1 4 Moore & Payne, 750; 7 Bing. 110. " 2 Carr. & Payne, 409, note. ' Kerridge v. Hesse, 9 Carr. & Payne, 200. ♦ 8 Jur. 62. CHrl.] JOINT-STOCK COMPANIES. 939 and no deposit had therefore been paid. In the prospectus the name of the Duke of Argyll was inserted as president, and that of Sir James Cockburn as a member of what was called the consulting council. By the prospectus it also appeared that the whole man- agement of the vmdertaking was to be placed in the hands of six commissioners ; and further, that no peer or baronet wha should become a vice-president should be liable, as such, to the expenses of the association. Upon these facts, the Lord Chief Justice left it to the jury to say whether there was any evidence of a direct con- tract between the parties ; or secondly, whether there was any partnership formed of which the defendants were members ; or whether, thirdly, the defendants had held themselves out to the plaintiff as members of the association. The jury answered all these questions in the negative, and a verdict was therefore en- tered for the defendants, which the Court of Common Pleas, on a motion for a new trial, refused to set aside. § 1092. In the subsequent case of Lake v. Duke of Argyll,^ in an action against the Duke of Argyll as a member of the same company, the jury having returned a verdict for the plaintiff, on a motion for a rule nisi to enter a nonsuit, or for a new trial, Lord Denman C. J., delivered the judgment of the Court of Queen's Bench : " The question in this case was, whether the defendant had made himself liable for certain printer's work. I was asked to direct a nonsuit, because it was said there was no evidence to show the defendant's liability. I thought, however, that I could not nonsuit, as, undoubtedly, some proof was given of acts done by the defendant, which were fit to be considered by the jury, in order to determine whether he had incurred any individual habil- ity, and on the effect of which the plaintiff had a right to take the opinion of the jury. The case of Wood against this same defend- ant, tried in the Court of Common Pleas, was referred to, where the Lord Chief Justice laid down the law to the jury, and summed up very strongly for the defendant, I adopted the same course, and laid down the law to the jury, I believe, in the very words there employed, and summed up somewhat in favor of the defend- ant ; observing, also, that, upon the evidence in the cause, there was strong reason for supposing that credit had been given by the plaintiff to other persons, who had previously been the plaintiff's 1 9 Jur. 295 ; s. c. 6 Adol. & Ell. (n. S.), 477. 940 PAETICULAR PARTNERSHIPS. [BOOK V. customers, and not, in point of fact, to the defendant. The jury, in the Court of Common Pleas, found a verdict for the defendant. In this case the jury found a verdict for the plaintiff; and a motion has been made for a rule to show cause why a nonsuit should not be entered, or why there should not be a new trial. We expressed our opinion when the rule was applied for, that there was no ground for a nonsuit, for the reasons which we then stated. We now, therefore, come tb consider the application for a new trial. It ap- pears that certain persons agreed to form an emigration society ; they held some meetings ; the names of several persons were put forward as the names of those who were engaged in forming this society ; and they afterwards obtained the consent of the defend- ant to be named president, — that involving a consent to the pub- licity of such appointment. Some meetings were afterwards held, at one of which the defendant acted as president, and signed cer- tain resolutions there agreed upon, and, among others, a resolution that the proceedings of that meeting should be printed. The de- fendant was also pubhcly held out to the world as president of the intended association, in papers which were regularly transmitted to him ; and he also informed the Lord Mayor, in a correspondence relating to some sailors, whose case came before him, that he had at one time been a proprietor of shares in the undertaking, but that he had withdrawn from the company. On these facts, I asked the jury whether the defendant had held himself out to the world as a person intending to pay for the work charged, and arti- cles furnished, to the company ; and they thought he had, and fixed him with the amount. An objection was made to that mode of puttmg the question. It did not appear that the company had ever been formed according to its intended constitution ; and it may be proper to distinguish between acts done by the company in execution of their project, and acts done by those who hold meetings preliminary to the formation of the company. In the former case, the tradesmen, in order to establish the liability of the party, may be bound to show that the company was created according to the announced terms. He might have no right to separate the statement in a prospectus or similar publication, that the defendant meant to be a member of the company, when formed, from the accompanying statement, that no company was to be formed until a certain capital was subscribed, or a certain amount paid, or other conditions precedent be complied with ; but where CH. I.] JOINT-STOCK COMPANIES. 941 persons meet together for tlie purpose of preparing measures neces- sary for calling a society into existence, their attendance at such meetings, and their concurrence in such resolutions as may be deemed necessary for the intended purpose, would be strong evi- dence that any individual there present held himself out as a pay- master to all who executed their orders ; for though he might not be liable as a member or shareholder, since no shares were in act- ual existence, y^t, if it was his declared intention to become a president or member, or to take any share under any condition, he might be liable for the prehminary expenses by virtue of the declaration of his intention. It might be material, in a case where a party to be charged did not actually give the order, to show that the secretary had authority from that party to contract with those whose services were required by what may be called the constit- uent body : that proof was given here. In this case, the work done by the plaintiff was obviously necessary for the existence of the company. Part of it was ordered at a meeting held in the defendant's presence, by a resolution which was read by him from the chair. This proof was not certainly conclusive, for the defend- ant might only be giving his attendance as a spectator, and the plaintiff might possibly have been informed, or might have believed from circumstances, that other persons were to pay. But the de- fendant here had the benefit of that possible presumption ; for the circumstances which might fairly have led to such an inference were fully commented on in the summing up ; and we cannot say the jury have done wrong in, thinking them insufficient to justify that inference, and to outweigh the defendant's conduct in the par- ticulars above mentioned. In Wood's action the claim was not precisely of the same nature ; it was for maps to be used apparently in execution of the company's scheme of emigration, — with a view to the accomplishment of the very object for which it was formed ; hence, the evidence was confined to proof that it was so formed, and that the Duke had become a member of it. There was no difference between the summing up in the two cases, nor is it at all certain that the same jury might not have found both verdicts. Possibly this view might lead to the opinion that this verdict was for too large a sum. Part of the work may have been properly charged, because done in respect of preliminary matters ; and part improperly, because claimed in respect of a company which may never have been formed, or of which the defendant may never 79* 942 PARTICULAR PARTNERSHIPS. [BOOK V. have been a member. But this division it would not have been easy to make, and it ought to have been pointed out at the trial ; nor is it the ground of the motion now refused. We only advert to it at present upon the supposition that the jury have so found their verdict in this case as to refer the liability to every contract made by the supposed company, the apprehension of which was stated to be the mam reason for resistance to Mr. Wood's demand. Bach case must depend upon its own circumstances, and must be deter- mined with reference to the defendant's own language and con- duct. On the whole, therefore, we are of opinion that the direction was right, and that the jury exercised their judgment on matters properly submitted to their consideration." ■i' § 1093. In regard to the clause in the prospectus above cited, which pretends to provide that " no peer or baronet who should become a vice-president should be liable, as such, to the expenses of the association," (and the remark about to be made is equally applicable to all clauses in any such prospectus, which profess to hold out either a total or a partial immunity from risk as a lure to the unwaisjr), it cannot be viewed as any thing but a fraudulent misrepresentation of the law on the subject ; in short, a trap by which persons of rank should be first entrapped to lend their names, and those names then made use of as a fresh trap to the public at large ; and to which the words of Lord EUenborough, in the case of Rex v. Dodd,' are fully applicable : " This is a mis- chievous delusion, calculated to ensnare the unwary pubhc. As to the subscribers themselves, indeed, they may stipulate with each other for this contracted responsibihty ; but as to the rest of the world it is clear that each partner is liable to the whole amount of the debts contracted by the partnership." ^ ' § 1094. In Bartlett v. Lambert ^ the action was brought against the defendant, as a member of the provisional committee of the Great Welsh Junction Railway Company, to recover the price of stationery supplied to the company. Some iiime after the forma- tion of that company, the defendant intimated by letter his con- sent to become a member of the provisional committee » His name was accordingly pubhshed as one of the persons constituting that committee, and hp afterwards took the chair at one of its meetings. It was held by the Court of Exchequer, that he might be sued for ' 9 East, 516. ° 9 East, 527. » lo Jur. 416. CH. I.] JOINT-STOCK COMPANIES. 943 SO much as had been furnished after the date of the letter declar- ing his wiUingness to act on the provisional committee.^ § 1095. And the mere fact of having exercised some degree of personal interference in the management, even though the party may not have formally assumed the character of director, will be sufficient. Thus, in an action by the solicitor of an intended com- pany for preparing their copartnership deed, it was proved that, at a meeting of the company at which the defendant was present, but before he became a director, the draft of the deed was produced, and its clauses discussed ; and that the defendant took a part in suggesting alterations io the draft. Lord Denman C. J. : " The question is, whether the defendant Francis so acted before he be- came a director as to become one of the employers of the plaintiff in preparing this deed. "Where persons become directors in one of these proposed companies, they make themselves liable, and other persons may do so if they interfere in the management, and hold themselves out as persons giving the order." ^ SECTION II. OF THE MUTUAL EIGHTS OF SHAREHOLDERS. § 1096. The partners in a joint-stock company are of two classes ; one consists of directors, trustees, and others, who are ' It having been urged on behalf of the defendant that he limited his re- sponsibility to the amount of his shares, Alderson B., said: " All that is inter se;" and in reference to the following question, — "The majority of the committee of a company might be in favor of ordering certain goods, and the minority against it ; would the minority in that case be liable for the goods when supplied ? " the same learned Judge observed : " The case has been put of the defendant being one of a minority of the committee who dissented from giving these orders ; but if that were so, it lay on the defend- ant to show it. I am by no means prepared to say that the defendant would not be exempt in such a case ; for he gave no actual authority to pledge his credit, and there could be no implied authority, as he dissented from the act." ' Bell V. Francis, 9 Carr. & Payne, 66. And in Harrison v. Heathorn, 6 Scott N. R. 735, it was held by the Court of Common Pleas that the pres- ence of a party at a meeting of a company was sufficient to render him liar ble as a partner or shareholder. 944 PARTICULAR PARTNERSHIPS. [bOOK V. actively employed in conducting the concern ; the other, 9f a number of persons who take little or no part in its management, and many of whom become shareholders for the sake only of ob- taining a profitable investment for their money. The general conduct of the trade falls upon the directors, whUe the more par- ticular transactions are usually managed by paid agents who are not shareholders. The funds and other property of the company are vested in the trustees. § 1097. Not only have the subscribers or allottees in a scheme for a company, which has not advanced to completion, been held not hable for debts incurred to strangers in the name of the com- pany, but it has been decided in some important cases, both be- fore and since the passing of the Joint-stock Companies Regis- tration Act, in England, that, when a scheme for a joint-stock company proves abortive, that is, when it has never arrived at the point set forth by the directors or promoters to the subscribers as the starting-point, the subscribers may recover back their de- posits. Therefore, where a scheme for establishing a tontine was put forth, stating that the money subscribed was to be laid out at interest, and after some subscriptions had been paid to the direc- tors, but before any part of the money was laid out at interest, the directors resolved to abandon the project, it was held that each subscriber might, in an action for money had and received, recover the whole of the money advanced by him, without deduction of any part towards the payment of the expenses incurred.^ So, in a case where A., the purchaser of shares in a projected railroad company, had sold them to B., and the undertaking was after- wards abandoned before any thing was done in pursuance of the project, it was held that B. might recover the amount of the shares in an action against A.^ § 1098. Walstab v. Spottiswoode ^ was a case which arose at law in England since the passing of the Joint-stock Companies Registration Act. The plaintiff was a subscriber to a railway company, of which the defendant was one of the provisional com- mittee. Shares had been allotted to the plaintiff, and the deposit > Nockels V. Crosby, 3 Barn. & Ores. 814 ; 5 Dowl. & Ryl. 751. ' Kempson v. Saunders, 12 Moore, 44; 4 Bing. 5. See Watkins Huntley, 2 Carr. & Payne, 410. ' 10 Juris* 460, 498. CH. I.] JOINT-STOCK COMPANIES. 945 required -was paid upon them. Public confidence in railwaj schemes having been much shaken, the deposit was paid on a very small proportion of the -whole number of shares, and the scheme did not proceed. The plaintiff was held entitled to recover the deposit paid in. Pollock C. B., in delivering his opinion in this case, said : " With respect to the first point made for the defend- ant, that the subscribers became a quasi partnership, and that their subscriptions became a common fund to be applied for the general benefit, so that no one could claim back his subscription, we are of opinion that such is not the true result of the publica- tion of the prospectus by the provisional committee (of which the defendant was one), of the application for shares, and the allot- ment, and the payment of the deposit. We think in this case no partnership ever actually commenced. In the 'case of Pitchford V. Davis,^ it was decided that, where a prospectus was issued for a speculation to be carried on by means of a certain capital, a subscriber did not become a partner unless the terms of the pro- spectus were in that respect fulfilled. And that decision has been since frequently acted on in this and other courts. In the case of Nockels V. Crosby, cited by the plaintiff's counsel, a similar doctrine was held. It appears to us that the application for shares and payment of the deposit amounts to nothing, if the shares sub- scribed for are so few that the concern cannot proceed and the scheme must necessarily be abortive." § 1099. Similar relief may be had in equity, in cases where the projected company turns out to be a mere bubble, and the whole scheme was concocted in fraud. Thus, in the well-known case of Colt V. Woollaston,^ the defendant WooUaston, who had procured a patent for extracting oil out of English radishes, assigned this patent to one Arnold, in trust for the contributors to the project, which he divided into five thousand shares, valuing every share at ^£20, in order to raise <£100,000. As an encouragement and se- curity for the contributors, WooUaston likewise conveyed to Ar- nold and his heirs an estate which he had bought for ^31,800, subject to a mortgage of £28,000, upon trust in the first place to pay off the mortgage, and afterwards to pay to him, WooUaston, ie57,200 (in aU £85,200) ; and as to the surplus which the estate would raise, it was to be for the benefit of the contributors. ^ 5 Mees. & Wels. 2. MP. W. 154. See Stent v. Baillis, id. 217. 946 PARTICULAR PARTNERSHIPS. [BOOK V. The project was to be called the " Land Security and Oil Patent," and was represented by the defendants to be a most advantageous project, without any hazard, there being land security given for the benefit of the contributors. The project failed, and the con- tributors, with some resentment, called for their money ; upon which the projectors promised to return the money, with interest, within six months ; but afterwards this was refused. The plain- tiffs, who had each contributed £120 for six shares apiece, then brought their bill to be repaid these several sums, and the court granted the reUef. Sir Joseph Jeky 11 said that this was an impo- sition, to propose the surplus of the value of an estate (which cost but £31,800), after £85,000 charged upon it, — more than double its value, — as a security to the contributors who laid out their money upon this project; it was giving them moonshine instead of any thing real. It was no objection that the parties had their remedy at law,- and might bring an action for moneys had and received for the plaintiffs' own use : for that in cases of fraud a court of equity has a concurrent jurisdiction with the com- mon law, matter of fraud being the great subject of relief there. § 1100. Modern cases in equity have been decided on the same principles. In Green v. Barrett,^ the plaintiff was a shareholder in, and the defendants were the directors of, a company called " The Imperial Distillery Company." The bill alleged that ten of the defendants caused a prospectus to be printed and distrib- uted, stating the capital of the company to be £600,000, in 12,000 shares of £50 each, naming certain persons as directors, &c. ; and promising that a settlement would be prepared, and that an act of Parliament would be passed to enable the company to sue and be sued in the names of its officers. The bill further stated, that the plaintiff, confiding in the truth and accuracy of the prospectus, and in the persons named as directors therein, and be- lieving that it would be adhered to and carried into effect, pur- chased twenty shares and paid his deposit of £100. That the plaintiff afterwards discovered that a small part only of the 12,000 shares was in fact disposed of; that the deposit on several of the shares which had been disposed of had not been paid ; yet that the defendants determined to proceed in the scheme, and advertised for the purchase of premises for carrying on the distil- ' 1 Sim. 45. CH. I.] JOINT-STOOK COMPANIES. 947 lery business on an extensive scale. That tlie ten defendants before mentioned had, of their own sole assumed authority, chosen the two other defendants to be directors in the place of two per- sons, who, although named in the prospectus as directors, refused to act ; and that thereupon another prospectus was pubUshed by the direction of the defendants, which entirely, or in a great measure, differed from the first prospectus, upon the faith of which the plaintiff had paid his deposits. That no act of Parhament had been attempted or was intended to be obtained for the regula- tion of the company. That the plaintiff was informed, by means of a circular letter sent by order of the defendant, that they had purchased very valuable distillery premises, and he was required to pay the further sum of £100, being £5 each on his shares. That the plaintiff, under the circumstances, had refused to pay this sum. The bill then charged, that the directors had become directors for their own private emolument, and that a great num- ber of shares had been allotted by them to themselves, and that they had sold them at very considerable premiums. That the money ^aid by the plaintiff had been obtained from him by fraud, and by means of misrepresentation, and for a purpose which had failed of effect ; and prayed that the defendants might be decreed to repay the plaintiff, with interest, the £100 paid by him for the shares. To this bill two of the defendants demurred generally, but the demurrer was overrided. Sir John Leach : " Assuming the several statements in this bill to be true (which the demurrer does in form admit), I am, of opinion that the defendant is entitled to recover back from the defendants the £100 which he has paid ; and that the only question is, whether a bill in equity will hold for that purpose, or whether he must have recourse to a court of law. I lay no stress upon the allegation that the second prospectus materially differs from the first ; because such material difference is partly matter of law ; and the plaintiff, not having stated the nature of that difference, has not enabled the court to form any opinion upon the subject. Considering that, in substance, the allegations of this bill amount to this, that the prospectus for this undertaking was published, not with any intention to establish a company upon the principles there stated, but as a snare to per- sons who might unwarily become subscribers, and for the purpose of enabhng the directors to make a profit by the sale of shares which they thought fit to assume to themselves, it does appear to 948 PARTICULAR PARTNERSHIPS. [BOOK V. me that the case is governed by Colt v. WooUaston, and, upon the authority of that case, I overrule this demurrer." § 1101. As the relief given in cases of this nature arises out of fraud in the transactions stated in the bill, it has been held that the name of every party suing must appear on the record, and that one individual cannot be permitted to represent a class of persons having the same interests as plaintiffs. It has even been thought doubtful whether several persons can appear as ostensible plaintiffs in these cases, unless they become shareholders precisely at the same time, and stand in other respects precisely in the same situation with regard to each other. In Colt v. WooUaston, the bill was brought by two shareholders ; but every circumstance of the case applied equally to both, and the bill was not demurred to ; but in the case of Jones v. Garcia del Rio,^ Lord Eldon ex- pressed a strong opinion on the subject. That was a bill filed by three persons on behalf of themselves and all other the holders of scrip or shares of the Peruvian loan, against the envoys of the Peruvian government, the contractor for the loan, and the bankers to whom the subscriptions for the loan were paid, praying an ac- count, repayment of the moneys advanced, and an injunction to restrain the bankers from parting with the moneys, &c. The bill proceeded on the ground of fraud and misrepresentation, and of inability on the part of the envoys and the contractor to perfect the security which they had undertaken to ^ve for the loan. The bill also alleged, and the answer of the contractor admitted, that the Peruvian government had not been acknowledged as an inde- pendent state by Great Britain. Upon motion to dissolve the in- junction, Lord Eldon said, that the plaintiffs, if they had any de- mand at all, had each a demand at law, and each a several demand in equity ; that they could not file a bill on behalf of themselves and the other holders of scrip, and as they were unable to do that, they could not, having three distinct demands, file one bill ; and upon that ground alone, his Lordship, without adverting to the question of public policy, dissolved the injunction. It is, however, to be observed, that in the late case of Blain v. Agar,^ of which » Turn. & Russ. 297. " 2 Sim. 289. In the case of Thompson v. Powles, decided, on appeal, by Lord Brougham, his Lordship took occasion to express his disapprobation of the whole of this class of cases in equity. CH. I.] JOINT-STOCK COMPANIES. 949 the facts were very similar to those of Green v. Barrett, three shareholders were permitted to join as co-plaintiffs in a bill filed for the recovery of their deposits. § 1102. But whether public companies shall be considered in the light of bubbles, and so they who are entrapped into them shall be allowed to have their remedy against the projectors, is a question which may depend on matters appearing in evidence long after such companies have been set on foot. So that no man who shall have so far interfered in the formation of a company as to be entitled to share the profits, if there be any, shall, on the prospect of failure, be permitted, of his own free will and pleasure, and without consideration, to withdraw himself from the undertak- ing. In the case of the Kidwelly Canal Company v. Raby,^ the defendant Raby was one of the original subscribers to proposals for uniting for the purpose of improving the harbor of Kidwelly, and making a canal, &c., and of obtaining an act of Parliament as the foundation of the undertaking. In the progress of the scheme he attended various meetings as chairman, and voted, and otherwise took an active part. Afterwards, at a meeting of the committee of the House of Commons, during the progress of the biU, the de- fendant, -disapproving the proceedings, signified that he should withdraw his subscription, and desired that his name might not be inserted in the bill ; to which the chairman of the committee assented : and when the act passed, his name was in fact omit- ted. He nevertheless attended a meeting of subscribers in No- vember following, and seconded a motion for the appointment of a clerk. On this evidence it was held at Msi Prius, that the defendant was not at liberty to withdraw his name without the con- sent of the other subscribers ; and, therefore, that he was liable in an action brought against him to recover the amount of six calls. And this opinion was afterwards confirmed by the Court of Exchequer. We have already observed that they who sign the deed of settlement are, to all. intents and purposes, partners. They, therefore, who have subscribed the deed of settlement, and wish to retire from the concern, must conform to the stipulations of the deed ; which usually provides that any proprietor shall be permitted to retire upon payment of a certain sum in respect of his share, and upon giving notice to the directors. ' 2 Price, 93. 80 950 PARTICULAR PARTNERSHIPS. [BOOK V. § 1103. Supposing the company to hare been properly and legally formed, we have next to consider the rights and remedies as between the shareholders, either by virtue of the deed of set- tlement, or by virtue of the general law of partnership. And first as to the rights and remedies under the deed of settlement. The deed of settlement is a covenant made betwejen a few of the shareholders chosen as trustees for that purpose, and the others ; by which each of the latter covenants with the trustees, and each of the trustees covenants with the rest of the shareholders, for the due performance of a series of articles which are thereafter specifically set forth. These articles point out the duties of the directors, trustees, and auditors ; the powers of general meetings of the proprietors to make further calls on the deposits ; the limi- tations under which proprietors are to hold their property in th^ concern, — namely, as regards the number, the power of assign- ment, and the mode of descent of each share ; the remedies given to the directors for breaches of covenant ; and a variety of other provisions, which are better understood by a perusal of the instru- ment itself, and which, therefore, it will be unnecessary to men- tion more in detaU in this place. § 1104. Whether a company be constituted by deed, only, or with the additional security of an act of Parliament, it is of the utmost importance to the safety of the adventurer that the provis- ions of the act or the deed should be carefully and minutely set forth. The courts, however, will endeavor to construe the several clauses of these documents in such manner as to guard, as far as possible, the interests of the public. Therefore, where an act of Parhament provided that the whole of the estimated expense of the works of a projected company should be subscribed before any of the powers and provisions given by the act should be put in force, it was ruled that the company could not maintain an action of debt for a call on shares, until every signature had been affixed to the deed of settlement.^ § 1105. The same principles appear to have guided the Court of King's Bench in the case of the Thames Tunnel Company v. Sheldon.2 gy an act of Parhament passed for making a tunnel ' Norwich and Lowestoft Navigation Company v. Theobald, 1 Mood. & Malk. 151. ' 6 Barn. & Ores. 341 ; 9 Dowl. & Ryl. 278. And see Stratford and More- ton Railway Company v. Stratton, 2 Barn. & Adol. 519. CH. I.] JOINT-STOCK COMPANIES. 951 under the Thames, the company of proprietors were enabled to raise a sum of J 200,000 for the purpose of making the tunnel ; and it -was enacted, that the persons who had subscribed, or -who should thereafter subscribe or advance any money towards mak- ing the tunnel, should pay the sums by them respectively sub- scribed, at such times and places, and in such manner, as should be directed by the directors ; and in case any of such subscribers should neglect to pay the same at the time and place, and in man- ner so required for that purpose, the company, or their directors, were empowered to sue for and recover the same. By another section, reciting that the probable expenses would amount to ^160,000, and that the sum of X140,000, being more than four fifth parts of such expenses, had already been subscribed for de- fraying such expenses by several persons, under a contract bind- ing them, their heirs, executors, and administrators, for payment of the several sums so subscribed by them respectively, it was en- acted, that the whole sum of £160,000 should be subscribed in like manner before any of the powers and provisions given by that act should be put in force. The defendant purchased eight shares in the company, and paid his deposits thereon. Before the pass- ing of the act, the contract was left at the company's office for the signatures of the subscribers, but was not signed by the de- fendant, although his name was mentioned at the foot of it as a subscriber for eight shares, and a space left opposite each sub- scriber's name for his signature and seal thereto. A short time after the act of Parhament had passed, when the company were procuring additional signatures and seals to the contract for com- pleting the subscription to £160,000, the defendant, on being then applied to, refused to execute the contract, alleging that he had sold his shares in the concern ; but no evidence of this fact was given. The works authorized by the act being in progress, calls became necessary, and this action was brought against the defendant for the amoiint of two calls on his eight shares. The Court of King's Bench held that the defendant was not liable ; that the word " subscriber " in the act did not apply to all those who had already advanced money, but only to those who, by signing the contract, had stipulated that they would make pay- ment. § 1106. The same principles must likewise be applied in adjusting the internal arrangements of the company, according to 952 PAKTICULAE PARTNERSHIPS. [bOQK V. tte terms of the deed. In Moore v. Hammoiid,^ it was provided by the deed of settlement that the directors of the company should, without notice or summons, meet together at their office once in every week, on and at such day and hour as they should from time to time agree upon, and also at such other times as they should from time to time be convened in manner thereinafter mentioned, or adjourned to ; and that three directors should be a board. By another clause, any three directors were empowered at any time to call a special board or meeting, by giving, under their hands in writing, three days' notice to the other directors of the company ; which notices were to be countersigned by the secretary, and to be sent to him two days prior to the time appointed for such meet- ing. It was held, that, in order to constitute a good weeHy meeting without notice or summons, the day and hour of meeting must have been previously agreed upon by the directors; and therefore that a meeting of three directors, without previous agree- ment on their part to meet on any fixed day or hour, was not a meeting duly convened within the meaning of the deed of settle- ment. Lord Tenterden ; " It is of great importance to a partner- ship, consisting, as this does, of a large number of persons, who place the management and control of their affairs in a small num- ber, and, by the deed by which they so place their affairs under the management of that small number, provide certain regulations for the conduct of that small number, by whatever name they may be designated, that the regulations regarding the meetings of those intrusted with the management of their affairs should be held in pursuance of the directions of the deed. The deed in question provides for two classes of meetings of the directors ; the one to be held without summons or notice, the other to be held upon sum- mons. The class that may be held without summons or notice are weekly meetings ; and they are to be held at such day and hour as the directors shall, from time to time, agree upon. Supposing, therefore, the directors at any meeting to have come to a resolu- tion that there should be a meeting held on any one specified day in the week, a meeting on that day, without notice or summons, would be a good meeting within the provisions of this deed ; but unless the directors have previously agreed upon the day on which the meeting shall be held, it appears to me that a meeting on any 1 6 Barn. & Cres. 456 ; 9 Dowl. & Eyl. 482. CH. I.] JOINT-STOCK COMPANIES. 953 other day is not a good weekly meeting witMn the meaning of this clause. If it were held to be so, it would be in the power of any thx'ee of the directors, the chairman or deputy chairman being one, to hold a meeting to make an order for payment on shares, or to do any other act whatsoever regarding the affairs of the company, without any notice to the proprietors. I cannot think that such was the meaning of this clause ; but that a meeting cannot be legally held, unless by notice, or unless the directors have previously agreed to meet at a certain time and place, in order that every director may know the day on which such business will be trans- acted, and that he may have an opportunity of attending." § 1107. To constitute a person a legal officer of the associa- tion, all the terms of the appointment, as agreed upon either by the proprietors in general or by the directors, as the case may be, must be comphed with. In a case where there was a general resolution of the directors (having power for that purpose), that no act should be binding, unless four directors were present at any meeting, and an agent was appointed by power of attorney given by the trustees of the company, under the sanction of a meeting at which three only of the directors were present, it was ruled that such appointment was invalid.^ The justice and expe- diency of these decisions are manifest, when we consider the extent of liability which the law of England imposes on the mem- bers of the company, and the confidence with which the majority of those members place their most important interests in the hands of a few. It has been well observed, that though the formal con- stitution of a joint-stock company may invest the body of its mem- bers with powers of superintendence and control, in practice they are inevitably passive. They contribute capital and receive ac- cruing profits in proportion to their respective interests ; but the conduct of the enterprise is abandoned to a few of the partners, or delegated to hired agents. These acting partners or agents rep- resent the company in its deahngs with strangers, and the com- pany, or the great and passive majority of its members, must trust to their honesty and discretion ; there being little security ' Ducarry v. Gill, 1 Mood. & Malk. 450. However, as between an officer of the company and the company, it will not be presumed that any acts done by the directors of the company in favor of the officer are irregular. Clarke V. Imperial Gas Company, 4 Barn. & Adol. 315. 80* 954 PAETICULAE PARTNERSHIPS. [bOOK V. besides, that they will not abuse their power of binding their con- stituents.^ § 1108. The mutual rights and remedies between the company and individual shareholders are, or ought to be, set forth and pro- vided for in the deed of settlement, or in such deeds as every shareholder is bound to execute on becoming a mfember of the company. AU who act as covenantees for the company must, of course, be made plaintiffs in an action on any of the covenants contained in these deeds. § 1109. It has sometimes been matter of doubt how far, con- sistently with the general law of partnership, actions of covenant can be maintained by one shareholder of a company against the company. It is conceived that, even in the case of ordinary part- nerships, actions of covenant may be maintained between part- ners, except, perhaps, where the damages, when recovered, are payable to a firm or partnership fund. A fortiori, therefore, they are maintainable between the members of a joint-stock company. In Bedford v. Brutton,^ it was held that an action of covenant was maintainable by a shareholder against the trustees of a com- pany, upon their express covenant to pay a sum of money to the plaintiff, although there was a remote right in the company to con- tribution in respect of the damages to be recovered in the action. It appeared that the plaintiff had demised land to the defendants, as trustees of' a building company, of which the plaintiff was a member, for the purpose of building a certain number of houses ; and that by that deed the defendants covenanted to pay the, plain- tiff rent. By another deed, being the deed of settlement of the company, and which recited that the buildings were to be paid for out of a fund to be raised by the subscription of the members, the plaintiff and the other members covenanted with the defend- ants that each of the members would, when called upon at their general meetings, to be held quarterly, do and perform all such acts as might be necessary for indemnifying the defendants from all loss and damage which they might sustain in the execution of the trusts. The plaintiff having brought his action on the cove- nant for rent, the defendants pleaded, amongst other matters, that the plaintiff and the other persons named in the last-mentioned ' Pari. Hist. Sess. 1825, p. 711. » 1 Bing. N. C. 399 ; 1 Scott, 245. CH. I.] JOINT-STOCK COMPANIES. 955 deed -were jointly liable •with the defendants to pay the damages, if any, to be recovered by reason of the alleged breach of cove- nant ; and an argument founded on this plea was offered on behalf of the defendants to the Court of Common Pleas. That court, however, held that the plaintiff had a right to recover, and Tindal C. J. in delivering the judgment of the court, said, that the an- swer to the objection was, the damages were in the first instance to be borne by the defendants, who were to be indemnified at a future and uncertain time, in such manner as the members of the society at a general meeting should direct. That the rent was reserved at certain stipulated times, while the meetings of the society were to be held quarterly ; and that it never was intended that the landlord should wait till the quarterly meeting when the day of payment occurred before it. His Lordship added, that this case differed from that of a common partnership in two impor- tant points, — namely, that the damages, when recovered by the plaintiff, did not go to any partnership fund, butVere his own sep- arate property ; and the damages were not to be paid out of any partnership fund, but by the trustees on their personal contract. § 1110. In the case just cited, the court adverted to that of Andrews v. Ellison ,i as a strong authority to show that an action of this nature is maintainable. There, in an action of covenant upon a policy under the seal of the defendants, it appeared upon the record that the defendants were jointly interested with the plaintiff in the funds which were ultimately to satisfy the plaintiff's loss by fire ; and it was held that the defendants were liable on their express covenant, by which they engaged that the plaintiff should be entitled to a remuneration out of the society's funds in case of loss by fire. § 1111. It seems^ that an action is maintainable on the part of the company against an individual member, for goods supplied by the company for that member's private use. This being the case, it is clearly competent for the proprietors in general to agree, that all actions for goods sold and delivered to members of the com- pany shall be brought in the name or names of one or more mem- bers of the company, exclusively. Where it was agreed, by the articles of association, that the property of the company should • 6 Moore, 199. « See infra, §1119. 956 PARTICULAR PARTNERSHIPS. [BOOK V. he vested in trustees thereafter to be elected, and that the sub- scribers would pay their respective subscriptions to such trustees, it was held that an action to recover subscriptions might be main- tained in the name of the trustees so elected.^ But if the arti- cles had contained no express promise to pay the trustees, it seems that the action would be properly brought in the names of the other subscribers.^ But, in a case where there is an agreement as to the person to sue, if the action be brought in a manner inconsistent with the terms of the stipulation, the plaintiffs will be nonsuited. In the case of Davies v. Hawkins,^ a number of per- sons formed themselves into a company for brewing ale, and en- tered into a deed, by which it was agreed that the conduct of the business should be confided to two persons, and the trade carried on in their names, and that they should be trustees for the com- pany, so far that the right of action for goods delivered should be in them, and that all actions for ale delivered should be brought' in their names ; and that all ale delivered should be considered as their property ; and that the directors, for the time being, should have power to regulate the general business of the com- pany ; and that general quarterly meetings of the members should be holden. It was held that one person only could not be appointed, at a general quarterly meeting, upon the recommen- dation of the directors, to conduct the business in place of the two persons originally appointed under the deed, unless such alteration was made by the consent of, or after notice to, all the subscribers ; and, therefore, that the plaintiff, who had been so appointed with- out the consent of, or notice to, the defendant, who was an Origi- nal subscriber, and executed the deed, could not maintain assump- sit for ale of the company delivered to the defendant. § 1112. We have seen that, in common cases of partnership, a partner is precluded from assigning his interest to a stranger, so as to make the stranger a partner.* To prevent this rule of law from affecting the shareholders of a trading company, there must be a provision in the deed of settlement, enabling each shareholder 1 Cross V. Jackson, 5 Hill (N. Y.), 478 ; Townsend v. Goewey, 19 Wen- dell, 424. " Cross V. Jackson, 5 Hill (N. Y.), 478. ' 3 Mau. & Sel. 488. * Ante, § 8. CH. I.] JOINT-STOCK COMPANIES. 957 to assign or transfer his shares. But as these shares must not be made transferable entirely at the will of the holder, there must also be provisions for giving due notice to the directors of the in- tended transfer or assignment. § 1113. Upon the death of a shareholder, although his legatees or next of kin will be beneficially entitled to his interest in the com- pany, yet neither they nor his executors will be entitled to stand in his situation as a partner, unless permitted to do so by the deed. Moreover, it may be convenient to stipulate, that, as between the several parties to the deed (or those claiming under them) and the company, the executors of a deceased partner shall be the only persons considered as standing in the situation of the de- ceased, even with respect to the mere power of disposing of the testator's shares. § 1114. In some cases the Act of Interpleader ^ wiU be useful in determining the rights of parties claiming, under distinct inter- ests, against the shares of a deceased proprietor. The act has been put in force in a case where the solvent executors of a shareholder, on the one hand, and the assignees of a bankrupt executor, on the other, claimed certain dividends due on the testator's shares in a public company .2 § 1115. In matters which might have been, but are not, provided for by the deed of settlement, the general law of partnership must prevail. Therefore, unless there be a stipulation to the contrary, every proprietor has a right to have free access at all times to the books of the company .^ And although in some cases this right is restricted by a stipulation in the deed, yet such a stipulation will not deprive the shareholder of a right to the production of the deeds in a suit brought by him against the company.* In matters which are beyond the control of the parties themselves, and which are not regulated by admitted custom, it seems almost unneces- sary to say that the general rules of partnership must be applied. § 1116. In referring to cases of actions between shareholders in which the courts have acted upon that general principle of part- nership, that one partner cannot maintain an action agamst his ' 1 & 2 Will. 4; c. 58. " Cooper V. Smelting Lead Company, K. B., East. T. 1832. ' Baldwin v. Lawrence, 2 Sim. & Stu. 18. * Hall V. Connell, 3 You. & Coll. 707. 958 PARTICULAR PARTNERSHIPS. [BOOK V. copartner on a contract relating to the partnersMp, we may notice in the first place those -which have been brought by attorneys, sur- veyors, &c., being also shareholders, against the company, for work and labor done in establishing the company. On the general prin- ciple above stated, these actions are not maintainable ; ^ and there- fore, in Goddard v. Hodges,^ a solicitor, who had been employed by a company, prevailed upon a member to become the trustee of his shares, in order that he might maintain his action against the company for work and labor done ; but the Court of Exchequer held, for the reasons which have been already mentioned, that such action could not be maintained. Where, however, it was provided by an act of Parliament estabUshing a company, that all the money to be raised should be laid out and applied in the first place in paying and discharging all costs and expenses incurred in applying for, obtaining, and passing the act, and all other expenses preparatory or relating thereto, it was held that a party, though a member of the company, might sue them for his time and trouble, and money expended in obtaining the act.^ § 1117. Other instances of the application of the general rule to joint-stock companies may here be adverted to. In Neal v. Turton * the plaintiff brought his action against the members of the London Patent Steam "Washing Company, on two bills of ex- change, which were drawn by him on " The Directors of the Lon- don Patent Steam Washing Company," and accepted for the directors of that company by their secretary. The bills were as follows : " Three months after date, pay to me, or my order, the sum of £115, for value received, — William Henry Neale. Ac- cepted, payable at the Bank of England, per procuration of the Directors of the London Steam Washing Company, — Isaac Bik- ton." The plaintifi" was a holder of twenty shares in the company. It was objected that he was a partner in the concern, and there- fore could not sue his copartners ; and the Court of Common Pleas held the objection valid. Best C. J. : "The bills are drawn on the directors of the company, and accepted for the directors. They ' See Holmes v. Higgins, ante, § 265. 2 Ante, § 10. * Garden v. General Cemetery Company, 5 Bing. N. C. 253 ; Tilson Warwick Gas Light Company, 4 Barn. & Cres. 962. ♦ i Bing. 149 ; 12 Moore, 365. CH. I.] JOINT-STOCK COMPANIES. 959 are the agents of the company, and accept as agents of the com- pany. The case, therefore, is that of one partner, drawing on the whole firm, including himself. Inhere is no prmciple by which a man can be, at the same time, plaintiff and defendant. We are clearly of opinion, that these biUs, being drawn on the directors, are in effect drawn on the company, of which the plaintiff is him- self a member. He cannot be, at the same time, drawer and ac- ceptor ; and the rule, therefore, which has been obtained for entering a nonsuit, must be made absolute." § 1118. The case of Teague v. Hubbard ^ is another important authority on this subject. That was an action by the plaintiff, as indorsee, against the defendant, as drawer of two bills of exchange. The plaintiff was a shareholder and managing director of the Cor- nish Tin-Smeltiag Company. The defendant was a shareholder, and likewise was the company's agent for the sale of their tin in London, which he sold upon a del eredere commission. The de- fendant, having sold tin for the company to one C, drew bills upon C. for the amount of the tin sold, in the following form : " Two months after date, pay to my order £200, value received, — Zach. Hubbard, for Cornish Tin-Smelting Company." ^ The bills being accepted by C, were indorsed by the defendant to the actuary of the company, and by the actuary to the plaintiff. Upon this evi- dence, the Court of King's Bench held, that, as the plaintiff and defendant were both members of the joint-stock company, and therefore joint contractoi^s, the defendant was not hable to the plaintiff jn an action on the bills. During the argument of the preceding case in the Court of King's Bench, Lord Tenterden sug- gested, that although the plaintiff could not sue the defendant on the bills, yet it might be a question whether the defendant, as one of the firm, having guaranteed a debt to the firm, and having re- ceived part of it from the debtor, the other partners might not recover against him for the money so received. " May not," he added, " the plaintiff say that the money received by the defend- ' 1 Man. &Ryl. 369 ; 8 Barn. & Ores. 345; Dans. & Lloyd, 118. " The form of the drawer's signature seems not to have been noticed by the court. Suppose the drawer had drawn and indorsed in his own name only, would the decision have been the same ? — Qu. ; and see D. Best C. J., Neale v. Turton, 4 Bing. 151 ; also, arg. Taddy, s. c. ; Preston v. Strut- ton, ante, § 269. 960 PARTICULAR PARTNERSHIPS. [BOOK V. ant, on account of the bills, was received by him, not as a partner, but in his individual character, and for the purpose of relieving himself, yro tanto, from his liability to the firm upon his guaranty ? Though the plaintiff may not be entitled to recover on the bills, by reason of the partnership, may he not recover the sum actually re- ceived by the defendant, the receipt of that sum not being a part- nership transaction ? " Upon further consideration, however, the court were of opinion that the defendant must be considered as having received the money, not in his individual character, but in his character of partner ; and, consequently, that he was not liable on the counts for money had and received. § 1119. "We may observe, that the transactions in the several cases just mentioned occurred in the course of conducting the affairs of the company. But with regard to insulated transactions, though possibly arising out of the affairs of the company, an action may be maintained between proprietors.^ And it seems, that where goods are supplied by the company to an individual member, for his private use, that will be regarded as an insulated transaction, for which an action for goods sold and delivered will lie by the company, or their agents, against such member.^ § 1120. When the conduct of the directors or managers of the company has been fraudulent, or in any other respects detrimental to the shareholders in general, they may file a bill in equity for relief. On occasions where reHef has been sought in equity against the acts of the directors, great difficulty has arisen as to the form of the suit. In some cases it has been said that every individual shareholder should be made a party ; in others, that a few shareholders may be made parties, provided it be averred that they represent a class having a common interest. The general distinction seems to be, that where a common benefit is to be en- forced against a few individuals, members of the partnership, as, for instance, against the directors, or against a common fund, the court will aUow some of the shareholders to sue on behalf of them- selves and others ; but where the court is required to act in a manner which may be against the interest of any of the parties, other than those who are specially charged, it cannot proceed, un- less all the parties are on the record.^ Ante, § 272. ' Davies v. Hawkins, 3 Mau. & Sel. 488. » 2 Sim. 876. CH. I.J JOINT-STOCK COMPANIES. 961 § 1121. As instances of bills being allowed to be filed on behalf of a class of persons to enforce a common benefit, we may men- tion the cases of Cockburn v. Thompson,^ and Kitchens v. Con- greve.^ In the former of these cases the bill was filed by several persons on behalf of themselves and all others, the proprietors of a charitable institution, against the solicitors and the bankers of the institution, praying an account of moneys received by the de- fendants, and that the institution might be dissolved. In the lat- ter case the bill was filed by five persons, on behalf of themselves and all other shareholders of an iron and coal company, for the purpose of compelling the defendants to refund moneys alleged to have been withdrawn by them from the stock of the company, and applied to their own use. To these cases may be added that of Taylor v. Salmpn,^ in which it was held that a bill might be sus- tained by the directors of a mining company on behalf of them- selves and all other the shareholders against their agent, who was also a shareholder, and a third person, to obtain the benefit of a contract entered into by the agent with such third person, without making the other shareholders individually parties to the suit. It may be remarked, that, although in Cockburn v. Thompson the bill sought to have the afiairs of the whole concern wound up, it was not a case of trading partnership ; and in Hitchens v. Con- greve the prayer of the bill did not extend to this species of relief. In neither of these cases, therefore, nor in that of Taylor v. Salmon, could the interest of the absent parties be prejudiced. § 1122. But where, in a trading partnership, the bill seeks to have the whole afiairs of the partnership wound up, the case has been considered to be within the second branch of the distinction above adverted to, namely, as involving the interest of other par- ties besides those who are specially charged ; for here all parties are equally accounting parties, or, at all events, equally interested in having the accounts taken. In cases, therefore, of this nature, it has been held that all the shareholders, however numerous, must be made parties to the suit. ' 16 VCS.-321. \ 4 Uuss. 562 ; aad see Society of Practical Science v. Abbott, 4 Jurist, 453. ' Myl. & Cr. 134 ; and see Gray v. Chaplin, 2 Sim. & Stu. 267. 81 962 PARTICULAR PARTNERSHIPS. [BOOK V. § 1123. Upon these considerations tlie case of Long v. Yonge ^ T^as decided. There the bUl was filed by forty-seven persons, on behalf of themselves and all other the members of and partners in the Norwich Equitable Insurance Company, against the sur- vivors of the original directors and trustees of the company, and certain other members of the company who had been appoiated by them in the room of the deceased directors and trustees, and also against the executors of the late secretary or registrar, pray- ing for a dissolution of the estabhshment, in consequence of the misconduct of the trustees and secretary, and that the necessary accounts, might be taken. Sir Lancelot Shadwell allowed the demurrer on the ground that all the shareholders should have been made parties; and his Honor, in the course of the argument, distinguished the case before him from that of Cockburn v. Thompson ; observing, that, in that case, the suit was, in effect, a suit against Thompson alone ; and the question was, whether he could be heard to say that the society should not proceed against him, unless all the members were made parties : if the question had been hond fide raised, whether the partnership should be dis- solved or not, and some members of the society had been made defendants, who insisted that it should not be dissolved, then the question which his Honor had to determine would have arisen in that case also. § 1124. So in Evans v. Stokes,^ where the bill was brought by three persons, on behalf of themselves and all other members of the French Brandy Distillery Company, except the defendants, against the directors and two shareholders who were not directors, suggesting that a dissolution had been brought about by the fraud of three of the defendants, and praying that the partnership affairs might be wound up. Lord Langdale M. R., allowed an objection taken by the defendants, that all the shajreholders were not part- ' 2 Sim. 369; and see Davis v. Fisk, Farren on Insurance, 128. ' 1 Keen, 24. In Maemahon v. Upton, 2 Sim. 473, it was decided, that an act of Parliament, giving to a company very extensive rights of suing and being sued, and by which it was provided, " that in all proceedings in which it would have been before necessary to state the names of the partners, it should be sufficient to state the name of the chairman only," did not extend to suits between the partners themselves, and therefore did not affect the general rule as to parties. CH. I.] JOINT-STOCK COMPANIES. 963 ners ; and his Lordship observed, that it -was obvious that a suit where all the accounts of the partnership were to be taken, and the rights of all the partners were to be determined, as between theiH- selves and under the various circumstances m which the^ stood in relation to each other, some of them for instance having paid their calls, and others having omitted to do so, could hot be prosecuted in the absence of any of those parthefs. § 1125. In Richardson v. Hastings ,i Lord Langdale said: "I cannot say that I entertain any doubt of the propriety of the de- cision which I made in Evans v. Stokes.^ I still think that the winding up of a partnership implies a complete settlement of all the rights and liabihties as between the parties themselves ; and as they may be in conflict with regard to these rights and liabili- ties, the partnership cannot be finally wound up in the absence of all the partners. This may be attended with very great incon- venience, even to the extent of preventing the due administration of justice between the parties ; but this appears to me necessarily to follow from the estabhshed rule of this court, which I have stated,^ and which cannot be corrected without a general authority." The English " act to facilitate the dissolution of certain railway com- panies" (the stat. 9 & 10 Vict. c. 28), is an example of the interposition of this " general authority " to correct this estab- lished rule of the court. § 1126. But the statute above referred to only apphes to " cer- tain railway companies;" and the question naturally arises, "Is ■ there, then, no remedy for cases in which the plaintiff may be en- titled to have a dissolution, and at the same time it may be impos- sible to have all the partners present ? " To this question the following answer was given by Vice-Chancellor Knight Bruce, in Richardson v. Larpent : * " It is impossible to suppose that the court would not meet the justice of such a case." In that case, the directors of a joint-stock company, consisting of 673 members, made certain calls, which the majority of the shareholders paid, but six of them, on the ground that the calls were improperly made, ' 7 Beavan, 323. f 2 1 Keen, 24. ' " That all persons interested in the subject-matter of the litigation ought to he parties." . , * 7 Jur. 691. 964 PARTICULAR PARTNERSHIPS. [BOOK V. refused to pay them, and filed their bill on behalf of themselves and all other the shareholders, &c., except the defendants, against the directors, trustees, and secretary of the company, praying for an account and sale of the partnership property, for a receiver, for an injunction to restrain the defendants, and all officers and ser- vants of the company, from dealing with the partnership property, for an account of the debts and liabilities of the company, and to have the property applied towards the payment of its debts and liabilities ; — it was held, that some at least of the absent share- holders, who had paid up the disputed calls, ought to be made parties to the suit. In the course of his judgment, Vice-Chancel- lor Knight Bruce said : " One object of this bill is to obtain a dis- solution, another to exempt the plaintiffs from the payment of a larger capital ; but the larger body of the dissentients are those who have contributed the increased amount of capital which is in dispute ; and those plainly have, it seems to me, an interest that the plaintiff should further contribute to the capital ; but the plain- tiffs desire that they should not contribute. It is too much to say that such an important proposition should be decided without an adequate number to maintain the other side. But only the direc- tors and trustees are here, and none of those who only owe to the plaintiffs the simple duties of partner and partner. Considering, therefore, the nature of the questions agitated on this bill, assum- ing the answer to be true for this purpose only, I must say the suit is defective for want of parties. My present impression is, not that, in every case where a dissolution is sought, all- the partners must of necessity be present ; for I can conceive a case in which the plaintiffs may be entitled to have a dissolution, and at the same time, it may be impossible to have all the partners present. It is impossible to suppose that the court- would not meet the justice of such a case. I do not say that all the parties dissentient should be here ; but there must be enough to candidly and freely discuss and agitate the question, more so than the present defendants can do." § 1127. In the recent case of Sharp v. Day,^ also before Vice- ChanceUor Knight Bruce, on a bill filed by one of the provisional committee, on behalf of himself and all other parties, except the defendants, interested as partners ^ in a railway company which > 10 Jur. 469. ° But according to the present state of the law on this subject, there would, CH. I.] JOINT-STOCK COMPANIES. 965 had been projected, but in wbich no shares had been allotted, and which had been abandoned, for an account of the partnership debts and credits, and for winding up ^ the concerns of the company, a demurrer for want of equity and for want of parties was overruled, without costs and without prejudice to any question. Knight Bruce V. C, said : " In this case the bill may, I think, be under- stood as alleging that the defendants are in possession of funds, in effect as trustees for purposes in the fulfilment of which the plain- tiff and other persons, who are so numerous as to render the junc- tion of them individually in a suit substantially incompatible with its prosecution, and on whose behalf, and on his own, he sues, are interested ; and that the defendants have acted, and intend to act, in contravention of those purposes, and it prays refief upon that footing. "Whatever I may think of the wisdom of instituting such a suit, as upon the face of this bill it appears to be, and assuming the professed objects of the bill to be the true objects, — whatever I may consider as being the probable fruit of this litigation, — I am apprehensive that, if I allow the demurrer, I shall be introduc- in this casCj be clearly no partnership or quasi partnership. See the recent cases in the Court of Exchequer, Reynell v. Lewis, and Wyld i). Hopkins, lb Jur. 972; id. 319. ' The bill prayed that an account might be taken of the moneys and prop- erty belonging to the company or partnership which had come to their hands, or the hands of any person by their order or for their use, in trust for the partnership (see note 2, supra) or company, and of all moneys which, by virtue of the resolutions come to by the parties, had been paid to or pos- sessed by the defendants for the purpose of discharging the debts and liabil- ities of the company ; that an account might be taken of the debts and liabil- ities of the partnership or company now remaining unsatisfied ; that the outstanding property of the company or partnership might be collected and applied, under the direction of the court, so far as it would extend, towards the discharge of the debts and liabilities, and that, if necessary, a receiver might be appointed by the court to carry into effect the above purposes ; that the defendants might be restrained from collecting or recovering the property or moneys of the company or partnership, or any part thereof, or from interfering therewith, or from applying any moneys or property paid or subscribed, or hereafter to be so, in consequence of the resolutions, otherwise than under the direction of the court, in discharge of the debts of the com- pany, and for the purposes for which such moneys had been subscribed ; and that the defendants might be restrained from prosecuting an action at law against the plaintiff, or any other proceeding at law touching the matters aforesaid. 81* 966 PARTICULAR PARTNERSHIPS. [BOOK V. ing a new rule, or, by making them more strict, altering old rules now in use. There seems to be enough to enable it to be said that the bill is not born dead. Whether it is likely to enjoy a prosper- ous, a longj or an easy life, is a dififerent question. It is not, how- ever, without doubt that I hold it to be, at the present stage, sus- tainable ; nor is the question of the applicability of the principle upon which I proceeded in Richardson v. Larpent, the only ground of doubt that I have. But doubting, I must allow the plaintiff to call for answers. Let the demurrers be overruled without costs, with- out prejudice to any question in the cause." § 1128. Lord Eldon did not evince any inclination to relax the strict rules of the Court of Chancery in favor of partnerships or companies consisting of a large number of members.-' Succeed- ing equity judges have, however, shown a disposition to adapt the practice and course of proceeding of the court, as far as possible, to the existing state of society. In Mare v. Malachy,^ where a bill was filed by a person who claimed a certain definite interest in a mine and mining adventure, as one of a number of copart- ners, stating that the defendants, who were the legal owners of the mine, and also copartners ia the adventure, had, subsequently, unknown to the plaintiff, but with the consent of the other copart- ners, and after fully accounting to such copartners for their shares of the profits up to that time, sold and conveyed the mine to trus- tees for a joint-stock company, the property of which was held by a numerous body of proprietors in transferable shares, passing by delivery of the certificates, and had received the consideration for the sale, partly in money, and partly in shares in the joint-stock company, and praying that the defendants might, at the plaintiff's election, either account to the plaintiff for his proportion of the profits derived from the sale, or, out of the shares in the joint- stock company in their hands, might 'transfer to him such a num- ber of shares as would be equivalent to the interest which the plaintiff had in the original adventure ; it was held by the Lord Chancellor, on an appeal against an order of the Vice-Chancellor allowing the demurrer, that a demurrer will not lie to such a "bill on the ground that the other copartners in the original adventure, ' See his Lordship's observations on joint-stock companies, in Van San- dau V. Moore, 1 Kuss. 441. i" 1 Myl. & Cr. 559. CH. I.] JOINT-STOCK COMPANIES. 967 or the trustees or shareholders of the joint-stock company, are not made parties. In this case Lord Cottenham said, — "lam clearly of opinion that the plaintiff has sufficiently stated, upon the face of his bill, a case -which entitles me to hold that the per- sons in question are not necessary parties. It is very desirable not to be too strict in cases like the present, which are becoming more and more common every day. In the present instance, however, for the reasons I have stated, it is not necessary to make any relax- ation of the strict rules of the court with respect to parties." § 1129. Again, in Taylor v. Salmon,^ Lord Cottenham said, with reference to the same subject : " The appellant, however, sets up certain objections to the plaintiff's title to a decree ; and, first, he objects, that all the members of the company on whose behalf the bill is filed are not parties to the suit. I have before taken occasion to observe,^, that I thought it the duty of this court to adapt its practice and course of proceeding, as far as possible, to the existing state of society, and to apply its jurisdiction to all those new cases which, from the progress daily making in the affairs of men, must continually arise, and not, from too strict adherence to forms and rules established under very different cir- cumstances, decline to administer justice, and to enforce rights for which there is no other remedy. I am not, however, in this case called upon to act upon this principle, as I find decisions already made which are amply sufficient to support the plaintiff's right to sue in the form they have adopted. That, where the parties interested are numerous, and the suit is for an object com- mon to them all, some of the body may maintain a bill on behalf of themselves and of the others, is established." § 1130. In the case of Walworth v. Holt,' where a bill was filed by some of the shareholders of an insolvent joint-stock bank, on behalf of themselves and all other shareholders, except the de- fendants, against the directors, some of whom were bankrupt, and the trustees and public officers of the company, and certain share- holders, who were alleged to have not paid up their calls, praying that an account should be taken of all the partnership assets, and that such part as was outstanding might be got in by a receiver, and the whole converted into money, and applied towards the sat- » 4 Myl. & Cr. 141. 2 Mare v. Malachy, 1 Myl. & Cr. 559. ' 4 Myl. & Cr. 619. 968 PAETICULAE PARTNERSHIPS. [BOOK V. isfaction of the partnership debts, a demurrer for want of equity, want of parties, and multifariousness, was overruled. In his judg- ment Lord Cottenham entered into a very full examination of the authorities on this subject, and also of the principle on which they proceeded. " The case stated by the bill," observed his Lordship, " which is filed by the plaintiffi on behalf of themselves and all other the shareholders and partners of the banking company called the Imperial Bank of England, except those who are made defend- ants, is shortly this : that they are shareholders, and have paid all the calls made, which amount to £15 per share ; that the business of the company has been suspended since 1839, but that it has not been dissolved ; that large debts are due by the company, for which they and the other shareholders are liable, and that there are considerable assets in the hands of the directors and trustees, though not equal to the debts ; that aU the directors, except one, have become bankrupts, and have thereby, by their regulations, become incapable of acting, and that the trustees refuse to act ; and that the other defendants are the only shareholders who have not paid their calls ; and it therefore prays for the assistance of this court to relieve them from this difficulty, by causing the assets of the company to be realized, and the debts to be paid ; and that, for this purpose, a receiver may be appointed, and authorized to sue for calls unpaid, and other debts due to the company, in the name of the registered officer, under 7 G-eo. 4, c. 46, who is one of the defendants. When it is said that the court cannot give re- lief of this limited kind, it is, I presume, meant, that the bill ought to have prayed a dissolution, and a final winding up of the affairs of the company. How far this court will interfere between part- ners, except in cases of dissolution, has been the subject of much difference of opinion, upon which it is not to my purpose to say any thing beyond what is necessary for the decision of this case ; but there are strong authorities for holding that, to a bill praying a dissolution, all the partners must be parties ; and this bill alleges that they are so numerous as to make that impossible. The result, therefore, of these two rules would be, — the one binding the court to withhold its jurisdiction, except upon biUs praying a dissolution, and the other requiring that all the partners should be parties to a bill praying it — that the door of this court would be shut in all cases in which the partners or shareholders are too nimierous to be made parties, which, in the present state of the CH. I.] JOINT-STOCK COMPANIES. 969 transactions of mankind, -would be an absolute denial of justice to a large portion of the subjects of the realm, in some of the most important of their affairs. This result is quite sufficient to show that such cannot be the law ; for, as I have said upon other occa- sions,^ I think it the duty of this court to adapt its practice and course of proceeding to the existing state of society, and not by too strict an adherence to forms and rules, established under dif- ferent circumstances, to decline to administer justice and to en- force rights for which there is no other remedy. This has always been the principle of this coitrt, though not at aU times sufficiently attended to. It is the ground upon which the court has, in many cases, dispensed with the presence of parties who would, according to the general practice, have been necessary parties. In Cockbum V. Thompson,^ Lord Eldon says, — ' A general rule, established for the convenient administration of justice, must not be adhered to in cases in which, consistently with practical convenience, it is incapable of application ; ' and again, — ' The difficulty must be overcome upon this principle, that it is better to go as far as possi- ble towards justice than to deny it altogether.' If, therefore, it were necessary to go much further than it is, in opposition to some highly sanctioned opinions, in order to open the door of justice in this court to those who cannot obtain it elsewhere, I should not shrink from the responsibility of doing so ; but in this particular case, notwithstanding the opinions to which I have referred, it will be found that there is much more of authority in support of the equity claimed by this bill than there is against it. It is true that the bill does not pray for a dissolution, and that it states the com- pany to be still' subsisting ; but it does not pray for an account of partnership dealings and transactions, for the purpose of obtaining the share of profits due to the plaintiffs, which seems to be the case ' contemplated in the opinions to which I have referred ; but its object is to have the common assets realized and applied to their legitimate purpose, in order that the plaintiffs may be relieved from the responsibility to which they are exposed, and which is contrary to the provisions of their common contract, and to every principle of justice. But whether the interest of the plaintiffs, in ' See Mare v. Malachy, 1 Myl. & Cr. 559 ; Taylor v. Salmon, 4 Myl. & Cr. 134. 2 16 Ves. 321. 970 PARTICULAR PARTNERSHIPS. [BOOK V. right of which they sue, arises from such responsibility or from any other cause, cannot be material ; the question being, whether some partners, having an interest in the application of the partnership property, are entitled, on behalf of themselves and the other part- ners, except the defendants, to sue such remaining partners in this court for that purpose, pending the subsistence of the partnership; and if it shall appear that such a suit may be maintained by some partners, on behalf of themselves, and others similarly circum- stanced, against other persons, whether trustees and agents for the company or strangers being possessed of property of the com- pany, it may be asked why the same right of suit should not exist ■when the party in possession of such property happens also to be a partner or shareholder. In Chancey v. May ^ the defendants were partners. In the "Widow's case, before Lord Thurlow, cited by Lord Eldon,^ the bill was on behalf of the plaintiffs and all others in the same interest, and sought to provide funds for a sub- sistiag establishment. In Knowles v. Houghton, 11th July, 1805, reported in Vesey,^ but more fully in Collyer on the Law of Part- nership,* the bill prayed an account of partnership transactions, and that the partnership might be established ; and the decree di- rected an account of the brokerage business, and to ascertain what, if any thing, was due to the plaintiff in respect thereof ; and the master was to inquire whether the partnership between the plain- tiff and the defendant had at any time, and when, been dissolved ; showing that the court did not consider the dissolution of the part- nership as a preliminary necessary before directing the account. In Cockbum v. Thompson ^ the bill prayed a dissolution ; but it was filed by certain proprietors, on behalf of themselves and others, and Lord Eldon overruled the objection that the others were not parties. In Hichens v. Congreve,^ the bill was on behalf of the plaintiff and other shareholders, against certain shareholders who were also directors, not praying a dissolution, but seeking only the repayment to the company of certain funds alleged to have been improperly abstracted from the partnership property by the de- fendants ; and Sir Anthony Hart overruled a demurrer, and his decision was aflSrmed by Lord Lyndhurst. In Walbum v. In- » Prec. Ch. 592. " 17 Ves. 15. » 11 Ves. 168. « P. 198, 2d ed. » 16 Ves. 821. ' 4 Kuss. 562. CH. I.] JOINT-STOCK COMPANIES. 971 gilby ^ the bill did not pray a dissolution of partnership, and Lord Brougham, in allowing the demurrer upon other grounds, stated that it could not be supported upon the ground of want of parties because a dissolution was not prayed. In Taylor v. Salmon ^ the suit was by some shareholders, on behalf of themselves and others, against Salmon, also a shareholder, to recover property claimed by the company, which he had appropriated to himself; and the Vice-Chancellor decreed for the plaintiff, which was affirmed on appeal. The bill did not pray a dissolution, and the company was a subsisting and continuing partnership. That case, and Hichens ■ V. Congreve, differ from the present in this only, that, in those cases, the partnerships were flourishing and likely to continue, whereas, in the present, though not dissolved it is unable to carry on the purposes for which it was formed, an inability to be at- tributed in part to the withholding that property of which this bill seeks to recover. So far, this case approximates to those in which the partnership has been dissolved ; as to which it is admit- ted that this court exercises its jurisdiction. This case also differs from the two last-mentioned cases in this, that the difficulty in which the plaintiffs are placed, and the consequent necessity for the assistance of this court, are greater in this case, — no reason, certainly, for withholding that assistance. How far the principles upon which these cases have proceeded are consistent with the doctrine in Loscombe v. Russell,^ ' that in occasional breaches of contract between partners, when they are not of so grievous a nature as to make it impossible that the partnership should con- tinue, the court stands neuter,' wiU be to be considered if the case should arise. It is not necessary to express any opinion as to that in the present case ; but it may be suggested that the supposed rule, that the court will not direct an account of partnership deal- ings and transactions, except as consequent upon a dissolution, though true ia some cases and to a certain extent, has been sup- posed to be more generally appUcable than it is upon authority, or ought to be upon principle. It is, however, certain, that the sup- posed rule, is directly opposed to the decision of Sir J. Leach in Harrison v. Armitage * and Richards v. Davies." ^ » 1 Myl. & K. 61. 2 4 Myl. & Cr. 134. « 4 Sim. 8. ' 4 Madd. 143. 5 2 Russ. & Myl. 347 ; see also, Mitf. PI. (4th ed.), 170, note (o), and the- cases there cited. 972 PARTICULAR PARTNERSHIPS. [BOOK V. t § 1131. The principles above enunciated by Lord Cottenbam have been recognized and acted upon to their fullest extent by the Master of the Rolls in Richardson v. Hastings.^ In this case, the demurrer having been allowed, on the ground that to a suit seeking to wind up the affairs of a club or partnership, all persons interested must be made parties, however numerous they may be,^ the plaintiff amended his bill and struck out that part of the prayer which implied a winding up of the affairs of the club, and the demurrer was overruled, but without costs. In this case. Lord Langdale M. R., made the following observations : " All cases of this kind are attended with some degree of difficulty, and the conclusion to be arrived at depends on rather nice circum- stances. The arguments in support of a demurrer of this kind have generally a very strong foundation, because cases of, this kind always deviate from two old and general rules of the court ; one is, that all persons interested in the subject-matter of the liti- gation ought to be parties ; the other is, that the court endeavors to do complete justice in every case, so that the matters involved in the suit may not be left open to future litigation. Now the present bill is, to a certain extent, a departure from both these rules, because it is proposed to be prosecuted in the absence of parties interested in the suit ; and it also proposes that the sums to be recovered should be left at their disposal if they can agree, and if not, then that they may be left for future litigation. How- ever, exceptions to, the two rules which I have stated have at all times been sanctioned. I recollect a treatise, in which one of the chapters was headed, ' In what cases necessary parties may be dispensed with.' The assumption that necessity could admit of any qualification, may seem to imply that exceptions to the ordi- nary rule were admitted with difficulty. It has, however, become necessary to extend the cases of exception, so as to keep pace with the progress and complications of the transactions of man- kind ; and everybody who reads what Lord Cottenham has said, on more than one occasion, must be perfectly satisfied with the justice of his observation,^ and see how necessary it is for this court, ' 7 Beav. 323. ^ 7 Beav. 301. ' See Mare v. Malaohy, 1 Myl. & Cr. 579 ; Taylor t. Salmon, 4 Myl. & Cr. 141 ; Wal^Torth v. Holt, 4 Myl. & Cr. 635. CH. I.] JOINT-STOCK COMPANIES. 973 acting always -within tlie limits of its jurisdiction, by an application of its powers, so necessary for tlie administration of justice, to adapt its forms of proceeding to the altered circumstances of society in our own times, and modify its rules so as to meet the changes of circumstances under which it is, at the present day, called on to administer justice. In no class of cases has the ex- tension of the exception been more frequent than in cases like the present." " It was at one time supposed, that in consequence of the second general rule, that complete justice must be done with respect to the subject-matter, the court could not, and would not, interfere at all as betweer; partners, unless the partnership was to be dissolved and finally wound up and settled ; and there are sev- eral conflicting cases in the books on that subject, different judges ha^'ing entertained very strong opinions and very different views on that question.^ I noticed, on the former occasion, that it now appears very clear that there is no such rule. It has been decided, that, in a continuing partnership, if a few have an interest in a particular subject adverse to all the rest, and claim for themselves the benefit of that interest, a bill may be filed against those few by one or more partners on behalf of themselves and all the rest. That is a remarkable instance of a case where all persons inter- ested are not brought before the court ; however, it is not much more remarkable than the cases where one creditor or cfte legatee is permitted to sue on behalf of himself and many other persons, and some other similar cases. The court has even gone to this extent ; in -the case of an insolvent partnership not formally dis- solved, it has permitted a bill to be filed by one or more on behalf of the r,est against the governing body, to have the assets collected and applied, as far as they would go, towards the discharge of the debts ; and that without seeking to ascertain the rights and liabili- ties of the parties as between themselves, and consequently leav- ing litigation as between those parties entirely open, after the debts have been paid ; that is, it has sanctioned a suit which sought nothing but to compel a satisfaction pro tanto of the part- ' See Forman v. Homfray, 2 Ves. & Bea. 329 ; Harrison v. Armitage, 4 Madd. 143 ; Marshall v. Colman, 2 Jac. & W. 266 ; Richards v. Davies, 2 Kuss. & Myl. 347; Loscombe v. Russell, 4 Sim. 8 ; Knebell w. White, 2 You. & Coll. (Exch.), 15; Bentley v. Bates, 4 You. & Coll. (Exch.), 182; Miles V. Thomas, 9 Sim. 609 ; Fairthorne v. Weston, 3 Hare, 387. 82 974 PARTICULAR PARTNERSHIPS. [BOOK V. nership debts, as far as the deficient assets would extend, and then leave all the members of the partnership exposed to such litigation as the unsatisfied creditors might choose to adopt for the recovery of the remainder of their debts; and also leave the partners liable, as amongst themselves, to such suits for contribution as the particular circumstances of the case might render necessary." § 1132. The principle, that in cases of joint-stock companies a biU may be sustained for an account without seeking a dissolution, and without making aU the shareholders of the company parties, has been subsequently recognized and acted upon in various cases. Thus, in Wilson v. Stanhope,^ on a bill filed by a shareholder in a railway company, duly provisionally registered, against the mem- bers of the provisional committee, complaining of the conduct of the committee in abandoning one line of railway in favor of an- other, and praying an account of all costs of the abandoned line, and of all moneys received as consideration for the abandonment of it, and praying other relief, a demurrer for want of equity and for want of parties, for that the other shareholders were not joined in the suit, was overruled, without prejudice to any ques- tion in the cause, and the costs reserved. Knight Bruce V. C. : " The failure of the demurrer for want of equity in this case is too manifest to require any remark. The only other ground al- leged by ^y of demurrer is the want of parties. The bill states various circumstances of alleged misconduct on the part of the persons to whom the whole scheme and the steps toward the per- fection of that scheme, were intrusted. It alleges, that improper acts have been done, or acts of such a nature, and to such an extent improper, as to render it impossible to pursue the scheme. It alleges, besides the matters of detail to which I have referred, that the moneys of the plaintiff, and of the other shareholders on whose behalf the plaintiff sues, have been obtained by fraud and misrepresentation, and for a purpose which has whoUy failed. The latter part of the record runs thus : ' Charges that the number of shareholders in the said London and Manchester Direct Indepen- dent Railway (Remington's Line) is so great, and the rights and liabilities of the shareholders are so subject to change and fluctuar tion, by death and otherwise, that, save as herein stated, plaintiff does not know, and is wholly unable to discover, the names of the • 10 Jur. 421. CH. I.] JOINT-STOCK COMPANIES. 975 other shareholders ; and, even if plaintiflf were able to discover their names, it would not be possible, without the greatest incon- venience, to make them parties to the suit, and so to do would render it impossible to bring this suit to a hearing. Charges that the interests of the said shareholders, except the said defendants, are identical with those of the plaintiff in respect to the matters herfin stated, or in respect of the property of the said company and the surplus thereof ; and all the said shareholders other than the said defendants are fully represented by the plaintiff, and have a common interest in the relief hereby prayed.' As to the non-ability to discover the names of the shareholders, I consider that so much of the charge as I have read must, for the present argument, be rejected, by reason of the late act of Parliament, referred to by Mr. Cooper, for the registration of joint-stock com- panies. I think that the allegation of ignorance is one that must be rejected, but that the allegation that a greater number remains, although there may possibly be cases in which that allegation would be too vague and loose, yet, when it is considered as applying to such an amount as those in question here, it does appear to me not too wide or vague. But with regard to the latter part of these charges, I am of opinion that, upon this record, the principle which one of our greatest judges has laid down, and upon which he acted in the case of Cockburn v. Thompson,^ renders it neces- sary to overrule the demurrer for want of parties. It is not, how- ever, necessary positively to decide that, because it is the rule of the court formerly practised, — more generally practised than it is at present or has been of late years, — that upon a demurrer, where the question is one of any nicety or difficulty, it is not necessary to pronounce a final or conclusive opinion ; but that, if the court sees that it is matter of difficult argument or of rea- sonable discussion, it may, and often does, overrule the demur- rer, saving the benefit of the question raised by it till the hearing of. the cause, or, in other language, without prejudice to the ques- tion. That is the course I propose to take here, to overrule the demurrer without prejudice to any question in the cause, and shall reserve the costs, unless the plaintiff can show that they ought to be disposed of now." ^ ' IS Ves. 321. ' See jilso, Parsons v. Spooner, 10 Jur. 423. In Lewis v. Billing, 10 Jur. 976 PAETICULAE PAKTNEKSHIPS. [BOOK V. § 1133. It -mil be observed that neither Lord Cottenham nor Lord Langdale confines his observations to any particular class of partnerships, — as large partnerships, commonly called joint-stock, — as distinguished from ordinary partnerships. Lord Cottenham, indeed, says : " It might be suggested that the supposed rule, that the court will not direct an account of partnership dealings and transactions, except as consequent upon a dissolution, though true in Home cases and to a certain extent, has been supposed to be more generally applicable than it is upon authority, or ought to be upon principle." ^ His Lordship does not say that the rule is " true in a Certain class of cases," as, for instance, ordinary part- nerships consisting of a few members ; but only that it is " true in some cases." And Lord Langdale expressly says, " that it now appears very clear that there is no such rule ; " ^ and " that the court will entertain a bill to settle a question that may arise be- tween partners, without proceeding to wind up the aflFairs of the partnership." ^ § 1134. In accordance with this position, his Lordship appears to have directed an account in the case of HUls v. Nash.* In 851, a demurrer for want of equity and for multifariousness was overruled. In Columbine v. Chichester, 10 Jur. 606, a demurrer for want of equity was overruled by the Vice-Chancellor ; but allowed on appeal by the Lord Chancellor (10 Jur. 626), on the ground that it did not appear from the statements on the bill that the defendants had any shares or scrip certificates which they could deliver to the plaintiff. The Lord Chancellor intimated, that, if the bill had distinctly alleged that the defendants had in their hands the scrip certificates asked to be delivered to the plaintiff, the case would probably have fallen within the decision of the Master of the Rolls in Jack- son V. Cocker, 4 Beav. 59. In that case, it was held that the purchaser of " scrip certificates " in a proposed railway company which had not obtained any act of Parliament, was not bound, after the act had passed, and in the absence of any special contract, to take a transfer of the corresponding shares from his vendor, or to indemnify him from the amount of calls subse- quently made. As to the difference between scrip and shares, see also Mitchell V. Newark (Exch.), 10 Jur. 318. In Bell v. Lord Mexborough, 10 Jur. 893, a demnrrer, for want of equity, was allowed by the Vice-Chancel- lor. As to the specific performance of an agreement for the sale of railway shares, see Duncuft v. Albrecht, 22 Sim. 189. 1 4 Myl. & Cr. 639. ' 7 Beav. 328. " Ibid. 307. * 10 Jur. 148. CH. I,] JOINT-STOCK COMPANIES. 977 this case the bill alleged that it was agreed between George Wedd, Thomas Nash, William Carpenter, John Sheppard, Hills & Co., and the plaintiffs in the suit, all being separately engaged in business as corn-merchants and corn-factors in London and else- where, that they should engage in a joint speculation in the pur- chase and sale of English wheat ; and that the purchases and sales should be made principally by the plaintiffs, and partly by the said William Carpenter on the joint account. That the respective par- ties were to be interested in the adventure according to the pro- portions in which they held foreign wheat at the time of the agree- ment. That in pursuance of the agreement the plaintiffs, from time to time, purchased out of their own funds, large quantities of English wheat on the joint account ; and Carpenter also purchased some small quantities of Enghsh wheat, in pursuance of the agree- ment, out of his own funds, upon the joint account ; and all the English wheat so purchased was afterwards resold, and all such purchases and sales were made within one year from the making of the agreement; and the plaintiffs and Carpenter respectively received the produce of the sales made by them. The speculation was wound up, and all the expenses attending the said purchases and sales were paid, by the plaintiffs ; and, upon taking the ac- counts of all the moneys received and paid on account of the said purchases and sales, it appeared that a loss was incurred, amount- ing to £18,180 18s. 6d. The bill further alleged, that Carpenter, Wedd, and Sheppard had come to an account with the plaintiffs in respect of their several shares of the loss ; and that the plain- tiffs had then no claim against them, nor had they, the said Car- penter, Wedd, and Sheppard, or any of them, any claim against the estate of the said Thomas Nash, in respect of their shares of the joint purchases and sales ; and that nothing whatever was due to the estate of the said J. Nash from Carpenter, Wedd, and Shep- pard, or any of them, in respect of Nash's share of the purchases and sales. That Nash never paid any sum whatever on account of the purchases, or in any manner in respect of the speculation ; and at his death there was due from his estate to the plaintiffs the sum of £1,010 Is. with interest thereon from the 25th March, 1841, in respect of his share of the loss incurred as aforesaid. In March, 1841, Nash died, having appointed the defendants his ex- ecutors, and in the month of August following the plaintiffs deliv- ered in their claim agamst his estate to the defendants, and 82* 978 PARTICULAR PARTNERSHIPS. [BOOK V. requested payment, which was refused. In May, 1842, the plain- tiffs filed their bill against the defendants, praying an account of all sums received and paid by the plaintiffs on account of the pur- chases and resales of English wheat on the joint account of Car- penter, Wedd, Nash, Sheppard, and the plaintiffs respectively, and of what was due to the plaintiffs in respect thereof from the estate of Nash, the plaintiffs being ready to account for and pay the defendants what, if any thing, was due from them ; and that the defendants might be decreed to pay, out of Nash's assets, what should be found due to the plaintiffs from his estate. The defend- ants, by their answer, stated that the plaintiffs had never given them any satisfactory evidence, and therefore they did not believe, that Nash had such share or interest as in the bill alleged in the said alleged purchases and resales ; and they insisted, in the event of the alleged agreement being established, that Wedd, Carpenter, and Sheppard were necessary parties to the suit. The plaintiffs amended their bill by making Carpenter a party, alleging that he had taken, and bought for his own use, part of the English wheat bought on the joint account by the plaintiffs and Carpenter, for themselves and Nash, Wedd, and Sheppard, and praying that in- quiries might be directed accordingly. Carpenter admitted hav- ing taken and bought wheat purchased by him on account of the speculation, but alleged that he had duly accounted for it, and long since settled with the plaintiffs all accounts relative to the subject of the suit, and fully satisfied all claims on him in respect thereof. Evidence was gone into, from which it appeared that the plaintiffs' claim against Carpenter had been settled under an award^ and that they had released Wedd and Sheppard, who were exam- ined as witnesses on the part of the plaintiffs. In July, 1843, the cause was heard before the Master of the Rolls, who over- ruled the objection for want of parties, declared the estate of Nash to be liable for one eighteenth part of the loss sustained in the ad- venture, and directed an account accordingly. From this decision an appeal was brought by the representatives of Nash, and Lord Lyndhurst, decided that the objection for want of parties ought to have been allowed. His Lordship said : " If the plaintifts had agreed severally with each of the defendants to engage with them • in a speculation of this sort, and that each should be interested in the profit and loss in a certain proportion, a bill might have been filed against only one of them to obtam payment of his proportion of CH. I.] JOINT-STOCK COMPANIES. 979 the loss, -without making any other contractors parties, for this would have constituted many separate contracts. But in the present case all the parties mutually contracted with each other to engage in this speculation, and to share the profit or loss. It was a mere case of partnership in a particular transaction, or a series of trans- actions, in which the business was to be transacted and the capital advanced by two of the partners. According to the general rule, therefore, the bill being filed for an account of the partnership transactions by one of the partners against some of the other part- ners, all the rest ought to have been joined as parties to the suit. Is there any thing, then, in this case to take it out of the general rule ? The circumstances insisted upon are these : that Sheppard has paid what is stated to be his share of the loss, and has obtained a release from the plaintiffs ; that Wedd is wholly unable to pay, and has been excused by the plaintifis ; and that the case between Carpenter and the plaintiffs was referred to arbitration, and the sum awarded has been paid to the plaintiffs. But none of these transactions are binding upon Nash or his representatives, or can in any way affect their rights. It does not -appear to me that they take the case out of the ordinary rule. If a decree should be ob- tained upon this record, it will not have any force against those who are not parties to the record. It would not be binding upon them if any dispute should arise between the parties, or any of them, and Nash's executors, as to the proportion of their contribu- tions, or of their obligation to contribute to the loss, or respecting any other matter arising out of this transaction. I think, there- fore, the objection for want of parties ought in this case to have been allowed. This is the conclusion to which I have come, though it is not without doubt and hesitation that I have differed from the Master of the Rolls upon a point of this nature." ^ We are not aware of any case precisely in point having been decided by Lord Cottenham, but, from the diota which have fallen from his Lordship, it seems not improbable that, had the appeal in this case of Hills V. Nash come before him, the decision of Lord Langdale would have been confirmed. Till, however, there shall be a sub- sequent decision of equal authority but to a different effect, it is apprehended that, for the present, the rule must be considered still to be, that, in ordinary partnerships, all the partners must be made • Hills V. Nash, 10 Jur. 148. 980 PARTICULAR PARTNERSHIPS. [BOOK V. parties to a suit seeking an account, without having regard to the question of dissolution at all, that is, either -with or without disso- lution. § 1135. In cases where a bill is permitted to be filed by some of the shareholders, on behalf of themselves and others, there should be an allegation in the bill that it is so filed,i and it is usual to allege that the bill is filed on behalf of all the shareholders except the defendants ; ^ but the omission of the exception is im- material, as the defendant, in his character of shareholderj has a joint interest with the plaintifif, and, therefore, in that character, the bill may be filed on his behalf^ Where, however, a bill is filed by the trustees of a company, such trustees having, to a cer- tain extent, distinct interests from the shareholders, it seems bet- ter, although the bill may be filed on behalf of the shareholders, to make the shareholders defendants ; or, if they are very numer- ous, to make some of them defendants, and to allege that the plaintiffs do not know, and are unable to ascertain, the names of the other shareholders.* But in regard to the allegation in the bill, that the parties are too numerous to be individually named,^ it is to be observed, that since the Joint-Stock Companies Regis- tration Act in England,*" the allegation of ignorance of the names of the shareholders will be rejected,^ and it seems now sufficient to allege that the number of shareholders is so great that it would not be possible, without the greatest inconvenience, to make them parties to the suit, and so to do would render it impossible to bring the suit to a hearing.^ In some of the cases above cited, the defendants have also demurred for want of equity and multi- fe,riousness.^ ^ Baldwin v. Lawrence, 2 Sim. & Stu. 18 ; Douglas v. Horsftll, id. 184. « Chanoey v. May, Prec. Ch. 592 ; Gray v. Chaplin, 2 Sim. & Stu. 267. » Taylor v. Salmon, 4 Myl. & Cr. 142. * Fenn v. Craig, 2 You. & Coll. 216. « See Mitf. PI. 170 (4th ed.), note (a). » 7 & 8 Vict. c. 110. ' Per Knight Bruce, V. C, in Wilson v. Stanhope, 10 Jur. 421. See anle,% 1132. » Ibid. « Wallworth v. Holt, 4 Myl. & Cr. 619 ; Wilson v. Stanhope, 10 Jur. 421. CH. I.] JOINT-STOCK COMPANIES. 981 SECTION III. OF THE RELATIVE EIGHTS OF SHAREHOLDERS AND THIRD PERSOKS. § 1136. Though a man is answerable, to the full extent of his property, for the debts of an unincorporated company to which he either actually or ostensibly belongs, yet, as we have already seen, he is not to be charged as a partner on the mere ground of his having done acts showing his assent to become a partner in case a projected company be carried into execution.^ And even after the formation of the company, there are some respects in which the shareholders stand in a different situation, as to their liabilities, from that of ordinary partners. Thus, there is no implied author- ity in a member of a joint-stock company to bind the company, or even the directors, by bills of exchange. A power to accept biUs is sometimes given to the directors by the deed of settlement ; but there is generally a provision in the deed, that, as far as is practicable, they shall pay the debts of the company in ready money. § 1137. As between the company and third persons it seems clear that a bill negotiated in the name of the company by any one of the members will, in the hands of a bond fide indorsee for value, be available against the whole body of the proprietors, pro- vided there is nothing on the face of the bill to show that it was drawn or accepted in an unauthorized manner. But if the bill itself appears objectionable in this respect, an indorsee cannot recover upon it as against the company generally, but only against the actual drawer or acceptor. In Bramah v. Roberts,^ C, who was a director in a joint-stock company, drew a bill upon the direc- tors, payable to his own order, which was addressed as follows : "Messrs. A., B., C, and other directors. of the South Metropoli- tan Gas Light and Coke Company, No. 3, Crosby Square." The form of the acceptance was, — " accepted for self and directors, D., Chairman." C. indorsed this bill to the plaintiffs, who brought their action upon it against all the directors. At the 1 Ante, § 1082, et seq. ' S Bing. N. C. 963. 982 PARTICULAR PARTNERSHIPS. [BOOK V. trial, no evidence was given by the plaintiffs of the constitution ■ of the company, or of any authority given by deed, or otherwise, to any of the directors of the company to bind the company at large by the acceptance of bills of exchange. It was held that the plaintiffs could not recover against the company generally, though the verdict which they had obtained against C. and D. was per- mitted to stand. Tindal C. J., in delivering the judgment of the court, said that the right of one director to accept a bill for him- self and the others, so as to make those others liable, was not a right or power implied by law, like that which belongs to one member of an ordinary partnership in trade, with respect to bills drawn and accepted for the purpose of the trade ; but that it must depend upon the powers given by the charter, or deed or agreement under which the company is established and constituted, or some other agreement between the parties, whether a bill so drawn and accepted shall or shall not have that legal effect.^ § 1138. Again, although it has been decided, upon the con- struction of certain acts of Parliament, that the members of joint- stock banking companies are amenable to the bankrupt laws,^ yet it seems to have been doubted, and' not to have been expressly settled, whether a member of an ordinary joint-stock trading com- pany is in that character liable to be made a bankrupt. Upon general principles, however, it seems clear that he is liable. If any shareholder in a company mortgages his shares and becomes bankrupt, then, unless notice of the assignment has been given to the company, the shares will be considered in the reputed owner- ship of the bankrupt, either if they be actually of a personal na- ture, or declared to be so by the act of Parliament or deed con- stituting the company. In the latter case, although they might not be personal for all purposes, yet they will be so as to all per- sons claiming through the bankrupt, and consequently as to the mortgagee.'' Where, however, by a clause in the deed of settle- ment of a banking company, it was stipulated that the company should have a lien on the shares of such proprietors as were cus- 1 See Dickinson v. Valpy, 10 Barn. & Cres. 128. s Ex parte Hall, 3 Deac. 405 ; 1 Mont. & Cli. 365. ' Ex parte Lancaster Canal Company, Mont. IIG ; Ex parte Vallance, 3 Mont. & A. 224 ; Ex parte Spencer, 3 Mont. & A. 692 ; Nelson v. London Assurance Company, 2 Sim. & Stu. 292. CH. I.] JOINT-STOCK COMPANIES. 983 tomers and indebted to the bank, and that no share should be transferred without the consent of the directors, and an abstract of these provisions was indorsed on the certificate of the share held . by each proprietor, it was held, upon the bankruptcy of a shareholder, that his shares (of which the certificates were in his possession) did not pass to his assignees by virtue of reputed ownership. 1 A mortgagee of shares in a company must give notice of his incumbrance to the secretary, or his lien will be lost as against a subsequent purchaser for valuable consideration with- out notice.^ § 1139. But the powers of a general agent for a mercantile company must be determiaed by the usage of trade, and the mode of transacting business in that department, in which an agent is employed to act for his principal, will, in fee absence of express directions, frequently determine a doubt as to the hability of the latter.^ If, therefore, the course of the trade in which the company is engaged be such that bills of exchange are usual or necessary for the conduct of that trade, the law would imply an authority in such agent to bind the company by bills of exchange. In a case* which arose in Massachusetts, an action was brought by the in- dorsee of a note given by an agent of a company, which had been formed for the purpose of purchasing timber land in Maine, and getting the lumber therefrom and selling it. It appeared that officers had been appointed to take the general management of the concerns of the company, with the power to appoint agents to transact its business. The agent who gave the note had been ap- pointed by these officers. The note was given in payment for services of laborers employed by the agent in getting out lumber. The court held that he had authority to give it, and that the mem- bers of the company, as partners, were hable to the plaintiff upon it. Shaw C. J., in this case said : " Here it is in proof, that the note in question was given for services actually done and per- formed by the -promisee. Now, without deciding whether this was so far a. trading company, either by the express provisions of the articles, or by the nature of the business to be carried on, as ' Ex parte Plant, 4 D. & C. 160. ^ Cumming v. Prescott, 2 You. & Coll. 488. ' Chitty on Contracts (10th Am. ed.), 236. * Tappan v. Bailey, 4 Metcalf, 629. 984 PARTICULAR PARTNERSHIPS. [bOOK V. that the company would be bound to an indorsee, on bills of ex- change or promissory notes, simply upon proof of the drawing, indorsement, acceptance, or promise of an agent, and without proof of consideration, we are of opinion that the agent had au- thority to make contracts for labor and services in the business of getting out lumber, and to give the negotiable promissory note of the company in satisfaction of such labor and services, and that an action may be sustained upon it by an indorsee." § 1140. But then the agent must be careful that he draws, ac- cepts and indorses as agent ; for otherwise he will be personally liable on such bills. In a case before Lord Holt,' a bUl was drawn by one Mildmay, a servant of the York Buildings Company, pay- able to S. or order, and the direction of it was to " John Bishop, cashier of the York Buildings Company, in Winchester Street, London ; " and the conclusion of the bill was, " Place the same to the account of the York Buildings Company." At the same time a letter was directed to the company, advertising them of this draft upon the defendant. Bishop. Bishop accepted the bill gen- erally, in his own name, without taking any notice of the com- pany. In an action by an indorsee against Bishop, the latter was held individually liable. A similar point occurred in the case of Ducarry v. Gill.^ An action of assumpsit was brought by the plaintiff, as indorsee, against the defendant, as drawer. The bill was addressed to Messrs. S. & Co., bankers, requiring them to pay to J. L., or order, £390 sterling, for value received, and to place the same to the account of the trustees of the Chilian and and Peruvian Mining Association. The bill was signed " Thomas Bagnold, Joseph Andrews," without further addition. It was countersigned by the secretary of the association. The defendant was one of the directors and shareholders of the company. Bag- nold and Andrews were the agents. It appeared that they were not properly constituted the agents of the company; but Lord Tenterden said, that, even supposing the agents had authority to bind the defendant by their. bills, they had not done so in this case, inasmuch as they.had drawn the bill in their own names, and not as agents. 1 Thomas v. Bishop, 7 Mod. 180; 1 Str. 955. » 1 Mood. & Malk. 450. CHAPTER II. OF JOrNT-STOCK COMPANIES BY STATUTE. SECTION I. LEGAL REMEDIES AFFECTING JOINT-STOCK COMPANIES, THEIR INDIVID- UAL MEMBERS AND STRANGERS UNDER THE LATE ENGLISH STAT- UTES RESPECTING THEM. § 1141. The combination of the funds of numerous individuals in one joint stock, Tvliile it purpoi-ts to give to companies, trading upon such united capital, power commensurate with the objects which they propose to themselves, would have been accompanied with difficulties in practice perhaps more than sufficient to coun- terbalance the advantages of augmented funds, had not the au- thority of Parliament been exercised to relieve them from the stringency of those principles of the common law, which, adapted as they have been to the regulation of ordinary partnerships, and proper to secure the rights and enforce the duties of their indi- vidual members, were calculated to render unwieldy, or even to paralyze, the operations of the former more numerous bodies. It was highly expedient that a new code should be introduced, which, while it sanctioned the direct management of such undertakings by a selected body of directors, subject to the due control of their proceedings by the wiU of those whose interests were embarked in the same risk (expressed by a majority at meetings to be held from time to time), and armed the directors with efficient means of securing the actual payment of the subscribed fund, should also render more available the protection of the pubHc and share- holders from the losses incident to fraudulent or delusive projects. At once to protect creditors and the public, by attaching to these 83 986 PARTICULAR PARTNERSHIPS. [BOOK V. numerous but fluctuating bodies a continued responsibility, propor- tioned to the important character they assume, and to relieve their individual members, by shortening the time during which they should respectively continue subject to the extended liabihties ■which they should uicur, were objects, the attainment of which would be highly advantageous, without too wide a departure from the principles of English commercial law. § 1142. To the effectuating of these purposes the provisions of the Jomt-Stock-Companies Registration Act (7 & 8 Vict. c. 110), are directed. These companies become, by complete regis- tration, bodies corporate for the purposes of carrying on the busi- ness for which they were formed, of taking and enjoying their common property, and of suing and being sued.^ They thus ac- quire a separate legal existence, apart from that of their individual members, and are no longer in danger of being hampered by tech- nical difficulties, in the process of enforcing the performance of their engagements against persons who may have in fact con- tracted with them, whether such persons be merely shareholders of the company bringing the action, and therefore, as copartners of the plaintiffs, not hable, according to the rules of pleading appli- cable to ordinary partnerships, to such proceedings at law, or whether they be joined as defendants in the action, with other per- sons, some of them interested as copartners with the plaintiffs, and therefore exempt, according to the same technical rules, from the enforcement of the contract in a court of law : nor are they any longer compelled to resort to the intervention of trustees, for the purpose of availing themselves of contracts either made or to be made on their behalf, being declared entitled in their corporate capacity to the benefit of all such previous contracts ; and by their actual investment with such character, exempted, in all future transactions, from the necessity of resorting to a course so circui- tous and inconvenient. i§ 1143. By virtue of the same corporate quality, the company becomes liable to be sued, as such, for its joint debts and upon its joint contracts, and, in the first instance, to satisfy the judgments obtained against it out of the comnion property ; while the share- holders, without escaping their due responsibility to the public, are protected from unnecessary inconvenience. A similar immunity ' See § 25. CH. Hi] JOINT-STOCK COMPANIES. 987 from actions at law is conferred by those statutes under -wliich banking or otber companies are empowered to sue and be sued in the name of their secretary or other public officer. § 1144. In the case of Steward v. Graves ^ (which was an action of assumpsit upon the common money counts, brought by the plaintiff as public officer of the East of England Bank against individual members of the Southern District Banking Company, established and carrying on business under the stat. 7 Geo. 4, c. 46), the second plea to the effect that the causes of action accrued against the defendants as members of such banking company and not otherwise, that one S. Bovill and one W. Dunn, had been duly appointed and registered, pursuant to the said statute, as public officers to sue and be sued for and on behalf of the same, and that the said persons so appointed and registered were living and resi- dent in England, and within the jurisdiction of the court, at the commencement of the suit, was held good in bar of the action, upon special demurrer. There was a third plea, to the effect that the causes of action accrued against the defendants jointly with certain other persons, therein named, as members jointly with the defendants, at the time of their accruing, of the Southern District Banking Company, and that such other persons were then, and thenceforth until the commencement of the suit, members and co- partners in the East of England Bank, as public officer of which bank and on behalf of the members thereof the plaintiff sued. This last plea was also demurred to, and abandoned as unsustaina- ble, by' the defendants' counsel. In the course of the judgment deUvered by him, Parke B., said : "The principal objection to the second plea was, that in the case of a company established and carrying on business under the 7 Geo. 4, c. 46, the individual members of it are hable to be sued upon the contracts of the com- pany as they would have been but for that statute, which, it was argued, gave an additional or cumulative, not an exclusive, rem- edy against the company by an action against the public officer." " We are all of opinion that the creditors of a company so estab- lished, and having a public officer, have no remedy against the individual members, as at common law. And we are of this opin- ion upon the words of the ninth section, giving the remedy against the public officers, and upon the whole purview of the Act." " It ' lOMees. & Wels. 711. 988 PARTICDLAK PARTNERSHIPS. [BOOK V. is clear, from the recital in the act, and the scope of most of its provisions, that the legislature intended to give to corporations and copartnerships of more than six, within the limits therein men- tioned, the power of being banks of issue, the Bank of England waiving its exclusive privilege in their favor, on the condition that the individuals should be liable for the bills and notes issued, or money borrowed, by such corporations or companies, in the quali- fied mode pointed out ly the act. This Hability by the common law would not attach at all to individual members of corporations, and would attach in a different mode from that provided for by the statute, to members of companies: for, at common law, those members only would be liable who were such when the con- tract was entered into ; but by the statute, not only those, but all who became members afterwards, and until th^ bills, notes, or debts were paid, are made liable. At common law, all the goods of the contracting parties and their persons would be liable to im- mediate execution ; by the statutes, the goods of the company are liable, and the members for the time being at the period of the execution, in the first instance, and afterwards those who were so at the time of the contracts being entered into or carried into effect, or when the judgment was obtained thereon. In a proceed- ing against individuals, they would be liable to simple contract debts for six years, to specialties for twenty ; in the statutory mode of proceedings, the members who have ceased to be such for three years are exempt from debts of every description. Thus the hability created by the statute is very different from that which would exist without it ; and it cannot be supposed that the legisla- ture meant to leave it to the option of any creditor, whether the members of the company should be subject to one species of liabil- ity or the other, stiU less that a creditor should have the power of depriving them of the statutory protection which is given to each after having ceased for three years to be a partner. The framers of the act had in view the convenience of the public, and thereby provided a more convenient remedy to creditors than at common law ; but they had also in view the benefit of the members of the company, by restricting their personal hability." " We are of opinion, therefore, that this act of Parliament meant to give one remedy only, and that against the company, in the name of its pubhc officer, and that the common law remedy is taken away, at least where such officer exists and is in England ; and, conse- CH. II.] JOINT-STOCK COMPANIES. 9S9 quently, that tlie second plea is good in substance." " The third was properly abandoned by the defendants' counsel ; on that the plaintiff is entitled to judgment." § 1145. By the 7 & 8 Vict. c. 110,i s. 66, the liability of the individual shareholders of joint-stock companies, upon judgments obtained against the company, is qualified to the same extent, and in like manner, as is stated by Mr. Baron Parke with reference to the banking companies constituted under 7 Geo. 4, c. 46, though by somewhat different methods ; ^ and an inconvenience which was not effectually provided for by the latter act has been redressed by 68th section of the former. By that section it is enacted, that, in the case of execution to be issued in pursuance of the act, either against the person or property and effects of any shareholder, upon a judgment against the company, or against the property and effects of the company, in satisfaction of any damages or expenses paid or incurred by a shareholder in any action or suit against the company, such execution may be issued by leave of the court, or of a judge of the, court in which the judgment was obtained, upon mo- tion or summons for a rule to show cause, or other motion, without any suggestion or scire facias in that behalf. The costs of the apphcation are to be in the discretion of the court or judge, and the court is empowered to frame writs of execution suitable to the case, and finally it is provided, th^t no such motion or summons ' " An Act for the Kegistration, Incorporation, and Regulation of Joint- Stoclt Companies." 5th September, 1844. °- See 13th sect, of 7 Geo. 4, c. 4S. The 7 & 8 Vict. c. 113 (An Act to Kegulate Joint-Stock Banks in England, 5th September, 1844), contains enactments concerning suits by and against such banking companies, similar to those contained in 7 Geo. 4, c. 46, and directed to the same end of en- forcing the discharge of liabilities, either in favor of or against them; but the liability of the shareholders seems to be differently qualified. Thus, by sections 6 & 7, these companies are incorporated, but without thereby limit- ing their liability ; and by section 10, giving power to levy execution against such former shareholders, who were so " at the time when the cause of action against the company arose" it is provided, that no person having ceased to be a shareholder shall be liable for any such debt " for which he would not have been liable as a partner in case a suit had been originally brought against him for the same " (a provision not contained in the corresponding section either of 7 Geo. 4, c. 48, or of 7 & 8 Vict. c. 110), " or for which judgment shall have been obtained after three years from the time when he shall have ceased to be a shareholder of such company." 83* 990 PARTICULAE PARTNERSHIPS. [BOOK V. shall be made or granted, for the purpose of charging any share- holder, until ten days' notice shall have been given to the person sought to be charged thereby. § 1146. It had been previously held by the Court of Exche- quer Chamber, upon a writ of error in the case of Ransford v. Bosanquet,^ that where judgment had been obtained against the public officer of a banking company, sued on their behalf under the statute 7 Geo. 4, c. 46, s. &, the proper mode of proceeding to execution, under sections 12 and 13, against a partner, not being such officer, is by scire facias. And in Clowes v. Bret- tell,'' in which the plaintiff sued the secretary of the " Patent Roll- ing and Compressing Iron Company," being thereto enabled by the statute 4 & 5 Vict. c. 89, which also enacted that " every judgment, &c., should and lawfully might be executed against, and have the Uke effect upon, the person and estate of every indi- vidual shareholder, as if he had been by name a party to the pro- ceedings, provided that no execution against a shareholder should be issued without leave first granted by the court, upon a motion in open court, and after notice of such motion given to the person to be charged ; the court refused to allow such execution to be issued against an individual shareholder merely on motion, with- out previous scire facias ; observing, however, that if any point could be raised on the construction of the act of Parlia- ment, it might be raised upon the scire facias, and solemnly determined. § 1147. It may be here observed, that in those cases where the shareholders are members of a company, incorporated for carrying on undertakings of a public nature, they are likewise made liable to execution upon a judgment, &c., against the company ; but that the amount leviable upon them individually is limited to the extent of their respective shares in the capital not then paid up : and it is also enacted, that if any such shareholder shall have paid any sum beyond the amount then due from him in respect of calls, he shall forthwith be reimbursed such additional sum by the directors, out of the funds of the company.^ The several enactments contained ' 2 Adol. & Ell. (n. 8.), 972. ^ 10 Mees. & Wels. 506. ^ See 8 Vict. c. 16, Companies Clauses Consolidation Act (8tli May, 1845), ss. 36, 37. CH. ir.] JOINT-STOCK COMPANIES. 991 as well in stat. 1 Vict. c. 73,^ as in stat. 7 & 8 Vict. c. 110, pro- viding for the registration of the shareholders' names, &c., of their respective shares, by the distinguishing numbers, and of the trans- fer or other determination of their property therein, are all auxiK- ary to the enforcement of the rights of creditors against the com- panies and their members, and no less so to the due restriction of the individual Uabilities of the members within the hmits assigned to them by the statutes above mentioned ; and this latter purpose appears effectually secured by the further provisions, requiring re- turns of all payments and repayments made by the individual members, in respect of execution upon judgments, &c., obtained against such companies or the public ofiBcers empowered to sue and be sued on their behalf. § 1148. As the legislature has thought it expedient to give to joint-stock companies a qualified corporate existence, enabling them readily to wield the combined resources of their numerous proprie- tors, guarded, however, from becoming a shield against the dis- charge, by their individual members, of the liabilities which the company may incur towards strangers ; so the authority of Par- liament has been exercised to confer upon the shareholders in every company a constitution, the principles of which are defined by the deed of settlement, containing certain particulars required by the statute, which secure both the existence of a distinct exec- utive body, and its responsibility at once to the shareholders and the public ; nor are the reciprocal duties of the shareholders less carefully enforced by the enactment which makes the execution of the deed of settlement, or of some deed referring thereto, a necessary condition to the receipt by them of any dividends or profits, and to the exercise of any power of control or superin- tendence.^ The articles of this deed comprising the conditions upon which the directors acquire their powers, whether exercis- able towards strangers or their own members, the courts of law enforce a strict^ adherence to its provisions ; not, however, without a due consideration of the reciprocal duties incumbent upon the proprietors. In the case of Smith v. Goldsworthy,^ which was an ' " An Act for better enabling her Majesty to confer certain Powers and Immunities on Trading and other Companies.'' 17th July, 1837. ' See 7 & 8 Vict. c. 110, s. 26. ' 4 Q. B. 430. 992 PARTICULAR PARTNERSHIPS. [BOOK V. action for calls, it was by the deed of settlement covenanted, that certain persons, who ■ had formed themselves into a company for working iron mines, should be and continue such company for sixty-one years, unless sooner dissolved, as in the deed was pro- vided ; that the company's capital should consist of two millions sterhng, divided into 20,000 shares of ,£100 each, and that the affairs of the company should from thenceforth be conducted and managed under and subject to the regulations thereinafter con- tained ; and clause 29 ordained that, for the better conduct and management of the affairs of the company, a special general meet- ing, called for the purpose, might from time to time amend, alter, or annul any of the clauses of the deed, or of the existing regular tions and provisions of the company, and substitute others ; pro- vided that such amended or altered regulations and provisions should not extend to alter the regulations, afterwards laid down in the deed, confining the individual responsibility of each proprietor, as between himself and his co-proprietors, for calls, debts, and other demands, to the amount of his share in the company's capital for the time being. Provision was made, by other clauses, for dissolving the society. The points in dispute are clearly stated in the judgment of the court, delivered by Lord Denman, after argu- ment upon several demurrers both to the pleas and replications. Lord Denman C. J. : " This is an action of covenant brought by the plaintiff as secretary to the British Iron Company. ^ The com- pany's original deed of settlement was dated 28th of April, 1825 ; and by it the subscribers covenanted with three trustees to pay such instalments on their shares, as should be called for by the di- rectors in pursuance of the powers vested in them. The defendant having become proprietor of shares, executed an indenture, dated 7th March, 1840, by which he covenanted to observe the covenants in the deed of 1826, and to pay such instalments upon his shares as should be called for by the directors." " The main objections to the plaintiff's right to recover are two : first, that the original number of directors, as fixed by the deed of settlement, had been reduced, by resolutions of the company, from sixteen to six ; sec- ondly, that the deed of settlement having provided that there ' By stat. 3 & 4 Vict. c. 96, power was given to the British Iron Company to sue and be sued in the name of their secretary. CH. il] joint-stock companies. 993 should be 20,000 shares of £100 each, those shares had been reduced by a resolution of the company to £50 each, and again, by a subsequent resolution, raised as before, to £100." " It is contended by the defendant, that these resolutions are not within the authority of the 29th clause of the deed of settlement. The deed provides, in the commencement, ' that the direction and man- agement of the affairs of the company shall be confided to sixteen directors ' ; and, by clause 102, ' that the directors of the com- pany shall never consist of more or less than sixteen.' It is argued, from this latter clause, that the number of sixteen directors was part of the constitution of the company, essential to its existence and unalterable, and that the 29th clause does not extend to it. Looking at the several clauses together, we are of opinion that it was competent to two special general meetings, properly convened, to alter the number of directors." " The second objection is of a more formidable description. The amount of the shares is properly part of the constitution of the company, and does not strictly de- pend upon any clause, regulation, or provision of the deed ; the alteration of the shares seems, therefore, not to come within the meaning of the 29th clause. If it did, we should hardly consider that the proviso in that clause forbade the alteration, because the reduction of the value of the shares could not have the effect of rendering any proprietor hable, as between himself and the other proprietors, beyond such reduced value, although it might, as was ingeniously argued, diminish the fund to which he had to look for indemnity, in the event of being sued by third persons for debts of the company. Admitting, then, that the resolutions of 7th No- vember and 4th December, 1826, by which the shares were re- duced, were not justifiable, the question will be, What consequences followed from them ? On the part of the plaintiff, it is argued that they were simply void, and wholly immaterial, and that the shares always remained, in point of law, £100 shares ; or, if not, that any mischief which might arise from these resolutions was cured by the subsequent resolutions of 4th May and 25th May, 1838, by which the value of the shares was restored." " The defendant farther answers, that the effect of the resolutions reducing the shares was to dissolve the company. We do not think that any such effect followed, but rather that they were simply void and in- operative. Neither does it lie in the mouth of the defendant, who became a proprietor after those resolutions passed, to say that no 994 PARTICULAR PARTNERSHIPS. [BOOK V. company tlien existed. We think the shares always were, in point of law, £100 shares, and therefore that the 37th and 40th pleas are no answer to the action. We also further think, that, if the shares were reduced at one time to £50, still, the resolutions of 1838 re- stored them to their original value ; and that the concurrence of the defendant in carrying those resolutions into effect is a material question. Neither is it necessary to show that such concurrence was by deed ; for it in no way alters the covenant of the defendant. That covenant binds him to observe the covenant in the deed of settlement, which deed provides for alterations to be made by res- olutions not under seal, but to be passed at special general meet- ings ; the resolutions themselves are not required to be by deed ; nor can it be in any way requisite that the concurrence of the defendant in them should be by deed. For these reasons, we are of opinion that the plaintiff is entitled to the judgment of the court." § 1149. It has been seen, that, with regard to projects which do not arrive at the working condition held forth in the projectors' prospectuses, or otherwise, an objection founded upon such dis- crepancy, by original allottees refusing to become shareholders, is held to be fatal to the promoters' claim for deposits or calls.^ This objection may, however, be provided against by the deed of settlement ; and, if so, becomes untenable by those who have exe- cuted such deed. In the case of Hut v. Giles,^ the deed, bearing date 1st March, 1841, recited that each of the parties thereto had contributed towards the (intended) capital of £50,000, £125 in respect of every share subscribed for or allotted to him, which had been paid, and that the business of the company was commenced on the 1st February, 1840. The parties also mutually cove- nanted, that they and other parties to become shareholders, as thereinafter mentioned, would be and continue, until dissolved under the provision thereinafter contained, a company by the name, &c., upon the terms and conditions thereinafter expressed, namely, in substance (among others), that the capital should con- sist of £50,000, agreed to be raised in shares of £500 each; with power to the directors, with the concurrence of a general meeting, to augment or diminish the capital, as therein mentioned ; ' See Fox v. Clifton, ante, § 1083. » 12Mees. & Wels. 492. CH. II.] JOINT-STOCK COMPANIES. 995 that notwithstanding the payment of the said instalments of ^£125 per share, the remaining ,£375 per share should be payable in such sums, not exceeding £125 at one payment, as the directors at an extraordinary board should appoint ; that the directors should, before the next and every subsequent general meeting, declare what, if any, dividend should be made at such meeting next following ; and that notwithstanding any applicant for a share or subscriber had neglected or might neglect or refuse to pay his subscription or to execute the deed, although the entire number of shares should not be subscribed for on or before the execution thereof, yet the deed and its provisions should be valid and effect- ual. The company was not empowered to sue and be sued, but the deed contained a clause binding every shareholder, if indebted to the company, on application, to pay his debts, as if an ordinary debtor, and not interested as a partner therein. The action was brought for a second instalment of £125, for which a call had been duly made by the directors, and it was held on demurrer to the defendant's plea (to the effect that only £40,000 had, at the time of making the call, or as yet, been subscribed for), that, not- withstanding such deficiency in the subscribed capital, the parties who had executed the deed were liable to the calls made by the directors on the £375 per share remaining unpaid. Parke B. : "I am of opinion, on the true construction of the deed, that it was not a condition precedent to the payment of the calls that the entire capital should be first subscribed ; and therefore that the plea is bad in substance." " The deed itself recites that the busi- ness of the company had already commenced, and therefore that the shareholders have become entitled to a dividend, if any profits have been reahzed." ^ Compliance with an enactment in their act of incorporation, declaring what the amount of capital shall be, and the number of shares into which it shall be divided, to the extent of effecting such division of the required capital, al- though the amount be not completed by subscription, is, it appears, sufficient to protect an incorporated company against a similar defence.^ § 1150. The adjustment of reciprocal rights and duties be- ' 12Mees. & Wek 501. ' London and Brighton Railway Company v. Wilson, 6 Bing. (n. s.), 135; 8 Bowling, 40. 996 PARTICULAR PARTNERSHIPS. [BOOK T. tween the directors and the shareholders, effected by the deed of settlement, being, as was observed, adapted to promote the work- ing condition of joint-stock companies, is determined immediately upon their dissolution. The proprietors are thereupon divested of the special rights, and exempted from the duties, by that instru- ment conferred upon them, and with regard to third persons are considered, in a court of law, in the light of individual members of an ordinary partnership. The injurious consequences of such determination might perhaps be avoided, by inserting in the deed itself provisions regulating the method of winding up the affairs of the company, and defining the persons to be intrusted there- with. Apart from such precaution, the partnership, which, not- withstanding the dissolution, subsists for the purpose of making good its previous engagements, is saddled with that onerous duty, though reduced to an unmanageable state ; the authority as well of the majority of shareholders to bind the minority, as of the directors to bind the other shareholders, having ipso facto ceased. An arrangement, both natural and prudent, intrusting to the ex- isting directors the realizing of the assets, the discharge of out- standing liabihties, and the distribution of the surplus among the shareholders, may be, and in the case of Lyon v. Haynes and others ^ was, made by resolutions ^ passed at a meeting of share- holders, from which, however, two of them were absent. In winding up the affairs the directors, with the acquiescence of ah the shareholders, in fact, proceeded ; but the court, in an action brought by a shareholder against the directors for not declaring a dividend out of the surplus, held that, the partnership having been dissolved, the members present could have no legal authority to bind the absent, unless it had been expressly given.^ It was also held, that the directors, without special advantage or compen- sation awarded to them in that behalf, had undertaken a burden- some trust, — a duty unconnected with any profit, and exercisable > 5 Man. & Grang. 504, 519. * It was resolved that the assets should be realized with all convenient speed, and that the surplus, after meeting the engagements of the company, should be divided among the shareholders ratably, in such dividends as the directors might from time to time think fit, a dividend to be declared at least once in every six months. 5 Man. & Grang. 519. ' Lyon V, Haynes, 5 Man. & Grang. 542. CH. II.] JOINT-STOCK COMPANIES. 997 according to their judgment ; that they were bare trustees, liable to account in equity ; but not bound by any legal contract, upon which an action could be hrought by each shareholder ; ^ and the court drew a marked distinction between the case before them and that of Owston v. Ogle,^ relied upon by the plaintiff's counsel, ia which there was an express and several agreement in writing be- tween the defendant and each part-owner to make out an account and divide the net profits on the ship's return.^ § 1151. The powers given by the legislature to companies incorporated for Carrying on undertakings of a public nature are conferred, indeed, at the instance of the projectors, but to be ex- ercised, not only without uncompensated injury to individuals, but for certain proposed ends of public advantage. These powers are so large and so peculiar that the legal remedies ordinarily in use where individuals only are concerned are comparatively inefficient, and the courts of law regard these companies as strictly bound by contracts, the terms of which, on behalf as well of the public as of every person interested in any thing to be done under them, are contained in the acts of incorporation, no less than the pecul- iar powers and privileges which they confer. The Court of Queen's Bench will not suffer these proposed advantages to be defeated, but will, on due application, exert its mandatory juris- diction to enforce upon these companies the performance of their Parliamentary bargains, both by executing the pubhc work sanc- tioned by the legislature, and by providing compensation for pri- vate injuries inflicted in the course of their operations. Thus, where a railway was constructed by a company, in whose act of incorporation it was provided that " all persons should have free hberty to pass upon and use the same with wagons and other car- riages, constructed as therein described, upon payment of the rates of tolls thereby prescribed," and the directors had taken up the rails and aboUshed part of the way, a mandamus was granted commanding ■ the company to reinstate the road. It was con- tended that an indictment against the company was the proper remedy, upon which Abbott C. J. in deUvering judgment, ob- served : " If an indictment had been a remedy equally convenient, beneficial, and effectual as a mandamus, I should have been o£ opinion that we ought not to grant the mandamus ; but an in- ' Ibid. 546. " 13 East, 538. » 5 Man. & Grang. 546. 84 998 PAKTICTILAR PARTNERSHIPS. [BOOK V. dictment is not such a remedy. The court, indeed, may impose a fine, to be levied by distress ; but the corporation may pay the fine, and refuse to reinstate the road. The corporation being Hable to an indictment is no objection to the granting of a mandamus" ^ And where the company, having obtained an act of Parliament empowering them to construct a railway from London to Norwich and Yarmouth, had nearly exhausted their funds in the execution of the work as far as Colchester only, it was held, on the applica- tion of certain shareholders who were owners of land beyond Col- chester, that a mandamus should issue directing the company to set out deviations, and to make purchases below Colchester, al- though the majority of the shareholders had passed resolutionSj at meetings duly convened, confirming the opinion of the direc- tors that it was inexpedient to carry the works beyond the point at which they had arrived. AfiSdavits by several of the applicants were read, purporting that the directors, before obtaining a second act of Parliament, under which they were then acting, had deter- mined not to purchase the lands required for the railway beyond Colchester, but that, upon the interference of the deponents, they had assured them that the line should be completed; upon which the deponents had withdrawn their opposition. Lord Denman C. J. : " There is no higher duty laid upon this court than to exercise a vigilant control over persons intrusted with large and extensive powers for public purposes, and to enforce the execution of such pwrposes ; and the more so, as we are acquainted with no other sufiScient remedy." " Interference by mandamus is occa- sioned by inferior courts or persons refusing to proceed in some course prescribed by law ; and not in consequence of misappre- hension or error in their course, provided they have entered upon it." And, after remarking that the case did not seem to be one of unavoidable failure upon experiment and trial, he proceeded : " This is not a complaint by a majority of proprietors against the governing body, but by a minority against the company itself, which they charge with a breach of faith towards them, by stop- ping short m. the execution of that purpose which induced them to become shareholders. To say that a majority of the whole body are satisfied with the dividends they are likely to receive, and are unwilling to risk more expenditure, is obviously no answer 1 Rex V. Severn and Wye Railway Company, 2 Barn. & Aid. 646. CH. n.] JOINT-STOCK COMPANIES. 999 to the public or to Parliament, which was induced to grant them powers by the promise of benefits much more extensively dif- fused." ^ Although the mandamus was afterwards, upon the return to it by the company, held bad, that decision rested upon the ground that it contained no sufficient averment to the effect that the company had abandoned the design, or had wilfully exer^ cised an injurious option in taking land for the purposes of the railway ; the court at the same time stating, that the principles of interference announced in the former judgment remained un- touched.^ The writ of mandamus is equally accessible for secur- ing the maintenance, by necessary repairs, of those pubhc works the ruinous state of which amounts to a public nuisance, and as such becomes punishable by indictment. In Rex v. The Bristol Dock Company,^ where a mandamus had issued, directing the company to repair the banks of a canal, and the return denied their HabiUty, the court said : " Those who obtain an act of Par- liament for executing great pubhc works are bound to fulfil all the duties thrown upon them. If this breach of contract causes a pubhc nuisance also, that cannot dispense with the specific per-* formance of the obligation contracted by them." § 1152. Nor are the courts of law less vigilant, during the pro^ gress of these public works, to confine the exercise of their statu-^ tory powers within the limits marked out for them, by strictly en- fi)rcing the conditions upon which they were granted. The Lon-: don and Birmingham Railway Company, in their return to a mandamus, issued on the prosecution of the inhabitants of Pinner^ and commanding them to set out and make a good and sufficient road, with a footway and bridge, as required by their acts of in- corporation, instead of a certain road which they had taken or diverted under the said acts, certified that they had caused a cer- tain bridge to be erected for carrying the diverted road over the railway, extending the parapet, walls on each side as far as neces- sary and no further ; * and had made another road and footway, ' Reg. V. Eastern Counties Railway Company, 1 Railway Ca. 609. ° Reg. V. Eastern Counties Railway Company, 2 Railway Ca. 260. » 1 Ga. & Davis, 286. * The parapet walls had been carried to a considerable distance on each, side of the road, reducing its former width, but leaving its iictual width much more than fifteen feet. 1000 PARTICULAE PARTNEKSHIPS. [BOOK V. in lieu of the road diverted, whicli were good and sufficient, and " as convenient for passengers and carriages as the road and foot- way taken or diverted by them." ^ The prosecutors traversed all tiiese statements, and on each of the three issues which arose upon this traverse the verdict was given for the crown, it being ruled, — 1. That every way made less convenient for passengers under any circumstances is a proper subject of inquiry, and that the conren- ience of passing with flocks and herds, as well as with carriages, was to be regarded ; 2. That, although the company were bound, by their act, to make the bridge of only fifteen feet clear width, tJiey had no right to narrow the road one inch beyond the span of the arch over the railway ; 3. That the extension of the parapet walls was not allowable.^ And where the Birmingham and Glou- cester Railway Company, who had taken part of a turnpike-road and erected thereon a bridge, sought in their return to excuse ijiemselves from obeying a writ of mandawms, on the plea that they could not do so without purchasing land, whereas their com- pulsory powers for that purpose had expired, such excuse was held inadmissible, and the court observed, that, before the company availed themselves of their powers, they should act strictly within &ose powers, yet the works were not begun until their powers were expired.^ ■■ § 1153. The remedy by mandamus by no means supersedes the redress of public injuries of the kind above mentioned by in- dictment. An indictment being found at the quarter sessions, on the prosecution of the surveyors of highways, against the servants of the Leeds and Manchester Railway Company, for a misde- meanor, was removed by the defendants, by certiorari, into the Queen's Bench. It was charged against the defendants, that they had diverted the highway and obstructed the old road by building a wall across it. The company had made a new road, but, as was asserted by the prosecutors, neither so convenient as the old road, nor as near thereto as might be, according to the requisitions of the act by which they were empowered. Much conflicting evi- ' This they were bound to do by a specific clause in their act; ' Reg. V. London and Birmingham Railway Company, 1 Railway Ca. 317. ' Reg. V. Birmingham and Gloucester Railway Company, 2 Q. B. (n. S.), 61. CH. II.] JOINT-STOCK COMPANIES. 1001 dence was given at the trial on the question of convenience ; the jury found the defendants guilty of a nuisance, and the Court of Queen's Bench, referring to the argument, that the company or their servants were not indictable for doing a lawful act, however responsible for disobedience in not substituting a sufficient road,' held that they had done what was legalized by their act upon at condition, which condition they had not performed ; ^ and that the indictment was therefore sustainable. § 1154. Where the injury done by a company in the exercise of their powers is of a private nature, the remedy by mandamus (to which, indeed, or to the alternative remedy provided by the arbitration clauses, the complainant is in such cases confined), is equally accessible, and avails for the purpose both of ascertaining whether any damage has been done, and of compensating the party aggrieved.^ Under an act giving them power to divert rivers and water-courses, the North Midland Railway Company had raised the level of a brook, into which the sough or adit of a coal-mine had discharged itself, and thereby caused the water to flow into the sough and inundate the coal-works ; upon an appli- cation for a mandamus to the company, commanding them to summon a jury to ascertain, and compensate the applicants for the damage sustained, which was opposed by the company, on the ground that they had restored the level, and that no damages had been incurred more than had occasionally occurred before the commencement of their works, it was held to be a question proper to be submitted to a jury, to be summoned by them, whether any damage had been done ; ^ and Littledale J., observed : " They (namely, the applicants) cannot recover by action for lawful acts ; if part of the injury be done under the powers of a statute, and part not, they cannot have their remedy by action at law." So, in The Queen v. The Birmingham Canal Company,* the rule for a mandamus to summon a jury to assess damages, if any, arismg hy reason of a diminished supply of water to the premises of the ' Keg. V. Scott and others, 3 Railway Ca. 187. ' Before a mandamus can be granted, it seems that an ineflFectual applica- tion must have been made to the Company to summon a jury. See Rex v. The Brecknock and Abergavenny Canal Company, 3 Adol. & Ell. 222. ' Reg. V. North Midland Railway Company, 2 Railway Ca. 1. * 4 Jur. 193. 84* 1002 PARTICULAR PARTNERSHIPS. [BOOK V. applicant, was made absolute, the Canal Company having leave to return either that no damage had been done, or to issue their pre- cept to summon a jury, according to the terms of the rule. § 1155. And where the question turns upon a legal right, and prejudice may arise by the intermediate progress of the disputed works, the aid of the restraining power of the Court of Chancery may be obtained, until the parties, having been placed in the fair- est position to try the question, have had their mutual rights duly ascertained in a court of law. Thus, where a biU was brought for an injunction ^ to restrain the defendants from carrying their rail- way across the plaintiff's private road, until they should have made, in lieu thereof, for the use of himself and his tenants, a good and proper road, by bridge or otherwise, in a direct line, or otherwise, " according to the meaning of their act ; " the com- pany, it was stated, intended to stop up the direct road to the extent of two hundred yards (thereby injuriously dividing the plaintiff's land), and to substitute a circuitous road of six hundred yards. The Lord Chancellor, premising that be would protect the property to be affected until the legal right was ascertained, said : " It is my intention to put the legal rights in a course of investi- gation. It is quite immaterial of what actual value the road may be, if it be one which, by the act, the plaintiff is entitled to have protected. The question is, whether the road proposed to be sub- stituted by the company is such as comes within the provisions of their act." And an injunction was granted restraining interfer- ence with the old road, the plaintiff undertaking to bring an action against the company for taking the old road, the company admit- ting that fact, and the plaintiff, for the purposes of the action, admitting that they had finished the substituted road. Where damage arises from the acts of railway or other companies, totally unwarranted by their statutory powers, it is clear that the remedy is by action of trespass, or upon the case, which last is the proper mode of proceeding where the injury has arisen from the negli- gence of the company .2 § 1156. A warrant or precept to summon a jury having been ■ ' Kemp V. The London and Brighton Railway Company, 1 Railway Ca. 495. ' Reg. V. Eastern Counties Railway Company, 5 Jur. 865 ; and Jones v. Bird, 6 Barn. & Aid. 837, there cited. CH. II.] JOINT-STOCK -COMPANIES. 1003 issued by a railway company ^ to the sheriff, and the inquisition having been returned, the general rule, that the proceedings of an inferior jurisdiction should show on their face that such juris- diction exists, was held to be satisfied by fair intendment from the facts stated in the instrument itself (namely, the issuing of the precept and the holding of the inquisition), and from the fact that the instrument itself was made, nor was a defect of technical pre- cision in the description of the premises for which compensation was awarded, and which were substantially ascertained, held to vitiate the return. § 1157. The above-stated modes of redress are available, at the option of the claimant, where compensation is claimed for lands taken, or injuriously affected, by the execution of puMic works under statutory powers, with the alternative right of ascertaining the amount by arbitration, except in cases where the amount claimed and disputed does not exceed fifty pounds.^ Th6se latter must, in compliance with a salutary enactment contained in the Lands Clauses Consolidation Act, be determined by two justices. The claimant must give notice in writing to the company ^ of his desire to resort to arbitration for settling the amount, before they have issued their precept for a jury, who, on their part, must ^ve ten days' notice to the other party of their intention to cause a jury to be summoned.* The act annexes the quality of expedition to these proceedings, by providing that, in case of default in the making of the award, the question shall be settled by a jury, as in other cases of disagreement ; and further guards against the fail- ure of the proposed arbitration by provisions conferring full powers of decision upon the arbitrator appointed by one party in default of the other, and by giving the appointment of an umpire, when rendered necessary by the laches of the arbitrators (in the case of a railway company), to the Board of Trade,^ or to two justices (in other cases), who is empowered, after undue delay on the part of such arbitrators, to pronounce a &ial decision ; ^ and it is ^ Taylor v. Clemson, 2 Q. B. 978. = 8 Vict. c. 18, s. 22 ; and 8 Vict. c. 20, ss. 6 and 44, and ss. 126-137. ' 8 Vict. c. 18, s. 23. ♦ Sect. 38. ' Now the Railway Commissioners. See stat. 9 & 10 Vict. o. 105. • See sections 23, 25, 28, 30, 31. 1004 PARTICULAR PARTNERSHIPS. [BOOK V. further enacted, that the submission to arbitration may be made a rule of any of the superior courts,'on the application of either of the parties.^ , ' * § 1158. It has frequently been deemed fit by the legislature to confer upon companies, incorporated for carrying on undertakings of a public nature, the power, under certain restrictions, of bor- rowing money upon mortgage or bond ; and it is, by stat. 8 Vict. c. 16, s. 42, enacted, that in such cases the respective mortgagees shall be entitled, one with another, to their respective proportions of the tolls and other premises comprised in such nlortgages, ac- cording to the respective sums advanced, and to be repaid such sums, with interest, without preference by reason of priority. The same act provides that the interest on moneys borrowed shall be paid in preference to any dividends payable to the shareholders ; and appoints half-yearly periods (when no time is specified in the mortgage) for its payment ; ^ but, unless an express stipulation to the contrary be made with the lender, the company is authorized to apply to its own purposes any future calls, although included in the mortgage.^ Until, therefore, the works be so far completed as to produce tolls, it seems that no action can, unless in special cases, be maintained against the company, as accountable to the mortgagee, for money had and received to his use ; and this, as may be inferred from the case of Pardee v. Price,* is the only form of action in which (regard being had to the form of the mortgage deed given by the act) the company can be sued at law. The court, in that case, after remarking that the legislature in- tended that all the mortgagees of the tolls of a turnpike trust should be paid ratably, proceeded to observe, " If, then, the trus- tees pay any, they ought in justice to pay all equally ; but the difficulty is, that there is no enactment in any of the statutes' which makes it obligatory upon the trustees, while they remain in possession of the tolls, at any particular time, to set apart any por- tion of the money received towards keeping down the interest, so as to give the creditors a legal right to insist on its payment ; if they have a surplus, after paying the expenses of the repairs, there is no provision that it shall be immediately applied to pay interest. It is competent to them to expend it on the further im- • Sect. 36. ' Sect. 48. ' Sect. 43. • 11 Mees. & Wels. 427 ; 13 Mees. & Wels. 267. CH. II.] JOINT-STOCK COMPANIES. 1005 provement of the road." It would seem that the provision in the 48th section of the last-cited act,' to the effect that the interest upon any mortgage or bond shall be faid at the periods appointed in such mortgage or bond-, and, if no period appointed, half-yearly, to the several parties entitled thereto, is sufficient to obviate the difficulty above mentioned in Pardee v. Price. To the action for money had and received by the company to the use of the plain- tiff, it would, indeed, be a sufficient defence to show that all the money received had been distributed pursuant to the provisions of the act ; ^ but such a defence could hardly be held consistent with the facts of a case, where such tolls, or other property comprised in the mortgage, had been so expended as to leave unsatisfied the legal rights of the mortgagees and obUgees to the half-yearly or other payment of interest e:5pressly provided for by the act ; and such rights would appear the more entitled to the favorable con- sideration of a court of law, when it is considered that, according to the observations of Lord Eldon in the case just cited, the money advanced by the mortgagee " would be very ill secured, if his only remedy were either an application to the vindictive power of the Court of King's Bench, or a suit in chancery, in which aJl the other mortgagees must be made parties." It would seem, there- fore, that such an action would lie by an individual mortgagee, as well for interest upon his mortgage when iu arrear, as for the prin- cipal and interest of his mortgage debt after the expiration of the time fixed for such payment, or, where no time is fixed, after the notice prescribed by the 51st section of the act. But his security is generally available only against such tolls when actually re- ceived, for the form of the mortgage deed, given in the schedule to the act, is such as to convey no interest in the land or property of the company, and does not therefore enable the mortgagee to maintain ejectment ; ^ and even were ejectment maintainable, the party obtaining possession of such land or property would, while holding it, be accountable to all the other mortgagees for their proportion of its proceeds.* ' 8 Vict. c. 16. = Doe d. Banks v. Booth, 2 Bos. & Pull. 219. ' Doe d. Myatt v. St. Helens and Runcorn Gap Company, 6 Jurist, 640; s. c. 2 Q. B. 364. * Doe d. Watton v. Eenfold, 3 Q. B. 757 ; s. c. 6 Jurist, 948. 1006 PARTICTOAR PARTNERSHIPS. [BOOK V. § 1159. Since the right of an individual mortgagee attaches only to his proportionate shares of the tolls, it would seem that, to obtain valuable fruits from the action for money had and received, some proof must be adduced of the sufficiency of the tolls received to meet all the statutory demands upon them. To avoid this diffi- culty, as well as with the view of enforcing the demands against future receipts, the appointment of a receiver under the power in that behalf, frequently given by the special act, may be obtained, — and for this purpose the 54th section of stat. 8 Vict., c. 16, provides an easy and expeditious method. § 1160. Summary legal remedies are also enacted on behalf of the public, to redress the inconvenience they may suifer, generally or individually, by reason of the non-performance of the conditions upon which railway companies are empowered to interfere with existing rights, and where penalties are imposed upon the compa- nies, the methods of enforcing them are made easily available^ Thus, questions relating to the repairs of any road which such companies may be empowered to use or interfere with are deter- minable by two justices, who may direct what repairs are to be made, and for disobedience impose a penalty not exceeding ^£5 per day, payable either to the surveyor of a public, or to the owner of a private road ; '• and a general power is conferred upon two justices both to ascertain the amount and enforce the payment of damages, not otherwise specially provided for, by distress of the goods of the company ; for want of such goods, in cases where the amount to be levied does not exceed £20, by distress of the goods of the treasurer, after seven days' previous notice in writing, who is authorized to reimburse himself out of the joint effects under his custody or control, or by suing the company for the same. § 1161. As for enforcing the performance of their duties by joint-stock companies, many securities are taken and remedies pro- vided ; so, for rendering available the means intended to be placed at the disposalof the executive body, suitable enactments have been passed. By the " Companies Clauses Consolidation Act," ^ the company is empowered to sue the individual shareholders for calls, and the form of the declaration and the matter to be proved in such actions are so prescribed ^ as to relieve the plaintiffe from » 8 Vict. c. 20, s. 58. ' 8 Vict. c. 16, s. 25. ' Sections 26, 27. CH. II.] JOINT-STOCK COMPANIES. 10G7 all unnecessary difficulty and expense.^ Both the legislature and the courts of law have dispensed, in this instance, with the techni- cal precision requisite in the proceedings of other inferior jurisdic- tion. In an action for calls hy the Great North of England Rail- way Company against Biddulph,^ the defendant was one of the original subscribers, having executed the Parliamentary contract, and received scrip. A verdict having been given against him, it was objected on his behalf, in the court above, that the necessary resolution of the directors to make the call, did not specify either the place of payment, or the person to whom such payment was to be made ; the notice, however, given by advertisement in the news- papers contained both these particulars ; and, no objection having been taken, at the trial, to a want of proof that the advertisement was referable to the directors, the court above assumed it to be their act, and sufficient to satisfy the requirements of the special act.^ In reply to the argument that the obligation of the defend- ant, as subscriber, was founded on the Parliamentary deed, and that the declaration did not disclose such obligation, the court said r " Though the preamble (of the special act) states that part of the capital to be raised was subscribed by contract under seal, yet there is no reason that the additional subscribers should bind * Where a statute provides a specific remedy for the delinquency of a member of a corporation in the payment of assessments, as by sale of his shares, he is not liable to an action for the recovery of assessments, unless he has expressly promised the corporation to pay them. Taunton, &c,, Turnp. V. Whiting, 10 Mass. 327; Franklin Glass Company v. Alexander, 2 N. Hamp. 380. But if no statute or by-law provides another remedy for the recovery of assessments, corporators are liable therefor, in action of assumpsit, though they have made no express promise. Essex Bridge Comp. v. Tattle, 2 Ver- mont, 303. And in Kentuciy, where a statute authorized a corporation to sell a delin- quent stockholder's share, it was held that the remedy was cumulative, and that after an unsuccessful attempt to sell them an action might be maintained. Instone v. Bridge Comp. 2 Bibb, 577 ; see also, Gray v. Turnp. Comp. 4 Band. 578 ; Tar River Navigation Comp. v. Neal, 3 Hawkes, 520. ' 2 Railway Ca. 401., ' Namely, that the calls should be paid at the place and to the person ap- pointed by the directors. It appears that in the absence of evidence on either side, the presumption of law is to the same effect. See London and Brighton Railway Company v. Fairclough, 2 Railway Ca. 544. 1008 PARTICULAR PARTNERSHIPS. [BOOK V. themselves so : nor is it necessary that the declaration should be framed specially upon the original subscription deed ; for the deed being executed before the incorporation of the company, the company could be no party to it. But if the deed be necessary to support the action against defendant, as subscriber, the omission is cured by the verdict." § 1162. It has been held, also, where by a railway act shares were transferable by deed, to be executed by the seller and pur- chaser and kept by the company, or their officer, who should enter a memorial of the transfer, and indorse the entry of such memorial on the deed of transfer, and that until such entry the seller should remain liable for calls, and the purchaser should have no share in the profits ; that such provision was made for the security of the company, who might, however, at their option, if in possession of the deed of transfer, treat the transferree, according to the legal effect thereof, as proprietor, and sue him successfully for calls, with- out proof of the entry of the memorial of the transfer.^ The time now limited, by the fifteenth section of the stat. 8 Vict. c. 16, for the continuance of the seller's liability to the company, is until the delivery of the deed of transfer to its secretary, when a title to profits also accrues to the purchaser, who is empowered to demand a new certificate, or, instead thereof, an indorsement of such trans- fer on the old certificate. In another case,^ under a special act, containing similar provisions as to the making of a memorial, and prohibiting transfers after a call was payable, the transfer deed, dated 7th April, and the book of transfers kept by the company, containing a memorial of the transfer, bearing even date with that inserted in the deed, were held admissible evidence (without further proof when the transfer was made) to show the time when the defendant became liable to calls as a proprietor ; and two calls having been regularly made, of the first of yihich., payable on the 9th April, notice was given on 6th March, and of the second, payable on 28th July, notice was given on 23d June, the defend- ant, not being a proprietor till after the first call was made, was held hable to the second call only. ' The London and Brighton Railway Company v. Fairclough, 2 Railway Ca. 544. ^ The Birmingham and Aylesbury Railway Company v. Thompson, 2 Railway Ca. 668. CH. II.] JOINT-STOCK COMPANIES. 1009 § 1163. A party may be sued for calls who has become liable to the company, notwithstanding the invalidity of the transfer deed (by reason of a blank left in it for the name of the purchaser and an untrue statement of the consideration), being precluded from setting up that defence by having forwarded such deed to the secretary, and thereupon, in compliance with his claim, being registered as a proprietor.^ But a forfeiture of his shares by the directors, with his acquiescence therein, may be successfully pleaded in bar to an action for calls.^ The defendant, however, in these actions, cannot, it seems, avail himself of a plea that the moneys called for are to be used for purposes unjustifiable by the special act, or that unwarranted deviations have taken place. On appeal to the Court of Common Pleas from a judge's order disal- lowing such a plea,^ it was held that, the call being a debt created by act of Parliament, it was never intended that, in calling upon a court of law to decide whether a sum for subscription is due or not, the parties should litigate matters belonging to another forum ; such questions would be proper subjects for dispute at a general or special meeting of the shareholders. § 1164. The non-payment of outstanding calls is a good objec- tion to an action by the vendor against the purchaser for not ac- cepting shares, but may be waived by parol ; and where the plairt- tiff tendered to the defendant a conveyance by another (from whom he had contracted to purchase shares), and the instrument of transfer (which was required to be under seal) was delivered, with a blank to be filled up with the name of the purchaser, it was held, both that the defendant might properly refuse to take the transfer from a stranger, having bargained for the implied cove- nant for title, in the statutory forms, from the plaintiff, and that such a deed of transfer was void at law, beihg delivered in fieri only, to be completed through an agent appointed only by parol.'' ' Sheffield, Ashton-under-Lyne, and Manchester Railway Company v. Woodcock, 2 Railway Ca. 522. " Edinburgh and Leith Railway Company v. Hebblewhite, 6 Mees. & Wels. 707. ' London and Birmingham Railway Company v. Wilson, 6 Bing. (n. s.), 135 ; 8 Dowling, 40. See also, Southeastern Railway Company t>. Hebble- white, 4 Perr. & Da. 247. * Hebblewhite v. McMorine, 2 Railway Ca. 51. 85 1010 PAETICULAK PAKTNBRSHIPS. [BOOK V. SECTION n. SUITS IN EQUITY BETWEEN JOINT-STOCK COMPANIES AND STRANGERS. § 1165. The difficulties attendant upon suits in equity in -wliich joint-stock companies are concerned, arising from the great num- ber of persons whose interests are affected, have, as regards suits between the company and strangers, been greatly diminished by the power, now very generally granted to them, to sue and be sued in their registered name, or in the name of some public offi- cer ; and by the principle now recognized by the Court of Equity, that where the parties interested are numerous, and the suit is for an object conmion to them all, some of the body may maintain a bill on behalf of themselves and of the others.^ But the greater number of cases between these companies and strangers appear to be suits by strangers seeking relief from the Court of Chancery against an alleged abuse of the great powers conferred on some of these compames by the authority of Parliament. § 1166. In reference to the powers given to such of these com- panies as are incorporated by act of Parliament, Lord Cottenham made the following observations in Webb v. The Manchester and Leeds Railway Company : ^ " The powers are so large, — it may be necessary for the benefit of the pubhc, — but they are so large and so injurious to the interests of individuals, that I think it is the duty of every court to keep them most strictly within those powers ; and if there be any reasonable doubt as to the extent of their powers, they must go elsewhere dnd get enlarged powers ; but they will get none from me, by way of construction of their act of Parliament." § 1167. These observations indicate the general principle upon ' That, -where the parties interested are numerous, and the suit is for an object common to them all, some of the body may maintain a bill on behalf of themselves and of the others, is established. Lord Cottenham in Taylor V. Salmon, 4 Myl. & Cr. 142. See also, the Vice-Chancellor's observations in Long v. Yonge, 2 Sim. 385. » 4 Myl. & Cr. 120. CH. II.] JOINT-STOCK COMPANIES. 1011 wHch the Court of Chancery interferes, — that principle being restrictive, not mandatory. It has been said, indeed, that though the court will not directly and in terms compel the performance of an act upon motion, yet there are many cases in which the effect may be indirectly obtained, by an order merely restrictive ; ^ and the cases of RoMnson v. Lord Byron,^ and Lane v. Newdi- gate,^ have been cited as authorities for such a position. Upon these cases. Lord Brougham made the following observations in the case of Blakemore v. The Glamorganshire Canal Navigation : * " The cases which seem to sanction an order for abating are very few, and in peculiar circumstances. An obstruction to the king's highway, or in a harbor which is qUasi highway, has been ordered to be removed as a public nuisance, at the suit of the crown ; as in the case mentioned by Lord Hardwicke,^ to have been decided in Lord King's time (a case relating to a street near the Ex- change), and in the cases of the Bristol and Portsmouth harbors, and others, in the Court of Exchequer. The East India Company V. Vincent,^ where Lord Hardwicke decreed a wall to be pulled down, did not proceed upon the ground of nuisance, but agree- ment, and appears to have been, like Franklyn v. Tuton,' not a case of injunction, but a decree on a bill for specific performance. On the other band, in Ryder v. Bentham,^ Lord Hardwicke said he never had known an order to pull down made on motion, and but rarely by decree ; and Lord Thurlow, in another case,^ though pressed with the order made by himself in Robinson v. Lord By- ron,^" and urged to direct that a ditch should be filled up, as well as the further digging restrained, would only grant the prohibiting part of the motion, and refused the ordering part. ' I do not,' said he, ' like granting these injunctions on motion. This ditch may be a mile long. Take an order that he shall do nothing more till answer, or further order.' > This brings us then to Lane v. Newdigate,^^ which may be said to go to the very uttermost verge of aU the former cases, and indirectly to order something to be ' Eden on Injunctions, 331. ' 1 Bro. C. C. 588. = 10Ves. 192. 'iMyl. &K. 183.- ' Ambler, 160. » 2 Atk. 83. ' 5 Madd. 469. » 1 Ves. sen. 543. " 1 Ves. jun. 140. ■" 1 Bro. C. C. 588. " 10 Ves. 192. 1012 PAETICtTLAR PARTNERSHIPS. [BOOK V. done, by restraining the party from continuing to keep certain ■works out of repair. This case appears to have been ex parte, and not at all argued. Lord Eldon himself suggested the difficulty of making an order that the repairs should be done. Sir Samuel Romilly said it was no more, in effect, than Lord Thurlow had ordered in Robinson v. Lord Byron ; but Lord Eldon appears to have thought otherwise, and he refused to order as prayed, direct- ing it, however, in such a manner as to produce the same result, by making it ' difficult,' his Lordship said, ' for the defendant to avoid completely repairing the works.' " ^ And in that case (Blake- more V. The Glamorganshire Canal Navigation), it was held that, on an interlocutory application for an injunction, the court will not, unless in a very special case, grant the order in such a form as indirectly to compel some positive act to be done by the party enjoined. § 1168. In an earlier stage of the same case,^ Lord Eldon made the following observations respecting the interference Of the Court of Chancery with certain of these companies which have obtained the authority of Parliament : "I follow and adopt the expression of the Lord Chief Justice of the King's Bench, and I am glad to fasten myself in some measure on his great authority, and say that, when I look upon these acts of Parliament, I regard them all in the light of contracts made by the legislature, on behalf of every person interested in any thing to be done under them ; and I have no hesitation in asserting, that, unless that principle is applied in construing statutes of this description, they become instruments of greater oppression than any thing in the whole system of adminis- tration under our constitution. Such acts of Parliament have now become extremely numerous ; and, from their number and opera- tion, they so much affect individuals, that I apprehend those who come for them to Parliament do, in effect, undertake that they ' In Lane v. Newdigate, 10 Ves. 192, an order specifically to repair the banks of a canal, and stop-gates, and other works, was refused. But the effect was obtained by an order to restrain, impeding the plaintiff from nav- igating, using, and enjoying, by continuing to keep the canals, banks, or ■works out of repair, by diverting the water, or preventing it by the use of locks from remaining in the canals, or by continuing the removal of a stop- gate. ' Blakemore v. Glamorganshire Canal Navigation, 1 Myl. & K. 162. CH. II.] JOINT-STOCK COMPANIES. 1013 shall do and submit to whatever the legislature empowers and com- pels them to do ; and that they shall do nothing else ; — that they shall do and shall forbear all that they are thereby required to do and to forbear, as well with reference to the interests of the public, as with reference to the interests of individuals. It is upon this ground that applications are frequently made to stay operations, where a canal is in progress of formation. In such a case it may be of very little consequence to A. B. whether the canal is brought to his lands through the lands of C. D., or through those of E. F. ; nevertheless, if the legislature has said the canal shall be brought to the lands of A. B. from the lands of E. F., and not of C. D., this court would never permit the parties to bring the canal to the lands of A. B. from the lands of C. D.j the parties are obliged to submit to the contract which the legislature has made for them. The result is, that the contract shall be carried into execution ; and the king's subjects are compelled to submit to it, upon the notion that it will be for the public good ; but they are not compelled to submit to any thing except what the legislature has said shall be done. I have therefore stated, and I have already more than once acted upon the doctrine, that if a deviation from the line marked out by Parliament were attempted, I would (unless the House of Lords were to correct me), stop the further making of a •canal which was in progress ; and for this reason, that a man may have a great objection to a canal being made in one line, which he would not have to its being made in another ; and particularly he might feel that objection in a case where parties, after obtaining from the legislature leave to do one thing, set about doing another. It may, I admit, be of no greater mischief to A. B. that the canal should come through the lands of C. D., than through those of E. F. ; but to that my answer is, that you have bargained with the legislature that you shall do the act they have authorized you to do, and no other act. There is another consideration, to which, I ap- prehend, this court would feel very much inclined to attend. In- dividuals come to the legislature, and apply for a canal, or a railway act ; and the legislature says, you shall have a canal, or railway, to run from such a point to such another point, thereby exposing many persons to infinite inconvenience, and in a great measure destroying the comfort of those who have property upon the hne through which the canal, or railway, is to pass. I agree that par- ties must submit to that, if such be the will of the legislature ; but 85* 1014 PARTICULAR PARTNERSHIPS. [BOOK V. I say, that if individuals go to Parliament, and Parliament, on be- ing satisfied that the railway or canal can be made at an expense of, say ^100,000, closes with their appUeation, and forms them into a company, with power to raise money to that amount ; that authority is given them by Parliament in the full confidence that the sum which they have asked and obtained power to raise will enable them to execute the work. But, if a case arises in which parties have been enabled by Parliament to engage in an under- taking, on a representation that £100,000 would enable them to complete it, and if they find afterwards that £100,000 is not enough for that purpose, this court would, I think, find it very dif- ficult to allow them to proceed with the work till they had obtained further authority, and till they had satisfied Parliament that, though they had deceived the legislature in the first instance, they were entitled to obtain an extension of their powers. There is an agree- ment on the part of those who satisfy Parliament, that they can and will do such a work for such a sum of money ; and, upon the faith of that understanding, they get the authority to begin the work ; but if they deceive Parliament, what right have they to complain if courts of justice will not allow them to go on •ffith the deception ? " § 1169. In Lee v. Milner,' Alderson B. said : " These acts of Parliament have been called Parhamentary bargains made with each of the land-owners. Perhaps, more correctly, they ought to be treated as conditional powers given by Parliament to take the land of the different proprietors through whose estates the works are to proceed. Each landholder, therefore, has a right to have the powers strictly and literally carried into effect as regards his own land, and has a right also to require that no variation shall be made to his prejudice in the carrying into effect the bargain be- tween the undertakers and any one else. This I conceive to be the real view taken of the law by Lord Eldon in the case of Blake- more V. The Glamorganshire Canal Company,^ to which I was referred. In that case, that learned judge says, — ' It may be of little consequence to A. B. whether the canal is brought through the land of C. D. or of E. F. ; but if the legislature has said it shall be brought through the lands of E. F., the Court of Chancery would enjoin them from bringing it through the lands of C. D.' > You. & Coll. 611. ' 1 Myl. & K. 162. CH. II.} JOINT-STOCK COMPANIES. 1015 But this expression, I apprehend, means this : that only those lands of A. B. which the legislature has given them authority to take, namely, those adjoining the lands of E. F., shall be taken. This is, therefore, but the first branch of the proposition which I have stated : that the power given by Parliament as regar.ds the lands of A. B. shall be strictly and literally performed. But Lord El- don went further in that case, and directed issues to be tried. Those issues afford a proof of the second branch of my proposition. They were, ' whether the works done below and out of the plaintiff's lands would injure Mr. Blakemore's works.' But if the' proposi-. tion contended for now had been true, that no variation at all could be allowed, this issue would have been wholly unnecessary. In Mr. Agar's case, which was mentioned at the bar, one point, it was said, was, that the Regent's Canal Company could not, for the sum which they had to raise, complete their works : and if that were clearly made out, Lord Eldon says, in the case before re- ferred to, that a court of equity would probably grant an injunc- tion ; and I fully accede to that proposition, in case the fact were clearly made out, and arose either out of circumstances occurring after the passing of the act, or from a failure to raise the sum con- templated by the act ; for to take any man's land, where the whole work can never be performed, is clearly injurious to him, and a substantial breach of the condition on which the legislature granted the right to do it. So, again, if the termini were changed, and, instead of proceeding to some great town or city, the canal or rail- way were to terminate in some obscure village, the same result would follow. But I cannot accede to the proposition, that where the contract, as far as regards the land of the complaining land- owner, is exactly performedy any variation made at a distant point, and with the consent of the land-owner there, and producing no real injury to the complaining land-owner, ought to be the ground for an injunction, in a court of equity, to be granted at his application. That is the case here ; and, on this ground, I should be prepared to discontinue the injunction." § 1170. But in Salmon «< Randall,^ Lord Cottenham held that a person whose property is required by the commissioners appointed under the- local acts of Parliament for improving the town of Cam- bridge,! for the purposes of the act, is not entitled to restrain them ' 3 Mj'l. & Cr. 439. 1016 PAETICULAE PARTNERSHIPS. [BOOK V. by injunction from taking the steps prescribed by the acts for ob- taining possession of the property, until they have shown a suffi- cient fund in hand to satisfy the price which may be awarded to him, or until they shall have shown the means by which they pro- pose to, procure it. In this case the Vice-Ohancellor had granted an injunction to restrain the commissioners from proceeding to have the value of the property assessed before a jury. In the course of his judgment Lord Cottenham observed : " In support of his view, the Vice-Chancellor referred to cases before Lord Eldon, The Mayor of King's Lynn v. Pemberton,^ and Agar v. The Regent's Canal Company, which is mentioned in the note to that case. In the judgment of Lord Eldon, in The Mayor of King's Lynn v. Pemberton, we have a statement by Lord Eldon himself of the ground on which he proceeded in the case of Agar V. The Regent's Canal Company. Lord Eldon there said, ' In the ease of Agar v. The Regent's Canal Company, I acted on the principle, that where persons assume to satisfy the legislature that a certain sum is sufficient for the completion of a proposed under- taking, as a canal, and the event is that that sum is not nearly sufficient, if the owner of an estate through which the legislature has given to the speculators a right to carry the canal can show that the persons so authorized are unable to complete their work, and is prompt in his application for relief, grounded on the fact, this court will not permit the further prosecution of the undertak- ing.' ^ His Lordship then refers to another ease, which does not appear to me to have any application to the present. His words are, ' So, in another case, a Mr. Taylor filed a bill, stating that, at the time of subscribing, he expected that, when he had paid the whole of his instalments, he should find the canal complete ; but that, with the present fund, it would not pass to the east of Hampstead ; and the court thought him entitled to relief.' That must have been upon the ground of misrepresentation or fraud practised on the party. purchasing a share in the canal, and does not appear to me to be applicable. The case of Agar v. The Regent's Canal Company, however, undoubtedly lays down a prin- ciple which may be extremely important in its application ; and I apprehend Lord Eldon must have gone upon this ground, that where acts of Parliament impose certain severe burdens on indi- ' 1 Swanst. 244. '1 Swanst. 250. CH. II.] JOINT-STOCK COMPANIES. 1017 viduals, by interfering -with their private rights and private prop- erty, for the purpose of obtaining some great public good, if the court sees that the undertaMng cannot be completed, and there- fore that the public cannot derive that benefit which was to be the equivalent for the sacrifice made by the individual, the court will protect the individual from being compelled to make that sacrifice, under the circumstances, and until it appears that the public wUl derive the proposed benefit from it. It is impossible to suppose Lord Eldon could have meant that, after an act of Parliament has been passed giving certain powers, and authorizing a body of per- sons to carry on certain works, those against whose rights such works are to be carried into efiect are to come into this court and say, ' We wUl undertake to prove that you cannot, with the money which you have in hand, carry those works into efiect ; ' and that therefore, and immediately, in that state of circumstances, the court is to interfere. If that were so, it is quite obvious that not a single bill passes the legislature, authorizing the formation of a railway or a canal, but would be brought immediately into this court ; thus making it the^ duty of the court to investigate the probable expense of the speculation ; and if it appeared that the money which the parties had at the time would not enable them — as in those cases, generally, it would not enable them — to carry their speculation into effect, the court would be called upon to say they should be prohibited from going on with it altogether. The consequence would be, that this court would be assuming to itself a power which would be neither more nor less than the repealing of an act of Parliament. Lord Eldon, it is clear, could never have meant that ; and he must, therefore, be supposed to have put his decision on the ground I have referred to. In the case of The Mayor of King's Lynn v. Pemberton, it appears that the defendants were not working on any lands belonging to the plain- tiffs ; and Lord Eldon refused the injunction. One reason stated in answer to the apphcation was, that, although there appeared to be a deficiepcy of funds to enable the company to complete their work, they were applying to Parliament to get further powers, — not t'hat they had obtained further powers, fcut that they were ap- plying for them. Lord Eldon upon that observed, ' A pecuUarity in this case is the pending apphcation to Parliament.' I do not perceive how that could make any difference, because it is open to all companies, and to all parties, to apply to ParUament. If they 1018 PARTICULAR PARTNERSHIPS. [BOOK V. got a new act, tBat might alter tlie ease ; but how the circum- stance of the parties applying to Parliament was to give them a right which they would not have if they had not been making that application, I confess I do not understand. I cannot but think that, on further consideration. Lord Eldon was disposed- to limit, and felt the necessity of limiting, the proposition which he is sup- posed to have laid down in Agar v. The Regent's Canal Company. The question, then, is, assuming the rule to be as Lord Eldon is supposed to have laid it down in the case of Agar v. The Regent's Canal Company, what application it has to the present. The prin- ciple of that case, taking it in the way assumed, was, not that the, company had no power to purchase the land they proposed to pur- chase, but that they did not appear to have the means of carrying into effect the whole of the plan they had projected ; and that, therefore, the ground on which they acted in taking from the in- dividual the right of dominion over his own property could not be supported ; and the consideration failed. Now what analogy has that to the present case ? There is no one individual object to be accomplished here ; the powers of this act are for a variety of objects, all tending to the same effect. There is no one defined purpose to be carried into effect ; but the commissioners are, from time to time, to be at liberty to exercise their powers for the pur- pose of widening and improving the streets of Cambridge. Every purchase they make, every house they take down, is a distinct work in itself, and to that extent accomplishes the object. The principle, therefore, of Lord Eldon's observations, does not, as it strikes me, apply in the slightest degree to the present case. If Lord Eldon had laid it down, that wherever a public body of this description, wherever commissioners, or an incorporated company, propose to purchase or take any particular property, the court will see beforehand, before the contract is complete, before the sum to be paid is ascertained, not only that they have the means of pay- ing for the property so proposed to be purchased or taken, but that the money which they have, and mean to apply for the pur- pose, is raised according to a particular mode prescribed by the act of Parliament, then such a proposition would come up to the present case. But no such proposition is laid down by his Lord- ship ; and it would be quite a new principle to contend that a party who is under an obligation to sell his property, either under the provisions of an act of Parliament or otherwise, has a right to CH. II.] JOINT-STOCK COMPANIES. 1019 ask the purchaser, Where do you get the money from, with vrhich you are to pay for the property you are purchasing of me ? " ^ § 1171. The ordinary case of interference by injunction is where the company commit a direct breach of the contract they have made y^'ith. the legislature, as by attempting a deviation from the line marked out by Parhament,^ or taking land which they do not require for a bond fide purpose sanctioned by their act of Parliament.^ The cases in which the Court of Chancery has interposed by injunction to restrain a company from exceeding the powers conferred upon it by act of Parliament, and that even though irreparable mischief is not shown to result from the pro- ceedings of the company, are very numerous.* § 1172. In Bell v. The Hull and Selby Railway Company ,5 it was held, on motion to dissolve an injunction ex parte (which had been obtained on the ground of an alleged contravention of the 69th section of their act of Parliament), restraining the com- pany from prosecuting any works which would render the plain- tiff's wharf inconvenient for its purposes, until they had made another good and sufficient wharf, as convenient as the old wharf, or as near thereto as might be, that the injunction should be con- tinued until after the trial of an action at law, on the question whether the plaintiff was entitled to have a wharf, such as he ' In regard to partnerships in general, when a judgment has been ob- tained against the firm, a court of cha,ncery will compel the creditor to ex- haust the firm property before proceeding against that of the individual partners. In like manner, when a judgment has been recovered against an individual partner, chancery will compel the creditor to exhaust his private property before he can proceed against his ultimate share in the property of the firm, which can be only ascertained upon a final settlement of accounts. In Ohio, Walker's Introd. to Amer. Law, 218, 219. ' " I have stated, and I have already more than once acted upon the doc- trine, that, if a deviation from the line marked out by Parliament were attempted, I would (unless the House of Lords were to correct me), stop the further making of a canal which was in progress." Lord Eldon, in Blakemore v. Glamorganshire Canal Navigation, 1 Myl. & K. 163. ' Webb V. Manchester and Leeds Railway Company, 4 Myl. & Cr. 116. ' The River Dun Navigation Company v. The North Midland Railway Company, 1 Railway Ca. 135 ; Spencer v. The London and Birmingham Railway Company, id. 159 ; Lord Petre v. The Eastern Counties Railway Company, id. 462 ; Gordon v. The Cheltenham and Great Western Railway Company, 2 id. 800, 872. ' 1 Railway Ca. 616. 1020 PARTICULAE PARTNERSHIPS. [BOOK ^V. claimed, made for him; in wMch action it was tO be admitted that the company had made a jetty as represented on ' a model produced by them. That the court would not, in the mean time, permit the defendants to proceed with their works, unless it was clear that the court would have jurisdiction to deal with such works as it should think proper after & trial at law. That the plaintiff, in such a case, is entitled to an injunction restraining the prosecution of works, notwithstanding these works are so far ad- vanced that such a prosecution thereof would not be further pre- judicial to the plaintiff, and the only effect would be to restrain the company from completing the railway. § 1173. Although an injunction ex parte, upon a statement in which material facts are concealed or misrepresented, would, on a speedy application, be dissolved with costs, yet that is not a sufficient ground for a motion to dissolve that injunction, after a period of several months has elapsed, before notice of such motion is given ; nor will the question whether there has been such con- cealment or misrepresentation be taken into consideration on appeal from an order made by the court in which the injunction was granted, and by which order the injunction waS continued and the costs reversed.^ "' ''■'■' ■ - § 1174. An injunction ex' phrt6 may be granted, notwithstand- ing that the defendant has appeared to the bill.^ The' general rule is, that, after the defendant has appeared, a special injunction .can be moved for Only upon notice.* In Perry v. Weller,* a dis- tinction is taken between a gratis appearance and an appearance entered upon service of the subpoena ; but where the threatened mischief is imminent, and would be' irremediable, it seems the court has not req-uired notice, even though the appearance has been the consequence of a subpoena.^ ' 1 Railway Ca. 616. ' Bell V. The Hull & Selby Railway Company, 1 Railway Ca. 623, and the cases there cited. In Allen u. Jones, 15 Ves. 605, Lord Eldon observed^ that if a person about to commit waste, and against whom a bill was filed, cotald, by appearing the evening before the motion, prevent it, he would get two days' for cutting the timber. ' See the learned reporter's note to Acraman v. Bristol Dock Cbmpany, 1 Russ. & Myl. 321, and the cases there cited; see also Eden on Inj. 323. ' 3 Russ. 519. ' See the note to Acraman v. Bristol Dock Company, 1 Russ. & Myl. 321. CH. II.] JOINT-STOCK COMPANIES. 1021 § 1175. The Court of Chancery will also interfere by injunc- tion to restrain these companies from committing a breach of a private contract by means of which they have been enabled to obtain their Parliamentary powers. Thus, where a person acfeig on behalf of the subscribers to a railway, who were then soliciting a bill in Parhament, for the purpose of forming them into an in- corporated joint-stock company, entered into a contract with the trustees of a road, whereby it was stipulated, that, in considerar tion of the trustees withdrawing their opposition in Parliament and consenting to forego certain clauses of which they had in- tended to press for the insertion in the act, a formal instrument to the effect of the clauses should be executed under the seal of the company when incorporated, and the bill was accordingly allowed to pass unopposed and without the clauses, an injunction was granted, at the suit of the trustees, to prevent the company from violating the provisions contained in the omitted clauses.' In the same ease, it was also decided that an agreement to withdraw or withhold opposition to a bill in Parliament is not illegal;^ and that a court of equity will enforce a contract founded on such a consideration. § 1176. In the case of Stanley v. The Chester and Birken- head Railway Company,^ the Birkenhead and Chester Railway Company agreed with the plaintiff to give him, for fourteen acres of land, jE20,000, to be paid by instalments ; other parties, called the Chester and Birkenhead Railway Company, at the same time started a rival Une, and both companies went to Parliament, In committee it was agreed that' the merits of both lines should be referred to two members of the committee, and the solicitors for the rival companies at the same time signed an agreement, by which it was stipulated that the adopted company should take the engagements with landholders into which the rejected company might have entered ; and to this agreement the sanction of two members of each company, and also of the plaintiff, was subset ' Edwards «. The Grand Junction Kailway Company, 1 Myl. & Cr. 650. ' It has since been decided by the Court of the Exchequer Chamber, re- versing a judgment of the Court of Queen's Bench, that such an agreement entered into by a peer of Parliament is not illegal. Lord Howden ». Simp- son, 2 Per. & D. 731 ; 1 Kailway Ca. 347, » 9 Sim. 264; 3 Myl. &-Cr. 773. 86 1022 PARTICULAR PARTNERSHIPS. [bOOK V. quently obtained, and ivas signified by a -written memorandum , of approval. The Chester and Birkenhead Company was adopted, and was incorporated I by act of Parliament. Their line would require sixteen acres of the plaintiff's land in a different place. The plaintiff filed a bill against the Chester and Birkenhead Com' pany, stating these facts, and seeking to compel them to keep the agreement entered into by him with the Birkenhead and Chester company, and to restrain the Chester and Birkenhead Company from entering upon any lands belonging to him, till after payment of the first instalment, which was already due ; and from pro- ceeding, after subsequent instalments became due, till such instal- ments should have been paid. To this bill the . defendants put in a general demurrer, which was overruled, first by the Vice-Ghan- cellor, and then, on appeal, by the Lord Chancellor, the latter (Lord Cottenham), observing, that " the case, as it appeared on the face of the bill, was one of the grossest frauds he had ever seen attempted." ^ It is lamentable to observe, generally, that in cases of this nature, as weU as in matters of minor importance, the conduct of railway companies has been characterized by a profligate disregard of the plainest principles of justice : — " Dicere vix possis quam multi talia plorent, Et quot venales injuria fecerit agros." ^ It is to be hoped, therefore, that the Court of Chancery will con- tinue to watch with jealousy the proceedings of these societies. Few persons, it is apprehended, except those who are directly interested in such concerns, can fail to appreciate the spirit of the observations of the Lord Chancellor in this case, heretofore quoted.^ § 117T. Nor wiU the interposition of the court be confined to those cases where the contract broken is one by means whereof the company were enabled to obtain their Parliamentary powers. Thus, in a recent case,* where a lease of premises at the Swindon station, granted by the Great Western Railway Company to the ' 3 Myl. & Cr. 781. See also Doo v. The London and Croydon Railway Company, 1 Railway Ca. 257. " Juv. Sat. 14, 147. » Ante, § 1166. * Rigby V. The Great Western Railway Company, 10 Jur. 488. CH. n.] JOINT-STOCK COMPANIES. 1023 plaintiffs for ninety-nine years, at a nominal rent, and expressed to be in consideration of the expense incurred by the plaintiffs in erecting certain refreshment-rooms upon the premises, contained the following clause : " And it is hereby declared to be the inten- tion of the said company, and the understanding of the lessees, that, in consequence of the outlay to be incurred by them in erecting the said refreshment-rooms at Swindon, and preparing such other works as herein mentioned, the company shall give every facility to the said lessees for enabling them to obtain an adequate return, by means of the rents and profits to be derived from the said refreshment-rooms ; and that all traias carrying passengers, not being goods trains, or trains to be sent express or for special purposes, and except trains not under the control of the company, which shall pass the Swindon station, either up or down, shall, save in case of emergency or unusual delay arising from accident, stop there for the refreshment of passengers for a reasonable period of about ten minutes ; and that, as far as the company can influence the same, trains not under the control of the company shall stop there for a like purpose ; and the company hereby undertake not to do any act contrary to the above inten- tion." And the lease also contained covenants on the part of the lessees to maintain the refreshment-rooms in a suitable manner, and, on the part of the company, not to erect any refreshment- rooms upon the line other than those erectedjby the lessees and those at the terminal stations. The plaintiffs, after expending considerable sums upon the premises, granted an underlease tiiereof to G., with whom they covenanted for quiet enjoyment, and that they would, during the continuance of the term granted to him, do all acts necessary for enforcing the fulfilment by the company of the agreements in theb lease to the plaintiffs con- tained, and for giving full benefit and advantage to Gr. of the refreshment-rooms and premises thereby granted, in the same manner as if Gr. were the assignee of the covenants contained in the lease to the plaintiffs ; and G. was thereby empowered to proceed in the names of the plaintiffs, he indemnifying them against the costs, for the purpose of enforcing the fulfilment by the company of the agreements contained in their lease to the plaintiflfe. Certain trains, which differed in no respect from the other trains of the company, except in the rate at which they travelled, having passed the Swindon station by the direction of 1024 PARTICULAR PARTNERSHIPS. [BOOK V. ike compafiy, witbout stopping for the refreshnlent of the passen- gers, the plaiiitiffs, without consulting G., filed their bill against the companj, and moved for an injunction- It wis held, first, in aOcof dance with the decisioti of a court of laty in an action directed foi* the purpose of the motionj that the claufee in the plaintiflfe' leafie providing for the stoppage of the trains at Swin- doa was a legal covenant, binding upon the defendants ; seootodly^ that, as it would be impossible accurately to measure, in dSimages, the loss arising from a breach of the covenant, the caSe being one hi which the plaintiffs could only recover such speculative damages as a jury might give them in repeated actions against the com- pany, the court had jurisdiction to enforce the specific perform- {ai(Se of the covenant by injunction ; thirdly, that the circum- stance, that the lease contained covenants by the pMntifis which might possibly thereafter be broken, was not a grouna for refus- ing protection to them in the matter of the covenant in question ; fotirthlyj that the defendants, for the purposes of the motion, must be considered as private individuals, and could not be heard to excuse a breach of contract with the plaintifife upon the ground of convenience to the public ; and) fifthly, that the faot that the suit was instituted without the previous authority or subse- quent adoption of Qt. was not a bar to the plainti&' right to proceed therewith. § 1178. But t^hatever may be the equity of a plaintiff with regard to the enforcement of a contract, if, after he is well aware of the alleged right, he, by his conduct, has led a party to believe that he had no intention to enforce the performance of the agree- ment, the court will not interfere on his behalf by injunctioil-^ § 1179. A railway company will not be prevented by injunc- tion from takmg lands for purposes wafranted by their act, on the gtound that, previously to the filing of the bill, and before the necessity of taking it for such purposes was made known to the owners, the company had endeavored to take the lands for other purposes not so warranted.^ § 1180. Where a railway company, under the powers of their ' Greenhalgh v. The Manchester and Birmingham Railway Company, 1 Railway Ca. 68 ; 3 Myl. & Cr. 784. * Webb V. The Manchester and Leeds Railway Company, 4 Myl. & Ct. 116; 1 Railway Ca. 576. CH. II.]:': JOINTrSTOCK COMPANIES. 1035 act, purchased a subsisting lease in lands, and gave a notice to the plaintiff, the owner of the reversion in fee, for summoning a jury to assess the value of the fee-simple and inheritance thereof, and the' plaintiff filed his bill, insisting that the company were not authorized by their act to take more than a certain portion of the land, and praying an injunction, to restrain them from proceeding to assess the value of the excess beyond that portion, it was held by the Vice-ChanoeUor, that, inasmuch as the contemplated pro- ceedings would, if the, company were not authorized by their act to, take' the land in question, be. a nullity, arid inasmuch as the entry arid possession of the plaintifis as derivative lessees was law- ful, and no case being made of any sudden grievous injury done to the inheritance, the motion for the injunction must be refused, T^ith costs.i § 118,1. Where a railway company made excavations upon their own land, which were intended to produce the partial diversion of the stream of a navigable river, and necessarily occasioned the ob- struction of a private road, and the plaintiffs^- who were the owners of a fulling-mill, supplied with water from the river, and had a right of way over the private road, alleged that the proposed diversion of the stream was illegal under the powers of the act, and also that the company were interfering with the road without fulfilling the preliminary condition imposed by the railway act, it was held that, although the company were working on their own land, the plaintiffs must be considered to have had notice of the intended works of the company, and had, by an acquiescence for eighteen months, during which the company had expended a large sum of money on the works, precluded themselves from asking for the interposition of the court by injunction.^ , § 1182. Where the. contract, as regards the. land of the plain- tiff, is exactly performed, any variation made, at a, distant, point, and with the consent of the land-owner there, and producing no real, injury to the plaintiff's land, will not be groimd for an injunc- tion in a court of equity, to be granted at his application.^ In the ' Mouchet V. The Great Western Railway Company, 1 Railway Ca. 567. ^ lUingwbrth v. The Manchester and Leeds Railway Company, 2 Railway Ca. 187 ; see also, Aldred v. The North Midland Railway Company, 1 Rail- way Ca. 404. ' Lee V. Milner, 2 You. & Coll. 611 ; ante, § 1169. 86* 1026 PARTICULAR PARTNERSHIPS. [BOOK V. case of Eton College v. The Great Western Railway Condpany,! it was held by the Lord Chancellor, that, there being nothing Of a Parliamentary contract between the parties, the company were entitled to exercise the powers given by the act in any manner not therein prohibited. § 1183. Another important question of liability is, whether a company, after incorporation, are bound by any thing which may have passed, or by any contract which may have been entered into by the projectors of the company, before their actual incorpo- ration. In the case of Edwards v. The Grand Junction Railway Company,^ it was decided by Lord Cottenham, that an incorpo- rated company will be bound by the agreement of its individual members, acting before incorporation on its behalf, if the company has received the full benefit of the consideration for which the agreement stipulated on its behalf. § 1184. In the above case his Lordship said, " The railway company contend that they, being now a corporation, are not bound by any thing which may have passed, or by airsr contract which may have been entered into by the projectors of the com- pany, before their actual incorporation. If this proposition could be supported, it would be of extensive consequence at this time, when so much property becomes every year subjected to the power of the many incorporated companies. < The objection rests upon grounds purely technical, and those applicable only to actions at law. It is said that the company cannot be sued upon this con- tract, and that Moss entered into a contract, in his own name, to get the company when incorporated, to enter into the proposed contract. It cannot be denied, however, that the act of Moss was the act of the projectors of the railway ; it is, therefore, the agree- ment of the parties who were seeking an act of incorporation, that, when incorporated, certain things should be done by them. But the question is, not whether there be any binding contract at law, but whether this court will permit the company to use their powers under the act, in direct opposition to the arrangement made with the trustees prior to the act, upon the faith of which they were permitted to obtain such powers. If the company and the pro- jectors cannot be identified, still it is clear that the company have succeeded to, and are now in possession of, all that the projectors » 1 Railway Ca. 200. » I Myl. & Cr. 650. CH. It] JOINT-STOCK COMPANIES. 1027 had before; they are entitled to all their rights, and subject to all their liabilities. If any one had individually prcgected such a scheme, and in prosecution of it had entered into arrangements, and then had sold and assigned all his interest in it to another, there would be no legal obligation between those who had dealt with the original projector and such purchaser ; but in this court it would be otherwise. So here, as the company stand in the place of the projectors, they cannot repudiate arrangements into which such projectors had entered ; they cannot exercise the powers given by Parliament to such projectors in their corporate capacity, and at the same time refuse to comply with those terms, upon the faith of which all opposition to their obtaining such powers was withheld. The case of The East London Water Works Company v, Bailey^ was cited to prove that, save in cer- tain excepted cases, the agent of a corporation must^in order to bind the corporation, be authorized by a power of attorney ;■ but it does not therefore follow that corporations are not to be affected by equities, whether created by contract or otherwise, affecting those to whose position they succeed, and affecting rights and property over which they claim to exercise control. What right have the company to meddle with the road: at all ? The powers under the act give them the right ; but before that right was con- ferred, it had been agreed that the right should only be used in a particular manner. Can the company exercise the right without ■regard to such an agreement ? I am clearly of opinion that they cannot ; and, having before expressed my opinion that the con- tract is sufficiently proved, it follows that the injunction granted by the Vice-Chancellor is, in my opinion, proper,, and. that this motion to dissolve it must be refused with costs. The case of The Vauxhall Bridge Company v. Earl Spencer ,2,^ was cited for the trustees, and it certainly is a strong authority in favor of their claim ; Lord Eldon having in that case expressed an opinion, that the withdrawing opposition to a bill in Parliament might be a good consideration for a contract, and having recognized the right of an incorporated company to connect itself with a contract made by the projectors of the company before the act of incorporation. On the other hand. Dance v. Girdler ^ was cited for the railway 1 4 Bing. 283. ' 2 Madd. 356 ; Jac. 64. '. 1 Bos. & Pull. N. R. 34. 1028 PAUTICDLAR PARTNERSHIPS. [BOOK V. company ; but that was an attempt to make a surety liable beyond his contract ; and Sir James Mansfield, in his judgment in that case, relied much upon the want of identity between the society with whom the contract was made and the corporation ; and the question there was as to a legal liability, not as to an equitable right. It was contended for the railway company, that to enforce this equity would be unjust towards the shareholders of the com- pany who had no notice of the arrangement. To this, two obvious answers may be made ; first, that the court cannot recognize any party interested in the corporation, but must look to the rights and liabilities of the corporation itself; and, secondly, that there is nothing in the effect of the injunction inconsistent with the pro- visions of the act ; for, although the act provides that bridges shall not be less than fifteen feet in width, it does not provide that they shall not be made wider," The company might, under this act, clearly agree that this or any other bridge should be fifty feet wide." CHAPTER III. OF PART-OWNERS OF SHIPS. SECTION I. OF THE INTEREST OP PART-OWNERS. § 1185. A SHIP is a chattel of which the owners are possessed as tenants in common ; i though, if it be conveyed to them at one • 3 Kent Com. 39, 40, 151 ; Nicoll v. Mumford, 4 John. Cb. 522 ; s. c. 20 John. 611 ; Story Partn. §417; Harding v. Foxcroft, 6 Greenl. 77, 78 ; Thomdike v. DeWolf, 6 Pick. 120; Ffendh v. Price, 24 Pick. 13, 18, 19 ; Lamb v. Durant, 12 Mass. 56 ; Knox v. Campbell, 1 Barr (Penn.), 366 ; Maule, J., in Atkihson v. Fbster, 1 Man., Grang. & S. 714. Mr. Justice Story- remarks, that " property in a ship may be acquired by two or more persons, either by building it at thfeir own expense, or by purchase of a part thereof of the sole owner, or by a joint purchase of the whole of another person. But whether acquired by the joint building, or by a part purchase, or by a joint purchase, the parties, in the absence of all positive stipulations to the contrary, become entitled thereto as tenants in common, and not as joint tenants. In this respect it will make no difference whether the title is acquired at one and the same time, by and under one and the same instru- ment, or whether it is acquired at different times and under different instru- ments." Story Partn. § 41 7. See Knox v. Campbell, 1 Barr (Penn.), 366 ; 3 Kent Com. 40, 41. In Glover v. Austin, 6 Pick. 221, Parker C. J., re- marked, that " if two or three agree to have a ship built, they will be pre- sumed to be owners equally, unless some different proportion is agreed upon." In Ohl v. Eagle Ins. Co. 4 Mason, 390, Mr. Justice Story thought, that, if no other distinct shares appeared in the registry or bill of sale, the parties must, in the absence of all other proof, be presumed to hold in equal moieties. Abbott Ship. (Am. ed. 1846), 124, in note. If property is given to two as owners of a ship, it belongs to them as tenants in common, and not as partners. Thorndike v. DeWolf, 6 Pick. 120. See Harding «>. Foxcroft, 1030 PAKTICULAK PARTNERSHIPS. [BOOK V. time, and by one instrument, they are more properly joint tenants,: without benefit of survivorship.!^ But a ship, as well as otheR, chattels, may be held in strict partnership, with all the control in each partner incident to commercial partnerships.^ § 1186. It is the primary business of thp owners to let the ship out to freight, freight bemg the consideration-money agreed to be paid for the use or hu-e of a ship,^or, in a larger sense, for the burden of such ship.^ However, it frequently happens that the pari^owners work their own ship for the purposes of their own traffic, and in such case they are to be considered as partners in the adventure, though part-owners of the ship.* § 1187. We have seen that partners have a specific lien on the partnership stock, in respect of the balance due to them on the, 6 Greenl. 78 ; Jackson v. Kobinson, 3 Mason, 138 ; French v. Price, 24 Pick. 19, 20. ' It is said, however, by a learned writer, that if the entire ship is granted to a number of persons generally, they become joint tenants at law, and that the rule /us accrescendi inter mercatores locum non Jiabet, which is applicable to a ship, is to be enforced only in a court of equity. See Abbott on Ship- ping (Am. ed. 1846), 123. No grounds, however, are given for this opinion. See D. Scarlett, arguendo, Rex v. Collector of Customs at Liverpool, 2 Mau. & Sel. 223. N. B. The note stood thus in the first edition of this work. The author has since been happy to find that the doubt which is implied- from the above observations, as to the accuracy of the statement in Abbott, is likewise entertained by Mr. Justice Story. See that learned judge's edition of Abbott, p. 68, note (Am. ed. 1846, p. 123, 124, note). - 3 Kent Com. 154. This was assumed by the court in Lamb v. Durant, 12 Mass. 54. See 3 Kent Com. 40, 153, 154. In Harding v. Foxcroft, 6 Greenl. 77, Mellen C. J., said: " There may be a partnership as well as a cotenancy in a vessel. When a person is to be considered as a part-owner, and when as a partner, in a ship, depends on circumstances. The former is the general relation between ship-owners, and the latter the exception, and it is required to be shown specially." See 3 Kent Com. 155. In Phillips v. Purington, 15 Maine, 427, it was remarked by Shepley J., that the usual relation of part-owners of a vessel is that of tenants in common, " but," he added, "they may become partners." In Niooll v. Mumford, 20 John. 622, Piatt J., said: " A ship may undoubtedly be a subject of partnership, as an instrument of commerce, and also as an article for sale." See Seabrook v. Rose, 2 Hill Ch. (S. C), 555, 556. In French v. Price, 24 Pick. 19, it was remarked by Morton J., that " partners, as such, may be ship-owners, but generally part-owners are tenants in common." ^ Beawes,. 34 ; Montefiore, Freight * See Story Partn. §§ 441, 444 ; Nicoll v. Mumford, 20 John. 611. CH. III.] PART-OWNERS OF SHIPS. 1031 partnersliip acdount.^ In Doddington v. Hallet,^ Lord Hardwicke extended this doctrine to part-owners of ships, holding, in a case where one of several part-owflers died without paying his portion of the expense of building and fitting out a ship, that the pther part-owners had a specific lien on his share for the moneys which they had laid out on this account.' But Lord Eldon, after great consideration, overruled this decision of Lord Hardwicke, being of opinion that part-owners of a ship, being tenants in common, and not joint tenants, have not, by analogy to partners, a lien on the shares of each other.* In one of the two cases before Lord Eldon, the managing owners, being indebted to the other owners, on balance of accounts, for the freight and earnings of the ship, became bankrupts, and their assignees sold their shares. The other owners petitioned that the sum due to them might be paid out of the proceeds of the sale ; but Lord Eldon (^missed the petition. § 1188. But where part-owners join in the particular adventure ' Ante, § 125. « 1 Vez. 407. ' The doctrine of Lord Hardwicke was affirmed in Mumford v. Nicoll, on error, 20 John. 611, as best founded in principle and public policy and con- venience, thereby overruling the decision of Chancellor Kent in the same case, in chancery, 4 John. Ch. 522. And Mr. Justice Story says : " After all, there would seem to be intrinsic equity in the doctrine maintained by Lord Hardwicke ; and, as liens may arise either from express or implied agreements, it is but a reasonable presumption (in the absence of all con- trolling circumstances) that part-owners do not intend to i-ely solely upon the personal responsibility of each other to reimburse themselves for expenses and charges incurred upon the common property, for the common benefit, but that there is a mutual understanding that they shall possess a lien in rem." Story Partn. § 444. * Ex parte Young, 2 Yes. & Bea. 242 ; Ex parte Harrison, 2 Rose, 76. The judgment of Lord Eldon in these cases was regarded as containing the better opinion, in Patlon v. Schooner Randolph, Gilpin, 457, 460, and in Nicoll V. Mumford, 4 John. Ch. 522. A like doctrine prevailed in Braden r. Gardner, 4 Pick. 456; and in Merrill v. Bartlett, 6 Pick. 46, it was decided, thsit if- two persons built a ship together, to be owned by them in certain proportions, and one advances more than his proportion of the ex- penses, he has no lien on the ship for the balance due to him, but the interest of the other in the ship, at least to the extent of his advances, is subject to attachment at the suit of other creditors. See also, Abbott Ship. (Am. eflr. 1846), 143, 144. 1032 PARTICULAR PARTNERSHIPS. [BOOK V. on which the ship is sent, they are, as we have already observed, partners in the adventure, and are entitled, as amongst themselves, to all the privileges of partnership'. Although, therefore, they have no lien on the ship, they will have a lien on the other goods of the adventure, in respect of the balance due to them for the whole transaction, including the expenses of the ship.' This doct trine was fully confirmed in a modern case of great importance.^ The bankrupt, Foxton, jointly with one Locking, and the defend- ant, and some other persons, was part-owner of the ship Jane, a vessel belonging to Hull, engaged in a whale-fishery. Locking was the ship's husband. The usual mode of managing the cargo was as follows : — On the arrival of^the vessel at Hull from the fishery, the whalebone was taken into the possession of Locking, and sold by him for the part discharge of the expenses of the ship. The blubber was landed and deposited in a yard belonging to the defendant, in which were several warehouses, each of which was appropriated to a particular ship. One of these was rented from the defendant by the owners of the ship Jane, and appro- priated exclusively to that ship. The blubber was boiled in a boiling-house in the yard, by one Gilchrist, the defendant's fore- man, and for this a certain price per ton was charged by the defendant. The blubber, being then reduced into the shape of oil, was put into casks ; each part-owner's share was then weighed out, and placed separately in the warehouse rented by the owners of the ship. Gilchrist kept the keys of the warehouse, and lived in the yard. After each division, the practice was for him to deliver to the separate order of each owner the oil belon^ng to him, unless, previously to the delivery, he received a notification from the ship's husband that the part-owner's share of the dis- bursements had not been paid to him. In that case, he used to " Story Partn. §§ 408, 441. Cases of this sort are treated as constituting a quasi partnership, with reference to the intended voyage or adventure upon which the ship is to be employed, and therefore the repairs, outfits, and other expenses incurred to accomplish the enterprise are deemed to be made on joint account, and intended to be governed, as to rights and liens, by the rules of strict partnerships. Story Partn. § 444. See Nieoll v. Mumford, 4 John. Ch. 522 ; 3 Kent Com. 155, and note ; Gardner v. Cleveland, 9 Pick. 334. « Holderness v. Shackles, 8 Barn. & Cress. 612 ; 3 Man. & Kyi. 95 ; over- ruling, in this respect, Smith v. De Sylva, ante, § 323. CH. III.] PAKT-OWNERS OP SHIPS. 1033 detain the oil till the ship's husband's demand had been satisfied. In June, 1.825, the ship Jane arrived with a cargo, and the above, being the usual course, 'was followed on that occasion. Foxton's share was weighed and set apart for him, and about nine tons of it remained in the ship's warehouse at the time of his bankruptcy. In January, 1826, Gilchrist had orders from Locking, as the ship's husba,nd, not to deliver to Foxton the remaining oil, as his share of the disbursem^jits of the ship was not paid. In the same month Foxton : became a bankrupt, and there remained due from him at the time, of his bankruptcy, in respect of his share of the shipy the- sum of ^564. 12s. The plaintifis, as assignees of Fox- ton, formally demanded possession of the nine tons of oil from the defendant, offering to pay to him a sum which exceeded what he demanded in respect of rent and charges for boUing the blubber. The defendant, however, absolutely refused to receive tho moneys, or give up the oil ; and, accordingly, the plaintiffs brought their action of trover against him ; but the Court of King's Bench gave judgment for the defendant. Lord Tenterden said, this was not the case of a claim of lien on the share rf the ship, but a claim by persons, being pa^rtrowners of a ship, engaged together in an adventure ; and the subject-matter, in respect of which thia action was brought, was part of the proceeds of that adventure, namely, part of the oil which had been obtained on a fishing voyage. That it was clearly established as a general principle of law, that if one partner becomes a bankrupt, his assignees can obtain no share of the partnership effects, until they first satisfy all that is due from Jiim to the partnership. Supposing that the partners had in this case a hen originally, had any thing happened to take it away? If the accouat wgre taken as between Foxton and Locking generally, there could be no question that the bankrupt was indebted to the other part-owners ; for they were ultimately obliged to pay the expense which had been incurred before the bankruptcy. §. 1189. Owners are not bound to contiujxe their paction or partnership longer than they please ; ^ and, accordingly, it will be seen at a futtre page that one part-owner may sell his share with- out the privity of the others. We will here, however, advert to an observation made by MoUoy.^ " If," he says, " a ship be ' Molloy, De Jur. Mar. 222. '^ De Jur. Mar. 224. 87 1034 PARTICULAR PARTNERSHIPS. [BOOK V. broken up, or taken in pieces, ■with an intent to convert the same to other uses, and afterwards, on change of mind, she be rebuilt with the same materials, she is now another and not the same ship, especially if the keel be ripped up or changed, and the -whole ship be all at once taken asunder, and rebuilt ; there determines the partnership, quoad the ship. But if a ship be ripped up in parts, and taken asunder in parts, and repaired in parts, yet she remains still the same vessel, and not another ; nay, though she hath been so often repaired that there remains not one stick of the original fabric." SECTION n. OF THE ship's EEGISTKT. § 1190. It has been the policy of the British legislature ^ to eon- fine the privileges of our trade to ships built within the king's do- minions. The various commercial privileges of British ships are stated in the statutes 6 Geo. 4, c. 109, and the 7 Geo. 4, c. 48, consolidated by the stat. 8 & 4 Will. 4, e. 64, the present Navi- gation Act. By these statutes it is enacted, that the several sorts of goods therein enumerated, being the produce of Europe, shall not be imported into the United Kingdom, to be used therein, ex- cept in British ships, or in ships of the country of which the goods are the produce, or in ships of the country from which the goods are imported. § 1191. It is evident, that, in or^er to enforce these enactments, it should be clearly understood what is, strictly and legally speak- ing, a British ship. Accordingly, by the 12th section of the Nav- igation Act, no ship shall be admitted to be a British ship, unless duly registered and navigated as such ; and by the 3 & 4 Will. 4, c. 65, the Registry Act, no ship or vessel shall be entitled to any of the privileges or advantages of a British registered ship, until the person or persons claiming property therein shall have caused the same to be registered in virtue of the previous Registry Acts ^ On the geheral policy of the Navigation Laws, see Mr. Huskisson's Speech, May, 1826. CH. III.] PART-OWNERS OP SHIPS. 1035. (the 6 G-eo. 4, c. 110, and 4 Geo. 4, c. 41), or in manner there- inafter mentioned, and shall haye obtained a certificate of such registry from the .person or persons authorized to make such reg- istry and grant such certificate, as thereinafter directed. Amongst the matters most worthy of consideration in the last-mentioned en- actment, we shall direct our attention to the two following : 1. The circmnstances and mode of registry ; 2. The form of the certifi- cate. § 1192. Under the first head, the leading regulations, are, that no ship shall be registered, except such as are wholly of the buUd of the United Kingdom, or of the Isle of Man, or of Guernsey, Jersey, or the colonies, or such as shall have been condemned in any court of admiralty as prize of war, or in any competent court for breach of the laws regulating the slave-trade, — that the own- ers must be subjects of Great Britain, and not more than thirty- two in number, — that the registry be made in the United King- dom, by the collector and comptroller of the customs in any port, — that ships shall be registered at the port to which they belong, and that they shall be deemed to belong to some port, at or near which somo or one of the owners, who shall make and subscribe "the declaration required by this act, shall reside, -^ that at every port where roasters shall be made, a book shall be kept, which shall contain the particulars of the certificate, — and lastly, that the owners, previous to registry, shall make and subscribe the declaration set forth in the act.^ Of these regulations, we shall consider somewhat more at length those which relate to the number of owners, and the declaration to be taken by them. § 1193. As to the number of the owners. By the 33d section of the act it is enacted, that no greater number than thirty-two persons shall be entitled to be legal owners, at one and the same time, of any ship, as tenants in common, or be registered as such. It is .provided by the same section, that nothing therein contained shall afiect the equitable title of minors, heirs, legatees, creditors, or others, exceeding that number, duly represented by or holding from any of the persons, within the said number, registered as legal owners of any share or shares of such ship. It is further ^ The important statute regulations of the United States on these various heads will be found referred to in Abbott Ship. (Am. ed. 1846), 79-96, in notes. 1036 PAETiCULAR PARTNERSHIPS. [BOOK V. provided by the same section, that if it shall be proved, to the satisfaction of the commissioners of his Majesty's customs, that any number of peTsOns have associated themselves as a joint-stock company, for the purpose of owning any ship, or any number of ships, as the joint property of such company, and that such com- pany have duly elected or appointed any number, not less than three, of the members of the same, to be trustees of the property in such ship or ships so owned by such company, it shall be lawful for such ti'ustees, or any three of them, with the permission of such commissioners, to make and subscribe the declaration required by this act before the registry be made, except that, instead of statihg therein the names and descriptions of the other owners, they shall state the name and description of the company to which such ship or ships shall in such manner belong.^ § 1194. By the 32d section it is enacted, that the property in every ship, of which there are more than one owner, shall be taken and considered to be divided into sixty-four parts or shares, and the proportion held by each owner shall be described in the regis- try as being a certain number of sixty-fourth parts or shares ; and that no person shall be entitled to be registered as an owner of any ship, in respect of any proportion of such ship which shall not be an integral sixty-fourth part or share of the same. It is pro- vided by the same section, that, if it shall at any time happen that the property of any owner or owners in any ship cannot be re- duced by division into any number of integral sixty-fourth parts'or shares, it shall be lawful for the owner or owners of such fractional parts as shall be over and above such number of integral sixty- fourth parts or shares, into which such property in any ship can be reduced by division, to transfer the same one to another, or jointly to any new owner, by memorandum upon their respective bills of sale, or by fresh bill of sale, without such transfer being liable to any stamp duty ; provided that the right of such owner Or owners to such fractional parts shall not be aflFected by reason of the same not having been registered. It is further provided by the same section, that it shall be lawful for any number of owners named in Siich registry, being partners, to hold any ship, or any share of any ship, in the name of such copartnership, as joint • There is no correspondent provision in the laws of the United States as to the number of owners. CH. III.] PART-OWNERS OP SHIPS. 1037 owners thereof, without distinguishing the proportionate interest of each of such owners ; and that such ship, or the share or shares thereof so held in copartnership, shall he deemed and taken to be partnership property to all intents and purposes, and shall be gov- erned by the same rules, both in law and equity, as relate to and govern all other partnership property in any other goods,»chattels, and effects whatsoever.' § 1195. Upon the construction of this section, it has been held, that although the respective shares in the ship to which the partners are individually entitled need not be defined, yet, in order to maintain the interest of each partner against third per- sons, the names of all the partners must appear on the register, although the name of the partnership firm may also be added. On these grounds, Lord Langdale decided the case o%Slater v. WiUis.'^ There, the ship had been registered in the name of the partnership firm of A. & B., in which C. was a dormant partner. A. and B. sold and assigned the ship to certain persons, who, as it should seem, had no notice of C.'s partnership. C. afterwards becoming bankrupt, his assignees filed a bill against the vendees of the ship, praying a declaration that the assignment by A. and B. passed only what might be their interest in the ship (exclusive of that of C.),, after taking the partnership accounts ; but Lord Langdale was of opinion that the plaintiffs had no equitable title, and dismissed the bill. And it should seem, that, even as be- tween the partners themselves, the one whose name is not regis- tered will not be allowed to claim an equitable interest against the other, who is possessed of the legal title by registry in his name. In Curtis v. Perry ,^ Lord Eldon, after saying that he would give ' There is no correspondent provision in the laws of the United States as to ships owned in partnership. It has, however, been decided by the Su- preme Court of Massachusetts, that where a ship belongs to a partnership, and constitutes a part of the partnership property, each partner is competent to sell it, as he may any other partnership property, and give a good title accordingly. And a bill of sale by him in the name of all the partners under seal will be valid. Lamb v. Durant, 1 2 Mass. 54. It does not appear certainly by the report, but there can be no doubt that the vessel in ques- tion was registered in the name of all the partners at the time of sale. Ab- bott Ship. (Am. ed. 1846), 82, Judge Story's note (2). " 1 Beav. 3.i4. » 6 Ves. 739. Sed qu. 87* 1038 PAUTICULAK PARTNERSHIPS. [BOOK V. no opinion on the effect of the registry acts on trusts implied by law, observed, that if the question before him was to be consid- ered as one between the two partners, it was perfectly clear that the partner whose name was not registered could not be heard to say that he had any interest in the ships. And in Battersby v. Smithji Vhere three persons had agreed to purchase a ship, and that it should be registered in the name of two only, and the Other filed a bill for an account of the profits, a general demurrer was allowed, the agreement being held illegal. So, likewise, in another case, the Court of Admiralty refused to give possession of a ship's register to a person whose legal title was doubtful ; Lord Stowell observing, that he took the general rule to be, that the register and certificate are conclusive evidence of want of title as against tBbse not named therein.^ § 1196. Where, hoivever, the title to the freight and the title to the ship are separate, it seems clear that the contracts as to freight, both as against third persons and as between the partners themselves, will not be invalidated in equity by a breach of the laws of registration. Even where the ship and freight are com- prised in one bill of sale, it has been thought that courts of equity would sever the two parts of the transaction, and hold the con- tract good as to the freight, though invalid as to the ship.^ But whatever might be the decision of a court of equity under such circumstances, it has lately been held by Lord Cottenham, in the case of Davenport v. Whitmore,^ that where the title to the ship and the title to the freight are expressly severed by the contract of the parties, there an account may be decreed as to the freight in favor of a person who, for want of proper registration, may have no legal interest in the ship itself. In the case before Lord Cottenham, A. being indebted to certain ship-owners, it was agreed between the parties that he should work the ship, and pay his debt out of the freight, and that, as a further remuneration for his services, he should, upon payment of the debt, be entitled to an interest in the ship. Lord Cottenham held, that a bill for an account of the freight was clearly sustainable by A. against ' 4 Mad.l. 110. See Thompson v. Leake, 1 Madd. 39. •■' The Frances, 2 Dods. 423. ' Mestaer c. Gillespie, 11 Ves. 261. * 2 Uyl & Cr. 177. And see Douglass v. Rnssell, 4 Sim. 524. CH. III.] PART-OWNERS OF SHIPS. 1039 the owners, although A. might not be able to set up a claim to the ship, -which was not registered in his name. In this, the bill charged that the defendant had given the plaintiif credit on ac- count for the freight, though the account delivered was erroneous. " If a ship," said his Lordship, " be registered in the name of One, and he, admitting the ship to be the property of himself and another, places the freight to the joint account, and settles the account upon that footing, can he at a future time withdraw all such items from the joint account, because, at law, he alone can be recognized as owner of the ship ? " And his Lordship distin- guished this case from that of Battersby v. Smith,^ by observing, that in the latter case there was no allegation of any contract as to the freight, or that the amount of it had been placed to the plaintiff's account by the defendant ; the title to the account of the freight was made to depend upon and to grow out of the plaintiff's alleged title of part-owner. The rights of third per- sons, as against persons really interested in a ship, cannot, it is conceived, be affected by the Registry Acts.^ § 1197. Next as to the declaration. By the 13th section it is enacted, that no registry shall thenceforth be made, or certificate granted, until the following declaration be made and subscribed before the person or persons hereinbefore authorized to make such registry and grant such certificate respectively, by the owner of such ship, if such ship is owned by or belongs to one person only ; or, in case there shall be two joint owners, then by both .of such joint owners, if both shall be resident within twenty miles of the port or place where such register is required, or by one of such owners, if one or both of them shall be resident at a greater dis- , tance from such port or place ; or if the number of such owners or proprietors shall exceed two, then by the greater part of the number of such owners or proprietors, if the greater number of them shall be resident within twenty miles of such port or place as aforesaid, not in any case exceeding three of streh owners or pro- prietors, unless a greater number shall be desirous to join in mak- ing and subscribing the said declaration, or by one of such owners, if all, or all except one, shall be resident at a greater distance. The declaration is then set forth, containing the name of the ship, » Ante,§ 1195. ' See post, § 1222 ; as to bankruptcy, see anle, § 891, note at the end. 1040 PARTICULAR PARTNERSHIPS. [bOOK V. her port and master, the description of the ship, the iiame, occu- pation, and residence of every part-owner, with other particulars tending to prove them subjects of Great Britain, and concludes with a positive averment that no foreigner, directly or mdirectly, hath any share or interest in the ship.^ By the same section, if the ship belong to a corporate body, the oath is to be made by the secretary or other proper officer of such body, and instead of the names and descriptions of the owners, he is to state the name and description of the company or corporation to which the ship be- longs. By the 14th section it is enacted, that in case the required number of joint owners or proprietors of any ship shall not per- sonally attend to make and subscribe the declaration thereinbefore directed to be taken and subscribed, then, and in such case, such owner or owners, proprietor or proprietors as shall personally at- tend, and make and subscribe the declaration aforesaid, shall further declare that the part-owner or part-owners of such ship then absent is or are not resident within twenty miles of such port or place, and hath or have not, to the best of his or their knowl- edge or belief, wilfully absented himself or themselves, in order to avoid the making the declaration thereinbefore directed to be made and subscribed, or is or are prevented by illness from at- ' Abbott Ship. (Am. ed. 1846), 91. In order to tlie lawful registry of a ship, the Act of Congress of 1792, ch. 1, § 4, prescribes, that an oath or affirmation must be taken and subscribed by the owner before the proper officer. This oath or affirmalion, among other things, states the place of residence and citizenship of the party applying ; that he is the sole owner, or, if the fact be otherwise, the names of the part-owners, and their residence and citizenship ; and if such part-owners be residents in a foreign country, that they are consuls or agents, or partners in a house consisting of citizens of the United States, and trading with the United States. The oath or affirmation is to be taken before the collector or other officer authorized to make the registry. If there be two or more owners, it is to be taken by at least one of them ; and the other owners, who are resident within the -United States, must transmit to the collector who grants the certificate of registry a like oath or affirmation within ninety days after the same is granted. Id. §§ 4, 5. The oath or affirmation may be taken by the party before the same or any other collector, or a judge of the Supreme or District Court of the United States, or of a superior court of original jurisdiction in any one of the States. Id. § 5. If such oath or affirmation be not transmitted within the ninety days, the certificate of registry is forfeited and void. Id. § 5 ; 1 U. S. Stat, at Large, 289, 290. See The Venus, 8 Cranch, 253. CH. in.] PAET-OWNEKS OF SHIPS. 1041 tending to make and subscribe the said declaration. By the 32d section it is enacted, that, upon the first registry of any ship, the owner or owners, who shall make and subscribe the declaration required by this act before registry be made, shall also declare the number of such parts or shares then held by each owner, and the same shall be so registered accordingly. § 1198. At the time of obtaining the certificate, a bond must be executed by the master, and such of the owners as personally at- tend, to be approTed of and taken by the person authorized to make the registry, in a penalty varying in proportion to the burden of the ship, but never exceeding £1,000 ; but if the master cannot attend at the time of the registry, by reason of the absence of him- self and the ship at some other port, a separate bond may be given by him at the port where the ship may then be, which shall be transmitted to the port where the ship is to be registered, and the two bonds shall be of the same efiect as if the parties had bound themselves jointly and severally in one bond ; and every such bond is to be as a security that the certificate shall not be lent, sold, or disposed of, but solely used for the service of the ship for which it is granted ; and in case the ship be lost, captured, or destroyed, or otherwise prevented from returning to the port to which she be- longs, or shall have forfeited the privileges of a British ship, or have been condemned for iUicit trading, or have been taken in ex- ecution for debt and sold accordingly, or sold to the crown, or have been registered de novo, the certificate, if preserved, shall be dehv- ered up, within one month after the arrival of the master in any port in his Majesty's dominions, to the collector and comptroller of some port in Great Britain, or the Isle of Man, or of the British plantations, or to the governor and so forth of Guernsey and Jer- sey ; or if' any foreigner shall have purchased or become entitled to the whole or a part of the ship, the certificate must be given up at the time and place mentioned in the statute, which vary accord- ing to the different circumstances therein mentioned.^ § 1199. The certificate^ specifies the name, occupation, and residence of every owner, in the proportions mentioned on the ' The correspondent provisions in the laws of the United States -will be fonnd in Act of Congress, 1792, ch. 1, § 7 ; 1 U. S. Stat, at Large, 290, 291 ; Abbott Ship. (Am. ed. 1846), 93, note (1). » 3 & 4 Will. 4, c. 55, s. 2. 1042 PARTICULAR PARTNERSHIPS. [BOOK V. back of it, the name of the ship, the place to which she belongs, her tonnage, the name of the master, the time and place of build- ing or of condemnation, the name of the surveying officer, the number of decks and masts, the length, breadth, height between decks, if more than one, or the depth of the hole, if only one deck, whether rigged with a standing or running bowsprit, the descrip- tion of her stern, whether carvel or clincher built, and gallery and kind of head, if there be any. And on the back are indorsed the names of the several owners, with the number of sixty-fourth shares held by each.^ SECTION III. OF THE ship's TRANSFER. § 1200. By the 31st section of the Registry Act, — When and so often as the property in any ship,^ or any part thereof, belong- ing to any of his Majesty's subjects, shall, after registry thereof, be sold to any other or others of his Majesty's subjects, the same shall be transferred by bill of sale or other instrument in writing, containing a recital of the certificate of registry of such ship, or the principal contents thereof, otherwise, such transfer shall not be valid or effectual for any purpose whatever, either in law or in equity ; ^ provided always, that no bill of sale shall be deemed void ' See Act of Congress, 1792, ch. 1, §§ 9, 10; 1 U. S. Stat, at Large, 291, 292 ; Abbott Ship. (Am. ed. 1846), 90, note (1). ' The words of the act throughout are " ship or vessel." ' The Registry Act of the JUnited States requires, that, upon every trans- fer of a registered ship, in whole or in part, to any other citizen, there shall be some instrument of writing in the nature of a bill of sale, which shall recite at length the certificate of registry, otherwise the ship shall be incapa- ble of being registered anew. Act of 1792, ch. 1, § 14; 1 D. S. Stat, at Large, 294, 295. But the act does not invalidate any contract of conveyance made between the parties if the certificate is not recited ; but leaves such contract to be decided upon according to the general principles of the com- mon law. Wendover v. Hogeboom, 7 John. 308 ; Hatch v. Smith, 5 Mass. 42, 53 ; Weston u. Penniman, 1 Mason, 306 ; Sharpe v. United States Lis. Co. 14 John. 201 ; Vinal v. Burrill, 16 Pick. 401. To entitle ships to be registered and to be deemed ships of the United States, with the privileges CH. III.] PART-OWNERS OF SHIPS. 1043 by reason of any error in such recital, or by the recital of any former certificate of registry instead of the existing certificate, pro- and exemptions of such ships, it ^s necessary that the transfer should be made according to the form prescribed in the Registry Acts ; that is to say, that it should be by some instrument in writing, -which shall recite at length the certificate of registry ; but the acts do not declare any other transfer void and illegal, but simply deny to ships transferred in any other manner the privileges of ships of the United States, and deem them alien or foreign ships. Hatch v. Smith, 5 Mass. 53 ; Abbott Ship. (Am. ed. 1846), 96, in note. In this respect, our acts differ from the English Registry Acts which declare, that all transfers or agreements for transfers, made without reciting the certificate of registry at length in the bill or instrument of sale or agree- ment for transfer, shall be utterly void to all intents and purposes whatsoever. Weston V. Penniman, X Mason, 316, 317. In Ohl v. Eagle Ins. Co., 4 Ma- son, 173, Mr. Justice Story said: "A bill of sale is indispensable to pass the title to a ship under our Registry Act of 1792, ch. 1, § 14, so as to pre- serve her American character." See Vinal v. Burrill, 16 Pick. 401. Aside from our Registry Acts, Mr. Justice Story held that a bill of sale is neces- sary to pass the title of a ship. " But this," he said, " does not depend upon any enactment peculiar to our municipal law ; but it grows out of the gen- eral maritime law, which requires such a document as the proper muniment of the title of a ship." Weston v. Penniman, 1 Mason, 317. He held the same in Ohl v. Eagle Ins. Co., 4 Mason, 172. See The Sisters, 5 Rob. 155 ; Ex parte Halkett, 19 Ves. 475. But in Bixby v. Whitney, 8 Pick. 86, it was decided that a bill of sale is not necessary to transfer the property in a ship. The same was also held in Vinal v. Burrill, 16 Pick. 401. See also, to the same effect, Lamb v. Durant, 1 2 Mass. 54 ; Taggard v. Loring, 16 Mass. 336 ; Wendover v. Hogeboom, 7 John. 308 ; Leonard v. Hunting- ton, 15 John. 298 ; Thorn v. Hicks, 7 Cowen, 698, 699 ; 3 Kent Com. 130, 131. If ^ registered ship is sold or transferred to a foreigner, by way of trust, confidence, or otherwise, the sale or transfer must be reported to the custom- house in the manner prescribed by the act, otherwise the ship will be for- feited. But if the ship be owned in parts, the shares of the owners who are conusant of the sale or transfer only are forfeited. Act of 1792, ch. 1, § 16 ; 1 U. S. Stat, at Large, 295, § 16 ; see also § 7, and 1 Wash. C. C. 226 ; Ab- bott Ship. (Am. ed. 1846), 96, in note. Upon the entry of every registered ship from any foreign port, the register and other ship's documents are to be deposited with the collector of customs. Act of 1799, ch. 128, § 63. Upon such entry, an oath or afiirmation is to be made, and the register contains the names of all persons who are then owners of the ship, or, if any part has been sold or transferred since the granting of the register, that such is the case, and that no foreigner hath, to the best knowledge and belief of the party, any share, by way of trust, confidence, or otherwise, in such ship. This oath or affirmation is to be taken by the owner or par^owner if the 1044 PARTICULAR PARTNERSHIPS. [bOOK V. vided the identity of the ship therein intended be effectually proved thereby. § 1201. By the 34th section it is enacted, that no bill of sale ^ shall be valid and effectual to pass the property in any ship, or in any share thereof, or for any other purpose, until such bill of sale shall have been produced to the collector and comptroller of the port at which such ship is already registered, or to the collector, &c,, of any other port at which she is about to be registered de novo, as the case may be, nor until such collector, &c., respec- tively shall have entered in the book of such last registry, in the one case, or in the book of such registry de novo, after all the requisites of law for such registry de novo shall have been duly complied with, in the other case, of such ship, as the case may be (and which they are respectively thereby required to do upon the production of the bill of sale for that purpose), the name, residence and description of the vendor or mortgagor, or of each vendor or mortgagor if more than one, the number of shares transferred, the name, residence, and description of the purchaser or mortgagee, or of each purchaser or mortgagee if more than one, and the date of the bill of sale, and of the production of it : and further, if such ship is not about to be registered de novo, the collector, &c., of the port where such ship is registered shall, and , they are thereby required to indorse the aforesaid particulars of such bill of sale on the certificate of registry of the said ship, when the same shall be produced to them for that purpose, in manner to the effect following, namely: — " Custom-house \_port and date ; name, residence, and descrip- tion of vendor or mortgagor'], has transferred by \hill of sale or other instrumenf] , dated [date ; number of shares'] , to [name, residence, and description of the purchaser or mortgagee'] . "A. B., Collector. " C. D., Comptroller." And forthwith to give notice thereof to the commissioners of cus- entry be at the port where they reside, otherwise by the master. A refusal to take such oath or affirmation depriTes the ship of her privileges as a ship of the United States. Act of 1792, ch. 1, § 17 ; 1 U. S. Stat, at Large, 295, § 17. See further, in reference to the United States regulations as to the transfers of ships and granting new registers, Abbott Ship. (Am. ed. 1846), 96-98, in notes. ' " Or other instrnment in writing," passim. CH. III.] PART-OWNERS OF SHIPS. 1045 toms ; and in case the collector, &c., shall be desired so to do, and the bill of sale shall, be produced to them for that purpose, then the said collector, &c., are thereby required to certify, by indorsement upon the said bill of sale, that the particulars before mentioned have been so entered in the book of registry, and indorsed upon the certificate of registry as aforesaid. § 1202. By the 35th section it is enacted, that when and so soon as the particulars of any bill of sale, by which any ship or any share or shares thereof shall be transferred, shall have been so entered in the book of registry as aforesaid, the said biU of sale shall be valid and effectual to pass the property thereby intended to be transferred, as against all and every person and persons whatsoever, and to all intents and purposes, except as against such subsequent purchasers or mortgagees who shall first procure the indorsement to be made upon the certificate of reg- istry of such ship, in manner thereinafter mentioned. § 1203. The 36th section enacts, that when a bill of sale has been entered for any shares, thirty days shall be allowed for in- dorsing the certificate of registry, before any other bill of sale for the same shall be entered ; but in case no person shall produce the certificate of registry for the purpose of being indorsed within the said space of thirty days, then it shall be lawful for the col- lector and comptroller to indorse upon the certificate of registry the particulars of the bill of sale, to such person or persons as shall first produce, the certificate of registry for that purpose, it being the true intent and meaning of this act, that the several purchasers and mortgagees of such ship, share, or shares thereof, when more than one appear to claim the same property, shall have priority, one over the other, not according to the respective times when the particulars of the bill of sale by which such prop- erty was transferred to them were entered in the book of registry as aforesaid, but according to the time when the indorsement is made upon the certificate of registry. § 1204. By the 11th section it is enacted, that whenever such owner or owners shall have transferred all his or their share or shares in such ship, the same shall be registered de novo before such ship shaU sail or depart from the port to which she shall then belong, or from any other port which shall be in the same part of the United Kingdom, or the same colony, plantation, island, or territory, as the said port shall be in. 88 1046 PARTICULAR PARTNERSHIPS. [BOOK V. SECTION IV. OP THE MUTUAL BIGHTS OF PAKT-OWNEKS. § 1205. In most countries it seems to be in the power of the majority, either in number or value, of the part-owners to send the ship on a voyage.^ In England, the majority in value are entitled to send out the ship " upon any probable design," subject to certain restrictions in favor of the rights of the dissentient minority.^ Those restrictions are enforced by the Court of Ad- miralty, which has authority to arrest and detain a ship upon the application of a part-owner who dissents from her intended em- ployment, until security be given by the other part-owners to the full value of his share. The practice has in some earlier in- stances been subject to some doubts ; but it has entirely survived those doubts, and it has been formally recognized by the courts of common law and equity.^ In matters of this nature, the Court ' Story Partn. §§ 428-434. ^ Beawes, 53 ; Abbott Ship. (Am. ed. 1846), 127 ; Steambbat Orleans v. Phoebus, 11 Peters, 175, 183 ; Stoiy Partn. § 428 ; 3 Kent Com. 151, 152; Willings V. Blight, 2 Peters Adm. 288. And in Steamboat Orleans v. Phce- bus, 11 Peters, 183, it was said by Mr. Justice Story, that "the minority of the owners may employ the ship in like manner, if the majority decline to employ her at all," and the minority are in such case " in like manner, to be entitled to all the profits of the voyage or adventure, and are to bear all the expenses and outfits and risks thereof." Story Partn. §§427, 428, note (3). If the interests of the owners be equal, and they diflfer about the em- ployment of the ship, one half being in favor of employing her, and the other opposed to it, in that case, it seems, the willing owner may, upon giv- ing the usual security, have the ship delivered to him for employment. Story Partn. § 435 ; Davis v. Brig Seneca, C. Court U. S. for Third Cir- cuit, April Sessions, 1829, reported 18 Amer. Jur. 486, 490 ; Abbott Ship. (Am. ed. 1846), 131 ; 3 Kent Com. 152, 153. ' The Apollo, 1 Hagg. 306; Strelly u. Winson, 1 Vern. 297; Anon. 2 Ca. Ch. 36 ; 3 Kent Com. 151, 152 ; Abbott Ship. (Am. ed. 1846), 126-130; Story Partn. § 428. Few cases on this point seem to have arisen in the United States. In Williams v. Blight, 2 Peters Adm. 288, where the appli- cation was made on behalf of a majority of the owners in interest to give se- curity for the safe return of the vessel, and to proceed with her on a voyage, CH. III.] PART-OWNERS OP SHIPS. 1047 of Admiralty is not merely ministerial, for it compels the party authoritatively to find security ; it likewise compels him to pay the sums stipulated m the bond given for the security.^ When a loss has happened, appUcation may be made by the minority to have the bond declared forfeited. But the court will not always wait until an actual loss has been proved. It will sometimes de- clare the bond to be forfeited if the vessel does not return within a certain time ; and if the vessel returns within that time, will dismiss the cited parties from the effect of the momtion.^ § 1206. In practice the bond is frequently, perhaps generally, conditioned for the return of the vessel to a particular port. The form, however, as given in Abbott,^ omits the mention of any par- ticular port, and merely speaks of the return ; and Sir Christopher Robinson expressed a doubt whether all bonds of this nature should not be limited to that extent. " When a vessel," he said, " is within the protection of the country to which she belongs, she is in her general home, and the parties are restored, as to any legal remedies, to the situation in which they stood before the departure of the vessel." In the case which gave rise to this remark, it appeared that a vessel which had been bound to return to a par- ticular port, being damaged by storms, was carried to another port in Great Britain, and there arrested in suits of salvage and wages ; but the court held, that, while the vessd was within the jurisdiction of the court, safe and unsold, an application to have the bond forfeited was premature.* § 1207. In Rodick v. Hinckley,^ the owner of the minor part the learned judge of the District Court of Pennsylvania expressed a clear opinion in favor of the jurisdiction, and decided in favor of the application. And he added, that it had never been deiided in our courts whether the minority might not be compelled to sell, and cited many of the foreign au- thorities on the point. See also, 2 Brown Civ. and Adra. Law, 131. In Buddington v. Stewart, 14 Conn. 404, it was held that after the attachment of the interest of a holder of a minor part of a ship, if the other owners are desirous of sending her on a voyage, they may, upon a proper applica- tion, be compelled to give security for the interest acquired by the attach- ment. ' The Apollo, supra ; Story Partn. § 428. " The Anne, and The Waterhen, 2 Hagg. 279, cited. 'Abbott Ship. (Am. ed. 1846), 805. * The Margaret, 2 Hagg. 275. ' 8 Greenl. 274. 1048 PARTICULAR PARTNERSHIPS. [BOOK V. of a vessel having refused to consent to a proposed voyage, his share was appraised, and a bond given to him by the other owners, conditioned that, at the end of the voyage, which was to the West Indies and back, they would restore him his share of the vessel, unimpaired, or, if she should be lost, would pay him the appraised value. Instead of returning her directly from the West Indies, they employed her several months in trade from thence to south- em ports and back, and thence home ; and it was hereupon held by the court, that the obligee in the bond might sustain an action upon it for the detention of the vessel ; and that the rate for which she might have been chartered was a reasonable rule for the esti- mation of damages.^ § 1208. When a bond is required and taken under the circum- stances which we have mentioned, the dissentient part-owners bear no portion of the expenses of the outfit, and are not entitled to a share in the profits of the under,taking ; ^ but the ship sails wholly at the charge and risk, and for the profit, of the others.^ It may happen that the dissentient part-owners forbear to take these steps in the Court of Admiralty ; * but, in such case, they ' In this case Mullen C. J., remarked: "It is said that the defendants were tenants in common of the vessel with the plaintiff, and, as such, had a legal right to use the vessel as they did. This doctrine, if sanctioned, would at once render the jurisdiction of a court of >admiralty, in cases of this nature, little more than nominal. The design of the law in requiring a bond to secure the rights of a recusant owner would be easily evaded, if the other owner or owners, having given the bond and sent the vessel to sea, could employ her in their own service as long as they should please, instead of performing and terminating the specified voyage according to the condition of the bond. The principle of the maritime law, upon which the bond in question was required and given, is a salutary one ; and it is our duty to see that it is fairly carried into execution by those who avail themselves of its application." 8 Greenl. 27 7, 278. ' In Willing ii. Blight, 2 Peters Adm. 289, an opinion was intimated, that no freight was legally demandable by a recusant owner, who would neither sell at a reasonable appraisement or make advances for outfit ; but his share of the vessel should be secured to him, that, as he gains no profit, he may incur no loss. See Story Partn. § 431. It is nowhere affirmed that the minority are entitled to compensation for any diminution in the value of the vessel by the mere wear and tear of the voyage or adventure. Story Partn. §431. " Abbott Ship. (Am. ed. 1846), 127 ; Story Partn. § 418 ; S Kent Com. 152 ; and see Knight v. Parry, 1 Show. 12 ; Davis v. Johnston, 4 Sim. 539. * It was held, in Gould v. Star;ton, 16 Conn. 12, that if the dissenting part- CH. HI.] PART-OWNERS OF SHIPS. 1049 should expressly notify their dissent to the others, and, if possible, to the merchants also who freight the ship ; for although it may be doubtful whether the Court of Chancery would give relief to a part-owner in respect of the loss of a ship sent to sea without his assent, yet, if a part-owner expressly notify his dissent, that court will not compel him to contribute to a loss.^ § 1209. The Court of Admiralty having jurisdiction to detain a vessel, at the instance of one part-owner, until the others give security to the extent of their shares, a fortiori, it must have such a jurisdiction to detain a vessel in a suit instituted by the real owner against a mere wrong-doer.^ But this court, according to the common law of England, has no jurisdiction to compel the sale of a part-owner's interest under any circumstances.* In Steam- boat Orleans v. Phoebus* Mr. Justice Story remarked, that " the jurisdiction of courts of admiralty, in cases of part-owners having unequal interests and shares, is not and never has been apphed to direct a sale, upon any dispute between them as to the trade and navigation of a ship engaged in maritime voyages." A strong disposition has, however, been manifested in the United States to assert the right and duty of courts of admiralty to decree a sale of a ship in cases of an equal division of opinion and interest in reference to undertaking a particular enterprise.^ Even though owner does not apply for security, he is supposed to consent to the employ- ment of the ship, and b liable for his share of the expenses, and entitled to a share of the profits. ' Horn V. Gilpin, Ambl. 255. ^ Per Lord Tenterden, In re Blanshard, 2 Barn. & Cres. 244. The cases and points of practice under this head of jurisdiction are stated in Abbott Ship. (Am. ed. 1846), 131, 132, in notes; 3 Kent Com. 152. •* Ouston V. Hebden, 1 Wils. 101. See, Story Partn. § 438 ; 3 Kent Com. 152, 153 and note. * 11 Pettrs, 183. ' Davis V. Brig Seneca, and Levely, part-owner, Circuit Court of the United States for the Third Circuit, April Sessions, 1829, reported in 18 Amer. Jurist, 486., In this case the parties were parl>owners of a vessel, having equal interests in her, each willing and desirous to employ her in navigation, but upon his own terms, and neither willing to do so upon any other. All prospect of compromise was hopeless. A sale was decreed by Mr. Justice Washington, on appeal from a contrary decree of Mr. Justice Hopkinson in the District Court. The opinion of Mr. Justice Hopkiuson is reported in Gilpin, 10. Mr. Justice Washington admitted that the English 88* 1050 PARTICULAR PARTNERSHIPS. [BOOK V. the Court of Admiralty has power to order, in the cases we have mentioned, security to be given on the footing of the respective shares, when the amount of these shares is apparent, still it has not that power when the amount is a subject of dispute. ' In such case the Court of Chancery will interfere, and by injunction re- strain the sailing of the ship, till the amount of the shares, for which the security is to be given, shall be ascertained.^ § 1210. The Court of Chancery will likewise adjust the equita- ble rights of part-owners after the ship has been arrested by process out of the Court of Admiralty. In a late case, where a ship, upon which one part-owner had expended a large sum of money, had been arrested by the other part-owner, who had taken security for his share, the Court of Chancery held that, though in consequence of the arrest the latter had precluded himself from sharing in the Admiralty had no such jurisdiction. He considered the case of Ouston v. Hebden, I Wils. 101, and of The Apollo, 1 Hagg. 306, as conclusive, both against the jurisdiction and the authority of that court. But he proceeded upon broader ground, and held that the judicial power of the United States under the constitution, and the jurisdiction of the District Courts under the 9th section of the Judiciary Act of 1789, embrace all cases of a vnaritime nature, whether they be particularly of admiralty cognizance or not ; and that this jurisdiction, and the law regulating its exercise, are to be sought for in the general maritime laxo of nations, and are not confined to that of Eng- land. He regarded the 5lh and 6th articles of the Marine Ordinance of Louis XIV. and Valin's Commentary thereon (torn. I. p. 585) to be evidence of the marine law of nations, that the court could award a sale of the ship, ■when the part-owners were equally divided, as in that case; and he held that, where the part-owners are equally divided in opinion, in reference to a particular enterprise, projected by one moiety and objected to by the other, a sale of the vessel should he decreed. A sale was decreed, to effect a divis- ion, upon the petition of one part-owner of a vessel against another, in the District Court of South Carolina. Skrine v. Sloop Hope, Bee Adra. 20. It was considered in the District Court of Pennsylvania as still an unsettled point, whether the court might not compel a sale of the shares of the minor- ity, who unreasonably refused to act, in Willings v. Blight, 2 Peters Adm. 288. Mr. Justice Story strenuously contends for the lawful exercise, by the courts of admiralty, of the power to decree a sale of the vessel, on a disa- greement of the part-owners of a ship upon a particular voyage, whether the ship be owned in equal or unequal shares. See Story Partn. §§ 435- 439 and the discussion and cases in the notes; 3 Kent Com. 153, 154, and notes. ' Haley v. Goodson, 2 Mer. 77. But the court will decline to interfere if the plaintiff has been guilty of delay. Christie v. Craig, 2 Mer. 137. CH. III.J PART-OWNERS OF SHIPS. 1051 profits of the voyage, he was, nevertheless, bound to pay his pro- portion of the expenses of the repairs and outfit incurred previously to the arrest ; the whole of those expenses, or the benefit of them, having been included in the sum for which the security had been given. 1 § 1211. With a view to give every encouragement to the equip- ment and employment of ships, the law of England enables a ma- jority of part-owners, in the manner and under the restrictions which have been mentioned, to employ the ship even against the will of the minority. But the law does not contemplate continual dissensions, and in many cases the minority of part-owners will be induced, from a variety of considerations, to yield to the wishes of the majority. Under such circumstances, however, the court will still be inclined to uphold the interests of the few against the encroach- ments of the many. In the case of Card v. Hope,^ Card and Cannan (being owners of nine sixteenth shares of a ship, and also husbands of managing owners) by deed sold five sixteenths to Hope. The deed contained a covenant that Hope should be ap- pointed to the command of the ship, and that Card and Cannan should continue to have the management as husbands, and should elect the tradesmen and appoint all the officers ; and that if Hope should relinquish the command, or die. Card and Cannan should appoint such fit person to succeed him as might be approved by him or his executors, or that he or they might nominate a fit per- son to the command in his steaxi, and that Card and Cannan should be employed as the agents of Hope in the concerns of the ship ; and if Hope should be minded to sell all or any of his shares, he might do so, upon condition that the purchaser should abide by the stipulations in the deed, and not remove Card and Cannan, or the survivor of them, from being managing owners, so long as they should perform the stipulations on their part. It was held that, although the covenant to continue Card and Cannan as Hope's agents in the concerns of the ship might be lawful if it stood alone, yet the deed being founded on a contract for the sale of the shares, with a stipulation for the appointment to the command and the continuance of the management, it was illegal and void. Lord Tenterden, in delivering the judgment of the court, said : " A ^ Davis V. Johnston, 4 Sim. 539. ' 2 Barn. & Ores. 661 ; 4 Dowl. & Ryl. 164. 1052 PARTICULAK PARTNERSHIPS. [BOOK V. power of employment invested in the majority seems to import a power of appointing officers, and in practice the majority certainly exercise that power.^ But such power carries with it a duty, — the duty of exercising a free and impartial judgment in the choice of every person who is to be intrusted with the management of the outfit, and with the navigation of the ship, ut dentur digniori. And any contract which is calculated to have the effect of fetter- ing the judgment, and of binding the party to concur in the nomi- nation of particular persons, at the peril of an action, is a violation of that duty. All part-owners ought to share ratably in every profit that may be made of the ship ; and if such contracts could be allowed by law, they must operate as a discouragement to per- sons to become part-owners of ships. The duty is owing, not only to the charterers and other part-Owners of a ship, but also to all whose life or property may be embarked in her. With regard to the other owners, although it may be true that, by becoming owners at the time when a majority of the interest was vested in the plain- tiffs, they knew that this majority of interest might, as it respects themselves, carry with it every power for the exercise and contin- uance of which this deed provides ; yet they might rely, for the faithful exercise of every authority, on the interest which the plaintiffs had in the prosperity of the ship, as being paramount to all other considerations. Bat this deed is calculated to deprive them of that security." § 1212. We wiU conclude this subject by observing, that if the minority happen to have possession of the ship, and refuse to em- ploy it, the majority may, by a similar warrant from the Court of Admiralty, obtain posses'sion of it and send it to sea, upon giving proper security.^ § 1213. In order to administer the affairs of the ship with unar nimity, it is usual to appoint a ship's husband. He may be either a part-owner or a stranger, and may be appointed by writing or by parol.^ His duties are to see to the proper outfit of the vessel, » 3 Kent Cora. 152 ; Story Partn. § 432. ' Abbott Ship. (Am. ed. 1846), 128, 129; Story Partn. §*428; 3 Kent Com. 1.52. » Story Partn. § 418 ; Abbott Ship. (Am. ed. 1846), 125, 126 ; Dunlap's Paley's Agency (ed. 1847), 108, 109, and notes; 1 Livermore, Prin. & Agent, 72. The position, that a part-owner may be ship's husband, is not without CH. III.] PART-OWNERS OF SHIPS. 1053 to have a proper master, mate, and crew ; to see to the furnishing of provisions and stores ; to see to the regularity of all the clear- ances from the custom-house ; to settle the contracts ; to enter into proper .charter-parties^ or engage the vessel for general freight ; to settle for freight, and adjust averages with the merchant ; to preserve proper certificates and documents in case of future dis- putes with insurers or freighters, and to keep regular books of the ship.i But without special powers, he cannot borrow money generally for the use of the ship, though he may settle accounts and grant bills for them, which will form debts against the con- cern.^ Nor can he, without special authority, insure the ship.^ And, though a part-owner, he has no power to purchase a cargo on the credit of the other part-owners.* § 1214. The ship's husband will be entitled, on the failure of the owners, to claim for the balance of his advances and commis- sion, to claim in relief of bills and engagements in his own name for the price of repairs, furnishing, &c., and to hold a Hen, for his security, and indemnification, over the documents and warrants of the ship, and over the freight recovered, or which he has been em- powered to recover.^ § 1215. Before a voyage is commenced, it is the duty of each owner to contribute his share of the capital for the expenses of the outfit. Hence, if one part-owner advances the share of another, or if the ship's husband, being a part-owner, at the request of the others, advances their shares for them, that constitutes a debt which he is entitled to recover in an action at law, independently of the profits of the voyage.* limitation ; as -when, from the nature of the ownership, the part-owner may Lave an interest hostile to his associates. See Benson v. Heathorn, 1 You. & Coll. 326, 341 ; Dunlap's Paley's Agency (ed. 1847), 108, 109, in notes. ^ 1 Bell Comm. 410; Beawes, 407 ; Sims v. Brittain, 4 Barn. & Adol. 375 ; 3 Kent Com. 157 ; Story Partn. § 446 ; 1 Livermore, Prin. & Agent, 72. ' 1 Bell Comm. 411 ; 3 Kent Com. 157. ' French v. Backhouse, 5 Burr. 2727; Turner v. Burrows, 8 Wend. 144. ' Ilewett V. Buck, 17 Maine, 147. ' 1 Bell Comm. 411 ; Story Partn. § 443 and notes ; 3 Kent Com. 155 and note ; Abbott Ship. (Am. ed. 1846), 138 and note ; Hewett v. Sturdevant, 4 B. Monroe, 466. « Helme v. Smith, 7 Bing. 709 ; see Sadler v. Nixon, 5 Barn. & Adol. 936 ; Gardner v. Cleaveland, 9 Pick. 334. 1054 PARTICULAR PARTNERSHIPS. [BOOK V. § 1216. The delectus personce does not hold between part- owners. Hence, though by the law marine it was required that a new-built ship should make one voyage upon the common risk, before the owners should be allowed to separate, yet, by the law of England, any owner may sell or transfer his right at what time he pleases. 1 § 1217. Although, in the ordinary course of trade, one partner may sell the goods of the partnership^ and, indeed, may dispose of the whole property of the partnership, supposing such a measure to be beneficial,^ yet this rule does not extend to part-owners. The interest of part-owners is so far distinct, that one of them cannot dispose of the share of another : and although the master himself be a part-owner of the ship, yet will not his sale therefore be good for more than his own part ; ^ except in cases of extreme neces- sity.* iMolloy De Jur. Mar. 222; Abbott Ship. (Am. ed. 1846), 133; Story Partn. § 447. = Ante, § 394. ' Abbott Ship. (Am. ed. 1846), 9, 10 ; Story Partn. § 417 ; 3 Kent Com. 153, 154; Hyde v. Stone, 9 Cowen, 230; Oviatt v. Sage, 7 Conn. 95. In reference to the distinction between part-ownership in ships and partnership in ships, Mr. Chancellor Kent observes (3 Kent Com. 154, 155) : " The cases recognize the clear and settled distinction between part-owners and partners. Part-ownership is but a tenancy in common, and a person who has only a part interest in a ship is generally a part-owner, and not a joint tenant or partner. As part-owner he has only a disposing power over his own interest in the ship, and he can convey no greater title. But there may be a part- nership, as well as a cotenancy, in a vessel; and in that case one part-owner, in the character of partner, may sell the whole vessel ; and he has such an implied authority over the whole partnership effects, as we have already seen. The vendee, in a case free from fraud, will have an indefeasible title to the whole ship. When a person is to be considered as a part-owner, or as a partner in a ship, depends upon circumstances. The former is the gen- eral relation between ship-owners, and the latter the exception, and requires to be specially shown. But as the law presumes that the common possessors of a valuable chattel will and desire whatever is necessary to the preservation and profitable employment of the common property, part-owners on the spot have an implied authority from the absent part-owners to order for the com- mon concern whatever is necessary for the preservation and proper employ- ment of the ship. They are analogous to partners, and liable under that implied * Abbott Ship. (Am. ed. 1846), 9-21, and cases cited. CH, III.] PART-OWNERS OF SHIPS. 1055 § 1218. We shall reserve for another section the consideration of the liabilities of part-owners for the acts of each other.^ But it may here be observed, shortly, that one part-owner may bind his fellow by contracts for repairs^ and necessaries.^ He has, how- ever, no implied authority to order insurances to be effected on account of the other part-owners,* and therefore he cannot, by so doing, charge the others with any part of the premium, unless they afterwards assent to the insurance,^ though a joint authority to him to insure may be presumed from the acts of the co-owners.^ Nor can he, though he be ship's husband, pledge the others to the expenses of a lawsuit.'' It has been said, that one part-owner may sell his vote in an election of a captain, and that, the money received not being a profit of the ship, a bill will not he against him by the other part-owners for an account of the money so received.^ § 1219. Part-owners being tenants in common, one cannot maintain trover against the other for detaining, or even for forci- bly taking and carrying away, the ship ; ^ secus, if the delinquent part-owner destroy the ship.^" It has likewise been held that one part-owner cannot recover damages from another part-owner for authority for necessary repairs and stores ordered by one of themselves ; and this is the principle and limit of the liability of part-owners." See Lamb v. Durant, 12 Mass. 54. ' Post^ § 1225 etseq. * See Gardner v. Cleveland, 9 Pick. 334 ; Story Partn. §§ 422-426. ' See Gowan v. Poster, 3 Barn. & Adol. 507. But in such cases it must be understood that the contracts are entered into with the express or implied assent of the other. Story Partn. §§ 420, 427.. * Hooper v. Lusby, 4 Camp. 66. ' Bell V. Humphries, 2 Stark. 345; Ogle v. Wrangham, Abbott Ship. (Am.ed. 1846), 137. « Robinson v. Gleadow, 2 Bing. N. C. 156; 3 Kent Com. 157; Story .Partn. §446. ' Campbell v. Stein, 2 Dow, 135. The other doctrine laid down in this case seems now to be overruled. ' Moifat V. Farquharson, 2 Bro. 338. » See Parr i'. Smith, 9 Wendell, 338; Hyde t. Stone, 9 Cowen, 230. One tenant in common cannot maintain replevin against his cotenaut. Barnes v. Bartlett, 15 Pick. 71. " Barnardiston v. Chapman, 4 East, 121 ; Abbott Ship. (Am. ed. 1846), 127; Wilson v. Reed, 3 John. 178; Hyde v. Stone, 7 Wendell, 357, per Sutherland J.; Gilbert «. Dickerson, 7 Wendell, 450; Story Partn. §449. 1056 PAKTICULAR PARTNERSHIPS. [BOOK V. fraudulently and deceitfully sending a ship on a voyage and sell- ing it abroad.! g^t j^ Yield v. Oliver,^ it was decided, that, if one tenant in common of personal property sell the whole, as exclusively his own, he thereby becomes liable in trover to his cotenant ; such sale being regarded as a conversion ; and the purchaser will be liable to the cotenant, if he sells the same again and delivers it as his own.^ § 1220. The ordinary remedy for part owners to obtain an adjustment of the ship's accounts among themselves is a suit in a court of equity. But, in a case where several part-owners entered into a written agreement, whereby they and each and every of them did agree to and with the others, and each and every of the others, that the ship should proceed on a certain voyage, and be under the exclusive management and control of one of the parties as husband thereof; and that, after the ship's return, a full account should be made out of the ship and her concerns, and the net profits be divided according to the propor- tions; it was held that each individual party to the agreement might maintain an action at law upon it against him who had acted as the husband, for not mating out an account and divid- ing the profits within a reasonable time after the ship's return.* It may here be observed, that a covenant to pay a certain sum of money yearly, in lieu of the profits of a vessel, as a part-owner, is not discharged by the capture of the vessel, provided the prop- erty be not altered by legal condemnation.^ § 1221. To a bill filed between part-owners for an account of the profits of the ship, all the part-owners must be parties ; it is not sufiicient to allege that the bill is brought by some of the part- ' Graves v. Sawcer, Sir T. Raym. 15. ' 21 Pick. 559. ' Ibid. See also, Story Partn. § 449 ; Hyde v. Stone, 7 Wendell, 354 ; Wilson V. Eeed, 3 John. 175; Thompson v. Cook, 2 South. 580; White v. Osborn, 21 Wendell, 72; Farr v. Smith, 9 Wendell, 338; Abbott Ship. (Am. ed. 1846), 128, in note. It seems to be doubted whether trespass can be maintained for a sale of the whole by one tenant in common of personal property, in Furlong v. Bartlett, 21 Pick. 403. , • Owston V. Ogle, 13 East, 358; Abbott Ship. (Am. ed. 1846), 145; Story Partn. § 449 ; Wilson v. Cutting, 10 Bing. 436 ; Servante v. James, 10 Barn. & Cres. 410. ° Grigg V. Stoker, Forrest, 4. OH. III.] PART-OWNERS OF SHIPS. 1057 owners on behalf of tkemselves and all otkers, except the defend- ants,^ unless, indeed, which is rarely the case, the great number of the parties should make it necessary to frame the suit in this manner.^ SECTION V. OF THE RELATIVE BIGHTS oIf PAKT-0WNER8 AND THIRD PEKSONS. § 1222. According to modern opinions, the liability of part- owners to third persons is not in any manner affected by the regis- try acts. "Title," said Lord EUenborough, "has nothing to do with tkese cases ; we must look to the contract between the par- ties." ^ And in a subsequpnt case Lord Tenterden said, that the acts enable a person to ascertain who are the legal owners of a vessel, but that might be appertained aliunde ; and if the legal owners would not at common law be kable to demands for repairs and necessaries merely on account of their ownership, he could not think tkat they were so by reason of any thing to be found in the registry acts.* And in another case his jDordship observes : " The object of the legislature ia passing these statutes was clearly one of general policy ; namely^ to prevent foreigners from par- ticipating in the advantages whiqh it was intended to give to Britr isli shipping only ; and the use of the registry is to enable the government to ascertain, at all times, th^t the real owners are British subjects. Soon aiffcer the passing of these acts, the lean- ing of courts of law in the construction of them was, to say that the registered owners of ships should at aU events be liable for repairs ; but the subject having become more accurately under- stood, a better and more correct principle now prevails, afad the recent cases have decided that the true question in matters of this description is, upon whose credit was the work done ? " ^ ' Moffat V. Farquharson, 2 Bro. 338. In an edition of Browne, by Mr. Belt, it is said that this case is clearly wrong, and has been repeatedly oyer- ruled. But there seems to be no ground for this observation. Story Eq. PI. §§ 166, 218 ; Partn. § 449. " Story Eq. PI. §§ 166, 218. ' Annett v. Carstairs, 3 Camp. 354. * Briggs V. Wilkinson, infra. ° Jennings v. Griffiths, Eyan & Mood. 42 ; Gould J., dissenting, in Starr 89 1058 PARTICULAR PARTNERSHIPS. [BOOK V. § 1223. Various modem cases have been decided in conformity with these principles. Thus, in M'lver v. Humble,^ Humble and Holland were partners and part-owners. A few months after the dissolution of the partnership, Humble's interest in the ship was conveyed away by a defective transfer. In order to aid this de- fect. Humble afterwards joined in another transfer of his interest, and for this purpose his name appeared in the indorsement of the certificate. Between the times of the respective transfers, a quantity of rope was supplied for the use of the ship, and it was sought to charge Humble with the price of this rope, on the evi- dence of the certificate and indorsements ; but the Court of King's Bench held that he was not liable. So, in Dame v. Hadlock,^ where a part-owner of a vessel, which had been furnished with supplies, had parted with his interest before they were furnished^ and had no concern in the voyage, it was held that he was not liable for the supphes, notwithstanding his name stiU remained in the enrohnent as a part-owner.^ So, in a case where a mortgage had been made of a share of a ship, it was sought to charge the mortgagee for repairs, &c., as owner, on the ground that it was not expressed in the certificate of transfer according to the pro- visions ,of the 4 G-eo. 4, c. 41, that the transfer was for a mort- gage ; but the Court of King's Bench held that this circumstance did |not render the mortgagee liable.* The weight of American authority is decidedly in favor of the position that a mortgagee of a ship, not in possession, although the register or enrolment may stand in his name, is not liable for repairs or necessaries procured on the order of the master, and not upon the particular credit of the mortgagee, who was not in the receipt of the freight ; though the rule is otherwise where the mortgagee is in possession, and the vessel is employed in his service.^ It has been held that parol t;. Knox, 2 Conn. 236-240 ; Lord v. Ferguson, 9 N. Hamp. 382, 383 ; Keeve V. Davis, 1 Add. & Ell. 312; 3 Kent Com. 133-135; Abbott Ship. (Am. ed- 1846), 39 et seq. and notes ; Leonard v. Huntington, 15 John. 298 ; Wendover v. Hogeboom, 7 John. 808 ; Thorn v. Hicks, 7 Cowen, 697 ; Cut- ler V. Thurlo, 20 Maine, 213 ; James v. Bixby, 11 Mass. 37, per Parker J. ' 16 East, 169. = 4 Pick. 458. " See Hussey v. Allen, 6 Mass. 163. * Briggs V. Wilkinson, 7 Barn. & Cres. 30 ; and see Jennings v. Griffiths, Eyan & Mood. 42. * 3 Kent Com. 134-137 ; Abbott Ship. (Am. ed. 1846), 48-51, in notes; CH. III.] PART-OWNERS OF SHIPS. 1059 eyidence is admissible to show that the bill of sale whereby a ship is transferred, although absolute on the face of it, was, neverthe- less, intended as a mortgage.^ However, in a case where there were two joint owners of a ship, and One by private agreement parted with all his interest in his share to the other, to be paid for by bills at different dates, but kept -his name on the register by way of collateral security for the payment of the bills, it was held that he was liable for repairs done to the ship ^iibsequent to such agreement, although he had never afterwards interfered in the con- cern or management of the vessel.''* § 1224. In the preceding cases, the person sought to be charged was one whose name appeared on the register, but whose bene- ficial interest was denied. If the person charged have a beneficial interest as part-owner, but be not named in the register ;■ 'm other words, if he be a dormant or secret part-owner, it should seem, on the authority of one case, that he will not be liable for neces- saries furnished to the ship. In Harrington v. Fry,^ goods had been ordered of the plaintiff by Wilsford, a part-owner of the ves- sel, on his own account and that of the owners ; at the time of the order, Wilsford did not name the defendant as owner ; the defendant's name was not on the register, nor did the plaintiff ever hear of him as an owner till the commencement of the action. Evidence, however, was adduced which connected the defendant with the ship, though it turned out that the conveyance under which he had takten his share was defective for want of compHance with the registry acts. The Court of Common Pleas held that he Cutler V. Winsor, 20 Maine, 213 ; Brooks v. Bondsey, G Greenl. 474 ;, Ring V. Franklin, 2 Hall (N. Y.), 1 ; Winslow v. Tarbox, 18 Maine, 132 ; Leon- ard w. Hiintington, 15 John. 298; Lord u. Ferguson, 9 N. Hainp. 380; Bir- beok V. Tucker, 2 Hall «, partnership, every man knows who his partner is ; but when one part-owner sells his share, the remaining part- owners, not being privy to the instrument by which the. new part- owners are created, may be entirely ignorant of the fact who the person is who has become a part-owner with them.^ It is to be * Abbott Ship. (Am. ed. 1846), 167-169, and notes. ' On this point see Abbott Ship. (Am. ed. 1846), 180-190, and notes, ■where it will be found that this claim on the ship is by no means general. ' Abbott Ship. (Am. ed. 1846), 169-180, and notes. ■• * See Winsor «. Cutts, 7 Greenl. 261 ; Cutler v. AVinsor, 6 Pick. .835 ; Houston V. Darling, 16 Maine, 413; Emery v. Hersey, 4 Greenl. 407; Thompson v. Hamilton, 12 Pick. 428; The Ship Nathaniel Hooper, 3 Sumner, .542 ; Arthur v. Schooner Cassius, 2 Story C. G. 92-94 ; Abbott Ship. (Am. ed. 1846), 42, 43, in note. * Jaggers v. Binnings, 1 Stark. 64; Abbott Ship. (Am. ed. 1846), 137; Story Partn. § 453. » Per Bayley J., 2 Barn. & Aid. 15. 1066 PARTICULAR PARTNERSHIPS. [BOOK V. obserred, however, that this reason would extend to all contracts made by the part-owners, and that it is not necessary for the sup- port of the other powerful observations of the same learned judge in the same case.i The case here referred to is that of Wilson v. Dickson,^ which depended on the construction of the 63 Geo. 3, c. 1, s. 9, and by which it is settled that one part-owner wiU not incur additional liability for losses occasioned to the shippers by the mismanagement of the master, from the circumstance that the master is likewise a part-owner. By the 53 Geo. 3, c. 159, s. 1, it is enacted that no owner or owners, or part-owner or part- owners, of any ship shall be hable for any loss or damage arising by reason of any matter or thing done, omitted, or occasioned without the' default or privity of such owner or owners, which may happen to any goods, &c., put on board the ship, further than the value of the ship, and the freight due or to grow due for and during the voyage. In the case in question, an action was brought against three joint-owners of a ship, on account of the loss of certain goods therein laden, belonging to the plaintiff, the nature of the loss being the improper sale of those goods in the course of the voyage, by the captain, who was also a part-owner. One question was, whether, inasmuch as there was fault or negli- gence on the part of one of the three owners, that circumstance took away the protection given by the statute to the other part- owners. The court held that it did not ; and, consequently, that the other part-owners were not liable beyond the value of the ship and freight ; the value of the ship being calculated at the time of the loss, and the freight being deemed to include money paid in advance. Neither will the share of one part-owner be liable to condemnation for acts done by his copartner without his privity. Where one of several part-owners is owner of the whole cargo, condemnation of the cargo will carry with it condemnation of his ' " The truer and broader ground is," says Mr. Justice Story, " that there is no community of interests, or of rights, or of authorities, between part- owners ; and they are not, as in the case of partnership, agents of each other in the concerns of the ship, unless some special authority is expressly or im- pliedly delegated to them for the purpose. Part-owners are not, therefore, bound by the acts of each other, unless those acts are specially authorized ; and hence it follows, a fortiori, that the mere admissions of one, without any such authority, ought not to bind the others." Story Partn. § 453. 2 2 Barn. & Aid. 2. CH. III.]; PART-OWNERS OP SHIPS. 1067 share of the ship. But the shares of the other part-owners will remain safe, if they can show by attestation that they had no knowledge of the contraband goods.^ But part-owners are answerr able in solido for costs and damages for wrong capture and con- demnation of another ship.^ SECTION VI. OP ACTIONS AND SUITS liY AND AGAINST PAET-OWNBKS. § 1230. It is laid down by a high authority, that in an action for the fi-eight of gOods conveyed in a general ship, all the part- owners ought to join as plaintiffs, or, if they do not, the defendant may avail himself of the objection by evidence at the trial, and without plea in abatement ; unless, perhaps, some one should have received his own share, or released his claim to it. It is added, that the necessity of all the part-owners joining as plaintiffs is founded on the consideration that all of them are partners with respect to the concerns of the ship.^ And even if the part-owners authorize their agent to sell the entire ship, they cannot, if they give him a joint authority, maintain separate actions against the agent for their respective shares of the money received by him on account of such sale; though each may maintain a separate ac- tion, if they separately authorize the agent to sell their respective shares.* § 1231. But it is to be observed, that the situation of part-owh- 1 The Jonge Tobias, 1 Rob. 329 ; Story Partn. §§ 453, 458 ; Abbott Ship. (Am. ed. 1846), 426, in note. ' The Karasan, 5 Eob. 291 ; Praris v. Martine, 2 Stair, 319. As to the liability of owners for torts committed by the master, see Abbott Ship. (Am. ed. 1846), 166, in note (1) ; Story Partn. § 458. * Abbott Ship. (Am. ed. 1-846), 147 ; Story Partn. § 454 and note ; Baker V. Jewell, 6 Mass. 460; Hart u.' Fitzgerald, 2 Mass. 500; Converse v. Symmes, 10 Mass. 377; Thompson v. Hoskins, 11 Mass. 419; Austin v. Walsh, 2 Mass. 405 ; Peters v. Davis, 7 Mass. 25 7 ; Burn v. Morris, 2 Caines, 54 ; Jordan v. Wilkins, 2 Wash. C. C. 482 ; Eobinson v. Gushing, 2 Fairf. 480. Contra, Stanley v. Ayles, 3 Keb. 444. * Hatsall V. Griffiths, 4 Tyr. 487; 2 Cromp. & Mees. 679; Abbott Ship. (Am. ed. 1846), 147. 1068 . PAKTIOULAR PAHTNEUSHIPS. ' [§00K V. ers differs ia many respects from that of partners, and not tlie teast in this circumstance, that the interest of the former in the profits of their trade is, comparatively speaking, an ascertained interest. Hence it seems, that, admitting the original interest of the part- owners in the profits of the ship to be joint, that will not prevent them from suing separately for their respective shares of tihe.profits, where the covenant or agreement for payment of those profit^ is separate, and it is clearly intended that they should have a sepa- rate interest under the covenant or agreement. In Owston z). Ogle,i it was jointly and severally agreed between part-owners and the ship's husband, who was one of the part-owners, that the-man- agement and expenses of the ship should be under the control of the husband ; and that, after the ship had returned from her voyage, a full account should be made out of the ship and her con- cerns, and the profits divided : it was held that an action might be maintained by either of the p^rt-owners against the husband for not making out such account and dividing the profits. In a sub- sequent case,^ the law on this point seems to have been confirmed. A covenant was entered into by the master of a vessel with the several part-owners, and their ■ several and respective executors, administrators, and assigns, to pay such sum as should be allowed to the owners by the Postmaster^General for the hire of the ship unto the owners, and to their and every of their several and respective executors, administrators, and assigns, at a .certain banker's, and in such proportions as were set against their several 'and respective names ; this was construed to be a several covenant, and as giving to each a several interest ; and it was held that each covenantee must sue severally in respect of such several interest, and that they could not maintain a joint action. § 1232. In an action ex contractu by part^wners against their agent, the defendant cannot dispute their title, by showing it to be defective under the re^stry acts.* In an action of tort by part^ owners, for an injury, for instance, done to the ship, all the part- owners ought to be plaintiffs; but the defendant can only take advantage, of the defect by plea in abatement.* So, in an action ' 12 East, 538. See Abbott Ship. (Am. ed. 1846), 145. * Servante v. James, Lloyd & Welsby, 54; 10 Barn. & Cres. 411. ' Dixon V. Hamond, 2 Barn. & Aid. 310. • Story Partn. § 454 ; Abbott Ship. (Am. ed. 1846), 146 ; Hart v. Fitzger- CH. III.] PART-OWNERS OF SHIPS. 1069 of trover, all the part-ovraers ought to join as plaintifife, though one only may bring trover for the whole ship, if the defendant do not plead La abatement.^ And if afterwards another part-owner sues for his own interest, the defendant can no longer avail himself of the objection, because the party to the first suit has no longer any matter of complaint. In case of the death of any part-owner after an injury received, the right of action survives in general to the surviving part-owners, who must afterwards pay to the personal representatives of the deceased the value of his share .^ § 1233. In an action against part-owners upon any contract relating to the ship, all should be sued jointly ; but the defendants can only avail themselves of the objection by plea in abatement.^ The same observation seems to be apphcable to actions ex quasi contractu against part-owners.* However, if the creditor were ignorant at the time of the contract, that there were other part- owners, he may sue him alone to whom the credit was given, and the defendant cannot plead the non-joinder of the other part-own- ers in abatement.^ In an action by an attorney against one of several part-owners whose interest is insured, for business done for the assured, the defendant may plead in abatement the non-joinder of the assignees of his bankrupt co-part-owners.^ § 1234. The rule, that joint and separate debts cannot be set off against each other, appUes as well to part-owners as partners. Therefore, upon the bankruptcy of a person separately indebted to each of the part-owners of a ship, they cannot set off their pro- aid, 2 Mass. 511 ; Thompson v. Hoskins, 11 Mass. 419 ; Patten v. Gurney, 17 Mass. 182; Converse v. Symmes, 10 Mass. 377 ; Depeyster v. Wheelright, 1 John. 471, 486 ; Brothersan u. Hodges, 6 John. 108. ' Addison t7. Overend, 6 T. R. 766 ; and see ante, § 672 ; Dockray v. Dick- enson, Comb. 366 ; Skin. 640. ' Abbott Ship. (Am. ed. 1846), 146. ' Abbott Ship. (Am. ed. 1846), 148 ; Ruggles v. Patten, 8 Mass. 480 ; Converse v. Symmes, 10 Mass. 877 ; Barstow v. Fossett, 11 Mass. 250 ; Tiele V. Campbell, 2 John. Cas. 382; Robertson v. Smith, 18 John. 459; Doremus V. Selden, 19 John. 213 ; Story Partn. § 455 ; Attorney-General v. Borro- daile, 1 Price, 162. * Arite, § 731 e< seq, " Doo V. Chippenden, Abbott Ship. (Am. ed. 1846), 134, 135 ; Baldney v. Ritchie, 1 Stark. 338. ' Pasmore v. Bousfield, 1 Stark. 296. 90 1070 PAKTICTJLAR PARTNERSHIPS. [BOOK V. portions'of a debt due from them jointly to the bankrupt on the ship account against the debts due by the bankrupt to them sepa^ rately.i § 1235. In actions against part-owners for stores supplied to the ship, it used to be the custom to produce the register as proof of their title, and the proof was received without c[uestion or ob- jection. But it is now held that the register alone does not furnish even primd facie evidence to charge a person as ovraer of a ship, in a suit between private individuals. Hence, "in, an action for stores supplied to a ship, if the defendant pleads in abatement that he is only liable jointly with others, it is not enough for him to pro- duce the ship's registry, containing the names of himself and those others as owners of the s^p.^ It seems to be settled, by the Amer- ican authorities, that the register of a ship is not of itself evidence of property, unless it be confirmed by some auxiliary circumstance- to show that it was made by the authority or assent of the person named Ln it, and who is sought to be charged as owner. Without such connecting proof, the register has been held not to be even primd facie evidence to charge a person as owner ; and even with such proof it is not conclusive evidence of ownership.^ § 1236. To a biU by a creditor, for an account and payment of moneys due from part-owners on the ship account, all the part- owners or their representatives should be made parties.* But, on demurrer by one of several part-owners for non-joinder of his co- part-owners as defendants, the plaintiff will be permitted to amend ' Ex parte Christie, 10 Ves. 105. » Flower u. Young, 3 Camp. 240; Abbott Ship. (Am. ed. 1846), 115, 118, and cases in notes. ' See 1 Greenl. § 394; 3 Kent Com. 150; Bas v. Steele, 3 Wash. C. C. 381 ; Abbott Ship. (Am. ed. 1846), 115-117, and notes ; Leonard v. Hunt- ington, 15 John. 298 ; Sharp v. United Ins. Co. 14 John. 201 ; Bixby v. Franklin Ins. Co. 8 Pick. 86 ; Hatch v. Smith, 5 Mass. 42 ; Ring v. Franklin, 2 Hall (N. Y.), 1 ; Colson v. Bonzey, 6 Greenl. 474; Wendover v. Hoge- boom, Anth. n. p. 120; s. c. 7 John. 308; Brooks v. Bondsey, 17 Pick. 442; Vinal B. BurriU, 16 Pick. 401; Lord v. Ferguson, 9 N. Hamp. 880; Jones V. Pitcher, 3 Stew. & Port. 135 ; Hacker v. Young, 6 N. Hamp. 95 ; Weston V. Penniman, 1 Mason, 306. But see Starr v. Enox, 2 Conn. 215. ' Pierson v. Kobinson, 3 Swanst. 139, note ; Coppard v. Page, Forrest, 1 ; Story Eq. PI. §§ 166-168; 1 Daniell Ch. Pr. (Perkins's ed.), 817; Story Partn. § 449. CH. III.] PAET-OWNEES OF SHIPS. 1071 his bill, on payment of the costs incurred by the defendant.^ Where a bill was brought by, the officers and crew of a ship against the owners, for an account of captures, &c., it was held that it might be alleged to be brought by the plaintiffs on behalf of them- - selves, and all others in the same interest.^ ' East India Company v. Neaye, 5 Ves. 185 ; Mitf. 215. Whether a part- owner or partner could demur for misjoinder of co-defendants, qucere; and see Pringle v. Crooks, 3 You. & Coll. 666. « Good V. Blewitt, 13 Ves. 397 ; 1 Daniell Ch. Pr. "(Perkins's ed.), 287 ; Story:Eq.Pl.§98. APPEI^DIX. No. I. DEED OF PARTNERSHIP BETWEEN TWO PERSONS. ( General Form.') THIS INDENTURE, made the day of between A. B. of, &c., of the one part, and C. D. of, &c., of the other part, WITNESSETH, that, in consideration of the mutual trust and confi- dence which the said A. B. and C. D. have in each other, each of them, the said A. B. and C. D., doth for himself, his heirs, executors, and administrators, covenant with the other of them, his executors and administrators, by these presents in manner following, that is to say: — I. That they, the said A. B. and C. D., will be partners in the business of ^ from the day of '^ for the term of fourteen years thence next ensuing.' II. That if, nevertheless, either of the said partners shall be desir- ous to. determine and dissolve the said partnership at the end of seven years from the said day of ,* and of such his desire 1 See anle, § 212. 2 Or, if so intended, "from the day of the date of these presents.'' 5 See ante, § 214. * If it is intended that there should be power of dissolution upon notice, at the will of either party, for the clause in the text substitute the following : — " That if, nevertheless, either of the said partners shall be desirous to determine and dissolve thB said partnership at any time before the expiration of the said term of fourteen years, and of such his desire shall give not less than six calendar months' previous notice in writing to the other of them, or shall leave such notice at the place where the said business shall for the time being be carried on, then and in such case the said partnership shall cease and determine immediately upon 90* 1074 APPENDIX. shall not give less than six calendar months' previous notice in writ- ing to the other of them, or shall leave such notice at the place where the said business shall for the time being be carried on ; then and in such case the said partnership shall cease and determine upon the ex- piration of the said seven years. III. That if either of the said partners shall be guilty of any breach or non-observance of any of the stipulations contained in the twelfth, fourteenth, fifteenth, and seventeenth articles hereinafter mentioned, the other of the said partners shall be at liberty, if he shall think fit, within three calendar months after the same shall become known to him, to dissolve the said partnership, by giving to the partner who shall so offend, or leaving in the counting-house, or other place where he shall usually carry on business, notice in writing declaring the said partnership to be dissolved and determined ; and the said partnership shall, from the time of giving or leaving such notice, or from any other time to be therein appointed for the purpose, absolutely cease and determine accordingly ; without prejudice, nevertheless, to the reme- dies of the respective partners, for the breach on non-observance of all or any of the covenants and agreements contained in these pres- ents, at any time or times before the determination of the said part- nership. And the partner to whom the said notice shall be given shall be considered as quitting the business for the benefit of the partner who shall give the said notice. IV. That the firm and style of the said partnership shall be .* V. That the business of the said partnership shall be carried on at -, or such other place or places as the said partners shall here- after determine. VI. That the capital of the said partnership shall consist of the sum of £ , to be brought into the said business by the said A. B. and C. D. in equal proportions ; and the said capital and the profits arising the expiration of the said six calendar months, or at such future day or time as shall he named in the said notice." As lunacy does not per se work a dissolution, this clause would, in a certain degree, provide for the case of a partner turning lunatic, by enabling the other partner to dissolve ; but as six months' notice would be necessary under this clause, a special clause for this purpose may be inserted, at least where there are several partners. A doubt may have formerly existed whether a, notice to dissolve, being served on a lunatic, was valid ; but this doubt has heen set at rest by the very recent case of Robertson v. Lockie, 10 Jur. 533, in which the Vioe-Chancellor of England (Sir L. Shadwell) held that, where partners agreed that their partnership should be dissolved on notice, the notice was good, though the partner on whom it was served was lunatic at the time. See ante, § 292 et seq. and notes. 1 See ante, ^ 215. PRECEDENTS. 1075 therefrom (iocluding the premiums to be paid for any apprentice to be taken by either of the said partners) shall (subject as hereinafter is mentioned) be employed in the said business ; and the said A. B. and C. D. shall be entitled to and interested in the said capital, and so much of the gains, profits, and produce thereof as shall remain after all payments hereinafter directed to be made thereout shall have been made, in equal proportions.* VII. That the rent of all houses or buildings where the business of the said partnership shall be carried on, and the costs of all repairs and alterations, and all taxes, rates, assessments, payments for insur- ance, and other outgoings whatsoever in respect of the same, and the salaries, wages, or maintenance of all persons employed in the said business, and all other moneys which shall become payable on account of the said business, and all losses and damage which shall happen in the same, shall be paid, defrayed, and borne by and out of the capital of the said partnership and the gains and profits arising from the same ; or in case the same shall become deficient, then by the said A. B. and C. D. out of their respective separate estates, in equal shares.^ 1 See ante, § 218. When the capital is not advanced in equal proportions, but, for example, in the proportion of two thirds by A. and one third by B., for the clause in the text substitute the following : — " That the capital of the said partnership shall consist of the sum of £ , to be brought into the said business by the said A. B. and C. D. in the following pro- portions, namely, two thirds by the said A. B., and the remaining one third part thereof by the said C. D., and the said partners shall be entitled to and interested in the said capital, and so much of the profits or produce thereof as shall remain after all payments hereinafter directed to be made thereout shall have been made, in the following proportions, namely, the said A. B. in two third parts, and the said C. D. in the remaining one third part thereof." * ^ Sometimes the house in which the business is carried on is the private property of one of the partners, and rent is then paid to such partner for his house. In this case insert the following clause : — " That the said A. B. (or C. D. as the case may be) shall be allowed by the said partnership the clear yearly sum of £ , by way of rent for the said messuage * See arUe, § 218. It frequently happens that the stock in trade, &c., is pur- chased of one of the partners. In such case substitute the following clause : — " That the capital of the said partnership shall consist of the sum of £ , to be advanced and brought into the said business by the said A. B. and C. D. in the following proportions, namely, two thirds by the said A. B., and the remaining one third part thereof by the said C. D., out of which sum of £ the sum of £ shall be forthwith paid to the said A. B., as and for the price or purchase-money of the stock in trade and fixtures heretofore used by him in his said trade or business of a , and which stock in trade and fixtures have been purchased by the said partnership at the price aforesaid, and the said partners shall be entitled to and in- terested in the said capital and the profits thereof, stock in trade and fixtures, in the proportions aforesaid." 1076 APPENDIX. Vni. That the sai^ A. B. shall be at liberty from time to time to draw out the moneys of the said partnership any sum or sums not exceeding the sura of £ per month for his pwn separate use. And the saad C. D. shall also be at liberty to draw out of the said moneys any sum or sums not exceeding the sum of £ per month for his own separate use ; but in case at the end of any year it shall appear upon taking the general annual account that the net profits of such year shall not« have amounted to the sum of £ {ike total amount drawn out hy both parties during the year), then and in such case immediately after such general annual account shall have been taken, each of them, the said A. B. and C. D., shall repay to the said partnership the excess (if any) of the amount of the sums which he shall actually have received over the sum which he shall have been entitled to receive as his share of the net profits of the said business during such year. IX. That each of them, the said A. B. and C. D. will diligently . employ himself in the business of the said partnership, and be faithful to the other in all transactions relating to the said partnership, and give a true account of the same, and all letters and things which may come to his hands or knowledge concerning the said partnership to the other, as the same shall be. required.^ X. That neither of them, the said A. B. and C. D., will either by himself, or with any other person or persons whomsoever, either directly or indirectly, engage in the business of [the business of this partnership], or in any business except the business of the said partnership and upon account thereof; ^ and that neither of theni street, aforesaid, so long as the said business shall be carried on therein, but that the said messuage shall continue the sole property of the said A. B. (or C. D.), subject only to be used for the purpose of the said partnership business." And, if so intended — " That the said A. B. (or C. D.) shall be at liberty, if he shall think proper, to use and occupy all such part of the said messuage as is not used in or wanted for the pui'poses of the said partnership business for the residence of himself and his family, without paying any rent or taxes for the same." Or, if so intended — "At the yearly rent of £ , to be paid by him to the said partnership in equal half-yearly portions, or proportionally for any less period during the time of such occupation, but the said A. B. (or C. D.) shall not be required to pay any propor- tion of the taxes in respect of his said occupation, and shall bo at liberty to quit and leave the said premises if he shall think proper, without any previous notice." 1 See ante, § 219. With respect to this and some of the subsequent clauses, the remark of Mr. Jarmau already cited may be repeated, that "provisions which are almost of course cannot be too short." ^ See ante, Ij 221. This covenant is frequently made to prohibit only the busi- ness of the partnership. PRECEDENTS. 1077 will, without the consent in writing of the other, employ any of the moneys or effects of the said partnership, or engage the credit thereof except upon the amount and for the benefit of the said partnership. XI. That neither of them, the said A. B. and C. D., will take any apprentice, or hire or dismiss any clerk, traveller, workman, or servant, in the business of the said partnership, without the consent of the other of them.^ XII. That in all cases where there shall be occasion to give any bond, note, bill, or other security for the payment of any sum or sums of money on account of the said partnership (except where the contrary shall in the common course of business be unavoidable), the same shall be respectively signed and executed by both of them, the said A. B. and C. T>. ; and that if either of them shall give any such security (except in the cases before mentioned)' which shall not be ex- ecuted and signed by the other of them, the same shall be deemed to be given orl the separate account of the partner so giving it, and he shall satisfy the same out of his separate estate, and shall indemnify the other of them from all expenses on account thereof. XIII. That if either of them, the said A. B. and C. D., shall'at any time during the continuance of the said partnership lend any of the moneys, or deliver upon credit any of the goods belonging to the said partnership, to any person or persons whom the other of them shall previously by notice in writing have forbidden him to trust ; or shall borrow or take up any money whatsoever on account of the said part- nership, or compound any debt or debts which shall be due to the said partnership, without the consent in writing of the other : then and in such case the partner so lending or delivering upon credit such money or goods shall pay to the said partnership so much ready money as the full amount or value of the money or goods which he shall so lend or deliver upon credit as aforesaid ; and the partner so borrowing money on account of the said partnership shall make good unto the said part- nership the whole of the money so borrowed ; and the partner so com- pounding debts shall make good unto the said partnership the whole of such moneys and debts as he, or any other person by his order or au- thority, shall give any receipt for. XIV. That if either of them, the said A. B. and C. D., shall at any one time buy, order, or contract for any goods or articles exceeding the 1 If so intended, add : — "And that any preminm or sum of money received in respect of any apprentice shall be considered part of the profits of the business of the said partnership ; " in which case it might be convenient to place this clause after the clauses respecting the capital or profits of the business. 1078 APPENDIX. value of £ — ■ — ^, without the previous consent in writing of the other, in such case the other shall have the option either to take such goods or articles on account of the said partnership, or to let the same remain the separate property of the partner who shall have so bought, or- dered, or contracted for the same. XV. That neither of them, the said A. B. and C. D. will without the previous consent in writing of the other enter into any bond or be- come bail or security with or for any person or persons,^ or subscribe any policy of insurance, or do or willingly suffer to be done any act, matter, or thing whereby the capital or property of the said partnership may be seized, attached, extended, or taken in execution. XVT. That each of them, the said A. B. and C, D., will punctually pay and discharge his separate debts, and indemnify the other of them and the capital and property of the said partnership against the same and all expenses on account thereof. XVn. That books of account shall be kept by the said partners, and proper entries made therein of all the moneys, goods, effects, debts, sales, purchases, receipts, payments, and all other transactions of the said partnership ; and that the said books of account, together with all bonds, notes, bills, specia,lties, assurances, securities, letters, and other writings belonging to the said partnership, shall be kept at the counts ing-house in aforesaid, or in such other place where the busi- ness of the said partnership shall be carried on, and each of the said partners shall have free access at all times to examine .and copy out the same.^ XVIII. That on the day of — ■ in the year , and on the — ■ day of in every succeeding year, during the continuance of the said partnership, a full and particular account and rest in writing shall be made and taken by the said partners of all the stock in trade, moneys, credits, and things belonging, due, or owing to the said partnership, and of all debts due or owing from the same, and of all such other matters and things as are usually comprehended in annual accounts of the like nature , taken by persons engaged in the business of a ; and that a just valuation or appraisement shall be made of all the particulars included in such account which require and are capable of valuation or appraisement ; and that the said annual account or rest and valuation or appraisement, or a suflScient abstract thereof referring to the particulars in the ordinary books of this part- nership, shall be entered in two books and be signed in each such book 1 " This prohibition is often found useful in affording partners a reason for refus- ing to become bail or security." 7 Jam. Conv. 127, note {d), 3d ed. -" See ante, § 220. PRECEBENTS. 1079 by each of them, the said A. B. and C. D., within three calendar months after the time appointed for taking thereof respectively, and that after such signature each of the said partners shall take one of the said books into his custody, and shall be bound and concluded by every such account respectively, unless some manifest error shall be discov- ered therein within twelve calendar months then next, and be signified by either of the said partners to the other of them, and then and in such case such error shall be rectified.'^ XIX. That within the space of six calendar months after the ex- piration or determination of the said partnership, a full, true, and par- ticular account in writing shall be made and taken by the said A. B. aridC. D. of all the stock in trade, moneys, credits, eflTects, and things then belonging to the said partnership, and of all moneys and debts due or owing by the said partnership, and of all the liabilities of the said partnership ; and a just valuation or appraisement shall be made of all the particulars included in such account which require and are capable of valuation or appraisement; and immediately after such last-mentioned account shall have been so taken and settled, the said partners shall pay or make due provision for the payment of the debts owing by the said partnership, and for meeting all the liabilities thereof; and the balance of the said stock in trade, moneys, credits, effects, and things then belonging to the said partiaership shall be divided be- tween the said A. B. and C. D. in equal shares ; ^ and such instru- ments in writing shall be executed by the said A. B. and CD. re- spectively for getting in the outstanding credits and effects of the said partnership, and foi* indemnifying eac'h other iconceming the premises, and for vesting the sole property in the said respective shares of and in the said stock in trade and effects in each of the said partners to whom respectively the same shall upon such division belong, and for releasing to each other all claims on account of the said partnership as are usual in cases of the like nature, such instruments respectively to be at the expense of the person requiring the same ; and if any question shall arise as to the propriety of any instrument, or of any clause or provision therein, required by either party, such question shall be referred to the senior counsel practising in the Court of Chan- cery who will consent to give an opinion therein. XX. That in case either of the said partners shall die during the said partnership, his executors and administrators shall, if such death shall happen before the day hereinbefore appointed for the first general annual account, be entitled to the capital brought in hy^uch_deceased. 1 See ante, § 224. * If the shares are not equal, substitute "in the proportions hereinbefore men- tioned." 1080 APPENDIX. partner, or, if the same shall happen after the day hereinbefore ap- pointed for the first annual account, shall be entitled to such sum of money as the share of the deceased partner of and in the stock in trade, moneys, credits, and effects of the said partnership shall upon the then last general annual account amount to, or as such share would have amounted to in case such account had been taken on the day of [the proper day for taking such account^ immediately preceding such death. And in case either the executors or administrators of the said deceased partner shall also be entitled to an allowance, after the rate of £ per cent, per annum, upon the capital or share of stock in trade, moneys, and effects (as the case may be), of such deceased partner, in lieu of profits, from the commence- ment of the said partnership or from the then last general annual ac- count (as the case may be), to the time of such death, and the surviv- ing partner, his executors or administrators, shall pay such allowance in lieu of profits on demand ; and shall within next after the death of the deceased partner execute and deliver to his executors or administrators a bond in a penalty double the principal conditioned for the payment of the said principal sum to which they shall become en- titled as aforesaid, with interest thereon, after the rate of £ per cent, per annum, from such death, in manner following: (that is to say) one third part of such principal sum with the interest on the same third part at the end of six calendar months from the date of such bond, one third part with interest thereon at the end of twelve calendar months from the date of such bond, and the remaining third part with interest thereon at the end of eighteen calendar months from the date of such bond. * XXI. That the surviving partner, his executors or administrators, shall also execute and deliver a bond in a sufficient penalty to the executors or administrators of the deceased partner for indemnifying them and the estate of the deceased partner from the debts, engage- ments, and liabilities of the said partnership at or after such decease, and from all expenses on account of the same : and the executors or administrators of the deceased partner shall release and assign unto the surviving partner, his executors and administrators, all their share, right, title, and interest of, in, and to the stock in trade, moneys, credits, and effects of the said partnership, and empower and enable him and them as much as in them lies to recover and receive the same.^ IN WITNESS, &c. 1 Clauses for referring disputes between partners to arbitration have been usually inserted in partnership deeds; but they are hardly ever acted upon, and there ap- pear to be grounds for believing that they are something worse than useless. See ante, § 234. PKECEDBNTS. 1081 No. II. DEED OF DISSOLUTION.^ THIS INDENTURE, &c., between A., of, &c., of the one part, and B., of,'&c.,' of the other part. (Ricite articles of partnership between A. and B. for a term of years, — the joint trading, — an agreement between them that A. shall retire, and B. go on with the trade, — that the accounts of the partnership have been taken, and that £ are due to A. on the balance of the account, — and that the parties have agreed to enter into the foUowirig deed for more effectu- ally dissolving the partnership, for assigning A's share to B., and for indemnifying A. from the debts of the concern, ^c. Then proceed.) Now THIS INDENTURE -VTiTNESSETH, that, in pursuancc of the said agreement, and in consideration of the sum of £ of lawful Eng^ lish money to the said B. in hand, &c., each of them, the said A. and B., for himself, his heirs, executors, and administrators, doth hereby covenant, promise, and agree with and to the other of them, his heirs, executors, and administrators, that the said copartnership or joint trade, and every part and branch thereof, and also the said indenture of the day of and every coveny,nt, matter, and thing therein contained, shall, from the day of last, be void and absolutely dissolved, any thing in the said recited indenture of copartnership contained to the contrary in any wise notwithstanding. And the said A., in pursuance of the said agreement, and for the con- siderations aforesaid, hath bargained, sold, and assigned, and by these presents doth bargain, sell, and assign, unto the said B., his executors, administrators, and assigns, all that the said part, share, and interest of him, the said A., of and in the said joint trade, and of all goods, wares, merchandises, moneys, debts, and effects thereto belong- ing, or in or to which the said A. has ' any right, title, or interest jointly with the said B., by virtue of the said copartnership ; and all the right, title, interest, claim, and demand whatsoever of him, the said A., of, in, and to the said capital joint stock, effects, money, and debts, and every or any part thereof; and all the profits, produce, gains, and proceeds thereof; to have, hold, keceite, and enjot the said part, share, and interest, and all other the share and interest of him, the said A., of, in, and to the said capital joint stock, 1 SeeoMte, §§ 242, 243. 91 1082 APPENDIX, and all and singular other the premises hereby assigned, or intended so to be, and every part and parcel thereof, unto the said B., his ex- ecutors, administrators, and assigns, to and for his and their own proper use and benefit. And the better to enable the said B., his ex- ecutors and administrators, to receive all the said partnership debts and effects to and . for his and their own use and benefit, he, the said A., hath made, constituted, and appointed, and by these presents doth make, constitute, and appoint, the said B., his executors and adminis- trators, his true and lawful attorney and attorneys, to ask, demand, sue for, recover, and receive of and from all and every person and per- sons whatsoever, all and every the debts, sum and sums of money, goods, chattels, and effects whatsoever, now due and owing or belong- ing to the said copartnership, and upon receipt of the same, or any and every of tliem, to give, sign, and execute proper and sufficient re- leases, acquittances, and discharges for the same ; and also to state and settle all accounts and differences in any way relating to the said joint trade, with all and every person and persons whatsoever, and to com- pound and release all and every or any part of the said debts and flemands, as he and they shall think fit and necessaiy ; and to do all and every other act, matter and thing whatsoever, in and about the premises, in the name of him, the said A., and as fully and effectu- ally, to all intents and purposes, as he, the said A., could or might do if personally present. And the said A. doth hereby, for himself, his heirs, executors, and administrators, covenant, promise, and agree to and with the said B., his executors, administrators, and assigns, that he, the said A., his executors, administrators, or assigns, shall not nor vnU at any time or times hereafter receive, release, acquit, or dis- charge any of the deb(s or demands due to the said copartnership, or any actions o;: suits that shall be brought, sued, or commenced for or on account of the same, without the consent of the said B., for that purpose in writinjf first had and obtained. JNor shall nor will do or suffer or cause to be done, any act, matter, or thing whatsoever, Y^hereby the said 15., his executors, administrators, or assigns, shall or may be hindered or obstructed in the recovering and receiving of the said debts, goods, chattels, and effects, due, owing, and belonging to the said cojiai'tnership, or any part thereof; but shall and will, from time to time, and at all times hereafter, at the cost and charge of the said B., do and execute all and every further and other lawful mat- ters and things, for the better enabling him, the said B., his executors, administrators, or assigns, to get in and receive the same, to and for his and their own use and benefit as aforesaid. And each of them, the said A. and B., doth hereby, for himself, his heirs, executors, and administrators, remise, release, and for ever quitclaim unto the other PRECEDENTS. 1083 of tliem, his lieirs, executors, and administrators, all and all manner of actions, suits, claims, and demands whatsoever, both at law and in equity, which either of them, the said parties, his heirs, executors, administrators, or assigns, now hath or can or may at any time or times hereafter have, claim, challenge, or demand against the other of them, his heirs, executors, or administrators, for or by reason or means of the said copartnership, or of the said indenture of copartnership, or any other matter, cauSe, or thing whatsoever relating thereto. And the said B. doth hereby for himself, his heirs, executors, and administrators, covenant, promise, and agree with and to the said A., his executors and administrators, in manner following: (tiiat is to say,) that he, the said B., his executors and administrators, shall and will, as soon as conveniently may be, pay and discharge all debts and demands whatsoever, due and owing from the said A. and B. on account of the said copartnership, or which he, the said A., his ex- ecutors or administrators, shall or may be liable to pay, satisfy, or make good, jointly with the said B., for or by reason or means of the said copartnership. And also shall and will, from time to time, and at all times hereafter, well and sufficiently save, keep harmless and indemnified, the said A., his heirs, executors, and administrators, and his and their and every of their estate, goods, chattels, and effects, of, from, and against all costs, payments, charges, demands, and ex- penses whatsoever, which he, the said A., his heirs, executors, or administrators, or his or their estate, goods, chattels, or effects, shall or may suffer, sustain, or be put unto, for or by reason of the said copartnership, or by reason of the said B., his executors or adminis- trators, making use of the name of the said A. in any suit, or action for the recovery of the said copartnership debts and effects, or by rea- son or means of his being made defendant in any suits, or any other matter or thing whatsoever, relating to the said copartnership. IN WITNESS, &c. INDEX. [The figures in this Index refer to Sections.] ABATEMENT, none of action, wliere a plaintiff dies pending the suit, 666. plea in, by partners. See Plea est Abatement. by part-owners, 1233. ABROAD, partner resident. See Fokeign Country, Suits nsr Equity, (3). ABSCONDING of a partner does not pe7' se operate a dissolution, 114, note. ACCEPTANCE. See Bili, of Exchange. of a person as partner, 8, 10. action lies between partners on separate, "269. in name of firm, binds all the partners, -iOl, 408. of firm taken in discharge of a separate debt, 492 ei seq. by partners, one of whom is an infant, how to be declared on, 721. after dissolution, of bill dated before, not binding on retiring partner, 643. by bankrupt pai-tner, 871. ACCOMMODATION, indorsement or other obligation by one partner, whether binding on firm, 421, note. ACCOUNT, — (1) Under the Articles, annual, 224. waiver of, by contrary practice, 224. may be made conclusive, notwithstanding errors, 225. but this will not cover fraud, 225. general, on dissolution, 226. (2) Stated, need not be signed, to support plea of, 371. long possession of, effect of, 371. by one partner, should be objected to by other within a reasonable time, 371, note, effects of stating^ and no objection, 371, note, difference between, and settled account, 371, note, party seeking to impeach an account settled must point out specific errors, 37.3, note. fraud a ground to open accounts, 373, note, meaning of snrclmrge and falsify, 373, note. (3) Cash Accounl. See Appkopkiation. current, excepted out of the Statute of Limitations, where, 376. (4) Action of, 298, note. fallen into disuse in England, and in some of the United States, 298, note, still retained in others, 298, note. 91* 1086 INDEX. ACCOUNT— Continued. (5) Under a Decree of a Court of Equity, may be decreed, of profits made contrary to the articles, 249. is usually consequent upon a dissolution, 298. ■whether can be decreed without praying for a dissolution, 299, 300, and notes, 1128-1133. has been decreed on a bill praying for the continuance of the part- nership, 300, notes. in joint-stock partnerships may be decreed -without prayer for disso- lution, and without making all of shareholders parties, 1128 et seq. semble, that partner seeking, must pay money borrowed as a private loan into court, 301. but need not pay in partnership money, 302 el seq. unless he admit himself to be indebted to that extent, 303. or unless he has received it contrary to good faith, 305. and there must be an admission by answer, unless the defendant file affidavits, 306. where will be assisted by a sale of the partnership effects, 307. See Sale. under depree for, master may generally examine parties, 315. decree for, generally contains directions to examine parties, 315, note, but master has no power to examine parties without such direc- tion, 315, note, how examination of parties conducted, 315. party charged by book or paper may read same in discharge, 315, note, difference between statements of party on examination and in answer to bill, 315, note, parties must generally produce books, 316. entries in partnership books presumed correct, 316, note, presumed that partners have access to books, 316, note. • where partners have access to books, it is sufficient to examine and state them, without vouchers, 316, note, exceptions, 316, note. practice as to sealing up parts of books, and time to inspect, 316, note, must be taken according to the method prescribed by the articles, 317. from what time will be reckoned, 318. must be taken according to Clayton's case, where, 319. what necessary to be considered in taking, 320. what may be considered subject of sale and, 321 et seq., and note, real and movable property, 321. good-will, 322. outstanding contracts, &c., 323. by remaining partners continuing to trade with the partnership ef- fects, 324. by surviving partners, 324. considerations which affect the division of profits between surviving partner and estate of deceased partner, 327. nature of the trade, source of the profit, capital employed, &c., 327. by solvent partners, 325. between solvent partners and assignees, must be settled on the foot- ing of the respective shares, though, at the bankruptcy, the- proportion of the shares was altered by advances, 325. on death of a partner, may be taken in a suit for the administration of the effects of one, 330. INDEX. 1087 ACCOTSJUT— Continued. must be rendered by executor partner of his debt, 332. must include allowances fixed by agreement, 333. ■whether may include an allowance for treating customers, quaere, 334. may, after inquiry directed, include allowance for specific loss, 334. how far may include interest, 335 and note. See Interest. (6) partners bound to keep, 189. and have ready for inspection, 189. « consequence of neglect, 189, note. duty in this respect where partners reside in diflTerent places, 189, note, to be partner one must have a right to call for account, 44, note, pp. 39, 40. ACKNOWLEDGMENT of one partner binding on firm, 422, 423. ACT OF BANKRUPTCY, what is, 848-850. notice of, committed by one partner, sufficient to invalidate a pay- ment made by that partner, 873. of one partner, does not avoid the hona fide acts of solvent partner, 860. notice of, to creditor, does not prevent his receiving payment from solvent partner, in what cases, 861 et seq. overreaches a subsequent execution on the partnership effects, where, 874. ACTION, right of, survives, 132. ACTION OE ACCOUNT, fallen into disuse in.Engla,nd, 298, note, and in some of the United States, 298, note, retiiined in others, 298, note, nature of, and pleadings, 298, note. ^ ACTION BETWEEN PARTNERS. See Covenant, Assumpsit, Debt. lies for money wrongfully carried to partnership account, 268. lies on separate acceptance, 269. for contribution of damages, 286. whether, in any case, by a shareholder against a director, on a bill of exchange, HIT- of tort, 382, 383. ACTIONS BY PA.RTNERS, and see Joint Action. (1) Generally, — in what cases the power of bringing, not coextensive with that of individuals, 642. • where there are two firms and a common member, 642. where the injury arises from fraud committed by the defendant jointly with one of the plaintifis, 643. same party cannot be both plaintiff and trustee, or defendant and ' trustee, in a trustee suit, 642, note. ^ where the contract made by one partner only, without the knowledge of his copartners, is illegal, 645. may be brought here, though they could not abroad, 646. (2) Parlies, — Actions ex contractu, must be brought generally, by all who were partners at the time of contract, 649. covenantees, 649, 652. joint owners of a fund, 649, note, payees, 649. but by such only as were partners at time of contract, 650. therefore not incoming partner, unless the old contract be ex- tinguished, 650. and where contract in writing, by such only as were parties to the contract, 651. always in deeds, 651. 1088 mDsz. ACTIONS UY PARTNERS — CommMe(7. rjenerally in unsealed conti-aoiS; as bills of exchange, 655. with exeeprions, — gnaranty, 653. policy of insuran(;e, 654. still teims of policy mnst embrace interest of party suing, 654 and note, hill indorsed in blank, 655. ■where partner admitted as from a previous day, 656. Tirhei-e- contract is severed, Go7, 658. onft partner cannot assign his share of a contract (not assignable at law) to his copartner, so as to enable him to sue alone on it, 644 and note. bu( such an assignment would authorize the copartner to use the name of the assignor, 644. and the assignee may sue alone in such case if the debtor assent to the arrangement, and promise to pay, 644, note. where one possesses an office, 659. by dormant partnei', 660. nominal parvuer, 662. infant partner, 664. solvent pai'tner, 665. ■foreign bankrupt, 665, note, surviving jjartner, 666. does not abate bj' death pending the action, 666. how advantage taken of defect of parties, 667. how of misjomder of parties, 667. (3) Parlies, — Aclions ex delicto, ought to be brought by all jointly on joint damage, 668. or by part jointly, where part are jointly damaged, 669. on death of one, must be brought by surviving partner, 670. no nonsuit in, for defect of plaintiffs, 671. except where the action is substantially founded in contract, 671. where may be brought severally, by each partner, 672. (4) neclaration, — declaration in, how should describe plaintiffs, 673. declaration by survivor, what he may include in, 674. joint interest iu, should appear in the declaration, 675. declaration in, to recover the amount of goods, should state the goods as of the partnership, 675. on policies of insurance, declaration in, 676 et iseqi for libel, declaration in, 679. (5) Pleas in Bar, — defendant may plead in bar, — all matters in confession and avoidance, 681. ' illegality of partnership, 681. that the promises were made jointly by plaintiff and defendant, 681. bankruptcy of a co-plaintiff, 682. release by one partner, 682. tender to one partner, 684. Statute of Limitations, 684. (6) Evidence. See Evidenck (1). ACTIONS AGAINST PARTNERS, (1) Process. See Process, Outla^why, Distkikoas. (2) Parties, — Actions ex contractu, all must be made defendants to, who were partners at the time of the contract, 712. but the admission of a co-defendant to, can only be taken advantage of by plea in abatement, 718. INDEX. 1089 ACTIONS AGAINST PARTNERS — Con«m«ed unless the defect appear on some pleading of the plaintiff; ■when defendant may — demur, 713. move in arrest of judgment, 713. sustain a ■writ of error, 713. plaintiff in, may give evidence of a joint contract by all, though some only are made defendants, ■where no plea in abatement, 715. cannot, ho-wever, in such case set forth the joint contract by all, in the declaration, 717. if he do, it is error, 717. ■whether the joint contract -will appear on the declaration by omitting to sho'w that a contractor is dead, 718. ■will not appear by omitting to state that he sealed, 718. non-joinder of dormant partner as defendant to, cannot generally be pleaded in abatement, 719. ■where dormant partner should be defendant to, and ■where not, 719. may be brought against dormant partner only, 719. ought not in England to be brought against a partner ■who ■was an in- fant at the time of the contract, 720. against several, one of ■whom pleads infancy, plaintiff cannot, in Eng- land, discontinue against him and proceed against others, 720. a different rule prevails in several of the United States, 720. ■whether, in these States, a suit may be brought against the adult alone, 720 and note, ought not to be brought against banlcrupt partner ■who has obtained , certificate, 722. against the surviving partners, after death of one, 723, 580, note, against representatives of deceased partner, other partner sur- viving, in some States, 580 in note, against the executors of last surviving partner, 723. against those ■who appear after the outlawry of the others, 724. misjoinder of defendants to, ho^w to be taken advantage of, 725. (3) Parties, — ^cft'ons ex delicto, may be brought against all or any of the partners, 727. and no advantage can be taken by plea in abatement, 727. secus as to actions involving real property, 729. misjoinder of defendants to, how to be taken advantage of, 730. (4) Parties, — Actions, ex quasi contractu, against ■what parties to be brought in the case of carriers, 731. if declaration states a special contract, plea in abatement allo^wed, 732. if no contract stated, any of the contractors may be sued, 734. in case of land-carriers ; this provided for by statute, 734. against ■what parties generally, 737. (5) Declaration, — declaration in, must be joint upon joint process, ■where bailable, 739. See Process. ■may include demands against defendant as surviving partner, and as solely liable, 740. need not describe the survivor as such, 740. how should state the outla^wry of one partner, 742. ■what counts may be joined in, ■where one partner has become bankrupt, 743. (6) Pleas in Abatement. See Plea in Abatement. (7) Pleas in Bar. Special plea to, frequently necessary, 751. release may be pleaded to, ■whether actions of debt on bond, or as.- sumpsit, 752. 1090 INDEX. ACTIONS AGAINST PARTNERS— Con&wed covenant not to sue, cannot be pleaded as release to, 753. plea of payment to, 754. tender, 754. former recovery, 755. set-off. See Set-off. infancy, 766. bankruptcy, 767. when generally under the statute, 767. when specially, 767. when puis darrein continuance, 767. for joint tort, release to one, good plea in bar, 768. may be discharged by nolle prosequi, where, 768. defence to, may be served, 768. ADJUDICATION of bankrupt under joint fiat, 1024, 1025. ADMINISTRATION, suit for, of one partner's estate, copartners may prove their debts in, 330. limited, of deceased partner's effects, 843. in bankruptcy. See Bankruptcy, Peoof. ADMINISTRATORS of partners. See Exectjtoks. permitting surviving partner to sell the stock in usual course of trade, not liable for loss, 605. otherwise where they put assets of deceased partner into the hands of survivors to trade with, 605. ADMIRALTY, court of, compels the majority of part-owners to find secu- rity for the value of the shares of the minority, 1205. and compels them to pay the sums forfeited on loss, 1205. may detain a vessel in these cases, 1205. cannot compel a sale of the part-owner's interest in England, 1209. but in certain cases of disagreement it is otherwise in the United States, 1209. and cannot order security to minority, where shares not apparent, 1209. relief in such case in chancery, 1210. will enable the majority to send the vessel to sea, when in possession of the minority, 1212. ADMISSION, of receipts before master, 315. of one partner binds the firm, when and how far, 422-424 and notes. See Statute of Limitations. of one partner evidence against him of the partnership, 774. riot evidence of partnership against the others, 776. of one partner evidence against the others to prove the partnership contracts, 779. but admissions in some cases may be shown to have been made by mistake, 785. of one part-owner not binding on the others, 1229. ADOPTION, of partnership arrangements by creditor, 486. of separate, as joint debt, 507. express assent of partners need not be shown, it may be implied, 507, note, burden of showing assent is on creditor who takes the partnership security, 507, note, of debts of prior firm by incoming partner, 522. of new firm on retirement of a partner by creditor, 557. striking balance of account with old firm and opening new account with new firm, and drawing on new firm on the footing of such account, is not an adoption of new firm as sole debtors, 566. INDEX. 1091 ADO'PTIO'S — Continued. transferring the balance of account against firm to the account of one of the partners does not bind creditor to the adoption of such partner as his debtor, 566, note, but taking the promissory note of one pai-tner for the partner- ship note and giving up the partnership note binds the cred- itor, 566, note. ADVANCE of money to an individual for founding the partnership, cre- ates no joint liability, 516. made to an individual partner, and carried to his account, not neces- sarily made to him separately, 504. ADVENTURE, single, partnership may subsist in, 17, 55. agreement to share profit and loss of, will not give an interest In the capital, 168-170'. secus, if there be clearly a joint undertaking throughout, 173. loss of goods in, must fall upon the owner, 170. partner in, may bind his copartner by bills of exchange, 402. but not in some kinds of adventures, 402. partner in, liable for fraud of copartner, 446. partner in, pledging bill of lading in discharge of his separate debt, 500. liabilities for, commence with the order of the goods, where, 511. where not, 513. incoming partner, liability of, 525. ' stoppage in transitu, as against one partner in, 648. AFFIDAVIT, on motion for payment into court, 306. on motion, for or to continue an injunction, 351, 352 and note, on motion, for receiver, 358. AFFIDAVIT TO HOLD TO BAIL, form of, 707, note. variance in the nature of the debt stated in, and that in the declara- tion, efiect of, 707. AGENCY, mere, rebutted by evidence of agreement to share loss, 30, and note, of partner, destroyed by bankruptcy, 871. AGENT, share of, in profits, 25, 29, 36, 44, note, pp. 39, 40 et seq. one partner for the others, 195, and note, of joint-stock company, his powers, 1139, 1140. appointment of, to collect joint debts, does not prevent payment to partner, 638. ' partner acting as, when witness in suit against others, 788. AGREEMENT, to enter into partnership, specific performance of, 202, 203, 205, 20G. execution of proper partnership deed may be compelled, 202, note, will not be enforced in equity, where the partnership may instantly be dissolved, 204, 205. but in these cases action may be brought where terms of in- tended partnership distinctly appear, 204. qumre, whether will be enforced, unless partnership be for a term, 206. may be enforced where partnership is for a specific term, 205, note, 206. how enforced where under seal, 207. of partnership, may be declared void when, 360 and note. ALIEN AMI, may be partner, 14. ALIEN ENEMY, cannot sue in this country, 14. nor can he be a partner, 14, note. ALLOWANCE, none to partner for extra services, unless stipulated for, 183. 1092 INDEX. ALLOWANCE— Coreimwed ■when not given to surviving partner for management, 199. where bankrupt partner entitled to, 1053. partner cannot have, under a joint fiat, both in respect of his joint aijd his separate estate, 1054. partner not entitled to any, until a sufficient dividend paid on both estates, 1054. but is to be enjoyed by each, without reference to the other, 1055, 1056. how to be calculated, 1056. under a separate fiat, depends on the dividend on the separate estate, 1057. ALLOWANCES, fixed by agreement, must be included in an account taken in equity, 333. ALTERATIONS may be made in partnership agreement, not only by writing, but also by conduct, 210, note. AMENDMENT of bill on demurrer by part-owners, 1236. ANNUAL ACCOUNT, 224. ANNUITY, retiring partner receiving out of the profits, 46, 238. ANNULMENT OF FIAT. See Second Fiat. may be ordered as to one partner, 1058. in what cases ordered generally, 1058. court will not generally order on ground of motives in suing out fiat, 1059. whether will be ordered as to one partner only, where fiat invalid in its concoction, 1070. ANONYMOUS PARTNERSHIP, in France, 6, note. ANSWER, motion for injunction before, 350, 351. where must accompany plea, 369. defendant submitting to, must answer fully, 379 and note. this rule altered by late orders, 379, note, of defendant residing abroad, 380. requisites of, in several cases, 380. to a bill in equity between partners, not evidence (for plaintiff) of partnership, in an action against the partners, 772. nor evidence for defendant in certain cases, 798. APPEARANCE, may be entered by one partner for the rest, 441, 698, note. but not after dissolution, 441, note, partner cannot be compelled to enter for his fellows, 698. of one partner cannot be compelled by distraining the separate prop- erty of the other, 703,. of partner resident abroad need not be enforced, 702. APPROPRIATION OF PAYMENTS, applied to the case of retiring partners, 547 et seq. takes place in cash accounts, by operation of law, 550. secus m bill accounts, 550. therefore, in latter case, must be specific, 550. . must in some cases be specific, even in cash accounts, 551. made in specific discharge of the debt of a particular partnership, is conclusive, 551. when must be made, 552, and note. how it affects the rights of partners, on the fluctuations of the firm, 633. ARBITRATION, stipulation as to, 234. whether action of covenant wiU lie for refusal to submit to, 250. equity will not decree specific performance of, 251. nor substitute master for arbitrator, 252. INDEX. 1093 ARBITB.ATIO'N — Continued. covenant for, how may be made available, 253. plea of covenant to refer to, where untenable, 377. submission to, by one partner, not binding on his copartners, 439, 485. submission to, by firm, where does not enure to benefit of individual partners, 622. ARBITRATOR, his powers in general, 234. how should allot houses and real property, 235. equity will not substitute the master for, 252. ARRANGEMENTS OF PARTNERS, do not alter their liability, 386. when binding on creditor, 98, 387, 486. ARTICLES OF PARTNERSHIP, specific performance of agreement for, 202. See Agreement. inspection of, motion for, 207, note. are construed according to the declared intention of the parties, not- withstanding general words, 208. where deficient, are supplied by the rules of Jaw, 209. how read in a court of equity, 209, 257. when will be considered as abandoned, 210, 257. constant alterations may be made in, not only by writing, but also by conduct, 210, note. strict execution of, will sometimes be restrained in equity, 224. effect of, after dissolution, by effluxion of time, 214. covenants of old partnership infused into new, continued after expira- tion of term by articles, 214 and note, except as to duration, 214. leading clauses of, relative to ^nature of the business, 212. time of commencement, 213. term of partnership, 214. style of firm, 215. business to be done in name of one person, 215, note, shares to be advanced, 216. several rights in capital, 217. profits to be distributed, 218. personal duties of partners, 219. • ■ books of account, 220. not exercising same trade on separate account, 221. decision of differences by majority, 223. annual account, 224. general account'on dissolution, 226. executors carrying on trade of deceased partner, 228. clause of expulsion, 233. arbitration, 234. liquidated damages, 236. construed so as to perpetuate the partnership, rather than to help the settlement, where, 228. where not acted on, courts of-equity will sometimes decline to help the parties, 244. where not admitted in evidence, upon the objection of a third party, 770. ASSENT, of. creditor to arrangements of firm, 554. of retiring partner to creditor's taking sole security of remaining part- ner, 561. ASSIGNEES, (1) Rights, Powers, and Interest, i are tenants in common with solvent partner, 8, note, 166. 92 1094 INDEX. ASSIGNEES — Continued. have a right to the bankrupt's share of the partnership property after restitution decreed, in specie, 177. have a right to require the sale of the partnership property in what cases, 309. can obtain no share of the partnership effects, until they satisfy what is due from the bankrupt to the partnership, 323._ but, subject to account, posspss the bankrupt's share of the joint prop- erty, 323, note. cannot maintain trover against solvent partner, 383. what property passes to, under a joint or separate bankruptcy, 853. under separate bankruptcy, have a right to the bankrupt's share of the profits of outstanding adventures, &c. 853. are not copartners with the solvent partners, except for the purpose of winding up the concern, 854. how far are bound to call for an account, 854. whether may trade, 854. when may insist upon a sale, 855. whether may be restrained from selling, 855. have the same rights generally as bankrupts had, 856. choice and removal of, 1034-1036 and notes. (2) Actions by, — may maintain such actions as the bankrupt might have done, 1037. and, in matters in which a right accrues by the bankruptcy, may maintain actions which he could not, 1038. must all join as plaintiffs, or will be nonsuited, 1039. how should be described in the declaration, 1040. may declare for what demands, 1041, 1042. where same assignees are appointed under separate fiats, 1041. where different assignees are appointed under separate fiats, 1042. under separate fiats, cannot declare in the same declaration for sepa- rate demands due to each bankrupt, nor for joint and also separate demands, 1043. whether, and how, can declare for causes of action arising between the respective bankruptcies of the partners, 1045. may bring trover for the separate property, of the bankrupts, 1046. how should declare in trover in certain cases, 1046. must join with solvent partner as plaintiffs, 665, 1047. of surviving partner, how may declare, 1048. set-off in actions by. See Set-off. are relieved by statute from proving certain matters, 1050. ASSIGNMENT. See Stamp. by one partner, to secure or pay the debts of the firm, 395 and notes. of a partner's rights in profits or in the partnership stock, ipso facto a dissolution, 110 and note. unless he continues to act in the partnership as before, 110. of bail-bond, 710, 711. by deed of goods in specie, not necessary upon conversion of partner- ship property, 895. by commissioners of bankruptcy in a foreign country, effect of, on subsequent attachment of same property, 877 and note. ASSUMPSIT (between Partners). See, also. Money advanced, Contiu- BUTION. will not lie on the partnership account, 264 et seq. with very special exceptions, 269, 270 et seq. will lie to recover the balance of an account, 276-278. INDEX. 1095 ASSUMPSIT— Continued. whether settled during continuance or after dissolution of part- nership, 277. express promise to pay, not necessary to sustain, 280, 281, and note, will lie after dissolution, though in respect of matters originating from the partnership, quoad third persons, 288. ATTACHMENT, of separate property may be made on joint debt, 818, note, lien thus acquired, not defeated by attachment for separate debt, 818, note, may be made by creditor of one partner of that partner's interest in goods of the firm, 822, note, but this will be defeated by subsequent attachment of the same goods by a partnership creditor, 822, note, and so, it seems, by a mere insolvency of the firm, 822, note, whether this rule prevails in case of a dormant partnership, credit being given to the ostensible partner, but the prior suit be- ing against ostensible, and subsequent against both dormant and ostensible partners, 822, note, by trustee process, of goods, effects, or credits in the hands of a debtor to the partnership, 822, note, manner of making, 822, note. ATTAINDER, for treason or felony, dissolves the partnership, 114, 119. ATTORNEYS. See Solicitors. partnerships between, 51. in what cases illegal, 70 and note, allowance to widows of, not illegal under 22 Geo. 2, 72. actions by, against companies, for work and labor, lllG. AWARD, where one partner may sue copartner on, 279. where offered in evidence against one partner deed of submission must be proved to have been executed by all, 472. plea of, 377. bond by one partner to perform, binds him, 471, note. BAD BEBTS, 235. BAIL-BOND, assignment of, 710. action on, 711. BAILIFF, may be appointed by one joint-tenant, 442. BALANCE OF ACCOUNT, recoverable in assumpsit between partners, 276-281, note. BANKERS, partnerships between, restricted in number, 11, note. custom of, in relation to interest, 338. BANKING ACCOUNT, discharge of liability of retiring partner, under, 548. BANKRUPT. See Ceetificate, Allowance, &c. in what cases may be party to a bill in equity, 363, 364. all the partners may become, or some or one only, 847. joint trading necessary to make partners, 847. they only are, who have committed acts of bankruptcy, 848. partner, indorsing bills, 871. payment by, where invalidated, 873. • cannot be agent for the firm, 871. conveyances and other transactions by, how protected, 872. payment to, how protected, 879. where may be made co-defendant in a suit in equity, 364. need not be made co-defendant in an action, 722. foreign, right to sue, 665, note. 1096 INDEX. BANKRUPTCY. See Proof, Fiat, Assignees, Joint and Separate Estate, Real Estate, &c. is a dissolution of a partnership at will, 111. for a term, 119. stipulation on, that bankrupt's share shall be taken at a valuation, 227. plea of, to bill for an account, 377. on an action, 682. what are acts of, 848-850. to support a, what is a good petitioning creditor's debt, 851. of infant partner, 852. rights of assignees under. See Assignees. effect of, on acts of solvent partner, 860 etseq. See Solvent Part- ner. destroys the mutual agency of partners, 871. except where innocent third parties are concerned, 873. secret acts of, committed by one partner, do not avoid the bond fide acts of a solvent partner, 860. even after notice of an act of, committed by one partner, the cred- itor may receive payment of his debt from the solvent part- ner, out of moneys in his hands, 861 et seq. execution after. See Execution. contracts and dealings after, how protected, 872. payment after, how protected, 873. effect of assignment by commissioners under foreign, on property subsequently attached, 877 and note. BILL IN EQUITY. See Suits in Equity. (1) Between Partners, will lie for an account, 298. will lie for a return of premium, in certain cases, 360. prayer of, where extended to injunction and ne exeat regno, 367. ought to pray a declaration of dissolution, 367. pleas in bar of. See Plea. may be demurred to, where persons joined as co-plaintiffs who have no interest,- 368. (2) Against Partners, may be filed by a few creditprs, on behalf of the ' rest, 838. BILL OP EXCHANGE, in name of firm, partners bound by, 403. whether firm be A. & Co. or A. & B., 403 et seq. or A. only, 411. instances as to drawing, 404. indorsing, 406. accepting, 408. indorsement by one partner only, 412. negotiated by one adventurer, whether binding on the others, 402. given after partnership for debt of one partner contracted before, but on account of the partnership, is founded on good consider- ation, 416. fraud in the negotiation of. See Fraud. given in name of firm, in discharge of separate debt, 492 et seq. accepted by incoming partner, for debt of the old firm, 525. negotiated after dissolution, 541. all the partners should join in the indorse- ment, 545. of new firm, taken in exchange for that of old firm, 559. given to a firm, is a security to those only to whom it is made paya- ble, unless it be made payable to their order, 631. must be sued on, by what parties, 655. when indorsed inJjlank, 655. INDEX. 1097 BILL OF EXCHANGE— Con(muerf. how must be negotiated, after the bankruptcy of one partner, 869. proof under. See Proof, Election of Pkoop, Double Proof, &c. shareholder in a company cannot sue director on, in what cases, 1116. negotiated in the name of the company by any one of the members, available against the company, in the hands of an innocent indorsee, 1137. unless he was the first person to whom it was negotiated, 1137. or the bill is objectionable on the face of it, 1137. how far agent of a company may bind the company by, 1139. BILL OF LADING, pledged for separate debt, .500. BOND, executed by one partnerin the name of the firm, where binds the firm, 463, note, 466. executed for duties to United States by one merchant, member of a firm, binds firm, 463, note, to Lord Chancellor, may be executed by one partner, 444. of one partner given for simple contract debt of firm, efiect of, 481, note, joint, reformed in equity, 585. taken from one partner, and money applied to partnership purposes, efi"ect of, 476. of one partner to perform an award binds him, 471, note, remedy in equity where one partner attempts to bind firm by, for partnership debt, and fails, 471, note, 481, note, given to firm, where will cease to be effective on a change of the firm, 614. as to change effected by introduction of a nominal partner, 619. how may be drawn, so as to extend to the future members, 620. where given to a house 'by its long-established name, will extend to all members as they arise, 621. obligor in taking partner, surety released, 614, note, given to trustees of a joint-stock company, remains in force through the fluctuations of the house, 621, 1139. BOOKS OF ACCOUNT, must be open to inspection, 220. production of, before master, 316. proceedings to be taken by defendant wishing to inspect, 380. detinue for, 383, no|e. partner resident in England need not schedule foreign, 846. BROKER, in what cases not a partner with principal, 19, 26 el seq. agreeing to share the profits of goods, not a. partner in the goods themselves, 171. may give evidence for plaintiff, though he is to share the profits, 687. CAPITAL, may- consist of the use of property owned separately, 18, note, of commissions for management of the property of others, 18. whether partner supplying labor only may share, 167. CAPTAIN OF A SHIP, receiving wages out of profits, 33, 34. CARGO, outward and return, 23. purchased by part-owners of a ship, 23, note. CARRIERS, actions against, 728, 731 et seq. CASH ACCOUNT CURRENT, gradual discharge of retiring partner's liability on account of, 547 et seq. whether continuance of, in new firm, discharges old firm, 566. liability of deceased partner's estate under, 598. rights of partners under, how regulated, 633 et seq. 92* 1098 INDEX. CERTIFICATE of bankrupt may be signed by one partner, 444. bars debts due by one partner to the otber, 858. under separate bankruptcy, is a bar to all actions for contribution by bankrupt's copartners, 858. of one partner, no bar to an action against the other, 859. under wbat circumstances granted, 1051. of one partner stayed on petition of the other, 1052. CESTUI QUE TRUST of partners, where liable as partner, 385. of one partner, where may consider moneys misapplied as a debt from the firm, 456. CHANGE OF FIRM. See Bond, Fluctuations. CHARGE AND DISCHARGE, 315. charge by entries in books kept by party may be discharged by other entries in same books, 315, note, so, paper read to charge'party may Ise read by him to discharge, 815, note, to render available, the discharge must be in same sentence or con- nection with charge, 315, note, charge in account cannot be discharged by distinct items on other side of account, 315, note. CHATTELS. See Stock. delivery up of, on dissolution, 243. CHILDREN, succeeding to their parent's share,. 232. CHOICE OP ASSIGNEES, 1034. commissioners in some cases ordered to review and proceed to a new choice, 1062.' CIVIL DEATH of partner dissolves partnership, 114. CLAYTON'S CASE. See Appkopriation op Payments. CLERGYMEN, partnerships between, 69. CLERK, lending money to firm, 565. CLUBS have liabilities similar to those of ordinary partnerships, 53. exception to the rule, 53, note. majority of members of, cannot in all cases bind minority, 197, and note. COACH, i&e Stage-coach. COLLUSION of one partner implicates the firn^ 455. COMMANDITE, partnership in, 6, note. COMMENCEMENT OF PARTNERSHIP, under the articles, 213. as to third persons, 509, 513, note. COMMISSION, partnership in, 51, 52. COMMISSION OF BANKRUPT. See Fiat. COMMISSIONS OF BANKRUPT, whether two can stand at the same time, 1061. COMMUNION OF PROFIT. See Profits. necessary to a partnership, 19, 400. but does not necessarily make one partner in capital stock, 171. implies a communion of loss, 19. means a joint and mutual interest in profit, 20, 25. may exist in part of an adventure only, 23. COMPANY. See Joint-Stock Companies. COMPENSATION for trouble does not make a man partner, 25. cannot be claimed by partner for getting in the debts, 199, 219. nor by one partner for extra services in the concern, unless by agree- ment, 183 and note, the reason for this, 183. INDEX. 1099 COMPOSITION DEED, what creditors, parties to, may file a bill, against the partners who execute it, 838. COMPOUND INTEREST, when allowed, 336, note. COMPOUND PARTNERSHIPS, obligations of partners under, 200. COMPROMISES AND COMPOSITIONS of claims by one partner enure to benefit of partnership, 199 and note. , partner who has made the compromise cannot keep claim alive and enforce it against the firm in name of original creditor, 199, note. CONNIVANCE of one partner binds firm, 455. CONSIDERATION necessary to assent of a creditor to be bound by arrangements of partners, 554. but may be presumed, 561. CONSOLIDATION OP ESTATES, 1033. CONTINGENT INTEREST in profits, 49. CONTINUATION OF PARTNERSHIP without fresh articles, 214. presumed, how levy, 105. CONTRIBUTION, not generally to be had at law between partners, 282- 284. may be had at law between partners for damages, 285, 286. may be had in equity, both for damages and costs, in an action against the partners, 287. CONTRACT of partnership must be voluntary, 8. by partners is joint and several in equity, 576, 580. rights of partners under parol, 623. CONVERSION, joint, in trover, 458. of joint into separate estate, &c., 174, and see Joint and Sbpaeate Estate. of joint into separate debts, &o. See Joiistt and Sepaeate Debts. CONVEYANCE of stock in trade for benefit of creditors, where an act of bankruptcy, 850. CONVEYANCERS, partnership between, 50. CO-OWNERS of chattels, 22, note. CO-PLAINTIFF, person made, who has no interest, bill demurrable, 368. CORPORAt'cON. See Joint-Stock Company (1). company becoming, whether a dissolution, 115, note. may be partner, 16. COSTS, party against whom balance is re'ported prima facie liable for, 339. rest in sound discretion of court, 339, note. where suit necessary to settle concern, costs may be divided, 339, note. party may be taxed with, for improper conduct, 339, note. observation as to, in intricate accounts, 339. may be decreed up to the hearing, and subsequent costs reserved, 339. refused to defendants, where they might have demurred, 378. on demufrer to plea in abatement, 748. on trial of plea in abatement, in actions against partners, 726, 750. in actions against partners generally, 811. in a suit by a creditor against the representatives of a deceased part- ner and the assignees of survivor, 842. allowed to petitioning creditor in first commission after a supersedeas, 1066. in bankruptcy in general, 1073. what they consist of, 1073. 1100 INDEX. COSTS — Continued. after a supersedeas, 1074. under distinct accounts, 1075. upon petitions in general, 1076. must be prayed for by petition, 1077. CO-SURETY. See Surety. COURTS OF EQUITY will not interfere between partners for trivial matters, 201. ' nor dissolve partnership on ground of bad temper, 296. may declare partnership void, 360 and note, and restore injured party to his original rights, 360, note, whether will restrain use of partnership name and order instruments to be delivered up, 360 and note. COVENANT. See Injunction. in agreement to enter into partnership, 207. in articles which have expired infused into the new partnership when continued, 214. specific performance of, in partnership articles, 247, 248. joint, by partners, will be construed in equity several, 256. joint, where not construed several, 256. not to sue, not equivalent to a release, 608. COVENANT (1), Actions between Partners. may be brought, where, 245, 246. except when the damages are payable out of the partnership fund, &c., 245. may be brought on the preliminary agreement for partnership, if under seal, 207. is the proper remedy, where, 246. where not the proper remedy, the covenant being enforced in equity, 246-248. See Specific Pekpokmance. whether will lie, fqr refusal to refer to arbitration, 250. to refer to arbitration not enforced in equity, 251. must be brought by all the covenantees, if cause of action be joint, 258.' but may be brought on a several account, where operative words are several as well as joint, 259. parties to, may be limited by agreement, as regards actons inter se, 261. may be brought by covenantees who have not sealed, 262. and cannot be brought without them, 262. unless, perhaps, they have refused to seal, 262. must be brought by survivors on death of one covenantee, 262. how advantage to be taken of nonjoinder of parties on, 262. when may be maintained, though the seal of one is erased, 263. (2) Actions by Partners — may be brought by one, if cause of action sev- eral, though woijds joint, 657. but parties to, alone may sue, 649, 651, 652. who are parties to, 651, 652. CREDITOR, payment of, under trust deed, 241. must be a party to an agreement to relinquish his old security, 552. taking security of new firm, 559 et seq. CREDITOR'S BILL, against partners, 838. CROWN, proceedings of, against partners, 461. CUSTOMS, breach of laws of, by partners, 461. DAMAGES, contribution for, 269, 285-287. in actions ex contractu, where cannot be had against those who suffer judgment by default, 810. INDEX. 1101 DAMAGES— Continued. in tort, when cannot be had against those who have suffered judg- ment by default, 810. how to be assessed where some of the defendants suffer judgment by default, and others plead to issue, 810. or where some demur and others plead to issue, 810. where defendants sever in pleading, 810. trespass, 810. DEATH, partnership dissolved by, 113, 114, 116, 119. accounts, how taken on, 330. of partner, gives right of action to the survivors, 666. against the survivors, 576, 723. DEBT, action of, on award between partners, 279. DEBTOR of partnership need not be a party to a bill for an account, 365. DEBTS, courts of equity lean to an ejuaZ- payment of, in construing deed of trust, 241. provision for payment of his share by one partner, how construed, 241. of partnership in equity are several as well as joint, 580 and notes, of one partner to the other, barred by certificate, 858. provable under Jiat against partners, 858. due to partnership upon transfer of, notice must be given to creditor, 896. conversion of. See Joint and Sepakatb Debts. DECEASED PARTNER, executors carrying on the trade for, 228. See Executors. widow of, when entitled to dower, 133, 156, and note. DECEASED PARTNER'S ESTATE, copartners may prove debts in suit for the administration of, 330. joint creditor receives payment out of, when and how, 576 et seq. whether or not pari passu with separate creditors, 584 and note, 920, note ; Sparhawk v. Russell, 10 Metcalf, 305. liable to be proceeded against immediately in hands of his represent- ative, 580. whether this is so, if survivor is solvent, 580 and note, joint creditor has a right to full payment out of, 589. liable for the fraud of a partner during his life, 589. how affected by the Statute of Limitations, 590, 593. how discharged generally from liability, 593 ; and see Retiring Partner. by what acts of creditor, discharged, 600. how affected by acts of survivor, 592. when survivor is executor, 592, 594. in order to exonerate, not necessary to give notice of dissolution by death, 113, 120, 538, 593. except where one of the survivors is executor, 593. not necessarily discharged by taking security of survivor, 596. nor by contiuuiiig account with the survivor, 597. nor by receipt of interest from the survivor, 597. how discharged in the case of cash accounts current, 598, 599. liability of, where executors continue the trade, 601. where executors carry on trade in a more limited manner, 601, 602 el seq. DECLARATION of one partner is not evidence against the others to prove the partnership, 776. but is evidence against the others to prove partnership contracts, 779. of one defendant, how far evidence against all in an action for joint tort, 801. 1102 INDEX. DECLARATION— Continued. in actions by partners, 673 ei seq., 688. in actions against partne;-s. See Actions against Partners (5). DEED. See Bond, Covenant. one partner cannot bind firm by, 2, 463. executed " for himself and partners," 466. executed in the presence of copartner, 465. executed under a previous parol authority or ratified by subsequent parol adop;ion of absent partner, 467 and note, when executed by one partner but not necessary to the conveyance, 467. in bankruptcy, 467. assignment of chose in action by, 4, 7, note. but the rule that one partner cannot bind the firm by, does not ex- tend to releases, 468. or perhaps to warrants of attorney, 469 and note, partner himself may be bound by, 471 and note, parties to, alone can bring actions on, 650, 651. secus as to cpntracts not under seal, 653. DEED OP DISSOLUTION. See Dissolution. DEED OF SETTLEMENT, executing, makes a man a partner, 1086. generally as to. See Joint-Stock Companies. DEED OP TRUST, how construed with respect to a partner covenanting to pay his proportion of the debts, 241. how construed as to payment of debts generally, 241. DEFENDANT answering, must answer fully, 379. this rule altered by late orders, 379, note, entitled to put in a separate answer, 380. what course must be taken by, if the partnership books are not in his possession, 380. what he must prove in actions by partners, 689. actions against partners, 782. where may be estopped from saying he is not a partner, 784. one, out of State, having no property in it, 702, note, others may be proceeded against, when, 702, note. DELECTUS PERSONiE, incident to the law of partners in England, 8, ' 9, 10, 113 and note, 193, 194. case in which this doctrine seems to have been disregarded, 10. does not hold between part-owners, 1216. DELIVERY UP, of chattels, 243. of instruments may be decreed, where, 360 and note. DEMURRER to a bill between partners for an account, 378. by part-owners, plaintiff may amend on, 1236. for misjoinder, 1236, note. DEPOSIT, where shareholder is a partner from time of payment of, 1086. may be recovered in an action, 1097, 1098. in a suit in equity, 1099. DESCRIPTION of bankrupt in fiat, 1020. DEVENERUNT, information by way of, 461. DIRECTORS of joint-stock company, fraud of, relieved against in equity, 1120. DISCHARGE of one partner arrested on a joint ca. sa., where extends to both, 609, note. DISCLAIMER by one partner of the acts of his copartner, 388, 389, 783. of guaranty, 420. DISCOUNT of partnership bills, not a loan to the partnership, 475, 476. INDEX. 1103 DISCOVERY, where plea to relief extends to, 369. wtere persons made parties for, 364: and note. DISHONOR, notice of, after dishonor by one partner, 443. DISSENT by one partner to future contracts or purchases of copartner, effect of, 388, 389. copartner not liable after, 388, 389. i unless he adopts transaction, 388. ■« whether dissenting partner will be liable merely because the benefit of contract or fruits of the purchase came to the firm, 388, 389 and note. DISSOLUTION takes place at the will of the parties, 165. how affected by term in a lease, 106, 407. of a partnership at will, by what means, 109. bankruptcy, 109, 111. assignment of profits or interest in partnership stock, 110 and notes. unless partner remains in firm as before, 110. insolvency, 112. does not^er se dissolve, 112. execution, 112. outlawry, 114. felony, 114. death, 113. marriage of a feme sole, 115. war, 115. extinction of subject-matter of partnership, 115. mere absconding of partner does not work a dissolution, 114, note, whether the fact that some or all the members become a body politic for the same purposes as the partnership dissolves, 115, note, of a partnership at will, may be immediate upon notice given, 109. moment's notice sufficient, 109, note, act of one partner extends to the whole society, 116-118 ; but see 116, note. / so the death of one, 113 and note, 116, 117. partnership exists after, for certain purposes, 118 and note, 546. of a partnership for a term, by what means, 119. by the mutual consent of psifties, 119. decree of a court of equity, 119. bankruptcy, 119. outlawry, 119. felony, 119. whether partnership for a term may be terminated at the will of one of the partners, 119, note (7). of a limited partnership, no notice necessary, 104. causes of, may be qualified, except in bankruptcy or felony, 119. of a partnership quoad third persons, 120. effect of, as between the partners, 121, 199, 214. as to leases, 121. duties of those appointed to wind up concern after, 199. must do every thing for utmost advantage, 199. can claim no reward for trouble, 199 and note, compositions and compromises to be for benefit of partnership, 199 and note, effect as to covenants in articles where business continued without articles, 214. effect of, as to third persons, 121. 1104 INDEX. DISSOLUTION — Continued. operates as a revocation of authority to make new contracts, 540, 546 and note, in some respects prospective only, 118 and note, 546. power and right of partners after, 546 and note, to settle, compromise, &c., 546, note, to waive demand and notice on note, 546. to assign a bond of the partnership, 546. where may be prevented by injunction, 206. may be awarded by arbitrator, 234. • must be by deed, where, 237. deed of, may be in what form, 237. what it contains, 237. will sometimes extend to what are not originally partnership contracts, 242. destroys lien after a division of property in specie, 243. partner's right to, may arise frotti — the impracticability of the undertaking, 291. incapacity of partners, 292. misconduct of partners, 296. will in some cases be decreed without being prayed for, 297. whether account can be prayed for without praying for dissolution, 298-300 and note, 1128 ei seq. instruments negotiated after, retiring partner not bound by, 541. after, partners become tenants in common of partnership securities, 545. and they must be indorsed by all the partners to put them in circulation, 545. severs joint contract, 658. evidence of, how given, 690. notice of, must be given, 120, 530 et seq. exception in case of dormant partner, 120, 536. so in case of death, 120 and note, 538, 593. unless copartner is executor, 593. so of bankruptcy duly declared, 120, note, 538. so of war, 538. so in case of limited partnerships, where the terms and time of continuance are required to be published, 538. DISTILLERY, partnership in, 76. DISTINCT ACCOUNTS, under joint or separate fiats, 1029 et seq. in bankruptcy, 1031, 1032. DISTINCT FIRMS, joining in one partnership transaction, effect of, on each other, 200. payment to one of two, 641. DISTRINGAS. See Process. DIVISION or EFFECTS, 227. DORMANT PARTNER, what, 4 and note. law relative to, confined to trade and commerce, 4, note, notice not necessary on retirement of, 120, 536. except to particular creditors, who happen to know him as part- ner, 537 and note, reason of this, 536. in all cases liable for the contracts of the firm during his partnership, 19, 20, 384, 537. incoming, how his liability determined, 524. retirement of, how it affects guaranty given to firm, 625. need not join in an action where not specially contracted with, 660, 661. INDEX. 1105 DORMANT PARTNER— Continued. nonjoinder of, as defendant, cannot be pleaded in abatement, 719. unless the firm be that of A. & Co., 719. may be sued alone, 719^ on retirement, leaving partnership property in the order and disposi- tion of the remaining partner, effect of, 885. doctrinfes respecting, do not apply to partnerships in the purchase and sale of land, 4, note, .51, note, may be witness in action by his partner, if he release, 687. action cannot be sustained against, and ostensible partner, after judg- ment against ostensible partner alone, 757. DOUBLE PROOF, what is, 963. semble, occurs when a bill is drawn by some of the partners upon and accepted by others, &c., and the drawers and acceptors constitute distinct firms, 963 ei seq. but the rule will not extend to the case of a single partner trading distinctly, 966. DOUBLE REMEDY, where the creditor holds the security of a firm, and also of some of its members, and the latter form a distinct partnership, 458. where the creditor of A. and B. takes out a fiat against A., 958. in the case of a separate mortgage for a joint debt, 962. DOUBTFUL DEBTS, 235. DOWER, when awarded to deceased partner's widow, 133, 135, 156, and note. DURATION OF PARTNERSHIP, how far to be regulated by the length of a lease, 106, 107. DUTIES AND OBLIGATIONS of partners, 178 et seq., and notes. good faith, diligence, skill, and the exercise of a sound discretion im- plied from the' relation, 1 78, note, partner acting fairly not responsible foi: a loss, 1 78, note, otherwise if he is grossly negligent, unskilful, fraudulent, or if he knowingly deviates from the partnership articles, 1 78, note, not only gross fraud, but intrigues for private benefit, are ofiences against the partnership, 179, 180, 181, note, if partner treats privately for the renewal of a lease, he will hold in trust for the benefit of partnership, 181. same rules applied to conduct of partners as to that of trustees, 182. and of agents, 182, note, each partner must devote himself to the interest of the concern, and therefore is entitled to no compensation for services, unless, &c., 183. though services very unequal, 183. reason of this, 183. one partner must not engage in any business to deprive his copartners of his skill, industry, &c., 184, 185. one partner may not place himself in a situation to have a bias against the discharge of his duty to gartnership, 186. temptation to abuse partnership property not sufficient ground for an injunction, 186, note, each partner must keep and furnish accounts, 189 and note, one partner cannot exclude another, 190. nor order expensive repairs, 191. nor introduce a stranger into firm, 192. nor make use of partnership property for private advantage, 196. power of majority, 197 e( seq., and notes. 93 1106 INDEX. EFFLUXION OF TIME, dissolution by, its efiect on articles, 214. EJECTMENT, injunction to restrain, 343. where -will lie between partners, 383. ELECTION to joint creditor after the superseding of a prior separate com- mission taken out by him, 1066; between profits and interest, 335, note. ^ limitations and effect of, 335, note. ELECTION OP REMEDY, where creditor holds a joint and several secu- rity for one debt, 936. where there are two debts, 937. where creditor obtains a mortgage, 939. ELECTION OF PROOF, where creditor holds the joint and several secu- rity of the firm, 940. whether by the same or different instruments, 942. in case of bill drawn by one of several partners on the firm, or by firm on individual members, 943. whether ignorance of the connection of the parties to the bill makes any difference, 944. where debt has been converted without extinguishment, 945. where debt has been converted by the collusion of the debtor and his copartners, 947. in the case of dormant and ostensible partners, 948. where a demand is split, 935, 949. gives no preference on the surplus, 951. EN AUTRE DROIT, fraud not binding on firm, 456. ENEMY'S COUNTRY, one of two partners resident and carrying on trade in, 647. ENTRIES, where partners not bound by, in their books, 770, note, where they have been held bound by, 453. where compelled to give inspection of, 456, note. EQUALITY OF INTEREST, presumed among partners when, 167 and note et seq. EQUITABLE MORTGAGE, partner cannot bind the firm by, 440. made to the partners of a firm, does not, prima facie, enure to the new firm after a change of partners, 623. yet may be enlarged by parol, 626. EQUITIES OF THE PARTNERS, creditors receiving payment through, 576. right of partnership creditors to preference over creditors of individ- ual partners in respect to partnership property, dependent upon, 125, note. EQUITY. See Courts of Equity. ERASURE of seal, effect of, in action on covenant, 263. ESTOPPEL, operates against the defendant in actions against partners, where, 784. EVIDENCE, — (1) Actions hy Partners. must be given that the plaintiffs were all partners at time of contract, 685. on a note payable to A., B. & Co., 685. sometimes even on a note indorsed in blank, 685. of partnership, how given, 686. may be given for plaintiff by nominal partners, 687. by dormant partner, if he release, 687. by person who has purchased an interest, &c., 687. by broker, 687. INDEX. 1107 EVIDENCE— Continued. but not by copartners, 687. nor by widow of deceased partner, in suit by survivor, 687. copartner not rendered competent by stat. 3 &,4 Will. 4, c. 42, 687. of partnership having been given, the declaration of one partner is evidence against another, 688. defendant may give a release in, 689. . of dissolirtion, how given, 690. on plea oi non assumpsit, 691. on plea that the promises were made jointly with a third person, lat- ter may be called as witness, 691. in actions of tort, 692. (2) Actions against Partners, — what necessary to prove partnership, 769. of partnership, deduced from instances of joint dealing, 769. sufficient, from acts, entries in books of firm, &c., without proving partnership deed, 770. where partnership deed not admitted, 770. may be derived from an invariable course of dealing by means of bills of exchange, 771. not from an answer to a bill in chancery filed by one partner against the other, the latter objecting, 772. whether the record of an issue to try the partnership is, 773. verdict and judgment not admissible to prove partnership between other parties, 773. record of judgment rendered against several as partners, on default, is evidence of partnership for other parties, 773 and notes. general reputation not evidence to prove partnership, 777. of partnership, declaration of one partner is, as against himself, 774. but not as against others, 776. against the firm, admissions and declarations of one partner will be, when partnership once established, 779. and even after its dissolution, 780. but it may be shown that the admission arose from mistake, 785. against the old firm, acts of agents of new firm will not be, 780.. of a separate contract, where joint contract may be given as, 781. of liability does not arise from bare acknowledgment, if there be evi- dence to the contrary, 782. of partnership, how may be rebutted, 783. of partnership having been given, how the defendant may be estopped from contradicting it, 784. by what witnesses may be given. See Witness. in an action against several for a joint tort, need not afiect all the defendants, 800. EXAMINATION. See Witness. of parties before master, 315. as to their receipts, and payments, 315. of parties on trial of issue, 381. on actions by partners, 687. against partners, 787, 798. EXECUTION, separate, works a dissolution, 112. vendee under sale upon, tenant in common with solvent partner, 166, 824. entitled only to balance due on settlement, 166, 822, notes, against partners, should agree with the judgment as to parties, 817. joint, may be executed against one only, 817. joint, where may be had against surviving partners, 817. in a joint action, may be had both against joint and separate efiects, 818 and note. 1108 INDEX. EXECUTION— Conimued by a separate creditor against whole or part of joint effects, 821, 822 and note, writs of, ipto different counties, 820. proceedings of sheriff under, 822 and notes, p. 708 et seg. interest passed by seizure and sale under, 822, notes, p. 707, 824. remedies for solvent partner against, 825. whether court of law will direct an account between the part- ners after, 825 et seg. whether there may be an injunction to restrain against joint effects, 340 and note, 831 and note, levied on partnership effects, overreached by previous act of bank- ruptcy committed by one partner, semble, 8 74 et seg. but not on acts committed by two, see Stat. 2 & 3 Vict. c. 29, 874 et seg. EXECUTOR, effect of appointment of copartner as, 186. copartner appointed in India, 319. copartner appointed, must account for a debt due from him, 332. should give notice of the testator's death, 593. partners of, permitting him to mix his accounts, 456, note. EXECUTORS OF PARTNERS (see Administkatoks) do not succeed to the condition of partners, 9. take the deceased partner's share in the movables, 129. are tenants in common with the surviving partners, 129. carrying on trade of deceased partner, 228. in what cases have an option so to do, 230. when considered partners, unless they give notice to the contrary, 232. have a right to require the sale of the partnership property in certain cases, 308. carrying on trade with surviving partners with only a share of the testator's assets, how liable to the creditors of the new firm, 602. are personally liable, 603-605. though not carrying on the business for themselves, 604. whether a firm may be, 610. of last surviving partner, where must sue, 666. indebted to testator, 332 and note. EXEMPTIONS PROM LIABILITY. See Paetnees. EXPULSION, clause of, 233. EXTENT against partnership property for separate debt, 825, note. EXTINGUISHMENT, of partnership debt by taking separate security of one partner, 481, note, 478, note, 557-561 and notes, separate security of surviving partner, 561, note, ''y judgment against one of several jointly liable, 757 and note, proof of debt in bankruptcy against one of several, is not, 757. FACTOR. See Beokeb. in what cases not a partner with principal, 26. / partnership may subsist in goods in the hands of, 55. FALSE INSTRUMENT. See Feaudulbnt Insteument. FALSE RECOMMENDATION of a person as worthy of credit, suit by partners for, 668, note. FARM, partnership in, not consummate till the joint occupation, 519. partners in, cannot bind each other by bills of exchange, 402. FARMERS may be partners, 51. INDEX. 1109 FELONY dissolves the partnership, 109, 114, 119. of one partner, how it affects the firm, 451. effect of, in bankruptcy, as to joint fiats, 852. FEME COVERT cannot be a partner, 15. except by the custom of London, 15. and perhaps in case of the civil death of husband, or where he has deserted wife, 15. FEME SOLE, marriage of, dissolves the partnership, 115. FIAT, — (1) Generally. petition for, all partner^ must join in, 444. by one partner against another, 851. motives for suing out, not generally to be regarded, 851. second, can be supported in bankruptcy, 852. where more than one, the court will uphold that which includes all or most of the partners, 1062. annulment of. See Annulment, Supersedeas. (2) Joint, what a sufficient petitioning creditor's debt for, 851. separate ci^ditor cannot sue out, 851. against some of the members is allowable, 851. separate estate administered under, 853. debts provable under, 858. should be taken out when it can, 1018. may be supported, though some partners have no share in the capital, 1019. but semMe, not, where no joint property ; as where two partners, and one having no share in the capital, 1019. how bankrupts should be described in, 1020. proceedings of commissioners under, 1021. exammation of witnesses, 1022. death of, 1024, note, petitioning creditor under former fiat, may be compelled to exhibit proceedings under, 1024. but the act of bankruptcy must be proved as strictly as before, 1024. at^udication under, 1025. solvent partners, attendance compelled under, 1026. summoning the bankrupt under, 1026. none but joint creditors can vote for choice of assignees under, 1034. issued after separate, void at law ; but may be supported in bank- ruptcy, 852, 1061 e< seq. (3) Separate, joint estate administered under, 853. debts provable under, 858. certificate under, is a bar to all actions for contribution by bank- rupt's copartners, 858, 859. proceedings under, exhibited under subsequent joint fiat, 1024. joint creditors may vote for choice of assignees under, 1034. FIRM, 626, note. the mode of designating the persons composing it, 626, note. legacy to a, 626, note. effect of change in, 626, note. appointed to an office, 626, note. a trade mark, 626, note. FIXTURES, law of, considered with reference to the bankruptcy of part- ners, 892 and note. FLUCTUATIONS of firm, how they affect remedies by and against the firm, 565, 613 et seq. effect of, on money lent by clerk to firm, 565. 93* 1110 INDEX. FOLLOWING THE PARTNERSHIP STOCK, 126. FOREIGN COUNTRY, partners resident in, but not trading in an ene- my's country, may sue out commission here, 14. FOREIGN PARTNERS, if not partners by the law of this country, cannot sue here, 646 and note, one of two partners residing and carrying on trade in enemy's coun- try, 647. FORGERY, effect of, as to indorsements, 447, note. by one partner, effect of, on the others, 451, 452. FORMER JUDGMENT AND FORMER RECOVERY, 755. may be pleaded by partners, though judgment against one only, 755. what must be shown in such plea, 755. against one joint contractor where debt is joint only, bars action against another, 757 and note, against ostensible partner, bars action against him and dormant part- ner, 757 and note, against one of several jointly and severally liable, does not bar action against others, 757 and note. FRAUD, — (1) Between Partners. may consist in intrigues for private benefit, 179. either in concocting, 179, 180. or in dissolving the partnership, 181. or in engaging in business, which deprives the partnership of his assistance, 184. may be subject of bill in equity between the parties, 360. (2) In reference to third persons, — whether committed on one partner, gives hini a right of contribution, 196. by one partner generally, binds his copartner, 445 et seq. in the case of bills negotiated, 447. in the same case, where there are distinct houses, 449. in adventures, 446. contract incomplete by reason of one partner's, is fulfilled by the co- partner, 450. partnership note indorsed by, effect of, on indorsee, 447. by one partner, and arising out of his felony, binds copartner, 451, 452. firm cannot acquire property in goods obtained by one partner's, 454. firm bound by connivance at, 455. en autre droit, not binding on firm, 456. by partner trustee, how it affects firm, 456. by partner and his separate creditor, who takes partnership securities, 493. may be rebutted, 502. FRAUDULENT INSTRUMENT, bill for delivery up of, 360. FRAUDULENT PARTNER cannot sue, 643. FRAUDULENT PREFERENCE in contemplation of the bankruptcy of the solvent partner, effect of, 866. FRAUDULENT REPRESENTATIONS, a person induced by, to enter into partnership, may file a bill for return of premium, 360. whether he may prove the money advanced a debt against the de- frauder, 980. as to the credit of a person, 668, note. FREEHOLD (and see Real Estate), purchased with partnership funds and held for the uses of the partnership, in equity for some purposes considered as personal estate, 133-161. certain exceptions, 158 et seq. INDEX. 1111 FREIGHT, -what it Is, 1186. whether a contract relating to, independently of the ship, is affected by registration, 1196. GAZETTE, notice of retirement in England should be inserted in, 532- 534. no particular newspaper required in the United States, 532 and note, put in as evidence of dissolution, 690. GENERAL ISSUE, pleaded to action by partners, what it admits, 685, note. GENERAL PARTNERSHIPS, 4, note. GIVING TIME, to remaining partners, where it discharges the remaining partner as a surety, 563. generally, to one of several joint debtors does not discharge the others, 563. to principal in a bond discharges surety, 563, note. GOODS of an adventure not shared under an agreement to share profit and loss, 1 70. supply of, to a partnership, as contrasted with money lent, 477. supplied for an adventure, who liable for, 513, 514. in specie need not be assigned by deed, upon the conversion of part- nership property, 895. GOODS SOLD AND DELIVERED, action for, where maintainable by company against shareholders, 1111, 1119. GOOD-WILL arising from exclusion of other persons may be valued, 161. must be created by express words, 161. arising only from sole ownership cannot be specifically valued per se, 162. how it may properly be described, 162, note, whether it survives, 162, note, receiver may be directed to carry on business, under direction of court, to preserve, 162, note, maybe taken into account in equity, in some cases, 162 and note, 322 and note, in business between professional men, how treated, 168. GROSS EARNINGS, 35 and note, 44, note. difference between sharing in and sharing net profits, 35 and note. GUARANTY by one partner, in what cases binds the firm, 417. given for separate debt, 496. given to a firm, does not, prima, facie, enure to the new firm, after a change of partners, 624. as, for instance, to the surviviag partner, 624. or the remaining partners, though the retii'ing partner was dor- mant, 625. but may be enlarged by parol, 626, 627. how construed, 628 and note. not beyond the obvious import of its language, 628, note, may be sued on by all partners, though given in terms to one only, 653. declaration in action on, addressed to one of two partners, may state promises to both, 675. HEIR of partner, tenant in common with survivors, 133. whether he takes real estate, 137 et seq. 156 and note. HIGHER SECURITY, partners resorting to, must abide by, 652. HOLDING ONE'S SELF OUT AS PARTNER, what it imports, 86, 97, notes, evidence in such cases, 89, 97, note ei seq. 1112 INDEX. HOLDING ONE'S SELF OUT AS PARTNER— ConimwcZ. no particular mode necessary to charge party, 97, note, if stipulated that he shall be liable for no loss, he will not be liable to one who knows it, 98, 86, note. IGNORANCE of creditor of the situation of the parties to a bill, how far it affects his right to double remedy or double proof, 944, 963, 964. of creditor of dormant partnership, 537, note. ILLEGAL PARTNERSHIPS. See Partnership, (1). observations on, in general, 56 ^ seq. partnership only illegal, where the breach of the law is pernicious to the pubhc, 76. must be pleaded specially, 645. are ground of nonsuit, 645. partners in, have no remedy against each other for contribution or apportionment, 77, note, when partner cannot set up illegality as a defence, 7 7, note. IMPRACTICABILITY of undertaking is ground of dissolution, 291. INCAPACITY of partners is ground of dissolution, 292. but does not per se dissolve, 292, note, reasons, 292, note. soundness of the principle doubted, 292, note. INCOMING PARTNER, stipulation as to his paying debts of the old firm, 239. liabilities of, 520. generally, will not be liable for the old debts, 520. though name of firm continues the same, 520, note, even where he is shown to have paid interest on the old debts, 521. exceptions, 522. question as to the liability of, how properly to be determined, 524. how, if he be a dormant partner, 524-. accepting bill for debt of the old firm,' 525. with a person who is lessee, 526. in adventures, not liable for price of goods, 527. to what extent liable, if an infant. See Infant. cannot join in an action for debts previous to his accession, 650. admitted as from a previous day, cannot join in action on subsequent contract, 656. INDEMNITY BOND may be enforced in equity by retiring partner, 243. INDIA, partner executor in, is entitled to a commission for getting in debts, 319. INDICTMENTS by partners, 693.-695. INDORSEE, rights of, when holding a bill originally negotiated with fraud but without notice of the fraud, 447. where will be put to prove consideration, 447, note, 494 and note. INDORSEMENT. See Bill op Exchange. in, name of firm binds the firm, 403, 404, 406. made before dissolution, whether binds the retiring partner after, 544. in blank, conveys a joint right of action to as many as sue on the bill, 655, 685. accommodation by one partner, 421, note. INFANCY, plea of, to action against partners, 766. cannot be pleaded by adult co-defendant, 720, note. INFANT may be partner, 13, 528. may avoid the contract, 13 and note. INDEX. 1113 INFANT— Continued. must avoid wllhin reasonable time after coming of age, and give notice, or will be liable as partner, 13, note, 528. may be placed out as a partner, 13. INFANT PARTNER may be considered, as to future contracts, as an incoming partner, 528. must give notice of disaffirmance, 528. whether by affirming contract he subjects himself to debts while un- der age, 529, note. what necessary to confirmation of infant's contract, 529, note. will not be chargeable for contracts during infancy, by law of Eng- land, unless his ratification be in writing, 529. no writing necessary in the United States, 529, note. may maintain action for money paid during infancy, where, and where not, 529. • must join in actions by partners, 664. ought not by English law to be made a co-defendant in actions against partners, 720. if made co-defendant, and he pleads infancy, the plaintifi", by English law, must discontinue action, 720. but by the law of several of the States in such case plaintiff may discontinue as to the infant only, and proceed against adults, 720. whether the plaintiff can sue the adult, omitting the infant, in these States, 720 and note. may plead his infancy, 720. acceptance by, jointly with adults, how to be sued on, 721. becoming bankrupt, effect of, as to fiat, 852. INFORMATION at suit of the crown against partners, 461. , INJUNCTION.— (1) Between Partners. cannot be granted to compel positive duties, 219. will be granted to restrain literal execution of articles in some cases, 224. whether will be awarded against a partner who places himself under a temptation to abuse the partnership property, 185, note. to prevent the dissolution of a partnership, 206. to restrain breach of covenant, generally refused, 246. but in certain cases allowed, 247. in what cases allowed generally, 340. will lie, according to circumstances, to restrain the negotiation of a partnership bill for separate debt, 341. will be extended, in some cases, to the holder, 341. will be granted to restrain the quondam partners from carrying on the trade for their own benefit, 342. on death of a partner, 343. danger of abuse or misapplication of partnership funds by surviving partner sufficient ground for, 343. mere suspicion of misapplication not sufficient ground for, 343. may sometimes be granted without dissolving partnership, 344, 345, and note. refused, where productive of great inconvenience, 346. whether refused, to restrain the use of partnership name, after disso- lution, 360, note. will be granted to restrain the working of stage-coaches, where, 347. usually not applied for till after answer, 349. secus, where irreparable mischief, 349. not granted ex parte in all cases of inconvenience, or even loss, 350. plaintiff's exclusive possession of partnership books sometimes a com- plete bar to a motion for, ex parte, 351. 1114 INDEX. mjTJ'SCTION — Continued. practice as to affidavits on moving for, 351, 352 and note. (2) Other Cases, — whether to restrain execution by separate creditor against joint effects, 340 and note, 831 and note, to restrain disposal of lease by executors of one partner, 365. to restrain the sale of partnership effects by the assignees of one part- ner, 870. railway and other joint-stock companies, 1169 et seg. INSANITY of partners, a ground of dissolution, 292. but does not per se dissolve, 292 and note. reasons, 292, note, soundness of principle doubted, 292, note. whether decree necessary to dissolve after insanity of one partner ascertained by commission of lunacy, or where one. partner has been put under guardianship by reason of, gucere, 292, note, 293, note, reference to master as to, 292: mode of proof, 293 and notes, real, must be shown, 393 and note. where it affects the rules as to proof between partners, 977. notice of dissolution under agreement good, though partner on whom served is lunatic, 293, note. INSOLVENCY (and see Insolvent Act), means, in partnership articles, inahiliiy to pay, 233. of one or all the partners does not joer se dissolve partnership, 112. of firm, knowledge of, by retiring partner, 573. on proof by retiring partner against the remaining partner sub- sequently become bankrupt, 985. of firm, knowledge of, by one partner, will not affect the doctrine of conversion, 902. of joint estate, not a condition precedent to receiving payment out of the estate of a deceased partner, 580 and note. INSOLVENT ACT, assignment under, works a dissolution, where, 112. mere insolvency, however, does not work a dissolution, 112. replication of discharge under, 722. INSPECTION.. See Introduction. of partnership deed, motion for, at law, 207, note, of entries, 456, note. INSPECTOB, appointed to take care of the interest of unrepresented cred- itors, 694. INSTRUMENT, delivery up of, 360 and note. rectification of, 586, 587. INSURANCE, partnerships in, are legal, 62. one partner may effect for firm, 438. INTEREST, person receiving, where and where not a partner, 46 et seg. bequest of, does not carry profits, 324, note, on balance in hands of partners, 335 and note. at what time interest begins on such balances, 335, note, on profits made by remaining partners in partnership stock, 335. election between, and profits, on bill against remaining or continuing partners, 335 and note, 336. effect of an election, and how far party may take interest for part of time and profits for another part, 335, note, the whole transaction should be adopted or repudiated, 335, note, partner decreed to pay, is considered as trustee for the partnership, 336. when trustee or partner may be charged with compound, 336, note. INDEX. 1115 INTEREST— Continued. whether may be charged by partner for money advanced in winding up the affairs of the concern, 337 and note, whether is to be allowed on advance of capital, 338 and note. effect of usage or agreement in this respect, 335, note, 338, note, where articles permit partners to withdraw money, not allowed on such sums, 335, note, usage of bankers as to, 338. how charged against trustee, where trust property employed in trade, 336, note, 456, note, paid by incoming partner for old debts, does not necessarily make him liable for them, 521. creditor taking, from new firm for old debt, does not discharge retir- ing partner, 564. nor deceased partner's estate, 597. in bankruptcy, creditors are entitled to, from the date of fiat, 930. how far separate creditors entitled to, in the event of a surplus on their estate, 930. separate creditors not allowed, before the solvent partners, having discharged the partnership debts, have been repaid, 983. included in joint debts, as between solvent partners and third per- sons, 976, 983. INTEREST (in the Stock). See Partners, (2). INTOXICATION, 12. IRELAND, separate commission issued in, and afterwards a joint commis- sion in England, 1065. IRREPARABLE MISCHIEF, warrants an ex parte injunction, 347. ISSUE taken on plea between partners, 369. where directed in suite between partners, 381. on plea in abatement in actions against partners, 749. JOINDER of plaintiffs in actions of covenant between partners, 258, et seq. in other cases. See Actions by Partners, (2) ; Actions against Partners, (2). JOINT, whether partnership contract is, or joint or several, 580 and notes. JOINT ACTION may be brought by persons dealt with as partners, 96. severed by dissolution, 658. by partners for tort, 668. libel, 668. false recommendation of person as worthy of credit, 668, note. JOINT AND SEPARATE DEBTS, conversion of, with or without extin- guishment of the original obligation, 907. how extinguishment may arise, 909 et seq. conversion best shown by an instrument in writing, 913. but may appear from other facts, 914. in latter case, proof of assent by creditor necessary, 914. not effected by judgment of outlawry, 919. nor by a separate execution, 919. without extinguishment, gives rise to the election of proof, 945. JOINT AND SEPARATE ESTATE, both administered under either a joint or a separate bankruptcy, 853. definitions of, respectively, 880. may be regulated by agreement between the partners, 881. 1 . Joint estate by the agreement is joint estate under the bank- ruptcy, 882. though left in the order and disposition of the remaining partner, he being a trustee, 883. 1116 TNDEX. JOINT AND SEPARATE ESTATE — Continued. secus, however, where the partner retiring is a dormant partner, 886 et seq. secus, also, if the partners lake a dormant partner, 888. in which case the creditors of the old firm proye pari passu with those of the new, 888. 2. Separate estate by agreement, not being goods in reputed ownership of the partners, is separate estate under the bankruptcy, 889. _ _ , as to whether goods may be in the order and disposition without being in reputed ownership, 890. 3. Separate estate by agreement, " being goods or chattels in the possession, order, &c., of the partnership," is joint estate under the bankruptcy, 891. but they must have been in the possession, order, &c., at time of the bankruptcy, 893. 4. Whatever has been converted into separate estate, and is no longer in the order, &c., of the partnership, i^ separate estate under the bankruptcy, 894. what necessary to the conversion of, respectively, from one class to the other, 895. there need not be an assignment of goods in specie, 895. debts due to the partnership must be transferred, with notice to the creditor, 896. executory agreement for conversion not sufiicient, 898. effect of absolute conversion, if defeasible on a certain event, 901. conversion of, not affected by knowledge by one of the partners of the insolvency of the house, 902. contract for conversion of, depends on the bona fides of the transac- tion, 903. conversion of, not controlled by creditor, 904. JOINT BOND, when equity will reform, by construing joint and several, 587. whether will be reformed on the sole ground of the obligors being partners, 587 et seq. JOINT CA. SA. See Discharge. JOINT COMMISSION. See Fiat, (2). , though void at law, has been frequently taken out and supported in bankruptcy after a separate commission, 1061. invalid in its concoction, may be superseded as to one partner, and stand good as to the other, 1070. JOINT CONTRACT, severed, action by partners severally, 657, 658. JOINT COVENANT, in what case equity will not construe several, 256, 585. JOINT CREDITOR. See Proof. proving under an order in a suit for the administration of a deceased partner's estate, 577, 578. whether he may prove pari passu with separate creditors, qucere, 584. in equity, partnership debt is several as well as joint, and joint cred- itor may proceed immediately against representative of deceased partner, 580. whether biU for this purpose must charge insolvency of survivor, 580 and note, rule varies in different States, 580, note, may sue out separate fiat, 851. may vote in the choice of assignees under separate fiat, 1034. after the superseding of the separate commission sued out by him. INDEX. 1117 JOINT CKEDITOR— Continued. may, on a subsequent commission, elect to be a joint or separate creditor of the bankrupt, 1067. proving under joint fiat, by Lord Loughborough's order, 1029. where may prove under separate fiat without order, 1030. JOINT FUND, owners of, must join as plaintiffs, 649, note. JOINT INSTRUMENT. See Joint Bond. by partners, not always construed joint and several, 588. JOINT LOAN is in equity considered joint and several, 583. JOINT OBLIGORS, plea of release by one of, 606, note. JOINT PURCHASE merely does not make purchasers partners, 21 and note. JOINT SALE, where necessary to constitute partnership, 20, 23, 400. not absolutely necessary in all ca,ses, 24. of property by same consignee for different consignors does not cre- ate partnership, 22. JOINT SECURITY, taken in discharge of separate debt, prima facie not binding on firm, 494. even where no other circumstances of fraud, 496. but may be bona fide, 502. given for separate debt, but greater in amount, 506. JOINT-STOCK COMPANIES, (not incorporated). (1) Constitution of Company, what makes a man a partner in, 1081. a man is not a partner who merely does acts showing that he will become a partner at a future time, and who is not entitled to share the profits, 1082 et seq. as by mere payment of deposits, 1083, 1084. or taking scrip receipts, 1085. but signing deeds makes him partner, 1086, 1102. and he will be so from the time of paying his deposit, 1086. yet it is not necessary to show that he executed the deed, 1086. being in a situation to share the profits makes him a partner, 1086. a man will be partner in, by holding himself out to the world as such, 1087. but signing a future prospectus is not an act of holding out, &c., 1088. and an act of the kind must be voluntary, 1089. (2) Mutual Rights of ShareJiolders, intended shareholder in, may recover his deposit from the directors in an action at law, 1097, _ 1098. or, in cases of fraud, by a suit in equity, 1099 et seq. frame of the suit in these cases, 1101. intended shareholder in, where not allowed to withdraw from the un- dertaking, 1102. rights of shareholders in, under deed of settlement, 1103. what is deed of settlement, 1103. how construed generally by the courts, 1104. as to actions brought under for calls, &c., 1104, 1105. as to meetings under, 1106. as to appointment of ofiicer under, 1107. as to matters not provided for by, 1115. as to matters out of the control of the parties, — such as the power of a shareholder suing the directors, his copartners, on a bill of exchange, 116-118. or attorney or surveyor, being shareholder, bringing action, 116. as to assignment of shares under, 1112. may regulate actions between shareholders, 1111. 94 1118 INDEX. JOINT-STOCK COMF AMES— Continued. actions between shareholders on covenants in deed of settlement, , generally maintainable, 1109. action between ditto for goods sold for private use, 1111, 1119. in insulated transactions, 1119. suits in equity between shareholders in, 1120. general rule as to parties, — 1. where common benefit to be enforced against a few, some may sue on behalf of others, 1120 ef seq. 2. where court may have to act against interest of parties not specially charged, all must be parties, 1120, 1122 et seq. 3. how to proceed in cases where impossible to have all par- ties present, 1126 et seq. proper allegations to be made in such bills, 1135. (3) Relative Rights of Shareholders and Third Persons. every shareholder is answerable to the full extent of his private prop- erty for the debts of the company, 1078, 1093, 1136. but is not liable on bills of the company, unless usage or express authority to draw bills, 1136. such bill, however, is available in hands of indorsee for value, unless objectionable on the face of it, 1137. shareholders in, liable to the bankrupt laws, setnble, 1138. shares in, when considered in reputed ownership of bankrupt share- holder, 1138. mortgagee of shares of, must give notice of his incumbrance to secre- tary, 1138. agents for, their powers in binding the companies generally, 1139, 1140. (4) Liability of Promoters and Directors. they, or those who hold themselves out as managers, will also be lia- ble for all payments, salaries of officers, &c., unless the par- ties expressly agree to look to some particular fund iol pay- ment, 1090-1092, 1094, 1095. where scheme fails before completion, the subscribers or allottees may recover back their deposits from the provisional direc- tors, 1098. (5) Legal Remedies, aifecting joint-stock companies, their members, and strangers, under late English statutes, 1141 et seq. efiect of registration, 1142 et seq. how far become corporate bodies, 1142 et seq. company liable to be sued as corporate body, 1143. shareholders in, protected from suits, how far, 1143 et seq. public officers, how far liable to suits, 1144. liability of shareholders on judgment obtained against the company, 1145. on executions obtained against the company, 1147. how companies affected by deed of settlement, 1148 et seq. mandamus, remedy by, 1151 et seq. injunction, remedy by, 1155, 1169 et seq. remedy where company has exceeded its statutory powers, 1155, 1169 et seq. assessment by jury of damages done by railway and other com- panies, 1154, 1156. arbitration, 1157. summary remedies, 1160. for company against shareholders, 1161. where shares transferred, 1162. (6) Equitable Remedies between Joint-Stock Companies and Strangers, 1165 et seq. INDEX. 1119 JOINT-STOCK COMPANIES— Continued. suits by or against them by their registered name or name of some public officer, 1165. principle on which Court of Chancery interferes, 1167, 1168. rights of land-owners against companies empowered to take lands, 1169 et seq. injunction to prevent deviation from line marked out, 1171 et V seq., 1182. to prevent breach of contracts by means of which companies have obtained Parliamentary powers, 1175. for other purposes and acts of companies, 1180 e< seq. how far company liable for acts or contracts of projectors before actual incorporation, 1183, 1184. JOINT-STOCK COMPANIES (by Statute), 1142 et seq. See Railway Companies. JOINT TENANCY, where severance of, in movables, presumed, 132. severed in equity in real estate upon death of a partner, 133. JOINT TENANTS, partners are, of the stock, 123. one of several, may appoint bailiff, 442. JOINT UNDERTAKING to do particular piece of work, merely, does not make undertakers partners, 21. JUDGMENT, taken by one of two partners, does not extinguish the debt, unless taken with consent of both, 640. cannot be had against those who suffer judgment by default, where the plaintiff fails as against those who plead, 795, 810. confession of, by one partner, 469, note. bond and warrant of attorney to enter, by one, i69, note. ^ former, in favor of several of the members of a firm, bars an action against the others, 756. against one of several of the members of a firm, bar to an action against the others, 757. though others dormant, 757 and note, but former, against one of two jointly and severally liable, not a bar to an action against the other, 757 and note. JUDGMENT BY DEFAULT. See Judgment, Damages. JUST ALLOWAJSICES, where given, 328, 333, 334. LABOR, whether it will give an interest in the capital, 167-173. LAND (see Real Estate), partnership may subsist in the purchase and sale of, 51, note, would not, however, be affected by all the* rules applicable to com- mercial partnerships, 51, note, of firm cannot be conveyed by one partner except by special author- ity, 394. LAUNCHING PARTNERSHIP, money lent for, how recoverable between partners, 264. LEASE, how far it regulates the duration of a partnership, 106, 107. held of a partner determined by dissolution, 121. considered in equity as one of the movables of the trade, 136. taken by partner in his own name, held in trust for the partnership, 160. an injunction granted to restrain executor from disposing of, 343. bill by surviving partner against executors of deceased to restrain disposition of, 365. deposit of, as a security for a debt after the bankruptcy of one part- ner, good only for a moiety, 869. 1120 INDEX. LEGACY by one partner to another, 332. LEGAL PROCEEDINGS, binding the firm by, 441. LEGALITY of partnership discussed, 56 et seq. LEGATEE appointed partner, 228. how far bound to become a partner under will, 230. must do equity if he elect to take under will, 231. of deceased partner, not a party to a bill for an account between executor and survivor, 366. bill by residuary, against executor and surviving partner, 844. LESSEE, person entering into partnership with, may be liable to landlord, in equity, semhle, 385. but not at law, unless evidence of a new promise, 526. LIABILITIES of partners, 6. See Paktnees (4). how they arise, 6. no restriction of, except by charter or statute, 6. in case of limited or special partnerships, 99 ei seq. for the acts of each other, 384. in what cases commence from the date of the deed, 509. date of deed immaterial, if joint interest commenced before, 509. in adventures commence from the order, where, 511. where not, 513. ; commence with joint interest, 509, 514 and note, theory of partnership liability. Hickman v. Cox, 18 Com. B. 617; affirmed, 3 Com. B. n. s. 623 ; overruled, 23 Law Rep. 498. law of partnership liability, branch of law of principal and agent. Cox V. Hickman, 23 Law Rep. 498. LIBEL, action by partners for, 668. declaration in, by partners, need not state special damage, 679. in actions for, by partners, damages not given for injury to private feelings, 680. separate action of, by partner more particularly aggrieved, 669. LIEN on profits. See Peofits. of partner on the stock, 125-127 and notes. extends to real as well as to personal estate, 125, note. one must have, to be partner, 44, note, p. 38. of partner, ceases on dissolution and division of'property in specie, 243. creditors have none on partnership effects for their debts, 894. LIMITATIONS. See Statute of Limitations. LIMITED ADMINISTRATION, 843. LIMITED PARTNERSHIPS, in France, 6, note, in England, 6, note, in the United States, 99 e< seq. introduced by statute, 99. statement of provisions, generally, 100. kind of business, 100. to consist of general and special partners, 100. special to contribute cash, 100. affidavit respecting, 103. when this affidavit riiay be given in evidence, 103. certificate of terms to be recorded and published, 100. what acts will render special, liable as general partners, 100, 103. renewals and continuations, 100. business to be carried on in name of general partners, 100. capital stock, how far may be withdrawn, 100. INDEX. 1121 LIMITED PARTNERSHIPS— ConJinuficZ. suits, how to be commenced, 100. ♦ dissolution, 100. when no notice of, necessary, 104. insolvency of, 100, 103. provisions of statutes respecting these partnerships to be sub- . stantially complied with,, 101. defects in form disregarded, 101. instances, 101. LIQUIDATED DAMAGES, 236, 253-255. LOAN by one partner to another, 196, 264. to a partner, how satisfied on account taken, 826. to one partner binds the firm, where, 390, 391. to partnership, cannot be construed from mere matter of discount, 476. nor from advances to one partner, which are afterwards carried to the partnership funds, 474 et seq. to a partner on his own security does not create a partnership debt, though money applied to partnership purposes, 478 and note, reason of this, 478, note. rule does not apply to secret partnerships, 478, note, to one of the firm in the name of the firm, all liable, though money appropriated to borrowing partners own use, 480, note, if on joint security of firm, not to be construed as made to the individual partner because carried to his separate account, 503. to one of several, as to his share of an iritended partnership, creates no joint liability, 516. LORDS' ACT, signature of note for weekly payment under, 442. LOSS, not necessary that every partner should undertake to share, 19. undertaking to share, inconsistent with the notion of agreement to share profits by way of remuneration, 30. notice of stipulation not to share, how it afiects third persons, 98. in an adventure, falls on the owner of the goods, 170. inquiry will be directed in equity as to, where specifically alleged, 334. LUNATIC. See Insanity, Pboof, (7). MAJORITY, decision of difierences by, 197, 198, 223, 389, note, never binds except where minority consulted, 197, 198. power of, to bind minority seems to be confined to ordinary transac- tions of partnership, 197, 389, note. ' does not extend to change the fundamental articles of partner- ship, 197, 198 and note, withholding from one his share of the profits, 218, note. MALICIOUSLY HOLDING TO BAIL, 680. MALUM PROHIBITUM, 56 et seq. MARRIAGE of a feme sole dissolves the partnership, 115. MARSHALLING DEBTS, in case of proof, 934. MASTER'S OFFICE, proceedings in, 315 et seq. MASTER OP SHIP taking her on shares, 33, 34. agent for part-owners, 1225. not liable where owners contract personally, 1225, note. MERCHANTS' ACCOUNTS, exceptions as to, in Statute of Limitations, 376 and note. MERGER. See Extinguishmekt. 94* 1122 INDEX. MINES are partnership property for many purposes, 165. partner in, has no implied authority to bind his copartners by bill of exchange, 402. MISCONDUCT of partners ground for dissolution, 296. MISJOINDER of plaintiffs in suits between partners, 368. of plaintiffs in actions by partners, 667. of defendants to actions ex contractu against partners, how to be taken advantage of, 725. actions ex delicto, 730. of defendants in suits against partners, 1236 and note. MISNOMER, 667, 744. MISREPRESENTATION as to firm's solvency, 574, note. MISTAKE, money paid by partner by, 196. IS a good ground for reforming a joint bond, 587. where parties not bound by, but by actual contract, 632. MONEY ADVANCED. See Loan. by one partner to another for founding the partnership, how recover- able, 264, 271. by stranger to one partner for same purpose, creates no joint liability, 516. secus, where the partners all join in a security for the advance, 518. carried to separate account of partner, 504. MORTGAGE, by one partner, of partnership property, 399. separate, for a joint debt, gives rise to double remedy in bankruptcy, 962. MORTGAGEE and partner, what money he may be compelled to expend in the partnership, 189. partnership proof by, 933. MUTUAL COVENANTS, 207. MUTUAL INTEREST, each party must have, in profits, to make him part- ner, 25, 44, note, p. 38. NAME, of firm, 215. See Style. Christian, should be stated in writ, 708. on bills, &c., initials may be used when, 708. misnomer, how cured, 708. NE EXEAT REGNO, 367. what afiidavit must be made to obtain, 367, note. NEGATIVE PLEA, when may be pleaded, and on what ground, 370 and note. NEGLIGENCE, amounting to covin, 420, 451, 452. NET PROFITS, difference between sharing in, and sharing the gi-oss earn- ings, 35 and note, 44, note. NEW FIRM, creditor taking security of, when discharges the old, 556- 559. NOLLE PROSEQUI, cannot be entered by plaintiffs, in England, after plea of infancy, 720. but may be, in some of the States, 720. evidence by bankrupt after, 779, 796. costs on, 813. NOMINAL PARTNER, what, 4. presumption that he is a real partner, how rebutted when his part- nership is set up as a defence, 96. liability of, during time he holds himself out, 4, note, 6, 86 and note, 384. INDEX. 1123 NOMINAL TARTN'EB.— Continued. not necessary, it seems, that person charging nominal partner should have been aware that he was partner at the time of the contract, 86 ; but see id., note, reason of this, 86. what the term "holding one's self out as partner" means, 97. no particular mode of holding one's self out necessary to charge him, 97, note, if stipulated that nominal partner shall be liable to no loss, he will not be liable to one who knows the fact, 98. use of one's name without his consent, though he may have previously belonged to firm, does not render him liable if he has noti- fied his retirement, 97 and note, slight circumstances, it seems, sufficient to show one has held himself out as partner, 89. mere fact of giving joint order for goods will not show this, provided, &c., 91. one's signature to the transfer of chattel not an avowal of partner- ship in it, 93. mere interference in the management of a partnership does not prove one a partner, 94. the fact that two persons sign a note jointly not evidence of partner- ship, 95. otherwise where two draw a bill of exchange, 95. person charged as, cannot rebut the, evidence of lending his name ■by showing he had no interest, 96. effect of introduction of, after bond given to the firm to secure ad- vances, 619. need not join as co-plaintiff in an action, 662. except on a bill of exchange, 663. may be a witness for the plaintiff, 662, 687. NON-ASSUMPSIT, evidence under, 691. NONJOINDER, in actions of covenant between partners, 262. of plaintiffs in actions by partners, 667. NONSUIT, where partners sue on illegal contract, 645. for nonjoinder of parties plaintiffs, 667. for misjoinder of defendants in actions against partners, 725. cannot, even in tort, be as to one defendant, and verdict against the others, 730, 809. as to one defendant, extends to all, 808. as to one defendant, and nolle prosequi as to the other, 808. as to one defendant, and judgment by default as to the other, 808. for nonjoinder of assignees as plaintiffs, 1039. NO PARTNER, plea of, 370. NOTICE of a private arrangement between the partners, 98 and note, 386, 387. of a stipulation not to share loss, how it affects third persons, 98. that one partner will not be answerable in a particular transaction, 388, 389. what sort of, necessary on a dissolution of partnership at will, 109, and notes. degree of, may be inferred from the articles, 109. to third persons of a dissolution by death not necessary to termi- nate the liability of deceased partner's estate, 120 and note, 593. except when one of the survivors is executor, 593. of a dissolution by retirement, where partner unknown, 536. by one partner in legal proceedings, generally binds the firm, 442. 1124 INDEX. 'NOTICE— Continued. to one, equivalent to notice to all, 442, 443. of dishonor, after dishonor by one partner, 443. of dissolution and retirement by ostensible partner, 530. efiect of, 531. in the Gazette or other public and regular newspaper is sufficient, where, 532-534 and notes, where express, must be given, 533. what is ample, in all cases, 534. useless, where partner's name is retained in the firm, 535. evidence of mere notoriety of dissolution not suflicient to show, 533 and note, alteration in form of checks, 533. question of, whether sufficient or not, generally mixed of law and fact, 534. not necessary where partnership is dissolved by operation of law, 538. as by death, bankruptcy, or war, 538. of retirement, need not generally be given by dormant partner, 120 and note, 536. of dissolution, signed by the parties preparatory to being inserted in the Gazette, is conclusive against the parties signing, 690. instructions for, in the shape of an agreement, must have an agree- ment stamp, 690. of an act of bankruptcy committed by one partner, will not prevent creditor receiving payment from solvent partner of moneys in his hands, 861. of an act of banki'uptcy by one partner, how far evidence of fraud- ulent preference in contemplation of the bankruptcy of the other, 864-866. of an act of bankruptcy committed by one partner, sufficient to in- validate a payment by that partner, 873. must be given to creditor of the transfer of partnership debts, upon the conversion of partnership property, 896. must be given by mortgagee of shares to company, 767. NOTICE TO QUIT, none necessary by lessor partner on dissolution, 121. signed by one of several partners, 442. NUMBER OF PAKTNEIIS, 11. OFFICE, whether a partnership can subsist in, 54. suing severally by reason of, 659. ORDER AND DISPOSITION. See Reputed Ownership. OSTENSIBLE PARTNER, what, 4. must give notice of his retirement. See Notice. action cannot be sustained against, and dormant partner when dis- covered, after judgment against ostensible partner alone, 757. OUTFIT of ship, 1215. OUTLAWRY, partnership dissolved by, 109, 114, 119. when process of, enforced in actions against partners, 702. how process of, enforced, 702. must be completed before action can be proceeded in against the other partners, 702. how stated in a declaration against partners, 742. judgment of, where does not effect a conversion of joint and separate debts, 919. OUTWARD CARGO, 23. PAROL EVIDENCE admitted to enlarge the effect of a note, 631, note. INDEX. 1125 PARTIES. See Examination. (1) Action of Covenant between partners, 258. See Covenant (1). (2) Bill in Equity between Partners, 359 et seq. where, pending the suit, one partner becomes bankrupt, 362. or dies, 862. after the bankruptcy of a partner, 363. in general they only need be, who were parties to the contract, 365. See Debtor, Sub-Paetnee, Legatee. if necessary party will not be plaintiif, may be made defendant, 361, note, where parties are numerous, 361, note, 1134, 1135. if bill prays dissolution, all must be parties, 361, note, defect of, how to be taken advantage of, 368 and note, persons made, as co-plaintiiFs, who have no interest, bill demurrable, 368. (3) Actions by Partners. ) (4) Actionsiggainst Partners. > See the respective titles. (5) Suits ir^quity against Partners. ) (6) Suits between ShareJiolders, 1120 ei seq. PARTITION of lands held by partners, 135, note, p. 119. PARTITION AND DELIVERY, 150, 226, 227, 309, 310. PARTNERS. See Doemant Partner, Ostensible Partner, Sol- vent Partner, &c. (1) How Constituted. can only be introduced into the firm with the consent of the old part- ners, 8, 192. but a person may share the profits of one partner, 8, 194. cannot be constituted by virtue of being representatives of a de- ceased partner, 9. nor by purchase of the interest of a partner, 8, note. may consist of any number, 11. who may enter into the contract, 1 2. may be infants, &c., 13, 14, 15, 16. quoad the world, must be partners inter se by operation of law, or must have held themselves out to the world as partners, 78, 86. are liable by holding themselves out, &g., 86. but this act must be voluntary, 97. are exempted from such liability to persons who have notice that they are not liable inter se, 98. (2) Interest in Stock. their interest must be joint and mutual, 19. are joint tenants in the stock, 123. but without survivorship, 123. have each a specific lien, 1 25. and therefore the stock, if identified, may be followed, 126. shares of, in the movables, descend to the personal representatives, 129. taking movables in joint tenancy and afterwards trading, joint ten- ancy on death presumed to be severed, 132. take real estate usually as tenants in common, 133. take no real estate by survivorship in equity, though conveyed to them as joint tenants, 134. take a lease as one of the movables, 136. in equity, for certain purposes, take freehold estate as personalty, 135-161.. interest of, in the good-will, 161 et seq. See Good- Will. supplying labor only, whether they have an interest in the capital, 168 et seq. 1126 INDEX. PAETNERS— Coniinued are presumed to be equally entitled where interest does not appear, 167 and note, 218. but not in Scotland, 167. supplying labor in an adventure, not entitled to share the goods, 168 et seq. are tenants in common of the partnership securities after dissolution, 545. may convert joint into separate property, 1 74. interest of, is not altered by seizure and restitution, 1 75. secus, if only compensation be made, 176. (3) Mutual Rights and Obligations. one of several, taking lease in his own name a trustee for the part- nership, 160. must use the property for the benefit of all, 179. one cannot bargain for a private advantage with creditors of firm, 179. '^ duty of, on receiving partnership money, 182. must account for profits made by partnership money, besides interest, 182. cannot engage in business which deprives the partnership of their assistance, 184. nor pkce themselves in a situation to be biased against their duty, 186 and note. ought not generally to be executors of their copartners, 187. cannot exclude each other, 190. nor order expensive repairs against the will of the others, 191. but need not look to the eligibility of assignee,, where they have power to assign their shares, 192, 193. may enter into a sub-partnership, 194. constitute each other agents for the partnership, 195. must use the stock in the augmentation of trade, 196. where one has no claim to contribution, 196. whether, must be guided by majority, 197, 198 and note. cannot be compelled in equity to do duties of a positive nature, 219. secus as to negative duties, 219. cannot claim compensation for getting in the debts after dissolution, 199. nor salary for performance of duties, 219. neither partner can claim compensation for his services in the con- cern, 183. although services very unequal, 183 and note. rights of, under the articles. See Articles. actions between. See Action, Covenant, Debt, Assumpsit. may prove debts against a copartner in suit for the administration of his estate, 330. (4) Liabilities. how they become liable, 6. theory of partnership liability, a branch of the law of principal and agent. Cox v. Hickman, 23 Law Rep.^498. no restriction of liability of, except by statute or charter, 6. liable to the full extent of partnership and separate property, 6. excepting in limited or special partnerships, 99 et seq. generally bound by the contracts of one in the name of the firm, _ 384. immaterial whether they are trustees for. others, 385. bound notwithstanding private arrangements, 886. secus, where creditor has notice, 387-389. notice may be inferred from circumstances, 887, note. INDEX. 1127 PARTNERS — Continued. bound in matters relating to the partnership by the — loan to one partner, 390. but qucere whether in all cases, 390, notes, firm liable, though money loaned has been misapplied, 391. so if one of the partners having money as trustee applies it to the uses of the firm, with consent of other partners, 391. whether knowledge and consent of other partners necessary to make them liable in such case, 391. if money borrowed by partner on his own credit, firm not liable because he applies it to the use of the firm, 391. power of one partner to borrow money does not necessarily extend to, raising money to increase capital, 390, note. purchase by one partner, 302. seller not affected by misapplication, of goods purchased, unless he colludes, 392. stoppage m transitu against one partner, 393. sale by one partner, 394. one partner may sell all the partnership goods at a single sale, 394. purchaser not affected if partner selling appropriates the price paid to his private debt, 394. right of one partner to sell stock is confined to personal effects, 394. does not extend to sales or agreements to sell the real es- tate of the partnership, 394. assignments by one partner to secure or pay debts of the firm, 395. whether one partner can by an assignment appoint a trustee and give preferences, 395 and notes, pledge by one partner, 396. but qucere whether so, if the pledgee have notice of the part- nership, 396. mortgage by one partner, 399 and note. bill of exchange drawn, accepted, or indorsed, in name of firm, 401. whether firm be A. & Co., or A. & B., 403 et seq. or A. only, 411. effect of indorsement in name of a single partner, 412. ditto of acceptance, 412. promissory note drawn in name.of firm, 413. though drawn for A. B. C. — A., 413. but not where joint and several, and signed by individual partners only, 414. guaranty, 417. acts and insurances in general, 422. acknowledgment by one partner, 422, 423 and note, promise by one partner, 424. payment by one partner, notwithstanding Statute of Limita- tions, 425. undertaking in general of one partner, 433. undertaking to effect insurances, 438. by legal proceedings, 441. fraud of copartners. See Fraud. not generally by tort of copartners, 457. power of, continues after dissolution for certain purposes, 118 and note, 546 and note. (5) Exemption from Liability. not bound by entries not communicated to customers, 384, note. 1128 INDEX. PARTNERS— Continued. not bound by deed executed by one partner, 463. except the partner be authorized by deed, 464. or the deed executed in presence, &o., 465. or there be a previous parol authority, or subsequent parol adop- tion of the act, 476. or a deed is employed where the act might have been done by the partner without deed, 476. . or in cases of bankruptcy, 476. bound by release of one partner, 468. warrant of attorney, 469 ; but see 469, note, not bound by deed of submission executed by one, 439, 470. nor by the separate security of one, 473. nor by the loan to one where there is a separate security only, and no evidence of a partnership contract, 474. or where no separate security, and want of caution in creditor, 4*80. nor generally by equitable mortgage of one, 440. but bound generally, though separate security taken as a collateral security, 481. and though money borrowed be carried to separate account, if joint security given, 504. not bound where contract wholly unconnected with partnership, 437, 483. secus, where it arises out of partnership, though not within the ordinary business, 484. not bound, where creditor has assented to private arrangements, 486, 488. not bound in some oases by custom of trade, 489. not bound by collusion between a copartner and his separate cred- itor, who takes the partnership securities, 493. See In- DOKSEB. even where no fraud proved, but the bare taking the secu- rity, 496 et seq. but the fraud may be rebutted, 502. * bound for the difference where a security greater in amount than the separate debt is given, 506. (6) Limits of Liability. See Incoming Partner, Retiring Partner, Deceased Partner's Estate, Executors, &c. ' (7) Rights quoad Third Persons. rights of, preserved by various acts of Parliament, 611. rights of, must be measured by the express terms of a contract, 613. as under a bond given to the firm, 614. See Bond. and frequently under a parol or unsealed written contract, 623. See Equitable Mortgage, Guaranty, Power of Attorney. (8) Actions by. See Actions. PARTNERSHIP. (1) Formation of the Contract. on what foundation law of, rests, 1. definition of, 3. requires no writing, 3 ; except, 3 and note. even for speculating in purchase and sale of lands, 3, note, different kinds of partnership ; as ostensible, nominal, dormant, and secret, 4 and note, general and limited, 4, note, universal, 4, note, express stipulation to share profit and loss not necessary to create a, 19, note, must be voluntary, 8. INDEX. 1129 PARTNERSHIP — Continued. may consist of any number of partners, 11. may be composed of what persons, 12. must be constituted for what purposes, 1 7. may subsist in an adventure, 17, 50, 55. may subsist where some persons contribute labor, others skill, others money, &c., 18. so where persons own property separately, they maybe partners in the use of it for their joint profit, 18 and note. may subsist in the purchase and sale of land, 3, note, 51, note, must involve communion of profit, 19. which communion must be a joint and mutual interest, 20, 25,40, note. See Peofits. but party may stipulate to be free from loss, 19. will not be constituted by a joint purchase without a joint sale, 20, 23. nor by joint work, without a joint disposal of the money received, 21. semble joint sale not a necessary ingredient of, 24. must involve joint, but not equal, shares, 20, note, may subsist in part of an adventure only, 23. as in the outward and not in the return cargo, 23. whether may subsist in profits and not in the property, 28, 29. will not be constituted by factors, &c., in what cases, 26. nor by servants, &c., receiving remuneration, 25, 28-32, 36. nor by one party taking a share of the gross earnings, 35, see note, but may, in certain cases, enumerated in §§ 35-38. is constituted generally by giving a specific interest in the profits, 25, 40 et seq. and notes, 44, note, pp. 36, 38. but not by one partner receiving an annuity, certain in amount, &c., 46. secus, where annuity is uncertain, &c., 48. ' and where a party receives a contingent interest in the profits, 49. must be in a lawful trade, &c., 50, 56. may subsist between attorneys, farmers, &c., 51. may subsist in the gross profits of commission, 52. cannot subsist in a mere personal office, 54. may subsist in underwriting, 62. wiere to be considered usurious, 63 et seq. between spiritual persons illegal, 69. between attorneys not duly qualified, 70, 71. between proctors in certain cases, 73. between pawnbrokers in certain cases, 74. in theatres not duly licensed, 75. not necessarily to be considered illegal, because the terms of an act *f Parliament have not been complied with, 75. may subsist quoad the world, in what cases, 78, 85. See Woeld. and will then be prima facie evidence of partnership inter se, 96. question of law whether partnership or not, when the terms and facts are admitted, 95. limited or special, 99 et seq. general and.universal, 4, note. (2) Dissolution of the Contract. may be dissolved at any time by the parties, 105. except in cases of bankruptcy or felony, 105. how long presumed to endure, 105. whether it will endure as long as the lease of partnership property, 106. at will, dlssdvable by what circumstances, 109. See Dissolution. 95 1130 INDEX. PARTNERSHIP— Continued. ■what notice required, 109 and note, dissolved in toto by the act of one, 116. for a term, dissolvable by what circumstances, 119. whether dissolvable by act or will of one of the partners before term expires, 119, note (7). quoad third persons, how dissolved, 120. notice of, not necessary when dissolved by death, 120 and note, 538. nor when by bankruptcy or war, 538. effect of dissolution, 121, 199. continues after dissolution for certain purposes of settling, &c., 118 and note, 546 and note. (3) Regulation of, under the Articles. commencement, 213. term of, 214. continuation of, without fresh articles, 214. may be declared void, when, 360 and note. PARTNERSHIP NAME, whether injunction refused to restrain use of, 360 and note, and see 535, note. PART-OWNERS, 22 and note. PART-OWNERS OF SHIPS, (1) Interest of. are generally tenants in common, 1185 and note. may hold in strict partnership, 1185 and note. how property in ships may. be acquired by two or more, 1185, note. proportions in which two or more owners are presumed to hold, 1185, note, usually let out the ship to freight, 1186. whether have a specific lien upon each other's shares, 1187 and notes, have such lien as to the goods of an adventure in which they are concerned, 1188. determination of their interest by the breaking up of the ship, 1189. (2) Registry. must, under British acts, be only thirty-two in number, 1193. may hold ship, if partners, in the name of the copartnership, without distinguishing the proportionate interest of each of the own- ers, 1194. but the name of each partner should be mentioned, 1195. and that, perhaps, in order to preserve the equities of the part-owners, inter se, 1195. but contracts as to freight alone not affected by breach of laws of registration, 1196. need not all make the registry declaration in certain cases, 1197. what further to be done in such cases by those who make the declaration, 1197. interest of, cannot be sold by Court of Admiralty in England, 1209. otherwise, in certain cases of disagreement in the United States, 1209. (3) Transfer of Ships, 1200 et seq. how far and for what purposes writing or bill of sale necessary, 1200 and note, whether ship may be transferred by parol, 1200, note, writing necessary under Registry Acts, 1200 etseq. and notes. , (4) Mutual Rights. majority of, may send ship on voyage, 1205. must find security for the value of the shares of the minority, 1205. and this in favor of one who has attached the share of a minor owner, 1205, note. INDEX. 1131 PART-OWNERS OF SHIPS — Continued, minority of, on loss, may have the bond of indemnity forfeited, 1205. See Admiralty. so, where majority have detained the ship a longer time, or taken her on a different voyage than that stipulated in bond, 1207. whether freight demandable by recusant owner, 1208, note, whether majority employing ship liable for wear and tear, 1208, note form of the bond, 1206. minority of, their, interests guarded in a court of equity after dissent expressed, 1208. and after ship has been arrested by process out of admiralty, 1210. minority of, their interests guarded in a court of law, where, 1211. may employ ship, if majority decline to employ her at all, 1205, note, where owners hold equal shares and one half in value wish to employ ship, and other half oppose, it seems willing owners may have her on the usual security, 1205, note, majority of, may obtain possession of ship by a warrant from the Court of Admiralty, 1212. sale of part-owner's share cannot be compelled in admiralty in Eng- land, 1209. may be in America on an equal division of opinion in reference to undertaking a particular enterprise, 1209 and note, must each contribute his share to the expenses of the outfit, 1215. delectus personce does not hold between, 1216. cannot dispose of the shares of each other, 1217 and note. may bind each other for repairs, 1218. cannot order insurances so as, to bind each other, 1218. cannot pledge each other to the expenses of a lawsuit, 1218. whether can sell their votes in the election of captain, 1218. duties of, as ship's husband, 1213. See Ship's Husband. cannot maintain trover or replevin against each other, 1219 and note, but where ship is destroyed trover will lie, 1219. so, where she is sold, 1219. remedies between, in a court of equity, 1220. to a bill filed between, all must be parties, 1221. (5) Relative Rights of Part-owners and Third Persons. liability of, not affected by Registry Acts, 1222. therefore, the name being on the register does not necessarily implicate the owner, 1223. but, semble, the name not being on the register, saves the owner from liability for repairs, sed qumre, 1224. are agents for each other, in all that concerns the repairs and neces- saries of the ship, 1225. therefore each part-owner answerable, in solido, to the trades- man who builds or fits out the ship, 1225. even although credit be given to one particularly, 1226. semble, cannot bind each other by bills of exchange, even for repairs, 1227. whether taking bill or note of one, for repairs, &e., discharges others, 1227. liability of, not affected by private arrangement between themselves, 1228. admissions of, do not bind the rest, 1229. reasons of this, 1229 and note. 1132 INDEX. PART-OWNERS OF SHIPS — Continued. shares of, not liable to condemnation for the acts of each other, 1229. are answerable, in solido, for costs and damages for wrong capture, 1229. (6) Actions and Suits hy and against Part-owners. ought all to join as plaintiffs in an action for freight of goods con- veyed in a general ship, 1230. • where may sue separately for their shares of profits, 1231. ought all to join in tort, 1232. sued in an action, where may plead the non-joinder of other part- owners in abatement, 1233. set-off by, 1234. evidence of register in actions against, 1235. to bill against, for account, all should be parties, 1236. See De- MUKBEK. (7) Goods and Merchandise purchased hy nature of interest in, 23, note, 1185, note. PATENT, joint-owners of, liable for fraud of co-adventurers, 446. partnership i!i working, 55, note. PAWNBROKERS, partnership between, 74. , PAYMENT, under a deed of trust, how regulated, 241. of principal or interest by one partner, whether ousts the Statute of Limitations, 425-430 and notes. See Statute or Limi- tations. by one partner is payment by all, whether made before or after dis- solution, 609. to one partner is payment to all, 638. notwithstanding agent appointed to collect debts after dissolu- tion, 688. to one partner, having liberty to retain money, 639. to one is not payment to all, without specific appropriation, where the one is also a separate creditor, 639. to bankrupt partner, how protected, 873, 879. by negotiable note, 408 and note. PAYMENT INTO COURT, where it can be enforced in a suit between partners, 303. semUe, necessary where party has borrowed privately of the partner- ship, 301. will not be ordered of partnership moneys, unless the defendant ad- mit himself indebted to the amount claimed, 303. or unless he have taken the money fraudulently, 305. but it is immaterial whether the admission is made in words, if made by answer admitting facts, 304. admission may be made by affidavit, 306. whether at law, operates as estoppel to objections to the nature of the contract, 726. PENALTY, 236, 253, 254. PERSONAL ESTATE, partner's interest in, 123. where a severance of interest in, will be presumed, 132. PERSONAL REPRESENTATIVES. _ See Executoes. take the deceased partner's share in the movables, 129. PETITION for fiat, all partners must join in, 444. PETITIONING CREDITOR'S DEBT, 851. PLEA of one defendant, in actions ex contractu, enures to the benefit of all, 810. INDEX. 1133 PLEA IN ABATEMENT. (1) Suits in Equity between Partners, 359 et seq. (2) Actions against Partners. after, plaintiff must proceed to outlawry in some cases, 702. in actions ex contractu, must be resorted to for omission of parties as defendants, 713. but not for omission of dormant partner, 719. unless the firm be that of A. & Co., 719. replication to, that defendant omitted is an infant, 720. or bankrupt, 722. can only be, where all the parties ought to be joined, not wher(^ they may be joined, 727. therefore, in actions ex delicto, not allowed, 727. how far allowed in actions ex quasi delicto, 731 €t seq. is no longer a remedy for misnomer, 744. for want of parties, must be accurate, 745. must give the plaintiff a better writ, 745. should therefore give the residences and additions of the other defendants, 745. may be to part of the writ, 745. must aver that the party omitted is living, and resident within the jurisdiction, 746. how must conclude, 74.6. must have an affidavit, 746. when truly pleaded, declaration not allowed to be amended, 747. demurrer to, 748. judgment on, 748. replication to, 749. trial of issue on, 749. evidence upon, 749. judgment on, 750. non-suit on, 750. fresh action after, 750. PLEAS IN BAR, (1) To Bill in Equity between Partners. where sufficient to bar both discovery and relief, 369. where not, and must be accompanied by answer, 369. argument of, 369. issue on, 369. of no partner, 370. of stated account, 371. of Statute of Limitations, 374. See Statute of Limitations. of release, 377. of award, 377. of bankruptcy, 377. of covenant to refer to arbitration, 377. (2) To Actions by and against Partners. See Actions by Partners, Actions against Partners. PLEADINGS. See Bill, Answer, Parties, Pleas in Bar, Discov- ert, Actions. PLEDGE by one partner, in what cases binds the firm, 396. POLICY OF INSURANCE, action on, may be brought either by the per- son in whose name or on whose account effected, 654. semble, interest of party suing must be embraced in terms of policy, 654 and note, declaration in action on, how must state interest of joint owners, 676. POWER OF ATTORNEY, maybe executed for -the firm by one part- ner, where, 444, 469. 95* 1134 INDEX. POWER OF ATTORNEY— ConfeWed to one of two partners does not enure to the benefit of the other, 622. POWER of partner continues after dissolution for certain purposes, 118 and note, 546 and note. PREMIUM, whether bill may be filed for return of, 360. return and apportionment of, 360 and note. PRESUMPTION, as to shares of profits, 167 and note. of partnership inter se, 96. PRINCIPAL. See Surety. PRINCIPAL TRADER, each party must be, to constitute partnership, 25 and note, 40, note, 44, note, p. 38. PRIORITY among Separate and Joint Debts. in bankruptcy, 920 and note, in equity, 584 and note, 920, note. PROCEEDINGS, under separate fiat, exhibited under subsequent joint fiat, 1068. PROCESS, to compel appearance, how enforced, 696. by writ of summons, 696. by distringas, 698. distringas may be to compel appearance, 701. See Appear- ance. or for outlawry, 702. bailable, where may be enforced, 705. if bailable, and writ joint, declaration must be joint, 709. affidavit to hold to bail must correspond with declaration, as to parties, 707. bailable, in tort, 709. See Tort. under bailable, when assignment of bail-bond to be taken, 710. PROCTORS, partnership between, 73. PRODUCTION of books before master, 316. of ditto, how obtained at the instance of defendant, in suits between partners, 380. of ditto in bankruptcy, 688. PROFIT AND LOSS. See Communion of Promt. PROFITS, there must be a specific interest in, to constitute a partnership, 25, 40. distinction between specific interest in profits, as profits, and a stipu- lated sum proportioned to the profits, 40 and note, 44 and note, sharing in, as a compensation for trouble, does not make a man a partner, 25, 44, note, sharing in, by broker or factor, does not, 26-28. sharing in, instead of receiving wages, does not, 31. sharing in, by the captain of a ship, does not, 33, 34. semble, sharing in, as gross earnings, does not, 35 and note. difference between sharing in net and gross earnings, 35 and note, 44, note, sharing in, by agents, 29, 36, 39, 44 and note, result of authorities as to sharing, 39, 44. that which entitles one to a share of the profits, makes him liable to the debts of the trade ; viz., that the trade has been con- ducted on his behalf by his agent. Cox v. Hickman, 23 Law Rep. 498. received in the shape of an annuity or interest, 46 et seq. contingent interest in, 49. INDEX. 1135 PROFITS — Continued. sharing, prima facie evidence of partnership quoad tlie world, 79 and note, but semble, this presumption may be rebutted, 80, 85. agreement to share in an adventure will not give an interest in the goods, 170, 171. where not regulated by agreement, presumed to be shared equally, 167 and note. secus in Scotland, 167 and note, made after dissolution, must be accounted for, by executors of deceased partner, 187. by surviving partners, 324. by solvent partners, 325. not included in bequest of interest, 324, note. PROMISE to pay, express, not necessary in .assumpsit between partners, 280, 281 and note, by one partner binds the firm, 424. PROMISSORY NOTE. See Bill of Exchange. though given by one partner to another, gives a right to interest to the holder, although he may be debtor to the other on the partnership account, 196. action lies between partners on separate, 269. fraudulent, made in the name of the firm, whether will be decreed in equity to be delivered up, 360. drawn in name of firm, binds all the partners, 413. though drawn for A., B., C. — A., 413. for " himself and partners," will satisfy what terms in an act of Par- liament, 413. joint and several, not signed in the name of the firm, binds only the partners signing, 414. separate, given by one partner to the other, and indorsed by him to creditor, where may be enforced against the maker by the creditor, 415. given to firm, is available through all the changes of the firm, if pay- able to the firm or their order, semble, 631. must be sued on, by what parties, 655. PROOF, (1) Generally. by one partner for firm, 444. must be by joint creditors against, the joint estate, and by separate creditors against the separate estate, 920 and note, the rule the same, whatever be the form of the fiat, 922. but in three eases, joint creditor may prove and receive divi- dends against the separate estate, pari passu with the separate creditors, — 1. Where joint creditor is petitioning creditor under sep- arate fiat, 924. 2. Where no joint estate, and no solvent partner, 923 and note, 926. but this does not apply where the solvent partner is dead, 927. 3. Where no separate debts, 929. how surplus, if any, is apportioned, 930, 931, and see Surplus. may be effected by marshalling debts, where and where not, 934. (2) Election of Remedy. "1 (3) Election of Proof. (4) Waii'er of Proof. (5) Double Remedy. (6) Double Proof. See the respective Titles. . 1136 INDEX. PROOF— Continued. (7) Between Partners. may be had for a debt due from one to the other, 972. but not in competition with the creditors of the partnership, 972. nor in competition with the separate creditors, unless the joint creditors are first paid, 973. and the partnership debts must have been satisfied, either by payment of the whole, or part in discharge of the whole, 974. indemnification of the bankrupt not sufficient, 974. except where one partner a lunatic, 977. and in other cases of absolute necessity, 977. nor until interest has been paid on the joint debts, 976. whether allowed, where the party seeking proof has been induced by fraud to enter the partnership, 980. will be allowed after discharge of partnership debts, 981. and the debt must be repaid to them in full, before interest al- lowed to the separate creditors, 983. in the case of a retiring partner, with knowledge of the firm's insol- vency, 985. by solvent partner against his partner B., not only for B.'s share of a debt, but a share of the deficiency of another partner, C, 986. by solvent firm against bankrupt firm, where the estate, against which proof is admitted, is not liable with solvent firm for joint debts, 987. by solvent against bankrupt partner, where no joint debts, 989. (8) Between Estates. not allowed by the separate estate of one partner against the joint estate, in competition with the joint creditors, nor by the joint estate against the separate estate, in competition with the separate creditors, 990. except in two cases, ^ 1. Where money or effects have been fraudulently abstracted from one estate to benefit the other, 991. which cannot be inferred where one partner puts the other in absolute possession of the partnership funds, 995. 2. Where sonje of the members form an entirely distinct firm, carrying on a distinct trade from that of the general part- nership, and the articles of one trade have been furnished by one firm to the other, 1000. in which case the demand of the party seeking to prove must arise from a dealing in respect of the distinct trade, 1003. semUe, that the doctrine extends to a single partner, carrying on a distinct trade, 1004. (9) Under Joint and Separate Fiats, 1028. where general order for proof, and where not, 1028 et seq. PROPERTY, of partnership, what is, real estate, 133 et seq. leases, 136, 160. " good-will," 161. what " good-will" is, 161, 162 and note, trade marks, 165. mines, 165. where ownership of, is not coextensive with the partnership not part- nership property, 165. levy on, for separate debt. &e Attachment and Execution. in goods obtained by one partner's fraud, 454. INDEX. 1137 PROPORTION OF PROFITS. See Profits. PUIS DARREIN CONTINUANCE, 767. PURCHASE by one partner binds the firm, where, 392. QUARRY, partners in, 402. RAILWAY, subscribers to, partners in the undertaking, 65. RAILWAY COMPANIES, acts for certain special provisions as to actions for calls, 1161. general principles as to controversies between, and the public, 1151, 1165 et seq. in what cases will be compelled by mandamus, 1151 et seq. in what cases restrained by injunction, 1155. where they take land not required for the purposes of their act, 1169. in cases of breach of Parliamentary contracts, 1160, 1165 et seq., 1171. and private contracts, 1175. observations upon frauds of, 1476. parties cannot have relief against, on the ground of deviation, if the deviation" not injurious to parties so applying, 1169. REAL ESTATE. See Lanp. usually conveyed to partners as tenants in common, 133, 135. does not go to the survivors in equity, though conveyed to partners as joint tenants, 134. is in equity, if held under a lease granted to the partners considered as part of the partnership trade, 136. Low far in equity, if freehold, considered and distributed as personal property, 136 et seq. purchased with partnership funds for partnership use, held by part- nership in trust for payment of debts, 135 and note, survivor has equitable lieu on estate so purchased to pay debts of firm to third persons and to himself, 135. of partnership, right of widow of deceased partner in, 135, 156 and note, 159. whether it will go to heir or personal representatives, 137-152, 154- 157 and notes, partners in, may bind each other by bills of exchange, 402. administration of, under bankruptcy, 889, 900, 902. , RECEIPT of moneys by partner, must be proved before master, how, 315. is only ^nnia facie evidence of payment, 689. given in defence to action by firm, 689. RECEIVER (between Partners), general right to, 353. whether will be appointed, unless plaintiff entitled to a dissolution at the hearing, 353 and notes, will be granted, where one partner excludes the other, 353, 354, note. reason of this, 355, note. semUe, will not be appointed, if it would destroy the trade, though on occasion of embezzlement, 353. will be appointed generally, if there be a breach of duty in partner, or of contract of partnership, 354. so in New York, of course, if partners cannot agree as to con- trol of property on bill filed to close concern, 354, note. where necessary to preserve good-will of concern, may be appointed to carry it on until sale, in New York, 354, note, for a steamboat, 354, note, will be appointed on death of one partner, 343, 356. but not unless confidence in survivor is destroyed by his misman- agement, 357, note. 1138 INDEX. RECEIVER — Continued. . _ or lie insists on continuing partnership witli assets of deceased partner, 357, note, will be appointed, as of course, on death of all, 357. may, under certain circumstances, be empowered to sue, 358. may be moved for, on affidavit before answer, 354, note, 358. notice to parties interested, 358, note, how appointed, 354, note. RECORD of an issue to try the question of partnership, whether evidence of partnership in an action against the partners, 773. RECTIFICATION. See Joint Bond. RE(JISTRY of ship, proceedings on, U90 et seq. REGISTRY ACTS do not affect the liabilities of partners, 1222. therefore the name being on the register does not necessarily implicate the owner, 1223. but semble, the name not being on the register saves the owner from liabilities for repairs, sed quaere, 1224. RELEASE, by one partner of a right of action, 441. to one of several partners, a release to all, 606. but may be limited in its operation, 607. to one by operation of law not release to all, 606, note, composition deed, where in the nature of, 606. covenant not to sue is not equivalent to, 608. by one partner, is release by all, 468, 636. as by releasing an action, 636, 637, undertaking to acceptor to pay acceptance, 637. giving time to debtor, 637. by one partner, what will destroy the effect of, 468, note, fraudulent, by one partner, will be set aside, 636. by one partner, construction of, 468, note, plea of, to actions by partners, 682. to actions against partners, 752. given in evidence, 68fl. REMAINING PARTNER, continuing to trade, must account, where, 324, and note, chargeable with interest, where, 335 and note, when liable, with his new partners by adoption, instead of old firm, 554. creditor taking securitj' of, does not discharge old firm, 557. cannot bind retiring partner, after bond fide dissolution by any new contract, 540. cannot renew a partnership note, 540, note, other acts he cannot do, 540, note. REMOVAL of assignees of bankrupts or insolvents, 1036, note. REPAIRS, partner ordering extensive, 191. one part-owner may bind the other for, 1225. whether by bills of exchange, 1227. REPLEVIN CLERK, whether he may be a partner, 54. REPUTED OWNERSHIP, doctrine of, takes place, notwithstanding agree- ment for conversion between partners, 889 et seq. effect of, as to dormant partner, 885 et seq. whether " order and disposition" may be independent of, 890. affects shares in companies, 1138. REPRESENTATIVES of deceased partner,' when may be sued, 580, note. RESIDUARY LEGATEES, bill by, against executor and surviving part- ner, 844. INDEX. 1139 RESTITUTION IN SPECIE of partnership property, preserves their respective interests, 175. after decree of, the assignees of a bankrupt partner have a right to his share, 176. RETIRING PARTNER, receiving annuity, 46, 238. leaving capital in the firm, stipulation as to, 238. provision for private debta of, 240. may enforce indemnity bond in equity, 243. ostensible, must give notice of his retirement, 530. See Notice. bound after dissolution, where no notice, 530. principle on which this proceeds, 530. but not to a person who had no knowledge of his being a mem- ber of the firm, 530, note, continues bound after dissolution oil executory contracts of firm, 539 and note, not bound, after notice, by subsequent acts of remaining partners, 531, 540. as by instruments negotiated in the name of the original firm, 541. although dated before dissolution, 543. whether bound by indorsements made before, the paper not being put into circulation until after, dissolution, 544. will remain liable on specialties, where, 539. may authorize remaining partner to indorse bills in partnership name, 542. effect of payment by, towards note given by remaining partner in name of firm, 542. how discharged from liability in the case of cash accounts current, 549. banking acccounts distinguished from others, 550. how discharged by payment made in specific discharge of a debt due by his partnership in the course of an account current, 551. how and when discharged by arrangement with remaining partner, and assent of creditor, 554, as — creditors taking security of remaining partner, 557, 558. in which case the acceptance of the security of one partner may be a good consideration for the discharge "of the security of two, 561, 568, 569. creditors receiving interest from the new firm for old debts, 564. creditors continuing an account current with new firm, 566 et seq. in which case the transfer of the amount alone may be a sufii- cient discharge, 568. will be liable for trust moneys borrowed by his firm, 571. whether may retire with knowledge of firm's insolvency, 573 et seq. when considered as a surety, 563. RETURN CARGO, 23. REVENUE LAWS, proceedings under, against partners, 459, 461. RIGHT OF A:CTI0N by partners survives, 132. RIGHTS AND DUTIES of partners. See Duties and Obligations. RULE IN CLAYTON'S CASE. See Appkopkiation of Payments. SALARY, none allowable to partner, 44, note, 183, 219. and share of profits for further remuneration, 37, 42, 43, 44, note, p. 37. SALE. See Assignment. inferred from agreement for division, 227. 1140 INDEX. SALE — Continued. of partnership effects under a separate execution, ipso facto, a disso- lution, 112. of the partnership effects, when decreed, 307, 313 and note, on what principle, 307. executors of a partner have a right to require the sale of the whole interest, 308, 313. so have assignees of bankrupt, 309. even where proviso to the contrary, if proviso is impracticable or illegal, 311, 312 and note, or fraud in copartner, 313. of what effects may be decreed, 321 et seq. by one tenant in common of the whole property, 382 and note, by one partner binds the firm, 394. SEAL. See Ekastjkb. SECOND EIAT, when may be supported, 852, 1061. SECRET PARTNER, 4 and note. SECURITY, fraudulent, cancelled by consent, 341. SEPARATE ACCOUNT, partner indebted on, to copartner, stipulation as to, 240. money carried to, not necessarily evidence of separate debt, 504. SEPARATE CREDITOR. See Pkoop. taking partnership securities, 493, 496 et seq. where he has been considered to have done so bond fide, 502. where may file a bill against surviving partners, 843. cannot sue out a joint fiat, 851. on joint fiat, must get an order for distinct accounts, 1030. where may prove without an order, 1030. under joint fiat, cannot vote in choice of assignees, 1034. SEPARATE DEBT, partner giving joint security for, 493. SEPARATE EXECUTION. See Execution. SEPARATE FIAT. See Fiat. SEPARATE SECURITY. See Bond. partners not bound by, though given for money borrowed for firm, 474. taken only as a collateral security, does not alter the joint contract, 481. bond of one partner taken for simple contract debt of partnership merges the latter, 481, note, taken in exchange for joint, on retirement of partner, 559. for joint demand, effect of, in bankruptcy, 962. one partner giving his, treated as a surety with all the rights and privileges, 962, note. SEPARATE TRADING, guarded against by articles, 221. bill for an account of profits in case of, 249. SERVANT OR AGENT in adventure, not a partner, 36. powers of partners as to dismissing or retaining, 190. SERVICE of subpoena on one of two partners, 441. of order to deliver bill of costs, 441. SET-OFF. (1) Actions by and against Partners. in what actions allowed, 760. must now be pleaded, though formerly provable under general issue, 758. must be of debts due in the same right, 761. INDEX. 1141 SET-OFF — Continued. may be of debts which are each essentially joint, 762. or separate, 763. may be regulated by agreement, 764. what allowed to a surviving partner, 764. upon motion, in courts of law, 765. in case of dormant partners, 660 and note. (2) Bankruptcy. of what debts allowed, 1007 et seq. must be of debts in the same right, 1009, 1010. nevertheless equitable sometimes allowed, 1011 et seq. to prevent circuity, 1013. in cases of fraud by the bankrupt, 1014. in actions by the assignees, 1017. SETTLED ACCOUNT, not to be unravelled, 373. SEVERAL CONTRACT not to be inferred in all cases where money car- ried to individual partner's account, 504. in equity, partnership contract is several as well as joint, 580 and note, so by statute in some States, 580, notes. SEVERANCE of joint tenancy in movables presumed, 132. in real estate, presumed in equity, 134. of joint contract, action after, 657, 658. SEVERING in defence, 768. SHAREHOLDER, when a partner. See Joint-Stock Company (1). cannot sue director on bill of exchange, in what cases, 1117. regulations as to his assigning his shares, 1112. has no implied authority to bind co-shareholders by bill of exchange, 1136. may be made bankrupt, 1138. SHARE, of partner, what it is, 154, note. SHARES, in the proceeds of a whaling voyage, do not make master and seamen partners, 31. nor master or seamen and owners, 32. of profits, where presumed to be equal, 167 and note, bequest of, whether passes subsequent profits, 324, note. in a joint-stock company, assignment of, regulated by deed of settle- ment, 1112. mortgagee of, must give notice, 1138. reputed ownership of, 1138. SHERIFF. See Execution. money stayed in his hands, after execution against joint effects for separate debts, 831 and note, may be made a party to the bill to restrain the sale of partnership effects, 831. vendee of, put in possession of debtor partner's share after execution, 832. SHIP, mortgage of, how treated in bankruptcy, 891, note, consequences of breaking up, 1189. is divided into sixty-four shares, 1194. registry .of, in general, 1190. transfer of, 1200 et seq. how far and for what purpose writing necessary, 1200 et seq. and note. SHIP AGENTS, may be partners, 51. SHIPMENTS, on half profits, do not create partnership, 44, note, p. 37. 96 1142 INDEX. SHIP'S HUSBAND, his duties generally, 1213. cannot borrow money generally for the use of the ship, 1213. cannot insure the ship, 1213. has a lien on the warrant, documents, and freight, 1214. SIGNATURE of one partner, where binds the firm, 442. where not, 444, note. SKILL AND LABOR, may be joined for the purposes of trade, 16. whether they will give an interest in the capital, 167, 169. not in adventures, 1 70. SOCIETIES other than trading partnerships treated as such, 53 and note. SOLICITORS, partnership between, where one not qualified, illegal, 70. allowance to widow of, 72. service of order to deliver bill of costs on one of two, 441. peculiar privileges and liabilities of, as partners, 610, note, actions by, against company, 10. retained and agreeing to share profits in a case, 55, note. SOLVENT PARTNER, tenant in common with the assignees of bankrupt, 106. with the vendee of sheritf, 166. with the vendor of goods stopped in transitu, 166. continuing trade, must account with the assignees, 325. must sue jointly with the assignees of the bankrupt partner, 665. may file bill to restrain execution against joint effects, where, 83. acts of, hand fide and for a valuable consideration, not avoided by a previous secret act of bankruptcy committed by his copart- ner, 860. may satisfy joint creditor out of funds in his hands, even after notice to the creditor of an act of bankruptcy in the other part- ner, 861 e< seq. disposing of the partnership effects after the bankruptcy, conveys the entire interest, 868. cannot dispose of the partnership property by deed, or negotiate bills or notes in the name of the firm, 869. whether may be enjoined from selling the partnership property, 870. when entitled to apply for surplus of bankrupt's estate, 931. proof by. &a PnooF (7). whether may prove against the estate of his partner B., not only the share due from him, but a share of the deficiency of C, another partner, 986. attendance of, before commissibners, 1026. SPECIALTY CREDITORS, where surviving partners are, of the de- ceased, 331. SPECIFIC LIEN on profits. See Profits. one must have, to be partner, 44, note, p. 38. each partner has, on the stock, 129. whether between part-owners on each other's shares, 1187. exists as to the goods of an adventure in which they are con- cerned, 1188. SPECIFIC PERFORMANCE of agreement to enter into partnership, 202 et seq. See Agreement. , of agreements respecting personal estate, 202, 203, and note. of indemnity bond on retirement, 243. of partnership covenants, where enforced, 247, 248. of covenant to refer to arbitration not enforced, 251. SPIRITUAL PERSONS, partnerships between^69. STAGE-COACHES, injunction to restrain the working of, in certain cases, 347. INDEX. 1143 STAGE-COACH PROPRIETORS, special contract by, its extent, 435. where not bound by the acts of their copartners, 489. running a line from one place to another, the route being divided between them, liability ofj' 38, note. STAMP, none, ad valorem, required on assignment of partner's share of credits to copartner, 237. notice of dissolution may be given in evidence without, 690. STATED ACCOUNT, plea of, 371. what constitutes, 371, note. STATUTE OF FRAUDS. partnership not to commence within a year from agreement, 3, note, partnership for the purchase and sale of real estate, 3, note. STATUTE OF LIMITATIONS bars only legal remedies, 374. but adopted in equity, 374. and plea of, therefore, good to a bill for an account, 374. but not always enforced in equity, 375. not enforced where partner devises his estate for payment of his debts, 375. account current excepted out of, in equity, 376. to what this exception is confined, 376, note, payment of interest, or part payment of principal by one partner, whether ousts, 425-430 and notes, same eifect where payment by one of several makers of promis- sory note, 426 et seq. except eifter the death of J4iy of the makers, 427. same effect where payment by asssignees of, 428. proof of payment not to be by mere admission in case of part- ners and joint contractors, 429 ; but see 429, note, effect of promise in writing by one of several promisors, as to his share, 431. part payment is a fresh promise, 433. plea of, to actions by partners, 684. how affects deceased partner's estate in equity, 590. STIPULATION between partners, where binding on third persons, 98. STOCK, misapplied by partner, may, at creditor's option, be considered as a debt, or be specifically replaced, 589, note. STOCK OF PARTNERSHIP, partner's interest in. See Pabtners (2). to be used only in augmentation of the trade, 196. agreement for division of, means sale, 22 7. personal, is a proper subject of sale, where sale more beneficial than division, 321. STOPPAGE IN TRANSITU, vendor by, becomes a tenant in common with solvent partner, 166. , as against one partner, firm bound by, 3^3. STRANGER cannot be introduced into the firm without consent of all par- ties, 8 and note, 9, 10, 113, note. STYLE OF FIRM, not properly recognized by a signature for self and partners, 215. business to be done in name of one person, 215, note, not absolutely necessary to state, in articles, 215, note, in New York, misdemeanor to transact business under fictitious, 215, note. See Firm. . must be used to bind the firm, 412, note. SUBMISSION TO ARBITRATION, not binding on the firm, 485. though made by firm, where does not enure to the benefit of an indi- vidual partner, 622. 1144 INDEX. SUB-PARTNER., need not be party to a bill for an account of the general partnership, 365; extent of his liability, 8, 194 and note. SUB-PARTNERSHIP, 194. how constituted and liability under, 8, 194 and note. SUBPCENA upon one partner, 441. SUB-PURCHASE, 400. ' SUBSEQUENT APPROBATION, equivalent to previous consent, 507. SUITS IN EQUITY, (1) Betwfien Partners. See Account, Bill, Feaud, Injunction, Par- ties. ' (2) By Partners. Parties to, 834. ■whether representatives of deceased must be plaintiffs, 834. (3) Against Partners, 836. for an account, must state mutual dealings, 837. case of successive partnerships, 837. by creditors under composition deed, 838. some, on behalf of the rest, 838. allegations in, 838. all partners must generally be defendants in, 839. exceptions, 840. ' where numerous, 840. but then with certain allegations^ 840. how may be sustained where p^tner abroad, 840. representatives of partners must be defendants in, 841. but not persons claiming under them, 841. • or claiming derivative interests, 841. but surviving partners should, 841. where may be instituted by the separate creditor of one partner, 843. where by residuary legatees of one partner, 844. defendants in, must all answer, jointly or separately, 845. except those who are resident abroad, 845. whether one of the defendants in, who has retired from the active business of the firm, can be compelled to examine the part- nership books, 846, and see Books of Account. SUMMONING THE BANKRUPT, 1026. SUPERSEDEAS. See Annulment. writ of, superseded by order for annulment, 1058. . in what cases annulment allowed, 1058. has been used against a separate commission, where the estate is ad- ministered better un(^er a subsequent joint one, 1061. ' has been considered discretionary with the court, 1064. SURETY, retiring partner considered as, where, 563. in what case discharged by part payment by his co-surety, 606, note, how far one partner may bind firm as, without consent of other mem- bers, 421 and note. SURPLUS, in the event of, on separate estate, when separate creditors are entitled to interest, 930. on joint estate, how apportioned, 930. when solvent partner entitled to apply for; 981. SURVIVING PARTNER, takes partnership property to administer the estate and pay the debts, 129. debts to be collected in his name, 129, note, 666 and note, liable to account with representatives of deceased, 129. acts as trustee, 130. may be enjoined and receiver appointed in case of mismanagement, INDEX. 1145 SURVIVING FA-RT-SER— Continued. if he continues to trade, at his own risk, 130. not compellable to carry on business with executors of deceased part- ner, 130. when himself executor of deceased partner, 131, 187. duties in such'case inconsistent,\187, 188. right of, to use partnership name, 162, notes, 215, note, right of, to books and evidences of debt, 666, note, right of surviving dormant partner, after death of ostensible partner, to sue, 666, note, eflfect of giving his own security for partnership debt, 561, note, whether and when entitled for personal services or skill in winding up concern, 328 and note, not entitled to compensation for services in winding up affairs of partnership, 199 and note, 232. where is a specialty creditor of deceased, 331. continuing to trade, must account, 324 and note, 335, note, considerations which will affect division of profits between, and rep- resentatives of deceased partner, '327. liable to option of representatives of deceased partner to take profits or interest, 335, note, chargeable with interest, where, 335 and note, rights of, under a cash account current, 633. action must be brought by, where, 129, note, 670. declaration by, may include debt due to himself in his own right, 674. may unite demands due to him as survivor of two firms, 6 74. should sue in his own right, when, 6 74. only can be sued, 723 ; otherwise in some States, 580, notes. declaration against, may include demands due from him solely, 740. how to be described in declaration against, 740, 741. declaration against, may include demands against him as survivor and as sole, 740. set-off by, 764. SURVIVORSHIP, none in the chattels of the partnership, 123. none in the real estate', in equity, 133. but there is, in the partner's right of action, 132. TEMPER, badness of, whether ground for dissolution, 296. TENANTS IN COMMON of the partnership securities, partners are, after dissolution, 545. ^ TENDER, ^lea of, in action by partners, 684. in adtion against partners, 754. TERM OF PARTNERSHIP dissolved by death, though partnership un- der articles, unless stipulation to the contrary, 214. when expired by etHuxidn of time, may by inference be renewed for the same period, 214. THEATRE, partnership in, 75. TORT, actions of, against partners. See Actions against Paetneks, (3)- between partners, 382. by one partner, not generally binding on firm, 457. by servants of firm, binding on firm, 457. action for joint and several, 458, 460, 668. bailable process, in action of, against partners, 709. declarations of defendants in actions of, against partners, 801. TRADE-MARK, partnership property, 165. TRADING on separate account,, 221. 1146 INDEX. TREATING CUSTOMERS, allowance for, 333, 334. TRESPASS, declarations of defendants in actions of, against several, 801. witness made defendant in, by mistake, may be struck out of the record on motion, 802. i one who suffers judgment by defi|,ult in, not a competent witness for plaintiff, 802. ■ : _. particeps criminis in, may be witness for plaintiff, 803. against several defendants, damages in, 810. TROUBLE, compensation for, 25. TROVER, whether maintainable between partners, 383. cannot be brought by assignees of bankrupt against solvent partner, 383. against partners, 458. demand of and refusal by one partner evidence of conversion by both, 458, note, several actions of, by each partner, 672. by assignees of bankrupt partners, 701. between part-owners, 1219. TRUST-DEED. &e Deed. TRUSTEE, nominal partner acting as, for real, 10. partner will be, of lease taken in his own name for partnership pur- poses, 160. who is partner, how affects firm by committing breach of trust, 451, ' 452, 456 and note, lending trust^money to his firm, 336, note, 456, note.' as to partners who enter and leave firih during continuance of breach of trust, 456. TRUSTEE PROCESS, partners called to answer in, answer of one, how far it binds firm, 441 note, attachment by, on separate suit against one partner, 822, 'note. TRUSTEES,,may be partners, 45. partners are in certain oases in the situation of, 182. TRUST-MONEYS, partnership borrowing, retiring partner liable for, 571. UNDERTAKING by one partner binds the firm, 422, 433. UNDERWRITING, partnership in, 62, 300, note. UNIVERSAL PARTNERSHIPS, 4, note. ' USURIOUS AGREEMENT does not avoid a prior deed of dissolution, 238. USURIOUS PARTNERSHIPS, 63. partnerships not to be deemed usurious where the principal is haz- arded, 64, 65. VALUATION, taking share at a, 226, 227. whether permissible in case of bankruptcy, 227. executors and assignees of partners not bound to take share at a, 308, 309. VENDEE of sheriff, tenant in common with the solvent partner, 166. VENDOR of goods stopped in transitu, tenant in common with the solvent partner, 166. VERDICT in action ex contractu must be found against all, or for all, 808. secus in actions of tort, 809. VOID, partnership may be declared, in certain cases, 860 and note. and partner be restored to original rights, 360, note. VOLUNTARY, contract of partnership must be, 8. WAGES. &e Profits. person receiving, whether a partner, 28-34. INDEX. 1147 WAIVER OF PROOF, in what cases allowed, 952, 953. ■will frequently not be allowed after the creditor has signed the cer- tificate, 957. WAR, effect of on partnership contract, 14 and note, 115. dissolves partnership, 14, note, 115. effect of, on right of action, 647. WARRANT OF ATTORNEY, by one partner, binds the firm, 469. bond and warrant of attorney to enter judgment against firm by one, 469, note. WASTE, mischief to partnership effects in the nature of, 349, 350. WHALING VOYAGES, captain and seamen in, not partners with each other or with owners, 31, 32. meaning of the shipping contract in, 32. WIDOW receiving annuity out of banking-house, 46, note. of deceased partner, when entitled to dower, 133, 135, 156 and note, 159. WINDSOR HERALD, 54. WITNESS, (1) Action by Partners, 686, 687. See Evidence (1). (2) Actions ex contractu against Partners. copartner may be, for plaintiff, to prove the partnership, 787. ' to prove the plaintiff's case generally, 787. even though he be a party to the record, 791. party named in the defendant's plea in abatement, may be, for plain- tiff, 788. having an interest inclining him to each party, may give evidence for either, 789. copartner cannot be, for defendants, 793. although his evidence may tend to onerate himself, 794. but may be, by consent of plaintiff, 798. party named in plea in abatement cannot be, for defendant, 794. except by consent, 798. nor party letting judgment go by default, 794. but one of several defendants may be, for the others, where deprived of all interest, 795. as, if he plead his bankruptcy, and a nolle prosequi be entered as to him, 796. or if he plead his bankruptcy, and a verdict be recorded for him, 797. but he is not entitled to have the verdict recoi-ded in the middle of a cause, 797. copartner called on to prove partnership, and denying partn.er- ship, proof allowed aliunde, 798. testimony of, how objected to, 799. (3) Actions ex delicto against Partners. in trespass. See Tkespass. in trover, 804. for the defendants, a co-defendant in an action of tort may be acquit- ted in order to be, 805, 810, note. (4) Oenerally. effect of the statute 3 & 4 Will. 4, c. 42, s. 46, as to, 687, 793, 806. examination of, in bankruptcy, 1022. WORLD, PARTNERSHIP AS TO, how constituted, 78. whether by merely sharing the profits, though no holding out and no partnership inter se, 78, 88, 85. mere fact of giving a joint order will not make a, 91. nor will the signing of a note jointly^ 95. 1148 INDEX. WORLD, PARTNERSHIP AS TO,— Continued. whether drawing a bill jointly makes parties partners as to bill, 95. nor mere interference, without profits, effect of introducing one as partner, 92. associating and holding meeting, 95. effect of signature of a person's name to conveyance of chat- tels, 93. raises presumption of partnership inter se, 97. WRIT OF SUMMONS, 696. WRITING not necessary to constitute a partnership, 3 and note, whether necessary to transfer title to a ship, 1200, note. 1 1