^'■'^M«':'^-'«^i;^^ Cornell University Law Library The Moak CoUection PURCHASED FOR The School of Law of Cornell University And Presented February 14, 1893 IN HEnORY OF JUDGE DOUGLASS BOARDMAN FIRST DEAN OF THE SCHOOL * By his Wife and Daughter A. M. BOARDMAN and ELLEN D. WILLIAMS Cornell University Library KF 1375.C71 1878 v2 Wood's Collyer on the law of partnership 3 1924 019 333 222 The original of tiiis book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924019333222 WOOD'S COLLYER THE LAW OF PARTNERSHIP. APPENDIX OF FORMS JOHN COLLYER, tJP LINCOLN S INN, ESQ., BABRISTER AT LAW. WITH ADDITIONS FROM LINDLEY AND OTHER ENGLISH AUTHORS, FULL AMERICAN NOTES AND REFERENCES TO AMERICAN CASES, By H. G. wood, Author of "The Law of Nuisances," "The Law of Master and Servant," "The Law of Fire Insurance," etc., etc. Vol. II. ALBANY, K Y. W. C. LITTLE & CO., LAW BOOK PUBLISHERS, 425 BROADWAY. 1878. -mi V;^C Entered, according to act of Congress, in the year eighteen hundred and seventy-eight. By HORACE G. WOOD, In the oflBce of the Librarian of Congress, at Washington. WEED, PARSONS AND COHPANY, PRINTERS AND E L E C T R O TY PERS, ALBANY, N. Y. TABLE OF CONTENTS. CHAPTER XXIII. INCOMIKG PARTNERS. Sec. -515. Of tlie liabilities of an incoming' partner — .Slierreff v. Wilks. Sec. 516. Payment of interest by new firm on debt of old firm does not necessa- rily bind new partner — Kir wan v. Kirwan. Sec. 517. Commencement of liability in ordinary partnership. Sec. 518. Firm as such, not liable for acts done before it was formed. Sec. 519. Rule in Wilson v. Whitehead. Sec. 520. Rule in Saville V. Robertson. Sec. 521. • Rule in Gouthwaite v. Duckworth. Sec. 522. Principle applies to incoming partners. Sec. 533. Rule in Es parte Jackson — Beale v. Mouls. Sec. 524. Liability arising from tacit contract — Dyke v. Brewer. Sec. 525. May make himself liable by agreement. Sec. 526. Instances in which liability was created. Sec. 527. Note or bill given for debt of old firm, in name of ne-w , prima facie a fraud on the new partner. Sec. 528. Introduction of new partner — firm bound to let in, when — rights of new partner when not provided for in articles. Sec. 529. Must not be joined as party plaintiff" or defendant in suits relating to business of the old firm. Sec. 530. Evidence of assumed obligation to pay. Sec. 531. Rule in Helsby v. Mears. Sec. 532. Must be novatio debiti — Vere v. Ashby. Sec. 533. What amounts to a novation. Sec. 534. When incoming partner is not liable. Sec. 535. Where an infant partner may become liable. CHAPTEK XXIV. RETIKING PABTNBES. Sec. 536. Liabilities of retiring partners. Sec. 537. Rule as to original creditors. Sec. 538. Permitting name to be used aftej retirement. Sec. 539. Rule as to dormant partners. Sec. 540. Liability for special contracts. Bbc. 541. Not generally, bound by new contracts — Pindar v. Wilks. Sec. 543. Not bound by instruments negotiated after dissolution — Abel v. Sutton. iv Table of Contents. Rule in Kilgour v. Finlyson. May give power to remaining partners to indorse ij name of old firm. Acceptances in name of old firm not binding. Wriglitson v. Pullau ; Usher v. Dauncey. Eifert of dissolution upon interest of partners in tlie firm property. How lie may be discharged from contract — Clayton's case. Rule in Brooke v. Enderby. Incase of a continuance of new partnership — Newmarch v. Clay. Money of new partnership applicable only to debts of new firm — Thompson v. Brown. Appropriation of payments by the payee. Simpson v. Ingham. Contract of remaining partners to pay old debts, effect of. When creditors accept the remaining partners. Bedford v. Deakin. When bill or note is indorsed with reservation of all rights. Feath- erstone v. Hunt. Where the creditors accept new security. Evans v. Drummond. Rule in Reid v. White. Taking sole security of new firm no written security previously exist- ing. Thompson v. Drummond. Ex parte Whltmore. Rule when creditors agree that retiring partner shall be simply surety for old firm. Oakley v. Parsheller. Retiring partner under some circumstances becomes surety merely. Where the creditors receive interest of the new firm — Gough v. Da vies. When the creditor continues trading with the new firm — David v. Ellice. Lodge V. Dicas. Lodge V. Dicas and David v. Ellice, overruled by Thompson v. Percival, Kirwan v. Kirwan, and Hart v. Alexander. Thompson v. Percival. Kirwan V. Kirwan. Hart V. Alexander. Money borrowed of a trustee who is a partner — Dickinson v. liOckyer. Retirement of a partner with knowledge of firm's insolvency — Anderson V. Maltby. Termination of liability in ordinary partnerships. Termination of liability as to future acts. Retirement of dormant partner. Rule in Heath v. Sanson. Dissolution and notice, eflect of. Instances where notice does not protect from liability. Rights of partners after dissolution — Lyons v. Haynes, Butchart v. Dresser, Ault v. Goodrich. What amounts to notice of dissolution. Termination of liability as to past acts . Payment. Rule in Clayton's case . Rule in Sterndale v. Hawkinson . Rule in Brooke v. Enderbey. Rule in Newmarchv. Clay. Application of the rules adopted in the preceding cases. Sec. 543. Sec. 544. Sec. 545. Sec. 546. Sec. 547. Sec. 548. Sec. 549. Sec. 550. Sec. 551. Sec. 553. Sec. 553. Sec. 554. Sec. 555. Sec. 556. Sec. 557. Sec. 558. Sec. 559. Sec. 560. Sec. 561. Sec. 562. Sec. 563. Sec. 564. Sec. 565. Sec. 566. Sec. 567. Sec. 568. Sec. 569. Sec. 570. Sec. 571. Sec. 573. Sec. 573. Sec. 574. Sec. 575. Sec. 576. Sec. 577. Sec. ,578. Sec. 579. Sec. ,580. Sec. 581. Sec. 583. Sec. 583. Sec. ,584. Sec .585. Table op Contents. y Sec. 586. Illustration — Beale v. Caddick. Sec. 587. Simpson v. Ingham. Sec. 588. Partner may bind firm by assenting to transfer of debts due from or to it. Sec. 589. Illustration — Wickham v. Wickham. Sec. 590. Application of payments. Sec. 591. Release. fcjEC. 592. Kule in Solly v. Forbes, Price v. Baker, Hartley v. Manton. Sec. 593. Substitution, of debtors and securities by agreement. Bec. 594. Agreement of creditors to look to remaining partners is valid. iSEC. 595. Cases in which a retiring partner has not been discharged, no new- partner having been brought into the firm. Sec. 596. Oases in which a retiring partner has not been discharged, although a new partner has been brought into the firm. Sec. 597. Cases in which a retiring partner has been held discharged. Sec. 598. Of the doctrine of merger. Sbc. 599. Cases in which a retired partner has not been discharged, although a new partner has been introduced into the firm. Sec. 600. Cases in which a retired partner has been held to be discharged. Sec. 601. Of the doctrine of merger. CHAPTEE XXV. pF THE LIABILITY OF DECEASED PABTNEK'S ESTATE. Sec. 603. Remedy at law. Sec. 603. Rule in Gray v. Chiswell. Sec. 604. Partnership debt, several as well as joint, in equity. Sec. 605. Rule in Devaynes v. Noble. Sec. 606. Confirmed in Wilkinson v. Henderson. Sec. 607. Rule carried still farther in Thorpe v. Jackson. Sec. 608. Joint and several contracts. Sec. 609. Rule in equity when partners enter into a joint security. Sbc. 610. Rule does not apply to all transactions — Sumner v. Powell. Sec. 611. Partnership creditors, rights against a deceased partner's estate — Vul- liamy v. Noble. Sec. 613. Admission of survivor of representatives of a deceased partner — Braith- waite V Britain — Winter v. Innes . Sec. 613. Subsequent dealings with the new firm. Sec. 614. Acts in discharge of deceased partner's estate — Jacomb v. Harwood. Sec. 615. Rule in Winter v. Inness. Sec. 616. Payments made in case of decease of one of the partners — Devaynes V. Noble. Sec. 617. Sleech's case — Clayton's case. Sec. 618. Liability in case of continuance of firm under will of deceased. Sec. 619. Creditors of new firm not entitled to pursue the estate. Sec. 630. Ex parte Garland. Sec. 631. Executor carrying on business liable for excess of authority. Sec. 633. Rule in Wightman v. Townall. Sec. 633. Consequences of death of a partner. Sec. 624. 'Relative rights of executor and surviving partner. Sec. 635. With reference to what occurred before death. Ti Table ov Contents. Sec. 626. Creditors may pursue estate in equity. Sec. 627. Position of firm creditors as to individual creditors of deceased partner. Sec. 628. Rule in Brett v. Beckwith. Sec. 629. Substance of degree in such cases. Sec. 630. Questionable whether both remedies can be pursued at once. Sec. 631. With reference to what occurred after death. Sec. 632. What acts of an executor impose liability upon assets of deceased partner. Sec. 633. Cases illustrating. Sec. 634. Effect of provision in will directing continuance of business. Sec. 635. In the case of companies. Sec. 636. Consequences as to separate creditors, legatees and next of kin of deceased partners. Sec. 637. General rule as to separate creditors. Sec. 638. Exceptions to the rule. Sec. 639. When share of deceased is not got in. CHAPTER XXVI. extinction op liabilities. Sec. 640. Extinction of liability. Sec. 641. Composition deed treated as release. Sec. 642. May be limited to one partner. Sec. 643. Covenant not to sue not treated as release. Sec. 644. Payment by one, payment by all. CHAPTER XXVII. OF THE BIGHTS OF PARTNERS AGAINST THIRD PERSONS. Sec. 645. Contract gives no new rights to individuals. Sec. 646. Limits of rights. Sec. 647. Under sealed instruments — Bonds — Rule in Wright v. Russell. Sec. 648. Rule in Barclay v. Lewis. Sec. 649. Barclay v. Lewis overruled by Barker v. Parker. Sec. 650. Rule in Strange v. Lee. Sec. 651 Bond for repayment of money advanced- by firm or either member of, does not protect advances by survivor. Sec. 652. Rule as to bond to cover bills drawn by firm. Sec. 653. Effect of death or retirement of partner upon bond of indemnity to firm. Sec. 654. Effect upon such bonds when firm is afterward incorporated. Sec. 655. Same principles applied in equity — -Pemberton v. Oakes. Sec. 656. Introduction of new partner — Effect of, on such bonds. Sec. 657. Bond may be made so as to cover fluctuations and changes in composi- tion of the firm. Sec. 658. Who may recover on bond given to firm in firm name. Sec. 659. Bonds to companies, not affected by changes in members of. Sec. 660. What submission to arbitration covers — Garland v. Noble. Sec. 661. Power of attorney given to one member — Effect of. Sec. 662. Rights of partners under unsealed contracts. Rule in Ex parte Garland. Table of Contents. vii Sec. 663. Guaranty given to one partner, not guaranty to firm. Sec. 664. Simple contracts may be enlarged or explained by construction. Ex parte Kensington. Sec. 665. Guarantees given to one partner may in some cases be extended to firm — Garrett v. Handley. Sec. 666. Alexander v. Barker. Sec. 667. Bills and notes, generally security only to one to whom payable — Ex- ceptions i Sec. 668. Eule when contract by mistake fails to express the intention of the parties. Sec. 669. Rights of partners as to accounts current with their debtors — Boden- ham V. Purchas. Sec. 670, Bodenham v. Purchas questioned in Jones v. Maud. Sec. 671. Of extinction of rights. Payment to and release by one partner. Effect of. Sec. 672. Payment to one partner — King v. Smith. Sec. 673. Distinction when the debtor owes both the partner and the firm. Sec. 674. Judgment taken by one of two joint creditors. Effect of. Sec. 675. Payment to one of two firms that are partners in certain transactions CHAPTER XXVIII. OF ACTIONS BY PARTNEKS. Sec. 676. General rights of partners to sue. Sec 677. Of parties to action ex contractu. Sec. 678. Must have been partnership when contract was made. Sec. 679. Distinction between specialties and simple contracts. Sec. 680. Parties to actions on bills and notes. Sec. 681. Eights of action cannot be transferred when. Sec. 683. Parties to actions on deeds. Sec. 688. Dormant partners. Sec. 684. Partners not known in firm. Sec. 685. Infant partners. Sec. 686. Bankrupt partners. Sec. 687. Death of partner. Sec. 688. Demurrer in case it appears there should be other parties. Sec. 689. Of the parties to an action ex delicto. Sec. 690. Of the declaration. Sec. 691. Joint interest, joint action. Sec. 693. Libel. Sec. 693. Of pleas in bar. Sec. 694. Of plea of bankruptcy. Sec. 695. In actions on bonds. Sec. 696. Tender. Sec. 697. Former recovery. Sec. 698. Statute of limitations. Sec 699. Proof of partnership. Sec. 700. How proved. Sec. 701. Nominal partners. Sec. 703. Declarations of one partner. viii Table of Contents. Sec. 703. Proof of dissolution. Sec. 704. Misjoinder may be shown under general issue. Sec. 705. Evidence in actions for tort. Sec. 706. Indictment by partners. Sec, 707. Equitable remedies against partners. GHAPTEK XXIX. OP ACTIONS AGAINST PARTNEHS. Sec. 708. Of the process. Sec 709. Personal service necessary. Sec. 710. One partner may appear for all. Sec. 711. Distringas. Sec. 713. Return of nulla bona, or non est inventus. Sec. 713. When defendant is abroad. Sec. 714. Separate property of one cannot be distrained to compel appearance of the other. Sec. 715. As to bailable process. Sec. 716, Pull name of defendant shall be given. Sec. 717. Must be jointly declared against. Sec. 718, In case of tort. Sec. 719. Action on bail bond. Sec. 720. Of parties to action on contract. Sec. 721. Non-joinder must be plead. Sec. 722. Separate contract may be declared on, and joint contract proved when. Sec. 723. When non-joinder may be availed of, although not plead. Sec. 724. Non-joinder of dormant partner. ' Sec. 725. Of infant partner. Sec. 736. Of bankrupt partner. Sec. 727. When one is dead. Sec. 728. Outlawry of one. Sec. 729. When too many are joined . Sec. 730. Of parties to actions for torts. Sec. 731. Of parties to actions ex quasi contractu. Sec. 733. Other actions ex quasi contractu. Sec. 733. All partners must be sued. Sec. 734. Actions against survivor. Sec. 785. Should be declared against as survivor. Sec. 736. Outlawry. Sec, 737, Non-joinder, matter of abatement only. CHAPTER XXX. OF THE PLEADINGS IN, Sec, 738. Of pleas in abatement. Sec. 739. For misnomer. Sec. 740. Plea should be accurate and certain. Sec. 741. Plea for non-joinder ; what must be stated in. Sec. 742. How must conclude. Table of Contents. ix Sec. 743. Plaintiff not allowed to amend. Sec. 744. Demurrer to plea. Sec. 745. When plaintiff should reply to plea. Sec. 746. Effect of finding under issue raised by plea and replication. Sec. 747. Of pleas inbar, nature of. Sec. 748. Release. Sec. 749. Covenant not to sue. Sec. 750. Payment or tender. Sec. 751. Former recovery. Sec. 753. Joint and several debts. Sec. 753. Set-off. Sec. 754. Torts cannot be set off. Sec. 755. Must be debts due in same right. Sec. 756. Enough, if rights are essentially the same. Sec. 757. Demands essentially separate. Sec. 758. Effect of agreement to sever. Sec. 759. Court will sometimes order judgments to be set oflf. Sec. 760. Infancy, plea of. Sec. 761. Bankruptcy. Sec. 762. Joint tort. Sec. 763. When defense is joint. CHAPTER XXXI. OF THE EVIDENCE. Sec. 764. Evidence must be sufficient to hold all. Sec. 765. Strict proof required. Sec. 766. May be by parol. Sec. 767. That bills were drawn or accepted in particular way. Sec. 768. Acts and conduct of the parties. Sec. 769. Answer to bill in equity, when admissible. Sec. 770. Records in former suits. Shc. 771. Declarations or admissions, how far admissible. Sec. 773. Statements made by others in presence of defendants. Sec. 773. Admission of one partner. Sec. 774. Evidence required to sustain plea of non-joinder. Sec. 775. When admissions of one partner are admissible. Sec. 776. Admissions after dissolution. Sec. 777. Admissions by agent after retirement of one partner. Sec. 778. What must be shown to hold the firm. Sec. 779. [ Admission does not make person a partner, may show that he was not. Sec. 780. When estopped from denying. Sec. 781. May show admissions had no reference to partnership. Sec. 783. Rule in Ridgway v. Phillips. * Sec. 783. When one partner may be called to prove partnership. Sec. 784. Interest of witness. Sec. 785. No party examined without consent. Sec. 786. Evidence in actions for tort. Table of Contents. CHAPTER XXXII. OP NONSTTIT ; VERDICT ; COSTS. Sec. 787. Nonsuit, when directed. Sec. 788. Verdict must be for or against all. Sec. 789. Costs, who entitled to. CHAPTEE XXXIII. OF EXECUTION. Sec. 790. Joint execution must be predicated on joint judgment. Sec. 791. What may be taken on. Sec. 793. Plaintiff may have several executions. Sec. 793. Executions in favor of separate creditors. Sec. 794. As to the interest passed by seizure and sale. Sec. 795. As to the relief of the solvent partner against the effect of the execu- tion, CHAPTEE XXXIV. OF SUITS IN EQUITY BY AND AGAINST PARTNERS. Sec. 796. Who should be parties plaintiff. Sec. 797. When suit may be maintained against partners. Sec. 798. Who should be made defendants. Sec. 799. When separate creditors may bring suit for administrator. Sec. 800. Who must answer. CHAPTEE XXXV. OF PARTNERSHIPS IN MINES. Sec. 801. Subject to rules of ordinary partnership. Sec. 803. Rights of co-adventurers. Sec. 803. Eights of mortgagees of shares. Sec. 804. Shares in, assignable . Sec. 805. Implied conditions of the relation. Sec. 806. Person liable as partner in, by holding out, when. Sec. 807. No implication as to power of directors or agents to draw bills. Sec. 808. Provisions of codes and ordinances. CHAPTER XXXVI. OF PART OWNERS OP SHIPS. Sec. 809. Of the interest of part owners. Sec. 810. Of the ship's register. Sec. 811. What may be registered. Table of Contents." xi Sec. 812. As to the declaration. Sec. 813. Contents of certificate. Sec. 814. Of the ship's transfer. Sec. 815. Of the material rights of part owners. Sec. 818. Eights of majority. Sec. 817. Ship's husband, duties of. Sec. 818. Duty of part owners as to expenses. Sec. 819. Rights of, between themselves. Sec. 820. Relative rights of part owners and third persons. Sec. 821. Power of agents and part owners as to repairs. Sec. 822. Distinction between part owners and partners. Sec. 823. Of actions and suits against partners. Sec. 824. Who should be sued. OHAPTEE XXXVII. OP PAKTICUIiAK PABTNERSHIPS. Sec. 825. Of joint-stock companies in general. ■Sec. 826. Of the Bubble Act. Sec. 827. Later acts. Sec. 828. Repeal of the statute and its consequences. Sec. 829. Who are to be treated as usurping powers of a corporation. Sec. 830. Test of legality as to joint-stock companies. Sec. 831. What makes one a partner in. Sec. 832. What constitutes an actual partner in. Sec. 833. By holding out. Sec. 834. Liability of promoters or provisional directors. Sec. 835. Liability of the company. Sec. 886. Legal remedies affecting companies, members of, and strangers. Sec. 837. Of the formation of — Evidence to charge one as shareholder. Sec. 838. Where there, has been no waiver of formalities. Sec. 839 Where the prescribed formalities have been apparently waived. Sec. 840. As between company and alleged shareholder. Sec. 841. As between alleged shareholder and a creditor. Sec. 842. Cost-Book Mining Companies. Sec. 843. Of chartered companies. Sec. 844. Of companies under letters patent. Sec. 845. Of the mutual rights of shareholders. Sec. 846. When company is projected, but never formed. Sec. 847. Every party suing must be named. Sec. 848. Deed of settlement, what it should set forth. Sec. 849. The general law of partnership applies when the deed of settlement does not provide remedies. Sec. 850. When shareholders may proceed in equity against the directors. Sec. 851. Of the relative rights of shareholders. Sec. 852. Liability of shareholder of unincorporated company. Sec. 853. Powers of agent or manager of company. Sec. 854. Unincorporated companies — Liability of. Sec. 855. Of the management of companies. Sec. 856. Of companies under 7 & 8 Vict. — Managing body. xii Table of Coktents. Sec. 857. As to shareholders. Skc. 858. As to managing body. Sec. 859. As to shareholders of statutory companies. Sec. 860. Of the sale and transfer of shares. Sec. 861. Of the relinquishment of shares, and of the right to retire. Seo. 863. Of the forfeiture of shares and the right to expel. Sec. 863. Of suits in equity between company and strangers. Sec. 864. Grounds on which equity will interfere. Sec. 865. When will enjoin. Sec. 866. Ex parte injunctions. Sec. 867. Will restrain company from acting in excess of authority. Sec. 868. When injunction will be refused. Sec. 869. Suits in equity among the shareholders of joint-stock companies. Sec. 870. Dissolution when all partners cannot be present. Sec. 871. Account without dissolution. Sec. 873. General discussion of question. Sec. 873. Demurrer. Sec. 874. Plea. Sec. 875. Answer. Sec. 876. Injunctions against directors, etc. Sec. 877. An injunction has been refused to restrain. Sec. 878. Actions at law against companies . Sec. 879. Of the recovery back of subscriptions to companies. Sec. 880. Of actions between companies and their shareholders. Sec. 881. Of actions for calls. Sec. 883. Of actions for dividends. Sec. 883. Of set-ofE, by and against companies. Sec. 884. Of executions against companies and their shareholders. Sec. 885. As to executions against company or person named in judgment. Sec. 886. As to proceedings against shareholders upon j udgment against com- pany. Sec. 887. As to shares. Sec. 888. Termination of liability. Sec. 889. When shares in companies are specifically bequeathed. Sec. 890. Profits — Division of. CHAPTEK XXXVIII. OP JOINT-STOCK COMPANIES BY STATUTE. Sec. 891. Statutory companies. Sec. 893. Banking companies. Sec. 893. Actions by and against. Sec. 894. Canal companies. OHAPTEE XXXIX. OP THE BANKRUPTCY OP PAETNEKS. Sec. 895. Of the consequences of bankruptcy. Sec. 896. Who are to be deenjed bankrupts. Sec. 897. Who are to proceed against. Table of Coni^ents. xiii Sec. 898. "When fiat is void. Sbc. 899. What property passes to assignee. Sec. 900. Administration under, joint and separate. Sec. 901. Effect of an act of solvent partner. Sec. 903. Powers of solvent partner. Sec. 903. Effect of acts of bankrupt partner on dealings of firm. Sec. 904. Effect of bankruptcy of one, on execution against firm. CHAPTER XL. OF THE ADMINISTKATION IN BANKRUPTCY. Sec. 905. Of joint and separate estate. Sec. 906. What is joint estate in bankruptcy. Sec. 907. Ostensible partners. Sec. 908. Dormant partners. Sec. 909. What is separate estate in bankruptcy. Sec. 910. Wlien separate, is joint estate in bankruptcy. Sec. 911. Joint estate converted into separate. Sec. 913. ■ How joint estate may be converted into separate. Sbc. 913. What is essential to make conversion complete. Sec. 914. All the terms of the contract must be complied with. Sec. 915. When conversion may be defeated. Sec. 916. Conversion not defeated by knowledge of the firm that it was insolvent. Sec. 917. Creditors cannot prevent conversion. CHAPTER XLI. OF JOINT AND SEPARATE DEBTS. Sec. 918. Separate debts, what are. Sec. 919. How separate debt is converted into joint. Sec. 930. What amounts to conversion, and how proved. Sec. 931. Of proof in general. Priority of joint creditors as to joint estate of separate creditors. Sec. 933. Exceptions to rule as to dividends with separate creditors. Sec. 933. When a joint creditor is a petitioner under a separate fiat. Sec. 934. Where there is no joint estate and no solvent partner. Sec. 935. Where there are no separate debts. Sec. 936. As to interest. Sec. 937. When partners may be creditors upon each other. Sec. 938. Enforcement of joint debts, against whole of deceased partner. Sec. 939. Of election of remedy. Sec. 930. Confined to same debt. Sec. 931. Confined to bonds, bills and personal securities. Sec. 933. Of election of proof. Sec. 933. Rule when debt has been converted with or without extinguishment. Sec. 934. When debt has been collusively converted. Sec. 935. Rule when dormant and ostensible partners become bankrupts. Sec. 936. When a demand may be split. Sec. 937. Of the time of elections and waiver of proof. xiT Table of CoijTEifTS. Sec. 938. Of double remedy. Sbc. 939. Of double proof. Sec. 940. Limitations as to double proof. Sec. 941. Of proof between partners. Sec. 942. Qualification of the rule. Sec. 943. Exceptions of a special nature. Sec. 944. What debts one partner may prove against separate estate. Sec. 945. Wlien one partner may prove against separate estate, although not sufficient to pay separate debts. Sec. 946. Rule as to distinct fines. Sec. 947. When there are no joint debts. Sec. 948. Of proof between estates. Sec. 949. Exceptions to rule . Sec. 950. Rule when one partner is appointed manager of firm business. Sec. 951. Rule when some of the partners form a distinct firm. Sec. 953. Of set-oflT. Sec. 953. Equitable set-oflf. CHAPTER XXIII. IN-COMING PARTNERS. Sec. 515. Of the liabilities of an incoming partner — Slierreff v. Wilks. Sbc. 516. Payment of interest by new firm on debt of old firm does not neces- sarily bind new partner — Kirwan v. Kirwan. Sec. 517. Commencement of liability in ordinary partnership. Sec. 518. Firm as such not liable for acts done before it was formed. Sec. 519. Eule in Wilson v. Whitehead. Sec. 520. Rule in Saville v. Robertson. Sec. 521. Rule in Qouthwaite v. Duckworth. Sec. 522. Principle applies to incoming partners. Sec. 523. Rule in Ex parte Jackson — Beale v. Mouls. Sec. 524. Liability arising from tacit contract, Dyke y. Brewer. Sec. 525. May make himself liable by agreement. Sec. 526. Instances in which liability was created. Sec. 527. Note or bill given for debt of old firm, in name of new, prima facie a fraud on the new partner. Sec. 528. Introduction of new partner — Firm bound to let in, when — Rights of new partner when not provided for in articles. Sec. 529. Must not be joined as party plaintiff or defendant in suits relating to business of the old firm. Sec. 530. Evidence of assumed obligation to pa> Sec. 531. Rule in Helsby v. Mears. Sec. 532. Must be novatio debiti — Vere v. Ashby. Sec. 533. What amounts to a novation. Sec. 534. When incoming partner is not liable. Sec. 535. Where an infant partner may become liable. Of the liabilities of an incoming partner — Sherreff v. Wilks. Sec. 515. Generally, of course, an incoming partner will not be lia- ble in respect of debts contracted by the firm previoiisly to his join- ing it. In Sherreff v. "Wilks, the facts of which have been 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 suffered 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, ' 1 Bast, 48. 824 Eights or Paetnees. that the liability of an incoming partner for contracts made by the firm before his accession is not to be presumed.' Payment of interest by nevr firm on old debt does not necessarily bind nettr partner — Kimran v. Kirwan. Sec. 516. Even where there is evidence of payment of interest by a new firm for an old debt, the incoming partner, by whose accession 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 wei'e rendered to him. During the time that A dealt with the firm all the partners retired except C, who formed a new partner- ship 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 partnership, and the balance was struck annually as ' before, and A, until his death, which happened nearly three years afterward, 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 quon- dam partners contended that their responsibility had shifted to C and K, and it was argued in their behalf that the transfer of the account 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 Bolland, 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 responsibili- ties. And although the account was transferred from the old to the 1 Catt V. Howard, 3 Stark. 5. It is Thrall v. Seward, 37 Vt. 578 ; Hartley evident that the Incoming partner v. Kirlin, 45 Penn. 49 ; Badcocfe. v. Stew- might assume the debts of the old firm art, 58 Penn. St. 179; Deere v. Plant, for a consideration, and obligate him- 42 Mo 60 ; Adkins v. Arthur, 33 Tex. self to the members of the old firm, to 431. An incoming partner is not liable pay the same. But the general rule is for the debt of the old firm unless there that the incoming partner is not liable is a novation of the debt, by a new for the debts of the old firm. Beale v. promise upon a valid consideration, and Mouls, 10 Q. B. 976 ; Beech v. Eyre, 5 a discharge of the old firm therefrom. Man. & G. 415 ; Whitehead v. Barron, 3 Sternburg v. Callanan, 14 Iowa, 251 ; Mood. & R. 248 ; Young v. Hunter, 4 Eichardson v. Farmer, 36 Mo. 35. Taunt. 582 ; Hart v. Tomlinson, 3 Vt. ^ 2 G & M. 617, and see Ex parte 101 ; Sternburg v. Callanan, 14 Iowa, Sandham, 4 D. if C. 812. 251 ; Cadwallader v. Blair, 18 id. 420 ; Incoming Partkers. 825 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. Commencement of liability in ordinary partnerships. Seg. 517. 'IThe doctrine that each partner has implied authority to do whatever is necessary to carry on the partnership business in the usual way," says Mr. Lindley,' " is based upon the ground that the ordi- nary business of a firm cannot be carried on either to the advantage of its members or with safety to the public, unless such a doctrine is recognized. The existence of a partnership is, therefore, evidently presupposed; and although persons negotiating for a partnership, or about to become partners, may be the agents of each other before the partnership commences, such agency, if relied on, must be established in the ordinary way, and is not to be inferred from the mere fact that the persons in question were engaged in the attainment of some com- mon end, or that they have subsequently become partners. This is shown by the cases already referred to, when the difference between partnerships and inchoate partnerships was being discussed. Almost all those cases in fact arose in consequence of attempts made to fasten liability on the defendants, by reason of some act done by other persons, alleged to»be their partners, and each of those cases in which the plaintiff failed is an authority for the proposition that so long as there is no partnership there is no implied authority similar to that which exists after a partnership is formed.^ But although this is undoubted law, still if persons agree to become partners as from a future day, upon terms to be embodied in a deed to be executed on that day, and the deed is not then executed, but they nevertheless commence their business as partners, they will all be liable for the acts of each, whether those acts occurred before or after the execution of the deed.' For the question in such a case is not, when was the deed executed ? but rather this : when did the partners commence to carry on business as such ? The agency begins from that time, wJBether they choose to execute any partnership deed or not. Where there is an agreement for a partnership, and there is noth- ing to lead to the conclusion that the partnership was intended to ' Lindley on Part. pp. 312-318. existed, the option to become a partner '' Gabriel v. Evill, 9 M. & W. 297, not having been exercised, where it was held that no partnership ^ Battley v. Lewis, 1 Man. & Gr. 155. 104 826 Eights of Paetkees. commence at any other time, it will be held to commence from the date of the agreement.' Firm, as such, not liable for acts done before it was formed. 8ec. 518. The agency of each partner for the firm commencing with the partnership, and not bef ore, i t follows that the firm is not liable for what may be done by any partner before he becomes a member thereof. So that if several persons agree to become partners, and to contribute each a certain quantity of money or goods for the joint benefit of all, each one is solely responsible to those who may have supplied him with the money or goods agreed to be contributed by him;^ and the fact that the money or goods so supplied have been brought in by him as agreed, will not render the firm liable." Rule in Wilson v. Whitehead. Sec. 519. Upon this principle, apparently, it was held in Wilson v. Whitehead,'' that the author and publisher of a work were not liable for the paper supplied for it, the paper having been ordered by and sup- plied to the printer, who was to share the profits of the work. The agreement between the parties was that one should be the publisher, and make and receive general payments; that another should be edi- tor, and that the third should print and find the paper for the work, charging it, however, to the account of the three at cost price. The profits were to be equally divided amongst the three. It was, therefore, urged that all were liable for the paper supplied, but it was held otherwise, for the printer was not authorized to buy the paper except on his own account, and when he had bought it he might have used it for some other book. The case was likened to that of coach proprietors, where each horses the coach for one or more stages, and each agrees to bring into the concern the work and labor of his horses, and none of the others has any interest in them, though all share the profits.' The twq well-known cases of Saville v. Eobertson" and Gouthwaite V. Duckworth' further illustrate the principle now in question. The cases closely resemble each other in many respects, for in each there was an agreement for a Joint adventure in goods; in each an attempt ' See Williams v. Jones, 5 B. & C. * 10 . & W. 503. 108. - Barton v. Hanson, 3 Taunt. 49, ' See Greenslade v. Dower, 7 B. & C . which shows that in such a case each is 635 ; Dickinson v. Valpy, 10 B. & C. 141, alone liable for hay, etc., supplied to his 143 : Fisher v. Taylor, 3 Hare, 339, 330. own horses. 3 Smith V. Craven, 1 Cr. & J. 500; « 4 T. R. 730. Nicholson v. Ricketts, 8 W. R. 311. ' 2 East, 431. Incoming Partneks. 837 was made to compel a person who did not order the goods to pay for them, on the grounds that he was in partnership with the person who did order them, and that they were supplied and used for the joint adventure; and in each the defense was that the goods were ordered before any partnership commenced, so that the defendant was not liable for the purchase made by his copartner. In Saville v. Eobert- son the defense was proved and prevailed, whilst in Gouthwaite v. Duckworth the defendant was compelled to pay. In order to explain the apparent conflict between the two cases, it is necessary to state shortly the material facts in each. Rule in Saville v. Robertson. Sec. 520. In Saville v. Eobertson,' several persons agreed to share the profit and loss of an adventure in goods, of a kind to be fixed by a majority, but no one was to have any share or proportion in the adven- ture other than to the amount of the goods ordered and shipped by him- self, and no adventurer was to be answerable for any thing ordered or shipped by any coadventurer. One of the" adventurers having ordered goods and not paid for them, it was contended that his coad venturers were liable for them, on the ground that he and they were partners. But the court held that no |)artnership commenced until the goods were on board ; each partner was to bring in his share only, and his copartners were not liable to persons who 'supplied him with the means which enabled him to bring ih such share. Rule in Gouthiraite v. Duckvrorth. Sec. 531. In Gouthwaite v. Duckworth,' Browne and Powell, who were in partnership, were indebted to Duckworth, aijd it was agreed that all. three should join in an adventure in the purchase and sale of goods ; that the goods should be bought, paid for and shipped by Browne and Powell, and that the proceeds of the sale should be remit- ted to Duckworth, who should deduct thereout the amount of his debt, and then share the profit of the adventure with Browne and Powell. It was also agreed that in the event of a loss Duckworth should share it. In consequence of this agreement, Browne bought goods for the adventure on credit, and it was held that all the three, viz., Browne, Powell and Duckworth, were liable to pay for them; for the goods were bought in pursuance of the agreement for the adventure, and although it was never intended that Duckworth should ' 4 T. B. 730. = 3 East, 431. 828 Eights of Partners. pay for the goods, yet it was thought that the adventure commenced with the purchase of the goods, and that Duckworth was therefore liable. There is considerable difficulty in supporting this decision, if rested on the ground of partnership and implied agency resulting therefrom, for it is not easy to see how any partnership existed prior to the purchase of the goods. But if rested on the ground of agency independently of partnership, there is not the same difficulty. For although the goods were to be paid for by Browne and Powell, that might be regarded as nothing more than a stipulation to take effect as between them and Duckworth ; it did not necessarily exclude the inference that as Browne and Powell were to buy for the adventure, they were at liberty to procure the goods on the credit of all con- cerned.' Principle applies to incoming partners — Young v. Hunter. Sec. 523. As the firm i^ not liable for what is done by its members before the partnership between them commences, so upon the very same principle a person who is admitted as a partner into an existing firm does not by his entry become liable to the creditors of the firm for any thing done before he became a partner. Bach partner is, it is true, the agent of the firm; but, as befpre pointed out, the firm is not distinguishable from the persons from time to time composing it, and when a new member is admitted he becomes one of the firm for the future, but not as from the past, and his present connection with the firm is no evidence that he ever expressly or impliedly authorized what may have been done prior to his admission. It may perhaps be said that his entry amounts to a ratification by him of what his now partners may have done before he joined them.'^ But it must be borne in mind that no person can be rendered liable for the act of another on the ground that he has ratified, confirmed, or adopted it, unless, at the time the act was done, it was done on his behalf.^ Therefore, in Young v. Hunter,* where Hunter & Co. had ordered goods of the plaintiff for sale in the Baltic, and afterward it was agreed between Hunter & Co. and Hoffman & Co. that the latter should join in the adventure and share the profit and loss, it was held to be clear that Hoffman & Co. were not liable to the plaintiff to pay for the goods. ' See Young v. Hunter, 4 Taunt. 582, ' Wilson, v. Tumman, 6 Man. & Gr. the judgment of Qibbs, J. 236, E. C. L. R. 46. « See Horsley v. Bell, 1 Bro. C. C. 101, *i Taunt. 583. note, per Gould, J. Incomikg Paktnebs. 829 Rule in Ex parte Jackson — Beale v. MouIb. Sec. 523. So, in Ex parte Jackson,' a person who was indebted by bond for money borrowed to carry on a trade, took two other persons ostensibly into partnership. After two years a joint commission of bankruptcy issued against the three, and it was held that the bond debt was not provable as a partnership debt against- the joint estate, but remained what it was originally, the separate debt of the obligor. Again, in Beale t. Mouls," the members of a provisional committee of a company entered into a special agreement with the plain tifE for the manufacture of a steam carriage. Afterward, but before the con- tract was completed, the defendant Mouls became a member of the committee, and interested himself in the completion of the carriage. Several alterations and payments on account were also made whilst he was a member, and with his knowledge. The carriage was completed but the committee then refused to take it or to pay for it. In an action brought against Mouls and the other members of the commit- tee, it was held that Mouls was not liable. He was not liable on the special contract, for he was no party thereto, by himself or any agent; and he could not be made liable on any implied contract, for the exist- ence of a special excluded any implied agreement relative to the same subject-matter. It follows, from the principles on which this case was determined, that if the carriage had been accepted by the com- mittee, Mouls would not have been liable to pay for it. The delivery and acceptance in such a case would have been in pursuance of the contract, to which, ex hypothesi he was no party; and no liability could attach to him by virtue of any implied contract to pay that which became payable by virtue of an express contract made with other people. It has, indeed, been expressly decided, that if several mem- bers of a committee order goods, and then a new member joins the committee, he is not liable to pay for the goods, though they are delivered after he joined it.' Ijiability arising from tacit contract — Dyke v. Brewer. Sec. 524. Oases, however, of this kind must not be confounded with those in which a new, though tacit contract is made after the introduction of a new ^rtner. Dyke v. Brewer * illustrates the dis- ' 1 Ves. Jr. 131. In Beech v. Byre, 5 Man. & Gr. 415, the ^ 10 Q. B. 976. See, too, Brenmer v. goods were both ordered and supplied Chamberlayne, 2 Car. & Kir. 569 ; Ker- at a time when there was evidence to ridge v. Hesse, 9 C. & P. 200. show that the defendant was one of the 'Newton V. Belcher, 12 Q. B. 921; committee. Whitehead v. Barron, 2 Moo. & Rob. 243. * 2 Car. & Kir. 838. 830 Eights of Partners. tinction alluded to. In that case the plaintiff agreed with the defend- ant, A, to supply him with bricks at so much per thousand, and began to supply them accordingly; the defendant, B, then entered into part- nership with A, and the plaintifE continued to supply bricks as before. It was held that both A and B were liable to pay, at the rate agreed upon, for the bricks supplied to both after the partnership commenced. The ground of this decision was, that as A had not ordered any definite number of bricks, each deliyery and acceptance raised a new tacit promise to pay on the old terms, although if all the bricks delivered had been ordered by A in the first instance, he alone would have been liable to pay for them.' May make himself liable by agreement. ^ Sec. 525. If an incoming partner chooses to make himself liable for the debts incurred by the firm prior to his admission therein, there is nothing to prevent his so doing. But it must be borne in mind, that even if an incoming partner agrees with his copartners that the debts of the old shall be taken by the new firm, this, although valid and binding between the partners, is, as regards strangers, res inter alios acta, and does not confer upon them any right to fix the old debts on the new partner.** In order to render an incoming partner liable to the creditors of the old firm, there must be some agreement to that effect entered into between him and the creditors, and founded on some sufficient consideration. If there be ahy such agreement, the incoming partner will be bound by it, but his liabilities in respect of the old debts will attach by virtue of the agreement, and not by reason of his having become a partner. An agreement by an incoming partner to make himself liable to cred- itors for debts owing to them before he joined the firm, may be, and in practice generally is, established by indirect evidence. The courts, it has been said, lean in favor of such an agreement, and are ready to infer it from slight circumstances,' and they seem formerly to have inferred it whenever the incoming partner agreed with the other part- ners to treat such debts as those of the new firm.* But this certainly is not enough, for the agreement to be proved is an agreement with ' Helsby v. Mears, 5 B. & C. 504, E. Peele, 6 Vfc. 601 ; Ex parte Williams, C. L. K. 11, is another case turning Buck. 13. on the same principle as is explained ' Ex parte Jackson, 1 Ves. Jr. 131 ; Ex by Lord Denman in Beale v. Mouls, 10 parte Peele, id. 604. Q. B. 976. » See Cook's Bank. Law, 534 (8th ed.) ' See per Parke, J., in Vere v. Ashby, citing Ex parte Bingham, and Re 10 B. & C. 298, E. C. L. R. 21 ; Ex parte Staples ; Ex parte Clowes, 2 Bro. (P. C.) 595. Incomin^g Paetners. 831 the creditor, and of such an agreement an arrangement between the partners is no CTidence.' Instances in which liability was created — Ex parte Whitmore. Sec. 526. As an instance where an incoming partner made himself liable for debts contracted by the firm before he joined it, reference may be made to Ex parte Whitmore." In that case "Warwick and Clagett became partners. Warwick, who had had dealings with mer- chants in America, informed them that he had taken Clagett into partnership, and requested them to make up their accounts, and transfer any balance due to or from him (Warwick) to the new firm. These instructions were repeated and confirmed by Warwick and Cla^tt, and were acted on. A debt owing froni Warwick was placed to the debit of the new firm, and a bill was drawn on the firm for the . amount of the debt and was accepted, but was dishonored. On the bankruptcy of the firm it was held that the debt in question had •become the joint debt of Warwick and Clagett, and not only so, but that the joint liability of the two had been accepted in lieu of the sole liability of Warwick. Note or bill given for debt of old firm, in name of new, prima facie a fraud on new partner. Sec, 527. Before leaving this subject, it may be as well to observe that, as an incoming partner does not, by the fact of entering the firm, take upon himself the then existing liabilities thereof, if after he has joined the firm his copartner give a bill or note in their and his name for a debt contracted by them alone, this is prima facie a fraud upon him, and consequently he will not be liable to a holder with notice.' Introduction of new partners. Sec. 528. It is a common provision in partnership articles that on the death of a partner, his executors, or his son, or some other per- son, shall be entitled to take his place. The effect of any such pro- vision must of course depend on its words; but speaking generally, it may be said: 1. That clauses of this kind, although they bind the surviving ' Ex parte Freeman, Buck. 471 ; Ex * 3 Deac. 365. parte Fry, 1 G. & J. 96 ; Ex parte Wil- « See Shirreff v. Wilks, 1 Bast, 48. liams,Buck.l3;BxpartePeele,6Ves.601. 832 Rights of Partners. partners to let in the person nominated,' do not bind him to come in, but give him an option whether he will do so or not.'' 2. That before making up his mind he is entitled to make himself acquainted with the state of the partnership affairs, although he is not entitled to have its accounts formally taken/ 3. That if he is desirous of coming in, he must comply strictly with the terms upon which alone he is entitled to do so.* < 4. That if he declines to come in, and there is no provision as to what is then to be done, the partnership must be dissolved and wound up in the usual way.' As a general rule, and excluding cases of agency, an agreement between two persons cannot be enforced against either of them by a third person, even although such third person was intended o dfiive a benefit from the agreement. " In a recent case it was attempted to apply this rule to an agreement between two partners, that on the death of one his widow should succeed him. One of the partners was dead; it was contended that his widow had no right to succeed. But it was held that the rule in question had no application to such a case, th9,t the articles had created a valid trust in favor of the widow, and that she was entitled to come to the court for a decree for the execution of such trust.' In a case where articles provided that in the event of the death of a partner during the term for which the partnership was intended to last, his share should go to his widow for life, and after her death to his children, and in default of children to his widow's executors, administrators or assigns; it was held that the children of a partner, who had died leaving a widow, did not take any vested interest in the partnership assets during her life. " In another case partnership articles provided that on the death of a partner the survivor should carry on the business for the benefit of himself and such person as the other should by will appoint, and, in ' In Waiuwright v. Waterman, 1 Ves. Cox, 10 id. 163 ; se6, too, Pearce v. Cham- Jr. 31 1, a person was declared entitled to berlain, 3 Ves. Sr. 33. be admitted, although those with whom ^Pigott v. Bagley, McCl. & Y. 569. that question rested were divided in ■• Holland v. King, 6 C. B. 727 ; Brooke opinion. But in Milliken v. Milliken, v. Garrod, 3 K. & J. 608, and 3 DeG. & 8 Ir. Eq. 16, it was held that a person J. 61; Milliken v. Milliken ; see Ex parte who is to be let in, provided he conducts Marks, ID. & Ch. 499. himself to the satisfaction of the sur- * Kershaw v. Matthews, 3 Russ. 63; vivors, is without remedy if they will Downs v. Collins, 6 Ha. 418 ; Madgwick not admit him. v. Wimble, 6 Beav. 495. 2 Pigott V. Bagley, McCl. & T. 569 ; « See Colyear v. The Countess of Mul- Madgwick v. Wimble, 6 Beav. 495 ; grave, 3 Keen, 81. Downs V. Collins, 6 Ha. 418; Page v. 'Page v. Cox, 10 Ha. 163. 8 Balmain v. Shore, 9 Ves. 500. iNCOMiifG Partitees. 833 default of appointment, for the benefit of his widow, or (if she should be dead), for the benefit of his children, and in default of children, for the benefit of his executors or administrators; and that such per- sons, or the said widow, children, executors, or administrators, should stand in the place of the deceased, and be entitled to the same share in, and have the same control over the partnership trade and assets as the deceased would himself have been entitled to, if living. It was held that this was not, technically speaking, a power of appointment, and that consequently a partner could bequeath his share by a will which did not allude to the power or to the partnership.' When a person has been admitted into an existing firm, and no express agreement has been made as to his rights and liabilities, the inference is that his position is the same as that of the other partners. If they are bound by existing articles he will be bound by the same articles, if his conduct justifies the conclusion that he has assented to them, and if any special agreement is made with him, it will be regarded as incorporated with any previous agreement between the older partners, although of course so far as the two may be inconsist- ent, the latest will prevail.'' If, indeed, the incoming partn,er has no knowledge of any prior agreement between the others, he cannot be bound thereby,^ for nothing that he can have done can, under these circumstances, be regarded as evidence of any assent thereto on his part, and it is upon such presumed assent that the rule is founded." • Miist not be joined as party, plaintiff or defendant, in suits relating to business of the old firm. Sec. 529. As ar incoming partner is not a party to any contract or other obligation created by the firm before he became connected with it, it follows as a matter of course that at common law he can neither sue nor be sued thereon." But this does not apply to bills or notes or other obligations that pass by delivery,' but as to all other obligations the rule is inflexible, even though by agreement the new firm assumes the obligations of the old.' This rule has been changed by statute in many States, and in determining the question in a given case, reference should be had to the statute, if there be one. 'Ponton V. Dunn, 1 R. & M. 403; E. v. Portlat, 3 Camp. 239, n.; Vine v. C. L. R. 31. Ashby.lOB.&C. 388; Toungv. Hunter, ' See Austen v. Boys, 34 Beav. 598, 4 Taunt. 583. and 3 DeG. & J. 636. ' Ord v. Portlat, ante. 3 Id. « Witsford^v. Wood, 1 Eap. 183 ; Ra- ^Milford V. Ward, 1 Bsp. 183; Ord denhurst v. Bates, 3 Bing. 463. 105 834 Rights of Pabtnees. Evidence of assumed obligation to pay. Sec. 530. Unqiiestionably, however, peculiar circumstances may produce exceptions to the general rule, and it has been held that pay- ment 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 evidence 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 Kirk & 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 afterward a commission of bank- rupt issued against tbem. No articles having been executed. Ford disputed the point of partnership, which was tried at law, and the partnership was established upon the evidence of acts done. A peti- tion 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 partnership, that entries were made in the books with the knowledge of Ford, and, particularly, that the goods furnished by the petitioner were entered at a reduced price. This was opposed by the affidavit of Ford, denying the agreement, or even Icnowledge of these circumstances. Lord Bldon : " 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 partner- ship to enter into that contract, so as to bind the partnership, and then it depends upon the degree of evidence. Slight circumstances might be sufficient, where in the original transaction the party to be bound was not a partner, but at the subsequent time had acquired all 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 implied authority. So here, if this was a case in which it was found 'Ex parte Jackson, 1 Ves. Jr. 131: ' 6 Ves. 603; 1 Hov. Supp. 631. Saville Kirwan v. Kirwan, 3 Comp. & M. 617. v. Eobertaon, 4 T. R. 730. IscoMiNG Paetneks. 835 upon the trial that this man was a partner upon a long existing partnership, with a regular series of transactions, books, etc., a knowledge of what his partner had been doing might be inferred against him ; that which in common prudence he ought to have known. But that is not the case of this partnership: ib was a treaty. It is not eyen 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 consideration, whether this man, so trepanned into a partnership, had got regular books, etc.; and it is difficult to say, not only, that knowing this he had agreed to it, but that he knew it, in which case I am afraid he must be bound. That 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 Rule in Helsby v. Mears. Sec. 531. In a modern 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 proprietor of the Liverpool and Chester mail, agreed to convey watch cases for "Walker, the assay-master at Chester, at the ordinary charge for par- cels. Upon the loss of some of the watch cases, an action of assumpsit was brought against Mrs. T. and her partner Salisbury. 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 delivering 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 afterward become so, until some notice of an intention to rescind the contract was given to Walker. Must be novatio debiti — Vere v. Ashby. Sec. 532. It may be observed, upon the case just cited, that a different decision might have led to consequences highly injurious to the public. With respect also to Lord Bldon'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, indeed, it be clear ' Helsby v. Hears, 5 . & C. 504. 836 Rights of PaIitners. 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 debiti, 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 dor- mant 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 & Eowland, as from the 18th of May preceding the agreement. Accordingly Shaw became a part- ner, 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 ex- change 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 i,t was discounted. In this case it was observed by Parke, J., that the rule as to ratification applies only to the acts of one who professes to act as the agent of a person who afterward ratifies. Rowland, at the time when the first bill was discounted, did not j)rofess to act as the agent of Shaw. The retrospective date of the partnership might affect the accounts between partners, but not the rights of third persons. What amounts to a novation. Sec. 533. But if after the accession of a parkier 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 member 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.' The principles which we have just been discussing will be applica- ble to c:rcumstances unconnected with the general routine of trade. Thus, when a person enters into partnership with another who is ten- ant 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 ' 10 B. & C. 288 ; Lloyd & Welsby, 30: '■' See and consider Lloyd v. Ashby, 3 and consider Saville v. Robertson, 4 T. Car. & Payne, 138 ; 3 Barn. & Adolpb- B. 730. 33. Incoming Paktneks. 8§7 partner after the commencement o£ 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, 101. per cent, it was held that the landlord might main- tain a joint action of assumpsit against the partners on this collateral agreement.' When incoming partners not liable. Sec. 534. In adventures, an incoming partner is not liable for the price of the goods. In the case of Young v. Hunter,'' 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 afterward allowed to join in the adventure, and to have a fifth share upon the goods being put on board. The plaintiffs knew noth- ing of Hoffman & Co., but sold the goods to Hunter & 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. " Supposing it to be shown," said Heath, J. , " that at one period of the transaction there was a partnership sub- sisting, it is not therefore to be inferred that there was a partnership in the particular original purchase." And Gribbs, J., observed as fol- lows: " The only possible ground for a new trial would be, if the plain- t^s could show that at the time of the purchase of the goods from the plaintiffs, Hoffman & Co. and«Hunter & Co. were concerned in that purchase on their joint account; ' now, the only evidence given of it was, that at the time of the shipment they were so interested. How long before the shipment the purchase was made does not appear, but it is not to be inferred from Hoffman & Co. being interested at the time of the shipment that they were interested at the time of the purchase,'' it is for the plaintiffs who seek to implicate them to make it out by evidence." ♦ When an infant partner may become liable,. Sec. 535. An infant partner coming of age, and not disaffirming the partnership, may be considered in the light of an incoming part- ner 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 1 Hobey v. Eoebuck, 3 Marah. 434 ; 7 ^ See Gouthwaite v. Duckworth. Taunt. 157. ■* See Saville v. Robertson. " 4 Taunt. 582. 838 Eights of PARTifERS. 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 Harrison, on the credit of Goode & 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. Afterward, and after Ben- nion 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 h^d ceased to be a partner with Goode. In an action brought by Harri- rison against Good & 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 committed by Goode, and that where one of two innocent parties was to suffer, he ought to do so whose negligence occasioned the loss. That an infant may in point of fact be a partner, and sue as a partner on a contract, though he is not liable 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^n not putting a stop to that delu- sion. 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 coines 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 partnership between Goode and Bennion, and inas- much 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 liable as a partner, he ought to be liable to Har- rison, and that, in efEeet, 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 excep- tions was then taken to the learned judge's direction, but the Court ^ Barn. & Aid. 150. The infant ties of the firm incurred before coming partner on coming of age may confirm of age. And such confirmation may be the partnership contract, in which case express or implied. Miller v. Sims, 2 he would subject himself to the liabili- Hill (S. C), 479. Incoming Partners. 839 of King's Bench were tinanimously of opinion that ttie direction was right. 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 liability for juas^ contracts. In the first place, he will not be chargeable in an action in respect of past contracts, unless liis promise to pay, or his ratification of a debt contracted during infancy, be made in writing." And secondly he may maintain an action to recover money paid by him on a contract entered into during his infancy, provided he has received no benefit from the contract during that time," and a fortiori he may maintain such action against a party who holds the money as a penalty for the non-performance of the con- tract 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 act for the recovery of money paid by him- self personally, as the consideration for the contract. •* The requirements of the English statute has no application in this country. But as we have seen, there may be an express or implied ratification by the infant after coming of age." On the subject of an infant's liability Mr. Lindley observes : "In equity, an infant who is guilty of fraud is not so free from liability as he is at law," and although, as a rule, an infant cannot be made bank- rupt,' yet if he fraudulently represents himself as of age, and obtains credit by his false representations, and is made bankrupt, the adjudi- cation against him will not be superseded, and his deceived creditors will be paid out of his estate. ' Moreover, notwithstanding the general irresponsibility of an infant, he cannot, as against his copartners, insist that in taking the part- nership accounts he shall be credited with profits, and not be debited with losses. He must either repudiate or abide by the agreement ■ By the 5tli section of Lord Tenter- ' See, also, Thompson v. Lay, 4 Pick, den's act, the 9th Geo. 4, c. 14, it is 48 ; Peirce v. Toby, 5 Met. 168 ; Dana enacted, " That no action shall be main- v. Stearn, 3 Cush. 373 ; Hale v. Gerish, tained, whereby to charge any person 8 N H. 374 ; Benhani v. Bishop, 9 Conn, upon any promise made after full age, 330; Merriam v. Wilkins, 6 N. H. 433 ; to pay any debt contracted during in- Lawson v. Lovejoy, SOreenl. 405. fancy, or upon any ratification after full ^ See Wright v.Sno'we,3 De G.& S.331. age of any promise or simple contract 'Bx parte Henderson, 4 Ves. 163 ; Ex made daring infancy, unless such prom- parte Lees, 1 Deac. 705; Belton v. ise or ratification shall be made by Hodges, 9 Bing. 365. some writing, signed by the party to be * See Ex parte Watson, 16 Ves. 365; Ex charged therewith." parte Bates, 3 M. D. & D. 337 ; Ex parte ' Corpe V. Overton, 10 Bing. 353. Unity Banking Association, 4 Jur. (N. 3 Ibid. S.) 1J57, now reported in 3 De G. & J. - Holmes v. Blogg, Taunt. 508. 63. 840 Rights of Partners. under which aione he is entitled to any share of the profits. So an infant cannot hold shares, and decline to pay the calls payable in respect of them. He may, if he chooses, repudiate the shares, and so get rid of his liabilities ; ' but if he does not repudiate the shares, he must pay calls like any other shareholder.'' Qui sentit commodum sentire debet et onus. He may avoid the contract into which he has entered, either before or within a reasonable time after he has come of age.' If he avoids the contract, and has derived no benefit from it, he is entitled to recover back any money paid by him in part performance of it ; * but he cannot do this if he has 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.'' If, when he comes of age, he is desirous of retiring from the firm, he should express his determination speedily and unequivocally. It is true that by Lord Tenterden's Act * it is enacted that "no action shall be maintained whereby to charge any person upon any promise made after full age, to pay any debt contracted during infancy, or upon any ratification after full age, of any promise or simple contract made during infancy, unless such promise or ratification shall be made by some writing, signed by the party to be charged therewith;" but this enactment only protects a person come of age from the consequences of acts done by him during his minority. It does not say that a con- tract entered into before and persisted in after the attainment of majority shall not be binding, as from that time. ISTor, it is con- ceived, could the act be construed so as to have any such effect. Therefore, if an infant shareholder, after he comes of age, permits his name to continue registered, he thereby ratifies the agreement by which he originally became a shareholder.'' Moreover, the doctrine of holding out is itself suflBcient to impose ' Newry and Enniskillen Rail. Co. v. North West. Eailr. Co. v. McMichael, 5 Coombe, 5 Ex. 565. The repudiation Ex. 114. The Birkenhead, Lancashire, must be either before or witliin a rea- etc.. Rail. Co. v. Pilcher, 5 Ex.24, is not sonable time after majority. Dublin opposed to these ; see S. C, id. 121. andWicklow Rail. Co. v. Black, 8 Ex. 'Co. Litt. 380, b. Newry and Ennig- 181. If a. company s being wound up killen Rail. Co. v. Ooombe, 3 Ex. 565 ; and is insolvent, of course i will be for Dublin and Wicklow Rail. Co. v. Black, the benefit of an infant shareholder to 8 Ex. 181. repudiate his shares, and so avoid be- ^ Corpe v. Overton, 10 Bing. 253. ing made a contributory. See Reid's ' Holmes v. Blogg, 8 Taunt. 508 ; Ex case, 24 Beav. 318. parte Taylor, a Jur. (N. S.) 220. 2 See Cork and Bandon Rail. Co. v. «9 Geo, 4, c. 14, § 5. Cazenove, 10 Q. B. 935; Leeds and 'See Cork and Baudou Railway v. Thirsk Rail. Co. v. Fearnley, 4 Ex. 26 ; Cazenove, 10 Q. B. 935. iNcoMixa Paktneks. 841 liability upon an adult, althougli he may not long have attained his majority. This is well exemplified in Goode v. Harrison.' There an infant was a member of a firm, and he was known to be such. After he had attained twenty-one he did not expressly either affirm or disaffirm the partnership. He was held liable for debts incurred by his copartners subsequently to that time . If an infant, shortly before he comes of age, represents himself as a partner, he ought to take care to notify that he is not so when he comes of age. ' 5 B. & AW. 147. 106 842 Rights of Partneks. CHAPTER XXIV. BETIBIXG PABTNEBS. Sec. 636. Liabilities of retiring partners. Sec. 537. Rule as to original creditors. Sec. 538. Permitting name to be used after retirement. Sec. 539. Rule as to dormant partners. Sec. 540. Liability for special contracts. Sec. 541. Not generally bound by new contracts. Pindar v. Wilks. Sec. 542. Not bound by instruments .negotiated after dissolution. Abel v. Sat ton. Sec. 543. Rule in Kilgour v. Finlyson. Sec. 544. May give power to remaining partners to indorse in name of old firm. Sec. 545. Acceptances in name of old firm, not binding. Sec. 548. Wrightson v. PuUan ; Uslier v. Dauncey. Sec. 547. Effect of dissolution upon interest of partners in the firm property. Sec. 548. How he may be discharged from contract. Clayton's case. Sec. 549. Rule in Brooke v. Enderby. Sec. 550. In case of a continuance of new partnership. Newmarch v. Clay. Sec. 551. Money of new partnership applicable only to debts of new firm, Thompson v. Brown. Sec. 553. Appropriation of payments by the payee. Simpson v. Ingham. Sec. 553. Contract of remaining partners to pay old debts, effect of. Sec. 554. When creditors accept the remaining partners. Bedford v. Deakin. Sec. 555. When bill or note is indorsed with reservation of all rights. Peath- erstone v. Hunt. Sec. 556. Where the creditors accept new security. Evans v. Drummond. Sec. 557. Rule in Reid v. White. Sec. 558. Taking sole security of new firm no written security previously exist ing. Thompson v. Drummond. Sec. 559. Ex parte Whitmore. Sec. 560. Rule when creditors agree that retiring partner shall be simply surety for old firm. Oakley v. Parsheller. Sec. 561. Where the creditors receive interest of the new firm. Gough v. Da vies. Sec. 562. When the creditor continues trading with the new firm. David v. Ellice. Sec. 563. Lodge v. Dicas. Sec. 564. Lodge v. Dicas and David v. Ellice, overruled by Thompson v. Per- cival, Kirwan v. Kirwan, and Hart v. Alexander. Eetiring Partneks. 843 Skc. 565. Thompson v. Percival. Sec. 566. Kirwan v. Kirwan. Sec. 567. Hart v. Alexander. Sec. 568. Money borrowed of a trustee who is a partner. Dickinson v. Lockyer. Sec. 569. Retirement of a partner with knowledge of firm's insolvency. Parker V. Eamsbottom. Sec. 570. When the purpose is to' defraud the creditors. Anderson v. Maltby. Sec. 571. Termination of liability in ordinary partnerships. Sec. 572. Termination of liability as to future acts. Sec. 573. Effect of bankruptcy on powers of partners. Sec. 574. Betirement of dormant partner. Sec. 575. Rule in Heath v. Sansom. Sec. 576. Dissolution and notice, efiFeet of. Sec. 577. When notice is not given. Sec. 578. Effect of notice of dissolution. Sec. 579. Instances where notice does not protect from liability. Sec. 580. Rights of partners after dissolution. Lyons v. Haynes, Butchart v. Dresser, Ault v. Goodrich. Sec. 581. What amounts to notice of dissolution. Sec. 582. Termination of liability as to past acts. Sec. 583. Payment. Sec. 584. Rule in Clayton's case. Sec. 585. Rule in Sterndale v. Hawkineon. Sec. 586. Rule in Brooke v. Enderbey. Sec. 587 Rule in Newmarch v. Clay. Sec. 588. Application of the rules adopted in the preceding cases. Sec. 589. Illustration. Beale v. Caddick. Sec. 590. Simpson v. Ingham. Sec 591. Partner may bind firm by assenting to transfer of debts due from or to it. Sec. 592. Illustration. Wickham v. Wickham. Sec. 593. Application of payments. Sec. 594. Release. Sec. 595 Rule in Solly v. Forbes ; Price v. Baker ; Hartley v. Manton. Sec. 596. Substitution of debtors and securities by agreement. Sec. 597. Agreement of creditors to look to remaining partners, is valid. Sec. 598. Cases in which a retiring partner has not been discharged, no new partner having been brought into the firm. Sec. 599. Cases in which a retiring partner has not been discharged, although a new partner has been brought into the firm. Sec. 600. Cases in which a retiring partner has been held discharged. Sec. 601. Of the doctrine of merger. Of the liabilities of retiring partners. Sec. 536. When an ostensible partner retires from the firm he must give notice of his retirement, otherwise he will be liable to the oredi- 844 Eights of Partners. itors of the continuing firm for contracts entered into by them subse- quently to his retirement.' The effect of a proper legal notice of a partner's retirement is, to exonerate him from liability for the future, though not for the past." It is clear, therefore, that after a retirement properly notified, no new contract by the continuing firm can bind the 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. To those who have had no dealings with the original firm, notice of the dissolution of a partnership inserted in the Gazette is equiva- lent to actual notice. Therefore, where the plaintiff Godfrey,' who ' Parkin v. Carruthers, 3 Esp. 248 ; Stables v. Eley, 1 Car. & Payne, 614 ; Graham v. Hope, 1 Peake, 154. On tbe subject of notice of the dissolution of a partnership, Mr. Lindley observes: "No- tice of death is not requisite to prevent liability from attaching to the estate of a deceased partner, in respect of what may be done by his copartners after his decease. Devaynes v. Noble, Houlton's case, 1 Mer. 616 ; Johnes' case, id. 619 ; Brice's case, id. 620 ; Webster v. Web- ster, 3 Swanst. 490 ; see Vulliamy v. Noble, 3 Mer. 614 ; Brown v. Gordon, 16 Beav. 302, as to the power of the sur- viving partners who are the executors of the deceased partner, to bind his ea tate. For by the law of England, the authority of an agent is determined by the death of his principal, whether the fact of death is known or not. See Blades v. Free, 9 B. & C. 167 ; Smout v. Ibery, 10 M. & W. 1 ; Campanari v. Woodburn, 15 C. B. 400. The death of one partner does not, however, deter- mine an authority given by the firm through him before his death ; and con- sequently, if after his death such an authority is acted on, the surviving partners will be liable for It. In Usher V. Dauncey, 4 Camp. 97, bills were drawn and indorsed in blank by a part- ner in the name of the firm, and were given by him to a clerk to be filled up and negotiated as occasion might re- quire. The partner in question died, and after his death, and after the name of the firm had been altered, one of the bills was filled up and negotiated. Lord Ellenborough held that the bill was •' Wood v. Braddick, 1 Taunt. 104 ; Ault V. Goodrich, 4 Euss. 430. binding on the surviving partners, con- sidering that the power to fill up the bill emanated from the partnership and not from the individual partner who had died. Moreover, it does not follow that because a creditor has no remedy against the estate of a deceased partner in respect of debts contracted by his copartners since his death, his estate is not liable to contribute to such debts at the suit of the surviving partners. That is a different matter altogether, and depends on the agreement into which he entered with his copartners, as will be seen hereafter when the sub- ject of winding up is under considera- tion. For instances where the estate of a deceased partner has been held liable to contribute to debts incurred since his decease, see Blakesley's Executor's case, 3 Mc. & G. 726 ; Hamer's Devisee's case, 3 De G. M. & G. 366. When a firm becomes bankrupt, the authority of each member to act for the firm at once determines. If one partner only becomes bankrupt his authority is at an end, and his estate cannot be made lia- ble for the. subsequent acts of his solv- ent copartners. At the same time, if notwithstanding the bankruptcy of one partner the others hold themselves out as still in partnership with him, they will be liable for his acts, as if he and they were partners ; see Lacy v. Wol- cott, 2 Dowl. & Ey. 458 ; and although the estate of a bankrupt partner does not incur liability for the acts of the other partners done since the bank- ruptcy, yet the solvent partners Iiave power to bring the partnership transac- ' Godfrey v. Turnbull, 1 Esp. 371. See Wrightson v. Pullan, 1 Stark. 375 : 2 Chit. 121. Retiring PaeTners. 845 had not previously dealt with the firm, took a partnership bill, which had been made in the partnership name after the retirement of a l^artner so notified. Lord Kenyon said to the jury: "If the dissolu- tions to an end, and to dispose of the partnersliip property. This subject will be examined hereafter in the chap- ter on Bankruptcy, to which the reader is therefore referred. See Fox. v. Hau- bury, Cowp. 445 ; Morgan v. Marquis, 9 Ex. 145. Another exception, but one which only proves the rule, is that if a dormant partner (i. e., one not known to be n partner), known to a few per- sons to be a partner, is not dormant as to them; see Farrar v. Deflime, 1 Car. & K. 580; Carter v. Whal- ley, 1 B. & Ad. 14 ; Evans v. Drummond, 4 Esp. 89, retires, the authority of his late partners to bind him cea.ses on his retirement, although no notice of it be given. But tliis is because he never was known to be a partner at all, and the reason for the general rule has therefore no application in his case. The following decisions illustrate this ex.ception : In Carter v. Whalley, 1 B. & Ad. 11, the defendant Saunders was a partner in the " Plas Madoc Colliery Go." but there was nothing to show that the plaintiff or the public ever knew tliat such was the case. Saunders with- drew from the company, but no notice of his withdrawal was given either to the plaintiff or to the public. After his withdrawal, the company became in- debted to the plaintiff, and it was held that Saunders was not liable for the debt, upon the ground that the name of the company gave no information as to the parties composing it, and Saunders himself was not known either to the plaintiff or to the public to have be- longed to the company before he with- drew. In Heath v. Hansom, 4 B. & Ad. 173, the defendants Sansom and Evans carried on business as partners under the style of Phillip Saunders & Co., butEvaus was not known to be a part- ner. They dissolved partnership by mutual agreement, but did not notify the fact. After the dissolution, Sa:nsom gave the plaintiff a promissory note on which he sued Sanaom & Evans. The court decided that Evans was not liable, for when his right to share profits ceased, he could not be held responsi- ble for the subsequent acts of his co- partner, unless he authorized those acts or held himself out as still eonnected with him. and he had done neitlier. See, too, Evans v. Drummond, 4 Esp. 89. This doctrine seems not to apply to Scotland, see Hay v. Mair, 3 Ross' L. C. on Common Law, 639. The recent case of The Western Bank of Scotland v. Needell, 1 Fos. &Pin. 461, seems at first sight opposed to the authorities in the text, but it is conceived that in that case there must have been evidence to show that the defendant was known to have been a partner to the plaintiffs be- fore he retired. With the three excep- tions which have been noticed, the gen- eral proposition above stated holds good. Thus, if a partner becomes lunatic, and his lunacy is not apparent or made known, his power to bind the firm and his liability for the acts of his copart- ners, see Molton v. Camroux, 2 Ex. 487, and 4 id. 17, and Baxter v. The Earl of Portsmouth, 5 B. & C. 170, and the cases cited, to show that the lunacy of one partner does not dissolve the firm, will remain unaffected. So, if a part- nership isdissolved.or one of the known members retires from the firm, until the dissolution or retirement is duly noti- fied, the power of each to bind the rest remains in full force, although as be- tween the, partners themselves a disso- lution or a retirement is a revocation of the authority of each to act for the oth- ers. See Mulford v. Griffin, 1 Fos. & Fin. 145; Faldo v. Griffin, id. 147, and the next cases. Thus, if a known partner retires and no notice is given, he will be liable to be sued in respect of a promissory note made since his retirement by his late partner, even though the plaintiff had no dealings with the firm before the making of the note. See Parkin v. Carruthers, 3 Esp. 248 ; Williams v. Keats, 2 Stark. 390, E. 0. L. R. 3 ; Brown v. Leonard, 2 Chitty, 120 ; Dolman v. Orchard, 3 C. & P. 104, in which three last cases, how- ever, there was a continual holding out. See as to ordering such a bill to be de- livered up, Ryan v. Mackmath, 3 Bro. C. C. 15. And in determining which was first in point of time, viz., notice of dissolution or the making of the note, effect must be given to the presumption that the instrument was made and issued on the day it bore date, unless some reason to the contrary can be shown See Anderson v. Weston, 6 Bing. N. C. 296. In a modern case a firm was dissolved on the 39th of Dec, UQ Eights of Partners. tion be notified in the ordinary and usual way, as it is the only mode by which the fact of the dissolution can be promulgated to tlie world, at least to those who have had no previous dealing with 1837, and a bill dated the 2d of Febru- ary, 1838, was drawn and indorsed by one partner in the name of the late firm, but when he indorsed it did not exactly appear. Notice of dissolution was given by advertisement in the " Gazette," on the 20th March, 1838. It was held that in the absence of evi- dence to the contrary, the bill must be taken to have been drawn on the day it bore date, and that the time of its indorsement was a matter to be inferred by the jury from all the cir- cumstances of the case. The jury found that it was indor.ped before the 20th March, 1888, and the holder of the bill was consequently held entitled to a verdict against all the members of the dissolved firm. See Anderson v. Wes- ton, 6 Bing. N. C. 290, So a partner who retires and does not give sufficient notice is liable to be sued for torts com- mitted subsequently to his retirement by his late copartners or their agents. Stables v. Eley, 1 Car. & P. 614. More- over, if a dormant partner is known to certain individuals to have been a part- ner, he is as to them no longer in the situation of a dormant pa.j'tner, and must therefoi-e give them notice of his retirement if he would free himself from liability in respect of the future transactions between them and his late partners. Farrar v. Deflime, 1 Car. & K. 580. See, too, Evans v. Drummond, 4 Esp. 89, and Carter v. Whalley, 1 B. & Ad. 14. It is obvious, therefore, tliat on the dissolution of a firm or the retirement of a partner, it is of the greatest importance to notify the fact, and each partner has a right to notify it. If his copartners prevent him from exercising that right, a court of equity will, if possible, aid him and compel them to do what may be necessary to enable notice to be given. In Trough- ton V. Hunter, 18 Beav. 470, a partner- ship was dissolved by a decree of the court. It appeared that no advertise- ment of the dissolution would be in- serted in the " Gazette " unless signed by both partners. The defendant, who, it seems, would not sign the advertise- ment, was ordered so to do by the court. Effect of notice of dissolution. — Subject to two exceptions, which will be ex- amined hereafter, notice of dissolution of a firm or the retirement of a partner duly given, determines the power pre- viously possessed by each partner to bind the others. Hence, after the dis- solution of a firm or the retirement of a member and notification of the fact, no member of the previously existing firm is, by virtue of his connection there- with, liable for goods supplied to any of his late partners subsequently to the notification, Minnitt v. Whinery, 5 Bro. P. C. 489 ; nor is lie liable on bills or notes subsequently drawn, accepted, or indorsed by any of them in the name of the late firm, Paterson v. Zachariah, 1 Stark. 875 ; Abel v. Sutton, 3 Esp. 108 ; Spenceley v. Greenwood, 1 Fos. & Fin. 297, even although they may have been dated before the dissolution, Wright- son V. Pullan, 1 Stark. 875 ; S. C. Wright V. Pulham, 2 Cliitty, 121 ; or have been given for a debt previously owing from tlie firm, Kilgour v. Finlyson, 1 H. Blacks. 156 ; Dolman v. Orchard, 2 Car. & P. 104, by the partner expressly au- thorized to get in and discharge its debts. Kilgour v. Finlyson, 1 H. Blacks. 156. See Lewis v. Reilly, 1 Q. B. 349. There are, it is true, cases to be met with in which, notwithstanding a disso- lution and notice, a bill or note in the name of the firm has been held to bind those who were members thereof prior to the dissolution ; but in each of these cases there was some circumstance tak- ing it out of the ordinary rule. In Bur- ton V. Issitt, 5 B. & Aid. 267, the con- tinuing partner had authority ^o use the name of the retired partner in the prose- cution of all suits for the recovery of partnership property. This was held to authorize the giving of a promissory note for sixpences, payable under the Lords' Act, and the retired partner was therefore held bound by a note given by his late partner in payment of those sixpences. In Smith v. Winter, 4 M. & W; 454, the continuing partner had express permission to use the name of his late partner, who was therefore justly held liable on a bill given in the name of the old firm after his retire- ment. The only case, indeed, of this description which presents any difiiculty is, Lewis v. Eeilly, 1 Q. B. 34y. There two partners drew a bill payable to their own order, and afterward dissolved partner- ship. One of them then indorsed the bill Retiring Paetneks. 847 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 proof of any actual notice to Godfrey, the plaintiff, but the publication in the in the name of botli to the plaintiff, who knew of the dissolution. It was held, in an action by him against both part- ners, that he was entitled to recover on the bill, and that it was immaterial whether he knew of the dissolution or not. The precise ground of this decis- ion does not distinctly appear. The court seems to have proceeded on the supposition that an indorsement by one of several payees in the name of all is sufficient, but the writer has been un- able to find any previous authority for such a doctrine, save where the indor- sers are partners, which in the case in question they were not, as the plaintiff was found by the jury to have known. The case is certainly anomalous and re- quires reconsideration. See Story on Bills, § 197, and Abel v. Satton, 3 Esp. 108. The exceptions alluded to above as qualifying the rule that the agency of each partner is determined by disso- lution (or retirement) and notice are : — First, where a partner who has retired and notified his retirement, nevertheless continues to hold himself out as a part- ner ; and, secondly, where what is done only carries out what was begun before. 1. If a partner retires and gives no- tice of his retirement, and he neverthe- less allows his name to be used as if he were still a partner, he will continue to incur liability on the principle of hold- ing out explained in the early part of this treatise. In Williams v. Keats, 3 Stark. 390, B. C. L. R. 3. See, too. Dol- man v. Orchard, 3 Car. & P. 104 ; Em- met V. Bradley, 7 Taunt. 600, after a partner has retired, and after notice thereof had been given by advertise- ment, a bill was accepted by his copart- ner in the names of himself and late partner. The names of both still re- mained painted up over their late place of business, and Lord Ellenborough held that the partner who had retired was liable on this bill notwithstanding the advertisement, for there was no evi- dence to show that the plaintiff in fact knew of the dissolution . See, as to this, Brown v. Leonard, 3 Chitty, 130. Upon this, however, it is to be observed Uiat the only evidence that the retired partner authorized the continued use of his name, was the fact that he had not prevented it. Now, au- thorities are not wanting to show that if a partner retires, and notice of his retirement is given by advertisement, he will not continue to incur liability by the acts of his copartners simply because they continue to can-y on busi- ness in the old name, and lie does not take steps to stop them. See Newsome v. Coles, 3 Camp. 617. His forbearance in this respect does not necessarily amount to an authority to use his name as be- fore, and unless his name is used by his authority, he is not liable on the ground that he liolds himself out as a partner. As to a retiring partner's riglit to an in- junction to restrain the continuing part- ners from carrying on business in the old name, see De Tastct v. Bordenave, Jac. 516 ; Webster v. Webster, 3 Swanst. 490, note ; Lewis v. Langdon, 7 Sim. 421. But although it may be doubtful whether in Williams v. Keats there was a sufficient holding out, it is clear that if a partner retires and does still hold himself out as a partner, this is in fact signifying that he is willing to incur the responsibilities of a partner for the sake of those with whom his name is associated, and, therefore, he will continue to be answerable for their conduct, even to persons dealing with them with knowledge of his retirement. This was decided in Brown v. Leonard, 3 Chitty, 120, a case in which the plain- tiif sued on a promissory note made in the name of Spring, Leonard & Bush. Before the note was made. Bush had re- tired from the firm, and the plaintitf, be- fore he took the note, was told by Bush that he had ceased to be a partner with Leonard & Spring, but that his name was to continue for a certain time. Bush was held liable on the note, for, notwithstanding his retirement, his name was continued and with it his re- sponsibility. The same principle was acted on in Stables v. Eley, 1 Car. & P. 614 ; E. C. L. R. 13, in which a retired partner whose name was still on a cart, and over tlie old place of business, was held liable for tlie negligence of the driver of the cart. The custom in England of giving notice in a particular paper of a dissolution of a partnership,which seems to be recognized in the English courts as conclusive so far as the rights of parties depends upon the question, lias no force in this country. Actual notice is required here to all parties who 848 Rights of Partxees. Gazette is proved, antecedent to his taking the note. The jury are to judge from the jjractice in the usual course and ordinary mode of business. Notices are to be found in every Gazette of the dissolution have dealt with the firm, in order to exonerate a retiring partner from liability to subisequent creditors who in good faith have relied upon the obliga- tions of the former firm, or at least knowledge of the fact or such circum- stances as furnishes satisfactory evi- dence tliat they had knowledge of the fact, must be shown. Johnson v. Tot- ten, 3 Cal. 3;>1 ; Williams v. Bowers, 15 id. 321 ; Pope v. Brant, 18 111. 37 ; Ennis V. Williams, 30 Ga. 69i ; Lowe v. Pennv, 7 La. An. 356 ; Skannel v. Taylor, 12 id. 773 ; Reiley v. Smith, 16 id. 31 ; Zaller V. Janvrin, 47 N. H. 324; Vernon v. Manhattan Co., 17 Wend. (N. Y.) 524 ; Ward well v. Haight, 2 Barb. (N. Y.) 549 ; Como V. Port Henry Iron Co., 12 id. 27; Felbricht v. Armstrong, 5 Rob. (N. Y.) 339 ; Williams v. Birch, 6 Bosw. (N. Y.) 299; Little v. Clark, 36 Penn. St. 114; White V. Murphy, 3 Rich. (S. C.) 869 ; Hutchison v. Pludson.S Humph. (Tenn.) 426 ; Kirkman v. Snodgrass, 8 Head (Tenn.), 370 ; Tudor v. White, 27 Tex. 584 ; Prentiss v. Sinclair, 5 Vt. 149. And the publication of the notice in a news- paper taken by the plaintiff is a fact from which the jury may infer actual notice. Tread well v. Wells, 4 Cal. 260; Page v. Brant, 18 111. 37. And a party who takes a partnership note signed by the firm, who has knowledge that the partnership articles provide for its dis- solution in case of the withdrawal of capital, is put upon inquiry as to whether such dissolution has taken place. Smith V. Vanderburg, 46 HI. 34. No formal or precise announcement of the dissolu- tion of a partnership, either by publica- tion or otherwise, is necessary even to bind a dealer with the old firm, but knowledge of any fact, however ac- quired, sufficient to put an ordinarily prudent man upon inquiry, will charge him with notice of whatever other facts a reasonable investigation would have disclosed. And persons who have dealt with a partnership are affected with notice of a dissolution if a statement of the fact that the firm have dissolved has reached him in any way, even though informal and not signed by a member of the firm, as this was sufli- cient to put him on his guard. Young V. Tibbitts, 32 Wis. 79. But see Ranson V. Soyless, 49 Ga. 471. The burden of proving notice, as against a subsequent creditor who has dealt with tlie former firm, rests upon the retiring partner. Kenny v. Atwater, 77 Penn. St. 34 ; Car- michael v. Greer, 55 Ga. 116. And to charge a principal with notice of the dissolution of a mercantile partnership, on the ground that notice was given to his agent, it must appear that the agent was authorized to represent the princi- pal in that particular. Stewart v. Sonneborn, 49 Ala. 178. See, also, as to the rights of a party dealing with the firm after a dissolution where no public notice has been given, Southern v. Grein, 67 111. 106. And in Ohio, even where there had been a publication of dissolution of the old firm and the formation of a new one, but the retiring partner was a man of means and sold out his interest to his son, and the firm continued the business in the name of the old firm, it was held that a creditor who had no notice of the change, and who trusted the firm on account of the pecuniary responsibility of the father, was entitled to hold him responsible for the credit given. Speer V. Bishop, 24 Ohio St. 598. In Ketcham V. Clark, 6 Johns. (N. Y.) 144, the court say: "In England the notice must be given in a particular news- paper, 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 pub- lic notice must be given in a newspaper of the city or county where the partner- ship business was carried on, or in some other way public notice of the dissolu- tion must be given. The reasonable- ness of it may perhaps become a quep- tion 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 dissolu- tion is, without such notice, brought home to the person dealing with the firm, such knowledge may be sufficient to conclude him." Notice to svbseguent dealers. — The question as to what notice is required, if any, to subsequen#dealers with the continuing firm, who have had no deal- ings with the old firm, has been fre- quently discussed. In some of the cases Eetiking Partnees. 849 of partnerships, which seems to point out that as the mode adopted by the world for notifioations of this sort, and therefore every pru- dent nian in business ought to consult them." it lias been held that the usage in giv- ing notice of the dissolution in a news- paper would be good, in others that it might be inferred from all the circum- stances, such as adequate means of knowledge of the fact : Amidown v. Os- good, 34 Vt. 278 ; Burgau v. Lyell, 2! Mich. 103 ; Johnson v, Totten, 3 Cal. 343, or the long lapse of time between the dissolution and the contracting of the debt. Prentice v. Sinclairj 5 Vt. 148 ; Martin v. Walton, 1 McCord, 16 ; Hart v. Alexander, 3 M. & W. 484; Young V. Tibbitts, 83 Wis .79 ; see, also, Remsom v. Loyless, 49 Ga. 471. Mr. Story maintains that in such cases no notice is required. Story on Partner- ship, § 159 and note ; Ayrault v. Cham- berlain, 36 Barb. (N. Y.) 89 ; Warren v. Ball, 87 111. 76 ; Chamberlain v. Dow, 10 Mich. 319. But the question of notice to those who have dealt with the firm is one, as we have stated, of fact. No- tice or knowledge must be shown in such cases to exonerate the retiring partner from liability to one who deals with the new firm in good faith, as the former firm. The fact of knowledge of the change may be shown by circum- stances. But no particular means of knowledge can be held as a matter of law to be actual or constructive notice in such cases. Schorten v. Davis, 31 La. An. 173 ; Pitcher v. Barrows, 17 Pick. 361 ; Goddard v. Pratt, 16 id. 413 ; Southwick V. Allen, 11 Vt. 75; 3 Kent, 67 ; Grinan v. Baton Rouge Mills Co, , 7 La. An. 638; Bedford v. Reynolds, 86 Penn. St. 335; Bank v. Mudgett, 45 Barb. 663; Merritt v. Pollys, 16 B. Mon. (Ky.)355; Southwick v. McGov- ern, 38 Iowa, 538. What circumstances will warrant the finding that one deal- ing with the firm was not affected by notice. Newcomet v. Bretzman, 69 Penn. St. 785. And actual notice of the withdrawal of a member from a firm would exonerate him from subsequent liability for the firm debts to those who had formerly dealt with the firm, even though his name might be retained in the firm, but without his authority. Newsome v. Coles, 3 Camp. 617; Jen- kins V. Blizard, % Stark. 418 ; 33 Kent, supra. And in such cases where the necessity of some notice has been recog- nized, it has generally been held in this country that it was sufficient to publish 107 the fact of the dissolution in some news- paper of general circulation in the vi- cinity. Shurlds V. Tilson, 3 McLean (U. S.), 458 ; Watkins v. Bank, 4 Whart. (Penn.) 483 ; Lansing v. Gaine, 3 Johns. 800 ; Prentice v. Sinclair, 5 Vt. 149 ; Graves v. Merry, 6 Cow. (N.Y.) 701. And it has recently been held in the Supreme Court of the United States that a retir- ing partner who neglects to give such notice is liable for a debt subsequently contracted by the remaining members, to one who had never had any previous dealings with it, but who had previous- ly been informed that the retiring mem- ber was a partner therein. Lovejoy v. Spoffbrd, 93 U. S. 430 ; see, also, to same effect, Wardwell v. Haight, 3 Barb. (N. Y.) 549. But a distinction was recently made in Virginia between the sufficiency of the notice required to a former dealer and a subsequent oiie. Dickinson V.Dickinson & Co., 35 Gratt. (Va.) 331. And in Michigan it has been held that persons having no knowledge of a part- nership are not entitled to notice of its dissolution. Chamberlain v. Dow, 10 Mich. 319. And the fact that a bank has discounted notes bearing the names of the partnership, does not constitute them dealers with it, so as to require actual notice of dissolution to exoner- ate a retiring partner. City Bank v. McChesney, 30 N. Y. 340 ; Same v. Dear- born, id. 344 ; but see Mechanics' Bank V. Livingston, 88 Barb. (N. Y.) 458. A general printed notice in the newspa- pers of a dissolution of a copartnership, is not sufficient to bind one who has had dealings therewith ; such person is en- titled to special notice. Even if special notice is given, accompanied with the notification that certain persons will carry on the business, and settle that of the late commercial firm, these persons will be considered as agents of the firm for the settlement of its indebtedness. Skanuel v. Taylor, 13 La. An. 778. To affect the rights of one dealing with a partnership, actual notice of its dissolu- tion must be brought home to him ; and it is not sufficient that the firm took the necessary steps to give notice, if such notice was never received. The publi- cation of the notice of dissolution in a newspaper taken by the plaintiffs, is a fact from which the jury may infer ac- tual notice. Treadwell v. Wells, 4 Cal. •850 Eights of Partneks. Rule as to original creditors. Sec. 537. As to the original creditors of the firm, express notice of a partner's retirement must be conveyed to them,' though it is not material in what manner it is given. Where, on the trial of an action 260; Page v. Brant, 18 111. 37; Johnson V. Totten, 3 Cal. 343. And when sucli a newspaper is in evidence, it is no error to admit other papers in evidence not taken by them, by way of establishing the publicity of the notice and raising the presumption of actual knowledge on the part of the plaintiffs. Nor is it error to instruct a jury, that if sufficient time had elapsed between the dealings of the plaintiffs with the old firm, and their subsequent transactions with the new firm to put a reasonable man upon inquiry, they might be treated as new dealers. Treadwell v. Wells, 4 Cal. 260. In a recent case in Kentucky, Gaar v. Huggius, 12 Bush (Ky.), 259, it was held that a retiring partner who has given no notice of his retiracy from the firm, is not liable to one who deals with the firm for the fii#t time after his with- drawal, unless he permits his name to be used in the transaction of the busi- ness, or so conducts himself in reference to firm transactions as to induce the be- lief in those dealing with it that he is still a member thereof. See, also, Ken- nedy V. Bohannon, 11 B. Monr. (Ky.) 119. In Shamburg v. Ruggles, 83 Penn. St. 148, a different rule was adopted, and a person who was a partner in a firni do- ing business under the name of the Citizens' Bank, who retired without no- tice in Decemlaer, 1873, was held liable for a debt contracted by the firm in Jan- . uary, 1873, although the creditor, at the time when the debt arose, did not know that the retiring member had ever been a partner. But in this case it appeared that the defendant was, against his wishes, advertised as a director until June, 1873, but whether the plaintiff knew this fact or not does not appear. ' See Ex parte Burton, 1 G. & J. 207 ; Ex parte Leaf, 1 Deac. 176. To estab- lish the liability as partners of defend- ants who have dissolved partnership, it must appear, 1st, that the plaintiff, at the time the contract was made under ■which his account accrued, knew that defendants had been in partnership; 2d, that he was ignorant of theii dissolu- tion ; and 3d, that he made the contract supposing he was contracting with the defendants as partners, and in re- liance upon their joint liability. Pratt v. Page, 33 Vt. 13. Thus the defend- ants had been partners previous to March, 1857, at which time they dis- solved partnership and advertised the dissolution in a newspaper published in the town where they had done busi- ness. The business was continued by one of the partners, who, in the fall of 1857, bought coal of the plaintiffs which the latter sold with no knowledge of the dissolution, and on the credit of the partnership. The plaintiffs had sold coal in one instance to the defendants before the dissolution, which was the only dealing that they had had with them, but the defendants had been reg- ular customers of a firm which sold coal at the same place, and to which the plaintiffs had succeeded, the former firm having consisted of one of the plaintiffs and one A., and the present firm of the same plaintiff and one B, who had for some years been a clerk of the former firm . It was held that the Elaintiffs were to be regarded as having ad "former dealings" with the de- fendants, and that they could be affected only by actual notice of the dissolution. It was also held that the lapse of time between the dissolution and the pur- chase of the coal — the fact that the plaintiffs were doing business in the same town with the defendants — and the fact that an advertisement of the plaintiffs stood next to the advertise- ment of the dissolution in the newspa- per — although to be considered in de- termining whether the plaintiffs had actual notice, were of no avail in law against the fact that they had no actual knowledge of the dissolution. Lyon v. Johnson, 28 Conn. 1. Where a partner- ship is dissolved by the voluntary act of the partners, and not by opera- tion of law, reasonable notice (as a gen- eral rule, by publication in a newspaper of the vicinity) must be given to the public, and until it is actually so given, the partners remain liable as such to any person, although not a former deal- er with the firm, who may thereafter enter into a contract, within the scope of the partnership business, with either of the partners, in tlie name and upon the credit of the partnership, without actual knowledge of the dissolution. And it makes no difference that there has not been time to give such notice. Eetieinq Paktnbes. 851 against three persors who had been in partnership together at Liver- pool, but one of whom (Humble) had retired, 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 partner- ship was removed to another place in Liverpool, and circular letters announcing the change of partners were sent to the correspondents of the old firm, but there was no public advertisement of the change, nor any notice of it proved which could expressly affect the plaintiffs, the Court of King's Bench held that these circumstances were a suffi- cient notification to all the world, of the change in the firm, and that the action was not maintainable against Humble/ In like manner it has been ruled that a change of the form of checks in a banking- house is, without any advertisement in the Gazette, or circular letter or that for any reason it was not prac- ticable, and it is not enough that the fact of the dissolution has become noto- rious, if the notice required by law has not been given, and the party giving credit to the partnersliip has no actual knowledge of the dissolution. Martin V. Searles, 28 Conn. 43 : Mechanics' Bank v. Livingston, 33 Barb. (N. Y.) 458. Whether or not a creditor had actual notice of the dissolution of a partnership is a question of fact for the j ury, and it is not error to decline giving them a binding instruction, that a cer- tain course of dealing with the remain- ing partner was evidence from which they ought to infer actual notice of the dissolution, especially where there is some evidence of want of notice. De- ford V. Reynolds, 36 Penn. St. 335. Where, in an action on a. book-account against two copartners, one defended on the ground of a dissolution of the part- nership and notice to plaintiff before goods bought, proof of advertisement of dissolution, in a paper which plaintiff did not take, or of defendant's declara- tions to plaintiff that he was going out of the firm, but that his money would remain in it, will not amount to notice. Williamson v. Fox, 38 Penn. St. 314. Where one who has been in the habit of dealing with a firm makes advances upon property pledged to him by some of the partners, he is not to be preju- diced by the withdrawal of one of the members without due notice thereof. Williams v. Birch, 6 Bosw. (N. Y.) 209. Notice published in a newspaper, where the partnership business is carried on, is not sufficient notice to parties who have had prior dealings with the firm. Articles of dissolution of partnership are admissible in evidence without an offer to follow it up by proof of actual notice before the debt sued for was con- tracted, especially where evidence has been given from which notice might be inferred. A bill of goods sold, made out to one of the partners and not to the firm, is evidence to go to the jury without restriction ; but the declarations of the party purchasing made at the time are admissible in rebuttal to show why the goods were so charged. Little V. Clark, 36 Penn. St. 114. But notice of the retirement of a dormant partner need not be given except as to those who know of his connection with the firm. Thus ; B having been a dormant part- ner with T under tlie style of " The Atlantic Forge Company," the firm was dissolved, and a new firm was formed by T with a third person, under a differ- ent name, to conduct the same business at the same place, and the new firm sent notice by mail to all persons who had transacted business with the old firm. A person who had never dealt with the old firm sold goods nominally to T, and took the note of the new firm therefor. The jury found that the dissolution and formation of the new firm were matters of public notoriety and it was held that the retiring partner was not liable for the goods so sold, although the vendor, at the time of the sale, supposed him still to be a partner. Holdane v. But- terworth, 5 Bosw. (N. Y.) 1. 'M'lver V. Humble, 16 East, 169; see Hart v. Alexander, 2 Mees. & W. 484. 852 Rights of Partners. to the customers, sufficient notice of an alteration of the firm to a creditor who uses such checks.' However, in all cases, the proper mode of giving notice of a disso- lution 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.' Permitting name to be used in the firm after retirement. Sec. 538. 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 liable for partnership contracts. Thus, where a retiring partner permitted his name to remain over the shop door after notice of dissolution in the Gazette, and, while his name so remained, a bill was accepted in the name of the firm, the retiring partner was held liable on this acceptance.' Again, A, B, and were partners. B retired from the firm, but it was agreed that his name should continue until a future day. A afterward drew a note in the name of the old firm payable to J). 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 lia- ble 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 responsibility.* Rule as to dormant partners. Sec. 539. A dormant partner is only chargeable to third persons, in respect of contracts entered into by the firm during the time he is act- ually a partner, and is receiving the emoluments and profits of the business, for third persons have never trusted to his credit.' Therefore, upon a dissolution between an ostensible and a dormant partner, it is ' Barfoot v. Goodall, 3 Camp. 147. 'Williams v. Keats, 2 Stark. 290 ; - Newsome v. Coles, 2 Camp. 617 ; Dolman v. Orchard, 2 Car. & Payne, 106. Jenkins v. Blizzard, 1 Stark. 418. Cred- But where the retiring partner's name itora may be expected to look into the is retained in the firm, without his per- Gazette for notices of the dissolution of mission, by the remaining partner, the partnership. Munn v. Baker, 2 Stark, former is not bound to apply to the 255. But in matters unconnected with Court of Chancery for an injunction to partnership, and which are for the ben- restrain such use of his name where due efit of the person giving notice, as when notice of the retirement has been given, he states in the Gazette that he intends In such case, it is the duty of persons to limit his responsibility in the course taking securities in the name of the old of his trade, the Gazette will be weak firm, to inquire who are designated by evidence in his favor, as between him that firm, Newsome v. Coles, 2 Camp, and his creditors, unless the latter can 617. be proved to have been in the habit of * Brown v. Leonard, 2 Chit. 120. reading that paper. Leeson v. Holt, 1 ' Evans v. Drummond, 4 Esp. 39. Stark. 186. RETIRI2S-G Partners. 853 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.' Even where a person has retired from a firm, who, though intentionally a dormant partner, was known to many as a member of the firm, he will 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.' But a dormant partner will be liable to the lohole 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 cap- tain with stores and cash on account of the ship, to the amount of 1,000Z. and upwards. The amount of the debt, at the time of Wil- kinson's retirement, was 401Z. 16s. Id. Cay having become insolvent, the Court of Exchequer held clearly that Robinson was entitled to recover against Wilkinson the total sum of 401Z. 16s. Id. (with a trifling deduction on a particular account), although, when the goods were supplied, Robinson had no knowledge that Wilkinson was a partner. "A party," said Graham, B., "has always a right against a concealed partner of whom he has previously had no knowledge, as soon as he discovers him, unless that ignorance were his own fault, as, if he had not used due diligence in finding him." ' Where the partnership of a dormant partner is known to one par- ticular creditor, he will be liable to that creditor, until he has notice of the partner's retirement. Due notice ought, therefore, to be given to such creditor.* Iiiability for specialty contracts. Sec. 540. Having disposed of the preliminary subject of notice of dissolution, we will endeavor to investigate a variety of questions rela- tive 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 ' Brooke v. Enderby, 2 Brod. & Bing. and see, as to ignorance by the creditor 71 ; 4 Moore, 501. Per Patteson, J., of the dormant partnership, Wintle v. Heath v. Sansom, 4 B. & Ad. 177. Crowther, 1 Cromp. & Jerv. 316 ; Vere 2 Carter v. Whalley, 1 Barn. & Adolph. v. Ashby, 10 B. & C. 288 ; Bx parte 11. See Jones v. Shears, 4 Add. & Ell. Gellar, 1 Rose, 297; Gardiner v. Childs, 833. 8 C. & P. 345. ^ Kobinson v. Wilkinson, 3 Price, 538 ; * Evans v. Drummond, 4 Bsp. 89. 854 Eights of Partners. their retirement. And where a lease has been taken in the partner- ship name, a retiring partner, if he means to absolve himself from liability for future rent, should see that the lease is properly surren- dered. Where a lease was taken by A and B, partners, for seven years from 1827, and A retired in 1829, and afterward 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, although the landlord had notice of his retirement, and received rent both from B singly, and from B & C as partners, and wrote a letter to his attorneys (which, however, was not sent), directing them to make out a lease to B&C Not generally bound by new contracts — Finder v. WiUts. Sec. 541. Generally when a bona 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 great a length in Pinder 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 ageiit, in whose name the bill of lading was made out. They after- ward dissolved partnership, and made over their property 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 C for the freight, Gibbs, 0. J., held that, inasmuch as an implied assumpsit for the freight did not arise until delivery of the goods, and C had left the partnership before the delivery, 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. Not bound by instrument negotiated after dissolution — Abel v. Sutton. Sec. 542. Where a botia fide dissolution has taken place, the retir- ing partners are not to be bound by instruments negotiated in the 1 Graham v. Whichelo, 1 C. & M. 188. Scott v. Colmensill, 7 J. J. Marsh. (Ky.) ' But in the absence of knowledge by 416 ; Magill v. Merrie, 5 B. Monr. (Ky.) a creditor, notice need not be given. 168 ; Davis v. Allen, 3 N. T. 168. Deford v. Reynolds, 36 Penn. St. 325; '1 Marsh. 348; 5 Taunt. 613. Eetieing Paetnees. 855 name oi the onginal firm after such dissolution. 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 partnership name was put on by Poynter alone, without authority from the defendant; or that, even if it existed prior to the dissolu- tion, 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 dissolution, 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 con- cerns of the partnership." Rule in Kilgoiir v. Finlyson. Sec. 543.' The same point had been treated as settled in the pre- vious case of Kilgour v. Finlyson, ^ in which, though the terms of the notice of the dissolution in the Gazette 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 copartner- ship; " yet it was clearly admitted that A was not thus authorized to draw or indorse bills in the name of the partnership after the disso- lution, and that no action could be maintained on such bills. ' 3 Esp. 108. See Heath v. Sansom, 4 dorsed the note to Sterling who dis- B. & Ad. 172. Where, after the disso.- counted it, but retained the discount in lution of a partnership, a person, who discharge of the debt due to him from has been a clerk iu the concern, is em- the firm of Finlyson & Co. The note ployed to wind up the affairs, and in the became due before the bill, and Kilgour course of such employment negotiates paid Sterling the amount of the note a bill in the name of the firm, it is when due. It was admitted that Kil- doubtful whether he can be sued upon gour could not recover on the bill, but the bill, not being a party to it, and at the court also held that he could not re- all events if an action be brought against cover in an action against the partner- him on the bill, some proof must be ship for moneys paid to the use of the given that he had no authority to ne- partnership. Lord Loughborough said: gotlate such bills, or that he acted mala " When this note became due, the plain- fide. Wilson v. Barthrop, 3 M. & W. 863. tiff paid it to Sterling, but at that time ^ 1 H. Bl. 155. In this case it appeared no debt was owing to him from the part- that Scott was indebted to the partner- nership; the payment, therefore, of the ship of Finlyson & Co., and Finlyson & plaintiff was not a payment to the use Co. indebted to Sterling. After the dis- of the partnership. Though the money, solution of the partnership, Finlyson raised by discounting his note before it drew a bill in the, name of the firm, and was due, was in fact paid in discharge indorsed it in the name of the firm,ac- of a partnership debt, yet he cannot fol- cepted by Scott, to Kilgour. Kilgour low the money through all the applica- disoounted the bill by giving his prom- tions of it made by Finlyson. isaory note for it. Finlyson then in- 856 Eights of Partners. May give power to remaining partner to indorse in old name. Sec. 544. There is no doubt, however, that a retired partner may give authority by parol to a continuing partner, to indorsie bills in the partnership name after the dissolution of the partnership. And vehere the retired partner stated that he left the effects 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 objection to his using the partnership name, it was held that the jury were justified in find- ing that the continuing partner had authority to indorse promissory notes so left in his hands in the partnership name.' Acceptance in name of old firm aiter dissolution not binding. Sec. 545. 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 the dissolution.' So an acceptance, given under similar circumstances to a person who had notice that the partnership was intended to be dissolved, cannot be enforced against the firm.* Wrightson v. Fullan — Usher v. Dauncey. Sec. 546. LordKenyon, at Nisi Prius,^ expressed a doubt whether even if a bill were actually indorsed before the dissolution, but not sent into the world until afterward, such an indorsement would be valid. But it is to be remembered that the signature and indorse- ment are the acts which are obligatory on the makers. If, therefore, those acts were performed on a blank paper, stamped with a bill stamp before dissolution, and the bill were filled up and 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 nego- tiated.' This is deducible from the case of "Usher v. Dauncey,' in which, however, the dissolution took place by the death of one partner, and, consequently, the surviving partners only, and not the represent- atives of the deceased, were liable in the action, but, on the prin- ciples of that case, a retiring partner would be held liable under simi- lar circumstances. The facts were as follows : The defendants, together with Frederick Dauncey, had traded under the style of 1 Smith v. Winter, 4 M. & W. 454. ' In Abel v. Sutton, 3 Esp. 108. "> Ex parte Liddiard, 3 M. & A. 87 ; 4 « gee Kussell v. LangstafF, 1 Dousr. Dea. & Ch. 603. 513 ; Snaith v. Mlngay, 1 Mau. & Sel. 87. 3 Wrightson v. Pullan, 1 Stark. 375. ' 4 Camp. 97. *Patersoii v. Zachariah, 1 Stark. 71. Retiring Partners. 857 Daunceys, Cock & Co., and they had been in the habit, for the pur- poses 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 tff business required. The bill, which was the subject of the action, had been drawn and indorsed in blank by Frederick Dauncey, in the partnership firm of Daunceys, Cock & Co., in Feb- ruary, 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 firm was then changed to Daunceys & Squire. Afterward, in April, the clerk of the defendants (not having, as he alleged, any blanks in the new firm) filled up fche bill in ques- tion by inserting the date and sum, as usual. The bill was accepted by H, and discounted by the plaintiffs, who brought their action on the bill against the surviving partners. At the trial. Lord EUenbor- origh expressed his opinion that, after the death of Frederick Daun- cey, 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 afterward refused to set aside. Effect of dissolution upon interest of partners in the firm property. Seo. 547. The moment the partnership ceases, the partners become tenants in common of the partnership property undisposed of from that time. They become, therefore, tenants in common of all part- nership securities unindorsed, which were not issued before the disso- lution. If, therefore, it be necessary to put such securities in circu- lation, 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 partner- ship, beyond all controversy, all the partners must join in the indorsement, and one, by putting the partnership name, cannot bind the rest." '■ And if a bill be drawn by A after dissolution of his part- nership with B, and the proceeds of the bill are applied to pay the partnership debts of A & B, which A, on the dissolution, had assumed to pay, the holder of the bill can have no claim on B, in con- sequence of the particular appropriation of the proceeds.' " 3 Esp. 110 ; and see Carvick v. Vick- stated whether he knew of the security. ery, Doug. 653. In Adams v. Bingley, A &B afterward dissolved partnership 1 M. & W. 193, A & B being partners, with notice that all persons indebted C borrowed money of the firm, and gave to the concern should pay their debts a promissory note for it, payable to B to A. Afterward, B indorsed the note only. A knew of the loan, bat it is not to A for valuable consideration. It was 108 858 Eights of Partners. How he may be discharged from contracts — Cla3rton's case. . Sec. 548. In what has preceded we have directed our attention to the liability which a retiring partner may possibly incur in respect of contracts made by the remaining partners. We have likewise seen that this liability may be avoided by proper caution. It now remains to consider by what means the retiring partner's responsibility 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 afterward) 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. 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 dis- charged or reduced by the first item on the credit side." These general principles were fully 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 deceased paj-tner, Devaynes, under an account current with the house of Devaynes & Co., was limited and adjusted according to the principles above stated. Rule in Brooke v. Snderby. Sec. 549. To apply these principles to cases of retiring partners. Where there is a cash account current between a firm and a customer, 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 retirement. 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 held that A might sue C on the note, ' Le Eoy v. Johnson, 2 Peters (S. C. notwithstanding that B, after indorsing R.), 186. it to A, fraudulently obtained a fresh ^ Per Lord Lyndhurst, 4 Russ. 468. security from C, under promise of de- ^1 Mer. 572. livering up the note. * D. Abbott, J., 2 Barn. & Aid. 46. Retiring Paetnees. 859 first item on the debit side of the account which is discharged or reduced by the first item on the credit side. Iii the case of Brooke Y. Enderby/ Enderby was partner with Gilpin, in the business of woolen-draper, army clothier, and army agent, for the term of ten years. The plaintiff, Brooke, a lieutenant-colonel in the army, employed Gilpin as his agent, and likewise kept a running account with Gilpin as his banker, Gilpin from time to time receiving the pay and allowances, and also the dividends due to the plaintiff on stock and other moneys on his account. Gilpin carried on business in his own name only. Enderby never interfered with the business, and was unknown to the plaintiff as a partner with Gilpin until after the bankruptcy of Gilpin. 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 between them was kept as before, no rest being made, nor balance struck in the account from the 1st July, 1816, down to the bankruptcy 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 1,7731. 9s. id. into court. In calculating this sum Enderby sought credit for all sums paid by Gilpin to the plain- tiff" after the 24:th September, 1817, without givmg 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 calculation right, and, as Enderby had paid into court more than the amount of what was due to the plaintiff at the expira- tion of the partnership, they gave judgment of nonsuit. In case of a continuance of new partnership — Newmarch v. Clay. Sec. 560. But it is to be remarked that, in stating the principle of payment which is now under our consideration. Sir William Grant applied his observations to those accounts only which are in the nature of a hanhing account. In Clayton's case, which is the foundation of all the modern 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 ' 4 Moore, 501 ; 3 Brod. & Bing. 70. 800 Rights of Partners. 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 cfedit side. The appropriation is made by the very act of setting the two items against each other. Upon that principle all accounts current are settled, and particularly cash accounts." Now, it may be inferred from these obser- vations that in accounts current of a different nature, where there is room for appropriation other than that which arises from the order of the receipts and payments, such other appropriation will 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 whicb they as i-egularly pay by bills, and that an account is kept of the goods furnished and the bills paid. In such case, if a partner retire, and the accounts go on as before, the bills drawn after his retirement will not, like money payments, go in discharge of the debt due from him on this current account, unless such bills be specifically appropriated to that purpose, because the bills so drawn are the property of the new firm, and are prima facie appropriated to the payment of the debts of that firm. This was assumed in the case of Newmarch v. Clay, where the only question was, whether there was sufficient evidence of the appropria- tion to discharge the retiring partner. The plaintiffs brought their action for goods sold and delivered, 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 dissolution, was 2611. 19s. lOd., 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 36th November, 521. 12s." The amount of payments up to the time of the dissolution was 130Z., and the items next following on that side of the account were, " 1809, March 35, By bill, 651.," "January 16, By bill, 1001." (which bifls were dishonored), and then — "December 1, By bills, 14=11. Is." It appeared by the date of the dishonored bills, that Clay was interested ' 14 Bast, 339. EETIRIifG Partkebs. 861 in them, tliey would clearly, therefore, if good, have been applicable to the discharge of the 2&11, 19«. lOd. It was proved that the pay- ments contained on the credit side of the account were all paid with- out any express appropriation at the time, and even when the last bills for 141?. Is. were received, there was no specific agreement that that sum was to be applied in part discharge of the dishonored and returned bills of 651. and 1001. j but these latter were in fact delivered up at the time. Under these circumstances, the question was, whether the last item of credit for 141Z. Is. should be added to the other sum of 1301., and applied in discharge of the 261?. 19s. 10c?. (in which case the plaintiffs would be overpaid by the new partnership to the amount of 9?. Is. 2d. ), or whether it should be applied in discharge of the 52?. 12s. as well as to the 261?. 19s. lOd. (in which case there would be due to the plaintiffs 43?. 10s. lOd.) It was urged on behalf of the defendant, Clay, that the act of taking up the dishonored bills, upon the payment of the bills for 141?. Is., which sum was more than sufficient to cover all former debts, was evidence of an implied 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 were of that opinion. "There might," observed Lord EUenborough, ''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 dis- charge of which the defendant. Clay, was interested, for, upon receiv- ing this payment, the dishonored bills were delivered up." Money of new partnership applicable only to debts of new firm. — Thompson V. Brown. Sec. 551. 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 applicable to the discharge of the debts of that partnership only. In the same manner, where a sum of money can be deemed as the specific 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 ' 1 Mood. & Malk. 40. The new part- the accession and not the retirement of nership, it will be perceived, arose on a partner, but the principle is the same. 863 Rights of Paetkees. action against Brown and "Weston for goods sold and delivered. The defendants became partners in trade on the 1st January, 1834, and continued so until the 1st January, 1835. Before the partnership, Brown was indebted to the plaintiffs, who were ironmongers, in the sum of 64?., and during the partnership goods were supplied on the partnership account to the amount of 310?. Early in the year 1834, Brown paid to the plaintiff, on the general account, a check for 601, and, after the dissolution, 150?. was paid expressly for the partnership deU by "Weston, Brown having become insolvent. It was doubtful, on the evidence, whether the check was the property of the part- nershi}?, or the sole property of Brown, and it was contended for the plaintiffs that the payment (of that check) having been made without any appropriation, the defendants 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 partnershijj debt. Abbott, C. J, : " The general rule certainly is, that when money is paid generally, without any appropriation, it ought to be applied to the first items in the account; biit 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 allowing 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 defendants. « Appropriation of payments by the payee — Simpson v. Ingham. Sec. 553. 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 appropriation, 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 decis- ' It is not necessary, however, that a at the time of payment, to appropriate person owing money on two different it to one account specifically. Shaw v. accounts should declare the appropria- Picton, 4 Barn. & Ores. 715 ; Waters v. tion of it at the time of payment ; it is Tompkins, 2 C, M. & R. 723. sufficient if it can be collected from ^ Dig. lib. 46, tit. 3, as. 1, 3. other circumstances, that he intended. Retiring Paetkees. 863 ions 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 appli- cation to what debt he pleases — much beyond its original meaning, so as in general to authorize the creditor to make his election when he thinks fit." In a modern case, however, the Court of King's Bench came to a very just decision on this important subject. Thus, in Simpson 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 con- stituting the Huddersfield Bank. The damages were assessed by an arbitrator at 13,845?., subject to the opinion of the court upon the following facts: The house of Bruce & Co. were in the habit of send- ing 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 August. The bal- ance of that account was greatly in favor of Bruce & Co. No altera- tion in the account was made in the books of Bruce & Co. immedi- ately on the death of Benjamin Ingham, but, during the residue of that month and a part of October, the remittances made by the Hud- dersfield bank, and the payments made for them by Bruce & Co., were entered in continuation of the former account. Before, how- ever, any account was transmitted to the Huddersfield bank subse- quent to that for August, Bruce & Co., in consequence of a communi- cation with their solicitor, 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 began on the 16th September, without any balance brought forward, and contained the remittances and payments made during that month, subsequent to the death of Benjamin, and also those made in the ' 2 Barn. & Ores. 65 ; 3 Dowl. Ryl. 249. 864 Eights of Paetkers. 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 sep- arately by Bruce & Co., although in their own 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 payments by the. new firm; accordingly, after making certain allowances 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. In the preceding case the court proceeded on the principle that the entries which had been continued in the creditor's books immediately on the death of Ingham, not having been communicated to the debt- ors, 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 respect of the same account, the creditor will be barred by such subsequent transactions from establishing an appropriation of the payment. Contract of remaining partner to pay all debts — Effect of. Sec. 553. It frequently happens that upon the retirement of a part- ner, the remaining partners undertake to pay the debts and receive the credits of the fii'm. This, as has been already observed, is a pri- vate 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 agreement, 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 retiring partner, from those in which he has been held liable for the partnership debts, for want of a sufficient consideration moving to the creditor for his assent to the retiring partner's exemption. Retiking Paetjstees. 865 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 calling in the principal, this is not such an assent to the sole credit of the remaining partner, as will exempt the retiring partner's residuary legatee from liability 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, /or" still it was the bond of hoth." ' The principles which we are now discussing have been adopted more decidedly in modern cases, in which the creditor has either, 1, taken the securities of the remaining partners for a debt due from the old firm, or 3, received interest from the new firm for such debt, or, 3, continued an account current with the new firm, apparently adopting such account. In some of the States of this country, particularly in New York, (adopting the modern English rule, that will be referred to before this chapter is closed), it is held that, upon the retirement of a partner, under an agreement with the remaining partners to pay all the debts of the firm, the retiring partner becomes a mere surety for the remaining partners, as between themselves, and that he assumes the same rela- tion to all the creditors of the firm, who have notice of his retire- ment, and the agreement of the remaining members to pay the debts, and after such notice, if the creditors do any act that would discharge an ordinary surety, he is discharged thereby." - Heath v. Percival, 1 P. W. 683. plaiutiiF sought to collect the note of the * In Colgrove v. Tallman, 67 N. Y. 95, defendant. The court held that he was the defendant Tallman sold out his in- not entitled to recover, following the terest in a firm in which he was associ- rule in Oakley v. Pashlee, 10 Bligh (N. ated, to one Barnes, his copartner, who P. R.), 548. "By the dissolution," says agreed to pay all the firm debts. This Folger, J., "of the copartnership and the fact was notified to the plaintiffs who, transfer of all the property to Barnes and at the time the defendant sold out his his agreement with Tallman to pay all interest in the business under the agree- the debts of the firm, Tallman became, ment above named, held a note against in equity.as between himself and Barnes, the firm which was then overdue. Tall- a surety for Barnes as principal debtor man, a few days after the sale, notified in those debts. Millard v. Thorn, 56 N. the plaintifT of the arrangement, and T. 403; Savage v. Putnam, 33 id. requested him to proceed and collect 501; Kinney v. McCullough, 1 Sandf. the note. Barnes at that time was sol- Ch. (N. Y.) 376 ; Morse v. Gleason, 64 vent, and able to pay. The plaintiff did N. Y. 304. When it was made known not proceed to collect the note, and two to Colgrove by Tallman that Barnes years afterward Barnes failed, and the and Tallman had gone into this bargain 109 866 Rights of Paetnees. Where the creditors accept the remaining partners — Bedford v. Deakin. Sec. 554. 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 dis- honored. Upon the dissolution of the partnership, Bickley, one of the partners, informed the plaintiff that an arrangement had been made by which he, Bickley, was to provide for these bills, and there- fore requested the plaintiff to take his separate promissory notes for the principal, interest, and expenses due. To this the plaintiff ulti- mately agreed, at the same time reserving strictly the security of the three partners. It was held that this agreement did not operate as a satisfaction of the joint debt, and that, although the two other part- ners might be ignorant of the transaction, that would make no differ- ence in their favor, for that a creditor giving time to one of three joint debtors does not discharge the others. When bill or note is indorsed with reservation of rights against all — Feather- stone V. Hunt. Sec. 555. 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 bill. 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 bill drawn by ■which was thus made between them, comes insolvent, he has no claim upon Colgrove became bound to Tallman in the retiring partner." Hubbard v. equity to observe it. Thus, if he had Gurney, 65 N. Y. 457 ; Payne V. Pack- made a valid agreement with Barnes to son, 13 Johns. (N. Y.) 174 ; Key v. Bald- extend the time of payment of the note win, 17 id. 384; Remsen v. Beekman, made to him by the firm, Tallman would 25 N. Y. 553 ; Smith v. Sheldon, 35 have been discharged. Millard v. Thom, Mich. 42. 56 N. Y. 403. This could be only on ' 3 Barn. & Aid. 310. See, also, Harris the ground that extension of the time v. Lindsay, 4 Wash. (U.S. O.C.) 98; Pope of payment of a debt granted by a v. Nance, 1 Stew.(Ala.) 354; Patterson v. creditor to a principal debtor, acts as a Camden, 35 Mo. 13 ; Maxwell v. Day, 45 discharge of a surety of the debt, from Ind. 509 ; Grandolpho v. Appleton, 40 his liability. * * * It is the settled N. Y. 533 ; see, also, ante, p. 865, n ; law of the State that the surety, while Barnard v. Torrence, 5 Gill & J. 383. the principal is solvent, may req uire the '' 1 Barn. & Cres. 113 ; 3 Dowl. & Ryl. creditor to collect the debt, and if he 333. refiises to do so, and the principal be- Ketirinq Partners. 867 their firm on Hunt. The bill was dishonored. Hunt afterward retired from the firm. Featlierstone indorsed the bill to the new firm of Stab & Preston, and sent it to Preston, in order, if possible, to obtafin payment of it, but strictly reserving his rights on all the par- ties to it. Hunt also sent out an agent to settle 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 liabiliby was not discharged. Where the creditors accept nevr security — Evans v. Drummond. Sec. 556. 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 binding on the creditor, and will operate as a discharge to the retiring partner. In the case of Evans v. Drummond,' Oombrune and Drummond were partners. Goods having been furnished to the firm, a partnership bill was given for the amount. Drummond afterward retired from the firm, with the full knowledge of the creditor. After Drum- mond's retirement, and when the bill became due, it was renewed by another bill to the same amount, by Combrune. It being contended that Drummond was still liable, Lord Kenyon said: "Is it to be endured, that when partners have given their acceptance, and where, perhaps, one of two partners has made provision for the bill, the holder shall take the sole bill of the other partner, and yet hold both liable ? I am of opinion, that when the holder chooses to do so, he discharges the other partner. Here the plaintiff has taken the bill of Oombrune, after he was informed that Drummond had nothing to do with the concern, as he admits. It is a reliance on the sole security of Oombrune, and discharges the defendant." Verdict for the defendant. Rule in Reed v. White. Sec. 557. So in Eeed 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 ' 4 Esp. 89. ' 5 Esp. 123. 868 Eights of Partners. amount, which was dishonored and renewed, and again dishonored. For the other defendants it was insisted that the plaintiff had dis- chai-ged the other owners, who, in ignorance of this mode of dealing between the plaintifE and White, had suffered him to receive large sums of the East India Company for freight, which they would otherwise have detained. Lord Ellenborough : " If the plaintiff, dealing with White 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 full special jury of merchants found for the defendants. Taking sole security of new firm, no written security previously existing — Thompson v. Drummond. Sec. 558. 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 the Court of King's Bench in the case of Thompson v. Percival,' in which the cases of Evans v. Drummond and Eeed v. White were recognized and adopted as sound law. That was an action for goods sold and deliv- ered. 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 inserted in the " London Gazette," announcing the dissolution of the partnership, and that the business would be carried on by the defendant 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 23d of December. It did not appear that when these goods were delivered the plaintiffs had had notice of the dissolution. On the- dissolution, effects were left in 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 plaintiffs afterward 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 ' 5 B. & Ad. 925; 3 Nev. & Man. 167. Eetieing Paetners. 869 of the goods feoia, and obtained a yerdict. 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 acceptance of James, in satisfaction of the joint debt (the proof of which had not been insisted on at the trial), such agi-eement amounted to a discharge of Charles ; and that the facts proved raised a question 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 exchange 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 negotia- ble and transferable, was of itself something different from what the creditor had before ; and many cases might be conceived in which the sole liability of one of two debtors might be more beneficial than the joint liability of two, either in respect of the solvency of the parties or the convenience of the remedy, as in cases of bankruptcy, or sur- vivorship, 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 dis- charge of Charles ; because there was evidence of a delegation by Charles to James, to make such an agreement, for James had the partnership effects left in his hands, and was to pay all the partner- ship debts. Ets. parte Whitmore. Sec. 559. 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 separate estate. That was not a case of retiring partners, but it may be mentioned as connected with the principles laid down in Thompson v. Percival. The facts were shortly as follows : W . S. Warwick, 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 And see Kirwan v. Kirwan. " 3 Mont. & A. 627. 870 Eights of Partners. Virginia. W. S. Warwick afterward wrote to Jackson & Co., stating that ho had formed a partnership with Clagett, and adding — "I beg you to consider all credits, advices and instructions noiv in force from me, as extending 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 afterward 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 accordingly." In answer to these letters, Jackson & Co. wrote a letter acknowledging the receipt of the communication from Wai'wick & Clagett, and adding — "We shall be very happy to cultivate the most intimate business relations with your firm, and will gladly avail ourselves of every opportunity to infiuence valuable business to your good arrangement. We shall make up and transfer to your new firm the open accounts in joint exchange transactions. " In pursuance of these arrangements Jackson & Co. drew bills upon Warwick & Clagett for the same purposes for which they had pre- viously drawn upon Warwick, and these bills were accepted by War- wick and Clagett in the partnership name. Warwick & Clagett having afterward become bankrupt, Jackson & Co. were permitted by the commissioner 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 Eeview 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 sufBcient 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 account. Rule when creditors agree that retiring partner shall be simply surety of old firm — Oakley v. Pasheller. Sec. 560. If the creditor of a firm agrees that the retiring part- ner shall be considered simply as a surety for the debts of the old partnership, and the creditor afterward, whether holding the partner- Ketieing Partners. 871 ship securities or otherwise, give time to the new firm for payment 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 loth October, ISl?, and the 15th Jan- uary, 1818. In 1814 Sherrard died, having paid no portion of the debt. In June, 1815, a new partnership 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 considera- tions to pay the debt. Sir Charles Oakley having notice of this arrangement (which in the opinion of the court was held to consti- tute Sherrard's executors sureties only for the debt), continued to deal with the new firm, and adopted them as his principal debtors. He afterward gave time to the new house for the payment of the bills, and this indulgence was held to amount to a discharge of Sher- rard's executors. Where the creditors receive interest of the new firm — Gough v. Davies. Sec. 561. 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 inter- est 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 afterward applied to the case of a retiring part- ner, in the decision in Gough v. Davies.' There, Gibbons, the elder, Davies, and Gibbons, the younger, were partners in the business of bankers. The plaintiff, 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 dissolu- tion 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, '10 Bligh (N. S.), 548; 4 Clarke & rington, 3 Ves. 50 ; and Pitman on Prin- Finn. 207. As to the general doctrine cipalandSurety,part3,ch.5. Seeanie, p. of discharging the surety by giving ' 3 Ves. 277. time to the principal, see Eees v. Ber- ' 4 Price, 200. S73 Eights of Paktkeks. as well that part of it which was deposited before as that part which was deposited after the new partnership was formed, was calculated as upon one aggregate sum, without distinction. Gough, at various times after the dissolution, applied for and received several 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 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, however {dissentiente G-arrow, B.), granted a new trial, considering the direction wrong, and that there was not suffi- cient evidence of assent to be left to a jury. Graham, B. : "The question left to the jury was, whether, under the circumstances, they would presume 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 sufficient evidence to induce the jury to come to this conclu- sion. Gibbons the elder died in 1813, and the firm goes on with- out any alteration. No agreement is shown relating to what took place ; no settlements of accounts ; nothing 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 part- ner cannot release the old firm." 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 acknowledg- ment retired from it. The interest was paid from time to time, by the different firms till the last became bankrupt. The clerk contin- ued to serve all the different firms, and was cognizant of the different changes. It was held, notwithstanding, that he might recover the > Blew V. Wyatt, 5 Car. & P. 397. Eetiking Partnees. 873 money he had advanced, from the two persons who signed the acknowledgment. Where the creditor coutinues dealing with the new firm — David v. EUice. Sec. 562. Thirdly, where there is an account current between a firm and a creditor, and upon the retirement of a partner the creditor con- tinues his dealings with the house, this is not necessarily 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. Ellice," not only did these circumstances occur, but there was strong evidence 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 plaintiff was a merchant residing in Canada. The defendants, with John Inglis, deceased, were merchants and partners in London, under the firm of Inglis, Ellice & Co. The plain- tiff had had various dealings with that firm prior to the 30th April, 1821. On that day, the defendant, Ellice, 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 witli the liquidation of the debts of the partnership." 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 so soon as I receive my account current, 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 cur- rent with the plaintiff was made up to the 30th June, 1831, and not to the preceding 30th April (the time of EUiee'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 account current with your late firm is received, and, with the excep- tion of the outstanding debts of 1804, is perfectly correct, and have ' See Ex parte Appleby, 2 Dea. 482. ^5 Barn. & Ores. 196 ; 7 Dowl. & Ryl. 690. 110 874 Eights of Pabts-eks. transferred in a new account with your present firm, whose confidence I hope I shall continue to merit." On the 3d November, 1821, the plaintiff drew a bill for o,000Z. on the new firm. In July, 1822, the new firm of Inglis & Co. made tip and sent to the plaintiff the first account in their own names. In August, 1832, John Inglis died, and thereupon Inglis & Co. suspended their payments; and, in May, 1823, 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 bank- rupts and EUice, obtained a verdict against the defendant EUice, for 13,162Z. 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 pay- ments 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 application 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 delivered by Abbott, C. J., appears to have proceeded upon these considerations: First, that no benefit to the plaintiff could be presumed 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 withdrawn. That, under these circumstances, no transfer of the debt could be presumed. liOdge V. Dicas. Sec. 563. The principles upon which this judgment was founded had, to a certain extent, been acted upon in the previous case of Lodge T. Dicas.' That was an action of assumpsit for work and labor, etc., against two persons who had been in partnership together as attor- neys, at the time when the debt was contracted. Disputes having arisen between them, they agreed to dissolve their partnership, and it was arranged that Eondeau, one of the partners, should receive the partnership debts and discharge the plaintiffs' demand. The plain- tiffs received notice of the arrangement by a letter from Eondeau, as ' 3 Barn. & Aid. 611. Retiring Partkers. 875 follows: "We have been arranging 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 lia- bility as to the partnership account, and stated that they should chai'ge it to Rondeaia's private account, he having contiuued to employ them as his agents. The plaintiffs, notwithstanding this agreement, obtained 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 Eondeau as their debtor, and unless it could have been shown that they were parties to the agreement between Dicas and Eondeau, there was no consideration whatever for the promise proved to have been made. Lodge V. Sicas and David v. Elllice, overruled by Thompson v. Percival, Kir- , wan V. Kirwan, and Hart v. Alexander. Sec. 564. But the two last-mentioned cases, or at least the principles 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 security of one part- ner may be a good consideration for the discharge of the security of two, but also, that the transfer of an account from one firm to another without any fresh security being given to the creditor by the new firm, may, combined with other circumstances showing an acquiescence on the part of the creditor in, the change of his debtor, amount to a dis- charge of the old firm or retiring partner. Thompson v. Percival. Sec. 665. In Thompson v. Percival,^ Denman, 0. J., in adverting to the latter point, said that in his opinion, and that of his learned brothers, there was in David v. Ellice, abundant evidence to go to a ' But where an action was brought to this agreement, A took upon himself to recover from A & B the sum of 35Z., pay the 25J. to the plaintiflF, and retained which had been placed in their hands him in his sole employ, and that the by the plaintiff as a security for the plaintiff had notice of this and assented faithful discharge of his duty to them to such agreement and retainer by A, as their servant, and the plea alleged an and in consideration thereof, discharged agreement between A & B, upon disso- B from his promise as to the 251., it was- lution of the partnership, that A should held that the plea did not state an ade- undertake certain debts and retain cer- quate consideration for the alteration of tain servants, and B should undertake the plaintiff's security. Thomas v. certain other debts and retain certain Shillibeer, 1 M. & W. 134. other servants, and, in pursuance of "5 Brad. 935. 876 Rights of Partners. I jury (and upon which the court might have decided), 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 efEected by a transfer of accounts by mutual consent as by actual payment of money. Eirwan v. Kirwan. Sec. 566. 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 agreement had been made out, it would have been sufficient to discharge the old firm, notwithstand- ing 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 Anthony was their creditor to the extent of 12,000?.. for which they allowed him interest, he drawing upon them as his occa- sions required. Changes took place in the partnership by the retire- ment, first of Clement, and then of Matthew, and, lastly, by the introduction of Kelly as a new partner with Nicholas ; but through- out the whole of these changes the business was conducted in the same 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 pre- ceding years ; and after his death similar accounts were rendered to the plaintiff, who was his widow and administratrix. Upon the accession of Kelly, there being a new capital brought into the con- cern, the account of Anthony Kirwan 'vyas carried from the books of the old to that of the new partnership, 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 ' 2 Cromp. & Mees. 617. Kbtieing Partners. 877 Nicholas and Kelly. The following letter, however, from the intestate to Clement Kirwan, 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 action having been brought by the widow of the intestate against Clement, Matthew and Nicholas to recover the balance due, the question was, whether Clement or 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 accept- ing 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. Hart V. Alexander. Sec. 567. But, in connection with this subject, the strongest case in favor of the retiring partner is that of Hart v. Alexander,' in which the law laid down in the previous cases of Thompson v. Per- cival and Kirwan v. Kirwan does not seem to have been questioned by any of the learned judges, though considerable difEerence 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 lieu 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 Alexan- der & 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 plaintiff varied at different periods, ranging between the rate of 101. and 51. per cent. In 1822, and the two following years, it was 61. per cent ; in 1835 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 1 3 Mees. & Wels. 483. 878 Eights of Paetkehs. a partner in his room. In December, 1833, the then partners became bankrupt. In defense of the action the following evidence was submitted to the JU17 : The defendant came from India to England in 1818, having previously executed a deed by which he was to cease to be a part- ner in May, 1832, at the latest, and Nathaniel Alexander was to be admitted on his retirement. On the 6th May, 1833, the dissolu- tion of the firm by the defendant's retirement, and the formation of the new pai'tnership, 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, soliciting their suffrages, and stating that all his connection with mercantile concerns in India had ceased, and in 1833, he was elected a director. At this period the plaintiff (who had returned to Eng- land some time before, but at what precise time did not appear), wa's resident 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 in. The plaintiff continued to receive his accounts-current yearly, through the house of Fletcher, Alexander & Co., of London, the agents of the Indian house, until the year 1831, the respective rates of interest charged in each year being stated in such accounts. In October, 1831, the plaintiff, as one of the execu- tors of a brother of his who had died in Persia, executed at the office 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 named the partners, 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 .Bagshaw & 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, etc., etc., due to him, the plaintiff, on the balance of any account-current, etc., 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. Eetieing Partners. 879 Lord Abinger, G. B., by whom the action was tried, having observed strongly on the foregoing circumstances as leading to the conclusion that the plaintiff knew of the defendant's retirement, and his Lord- ship 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 remaining 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 the 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 under which the plaintiff had executed the powers of attorney, especially the power of attorney to Mr. PuUarton. And Parke, B., who, with Lord Abin- ger, 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. Ellice, and Kirwan v. Kirwan, the question had 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 all the three parties — the creditor, the old firm, and the new firm, — be transferred to the new firm. In David V. Ellice, 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 case of moneys borro-wed of a trustee vrho is a. partner — Dickenson v. Lockyer. Sec. 668. If a firm borrow trust-moneys of which one of the part- ners is a trustee, a retiring partner will not be exempt from liability in respect to trust-moneys, unless he have given a consideration to, or received a release from, the cestui que trust, or his agent. In the case of Dickenson v. Lockyer, ' it appeared that Lockyer was trustee imder 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 1 4 Ves. 36 ; 1 Hov. Supp. 438. 880 Rights of Partn-ees. bonds with Lockyer. The partnership was afterward 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 and Woodward, and giving up the bonds and securities of Bence, Lockyer, and 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 canceled, but no new security was taken in their place. At the time of the dissolution the partnei'^hip was solvent, and so was Lockyer in his private capacity. After the dissolution the interest, 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 & Woodward became bankrupts. A bill was then filed by the administrator 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 payment. The question in this court is, whether the trustee of a bond can, without the cestui que trust, release the obligor. Now, Bence is debtor with the two others under the bond, and they cannot, by manage- ment 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 according to the will, but the three co-obligors, by a transaction between themselves, agree, that one shall be discharged, and the whole security rest upon the two without the privity of the executor. But no act of Bence can affect those claim- ing under Furze, for Lockyer was the proper hand to pay. It is not necessary to inquire what would have been the case, if actual pay- ment 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 -all 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 Eetibin-g Paktneks. 881 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 Lockyer, not in the least affecting the estate. Therefore the representatives 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 gi'eat measure on the circumstance that there was no specific repay- ment by Bence to Lockyer of his share of the bond debts in question, but only a general assignment of his interest in the partnership effects. The same point is touched upon by Lord Kenyon, in a case of a simi- lar nature. ' There A and B were partners, 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 undertaking all the debts. Lord Kenyon said it was not to be denied 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 unliquidated 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. Notwithstanding the last of these cases, it may reasonably be con- cluded, 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 trnst-money of their copartner, ought to see that he has authority to lend and power to release. Retirement of a partner with knowledge of firm's insolvency — Parker v. Rams- bottom. Sec. 569. In concluding this section, we ought to notice a very important question connected with the retiring partners, namely, ^ u^.^ ■ r, ' Smith v.. Jameson, 5 T. R. 601. Ill 882 Eights of Paetners. how far they are at liberty to retire from the firm with the knowledge of the firm's insolvency. Upon the whole, it seems clear that if a partner, by right of the articles, or by permission of his copartners, retire from the firm on the very ground of its insolvency, this act per se is not fraudulent, and cannot render him liable to the creditors of the remaining firm, though, of course, it will be otherwise if his retire- ment arise from or be connected with some fraudulent agreement between himself and the remaining partners. In the case of Parker v. Eamsbottom,' 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 installments, 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 trans- action; 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 partnership was insolvent. "Might 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 practiced or intended. The mere circumstance of the partnership being, at the time of the retirement, in such a state that their joint effects were not sufficient to pay their joint debts, would not, per se, be sufficient to invalidate a dissolution of partnership 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." When the purpose is to defraud the creditors — Anderson v. Maltby. Sec. 570. But if two copartners enter into a contract for the pur- ' 3 Barn. & Cres. 257 ; 5 Dowl. & Eyl. held that, at all events, to support such 138. an action, the representation musi be ' Ex parte Peake, 1 Madd. 346 ; and in writing ; for, although it be made by see Ex parte Carpenter, Mont. & M'A. 1. a party as to the credit and circumstan- And it may be remarked that it is ces of a firm, of which he himself is a very questionable whether an action member, it is also a representation as to will lie against a man for representing, the credit of " another person " within contrary to the truth, that a partnership the meaning of thestat. 9 Geo. 4, c. 14, in which he is engaged is solvent,. Jn„a. _s. 6. Devaux v. Steinkeller, 1 Scott, N. late case, the Court of Common Pleas B. 203. avoided the decision of that point, btit Ektiking Paktnees. 883 pose of defrauding their joint creditoi-s, 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: Brough ikaltby, Thomas Maltby, arid Dyer, were in partnership, the share of Thomas in the capital being 6,200Z. In June, 1774, Dyer retired. A new part- nership 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 tlie partnership of Maltby & Dyer, and Maltby, Dyer & Maltby, were car- ried on in the new copartnership, without any entry denoting its com- mencement. At the time of forming this new partnership, no addi- tional capital was brought in by either of the parties, biit Thomas Maltby had credit given to him, under the title of "Thomas Maltby's capital," for the 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 con- cern, but no public notice was given of the dissolution of the partner- ship, 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' 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 pay- ment; and on the 3d of November, 1788, they became bankrupts, 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?., 155. 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 3,638?. 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, securities, and bills, paid to or deposited with the defendant by the partners and received by him during the subsistence of the partnership and since, and an account of his > 4 Bro. 423 ; 3 Ves. Jr. 244. 884 Eights of Partnees. share at the time he retired ; that the payments made to him should be declared fraudulent ; that he should be decreed to pay his pro- portion of the partnership debts ; and if a surplus should remain after discharging the partnership debts, that the proof of the defend- ant's debts should be reduced to his share of thab surplus. Lord Loughborough in an elaborate judgment, after entering min- utely into every particular of the case, iu order to show that a fraudu- lent 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 bona fide a creditor of the other two, then about to enter into a new partnership. If not, if all this trans- action is to be void, under the color in which 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 partnership of the two, contrived upon a certain foresight of bank- ruptcy at no very remote period (though the exact time was not cer- tain), 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 has received. The only doubt I have is, whether I should better attain the justice of the case by directing an account of all transac- tions between Brough and George Maltby, from the commencement of their partnership, for it can go no farther back, and the defend- ant, with an inquiry into the state of accounts at 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 people from the new copartnership into his pocket. Whether this should be done in the Master's oflBce, or by discussion of an issue at law, is a point upon which I doubt. Con- sider which will best attain justice." His Lordship ultimately directed an account, declaring his opinion, that the settlement of the defend- ant'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 Eetiring Paetnees. 885 the former partnership, at the time of the dissolution thereof, trans- ferred to the new partnership. Termination of liability in ordinary partnerships. Sec. 571. Before examining the circumstances which put an end to a partner's liability to creditors of the firm," says Mr. Lindley,' "it is necessary to draw attention to the distinction between a partner's lia- bility for what may be done after his copartners have ceased to be his agents, from his liability for what may have been done whilst their agency continued. It is obvious that there may be many circumstances ■which have no effect upon a liability already accrued, but which, nev- ertheless, may prevent any liability for what is not yet done from arising, and in order to determine with accuracy the events which put an end to a partner's liability to creditors, it is necessary to distinguish his liability for the future from his liability for the past. Termination of liability as to future acts. Sec. 572. The agency of each partner in an ordinary firm, and his consequent power to bind the firm, i. e., himself and his copartners, m ay at any time during the continuance of the partnership be deter- mined by notice,' for his power to act for the firm is not a right attach- ing to him as partner independently of the will of his copartners, and although any stipulations amongst the partners themselves will not afEect non-partners who have not notice of them, yet, if any person has notice that one member of the firm is not authorized to act for it, that person cannot hold the firm liable for any thing done in the teeth of such notice.^ With one or two exceptions which will be mentioned presently, the agency of each partner and his consequent power to bind his copart- ners can only be effectually determined by giving notice of its revo- cation. The authority imputed to each partner must continue until some event happens to put an end to it, and this event ought to be as notorious as that which conferred the authority upon him. The same reason which leads to the imputation of the power to act for the firm at all demands that such power shall be imputed so long as it can be exercised and is not known to have been determined. To this principle there are exceptions which may be conveniently disposed of before the principle itself and its application are discussed. ' Lindley on Partnership, pp. 334-370, Quin, 7 Price, 193 ; Galway v. Matliew, given entire in the foUowinpf pages. 1 Camp. 403, and 10 East, 364. ^ See Vice V. Fleming. 1 Y. & J. 337; 'This subject has been already dis- Willis V. Dyson, 1 Stark. 164 ; Booth v. cussed. 886 Eights of Partners. 1. When a partner dies. Notice of death is not requisite to pre- vent liability from attaching to the estate of a deceased partner in respect of what may be done by his copartners after his decease.' For, by the law of England, the authority of an agent is determined by the death of his principal, whether the fact of death is known or not.' The death of one partner does not, however, determine an authority given by the firm through him before his death, and consequently, if after his death such an authority is acted on, the surviving partners will be liable for it. In Usher v. Dauncey,' bills were drawn and indorsed in blank by a partner in the name of the firm, and were given by him to a clerk to be filled up and negotiated as occasion might require. The partner in question died, and after his death, and after the name of the firm had been altered, one of the bills was filled up and negotiated. Lord Ellenborough held that the bill was binding on the surviving partners, considering that the power to fill up the bill emanated from the partnership and not from the individual part- ner who had died. Moreover, it does not follow that because a creditor has no remedy against the estate of a deceased partner in respect of debts contracted by his copartners since his death, his estate is not liable to contribute to such debts at the suit of the surviving partners. That is a different matter altogether, and depends on the agreement into which he entered with his copartners, as will be seen hereafter when the sub- ject of winding up is under consideration. Effect of bankruptcy on powers of partners. Sec. 573. When a firm becomes bankrupt, the authority of each member to act for the firm at once determines. If one partner only becomes bankrupt, his authority is at a» end, and his estate cannot be made liable for the subsequent acts of his solvent copartners. At the same time, if notwithstanding the bankruptcy of one partner the others hold themselves out as still in partnership with him, they will be liable for his acts, as if he and they were partners,' and although > Devaynes V. Noble, Houl ton's case, '4 Camp. 97. 1 Mer. 616 ; Johnes' case, id. 619 ; Brice's * For instances where the estate of a case, id. 620; Webster v. Webster, 3 deceased partner has been held liable to Swanst. 490. See VuUiamy v. Noble, 3 contribute to debts incurred since his Mer. 614 ; Brown v. Gordon, 16 Beav. decease, see Blakesley's Executors' 302, as to the power of the surviving case, 3 Mc. & G. 736; Hamer's Devisees' partners, who are the executors of the case, 3 De G. M. & G. 366. deceased partner, to bind his estate. ' See Lacy v. Woolcott, 3 Dowl. & Ryl. 2 See Blades v. Free, 9 B. & C. 167; 458. Smout V. Ilbery, 10 M. & W. 1 ; Campa- nari v. Woodburn, 15 C. B. 400. Eetirikg Paktnbus. 887 the estate of a bankrupt partner does not incur liability for the acts ot the other partners done since the bankruptcy, yet the solvent part- ners have power to bring the partnership transactions to an end, and to dispose of the partnership property. This subject will be examined hereafter in the chapter on Bankruptcy, to which the reader is there- fore referred.' Retirement of dormant partner. Sec. 574. Another exception, but one which only proves the rule, is that if a dormant partner {i. e., one not known to be a partner") retires, the authority of his late partners to bind him ceases on his retirement, although no notice of it be given. But this is because he never was known to be a partner at all, and the reason for the general rule has therefore no application to his case. The following decisions illustrate this exception : In Carter v. Whalley,* the defend- ant, Saunders, was a partner in the "Plas Madoc Colliery Co.," but there was nothing to show that the plaintiff or the public ever knew that such was the case. Saunders withdrew from the company, but no notice of his withdrawal was given either to the plaintiff or to the public. After his withdrawal the company became indebted to the plaintiff, and it was held that Saunders was not liable for the debt, upon the ground that the name of the conipanygave no information as to the parties composing it, and Saunders himself was noit known either to the plaintiff or to th% public to have belonged to the com- pany before he withdrew. Rule in Heath v. Sansom. Sec. 575. In Heath v. Sansom,^ the defendants, Sansom and Evans, carried on business as partners under the style of Philip Sansom & Co., but Evans was not known to be a partner. They dissolved part- nership by mutual agreement, but did not notify the fact. After the dissolution, Sansom gave the plaintiff a promissory note on which he sued Sansom and Evans. The court decided that Evans was not lia- ble, for, when his right to share profits ceased, he could not be held responsible for the subsequent acts of his copartner, unless he author- ized those acts or held himself out as still connected with him, and he had done neither.'' 'See Fox v. Hanbury, Cowp. 445; n B. & Ad. 11. Morgan v. Marquis, 9 Ex. 145. " 4 B. & Ad. 173. ' A dormant partner known to a few ' See, too, Evans v. Drummond, 4 Esp. persons to be a partner, is not dormant 89. This doctrine seems not to apply to as to them, see Farrar v. Deflime, 1 Car. Scotland. See Hay v. Mair, 3 Ross' L. C. & K. 580 ; Carter v. Whalley, 1 B. & on Com. Law, 639. The recent case of Ad. 14 ; Evans v. Drummond, 4 Esp. 89. The Western Bank of Scotlsmd v. Nee- 888 Eights of Partners. With the three exceptions which have been noticed, the general proposition above stated holds good. Thus, if a partner becomes lunatic, and his lunacy is not apparent or made known, his power to bind the firm and his liability for the acts of his copartners ' will remain unaffected. Dissolution and notice — effect ot Sec. 576. So, if a partnership is dissolved, or one of the known members retires from the firm, until the dissolution or retirement is duly notified, the power of each to bind the rest remains in full force, although as between the partners themselves a dissolution or a retire- ment is a revocation of the authority of each to act for the others.' Thus, if a known partner retires and no notice is given, he will be lia- ble to be sued in respect of a promissory note made since his retire- ment by his late partner, even though the plaintiff had no dealings with the firm before the making of the note.* And in determining which was first in point of time, viz., notice of the dissolution or the making of the note, effect must be given to the presumption that the instrument was made and issued on the day it bore date, unless some reason to the contrary can be shown.'' In a modern case a firm was dissolved on the 39th December, 1837, and a bill dated the 3d February, 1838, was drawn and indorsed by one partner in the name of the late firm, but when he indorsed \t did not exactly appear. Notice of dissolution was given by advertisement in the "Gazette" on the 30th March, 1838. It was held that in the absence of evidence to the contrary, the bill must be taken to have been drawn on the day it bore date, and that the time of its indorsement was a matter to be inferred by the jury from all the cir- cumstances of the case. The jury found that it was indorsed before the 30th Marcli, 1838, and the holder of the bill was consequently held entitled to a verdict against all the members of the dissolved firm.' dell, 1 Fob. & Fin. 461, seems at first ^ See Parkin v. Carruthers, 3 Esp. sight opposed to the authorities in the 248 ; Williams v. Keats,, 3 Stark. 3'JO, tpxt, but it is conceived that in that E. G. L. R. 3 ; Brown v. Leonard, 3 case there must have been evidence to Chitty, 130; Dolman v. Orchard, 3 C. show that the defendant was known to & P. 104, in which three last cases, how- have been a partner to the plaintiff be- ever, there was a continual holding out. fore he retired. See as to ordering such a bill to be de- ' See Molton v. Camroux, 3 Ex. 487, livered up, Eyan v. Mackmath, 3 Bro. and 4 id. 17, and Baxter v. The Earl of C. 0. 15. Portsmouth, 5 B. & C. 170, E. U. L. R. ■> See Anderson v. Weston, 6 Bing. N. 11, and the cages cited. C. 396. 2 See Mulford v. Griffin, 1 Fos. & Pin. ^ See Anderson v. Weston, 6 Bing. N. 145 ; Faldo v. Griffin, id. 147, and the C. 396. cases in the next note. Retiring Partners. 889 When notice is not given. Sec.577. So a partner who retires and does not give sufl&cient notice is liable to be sued for torts committed subsequently to his retirement by his late copartners or their agents." Moreover, if a dormant partner is known to certain individuals to have been a partner, he is as to them no longer in the situation of a dormant partner, and must, therefore, give them notice of his retire- ment if he would free himself from liability in respect of the future transactions between them and his late partners." It is obvious, therefore, that on the dissolution of a firm or the retirement of a partner, it is of the greatest importance to notify the fact, and each partner has a right to notify it. If his copartners pre- vent him from exercising that right, a court of equity will, if possible, aid him and compel them to do what may be necessary to enable notice to be given. In Troughton v. Hunter,' a partnership was dis- solved by a decree of the court. It appeared that no advertisement of the dissolution would be inserted in the " Gazette " unless signed by both partners. The defendant, who, it seems, would not sign the advertisement, was ordered so to do by the court. Effect of notice of dissolution. Sec. 578. Subject to two exceptions, which will be examined here- after, notice of dissolution of a firm or the retirement of a partner duly given, determines the power previously possessed by each part- ner to bind the others. Hence, after the dissolution of a firm or the retirement of a member and notification of the fact, no member of the previously existing firm is, by virtue of his connection therewith, liable for goods supplied to any of his late partners subsequently to the notification,^ nor is he liable on bills or notes subsequently drawn, accepted, or indorsed by any of them in the name of the late firm," even although they may have been dated before the dissolution,' or have been given for a debt previously owing from the firm ' by the partner expressly authorized to get in and discharge its debts." 1 Stables v. Eley, 1 Car. & P. 614. Abel v. Sutton, 3 Esp. 108 ; Spenceley 2 Farrar v. Deflime, 1 Car. & K. 580 ; v. Greenwood, 1 Fos. & Fin. 297. see, too, Evans v. Drummond, 4 Esp. * Wrightson v. Pullan, 1 Stark. 375 ; 89, and Carter v. Wlialley, 1 B. & Ad. S. C, Wright v. Pulham, 3 Chitty, 131. 14. ' Kilgour v. Finlyson, 1 H. Blacks. " 18 Beav. 470. ' lf!6 ; Dolman v. Orchard, 3 Car. & P. ^Minnitt v. Whinery, 5 Bro, (P.O.) 104. 489. 8 Kilgour v. Finlyson, 1 H. Blacks. ' Paterson v. Zachariah, 1 Stark. 375 ; 156 ; see Lewis v. Reilly, 1 Q. B. 349. 112 890 Eights of Partkers. f Instances where notice does not protect from liability. Sec. 579. There are, it is true, cases to be met with in which, not- withstanding a dissolution and notice, a bill or note in the name of the firm lias been held to bind those who were members thereof, prior to the dissolution, but in each of these cases there was some circum- stance taking it out of the ordinary rule. In Burton v. Issitt,' the continuing partner had authority to use the name of the retired, part- ner in the prosecution of all suits for the recovery of partnership property. This was held to authorize the giving of a promissory note for sixpences, payable under the Lords' Act, and the retired partner was therefore held bound by a note given by his late partner in pay- ment of those sixpences. In Smith v. Winter,' the continuing part- ner had express permission to use the name of his late partner, who was, therefore, justly held liable on a bill given in the name of the old firm after his retirement. The only case, indeed, of this description, which presents any difficulty, is Lewis v. Eeilly.' There two part- ners drew a bill payable to their own order, and afterward dissolved partnership. One of them then indorsed the bill in the name of both to the plaintifE, who knew of the dissolution. It was held, in an action by him against both partners, that he was entitled to recover on the bill, and that it was immaterial whether he knew of the dissolution or not. The precise ground of this decision does not distinctly appear. The court seems to have proceeded on the suppo- sition that an indorsement by one of several payees in the name of all is suflBcienfc, but the writer has been viuable to find any previous authority for such a doctrine, save where the indorsers are partners, which in the case in question they were not^ as the plaintifE was found by the jury to have known. The ease is certainly anomalous and requires reconsideration.'' The exceptions alluded to above as qualifying the rule that the agency of each partner is determined by dissolution (or retirement) and notice are — First, where a partner, who has retired and notified his retirement, nevertheless continues to hold himself out as a partner, and secondly, where what is done only carries out what was begun before. 1. If a partner retires and gives notice of his retirement, and he nevertheless allows his name to be used as if he were still a partner, '■ 5 B. & Aid. 267. * See Story on Bills, § 197, and Abel v. « 4 M. & W. 454. Sutton, 3 Esp. 108. 3 1 Q B. 849. EETiEiNa Partkeks. 891 he will continue to incur liability on the principle of holding out explained in the early part of this treatise. In Williams t. Keats,' after a partner had retired, and after notice thereof had been given by advertisement, a bill was accepted by his copartner in the names of himself and late partner. The names of both still remained painted up over their late- place of business, and Lord BUenborough held that the partner who had retired was liable on this bill notwithstanding the advertisement, for there was no evidence to show that the plain- tiff in fact knew of the dissolution.^ Upon this, however, it is to be observed that the only evidence that the retired partner author- ized the continued use of his name, was the fact that he had not pre- vented it. Now, authorities are not wanting to show that if a part- ner retires, and notice of his I'ctirement is given by advertisement, he will not continue to incur liability by the acts of his copartners, simply because they continue to carry on business in the old name, and he does not take steps to stop them.^ His forbearance in this respect does not necessarily amount to an authority to use his name as before, and unless his name is used by his authority, he is not liable on the gi'ound that he holds himself out as a partner.' But although it may be doubtful whether in Williams v. Keats there was a sufficient hold- ing out, it is clear that if a partner retires and does still hold himself out as a partner, this is in fact signifying that he is willing to incur the responsibilities of a partner for the sake of those with whom his name is associated, and, therefore, he will continue to be answerable for their conduct, even to persons dealing with them with knowledge of his retirement. This was decided in Brown v. Leonard,' a case in which the plaintiff sued on a promissory note made in tlie name of Spring, Leonard, and Bush. Before the note was made Bush had retired from the firm, and the plaintiff, before he took the note, was told by Bush that he had ceased to be a partner with Leonard and Spring, but that his name was to continue for a certain time. Bush was held liable on the note, for, notwithstanding his retirement, his name was continued, and with it his responsibility. The same principle was acted on in Stables v. Eley,' in which a ' 2 Stark. 290 ; see, too. Dolman v. partners from carrying on business in Orchard, 3 Car. & P. 104 ; Emmet v. the old name, see De Tastet v. Borde- Bradley, 7 Taunt. 600. nave, Jac. 516 ; Webster v. Webster, 3 2 See, as to this, Brown v. Leonard, 2 Swanst. 490, note ; Lewis v. Langdon, Chitty. 7 Sim. 421 ' See Newsome v. Colea, 2 Camp. 617. ' Brown v. Leonard, 3 Chitty, 130. * As to a retiring partner's right to an * 1 Car. & P. 614. injunction to restrain the continuing 893 Eights of Partners. retired partner, whose name was still on a cart, and over the old place of business, was held liable for the negligence of the drirer of the cart. Rights of partners after dissolution — fiyons V. ItafniS. Sec. 580. It is said that a firm, notwithstanding its. dissolution, continues to exist so far as may be necessary for the winding up of its business.' This doctrine requires consideration. No doubt after, as well as before dissolution, each partner can pay, or receive payment of, a partnership debt, for it is clearly settled that, at law, payment by one of several joint debtors, or to one of several joint creditors, extinguishes the debt irrespectively of any question of partnership. So, again, as regards dealing with the partnership assets, it has been frequently held that the power of a continuing or surviving partner to sell partnership goods is as extensive as that of a partner in a going concern." But when questions of a different sort arise, considerable difficulty is experienced, and this difficulty is rather increased than diminished by the loose statement that a partnership which is dissolved is nevertheless deemed to continue so far as may be necessary for winding np its afi'airs. Lyons v. Haynes ° is a strong authority to show that when a com- pany is dissolved by a resolution of a meeting competent to dissolve it, the power of a majority of shareholders to bind the minority is at an end, and that even as regards the mode of winding Up the concerns of the defunct company, the majority of its shareholders cannot bind either a dissentient minority or absentees. Other cases, which have been already referred to,* clearly show that after the dissolution of an ordinary partnership, no one aware of the dissolution is entitled on any ground of implied agency to hold the ' Ex parte Williams, 11 Ves. 5 ; Pea- mon cannot maintain trover against cock V. Peacock, IG id. 57 ; Crawshay another, ia perhaps even yet scarcely V. Collins, 15 id. 227, and 2 Russ. 342 ; settled. This subject will be noticed Wilson V. Greenwood, 1 Sw. 480 ; Craw- hereafter. shay V. Maule, id, 507; Butchart v. ' 5 Man. & Gr. 504. The question Dresser, 4 De Q. M. & G. 542. N. B. — in this case was whether an action The dicta of Lord Eldon were not made would lie by a shareholder against di- iu any case in which the power of one rectors for not applying the assets of partner to bind the others after dissolu- the company as prescribed by a resolu- tion was before him for decision. tion made after the company had been '■' See Fox v. Hanbury, Cowp. 445 ; dissolved. It was held that such action Smith V. Stokes, 1 East, 363 ; Smith v. did not lie, although the directors had Oriell, id. 368 ; Harvey v. Crickett, 5 M. assumed to wind up the company under & S. 336 ; Morgan v. Marquis, 9 Ex. the authority of the resolution. See 145 ; Butchart v. Dresser, 4 De G. M. ante, 170 m-178 n. & G. 542. Whether this is the result * Kilgour v. Finlyson, 1 H. Blacks, of the doctrines of agency, or of the 156, and Abel v. Sutton, 8 Esp. 108. technical rule, that one tenant in com- See, too, Piuder v. Wilks, 5 Taunt. 611. Retiring Partners. 893 members of the late firm responsible for acts done by each other sub- sequently to the dissolution, and every one must feel the force of Lord Kenyon's observation in Abel v. Sutton, that if the contrary doc- trine were to prevail a man could never know when he was to be at peace and freed from all the concerns of the partnership. The doctrine now in question cannot, it is submitted, be carried further than this, viz., that notwithstanding dissolution, a partner has implied authority to bind the firm so far as may be necessary to settle and liquidate existing demands, and to complete transactions begun, but unfinished at the time of the dissolution.' Even Butchart V. Dresser,' which goes further than any other case, does not carry the doctrine beyond this. In that case two persons in partnership as sharebrokers contracted to buy shares. Before paying for them they dissolved partnership, and that fact was known to their bankers. After the dissolution one of the partners pledged the shares to the bankers for money to pay for their purchase, and authorized the bankers to sell the shares to indemnify themselves. The other part- ner contended that this was done without his authority, and that as the bankers knew of the dissolution, they could not retain the shares against him. The Vice-Chancellor, however, held that the partner who pledged the shares had authority after the dissolution to com- plete the contracts previously made by the firm; that he, therefore, nec- essarily had authority to raise the funds to pay for the shares in question, and that he had not gone beyond his authority in raising the money by pledging them with the bankers as he had done. The Lords Justices took the same view. " The general law," it was said, " is clear that a partnership, though dissolved, continues for the purpose of winding up its affairs. Each partner has, after and notwithstanding the dissolu- tion, full aiithority to receive and pay money on account of the part- n^ership, and has the same authority to deal with the property of the partnership for partnership purposes as he had during the continu- ance of the partnership. This must necessarily be so. If it were not, at the instant of the dissolution it would be necessary to apply to this court for a receiver in every case, although the partners did not differ on any one item of the account." It is to be observed that in Butchart v. Dresser nothing was done except for the purpose of completing a transaction unfinished at the ' See Lyon v. Haynes, 5 Man. & « 10 H. A. 453, and 4 De Q. M. & G. Gr. 541, and Smith v. Winter, 4 M. 543. & W. 461, 463. 894 Eights of Paexneks. time of the dissolution. Tiie case did not require the statement of so general a proposition's that until the affairs of a partnership are wound up, the agency of each partner continues to be as extensive as if no dissolution had taken place. At the utmost, the case under consideration decides that in the event of a dissolution it is compe- tent for one partner to dispose of the partnership assets for partner- ship purposes.' But neither Butchart v. Dresser, nor any other case, shows that a person who knows that a partnership is dissolved, can hold one partner liable for acts of his late copartners done subse- quently to the dissolution, and without authority; and if in Butchart V. Dresser the money to pay for the shares had been raised by a bill, it could not, consistently with prior decisions, have been held that the dissolved firm was liable, either upon the bill itself, or for the money raised by its means. Before leaving this subject, it is necessary to notice Ault v. Good- rich,' which is sometimes supposed to go much further than it really does. In that case, two persons, "Wilcox, the elder, and Wilcox, the ■younger, partners as timber merchants, entered into a joint specula- tion with the plaintiff and another in the purchase and sale of some trees. Wilcox, the younger, had the chief management of the affair, and before the adventure was closed the two Wilcoxes dissolved part- nership. Wilcox, the younger, seems to have ^lisapplied some of the moneys received by him on the joint account, and it_ was considered clear that Wilcox, the elder, was responsible for the dealings and trans- actions of Wilcox, the younger, during the continuance of the partner- ship. It was also considered that, as there was no evidence of any new speculation or agreement between any of the parties upon the dissolution of partnership between the Wilcoxes, the other parties to the adventure were to be treated as having continued to rely on the joint responsibility of the two Wilcoxes, in respect of the dealings of Wilcox, the younger. Wilcox, the elder, was accordingly declared to be responsible for the conduct of Wilcox, the younger, after the disso- lution. Upon this case it may be observed, first, that the facts are not satis- factorily stated ; and, secondly, that the judgment leads to the infer- ence that the responsibility of Wilcox, the elder, for the conduct of Wilcox, the younger, did not turn upon the circumstance that they were partners together, but upon the circumstance that they were ' Qti. if Lewis v. Reilly, 1 Q. B. 349, Lord Denman's judgment seems to liave can be supported on this principle ? roceeded on it. H Russ. 430. Eetiking Paetn^bks. 895 jointly intrusted with the management of tlie tree speculation. In this Tiew of the case it was obviously immaterial whether the AVil- coxes had dissolved partnership or not. What amounts to notice of dissolution or retirement. Sec. 581. It has been already seen that when a dormant partner retires, he need give no notice of his retirement in order to free him- self from liability in respect of acts done after his retirement. The reason is that, as he was never known to be a partner, no one can have relied on his connection with the firm, or truly allege that, when dealing with the firm, he continued to rely on the fact that the dormant partner was still connected therewith. But when an ostensible partner retires, or when a partnership be- tween several known partners is dissolved, the case is very different ; for then those who dealt with the firm before a change took place are entitled to assume, until they have notice to the contrary, that no change has occurred. And even those who never had dealings with the firm, and who only knew of its existence by repute, are entitled to assume that it still exists until something is done to notify publicly that it exists no longer.' An old customer, hewever, is entitled to a more specific notice than a person who never dealt with the firm at all;* and in considering whether notice of dissolution or retirement is sufficient or not, a distinction must be made according as the per- son sought to be affected by notice was a customer of the old firm or. not. When a known partner retires, or a partnership is dissolved, notice of the fact is usually given to the world at large by advertisement, and to old customers by some special communication. Public notice given by advertisement in the " Gazette " is suflBcient not only against all who can be shown to have seen it, but also as against all who had no dealings with the old firm, whether they saw it or not,' but an advertisement in any other paper is no evidence against any one who cannot be shown to have seen it." If, however, it can be shown that he was in the habit of taking the paper, ^ that is evidence to go to the jury of his having seen not only the particular ' Parkin v. Carrutliers, 3 Esp. 848. L. R. 3; Boydell v. Drummond, 11 2 Graham v. Hope, Peake, 154. East, 144, n. 3 Godfrey v. TurnbuU, 1 Esp. 371 ; * Showing that tlie paper circulated Wrightson v. Pullau, 1 Stark. 375 ; in hia neigliborhood goes for nothing Godfrey v. Macauley, 1 Peake (N. P.), alone. Norwich and Lowestoft Co. v. 309; Newsome v. Coles, 3 Camp. 017. Theobald, M. & M. 153, E. C. L. R. 33. " Leeson v. Holt, 1 Stark. 186, E. C. 896 Rights of Partkers. paper containing the advertisement, but also the advertisement itself; ' and if the jury are satisfied that he saw the advertisement, that will be sufiBcient, although no advertisement was inserted in the " Gazette." ' An advertisement, moreover, is not indispensable ; its place may be supplied by something else. Thus a change in the name of a firm painted on its counting-house, accompanied by a removal of the busi- ness of the old firm (for the purpose of winding up), and coupled with announcements of the change by circulars sent to the old cus- tomers, was held to be sufficient without any advertisement as against a person who had not been an old customer, and who was not proved to have had any distinct notice." As against persons who dealt with the firm before any change in it took place, an advertisement without more is of little or no value, whether it be in the " Gazette " or elsewhere.* But if notice in point of fact can be established, it matters not by what means, for it has never been held that any particular formality must be observed. And if an old customer can be shown to have seen an advertisement, that will be sufficient, and evidence that he took in a certain paper is some evidence that he knew of a dissolution advertised therein. ° Again, general notoriety, a change in the name of the firm and advertise- ments, coupled with the execution of powers of attorney to the new firm, were held (Bolland, B., dissentiente) to warrant the jury in finding knowledge by an old customer of a change in the old firm.* So, in the case of bankers, a change in the name of the firm appearing on the face of the checks used by their customers, has been held sufiB- cient notice to an old customer who had drawn checks in the new form.' With respect to advertisements, it may be here remarked that an advertisement of an agreement to dissolve is not admissible in evidence unless stamped, but that an advertisement of an actual dissolution is admissible without a stamp.* Termination of liability as to past acts. Sec. 582. When once it can be shown that liability has attached to any partner, the onus of proving that such liability has ceased is upon that partner or those representing him." The events determining his liability may be reduced to four classes, viz. : 1 See Jenkins v. Blizard, 1 Stark. 418 ; where, however, the plaintiff had a ver- Rowley v. Home, 3 Bing. 2. diet. 2 Eooth V. Quin, 7 Price, 193. * Hart v. Alexander, 2 M. & W. 484 ; 8 M'lver V. Humble, 16 Bast, 169 ; but 7 C. & P. 746. *ee Gorham v. Thompson, 1 Peake's N. ' Barfoot v. Goodall, 3 Camp. 147. P. 60. 'May v. Smith, 1 Esp. 283; Jenkins ■•flraham v. Hope, Peake, 154. v. Blizard, 1 Stark. 418. * Jenkins v. Blizard, 1 Stark. 418, « See 3 Mer. 619. Retiring Partnees. 897 1. Events over which his creditor has no control, e. g., the death, bankruptcy, or insolvency of the partner. 3. Dealings and transactions between the creditor and the partner whose liability is in question. 3. Dealings and transactions between the creditor and the other members of the firm; and 4. Lapse of time. The second of these classes of events does not require special notice. The effect of bankruptcy, insolvency and death, will be examined in a subsequent part of this work. There only remain, therefore, to be considered here the third and fourth classes of events alluded to. The nature of an obligation which is joint, or joint and several, is such that, although each person in whom it resides is responsible for its performance, yet each is not bound to perform it without reference to the question whether it has already been performed by the others ; for whether the obligation' be joint, or joint and several, it has only to be performed once, and performance by any one of the persons obliged is available as a defense to a second demand made against the others.' And not only is a joint, or joint and several, obligation at an end when performed by one of the persons in whom it resides, but whatever extinguishes the right to demand performance of that obli- gation extinguishes the obligation itself, and discharges all the persons in whom it resided.' But an event which merely disables a creditor from suing one of several persons jointly, or jointly and severally, indebted to him, does not necessarily extinguish the debt. For example, if one of the persons indebted becomes bankrupt and obtains his certificate, althoagh his liability is thereby at an end, yet the other persons indebted are not discharged from their obligation.to pay.^ So, a covenant by the creditor not to sue one of several persons liable 'jointly, or jointly .and severally, does not extinguish the cred- itor's right to obtain payment, its efl'ect only being to give the cove- nantee a right to be indemnified by the creditor against the conse- quences of an exercise of his right. ^ So, if the creditor receives from one of several debtors part of the debt, this does not discharge the others from their liability to pay the residue.' ' See, as to payment by one, Walters W. 264 ; Nicholson v.Eevill,4 A.& E.675. V. Smith, 3 B. & Ad. 889, E. C. L. R. 33; ^ Crosse v. Smith, 7 East, 356 ; 13 & Thome v. Smith, 10 C. B. 659 ; Beau- 13 Vict. c. 106, S 300 ; Noke v. Ingham, mont T. Greathead, 2 id. 494. 1 Wils. 89 ; 1 Wms. Saund.207 a. 2 See Cheetham v. Ward, 3 Bos. & P. '' See Lacy v. Kinastou, 1 Ld. Raym. 630 ; Ex parte Slater. 6 Ves. 146 ; Bal- 688 ; Deau v. Newhall, 8 T. R. 168 ; lam V.Price, 3 Moo. 33"i; Cocks v. Nash, Walmesley v. Cooper, 11 A. & E. 316. 9 Bing. 341 ; Wallace v. Kelsall, 7 M. & ' See Walters v. Smith, 2 B. & Ad. 889. 113 898 Eights op Paetnees, Payment. Sec. 583. Payment of a partnership debt by any one partner dis- charges all the others, if the object of the partner paying was to extinguish the whole debt, or if he made the payment out of the part- nership funds. But if a firm is unable to pay a debt, and one partner out of his own moneys pays it, but in such a way as to show an inten- tion to keep the debt alive against the firm for his own benefit, this payment by him will be no answer to an action brought against the firm by the creditor suing on behalf of the partner who made the payment.' If a partner is indebted on his own account to a person to whom the firm is also indebted, and that partner, with the moneys of the firm, makes a payment to the creditor without specifying the account on which it is paid, the payment must be taken to have been, made on the partnership account, and must be applied accordingly.'' Inasmuch as a payment by A of B's debt, on behalf of B, inures to the benefit of B, if his creditor accepts the money and B does not repudiate the payment,' it follows that if a firm is indebted,^ and, by the retirement of the original partners and the introduction of other partners, a wholly new firm is called into existence, a payment by the new firm expressly or impliedly on behalf of the old firm, of the debts contracted by the old firm, will extinguish its debt as between that firm and its creditor. But if there are circumstances showing that the money was paid, not on behalf of the old firm and in dis- charge of its liability, but as the consideration for a transfer to the new firm of the creditor's right against the old firm, the right of the creditor to sue the old firm will not be extinguished, but can still be exercised for the benefit of the new firm.^ As regards discharge by payment, it is important to bear in •mind the doctrine laid down in Clayton's case," that where there is one sin- gle open current account between the two parties, every payment, which cannot be shown to have been made in discharge of some par- ticular item, is imputed to the earliest item standing to the debit of the payer. If, therefore, a customer of a firm of bankers has funds ' M'Intyre v. Miller, 13 M. & W. 725. from tlie firm, but had the debt trans- ^ Thomson v. Brown, Moo. & M. 40. ferredto a trustee for himself. 3 Co. Lit. 207, a. See Belshaw v. ' 1 Mer. 572. See, in addition to the Bush, 11 C B. 191 ; Jones v. Broadhurst, cases cited in the text as illustrating the 9 id. 193; Kemp v. Balls, 10 Ex. 607; rule inqutstion, Ex parte Randleson, 3 Lucas V. Wilkinson, 1 H. & N. 420. D. & Ch. 534 ; Pennell v. Deffell, 5 De «See Lucas v. Wilkinson, 1 H. & N. G. M. & (J. 373 ; Copland v. Toulmin, 7 420; M'Intyre v. Miller, 13 M. & W. CI. & Fin. 349. 735, where one partner paid a debt due Retiring Partners. 899 standing to his credit at the time they dissolved partnership, and his account is continued by their successors, tliey taking new deposits and honoring liis drafts as if no change had occurred, and blending the accounts, then the payments first made by the new firm will be deemed to have been made in liquidation of the earliest item on the credit side of the customer's account, viz., the balance due to him at the time of the dissolution; and consequently, if, proceeding on this principle, that balance is liquidated, the customer has no claim against the old firm in I'espect of his account with them. This doctrine is of such importance in questions relating to the dis- charge of retired and deceased partners, that one or two of the lead- ing cases upon it may be usefully noticed. Rule in Clayton's case. Sec. 584. In Clayton's case,' Clayton was a customer of a banking firm consisting of five partners. One of the partners, Devaynes, died, and the banking business was continued under the old name by the four surviving partners. At the time of Devaynes' death there was a balance of 1,7131. due to Clayton on his cash account with the bank. After Devaynes' death the continuing partners received and paid money on Clayton's account, and that account was not treated as two accounts, one with the old firm ending on Devaynes' death, and the other with the new firm beginning from that time, but as one entire and unbroken account. Some time after Devaynes' death the bank- ing firm became bankrupt, and at that time there was a considerable sum due to Clayton, but the payments made by the bank on his account, after Devaynes' death and before the bankruptcy, considerably exceeded the before-mentioned balance of 1,713?. Under these circumstances it was held that Clayton had no claim against Devaynes' estate in respect of this balance. The Master of the Rolls, after noticing the general rule giving the .debtor the right to appropriate a payment made by him, and giving the creditor a right to appropriate a payment not appropriated by the debtor in the first instance, observed, " This is tl;e 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. Neither banker nor customer ever thinks of saying this draft is to be placed to the account of the 5001. paid in on Monday, and this other to the account of the 5001. paid in on Tuesday. There is a fund of 1,000?. to draw upon, and that is enough. In such a case there is no . 1 1 Mer. 573, 900 Eights of Paetnees. room for any other appropriation than that wliich arises from the order in which the receipts and payments talvC 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 principle all accounts current are settled, and particularly cash accounts. When there has been a continuation of dealings, in what way can it be ascertained whether the specific bal- ance due on a given day has or has not been discharged, but by exam- ining whetlier payments to the amount of that balance appear by the account to have been made? You are not to take the account back- ward and strike the balance at the head instead of the foot of it. A man's banker breaks, owing him on the whole account a balance of 1,000^. . It would surprise one to hear the customer say * I have been fortunate enough to draw out all that I paid in during the last four years, but there is 1,000?. which I paid in five years ago that I hold myself never to have drawn out, and therefore, if I can find anybody who was answerable for the debts of the banking-house, such as they stood five years ago, I have a right to say that it is that specific sum which is still due to me, and not the 1,0001. that I paid in last week.' This is exactly the nature of the present claim." Rule in Stemdale v. Hankinson. Sec. 585. In Stemdale v. Hankinson,' a grocer died indebted for goods supplied. After his death, his widow and administratrix con- tinued his business, and was supplied by her late husband's creditor with more goods. Upon the death of the husband, the account between him and the creditor was balanced, and a sum of loGl. was found due from the deceased. This balance was the first item in a .new account opened with the widow, and this new account was con- tinued by further sums debited to her for goods supplied, and by various sums credited to her in respect of payments made by her gen- erally. These payments were more than sufficient to cover the first item of 156L but were considerably less than the whole amount stand- ing to her debit. The creditor claimed the 156Z. as a debt due from the estate of the deceased, but it was held that that debt was paid. '1 Sim. 393; see, too, Smith v. Wig- partner continuing the business after a ley, 8 Moo. & Sc. 174, where the same dissolution, rule was applied to the case of a single Retiring Paetners. 901 Rule in Brooke v. Enderby. Sec. 586. The rule is as applicable to retired as to deceased part- ners, and to those who are dormant, as well as to those who are known. • In Brooke v. Endei-by,' Gilpin was an army agent, and was employed as snch by the plaintiff, before and after the year 1807. In that year Enderby entered into partnership with Gilpin for ten years. The part- nership ceased in 1817, but no notice of dissolution was given. The plaintiff, who knew nothing of this partnership, continued to deal with Gilpin who carried on the business in his own name only until he became bankrupt in 1819. Before and after 1807, Gilpin acted as the plaintiff's banker, and from time to time sent accounts to the plaintiff. E"© alteration was made in the accounts either when Endei'by became a partner, or when he ceased to be one, but Gilpin's receipts and payments on the plaintiff's account, both prior and subsequent to Enderby's retirement, formed part of one general account. At the .time of Enderby's retirement, a considerable balance was due to the plaintiff, and to recover this balance the action was brought. Enderby paid into court the amount of this balance, after deducting all sums paid by Gilpin on the plaintiff's account since the dissolution of parb- nei'ship, and the court held that the rule in Clayton's case applied, and that the plaintiff was not entitled to recover from Enderby any thing beyond the money paid into court. Rule in Ne-nrmarch v. Clay. Sec. 587. So in Newmarch v. Clay," the plaintiffs were creditors for goods supplied to a firm consisting of three partners, one of whom was dormant. The dormant partnei- retired, and, after his retirement, the plaintiffs supplied gopds to the other partners who continued to carry on the business in partnership together. The plaintiffs wei-enot aware that the dormant partner had been a member of the firm, and there was only one continuous account between the plaintiffs and the acting partners. At the time of the retirement of the dormant partner, a balance was due to the plaintiffs, and after his retirement, and before any more goods had been supplied by the plaintiffs, bills were given them by the continuing partners generally on account. These bills were dishonored, and were ultimately given up for other bills, which were paid at maturity; but this was not until after more goods had been supplied by the plaintiffs. The plaintiffs sought to apply the proceeds of these last bills to the payment of the goods supplied since the dissolution, but it was held ' 2 Brod. & Bing. 70. = 14 East, 839. 902 Eights of Paetneks. that those proceeds ought to be applied in liquidation of the balance due when the dormant partner retired, inasmuch as the last bijls were given to take up the dishonored bills, and they had been given on accounb of that balance. In this case the rule in Clayton's case waS, in fact, applied, but there were circumstances showing an actual intention that it should apply, and the decision proceeded on that ground. Application of the rules adopted in the preceding cases. Sec. 588. It need hardly be observed that the rule in Clayton's case applies to all accounts of the nature of one entire debit and credit account, without reference to any question of partnership, and is avail- able not only by a firm against an old creditor, but also against a firm for the benefit of its debtors. For example, where a person becomes surety to a firm guaranteeing a debt owing to it by a third party, then, if the debt is an item in an account between this third party and the firm, and is liquidated by general payments with which he is credited, the debt guaranteed will be extinguished, and the surety will be dis- charged, although upon the whole account there may always have been a balance owing to the firm.' Moreover, as a creditor has no right to take the account subsisting between him and his debtor backward, so as to make himself appear a creditor in respect of the earlier rather than of the later items of the account, so, on the other hand, a debtor, after making general payments in respect of one entire account, is not at liberty to have those payments applied in liquidation of the subsequent rather than of the earlier items. Illustration — Beale v. Caddick. Sec. 589. In the late case of Beale v. Caddick,'' two partners, A and B, were indebted to C, their banker, in a sum of 979Z. C trans- ferred his business to another bank, and A and B's account was, with A's assent, transferred to the new bank, and the first item in this account to A and B's debit was the above-mentioned balance of 979L Several payments were made by A on account of himself and copartner, and such payments were placed by the new bank to the credit of A and B in the usual way. These payments more than equaled the first item of 9791. on the debit side, but, owing to payments made by 'See Bodenham v. Parchas, 3 B. & Copland, 3 Y. & C. Ex. 635, and Copland Aid. 39; Williams v. Rawlinson,'3 Bing. v. Toalmin, 7 CI. & Fin. 350 ; Bank of 71; Field v. Carr, 5 id. 11; Pember- Scotland v. Christie, 8 id. 214. ton -V. Oakes, 4 Buss 154; Toulmin v. »3 H. & N. 336. Eetirinq Partkees. 903 the new bank on A and B's account, there was a considerable balance due from them to the bank. The account as it stood from time to time appeared in the pass-book, and was never objected to by A. The deed by which transferred his business to the new bank gave the new bank an option, to be declared within a year, of taking or rejecting any of C's customer's accounts, and within the year the new bank gave notice to C, declining to take A and B's account. The new bank having brought an action against A and B for the balance due on their account, the defendants contended that the first item standing to their debit was owing to 0, and not to the new bank, which had declined to accept C's transfer of that debt, and that, rejecting that item, there was nothing due to the plaintiffs. It was, however, held that, as betwen A and B and the new bank, the debt of 979Z. had been conclusively taken into account, and that the items on the other side must be applied first of all in liquidation of that sum, and that the plaintiffs were therefore entitled to recover the balance due to them on the whole amount. The rule in Clayton's case, howevei-, applies only to an entire unbroken account, and has no application to cases where one person is indebted to another in respect of several matters, each of which forms the subject of a distinct account. In such a case, if the debtor does not appropriate the payment when he makes it, the creditor is at liberty to apply the payment to whichever account he thinks proper. Moreover, when a change takes place in a firm by the retire- ment or death of a member, a creditor of the firm is under no obli- gation to assent to a carrying out of his debt, so that it shall form the first item in a fresh account with the new firm. He is at liberty to keep the accounts with the two firms distinct, and if he does so, pay- ments made generally by the new firm will not necessarily go, by vir- tue of the rule in Clayton's case, in liquidation of the debt owing by the old firm. Simson v. Ingham. Sec. 590. A remarkable illustration of this is afforded by the well- known case of Simson v. Ingham.' There two country bankers, Ben- jamin and Joshua Ingham, gave a bond to a London bank as a secu- rity for advances which it might make on account of the persons constituting the country bank, or either of them, associated or not with any other persons, Benjamin died, and at his death a consider- 1 2 B. & Cr. 65. 904 Eights of Partkers. able sum was due to the liOndon bank for advances made to the country bank. The London bank was in the habit of sending in monthly accounts to the country bank. In the month following Benjamin's death the London bank received and paid considerable sums on account of the country bank, and the sums were entered by the London bank in its own books in continuation of the former accounts between it and the old country bank. No account, how- ever, was sent to the country bank until two months after Benjamin's death, and then two accounts were sent, one of them being on account of receipts and payments prior to his death and the other being an account of receipts and payments made subsequently thereto. A con- siderable balance was due to the London bank on the first of these ac- counts and to recover this balance an action was brought against Joshua's representatives. It was contended that his estate was dis- charged by virtue of the rule in Clayton's case, the London bank hav- ing received since his death much more than sufiieient to liquidate that balance ; but it was held that the rule in question did not apply. The judgment of Mr. Justice Bayley contains such an admirable statement of the principles applicable to such cases that no hesitation has been felt in setting it out at length. " The general rule is, that the party who pays money has a right to apply that payment as he thinks fit. If there are several debts due from him, he has a right to say to which of those debts the payment shall be applied. If he does not make a specific application at the time of payment, then the right of application generally devolves on the party who receives the money. But there is a third rule, viz., that where one of several partners dies, and the partnership is in debt, and the surviving partners continue their dealings with a par- ticular creditor, and the latter joins the transactions of the old and new firms in one entire account, then the payments made from time to time by the surviving partners must be applied to the old debt. In that case it is to be presumed that all the parties have consented that it should be considered as one entire account, and that the death of one of the partners has produced no alteration whatever. In this case the partner died in September, 1814. If, in the ordinai'y course of business, a monthly account had been sent in, stating the transac- tions before and after the death of the partner, as forming part of one entire account, and the balance as due from the survivors, in that case the creditor would have been precluded, and would have had no right to have said that the payments made subsequently to the death Retieing Paetnees. 905 of the partner should be applied to any but the old account. In fact, the bankers in London did not send in any account after the death of tl\e partner until November, and then they sent in two distinct accounts, one made up to the day of the death of the partner, and the other commencing from that period. At that time, therefore, the bankers in London expressed tlfeir dissent from making the whole one entire account. It has been insisted that at that period of time they had no right so to do, because they were precluded by the entries which they had already made in their own books in the intermediate space of time. If, indeed, a book had been kept for the common use of both parties, as a pass-book, and that had been communicated to the opposite party, then the party making such entries would have been precluded from altering that account ; but entries made by a man in books which he kept for his own private purposes, are not conclusive on him until he has made a communication on the subject of those entries to the opposite party. Until that time he continues to have the option of applying the several payments as he thinks fit. For these reasons I am of opinion that the plaintiffs were not pre- cluded from applying the payments to the new account, and, therefore, this award is right." The case of Simson v. Ingham was decided upon the principle that a creditor of a firm has a right, when a change occurs in the firm, to decide for himself whether the sum due to him from the old firm shall or not form an item in his account with the new firm. This principle is further illustrated by the case of Jones v. Maund. ' There, three persons, A, B and 0, were partners, and D was indebted to them in a sum secured by a covenant and a mortgage. A and B died; C retired and assigned her interest to B, who, with F, continued the business of the old firm under the old name. D continued to deal with the new firm, and he made it several payments, more than sufficient to liquidate the debt above-mentioned if appropriated thereto. The mortgage had been realized, and the sum arising from it had been applied in part discharge of the debt secured by it. There was nothing to show that D's debt had been made an item in the account between him and the new firm, and it was consequently held that D had no right to insist that the payments made by him gener- ally to the new firm should be applied to the balance due from him on his covenant.' ' 3 Y. & C. Ex. 347. and according to the report it was held ' The case was decided on demurrer, that the balance due on the covenant 114 906 Eights of Partitees. Partner may bind firm by assenting to transfer of a debt due either from or to it Sec. 591. It should be borne in mind with reference to cases of this description that one partner can bind the firm by assenting to_a transfer of a debt, due to^r by it, from one account to another.' The rule in Clayton's case, viz., that in current accounts it is pre- sumably the sum first paid in that is first drawn out, or, in other words, that presumably it is the first item on the debit side of the accout which is discharged or reduced by the first item on the credit side, is a rule based on the presumed intention of the parties." It is not (as is sometimes represented) a rule of law obtaining inde- pendently of their will, and consequently, if it can be shown that some other appropriation was intended, the rule ceases to be appli- cable. An intention to appropriate a payment to some particular debt may be inferred from the usual course of business between the parties,^ from the source from which the money was obtained,'' from the security to meet which the payment was made,' from the repre- sentations of the parties," and from other circumstances.' Illustration — Wickham v. Wickhara. Sec. 593. An instructive case on this head is Wickham v. Wick- ham,* which in substance was as follows : A firm of Finch & Sons, as agents of the plaintiffs, supplied goods to the firm of Smith & Willey upon the terms that the latter should become debtors to the plaintiff in respect of such goods. Pinch & Sons also supplied Smith & Willey with other goods on their own behalf. In the accounts between Finch & Sons and Smith & Willey, no distinction was made between goods supplied by Finch & Sons on their own behalf, and those which they supplied as agents of the plaintiffs. Smith & Willey made payments generally on account, and applying the rule in Clayton's case, nothing was due from Smith & Willey in respect of the goods supplied to them on behalf of the plaintiffs. However, Edward Finch was a partner in both firms, and representations could not be considered as liquidated, 7 CI. & Fin. 349, tliere was evidence to unless it could be sbown that it had, show an agreement for a different appro- with C's assent, been made an item in priation, but it was not deemed suffi- the account between D and the new cient to exclude the rule, firm. But qumre what C had to do with ^ Taylor v. Kymer, 3 B. & Ad. 320 ; it, she having assigned all her interest Lysaght v. Walker, 5 Bli. (N. S.) 1 . in the debt to the new firm. Did she * Stoveld v. Eade, 4 Bing. 154 ; not thereby authorize the new firm to Thompson v. Brown, Moo. & M. 40. deal with the debt as it liked? See 'Newmarch v. Clay, 14East, 240. Pemberton v. Oakes, 4 Russ. 154. 'Wickham v. Wickham,-4 K. & J 1 Beale v. Caddick, 2 H. & N. 826. 478. '' Wilson v. Hurst, 4 B. & Ad. 767, per ' See Henniker v. Wigg, 5 Q. B. 792. Lord Denman, in Copland v. Toulmin, °2 K. & J. 478.' Retiking Pabtneks. 907 were made to the plaintiffs by the firm of Fiuch & Sons to the effect that a large debt was due to the plaintiffs from the iirm of Smith & Willey, and Finch & Sons itndertook that Edward Finch should use his influence as a partner in the firm of Smith & Willey, to secure the reduction of such debt. Upon the faith of this represent- ation and undertaking the plaintiffs forbore to sue Smith & Willey. It was held that the firm of Smith & Willey was precluded from treat- ing its debt to the plaintiffs as liquidated by the payments made by it to the firm of Finch & Sons, for it was not competent to the two firms so to arrange their accounts as to liquidate a debt which a person who was a partner in both firms represented to the plaintiffs as still owing to them. Upon the same principle, yiz., that the rule in Clayton's case is founded on the presumed intention of the parties, it follows that it cannot be applied as against a person who is a creditor in respect of a fraud committed on him and of which he is ignorant. This in fact was determined in Clayton's case itself. For Clayton, in addition to the claim which was held to have been discharged by the operation of the rule as noticed above, had another claim upon Devaynes' estate, arising out of a breach of trust committed by a fraudulent sale of some exchequer Bills, and of which sale he was kept in ignorance. The payments made to Clayton since Devaynes' death were more than sufficient to satisfy both claims; but it was held, that the claim arising out of the concealed sale of the bills was not affected by those payments. ' Application of payments. Sec. 593. Before leaving the subject, of appropriation of payments it may be as well to advert to a question of some difficulty which arises when a person indebted to a firm, and also to an individual member of it, pays him a sum of money under such circumstances that it cannot be ascertained on account of which debt the payment was made. In such a case ought the payment to be applied in liqui- dation of the debt due to the partnership or of that due to the indi- vidual member? Pothier" says that good faith requires that the partner receiving the money should apply it proportionately to both demands. The writer is not aware of any decision on this subject, but he apprehends that, as between the partner and the debtor, the payment might be applied to either debt at the option of the part- ' See Clayton's case, 1 Mer. 573-580. ^ Potliier, " Societe," § 131. 908 Eights of Partners. ner,' whilst, as between the partner and his copartners, good faith requires that the payment should be applied wholly to the partnership debt." Release. Seo. 594. Both at law and in equity, a release of one partner from a partnership debt discharges all the others,' for where several persons are bound jointly, or jointly and severally, a release of one is a release of them all.^ But in this respect a covenant not to sue differs from a release, for although where there is only one debtor and one creditor, a covenant by the latter never to sue the former is equivalent to a release, it has been decided on several occasions that a covenant not to sue does not operate as a release of a debt owing to or by other persons besides those who are parties to the covenant.' If. a release is so drawn as to show beyond all doubt that it was intended to inure only for the benefit of the releasee personally, and not to avail even him in an action by the releasor against the releasee, jointly with other people, then persons jointly liable with him in respect of the debt released will not be discharged therefrom. In such a case the deed will itself show that it was not in fact intended to operate as a release. , Rule in Solly v. Forbes — Price v. Barker — Hartley v. Manton. Sec. 595. In Solly v. Forbes,' the defendants, Forbes and Ellerman, were partners, and were indebted to the plaintiffs, and had stopped payment. In consideration of a sum paid by Ellerman, the plaintiffs released him from all further demands, but it was declared in the release (to which, however, Forbes was not a party), that nothing therein contained should affect the plaintiff's rights against Forbes, either separately or as partners with Ellerman, or against the joint estate of the two, and that it should be lawful for the plaintiffs to sue Ellerman, either jointly with Forbes, or separately, for the purpose of obtaining satisfaction of their ^ebt, either out of the joint estate ' But see Pritchard v. Draper, 1 R. & ^ See the last note, and as to joint and M. 191, in which it was held that after several obligations, Co. hit. 332, a ; Lacy a dissolution the partner who carried v. Kinaston, 1 Lord Raymond, 690 ; on the business had no authority to ap- KifRn v. Evans, 4 Mod. 379. ply moneys of a person indebted both ^Clayton v. Kinaston, 3 Salk. 573; to himself and to the firm, to the debt Lacy v. Kinaston, 1 Lord Raymond, 688, of the firm. and 3 Salk. 575; Hutton v. Eyre, 6 ' See Thompson v.Brown,Moo.&M. 40. Taunt. 389 ; Dean v. Newhall, 8 "T. R. ^ Bower v. Swadlin, 1 Atk. 394; Ex 168; Walmsley v. Cooper, 11 A. & E. parte Slater, 6 Ves. 146 ; Cheatham v. 316, and see Price v. Barker, 4 E. & B. Ward. 1 Bos. & P. 630; Cocks v. Nash, 760. 9 Bing. 341. e 2 Brod. & Bing. 88. Retieikg Partnees. 909 of the two, or from Forbes. In an action brought by the plaintiffs against Forbes and Ellerman to recover the debt owing by them, it was held that this deed was no bar to the action. Price v. Barker ' is a later decision on a similar deed, and is to the same effect. Again, in Hartley v. Manton,'' where a bill was drawn by a firm on, and was accepted by one partner, it was held that a release of the drawers did not discharge the acceptor, the object of the release being to discharge the joint liability of the firm, but not to affect the several liability of the accepting partner. In construing releases particular attention must be paid to the recitals, for, however general the operative words of the deeds may be, they will be confined so as not to affect more than the parties appear from the deed itself to haVe contemplated.^ If several persons are bound by a bond jointly, or jointly and severally, and their creditor removes the seal of one of them from the bond, all the others are dis- charged, but if the obligors are only bound severally, and in no sense jointly, then the removal of the seal of one of them does not affect the liability of the others.* An arrest of a debtor, followed by a dis- charge of him by the arresting creditor, is equivalent to a release by the latter of his debt; whence it follows that if a creditor of a firm obtains judgment against it, and arrests the partners, and then lets one of them go, the others are entitled to be discharged from custody. ' Substitution of debtors and securities by agreement. Sec. 596. A liability "which is originally ^'oint and several may be extinguished by being replaced by a liability of a different nature, and this may happen in one or two ways, viz., either by an agreement to that effect come to between the parties liable and the person to whom they are liable, or by virtue of the doctrine of merger, inde- pendently of any such agreement. In order that one liability may be extinguished by being replaced by another by agreement, it is essential that the person in whom the correlative right resides should be a part to the agreement, or should, at all events, show by some act of his own that he accedes to the sub- stitution. If A, being indebted to B, transfers his liability to 0, and B does not assent to the transfer, his rights are wholly unaffected, he ■ 4 B. cfe B. 760. Swe, too, Thompson Homersham. 4 M. & S. 433 ; Simmons v. V. Lace, 3 C. B. 540 ; Willis v. De Cas- Johnson, 3 B. & Ad, 175 ; Boyes v. Bluck, tro, 4 C. B. (N. S.) 316. 13 C. B. 653 ; Lampton v. Corke, 5 B. & «5Q. B. 347. Aid. 606. ' See, for illustrations of this rule, ^ See Collins v. Prosaer, 1 B. & C. 683. Lindo v. Lindo, 1 Beav 496 ; Paylar v. ^ Ballam v. Price, 3 Moo. 335. 910 Eights of Partners. ■will neither acquire any right against C nor lose his former right against A. As regards B, the agreement between A and C is res inter alios acta, and it does not in any way benefit or prejudice him. But if B assents to the arrangement come to between A and C, and adopts C as his debtor instead of A, then A's liability to B is at an end, and B must look for payment to C, and to him alone.' To apply this to cases of partnership, let it be supposed that a firm of three members, A, B, and C, is indebted to D, that A retires, and B, and C, either alone or together with a new partner, E, take upon themselves the liabilities of the old firm. B's right to obtain payment from A, B, and C, is not affected by the above arrangement, and A does not cease to be liable to him for the debt in question. But if, after A's retirement, D accepts as his sole debtors B & C, or B, C, & E (if E enters the firm), then A's liability will have ceased, and D must look for payment to B & C, or to B, C & E, as the case may be. When, therefore, a partner has retired, and a creditor of the firm con- tinues to deal with the continuing partners and such other persons, if any, as may have become associated with them in partnership, it is of great importance to ascertain whether the creditor has or has not accepted the new firm as his debtors in lieu of the old firm. If he has, the retired partner's liability will have ceased, whilst if he has not, it will still continue. Nothing is more common than for promoters of companies to put forward a prospectus in which it is said that all liability on the part of a shareholder will cease on a transfer of his share, but the hope thus held out is as false and delusive as that intended to be raised by the assertion that the liability of the shareholders will be limited to the amount of their shares. ' It cannot be too often repeated that merely by retiring a partner or a shareholder gets rid of no liability as to past transactions, unless there is some statutory enactment appli- cable to his case, and the same observation applies to a total dissolu- tion. To use the words of Mr. Justice Heath, " when a partnership is dissolved, it is not dissolved with regard to things past, but only with regard to things future. With regard to things past, the part- nership continues and always must continue.'" 'See per BuUer, J., in Tatlock v. lease of tlie partnership premises, al- Harris, S T. R. 180. though the firm may have been dis- ' See Blundell v. Winsor, 8 Sim. 613. solved since the lease was granted. See 3 Wood V. Braddick, 1 Taunt. 104, Hoby v. Roebuck, 7 Taunt. 157 ; Graham Therefore partners continue liable on v. Wishelo, 1 Cr. & M. 188. the covenants entered into by them in a Retiring Partners. 911 Although the partnei's themselves may agree that on the retirement of one of them the others shall take upon themselves all the debts and liabilities of the old firm, such an agreement in no way affects the creditors, it is a mere contract of indemnity,' valid indeed, as amongst the parties to it, but not in any way varying the rights of others as to whom it is resmter alios acta. A good illustration of this is afforded by Smith v. Jameson. ° There the two defendants were partners, one of them, with the privity of the other, improperly car- ried some trust moneys to their joint account, thereby incorporating them with the partnership assets. Afterward, on a dissolution of partnership, the partnership assets were assigned to the first partner and he took upon him the debts of the firm, but this was held in no way to alter as against the ceshd que trust the liability of both part- ners to make good the trust moneys. Turning now to those cases which bear upon the question of dis- charge by virtue of a substitution by a creditor of one debtor for another, it will be found that notwithstanding some confiict between them, they are all professedly based on a few simple principles, the most important of which are as follows: Agreement by creditors to look to remaining partners for their debt is valid. Sec. 59?. There is no a 'priori presumption to the effect that the creditors of a firm do, on the retirement of a partner, enter into any agreement to discharge him from liability. An agreement by a creditor of several persons liable to him jointly to discharge one or more of them, and look only to the others, is not necessarily invalid for want of consideration; for in some respects the security of one person liable solely is, or at all events may be, prefera- ble to the security of that same person if only liable jointly with others, e. g., in case of bankruptcy or death.' If, therefore, one part- ner retires, and a creditor of the old firm goes on dealing with the continuing partners, it is for the jury to say whether, in point of fact, the creditor abandoned the security of the retired partner and looked only to the continuing partners, and if the jury find in the affirma- tive, the court will not disturb the verdict on the ground that the abandonment cannot be sustained in point of law for want of consid- eration to support it.^ ' See Rodgers V. Maw, 4 Dowl. & L. 66. ■* Thompson v. Percival, 5 B. & Ad. 2.5 T. R. 601. See, too, Dickenson v. 935; E. C. L. R. 37, correcting Lodge Lockyer, 4 Ves. 36 ; Cummins v. Cum- v. Dioas, 3 B. & Aid. 611 ; and David v. rains. 8 Ir. Eq. 723. Ellice, 5 B. & C. 196. ' See per Parke, Baron, in Kirwan v. Klrwan, 3 Cr. & M. 617. 912 Eights of Partners. Except under special circumstances a creditor who discharges one partner discharges all. Consequently, if a creditor discharges a retired partner, and acquires no new right to obtain payment from the others, either alone or with a now partner, the creditor will be alto- gether remediless. One test, therefore, by which to determine whether a retired partner has been discharged is, to see whether the creditor has obtained a new right to demand payment, for if he has not, no discharge can possibly be made out by any evidence which fails to establish an extinguishment of the creditor's demand altogether. Bearing the foregoing principles in mind, it will not be difficult to reconcile most of the cases relating to the liability of retired part- ners for debts incurred before their retirement. They may be con- veniently classified thus: Cases in which a retired partner has not been discharged. No new partner having been introduced into the firm. Although a new partner has been introduced into the firm. Cases in which a retired partner has been discharged. After these cases have been examined, the analogous cases relating to the discharge of the estate of the deceased partner will be noticed. Cases in which a retired partner has not been discharged, no new partner hav- ing been introduced into the firm. Sec. 598. The strongest cases of this class are Lodge v. Dicas and David V. Ellice. In Lodge v. Dicas,' the two defendants, Dicas and Eondeau, had been in partnership ; when they dissolved thev agreed that Eondeau should get in the partnership debts, and discharge the plaintiffs' demand. The plaintiffs were informed of this arrangement, and they agreed to exonerate Dicas from all liability as to the part- nership account, and stated that they should charge their debt to Eondeau's private account. The debt, however, not being paid, and Eondeau having become embarrassed, the plaintiffs brought an action against him and Dicas, and it was held that Dicas had no defense, as the agreement to discharge him and look only to Eondeau was invalid for want of consideration. In David v. Ellice,'' three partners who were indebted to the plain- tiff dissolved partnership, one of them retiring, and the other two continuing to carry on the business in partnership together. It was agreed that the continuing partners should take the assets and also the liabilities of the old firm. Of this the plaintiff had notice ; his debt was transferred with his consent to the books of the new firm; ' 3 B. & Aid. 611 ; E. C. L. R. 5. « 5 3. & C. 196, and 1 C. & P. 369. Retiking Partners. 913 he afterward drew on the new firm for part of liis debt, and tliey accepted and paid liis draft. The new firm afterward becoming insolvent, the plaintiff brought an action for the recovery of his debt, and sued the retired partner as well as the members of the new firm. It was held that the retired partner continued liable, for that the plaintiff had done nothing to discharge him, and the fact that no per- son had become liable to the plaintiff, who was not so originally, was relied upon by the court as showing that there was no consideration for the alleged discharge.' These two cases have been much criticised,'' and they cannot at the present time be relied upon as authorities for the proposition that a creditor of a firm cannot, for want of consideration, abandon his right against a retiring partner, and retain it against the others, unless they give some fresh security. There can be little doubt that if similar cases were to arise again, and the jury found for the defendant, the verdict would not be disturbed. This appears from Thompson v. Percival.' In that case, the defend- ants, Charles Percival and James Percival, had as partners become indebted to tjie plaintiff. The partnership was dissolved, and it was agreed that the business should be carried on by James, and that he should receive and pay all debts, and assets sufficient to pay debts of the firm were left in his hands. The plaintiff, on applying to James for payment, was told that he must look to him, James, alone, and the plaintiff accordingly drew a bill on James, and the bill was accepted by him. The bill being afterward dishonored, the plaintiff sued both James and Charles for the original debt, and obtained a verdict for the full amount ; but the defendants had leave to move for a nonsuit if the court should be of opinion that Charles had been discharged. The court, without deciding that point, held that the question ought to have been left to the jury, and a new trial was, therefore, directed. The court held that the facts proved raised a question for the jury, whether it was agreed between the plaintiff and James that the former should accept the latter as his sole debtor, and should take the bill of exchange accepted by him alone by way of satisfaction for the debt due from both. If it was so agreed, the court thought that the agree- ment and receipt of the bil^ would be a good answer on the part of Charles by way of accord and satisfaction.'' ' See, too, Thomas v. Shillibeer, 1 M. - In Evans v. Drummond, 4 Esp. 89, & W. 134. • and Reed v. White, 5 id. 133, a retiring 2 See 5 B. & Ad. 933 ; 3 Or. & M. 633 ; partner was held discharged on the 3 M. & W. 493. ground here referred to. 3 5 B. & Ad. 939. 115 914 Eights of PARTiirEES. It is not unusual to represent Lodge t. Dicas and David v. Ellice as altogether overruled by Thompson V. Percival, and other cases. This, however, is going too far. The three cases together establish (1) that a creditor who treats the continuing partners as his debt- ors does not necessarily abandon his right to resort to a retired part- ner for payment ; (2) that whether he does or not is a mixed ques- tion of law and fact which ought to be submitted to a Jury; and (3) that their verdict will not be disturbed by the court upon the grounds acted on in Lodge v. Dicas and David v. Ellice. That a creditor who treats the continuing partners as his debtors does not without more discharge a retired partner, is shown by other cases, and especially by those in which the continuing partners have paid interest on the old debt at a rate or in a manner differently from that previously adopted. An old case on this head, and one often referred to, is Heath v. Percival,' in which two partners indebted to the plaintiff on a bond dissolved partnership. One of them continued to carry on the busi- ness and took upon himself the partnership debts and public notice was given that the creditors of the firm were either to come in and be paid their debts, or to look for payment to the continuing partner only. The plaintiff came in, but instead of being paid off, he kept the bond, receiving interest at 61 instead of 51. per cent. It was held that he did not thereby discharge the retired partner from his liabil- ity to pay the bond with interest at 51. per cent. Moreover, if the continuing partners give a new security for the old debt, this will not operate to discharge the retired partner, unless the creditor intended that such should be the case, or unless the new security is of such a nature as to merge the original debt. In Bed- ford V. Deakin," three partners were indebted to the plaintiff on bills of exchange. They dissolved partnership and arranged between themselves that one of them should pay the plaintiff. The plaintiff was informed of this arrangement and took from one of the partners his separate promissory note, indorsed by a third party, for the amount of the debt, but expressly reserved his right to look to all three partners for payment, and the plaintiff retained the bills already in his possession. The notes, when due, ■were taken up by other bills, and they in their turn were several times renewed. Ultimately the plaintiff sued all the three partners on the original bills, and he was ' 1 P. W. 682, and 1 Str. 403. erstone v. Hunt, 1 B. & C. 113 ; Spence- = 3 B. & AM. 210. See, too, Peath- ley v. Greenwood, 1 Fob. & Fin. 397. KETiEUiTG Partners. 915 held entitled so to do, never having discharged any of them, either intentionally or otherwise. The principle of the above cases applies to dormant partners even ' more strongly than to others, for a creditor, who has a security of which he is unaware, cannot intentionally give up that security. Therefore, if A and B are partners, and the two become indebted to a creditor who knows only of A, and then B, the dormant partner, retires, no dealings between the creditor and A will discharge B from his liability to be sued when discovered, unless those dealings extin- guish the original debt not only as against B but also as against A.' Cases in vrhich a retired partner has not been diaoharged, although a new part- ner has been introduced into the firm. Sec, 599. The introduction of a new partner has no effect on the liability of a retired partner, unless the liability of the former is sub- stituted by the creditor for that of the latter, which cannot be the case unless the creditor can, as of right, hold the new partner liable for the old debt. This, moreover, he cannot do by virtue of any agree- ment between the partners themselves, and even if the new firm adopts the old debt and pays interest on it, this i& prima facie only in pursuance of some agreement between the partners themselves, and a creditor who does no more than allow the partners to carry out that agreement, does not debar himself of his right to look for payment to those originally indebted to him. A leading case on this head is Kirwan v. Kirwan.' There, three partners, C, M, and N, were indebted to the plaintiff. retired, and M and N continued in partnership together and agreed to discharge the debts of the old firm. M afterward retired, and N took in a new partner. The plaintiff's account was transferred from the books of the old to the books of the new partnership, and interest was paid, and accounts ■ were rendei-ed to him as before. The plaintiff was informed of the dissolution, and had stated to one of the retired part- ners that he was aware he had no further claim upon him. But it was held that the three original partners remained liable, as there was nothing to show that the security of the new firm had been sub- stituted for that of the old, and the statement above referred to could not be regarded as an agreement to discharge the retired partner. In Gough V. Davies,* three persons were partners as bankers, and were indebted to the plaintiff. One of the partners retired; a new ' Robinson v. Wilkinson, 3 Price, 538. ' 3 Cr. & M. 617. ' 4 Price, 200. 916 Eights of Partners. partnership was formed between the continuing partners and other persons, the plaintiff's debt was transferred to the books of the new firm, and he assented to such transfer. Moreover, the plaintiff con- tinued to deposit money with the new firm, and was paid by it interest on the old debt and new deposits, as if they all formed one debt. But it was held that there was nothing in all this to show any agreement by the plaintiff to discharge the retired partner, and he was consequently held liable for the old debt. Blew V. Wyatt ' is another case to the same effect. A clerk lent money to his employers, who were in partnership as brewers, and took an acknowledgment for it. Several changes took place in the firm, one of the original partners retiring and other persons from time to time coming in and going out. The clerk remained in the employ of the firm notwithstanding these changes, and was aware of them, and was always paid interest by the firm for the time being. He was nevertheless held entitled to sue the two original partners for the money he had lent them. Whether in these cases of Kirwan v. Kirwan, Gough v. Davies, and Blew y. Wyatt, the creditor could have sued the new firm, may per- haps be open to doubt.^ If he could not, it would be absurd to con- tend that the liability of the new firm was substituted for that of the old ; whilst if he could, the evidence was not sufficient to show an intention on his part to deprive himself of the secm-ity afforded by the undoubted liability of the original firm before any change in it took place. It by no means follows that a creditor, who assents to an arrangement by which a new person becomes liable to him, consents to abandon his hold on another person clearly liable to him already ; and unless a substitution of liability can be established, the old lia- bility remains.' Cases in -nhich a retired partner has been held to be discharged. Sec. 600. That a retired partner may be discharged by the creditor's adoption of the other partners as his sole debtore, although no new partner has been introduced into the firm, is clear from the case of Thompson v. Percival ■* already noticed. In Evans v. Drummond,' a firm of two partners gave a partnership bill for goods supplied them. One of the partners retired, and the bill when due was not paid, but was renewed by another bill given by ' 5 Car. & P. 397, E. C. L. R. 24. » See Harris v. Farwell, 15 Beav. 31. 2 See per Bolland, 2 Cr. & M. 638; *5 B. & Ad. 925. Daniel v. Cross, 8 Ves. 277. " 4 Esp. 89. Eetieing Paetnees. 917 the partner who continued the business. The creditor took this bill knowing of the cliange in the firm. Lord Kenyon held that by so doing the creditor had relied on the sole security of the continuing partner, and had discharged the other. Eeed v. White ' is a similar case and to the same effect. In Hart \. Alexander/ the plaintiff, an officer in the East India Company's service, had in 1813 opened au account with the house of Alexander & Co. of Calcutta, which failed in 1832. The defendant retired from the firm in 1 823, when a new partner was introduced, and since that time other changes had takeui place, some of the old partners retiring and new ones coming in. The defendant's retirement was ad- vertised, and there was evidence to show that the plaintiff was aware of the fact. The new firms from time to time accounted with the plain- tiff and paid him interest, sometimes at one rate, and sometimes at another. On the bankruptcy of the firm in 1832, the plaintiff proved the amount of his debt against its joint estate. The plaintiff after- ward sued the defendant, and the case was tried before Lord Abinger, who is reported to have said, "To ask you if there was an agreement by the plaintiff to discharge the defendant, is to put the case upon a false issue, the agreement, if any, being an agreement raised by con- struction of law; the true question being whether the plaintiff did not go on dealing with the new firm and making up fresh accounts with them, so as to discharge the defendant. I take the law to be this : Where a debtor is a partner in a firm, leaves that firm, and any person trading with the firm has notice of it, and he goes on dealing with the firm and making fresh contracts, that discharges the retiring partner, though no new partner comes in. So it is if the creditor applies for part of his balance and sends in more goods; so, if the creditor strikes a fresh balance with the new partners for a different rate of interest; so, if a new partner comes in and the creditor accepts an account in which the new partner is made liable for the balance, that discharges the old firm, as both firms cannot be liable at once for the same debt. This is the law as laid down in several cases in which indeed there is some contradiction; however, what I have stated is the result of them.^ The jury found for the defendant. A new trial was moved for on the ground that there was no evidence to go to the jnry to show that the plaintiff had agreed to discharge the defendant from ' 5 Esp. 123. ' The learned judge was scarcely war- ^ 7 C. & P. 746, and 3 M. & W. 484. ranted by those cases in going so far as he did. 918 Rights of Partxees. his liability, but tlie court ' thought that there was abundant evidence to show that the plaintiff knew of the defendant's retirement, and a new trial was refused. A partner who has retired may also be discharged by the conduct of the creditor, if he has been party or privy to any fraud in conse- quence of which the former has acted on the supposition that the claims of the latter were satisfied by the continuing partners.'' Closely allied to the subject which has just been discussed, is that which relates to the discharge in equity of the estate of a deceased partner from the liabilities to which he was subject as a partner at the time of his death. The position of the estate of a deceased partner, with reference to the question of discharge by reason of a creditor's dealings with the surviving partners, is very similar to the position of a retired partner. The same principles are applicable to both, and the authorities which are in point as regards the one, are so also as regards the other. The parallel between the two would be complete were it not that the estate of a partner who dies in the life-time of his copart- ners is liable for the joint debts of the firm in equity only; and there may be circumstances which will induce a court of equity to hold that estate discharged, although the same circumstances would not, in the case of a retiring partner, operate as a discharge at law,' and vice versa. ■* It has been decided in equity that if a creditor of a firm knows of the death of one of the firm and continues to deal as before with the survivors he does not lose the remedy which he had against the estate of the deceased partner, unless there is evidence showing an intention to abandon the right of having recourse thereto for payment ; ' and an attempt by the creditor to obtain payment from the survivors is not sufficient evidence of such an intention. Thus, if he sues the survivors at law, and obtains judgment against them, this will not necessarily deprive him of his right in equity to obtain payment out of the estate of the deceased.' So, proving in bankruptcy against the estate of the new firm, is not, per se, sufficient to preclude the credi- tor from afterward having recourse to the assets of the dead partner.' - Bolland, B. , dissentiente. see Devaynes v. Noble, Sleech's case, 1 ^ See Featlierstone v. Hunt, 1 B. & C. Mer. 539 ; Clayton's case, id. 579 ; Pal- 113, where, however, the fraud was not mer's case, id. 633 ; Braithwaite v. made out. Britain, 1 Keen, 206. 3 See Ex parte Kendal, 17 Ves. 533 «Jacomb v. Harwood, 2 Ves. Sr. 265. and 525. ' Sleech's case, 1 Mer. 570 ; Harris v. '' Jacomb v. Harwood, 3 Ves. Sr. 365. '. 'Farwell, 15 Beav. 31 ; but see Brown v. ^ Winter v. Innes, 4 M. & Cr. 101, and Gordon, 16 Bid. 308. Retiring Partners. 919 Even where a new partner has been introduced, a creditor of the old firm, who continues to deal with the new firm as he dealt with the old, and is paid interest by the new firm as if the debt was its own, does not thereby deprive himself of his right to be paid out of the estate of a deceased member of the old firm.' In the late case of Harris v. Farwell,'' a banking firm consisting of three partners became indebted to a customer on a deposit note ; one of them died, and the survivors took his son into partnership with them. The new partner- ship paid interest on the note for some time, and then became bank- rupt. The plaintiff proved against the new firm for the amount of his debt, and was paid a dividend out of its estate. It was held that he had done nothing which precluded him from having recourse to the estate of the deceased partner. On thp other hand, if, after the- death of a partner, a creditor of the old firm knows of the death, and does not take any steps to obtain payment from the estate of the deceased, if he lies by and allows that estate to be administered as if he had no claim upon it, and if he continues to deal with the surviving partners as if they and they alone were his debtors, in that case a court of equity will not assist the creditor in an attempt to resort to the assets of the deceased, and will hold those assets to have been discharged. Oakley v. Pasheller and Brown v. Gror Bedford v. Deakin, 2 B. & Aid. 310 ; Oakley v. Pasheller, 4 CI. & Pin. 307 ; Jacomb v. Harwood,3 "Ves. Sr. 365. Brown v. Gordon, 16 Beav. 303. ^ Robinson v. Wilkinson, 3 Price, 538. ' Ex parte Seddon, 2 Cox, 49 ; Ex 2 Evans v , Drummond, 4 Esp. 89 ; parte Lobb, 7 Ves. 593 ; Ex parte Mein- Eeed v. White, 5 id. 133. ertzhagen, 8 Deac. 101 ; Ex parte Hay, * Hart V. Alexander, 3 M. & W. 484. 15 Ves. 4 ; Ex parte Kedie, 3 D. & C. ' Ex parte Kendal, 17 Ves. 533-5 ; 331. 116 922 Eights of Partners. was taken in satisfaction of the original demand.' So, if two part- ners are indebted on the partnership account, and one of them gives a bill or note for the debt, and that bill or note is dishonored, the creditor who took it will not be precluded from having recourse to both partners for payment,' unless it can be shown that he intended to substitute the liability of the one for the joint liability of the two.' But when a creditor obtains from his debtor a security of a higher nature than he had before, the original debt is merged in the higher security, and can no longer be made the foundation of any action or suit, or of proof in bankruptcy or insolvency;" and this doctrine is as much applicable to joint as to several obligations. Consequently, if two partners are jointly indebted by simple contract, and one of them gives his bond for payment of the debt, the joint debt is at an end ;' and if the creditoi: obtains judgment against one of the partners only, he loses his remedy against the others,' unless, perhaps, in the case where they are abroad, and cannot, therefore, be sued here with effect.' With respect to obligations which are joint as well as several, there is more difficulty. A joint and several obligation, arising ex delicto, is extinguished by a judgment recovered against any one of the per- sons obliged; * but, as regards joint and several obligations arising ex contractu, although a joint judgment against all the persons obliged extinguishes the separate liability of each, for nemo debet bis vexari pro eadem causa, yet a judgment obtained against one of them only does not extinguish the separate liability of the others." In order that this effect may be produced the judgment must be satisfied.'" Further, if several persons are jointly liable, and one of them after- ward gives a separate security on which judgment is recovered against him, this will not merge the prior joint liability. In the leading case 'As in Ex parte Whitmore, 3 Deac. 'Basset v. Wood, 11 Vin. Ab. Exting. 365 ; Ex parte Kirby, Buck, 511 ; Ex B. 8 ; and see Owen v. Homan, 3 Mc. & parte Jackson, 2 M. D. & D. 146. G. 407 ; Ex parte Hernaman, 12 Jur. 642. 2 Bottomley v. Nutall, 5 C. B. (N. S.) . « King v. Hoar<>, 13 M, & W. 494 ; Ex 122 ; Whitweai v. Perrin, 4 id. 412 ; parte Higgins, 3 De G. & J. 33. Ex parte Hodgkinson. 19 Ves. 291; ■■ See, as to this, Ex parte Waterfall, 4 see, too. Ex parte Raleigli, 3 M. & A. 670. De G. & S. 199. A colonial judgment ' As the jury found was the case in creates no merger. Bank of Australasia Evans v. Drnmmond, 4 Esp. 89, and v. Nias, 16 Q. B. 717. Reed v. White, 5 id. 122. Compare the * Brown v. Wooton, Cro. Jac. 73 ; cases in the last note. Buckland v. Johnson, 15 0. B. 145 ; and *Higgen's case, 6 Co. 44 b.; Owen v. see, as to the plea of another .suit de- Homan, 3 Mc. & G. 378 ; Price v. Mol- pending, Boyce v. Douglas, 1 Camp. 61. ton, 10 C. B. 561,E. C. L. R 70 : Shack ' Ex parte Christie, Mon. & Bl. 352. V. Anthony, 1 M. & S. 572 ; but the orig- "> Higgen's case, 6 Co. 46 a ; King v. inal debt may be made the foundation Hoare, 13 M. & W. 494 ; and see Drake of an adjudication of bankruptcy. Re v. Mitchell, 8 East, 251. Griffith, 3 De G. M. & G. 174. Retiring Partneks. 933 of Drake y. Mitchell,' three persons purchased a coal mine, and cove- nanted jointly to pay the purchase-money by installments. An install- ment being in arrear, one of the covenantors gave his own promissory note for part of the money due, and judgment was afterward recov- ered against him for the amount of the note in an action upon it. In a subsequent action on the covenant, brought against all three cove- nantors for the recovery of the installment in question, it was held that, as the note was not accepted in satisfaction of any part of the plaintiffs' demand, the judgment recovered on the note merely extin- guished the right to sue on the note itself, and did not affect the lia- bility on the covenant, so long as the judgment remained unsatisfied. The defendant who gave the note was in this case twice sued, viz., first, in respect of his separate liability on the note, and next, in respect of his joint liability on the covenant, but the liabilities being substantially different, the case is nob in conflict with the rule nemo debet Ms vexari pro eadem causa. Notwithstanding the undoubted rule that a bond or judgment merges any simple contract debt in respect of which it may have been given or obtained, this rule only applies if the simple contract debt existed first in order of time, and if the specialty creditor is the same as the simple contract creditor. So that if a bond is given or a judg- ment is obtained (under a warrant of attorney), as a security for future advances," or if a simple contract debtor gives a bond or con- fesses a judgment to a trustee for his creditor,^ in neither of these cases will there be any merger. It must also be borne in mind that in equity the doctrine of merger does not apply to the same extent as at law ; for in equity, a joint bond ia given for a pre-existing joint and several debt, the bond will itself be treated as joint and several.* Further, it is to be observed that merger does not, properly speak- ing, extinguish a debt; for, notwithstanding the fact that a debt is merged in a higher security, the merged debt is sufiBcient to support an adjudication of bankruptcy against the debtor.' ' 3 East, 251. See, too, Re Clarkes, 2 the law, ul res magis valeat quam pereat. Jo. & Lat. 212 ; Ex parte Bate, 3 Deae. * See ante, p. 395 ; Bishop v. Church, 358, where a joint and several deht was 2 Ves. Sr. 100 and 371 ; Simpson v. held not merged, so far as it was joint, Vaughan, 3 Atk. 31 ; and see, as to a by higher separate securities. judgment, Jacomb v. Harwood, 3 Ves. ■' Holmes v. Bell, 3 Man. & Gr. 313, Sr. 365. and the note there. ' Be Griffiths, 3 De G. M. & G. 174, ^ Bell V. Banks, 3 Man. & Gr. 358. In and the cases there cited, such a case,equity would probably follow 924 Rights of Pakthers. Again, proof in bankruptcy against the estate of one partner in respect of a partnership debt is not equivalent to a judgment and does not preclude the proving creditor from afterward suing the solvent partners, and recovering from them what he may have failed to obtain in the bankruptcy."' ' Whitwell V. Perrin, 4 C. B. (N. S.) 412 ; Bottomley v. NuttaJl, 5 id. 122. Limits ok Liability. 925 CHAPTER XXV. OF THE liability OF DECEASED PABTNER'S ESTATE. Sec. 602. Remedy at law. Sec. 603. Rule in Gray v. ChiswelL Sec. 604. Partnership debt, several as well as joint, in equity. Sec. 605. Rule in Devaynes v. Noble. Sec. 606. Confirmed in Wilkinson v. Henderson. Sec. 607. Rule carried still farther in Thorpe v. Jackson. Sec. 608. Joint and several contracts. Sec. 609. Rule in equity when partners enter into a joint security. Sec. 610. Rule does not apply to all transactions — Sumner v. Powell. Sec. 611. Partnership creditors, rights against a deceased partner's estate — Vul- liamy v. Noble. Sec. 613. Admission of survivor of representatives of a deceased partner — Braithwaite v. Brittain — Winter v. Innes. Sec. 613. Subsequent dealings with the new firm. Sec. 614. Acts in discharge of deceased partner's estate — /Jacomb v. Harwood. Sec. 615. Rule in Winter v. Innes. ^ Sec. 616. Payments made in case of decease of one of the partners — Devaynes V. Noble. Sec. 617. Sleech's case — Clayton's case. Sec. 618. Liability in case of continuance of firm under will of deceased. Sec. 619. Creditors of new firm not entitled to pursue the estate. Sec. 630. Ex parte Garland. Sec. 631. Executor carrying on business liable for excess of authority. Sec. 633. Rule in Wightman v. Townall. Sec. 623. Consequences of death of a partner. Sec. 624 Relative rights of executor and surviving partner. Sec. 635. With reference to what occurred before death. Sec. 636 Creditors may pursue estate in equity. Sec. 637. Position of firm creditors as to individual creditors of deceased part- ner. Sec. 628. Rule in Brett v. Beckwith. Sec. 639. Substance of decree in such cases. Sec. 680. Questionable whether both remedies can be pursued at once. Sec. 631. With reference to what occurred after death. Sec. 633. What acts of an executor impose liability upon assets of deceased partner. Sec. 633 Sec. 634. Sec. 635. Sec. 636. Sec. 687. Sec. 638. Sec. 639. 936 Eights of Partners. Cases illastrating. Effect of provision in will directing continuance of business. In the case of companies. Consequences as to separate creditors, legatees and nest of kin of deceased partners. General rule as to separate creditors. Exceptions to the rule. When share of deceased is not got in. Remedy at law. Sec. 602. 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 partners only. ' In equity, on the other hand, the creditor of a partnership may obtain payment of his debt out of the assets of a deceased partner, though under what principles, and under what modifications such relief will be granted, has not been established until late years. In the opinion of some judges, and particularly of Lord Eldon, a partner- ship creditor was permitted to receive satisfaction for his debt, out of the estate of the deceased partner, only through tlie medium of the equities existing ietween the partners themselves, those equities, so far as regards the interests of third parties, being these, that their joint debts should be satisfi|d out of their joint estate, but if that were insufficient, then subject to the claims of their separate creditors out ' The survivor and executor cannot an administrator who has notes belong- be joined as defendants. Voorhees v. ing to the firm which he refuses to de- Baxter, 1 Abb. Pr. (N. Y.) 43 ; Welsh v. liver up to the surviving partner is lia- Speakman, 8 W.& S. (Penn.) 260; Tracey ble in trover to him therefor. Stearns V. Suydam, 30 Barb. (N. T.) 115; Voor- v. Haughton, 38 Vt. 586. When the his V. Child, 17 N. "ST. 357 ; Hedden v. firm owns stock in a corporation, the Hedden, 1 Penn. St. 62. The action surviving partner alone is entitled to must be against the surviving partner vote thereon, Allin v. Hill, 16 Cal. 117; alone, Osgood v. Spencer, 2 H. & G. (Md.) and until the affairs of the firm are set- 133 ; Burg win v. Harther, 3 N. C. 75 ; tied, the probate court has no power to Davis V. Warrington, 5 Harr. (Del.) 147, distribute the deceased partner's share and all actions at law must be brought in the firm assets. Stewart v. Burkhal- in his name, as he alone is entitled to ter, 38 Miss. 396. In a word, the sur- administer the affairs of the firm, con- vivor has the full control of the assets trol its ass ets, and collect the debts due and business without interference from it, nice v. Richards, 1 Barb. (N. 0.) Bq. the representatives of the deceased 277 ; Wallace v. Fitzsimmons, 1 Dall. partner. Hull's Appeal, 40 Penn. St. (Penn.) 248, and the executor or admin- 410 ; Ray v. Vilas, 18 Wis. 173 ; Shields istrator of a deceased partner has no v. Fuller, 4 id. 102 ; Daniel v. Stone, 30 control over such choses in action, and Me. 386. And a court of equity will not a payment made to him is no defense to interfere with his control unless he is an action by the surviving partner, Wal- dealing improperly with the business, lace V. Fitzsimmons, ante, upon the Harrell v. Witts, 1 P. & D. Cas. 103 ; death of one partner all property and Evans v. Evans, 9 Paige's Ch. (N. Y.) debts of the partnership vest in the sur- 186. vivor, Barry v. Harris, 22 Md. 31, and Limits of Liability. 927 of their separate estates proportionally. 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 principle that in the consideration of a court of equity a partnership debt is several as well as joint. It became im- portant 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 to be considered as entitled to payment out of the decased partner's estate, not because his contract with that partner continued 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 miist wait till those equities were complete, that is to say, until an acccount should have been taken of the partnership transac- tions, and the joint estate ascertained ; and in case of the insolvency or insufficiency of the joint estate, then until the separate estate of each partner should have been ascertained, and all the separate cred- itors 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 satis- faction immediately out of the estate of the deceased partner, and, perhaps, even fari jyassu with the separate creditors. Rule in Gray v. Chiswell. Sec. 603. 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 exploded doctrine appears to rest.' Perhaps, however, an exception may be made in favor of the case of Gray v. Chiswell,' as showing the principle which Lord Eldon conceived to be applicable to this subject. In that case a ' bill was filed by the separate creditors of Chiswell, the late partner of Nantes, against the executrix and heir-at-law of Chiswell, for an account. The joint creditors of Chiswell & Nantes, who had proved their debts under a commission of bankrupt against Nantes, as sur- viving partner, went in ' under an order, and proved their debts before ' Lane v. Williams, 3 Vern. 393 ; id. 519 ; Campbell v. MuUett, 3 Jacomb v. Har wood, 3 Ves. 365 ; Haukey S wanst. 576 . V. Garrett, 1 Ves. Jr. 336; Ex parte Wil- ^ 9 Ves. 118. liams, 11 Ves. 3 ; Ex parte Kendall, 17 ' By consent. 928 Rights of Paktners. the Master. They then insisted upon their right to come in pari passu with the separate creditors of Ohiswell against his separate estate. It was admitted that the joint estate was insolvent, and would pay only an inconsiderable dividend ; and that the surviving partner having brought into the firm an inconsiderable sum, upon a final adjustment the joint estate would be greatly indebted to the separate estate. Upon the argument of the question, many authorities were cited in favor of the ]oint 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 sepai'ate creditor on the estate of the deceased partner. On the other hand, it was contended that these were all cases in which the bond had been made joint through fraud or mistake.' Lord Eldoh — " Why, if 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 satis- fied ? The cases of mistake, etc., differ in respect of the intention of the transaction, the intention originally to constitute a legal demand against the deceased man as well as the survivor. The decree goes upon the intention. What is now desired, 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 bo con- sidered a separate creditor, provided he had the security intended ; and then the court has always said a decree for such aii 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 rectified, and he had been alive ; for the court would during his life have rectified the bond. He is not, therefore, put in a better situation 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 Ohiswell alone, when he could not have sued Ohiswell alone in his life. This, therefore, seems to go farther than any other case ; and, I ' See Simpson v. VaugUan, 3 Ves. 101, Ves. 399 ; Burn v. Burn, id . 573 ; cited ; 3 Atk. 31 ; Thomas v. Fraier, 3 Bishop v. Church, 3 Ves. Sr. 100, 371. Limits of Liability. 929 think, will not do. It is extremely difficult to say upon what the rule in bankruptcy is founded. But if the court aim at equality, it is extraordinary to say they shall have a better remedy in conse- quence of his death than if he had lived, and when, by reason of his death, the remedy at law is gone." His Lordship afterward 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. It may perhaps be said that the case of Gray v. Chiswell is not an express authority in favor of the opinion which has been ascribed to Lord Eldon, and that the decision in that case might be supported consistently with the principle that a partnership 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 never- theless, by analogy to the rule in bankruptcy, be postponed to the separate creditor of the deceased partner. The answer to this argu- ment 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,' showing clearly that, in his opinion, the remedy of a partner- ship creditor against the deceased partner's estate was not immediate, but depended on the state of the account between the deceased and surviving partners. Partnership debt several as well as joint in equity. Sec. 604. But, whatever may have been the opinion of Lord Eldon upon this important subject, it is now established beyond controversy 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 immediately against the representative of the deceased partner for payment 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. '17Ves. 519. D. Lord Eldon :" Where cannot pay. That must be, however, parties think proper to enter into ajoint, subject to many considerations." instead of a joint and several contract, '•' See dicta of Lord Loughborough, though I am surprised that courts of Stephenson v. Chiswell, 3 Ves. 566 ; equity have not left that to its fate as a Lord Brougham, Devaynes v. Noble, joint contract, they have, I admit, said post, p. 930 ; Lord Mansfield, Rice v. that there is a remedy against the as- Shute, Burr. 2611; DeGrey, C. J. Ab- sets of one deceased, if the survivors bott v. Smith, 3 W. Bl. 947. 117 930 Rights of Partners. Rule in Sevaynes v. Noble. Sec. 605. The great case upon this subject ^ that of Devaynes v. Noble/ decided by Sir William Grant, and afterward, upon appeal from his decree, by Lord Brougham. By the 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 j)laintifEs, 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 partner- ship to such creditors, and to inquire whether such creditors, or any and which of them, continued 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 bankruptcy, and what had since been received by them, respectively; and, also, whether such creditors, or any and which of them, had, by such subsequent dealings, released the estate of Devaynes from the payment of their respective debts, or "what (if any thing) remained 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 difEerent classes of the partnership creditors at the death of Devaynes, and the various dealings which had since taken place between those creditors and the surviving part- ners, and his opinion, as generally applicable to all classes of the creditors, was that they had a right to resort to the estate of De- vaynes 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 judg- ment 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 several as well as joint, and upon this principle his Honor in the principal case held that the joint creditor might have jnmediate recourse to the estate of the deceased partner, with- out regard to the relative position of the deceased and the surviving partners, in- respect of the general accounts of the partnership. And ' 1 Mer. 529 ; 2 Buss. & M. 495. « Sleech's case, 1 Mer. 563. Limits of Liability. 931 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 representatives 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 partners, or in a case in which no proof is given by such joint creditors that the joint estate of the copartners is insuffi- cient 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, s The appeal was twice heard by Lord Bldon. His 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 predeceased 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 debtors. ' 3 Mer. 37. said firm of Devaynes, Dawes, Noble & ^ Sir H. Seton observes that since tlie Co. is sufficient to pay the joint debts of above appeal an inquiry is sometimes that partnership. And in case the said directed as to the joint estate. In Fisher Master shall find that the said joint es- v. Farrington the following clause tate is sufficient for the payment of the formed part of the minutes of the de- said debts, then, that the said bill may cree : " Let the Master inquire whether be dismissed with costs. And in case the joint estate of the said firm of B the said Master shall find that the said (the deceased partner) and M was, or joint estate is insufficient for the pay- not, sufficient for the payment of the ment of the said debts, then, that the joint debts due from the said firm at the said Master may be directed to take an death of the said testator ; such inquiry account of the joint estate of the said to be without prejudice to any question firm of Devaynes, Dawes, Noble & Co., as to the rights of the joint creditors, in possessed by the said defendants, Les- case it shall appear that at the decease tock Wilson, John Morris, and Joseph of the said testator the said joint estate Down, the assignees of the said John was sufficient for the payment of the Dawes, William Noble, Richard Henry said joint debts." Fisher v. Farrington, Croft, and Kichard Barwick, and also an Seton on Decrees, 239. account of the separate estates of the ^ The prayer of the petition was, that said John Dawes, William Noble, Rich- the said causes might be reheard, that ard Croft, and Richard Barwick, and the bill filed by Sir T. Baring and Sir F. that in the meantime all proceedings Standish might be dismissed, and that under the said order of the 1st day of the decree of 2d March, 1813, and or- June, 1830, and the 3d day of August, ders might be discharged ; otherwise, 1830 (orders for payment of the joint that the said decree might be varied, creditors out of the assets of Devaynes), "by directing the master to inquire and may be suspended." certify whether the joint estate of the 932 Eights of Paetkees, The case was afterward 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 ques- tion as Sir William Grant, considering the partnership creditor to have an absolute right, without any modification, to resort to the estate of the deceased partner. In the course of his judgment, his Lordship referred to the case of Sumner v. Powell as materially bear- ing on the question then before him, and he observed that in the last-mentioned case Sir William 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. Rule confirmed in Wilkinson v. Henderson. Sec. 606. 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 Shep- herd having died, the bill was filed by the plaintiff on behalf of him- self 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 defendants, the executors of Shepherd, it was objected that no decree could be had for payment of the part- nership debts out of the 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 consid- eration 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 payment 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 satis- faction 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 cred- itor shall be compelled to pursue the surviving partner in the first ' 1 Myl. & K. 532. In tliis case the tion of this treatise are embodied in the observations contained in the first edi- speeches of the counsel on each aide. Limits of Liability. 933 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 partner; or whether the joint cred- itor may, in the first instance, resort to the assets of the deceased partner, leaving it to the personal representatives of the deceased part- ner 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 liable to the full satis- faction 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 other- wise 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 separate estate of the deceased partner which in equity was not primarily liable, as between the part- ners, wi-thout first having resort 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 himself and all other joint creditors, for the payment of his debt out of the assets of Shepherd, the deceased partner. Hule carried still further in Thorpe v. Jackson. Sec. 687. The principles upon which the case of Wilkinson y. Hen- derson was decided were carried to the very fullest extent in that of Thorpe v. Jackson,' in which it was held that every joint loan, whether contracted in relation to mercantile transactions 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 debt- ors, Edmund Hamer, having died, a bill was filed by the bank against his personal representatives, and against the surviving joint debtors, praying an account and payment of what might be found due on the banking account out of Earner's assets. Only one of the surviving joint debtors was alleged to be insolvent, and no relief was prayed against any of them. On demurrer to the bill by Hamer's executors, 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 ' 3 You. & Coll.' 553 ; and see Braithwaite v. Britain, 1 Keen, 306. 934 Eights of Paktnees. had not been a partner in trade, the rule as to the severalty of a part- nership 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 Wilkinson 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 distinction set up in the course of the argument that such debt must be a mercantile debt incurred by joint traders, nor could he conceive why it should be so, though the question had most frequently arisen in such cases. " It is said," added his Lord- ship, "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 mercantile law a part- nership contract was several as well as joint, and then he adds that this may probably be the reason why courts of equity have con- sidered joint contracts of this sort (that is, contracts joint in form) as standing on a difEerent footing from others. I conceive, therefore, that partnership trading debts are only one, and that the most fre- quent 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 parties 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 persons, is of that description. Here it 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 shall be responsible 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 question concluded by the case of "Wilkinson v. Hender- son, to the reasons of which I fully accede." We ought not to conclude this subject without adverting 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 Limits of Liability. 935 partner, he is entitled to receive i^ayment pari passu witli the separate creditors of that partner. If this point were decided on principle alone, and without reference to any supiDosed analogy between the" practice in the courts of equity and the practice in bankruptcy, it seems clear that the partnership creditor, as resting on his separate contract, would have a right to come in competition with the separate creditors. On the other hand, the cases of Gray v. Ghiswell,' and Cowell v. Sikes," tend to show that, by analogy to the rule in bank- ruptcy, 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. ■17 Ves. 519 'SRass. 191. 33 Y. & C. 559. R&medy against the estate of deceased partner. — Some controversy existed for- merly in Eoglaud, whether a creditor of a firm might in equity claim satiafac- tiou of his debt against tlie firm, out of the estate of a deceased partner. But it has been finally determined that sucli a bill could be maintained. In this country there seema to be a great diver- sity of decisions on this question. Tile statutes of various States provide for the proving of claims against the estate of a deceased person before an officer designated for that purpose. And it is usually necessary to establish claims against the estate within a certain time in order to receive a dividend or pay- ment of the same. In such a case it would be necessary, in order to secure the claim against a deceased partner, in case of the insolvency, of the finn to which he belonged, to establish it before the proper officer within the time pro- vided by law. In the United States courts there seems to be a diversity of decisions, in reference to the partnership creditors' rights in equity, to claim satisfaction otit of the deceased partner's estate. Nelson v. Hill, 5 How. 137 ; Murrill v. Neil, 8 id. 414. See, also, Randolph V. Daly, 15 N. J. Eq. 313 ; Creswell v. Blank, 3 Grant's Cas.(Penn.) 330; Moore's Appeal, 34 Penn. St. 411. And in some of the States at least the ground for equitable jurisdiction in such cases is made to depend upon the circumstances connected with the claim, such as the insolvency of the firm, or other grounds for the exercise of equitable interfer- ence. Thus, in New York, it hag been held that no action will lie against the personal representatives of the deceased partner so long as any other members of the firm are living, nor until the lia- bility of the latter to pay the debt has been legally ascertained or clearly shown. Tracy v. Suydam, 30 Barb. (N. Y.) 110. See, also, Voorhees v. Baxter, 1 Abb. Pr. (N. Y.) 43 ; 18 Barb. (N. Y) 593 ; 17 N. Y. 354 ; Dubois Case, 3 Abb. Pr. {N. Y.) 177. And in Georgia a plea of assets of the firm sufficient to satisfy the claim of the firm creditor, if properly signed and verified, will be good, and if established, defeat the claim of satis- faction out of the estate of a deceased partner. Daneil v. Townsend, 31 Ga. 155. See, also, Thornton v. Bussey, 28 Ga. 303; Tombs v. Hill, id. Sll. So, in Illinois, it is held that before resort can be had to the separate estates of the individual partners, to pay partnership dSbts, the partnership estate must be exhausted. Morrison v. Kurtz, 15 111 198; Moline.etc, Co. v. Webster, 36 id 333. But see Pahlman v. Graves, id. 405. The general doctrine in this country may be said to be that if a creditor resorts to equity for the satisfaction of a.claim against a iirm out of the assets of a deceased partner's estate, he must conform to the recognized prin- ciples of equity applicable to such cases. And he would generally be re- quireS to show, either a failure to re- cover his claim against the survivor, or to satisfy the same out of the partner- ship assets, owing to it insolvency. Meyer v. Thornburgh, 15 Ind. 134; Lewis V. Conrad, 11 Iowa ; Pearson v. ■Keedy, 6 B. Monr. (Ky. 138 ; Stater v. Caroll, 3 Saudf. (N. Y.) Ch. 359 ; Law- rence V. Trustees, 3 Den. (N. Y.) 577; Voorhees v. Child, 17 N. Y. 354 ; Cop- cutt V. Merchant, 4 Bradf. (N. Y.) 18. 03C Rights of Paetkees. Joint and several contracts. Sec. 608. 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 ; be- cause the fact of joint debtors giving a joint security might, under some circumstances, rebat 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 exe- cuted 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. Rule in equity, when partners enter into a joint security. Sec. 609. But where partners in trade enter into a joint security for the payment of moneys due from the partnership, courts of equity will rectify the intrument 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 diminishing the security of the creditor. 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, no| merely the presumed nature of the debt, but the fact of positive mistake or fraud in framing the instrument. The authorities, how- ever, seem clearly to establish that all joint securities entered into by partners on the partnership account, whether under seal or other- wise, and although there may be no evidence of mistake or fraud in framing the instrument, will in equity be considered several as well as joint, and will be rectified accordingly. Thus, in Simp- ' See Sumner v . Powell, infra. 5 Lane v. Williams, 3 Vera. 393 ; Jacoomb v. Harwood, 3 Ves. Sr. 365. Limits os Liabi];,itt. 937 son V. Vaughan,' where a bill was iDrouglit 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, thougk he adverted to the fact of mistake in drawing up the bond, also took notice that the debt arose fi-om 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 considerations his Lordship rectified the instrument. Again, in Bishop v. Church,'' where money was borrowed by parbners 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 borrowed 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.' Rule does not apply to all transactions — Sumner v. Powell. Sec. 610. But although in rectifying joint securities given by part- ners in trade, courts of equity would look to the fact of the obligors being partners as evidence of their intention to be severally bound, yet it by no means follows that every joint instrument executed by partners in relation to the partnership transactions shall be con- sidered several as well as joint. In Sumner v. Powell,^ one of several partners died. Instead of winding up the afEairs 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 part- ners all interest in tne residue. S likewise received from the surviv- ing partners a joint covenant of indemnity against the debts of the old partnership. W, one of the surviving partners, afterward 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 Ws estate, and that, to enforce this demand, the joint covenant of indemnity ought to be construed several. But Sir William G-rant held the contrary, and dismissed the plaintiff's bill, though without '. ft ' 2 Atk. 31 ; 2 Ves. Sr. 101 ; and see ^2 Mer. 30. The obligations of part- Primrose V. Bromley, 1 Atk. 89. ners are in most of the States joint and "2 Ves. Sr. 100, 371. several. 3 Orr V. Chase, 1 Mer. 729 ; Thorpe v. Jackson, supra. 938 Eights of Partners. 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 equity 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 obligation to pay exists independently of any instrument by which the debt may have been secured. So^ where a joint bond has, in equity, been con- sidered as several, there has been a credit previously given to the dif- ferent persons who have entered into the obligation.- It was not the bond that first created the liability to pay. But, in this case, the covenant is purely matter of arbitrary convention, growing out of no antecedent liability in all or any of the covenantors to do what they have thereby undertaken. Why was Mr. Sumner's share of the part- nership estate to remain unaffected by any claims by which that estate might afterward be diminished? There was no equity that 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 covenant 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 operation and effect." Partnership creditors, rights against a deceased partner's asset's — Vulliamy v. Noble. Sec. 611. 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 Vulliamy v. Noble,' stock was transferred to a partner in a banking-house, by way of security for money borrowed of the firm • dldaker v. Lavender, 5 Sim. 239. mentioned, the creditor may elect to *3 Mer. 593, and see Clayton's case, consider the proceeds of tlie stock as a 1 Mer. 672; Ward's case, id. 634; Houl- debt due from the deceased partner's ton's case, id. 616. Where stock has estate, or to have the stock specifically been misapplied in the manner above replaced. Baring's case, 1 Mer. 611. LiJitiTS OF Liability. 939 hj one of their customers. The debt was subsequently discharged, but by consent the stock was not retransferred. The stock was after- ward fraudulently disposed of. Then one of the partners died, and after his decease the remaining partners became bankrupt. Lord Eldon held the creditor entitled to have the remaining stock trans- ferred to him, to receive the residue of his debt, if possible, out 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 various ways in which the discharge may take place, but dischai'ged they must be before his liability ceases." Admissions of survivor or representatives of a deceased partner — Braithwaite V. Britain — Winter v. Innes. Sec. 612. It seems not to have been expressly detei'mined as between the surviving partner and the representatives of the deceased part- ner, and vice versa, to what extent the acts or admissions of these par- ties respectively shall operate against the other so as to take a contract made with the partnership in the life-time of the deceased partuer out of the Statute of Limitations. It is apprehended, however, that the strict rule of law on which the cases of Atkins v. Tredgold and Sla- ter V. Lawson' depended, and by which an admission by a joint con- tractor or his reiDresentatives has no effect against the statute after the joint contract has been severed by death, will not apply in the case now under consideration. In Braithwaite v. Bi'itain,'' 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 till April, 1833, but it appeared the plaintiff received from the surviving partners several small sums on account in the course of the years 1827, 1828, and 1829. It was contended that these i^ayments would not take the case out of the Statute of Limita- tions as against John Britain's estate, and the cases at law which have been already noticed, wei-e cited in support of that proposition. Lord Langdale, M. K., however, seems to have dissented from that propo- sition, though he declined to decide the case, except upon its special '2B. &C. 23. »1 Keen, 306. 940 Rights of Pabtnees. circumstances. 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 circum- stances belonging to this case. But considering 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 surviving partners may, as to past trans- actions (in respect to which they are subject to liability in common' with the estate of the deceased partner), be not unreasonably consid- ered as acting not only for themselves, but also on account of the estate of the deceased partner; that the demand was clearly kept up against the surviving partners; that one of the surviving partners was one of the executoi's 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 pay- ment of his debts, I think that the case, considering all its circum- stances, does not fall within the operation of the statute, and is not governed by the legal consideration on which the cases of Atkins v. Tredgold and Slater v. Lawson were decided. In Winter v. Innes,' Lord Cottenham, in adverting to this point, said: " When the simple case shall occur of the representatives of a deceased partner setting up the Statute of Limitations against a claim by a creditor of the firm, it will be to be considered whether such a defense 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 deceased partner is founded upon the equity of ihe 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 partner continues, as that would be to create that cir- cuity which it is the object of the rule to prevent." Subsequent dealing ivith the neyr firm. Sec. 613. 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 dealing of the creditors with the surviving partners. And here it may be pre- mised that the estate of the deceased partner has this advantage over that of a retiring partner, that, in order to free it from future liabil- ity, it is not necessary to give notice to the creditors of the dissolu- ^^ » 4 Myl. & Cr. 111. Limits of Liability. 941 tion of the firm as to such deceased partner. Hence a court of equity- will not restrain the surriving partners from using the name of a deceased partner in the new firm.^ There is, however, an exception to this rule regarding 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.'' Acts in discharge of the deceased partner's estate — Jacomb v. Harwood. Sec. 614. The same acts of the creditor which operate in discharge of the retiring partner will be equally effectual in favor of the deceased partner's estate. Therefore, if, in respect of his claim on the orig- inal partnership, the creditor take the joint security of the new firm, at the same time relinquishing the securities of the old firm, and a fortiori, if there be express evidence of his receiving a considera- tion for abandoning his original rights, the deceased partner's estate will be absolved from liability on account of the debt. On the other hand, the taking the separate security of the surviving partner will not, per se, be evidence of an intention to relinquish the remedies against the original firm, more especially where the original securities are retained. This position seems clearly established by the case of Jacomb v. Harwood,^ though, in fact, the decision pro- ceeded on another ground.* Gibson and Sutton were partners in the trade of scriveners and bankers. The plaintiffs each held a promis- sory note of Gibson and Sutton. Gibson died. For three years after his death Sutton 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 action 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 plaintiffs as to their respective demands, agreeing that no execution should be taken on either of these judg- ments until such a time. In that agreement it was particularly ' Webster v.Webster,3 Swanst. 490, n. of Gibson. The bill prayed for a sale ' Vulliamy v. Noble, 3 Mer. 614 ; and of such mortgaged premises, and pay- ,Bee Wliale v. Knight, 4 T. R. 68). ment to the plaiutiifs of their principal, 2 2 Vez. 265. interests and costs, and Sir John Strange * Sutton had been appointed executor decreed according to the prayer of the of Gibson, and in that character had, bill, considering that such mortgage by for the purpose of satisfying the judg- the executor partner was valid and ment, mortgaged part of a leasehold es- ought to be enforced in favor of the tate, which was the separate property partnership creditors. 942 Eights of Partners. inserted, that these judgments thus obtained by the two plaintiflfs 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 discharged. Sir John Strange: "If these judgments were obtained against him as surviving partner on foundation of a suit in the life of the two partners, 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 case of a bond had that been given instead of a judgment, it would be at law an extinguishment of the simple con- tract 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 notknow (though it may bean 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 con- verted to a judgment from a common note. The plain tifPs 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 incline to think that, notwithstanding that judgment, it still continues a partnership debt, being obtained as surviving part- ner." Rule in Winter v. Innes. Sec. 615- And where no fi'esh security is taken from the surviving partner for a partnership debt, the motives of the creditor in continu- ing his dealings with the surviving partner will be taken into consider- ation before it can be decided that such subsequent dealings amount to an acceptance of the sole security of the surviving partner in the room of the joint security of the firm. In Winter 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 India merchant, in partnership with John Innes. At the death of Winter, which hap- pened in 1824, a sum of 37,748Z. 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 ' 4 Myl. & Cr. 101. Limits of Liability. 943 Winter, for the purpose of having the partnership accounts taken, one question in the cause was, whether by reason of the transactions between Baillie and the surviving partner Innes, the debt of 37,74:8?. was to be considered as remaining a partnership debt, so as to entitle Baillie to receive payment out of the estate of Winter. It appeared that Baillie was induced so to leave his property ia the hands of the house, partly, as it seemed, from kindness toward Innes, but princi- pally 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 settlement of Winter's affairs, and th6 realization of his property, as the means by which, aad the time at which his debt was to be paid ; Innes, in soliciting his forbearance, continually urging that, if payment of the debt were 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 Oottenham, in giving judgment in the cause, said, that without the evidence which has just been stated, the case would be simply that of continuing the accoxint 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' bankruptcy, but that this evidence was very important upon the question, whether the creditor had substituted the individual credit of the surviving partner for the joint liability of the firm. That in this ease there was not only no evidence of any intention to abandon the original claim against the partnership and to adopt the individual i-esponsibility of the surviving partner in its stead, but the total absence of any object or consideration for so doing, and conclu- sive evidence that the principal object of the forbearance was not to press upon or prejudice the estate of the deceased, of whose will the creditor was himself a trustee and executor, though he did not prove. That under these circumstances it would be extraordinary, if any authorities could be found to show that the remedy against the deceased partner's estate was gone. His Lordship then, after advert- ing 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 satisfaction 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 ' See Thompson v. Percival, 3 N. & M. 167 ; ante, 835. 944 Eights of Pabtners. the estates of deceased partners were to be regulated by the same principles as governed courts of law upon the retirement of partners, there could be no doubt of the right conclusion in the present case. His Lordship ultimately declared that the debt in question was to be considered as still due and owing 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 continues 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 accru- ing to himself, that person is not to be taken as having relinquished the original security of the house. And it seems clear that his receiv- ing interest from the surviving partner for the debt, would not dis- charge the estate of the deceased partner.' Payments made in case of decease of one of the partners — Devaynes v. Noble. Sec. 616. In casli accounts current, the balance due to the creditor at the death of a partner will be diminished by the subsequent payments made by the new firm to the creditors. We have already, in the case of retiring partners, had occasion to examine this mode of calcu- lating the reduction of the joint creditors' debts under accounts cur- rent, and, therefore, a very short notice of this subject will here suffice. In the case of Devaynes v. Noble,' so frequently referred to, Devaynes, Dawes, Noble, Croft and Barwick, were bankers, and part- ners, under the firm of Devaynes, Dawes, Noble & Co.; Devaynes died, and, from that period, the surviving partners 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 representatives of their deceased partner were not made up when the surviving partners became bankrupts. A commission of bankrupt having issued against them, a bill was filed by certain joint creditors 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 divi- dend under the commission might be ordered to be postponed until after the decree should have been had in the cause. Upon the hear- ■ Daniel v. Cross, 3 Ves. 377. ' 17 Ves. 514 ; 1 Mer. 529. Limits of Liability. 945 ing of certain exceptions to the Master's report in this cause, the claims of the several creditors, being various in their natui-e, were distributed in various classes. With regard to those creditors who had running accounts with the firm as their bankers, the main ques- tion was, how far the balance due to them at Devaynes' death was affected by the subsequent payments made to them by the new firm. Whether such subsequent payments, in default of any specific appro- priation at the time of payment by either debtor or creditor, could be applied in the gradual discharge 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' death undischarged, and still payable out of his assets. Sir William Grant, as we have already mentioned,' held, that, in the absence of any specific appropriation by either debtor or creditor at the time of payment, the several sums paid by the surviving jDartners in the course of the account were to go in discharge of the balance due at the death of Devaynes. Rnle in Sleech's case — Clayton's case. Sec. 617. 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 dealings of the creditors with the new firm. First, in Sleech's case, representing that class of claimants against the estate of Devaynes who were creditors of the house at the death of Devaynes, and who afterward continued to deal with the surviving partners, by drawing out, but not paying in — it was held, that the equity of the creditors againt Devaynes' estate was defeated in pro- portion 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' death and the bankruptcy, 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 ■ See ante, p. 935, n. 1. The partner- against the assets of the deceased part- ship creditor may continue to deal with ner. Hamersly v. Lambert, 2 Johns, the survivor, and receive interest from Ch. (N. Y.) 508. him without a prejudice to his claim 119 946 Rights of Partners. who, after the death of Devaynes, continued to deal with the surviv- ing 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, some- times 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 partnership amounted to l,713Z.,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 1,2601, thereby reducing his cash balance to 453?. and a fraction. From this time to the bankruptcy, Clayton both paid in and drew out consider- able sums ; but his payments were so much larger than his receipts that, at the time of the bankruptcy, his cash balance in the hands of the surviving partnei-s exceeded 1,713?., the amount of the cash bal- ance at Devaynes' death. By the amount of the dividends received since the bankruptcy (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 Clay- ton claimed against Devaynes' estate. But, in consequence of the decision in Miss Sleech's case, that claim was abandoned to the whole extent of the cash balance at Devaynes' 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-mentioned sum of 453?., minus its proportion of the divi- dends. It was contended on the part of Clayton that he was entitled to go against Devaynes' estate for a proportion of this 453?., on the grounds that he, as payer of such sum, had a right to appropriate it, at any time lie pleased, to the accoiint of the old partnership, and con- sequently, 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, there- fore, that Clayton had no claim against Devaynes' 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, according to some opinions, have made no dif- Limits of Liability. 947 ference, and the new partner, in the absence of express evidence to the contrary, would have been taken to have adopted the current account. ' Iiiability in case of continuance of firm under the will of deceased. Sec. 618. It remains to consider what degree of hability attaches on a deceased partner's estate, in case under some authority given him for that purpose, he directs by his will that his executors sliall con- tinue 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 trade, such limit can in no way affect the creditors of the partnership 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 observed, 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 {t. e., between the executor and surviving part- ner), 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 permit- ted part of the assets to go to the hands of persons from whom they could not draw them.' Creditors of new firm not entitled to pursue the estate. Sec. 619. But with regard to the creditors of the new partnership formed by the survivors and enecutors 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 partner- ship trade.* The reason is, that in addition to the security of the assets directed to be employed in the trade, such creditors have like- wise 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 proceeded 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 transactions of debtor and creditor. Moreover, if, as ' Pemberton v. Oakes, 4 Russ. 154. * See Cutbush v. Cutbusb, 1 Beav. '= Hankey v. Hammookr Buck, 211, in 184; Williamson v. Naylor, 3 You. & wliicli the general assets of the testator C!oll. 308. were made liable. * 10 Ves. 130 ; Wightman v. Townroe, 3 10 Vea. 130. 1 Mau. & Sel. 413. 048 Rights of Partners. Lord Eldon observed, the question is to be determined upon the con- venience, 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 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 variety of engagements, or entering into one great 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, secu- rity for the creditors on the trade. Ex parte Garland. Sec. 620. The case of Ex parte Garland,' though not a case of partnership, clearly illustrates the principles now under consideration. There the testator directed that his trade of a miller, and the farm- ing business then carried on by him, should be carried on by his wife Margaret, his executrix ; that the profits should be applied for her own use, and for the maintenance and education of her children ; that the stock should be valued; that a sum not exceeding 600Z. 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 received the 600Z., and 1,351?. for the valuation, and gave her notes of hand. But she also received from the trustees 768Z. ]2s. M., out of the testator's general assets. Upon the bankruptcy of Margaret, it was held that the trustees might prove for the 768?. 12s, 4f?. Executor carrying on business liable for excess of authority. Sec. 621. Upon the same principles it was held clearly, in a more recent case," that if an executor, who is directed to carry on his testa- tor's partnershij), exceed his authority, by employing the assets in the trade to an extent not warranted by the will, and the surviving part- ner and the executor become bankrupt, the excess of the assets so employed may be pi'oved by tlie 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 Eldon has observed, he places himself in • 10 Ves. 110. 8 Per Sir John Leach, Buck, 309. ' Ex parte Richardson, Buck, 803. Limits of Liability. 949 that situation by his own choice ; judging for himself whether it is fit and safe to enter into that situation and contract that sort of responsibility." Rule in Wightman v. Townroe. Sec. 633. The responsibility of the executor is not altered by the circumstance that he does not coritinue the trade for his own benefit, but only for the benefit of an infant child of a deceased partner. A, B and carried on the trade of maltsters in copartnership, under the firm of A & Co. A died, leaving 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 barley bought in the course of the trade, which were manufactured into malt for sale, and every other act was done which was necessary to carry on the trade of maltsters. In making up the accounts 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 accommodation of the part- nership, and paid in discharge of a partnership debt." Consequences of death of a partner. , Sec. 623. Mr. Lindley^ says : "The death of any one member of a firm operates as a dissolution thereof as between all the members, unless there is some agreement to the contrary, and the mere fact that the partnership was entered into for a definite term of years, which was unexpired when the death occurred, is not sufficient to prevent a dissolution by such death.* Unless all the partners have agreed to the contrary, when one of them dies, his executors have no right to become partners with the surviving partners, "^ nor to interfere with the partnership business, 1 10 Ves. 119. ■* Crawford . v. Hamilton, 3 Madd. " Wrightman v. Townroe, 1 Mau. & 251. Sel. 412 ; Ex parte Marks, 1 D. & C. 499. ' Pearce v. Chamberlain, 3 Ves. Sr. 3 Vol. 3, Lindley on Partnership, pp. 33. 867-895. 950 Eights of Pabtners. but the executors of the deceased represent him for all purposes of account, and, unless restrained by special agreement, tTiey have the power, by instituting a suit in chancery, to have the affairs' of the partnership wound up in a manner which is generally ruinous to the other partners. The doctrine of non-survivorship has no application to the legal estate in land, or to the riglit to sue at law for a debt due to the part- nership, or to the liability to be sued at law for a debt due by it. Moreover, if two persons agree to become partners, and one of them obtains a lease of land or any other property for the purposes of the partnership, but the other person declines to carry out the agreement and to become a partner, and dies, his executors have no right against the survivor in respect of the property in question.' On the death of a partner the surviving members of the firm become at law solely entitled to sue, and solely liable to be sued in respect of debts owing to or by the firm, and they are consequently the proper persons to get in and pay such debts.' But the debts they get in ' Beilly v. Walsh, 11 Ir. Eq. Kep. 33. ^ Sleech's Case, 1 Mer. 564. Entitled to possession of the assets of the firm. — The surviving'partner has the legal right to tlie partnersliip eflects ; but in equity, he is treated as standing merely in tiie relation of a trustee to pay the partnership debts, and dispose of the effects for the benefit of himself and the representatives of the deceased partner. He is not permitted to deal with the partnership property for his own benefit, but must account strictly for all profits arising therefrom. Case V. Abeel, 1 Paige's Ch. (N.Y.) 393; Ames V. Downing, 1 Bradf. (5J. Y. Surrogate) 331 ; Hanna v Wray, 77 Penn. St. 37 ; Renfreer v. Pearce, 68 111. 135 ; Mariatt V. Scantland, 19 Ark. 443 ; Gray v. Palmer, 9 Cal. 616 ; Andrews v. Brown, 31 Ala. 437 ; Tillotson v. Tillotson, 34 Conn. 335 ; Florida v. Bedding, 1 Fla. 243 ; Allen v. Hill, 16 Cal. 113 ; Holland V. Fuller, 13 Ind. 135. So long as he conducts himself properly in the admin- istration of this trust, a court of equity will not interfere with his management of the estate, or take it out of his hands and place it in the hands of a receiver ; but if he misconducts himself in that respect the court will interfere for the protection of the estate of the deceased partner as well as for the protection of the interests of the firm creditors. Jac- quin v. Buisscp, 11 How. Pr. (N. Y.) 385 ; Evans v. Evans, 9 Paige's Ch. (N.Y.) 178 ; Gant v. Reid, 24 Tex. 46. Thus, where on the dissolution of a firm the books were left with one partner to settle up the business of the firm . This partner died, and tlie surviving partner sued the ad- ministrator to recover' the books of the firm,and it was held that he was entitled to recover the possession of them, as his rights were the same as though the part- nership was on foot at the time of such partner's death, as, even after dissol ution the partnership is treated as on foot for the settlement of past firm transactions. Murray v. Mumford, 6 Cow. (N.Y.) 441. So if copartnership assets come to the possession of the- administrator of a deceased partner, and are actually ad- ministered by him, the surviving part- ner may obtain relief in equity against the estate of iiis deceased copartner, without authenticating his claim under the statute of administration. Mariatt V. Scantland, 19 Ark. 443 ; Gray v. Palmer, 9 Cal. 616. His power of con- trol over the firm property extends to the real estate of tlie firm until all the firm debts are paid and the affairs of the firm are finally settled, and no rights therein can be acquired by any person, througli such deceased partner or any of his representatives, that can in any measure interfere witli the rights of the survivor. Cobble v. Tomlinson, 50 Ind. 550, and he may sue as surviving partner for any trespass to the real Limits of Liability. 951 must be placed to tl^e credit of the late firm, and the debts they pay must be placed to its debit. Whilst, therefore, the executors of the deceased partner are entitled to have payments made to the surTivors estate of the firm. Pfeifer v. Steiner, 27 Micb. 537. But when, after the disso- lution of a partnership, the goods of the firm are intrusted to one of the partners to be by him converted into money by sale at retail, and with the proceeds pay the partnership debts, such partner be- comes a trustee, and the exchanginpr of the goods for land and taking the title in his wife's name are a fraudulent per- version of the trust property, ?ind equity will follow the land thus acquired, and subject it to the debts of the firm as against any person acquiring the litl'j with notice of the facts, or in fraud of tlie rights of the olher partner. Being a trustee, he is bound to exercise the highest degree of good faith, and will not be permitted to take the property at an estimated value even, without the consent of the representatives of the deceased partners, Ogden v. Astor, 4 Sandf . Ch. (N. Y.) 311, nor even with such consent, if he is one of the execu- tors or administrators of such deceased partner's estate. Nelson v. Hayner, 66 111. 487; and it would seem tliat such sale under the circumstances last named is liable to be impeached for fraud, even though the price paid is adequate. 'Thus, in Case v. Abeel, 1 Paige's Ch. (N. Y.) 393, a surviving partner, being also one of the executors of his deceased partner, agreed with his co-executor that he, the surviving partner, should take the stock at a valuation. It was held that if he had not been executor the agreement would have been valid ; but that being an executor he could make no such agreement without being liable to ac- count for profits. Power to dispose of the flrm property. — He has power to sell the firm property, and assign its choses in action, as notes, a bond and mortgage, etc., Pinckney v. Wallace, 1 Abb. Pr. (N. Y.)82, and at common law, may, with the assent of the representatives of the deceased partner, assign the firm property, in trust for the creditors of the firm. Hutch- inson V. Smith, 7 Paige's Ch. (N. Y.) 26 ; Egberts v. Wood, 3 id. 517. The sur- viving partner has authority to close up any contract or obligation entered into before the decease of his copartner, but cannot bind the estate by any new undertaking. Thus where goods were couBigned to a firm of commission mer- chants to be sold on account of the shippers, but before their sale one of the partners died, it was held that the survivor might sell the same,, and that the claim of the shipper was against the firm. Offat v. Scott, 47 Ala. 104. He cannot enter into any new undertakings however, in the name or on behalf of the firm, without the assent of the rep- resentatives of the deceased partner. Schenkl v. Dana, 118 Mass. 236. He has an equitable lien upon the firm property, not only for the payment of the debts of the firm to third per|ons, but also for the payment of any balance due to him from the firm. Grey v. Palmer, 9 Cal. 616; Wade v. Rusher, 4 Bosw. (N. Y. S. C.) 537. Has the sole rigid to sue on partnership claims. — He, and he alone, can sue for the recovery of a firm debt. Clark v. Howe, 23 Me. 561; audit has been held that they need not describe themselves as surviving partners, Atwood v. Rat- tenbury, 6 Moore, 579, but, whether it is essential to allege the character in which he sues or not, the rules of good pleading suggest the propriety of so doing, and a failure to do so is, at least, indicative of a careless and slovenly pleader, and it is believed that, in most of the States, at least, it is necessary that it should be stated, or at least ap- pear from some statement in the com- plaint or declaration, in what capacity he sues, Josslyn v. Taylor, 24 JSf. H. 268; Hubbell v. Skiles, 16 Ind. 138; Keith V. Pratt, 5 Ark. £61, but, after verdict, the defect is cured. Hill v. Mc- Neil, 6 Port. (Ala.) 29. The survivor may in his own name foreclose a mort- gage due the firm, Robinson v. Thomp- son, 9 Miss. 454, or maintain an action of trespass for an injury to its real estate, Pfeifer v. Steiner, 27 Mich. 537, and it seems that he must sue alone, and cannot join the representatives of the deceased partner, as plaintiffs in the action. Pfeifer v. Steiner, ante; Pitton v. Fisher, 44 111. 33. The right of action survives, Osgood v. Spencer 2 IL- & G. (Md.) 133 ; Burgwin v. Hastier, 3 N. C. 75, to him alone, upon all partnership claims, of every kind, Davis v. Church, 1 W. & S. (Penn.) 240 ; Walker v. Gal- braith, 8 Head (Tenn,), 315 ; Bernard v. Wilcox, 2 Johns. Cas: (N.Y.) 374, and he may join a plaim (iue to him from the 952 Rights of Partneks. by a debtor to the old firm, applied in payment of his debt,' the sur- virors have a right, if thoy pay more than their share of the debts of the old firm, to bo reimbursed out of the estate of their deceased copartner.' They are creditors against that estate for what may defendant individually, with a claim due the firm. Adams v. Hackett, 37 N. H. 29Si. The representatives of the firm have no right to collect a debt due the firm, and his receipt is no protection to the debtor, Wallace v. Fitzimmons, 1 Ball. (Penn.) 268, and the representative of the deceased partner cannot be joined with him as a party plaintiff in an action, nor can they be joined as defend- ants, Tracy V. Suydam 30 Barb. (N. Y.) 115 ; Voorhis v. Baxter, 1 Abb. Pr. (N. Y.) ^ ; Hedden v. Hedden, 1 Penn. St. 62, except where provision is made therefor by statute, as is the case in some of the States. McCullock v. .Tudd, 20 Ala. 703 ; Saunders v. Wilber, 3 Head (Tenn.), 578 ; Lockhart v. Harrell, 6 La. An. 531. May sell, transfer or pledge firm prop- erty to pay firm debts. — The surviving partner, for the purpose of paying the indebtedness of the firm, may sell, as- sign, transfer or pledge the assets of the firm, Loeschigk v. Hatfield, 5 Eobt. (N. Y. S. C.) 29 ; Peyton v. Station, 7 Gratt. (Va.) 381, and he may prefer creditors unless the preference is fraudulent and collusive. Loeschigk v. Addison, 4 Abb. Pr. (S.Y., N. S.) 313 ; Bredlaw v. Sav- ings Bank, 28 Mo. 186; Eoys v. Vilas, 18 Wis. 173. •' The death of a partner," say the court in Loeschigk v. Hatfield, ante, " invests the survivor with the exclusive right of possession and man- agement jf the whole partnership busi- ness and property, for the purpose of settling and closing it., Having the right to collect and dispose of the prop- erty, he has the power, for that pur- pose, of assigning, transferring or pledging, any chose in action, or other property belonging to the estate, in payment of a debt. He may make a preferential transfer to a particular creditor ; and the title so acquired by such favored creditor cannot be set aside by the other creditors of the firm, without proof of fraud," and the same doctrine has been held in numerous cases, and seems consistent with prin- ciple. French v. Lovejoy, 13 N. H. 461 ; Bredow v. Savings Institution, ante.; Roys V. Vilas, 18 Wis. 173. But, w^jile ' Lees V. Laforest, 14Beav. 350. he may sell the property to pay firm debts, or assign choses in action, etc., for that purpose, he cannot make a general assignment of the firm property , for the payment of firm debts even, without the assent of the representatives of the deceased partner. Hutchinson v. Smith, 7 Paige's Ch. (N. Y.) 35; Egberts v. Wood, 3 id. 521 ; Bancroft v. Snodgrass, 1 Ooldw. Kirkman v. Booth, 11 Beav. 273. * phjUipg y. Phillips, Finch, 410. - Kirkman v. Booth, 11 Beav. 273 ; « M'Donald v. Richardson, 1 Qiif. 81. see Skirving v. Williams, 24 id. 275. ' M'Donald v. Richardson, 1 Giff. 81, ' See Docker v. Somes, 2 M. & K. 655; and compare Simpson v. Chapman, 4 Palmer v. Mitchell, id. 672, note; Town- De G. Mac. & G. 154. end V. Townend, 1 Giff. 201. * Docker v. Somers, 2 M. & K. 655 ; Townend v. Townend, 1 Giflf. 301. Limits of LiABttiTT. 971 Upon the principle that every one concerned in a breach of trust with notice of the trust is answerable for such breach^ it follows that if a partner dies, and his surviving partners allow his assets to remain in their business, with the knowledge that to suffer them so to remain is a. breach of trust on the part of the executors, the surviving part- ners will be themselves responsible to the separate creditors, legatees, or next of kin of the deceased, for any loss which may be thereby sus- tained.' And, further, inasmuch as it is, f^r«»ia facie, a breach of trust for executors to allow the assets of the deceased to remain in the business carried on by him at his death, surviving pai'tners, who knowingly cai-ry on the business with the assets of the deceased, will be answerable as before, unless they can show that no breach of trust was in fact committed. " But if the executors are authorized to lend part of the assets of the deceased to his surviving partners, the latter will not be accountable for the profits they may make by the employrnent in their trade of money lent to them by the former in pursuance of their authority,' nor, if the money is lost, will the executors be responsible, if they took such security for its repayment, as, having regard to the will of the testator, it was their duty to take.'' The right of a legatee to an account of profits, and the difficulty of the position of executors who were the partners of the deceased, and who continue his assets in the business, are well illustrated by the recent case of Townend v. Townend.' There three brothers, A, B, C, were in partnership, under articles by which it was provided that the capital of the partners should not be withdi-awn until the expiration of seven years from that date ; that, in case of the death of one of the partners within that term, a valuation of his share should be made, and that the surviving partners should pay to his representa- tives the amount of such valuation within three years from the said term of seven years, and in the meantime give sufficient security for the same by a mortgage of a competent part of the partnership prop- erty. It was also provided that it should not be lawful for the repre- sentatives to commence any action for recovering payment of the share of the deceased until the end of three years after the expiration of the term of ten vears, nor to claim any participation in the profits > See Wilson v. Moore, 1 M. & K. 137 » Parker v. Bloxham, 30 Beav. 394. and 337 ; Booth v. Booth, 1 Beav. 135, ■* Paddon v. Richardson, 7 De G. Mac. and compare Ex parte Barnewall, 6 De &G. 563. G. Mac. & G. 801 . '1 Giff. 201. . ' Travis v. Milne, 9 Ha. 141. 973 Rights of Partners. made after the day up to which the valuation was made, the expressed intention being that the representatives of the partner dying should take 51. per cent on the value of the share in lieu of profits. It was further provided that nothing should prejudice the right of the representatives, within the term of seven years, to take any proceed- ings in order to obtain a fair valuation, or to obtain and enforce the mortgage security. In April, 184-4, A died, having by will devised his real and personal estate to B, C and D, upon trust, to raise the sum of 13,000Z. and invest the same in government or real security, and apply the proceeds toward the maintenance and education of the plaintifiF, his then infant daughter, and accumulate the surplus at compound interest ; and upon his daughter attaining twenty-one, to pay the accumulations to her, and to stand possessed of the capital on trust, to pay her the proceeds during her life. The testator's estate consisted almost entirely of his share in the partnership. In December, 1844, a valuation was made, by which the testator's, share was ascertained to be 20,OO0Z. and upwards. In June, 1853, being more than ten years from the date of the articles, certain heredita- ments, consisting of freeholds, leaseholds, and machinery (part of the partnership assets), were mortgaged by B to and D, as a security for the 12,000?.' The plaintiff came of age in 1857, and in 1858 B and C rendered to her an account of the trust funds, in which they debited her with various items for maintenance and education, with 51. per cent interest thereon, and credited her with the sum of 12,000?. and interest at 51. per cent with yearly rests, up to the 1st May, 1853, and thenceforth with interest at il. per cent with yearly rests. The plaintiff, however, insisted that the 12,000Z. had been continued in the partnership business, and she filed a bill against B, C and D for an account of the profits made in the partnership busi- ness on the sum of 12,000?. from the testator's death, and for payment of what should be found due to the plaintiff, alleging that the mort- gage was an improper security. The court held, 1, That the plaintiff was entitled to an account of the legacy of 12,000?., with interest at 5?. per cent, from one year after the testator's death up to the 1st January, 1849 (ten years from the date of the articles), and with compound interest on the surplus, after allowing for sums expended for her maintenance and education ; 2, that the plaintiff was entitled to an account of the profits made by the partners from the 1st ■ The property, so far as it oould be regarded as an authorized security, was not an adequate security for 13,0002. Limits of Liability. 973 January, 1849, on the balance found due for the principal at that date, with interest at 61. per cent and annual rests ; 3, that she was entitled to a decree for payment of what should be so found due ; and, 4, that the entry of the sum of 12,000?. in the account furnished by B and C must be taken as conclusive against them that they had such a sum in their hands. It was considered that the mortgage had not the effect of withdrawing the 13,000?. from the business : it was part of a plan for keeping the money in the business ; and the 12,000?. ought not to have been, left' on the security of property from which the trustees ought to have recovered it. It sometimes happens that the executor of a deceased partner is taken into partnership by the surviving partners, and a question then arises whether the profits received by the executor as partner belong to him personally, or to the estate which he represents. This must depend on the character in. which the executor became a partner. If admitted as the representative of the deceased, and in respect of the share to which he was entitled, the executor must account for any profits which he may have obtained as partner ; but, on the other hand, if he was admitted in some other character and on other grounds, the profits coming to him as partner will not form portion of the assets for which he must account as execiitor.' 'See Simpson v. Chapman, 4 De G., Mac; & G. 154. 974 Eights of Pautjs'ees. CHAPTER XXVI. EXTINCTIOSr OF LIABILITIES. Sec. 640. Extinction of liability. Sec. 641. Composition deed treated as release. Sec. 642. May be limited to one partner. Sec. 643. Covenant not to sue not treated as release. Sec. 644. Payment by one, payment by all. Discharge of the whole by the act of one partner. Sec. 640, Having seen in what manner bhe estates of a retiring, and of a deceased partner may be relieved from their respective lia- bilities, let us shortly consider how the estate of the whole firm may be discharged by the act of one or more partners. This, it is appre- hended, 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 inure to the benefit of the firm. Thus, where A & B are bound jointly and severally to 0, a release to one is a release of the debt to both.' Now a learned writer obsen'es that doubtless a release will 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 demand from one partner upon a bill of exchange, or for goods sold, he may come upon the others for the residue; but if he seals a release to one, whatever sum may still be due to him, he is barred as against each and all of them.' ' Hammon v. Kail, March, 202 ; Need- shall only operate as a release to him. ham's case, 8 Kep. 136 ; Bower v. Swad- Therefore, in determining the applica- lin, 1 Atk. 294 ; Co. Litt. 233, a ; Colling tion of this doctrine in a given case, ref- V. Prosser, 1 B. & C. 682. To a plea of erence must be had to the statute and a release by one of two joint obligors to the intention of the parties, the plaintiff cannot reply that the re- ' Wats. Part. 237. So if a creditor re- lease was given upon the undertaking on ceive payment of part of his debt from the part of the other obligor (defendant) a surety, such payment alone will not not to be released. Cocks v. Nash, 9 operate as a discharge to the co-surety, Bing. 341. This is not the rule in those for, if the latter be compelled to pay States where by statute it is provided more than his share, he will still have that' the release of one joint creditor his right of contribution ; but if the^ Limits of Liability. 975 Composition deed treated as release. Sec. 641. Upon this pi'inciple it has been decided that if, upon the dissolution of a partnership, the joint creditors execute a composi- tion 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 liability for the joint debts. ' May be limited to one partner. Sec. 642. 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 ma_y even leave that partner open to actions on account of his copartner. Thus, in Solly v. Forbes," an action was brought against the defendants, Forbes & Ellerman, for money paid, etc. Forbes pleaded the general issue. Ellerman pleaded the general issue, a' release, and set-off. The release was expressed to bo made between ■the plaintiffs of the one part, and the defendants, Forbes & Eller- man, of the other, and recited, among other things, that there were various transactions of business between Forbes & Ellerman and the plaintiffs; and that, upon the balance of accounts between the two houses, Forbes & Ellerman stood indebted to the plaintiffs, as copart- ners in trade, in a considerable sum of money, the whole of which was then due and owing; and that Ellerman had offered to the plain- tiffs to pay them the sum of 3,000?. upon having such a release from creditor on receiving such part payment the partners, must be one undei seal, discharge the surety from his whole lia- and then the discharge is placed on bility, that is a discharge to the co- technical grounds relating to specialties, surety. Nicholson v. Revill, 4 Ad. & Harrison v. Clare, 3 Johns. (N. Y.) 449 ; Ell. 675 ; Mayhew v. Crlckett, 3 Swanst. Eowley v. Stoddard, 7 id. 307 ; DeZeng 193. But subsequent consent may re- v. Bailey, 9 Wend. (N. Y.) 307 ; Cats- vive the liability of the surety without kill Bk. v. Messenger, 9 Cow. (N. Y.) 37; a fresh consideration. Id., and see Shaw v. Pratt, 33 Pick. (Mass.) 305 ; Smith V. Winter, 4 M. & W. 454. Lunt v. Stephens, 34 Me. 534. And ■ Ex parte Slater, 6 Ves. 146. wherever there are circumstances show- ' 4 Moore, 448 ; 3 Brod. & Bing. 38. ing an intention not to release the other For a tort, the release of one at common partners, even though the release is law was a release of all. Co. Litt. 333; executed to one of them under seal, this Bac. Ab. (G.); Williamson v. McGinnes, has been held not to release the others, 11 B. Monr. (Ky.) 74. as where by its terms it limits the re- lease only to the individual. Wiggin v. Release. — A release by one partner of Tudor, 33 Pick. (Mass.) 444; Sally v. the obligation of a debtor to the firm Forbes, 4 Moore, 448 ; Wilson v. Mower, generally releases all the others. Gray 5 Mass. 411 ; or where there is a mere v. Brown, 33 Ala. 363 ; Tuckerman v. covenant not to sue the particular part- Newhall, 17 Mass. 581; American Bk. nerto whom it is executed. Couch v. V. Doolittle, 14 Pick. (Mass.) 136 ; Wig- Mills, 31 Wend. (N. Y.) 434 ; Chandler gin v. Tudor, 33 id. 444; Barson v. Kin- v. Herick, 19 Johns. (N. Y.) 139 ; Hosack caid, 3 Penn. St. 57 ; Willings v. Con- v. Rogers, 8 Paige's Ch. (N. Y.) 339 ; sequa, 1 Pet. (U. S. C. C.) 301 ; Gray v. McLelahd v. Cumberland Bk., 34 Me. Brown, 33 Ala. 363 ; Brown v. Marsh, 7 566 ; Goodnow v. Smith, 18 Pick. (Mass.) Vt. 337. But it has been held that the 416 ; Shed v. Pierce, 17 id. 633. release, to be effectual to discharge all 976 Rights of Pabtnees. the plaintifEs as thereinafter contained; the release then witnessed that for valuable considerations (money and promissory notes to the amount of 3,000Z.), the plaintifEs remised, released, and forever dis- charged Ellerman, his executors, administrators, and assigns, from all actions, suits, debts, sum and sums of money, claims, demands, etc., in law and in equity, which the plaintifEs then had or might have against Ellerman, his executors, administrators, or assigns, by reason of any matter, cause or thing whatsoever, relating to the premises from the beginning of the world to the day of the date of those pres- ents, except and subject nevertheless to the provisos, declarations, or agreements thereinafter contained. Provided always, etc., that those presents or any thing therein contained should not release, or be con- strued to release, or in any manner to prejudice and affect any claims or demands which the plaintifEs, 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 & Eller- man, or either of them, or any other person or persons whomsoever. Provided also, nevertheless, etc., that it should be lawful for the plaintiffs, from time to time, when and as they should be thereto advised to commence and prosecute any actions, suits, or other pro- ceedings, 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 enabling the plaintiffs to recover or compel payment or satisfaction of the debt so due and owing from Forbes & Ellerman to the plaintiffs as afore- said, either by or out of any the joint estate or effects of Forbes & Ellerman, or by or from Forbes, his executors, administrators, or assigns, or his separate estate and effects. The plaintiffs by their replication averring that the action was brought to compel payment of the moneys due to them from Forbes & Ellerman, 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, among other things, that the provisos in this release were void as being repugnant to the nature of the instrument. But the Court of Common Pleas, after taking time to consider the case, overruled the demurrer, being of opinion that the release, as set forth, was no bar Limits of Liability. 977 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 payment from Forbes; that it was expressly provided and declared that it should be lawful for the plain- tiffs to commence and prosecute any action against Ellerman jointly with Forbes for the recovery of the joint debt; that this was a joint action for the recovery of sucli debt, and, therefore, an action expressly and in direct terms authorized by the deed of release itself. Covenant not to sue, not treated as release — Hutton v. Eyre. Sec. 643. 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 instrument evi- dences an intention on the part of the covenantor to avoid the legal effects of a release as to copartners. In Hutton v. Eyre,' the plain- tiff 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 covenanted 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 24:th of January, 1810. On the 37th October, 1810, the defendant executed an assign- ment of all his property to trustees for the benefit of his creditors, in consideration 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 bo a sufficient release and discharge for him. Between the time of execut- ing the deed of dissolution, and the 1st of January, 1810, the defend- ant contracted different debts in the name of Hutton & Eyre. The assignees having paid only a small dividend, the plaintiff was obliged 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 composition operated as a i-elease, not only to the defendant, but also to the plaintiff, as the defendant's partner, and, therefoi'e, that the plaintiff was under no obligation to pay the remainder of the debts, and had consequently paid them in his own ' 1 Marsh 603. But in Iowa it is held 35 la. 343. Bat under the statute of that a creditor may release one partner that state one of both may be sued, from all liability, and hold the other Ryerson v. Hendric, 33 la. 480; see, liable for his claim. Gardner v. Baker, also, Wilson v. Home, 37 Miss. 477. 123 978 Eights of Partners. wrong. The Court of Common Pleas held that the action was main- tainable. Gibbs, C. J. : " In a case like the present it is 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 covenant. 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 defend- ant would not extend to his partner. As, therefore, the terms of the covenant do not require such a construction, and as such a construc- tion would be manifestly against the intention of the parties, we are decidedly of opinion that it ought, not to be suffered so to operate." Payment by one, payment by aU. Sec. 644. Payment by one of several partners on their joint account is payment by all.' And where two houses are partners in a particu- ' Innea v. Stepbenaon, 3 Mood. & Malk. 145. Where two partners are defeud- aiita.and both are arrested on a joint ea. sa. for the amount of the damages, and one is discharged on giving a prom- issory note to the plaintiff, payable by installments, this operates as a discharge to the other. ' Ballam v. Price, 3 Moore, 335 ; and see Foster v. Jack- son, Hob. 59. And if the plaintiff con- sent to discharge one of several defend- ants taken on a joint ca. sa. , he cannot afterward retake him, or any of the others. Clerk v. Clement, 6 T. R. 525 ; see Basset v. Salter, 2 Mod. 136 J Black- burn V. Stupart, 3 East, 243; Tan- ner V. Hague, 7 T. R. 420. In Crow V. Commonwealth, 6 Pitts. Leg. Jour. (N. S.) 95 — a case decided by the Supreme Court of Pennsylvania in which it was held that in the distribu- tion of the proceeds of the sheriff's sale of partnership effects, the firm creditors should be paid according to the priority of their liens, whether their judgments be against a partner or the whole firm, and the creditor could go behind the record to show that it was a firm debt. This case seems to be contrary to the weight of authority. It has been held, in effect, that a judgment against one partner precludes an action against the others. See Nichols v. Burton, 5 Bush, (Ky.), 830 ; Candee v. Clark, 2 Mich. 255; Mason v. Eldred, 6Wall.(U.S.) 331; Sedan V. Williams, 4 McLean (U. S. C. C.),51; Crosby v. Jeroloman, 37 Ind. 376 ; Sloo v. Lea, 18 Ohio, 379; Haw v. Kane, 3 Chand. (Wis.) 333 ; Robertson v. Smith, 18 Johns. (N. Y.) 459; Smith v. Black, 9 S. & R. (Penn.) 143 ; Sedam v. Hodges, 4 McLean(U. 8.), 51; Ward v. Johnston, 13 Mass. 148 ; Van Valen v. Russell, 13 Barb. (N. Y.) 593 ; Philsou v. Bamp- field, 1 Brev. (S. C.) 303 ; Moale v. Kal- lins, 11 G. & J. (Md.) 11 ; Ward v. Motter, 2 Rob. (Va.) 559 ; Gibbs v. Bry- ant, 1 Pick. (Mass.) 131 ; Pierce v. Kearney, 5 Hill (N. Y.), 94 ; Peters v. Sanford, 1 Den. (N. Y.) 334 ; Willings V. Consequa, 1 Pet. (U. S. C. C.) 301; Nichols v. Aguera, 3 Mills (S. C), 290; Moss V. McCuUough, 5 Hill (N. Y.), 135. How, then, can a judgment against one partner be afterward regarded as a partnership liability? "A judgment against the known members of a partner- ship discharges the secret .or dormant members." , Scott v. Colmesnil, 7 J. J. Marsh. (Ky.) 416; Smith v. Black, i9 S. & R. (Penn.), 143; Moale v. Hollins, 11 G. &J. (Md.) 11. But this rule baa not been adhered to in South Carolina. Watson v. Owens, 1 Rich. Ill ; Union v. Hodges, 11 id. 480; Kentucky: Bronzel v. Poyntz,8 B. Monr. (Ky.) 178 ; Tennessee : Nichols v. Cbeare,4Sneed(Tenn.)339; Maine: Den- nett v. Chick, 3 Me. 191, and in United States Court, Van Ness v. Forrest, 8 Cr. (U. S. C. C.) 30. Regarding a part- nership as a mutual agency, electing to sue one partner and prosecuting the suit to judgment would seem to be a dis- charge of the other partners, although Limits op Liability. 979 lar transaction, payment by one house on account of that transaction the judgment was not satisfied. Priestly V. Ferine, 3 H. & C. 977, and Calder v. Dobbell, L. R.. 6 C. P. 486; King v. Hoare, 13 M. & W. 494; Ek parte Hig- gins, 5 De G. & J. 33. In England tlie rule is the same as in most of the states of this country, and a discharge of one partner, or a judgment against him, dis- • charges the others. Mr. Lindley in his work on Partnership, p. 868, says,: " If two partners are indebted on the part- nership account, and one of them gives II bill or note for the debt, and that bill or note is dishonored, the creditor who took it will not be precluded from hav- ing recourse to both partners for pay- ment. Bottomley v. Nuttall, 5 C. B. (N. S.) 122 ; Whitwell v. Perrin, 4 id. 412 ; Ex parte Hodgkinson, 19 Ves. 291 ; see, too, Ex parte Raleigh, 3 M. & A. 670, unless it can be shown that he intended to substitute the liability of the one for the joint liability of the two. As the jury found was the case in Evans V. Drummond, 4 Esp. 89, and Reed v. White, 5 id. 123. Compare with the cases preceding. But when a creditor ob- tains from his debtor a security of a higher nature thail he had before, the original debt is merged in the higher security, and can no longer be made the foundation of any action or suit, or of proof in bankruptcy or insolvency ; Higgen's case, 6 Co. 44, b ; Owen v. Homan, 3 Mc. & G. 378 ; Price v. Moul- ton, 10 C. B. 561 ; Shack v. Anthony, 1 M. & S. 572 ; but the original debt may "be made the foundation of an adjudica- tion of bankruptcy, Re Griffith, 3 De G. M. & G. 174 ; and this doctrine is as much applicable to joint as to several obligations. Consequently, if two part- ners are jointly indebted by simple con- tract, and one of them gives his bond for payment of the debt, the joint debt is at an end ; Bassett v. Wood, 11 Vin. Ab. Exting. B. 8; and see Owen v. Ho- man, 3 Mc. & G. 407 ; Ex parte Herna- raan, 12 Jur. 642 ; and if the creditor obtains judgment against one of the partners only, he loses his remedy against the others ; King v. Hoare, 13 M. & W. 494 ; Ex parte Higgens, 3 De G. & J. 33 ; unless, perhaps, in the case where they are abroad, and cannot, therefore, be sued here with effect. See as lo this, Ex parte Waterfall, 4 De G. & S. 199. A colonial judgment creates no merger. Bank Of Australasia v. Nias, 16 Q. B. 717. With respect to obliga- tions which are joint as well as several, there is more difficulty. A joint and several obligation, arising ex delicto, is extinguished by a judgment recovered against any one of the persons obliged ; Brown v. Wooton, Cro. Jac. 73; Buck- land V. Johnson, 15 C. B. 145 ; and see, as to the plea of another suit depend- ing, Boyce v. Douglass, 1 Camp. 61 ; but, as regards joint and several obliga- tions arising ex contractu, although a joint judgment against all the persons obliged, extinguishes the separate lia- bility of each, for, nemo debet bis vexari pro eadem causa, yet a judgment ob- tained against one of them only does not extinguish the separate liability of the others. Px parte Christie, Mon. & Bl. 852. In order that this eflFect may be produced the judgment must be sat- isfied. Higgen's case, 6 Co. 46 a ; King v. Hoare, 13 M. & W. 494; and see Drake V. Mitchell, 3 Bast, 251. Further, if several persons are jointly liable, and one of them afterward gives a separate security on which judgment is recov- ered against him, this will not merge the prior joint liability. In the leading case of Drake v. Mitchell, 3 East, 251 ; SOP, too, Re Clarkes, S Jo. & Lat. 212 ; Ex parte Bate, 3 Deac. 358, where a joint and several debt was held not merged, so far as it was joint, by higher separate securities, three persons pur- chased a coal mine, and covenanted jointly to pay the purchase-money by installments. An installment being in arrear, one of the covenantors gave his own promissory note for part of the money due, and judgment was after- ward recovered against him for the amount of the note in an action upon it. In a subsequent action on the covenant, brought against all three covenantors, for the recovery of the installment in question, it was held that, as the note was not accepted in satisfaction of any part of the plaintifi^s' demand, the judg- ment recovered on the note merely ex- tinguished the right to sue on the note itself, and did not affect the liability on the covenant so long as the judgment remained unsatisfied. The defendant who gave the note was in this case twice sued, viz., first, in respect of his separate liability on the note, and next, in respect of his joint liability on the covenant ; but the liabilities being sub- stantially different, the case is not in conflict with the rule nemo debet bis vexari pro eadem causa. Notwithstand- ing the undoubted rule that a bond or judgment merges any simple contract debt in respect of which it may have 980 Rights of Partsteks. is payment by both.' Payment by one of the obligors in a joint and several bond is payment by all." been given or obtained, tliia rule only applies if the simple contract debt ex- isted first in order of time, and if tlie specialty creditor is the same as the simple contract creditor. So, that if a bond is given or a judgment is obtained (under a warrant of attorney), as a secu- rity for future advances. Holmes v. Bell, 3 Man. & 6r. 313, and the note there ; or if a simple contract debtor gives a bond or confesses a judgment to a trustee for his creditor. Bell v. Banks, 3 Man. & Gr. 358 ; in such a case equity would probably follow the law, ut res magis valeat quam pereat, in nei- ther of these cases will there be any merger. It must also be borne in mind that in equity the doctrine of merger does not apply to the same ex- tent as at law; for in equity, if a joint bond is given for a pre-existing joint and several debt, the bond will itself be treated as joint and several. Bishop V. Church, 2 Ves. Sr. 100 and 371 ; Simpson v. Vaughan, 3 Atk. 31 ; and see, as to a -judgment, Jacomb v. Harwood, 2 Ves. Sr.365. Further, it is to be observed that merger does not, properly speaking, extinguish a debt; for, notwithstanding the fact that a debt is merged in a higher security, the 1 Cheap V. Cramond, 4 B. & A. 663. merged debt is suflicient to support an adjudication of bankruptcy against the debtor. Re Griffiths, 3 De G. M. & G. 174, and the cases there cited. Again, proof in bankruptcy against the estate of one partner in respect of a partner- ship debt is not equivalent to a judg- ment, and does not preclude the proving creditor from afterward suing the solv- ent partners, and recovering from them what he may have failed to obtain in the bankruptcy. Whitwell v. Perrin, 4 C. B. (N. S.) 413 ; Bottomley v. Nutall, 5 id. 123. If a person loans money for the use of a firm, and accepts the note of one partner, he cannot maintain an action against the firm. If a party, who accepts the note of one partner is ignorant that the loan is for the firm, he cannot maintain an action against the firm after he has recovered a judgment against the partner on the note. A judgment against partners and others jointly is a several claim as against the bankrupts, and cannot re- ceive a dividend from the joint estate. If the declaration of a dividend on a particular claim was unauthorized, the assignee may withhold its payment. In re Herrick and Herrick, 13 Nat. Bankr. Reg. 313. ^ Bac. Abr. Obligation, D. 4. Eights of Partners against Third Persons. 981 CHAPTER XXVII. OF THE RIGHTS OF PJtRTNERS AGAINST THIRD PERSONS. Contract gives no new rights to individuals. Limits of right. Under sealed instruments — Bonds — Eule in Wright v. Russell. Rule in Barclay v. Lewis. Barclay v. Lewis overruled by Barker v. Parker. Rule in Strange v. Lee. Bond for repayment of money advanced by firm or either member of, does not protect advances by survivor. Rule as to bond to cover bills drawn by firm. Effect of death or retirement of partner upon bond of indemnity to firm. Effect upon such bonds when firm is afterward incorporated. Same principles applied in equity — Pemberton v. Oakes. Introduction of new partner — Effect of, on such bonds. Bond may be made so as to cover fluctuations and changes in composi- tion of the firm. Who may recover on bond given to firm in firm name. Bonds to companies, not affected by changes in members of. What submission to arbitration covers — Garland v. Noble. Power of attorney givien to one member — Effect of. Rights of partners under unsealed contracts. Rule in Ex parte Gar- land. Guaranty given to one partner, not guaranty to firm. Simple contracts may be enlarged or explained by construction. Ex parte Kensington. Sec. 665. Guarantees given to one partner may in some cases be extended to firm — Garrett v. Handley. Sec. 666. Alexander v. Barker. Sec. 667. Bills and notes, generally security only to one to whom payable — Ex- ceptions . Sec. 668. Eule when contract by mistake fails to express the intention of the parties. Sec. 669. Rights of partners as to accounts current with their debtors — Boden- ham v. Purchas. Sec. 670. Bodenham v. Purchas questioned in Jones v. Maud. Sec. 671. Of extinction of rights. Payment to and release by one partner. Effect of. Sec. 645. Sec. 646. Sec. 647. Sec. 648. Sec. 649. Sec. 6.50. Sec. 651. Sec. 652. Sec. 653. Sec. 654. Sec. 655. Sec. 656. Sec. 657. Sec. 658. Sec. 659. Sec. 660. Sec. 661. Sec. 662. Sec. 663. Sec. 664. 982 Eights of Partners. Sec. 673. Payment to one partner — King v. Smith. Sec. 673. Distinction when the debtor owes both the partner and the firm. Sec. 674. Judgment taken by one of two joint creditors. Effect of. Sec. 675. Payment to one of two firms that are partners in certain transactions. Contract gives no new rights to individuals. Seo. 645. The contract of partnership cannot give new rights to an individual.' On the contrary, it seems clear that there are cer- tain rights which persons might possess as individuals, but which they would lose when united iii a body as partners. For instance, although it has been said that partners might be very fit to conduct the office and lusiness 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 appointed executors had no claim, in the same manner as individual executors, upon the residue undisposed of by the will." It frequently, however, happens that under the express provisions of certain statutes the rights of partners are especially provided for. Hence by the statute law, persons trading jointly are more advanta- geously situated with respect to the payment of duties than if they each traded separately.' Again, also, by a 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 Eaynard v. Chase,' the provisions of the statute 5 Eliz., c. 4, ' But see 6 Rep. 1. Solicitors, by ship cannot dissolve their partnership, reason of their peculiar business, pos- as against their client, without his con- sess some privileges, and are affected sent, so as to enable the retiring part- witli some disabilities which do not ap- ner as discharged to act against him. pertain to other partners. But tliis is Cholmondeley v. Clinton, 19 Ves. 273. entirely for the benefit of their clients. On the same principles where one of Thus, where a partnership has expired two solicitors, who were partners, be- by effluxion of time, and in a suit for an came bankrupt, and the assignees ex- account, etc. , a receiver has been ap- eluded the other from interfering with pointed before decree, the court will the affairs of the partnership, the court not compel the defendant, the former nevertheless refused to order the as^ managing partner, to deliver up to the signees to deliver to him the papers receiver, for the purpose of making out belonging to the clients of the firm. bills of costs, partnership books and ac- Davidson v. Napier, 1 Sim. 397. counts which have remained in his ' De Mazar v. Pybus, 4 Ves. 644. hands, and title deeds belonging to a ' 11 Geo. 4 & 1 Will. 4, c. 64. § 10, third party, which came into the posses- and t and 2 Will. 4, c. 32, § 21. sion of the copartners as solicitors, such ■* 6 Geo. 4, c. 16, § 15 ; 1 and 2 Vict, defendant offering the receiver free ac- c. 110, S 8. cess thereto, and to assist in making out ' 1 Burr. 3 ; 3 Wils. 40. But these the bills. Dacie v. John, M'Clel. 206. provisions f the statute of Eliz. are On the other hand, solicitors in partner- repealed by 54 Geo. 3, c. 96. Rights of PAKTisrEES against Thied Persons. 983 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 part- ner 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 con- trary to that policy. "We have seen that where partners have contracted with third per- sons they cannot, by their otvn 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 by their power to convert joint into separate property, and vice versa, 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 them- selves of it, and it is a rule of convenience that the distribution shall take place according to the several interests and equities of the part- ners as amongst themselves. The only points, therefore, which demand our consideration in the present chapter are: 1. The limits of the rights of partners under contracts with third persons; and, 2. The extinction of the rights of partners by the acts of their copartners. Of the limits of right. Seo. 646. The rights of partners, under a particular contract, must be measured by the express terms of the contract, whether it be con- tained in an instrument under seal, or a written agreement without seal ; or whether it exist only by parol. Such contract, therefore, as we shall see in a variety of instances, will extend only to the partners named, or such as are comprehended in a well-known general name at the time of the contract. Whei-e, however, the instrument is not under seal, evidence may be given that the contract was subsequently enlarged, so as to embrace incoming partners, or to give a new right to remaining partners, according to circumstances. Under sealed inatruments — Bonds — Rule in Wright v. Russell. Sec. 647. 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 984 Eights of Partners. is that of Wright y. Eussell,' which is relied upon by Lord Kenyoii in Myers v. Edge, his Lordship saying — "I very much approve of the case cited from Wilson." To be sure, in Wright v. Eussell, the obligee was sole, and afterward 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 con- ditioned for the faithful service of one W. Baird, as broad clerk to the plaintiff, a brewer. The defense 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, 1771, and no longer ; and the service intended by the condition was only meant to be performed while he continued sole and without a partner ; that the plaintiff, on the 26th of December, 1771, entered into partnership with one Dela- field, which still continued ; 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 serv- ice of Wright while sole. The plaintiff replied that Baird was never discharged from his office either by him or his copartner, and assigned a breach of trust, by embezzlement, in August, 1772. The Court of Common Pleas, however, held the plea to be good, and gave judg- ment for the defendant. De Grey, C. J.— " The law is, that the surety shall not be bound beyond the scope of his engagement, as understood at the time he entered into it: where there is the least difference between the condition and the breach assigned, 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. Prom fhat moment the suretyship is at an end. If there is one, there may be twenty partners taken in. Is the surety liable, if Baird disobeys the orders of any one of those partners ? Is Baird to be subject to all the obligations 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. "2 Rule in Barclay v. Lucas. Sec. 648. A different decision was afterward given, in the case of Barclay v. Lucas,^ where Lord Mansfield is reported to have held such ' 3 Wils. 532; 3 W. Bl. 934. knowledge of the obligee, the surety is ^ Upon the same principle it has been released. Bellars v. Ebsworth, 3 Camp. held that where the obligor of an in- 53. demnity bond takes a partner with the ' 1 T. B. 291. Rights of Partners agaikst Third Persons. 985 bonds to be undertakings rather to the house than to the individual partners of it, and, therefore, not to be dischai-ged by any change of partners. The facts of that case were similar to those of Wright v. Russell, except that the bond was originally given to the plaintiffs, who were partners, and not to an individual ; and recited that the plaintiffs, at the recommendation of the obligors, had agreed to take one P. J. into their service and employ, as a clerk, in their shoj) and counting-house ; and Mr. Justice Willis placed considerable reliance on this recital, as showing that the service was to be performed in the sho2} and counting-house, and not to the plaintiffs. « Barclay v. Lucas overruled by Barker v. Parker. Sec. 649. But the case of Barclay v. Lucas seems to be no longer lavv, and Lord Mansfield himself decided otherwise, in Barker v. Parker.' In that case he held that a bond, with condition that a clerk should serve faithfully, and account for all money, etc. , 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. Luc^s, in which the same trade was carried on by the original masters 'in the same manner, and, the only difference was the introduction of a new part- ner. Kule in Strange v. Iiee. Sec. 650. Since 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 defend- ant Lee, conditioned for the payment by the co-obligors, their execu- tors, etc., 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, etc. 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,, therefoi'e, the surviving partners of Walwyn could not bring an action on the bond, in respect of any. such advances. Lord Ellenborough — "The court will no doubt construe the words of the obligation according to the intent of ' 1 T. R. 287. firm on Walwyn's death, but nothing '' 3 East, 434. turns upon this fact in Lord Ellenbor- 2 A new partner was taken into the ough's judgment. 124 986 Eights of Partners. the parties, to be collected from them, but the question is, what that intent was. The defendant's obligation is to pay all sums due to them, on account of their advances to Blyth. Xow, who are ' them ' but the persons before named, amongst whom is James Walwyn, who constituted the banking-house, and with whom the defendant con- tracted ? 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 dif- ference 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 advances are to be made to the party for whom' he is surety; for, a man may very well agree to make good such advances, knowing that one of the partners, on whose prudence he relies, will not agree to advance money improvidently. The characters, therefore, 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. Eussell, and Barker v. Parker." Bond for repayment of money advanced by firm or either member of, does not cover advances by survivor. Sec. 651. So, where a firm of bankers, five in number, took a bond conditioned for the repayment "to them of any money advanced 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, C. J., "again and again refer to the obligee's 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 conceived, that, if any of the five advanced money, this bond should secure it, but the words are after- ward 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 '2Saund. 413. In Arlington v. Mer- material difference between the recital rick, it was held that the condition of and the condition. In all cases, the ap- the bond should be restrained by the parent intention of the parties, and not recital. There the terms of the condi- any invariable rale of law, will govern tion were indefinite, and those of the the construction of the instrument. See recital definite. In the case of Strange Sanson v. Bell, 2 Camp. 39 ; and see 2 V. Lee, stated in the text, there was no Wms. Saund. p. 415 a, note c. Rights of Partners against Third Persons. 987 their meauing to money advanced by any or eiblier of them, in their capacity of bankers, on behalf of all the five.' Bond for repa3rinent of money drawn upon bills does not cover bills dravm by survivor. Sec. 652. So, conversely, where one firm of bankers took from another firm of bankers, namely, A & B, a bond conditioned for the repayment of all 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.' Effect of death or retirement of partner upon bond oi indemnity. Sec. 653. So, where the condition of a bond recited that the Chancel- lor, Masters, and Scholars of the University of Cambridge had appointed 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 per- son 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, etc., or their successors, for the sale of books as aforesaid, did and should duly account to the said Chancellor, etc., for all books delivered or sent to them, or any or either of them for sale as aforesaid, and should pay all moneys which should become payable to the said Chancellor, etc., in respect of such sale, then the obligation should be void; it was held that by the retirement of C, from the partnership of A, B & C, the defendant, as their surety, was discharged from all further liability on this bond.' Bond conditioned for good behavior of collector of firm ceases to be operative if firm is incorporated. Sec. 654. Agreeably to the principles of Strange v. Lee, and the other various cases just cited, where a bond was given to certain per- sons and their successors as Governors of the Society of Musicians, conditioned for the good behavior of their collector, and the society was subsequently 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 constitu- tion.* ■ Weston V. Barton, 4 Taunt. 673. And ' University of Cambridge v. Bald- see Thomas v. Da Costa, 3 Moore, 386 ; win, 5 M. & W. 580. Ex parte Watson, 19 Ves. 459. * Dance v. Girdler, 1 N. R. 94. ' Simson v. Cooke, 1 Bing. 452. 988 Eights of Partners. Principles applied in courts of equity— Pemberton v. Oakes. Sec. 655. The principles of these decisions have been acted npon in courts of equity. Thus, in Pemberton v. Oakes,' B. Stokes, Pem- berton, and G. Stokes, by an indenture of the 4th of January, 1802, covenanted jointly and severally with Harding, Oakes & Willington, their executors, administrators and assigns, that they, B. Stokes, Pem- berton, and G. Stokes, or some or one of them, or some or one of their heirs, etc. , would pay to Harding, Oakes & Willington, or to the survivors or survivor of them, or to the executors, etc., of such sur- vivor, 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 Hard- ing, Oakes & Willington, or to the survivors or survivor of them, or to the executors or administrators of such survivor either for princi- pal 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 Harding, Oakes & Willington, or the survivors or survivor of them, or the executors or administra- tors of such survivor, to B. Stokes or to his order, or for his own use, etc. 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 accordingly carried on by the executors, conjointly with Oakes & Willington. 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 instru- ment 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. Ej£Fect of introduction of nevr member upon securities given for indemnity of the firm. Sec. 656. 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 afterward a nominal partner is ' Pemberton v. Oakes, 4 Russ. 154. Eights of Partners against Third Persons. 989 introduced into the firm, and, after, his accession, further 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 dis- tinction is to be drawn between this case and the preceding, from the circumstance of the incoming partner being only nominal. In a case where, after such accession by a nominal partner and subsequent advances, the firm became 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 remained solvent, they might have maintained an action lor the 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 supporting an action, but there was authority enough if they chose to try it. He added, that if this could be established as an equitable demand, con- tradistingviished from a legal demand, they would find it very difficult to make out a case under these circumstances, without filing a bill.' Bond may be made to indemniiy past or future partners. Sec. 657. But a bond or other instrument may be drawn so as to make the obligor or covenantor answerable not only to 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 C D, E' F, and G- 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 D, E F, and G H, or any of them, associated or not, as aforesaid." * Who may recover on bond given to the firm by firm name. Sec. 658. In the preceding cases the bonds were uniformly given to the existing jDartners by their respective names. But where a bond is given to a firm, by the name which it has used for many years, with- out 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 action on the bond, although the bond does not appear on the face of it to have been made to them in particular, but to the firm by its general name. Thus, in an action on a bond, the bond being read, it appeared ' Ex parte Watson, 19 Ves. 459. ' Simson v. Ingham, 3 Barn. & Cres. ' Per Lawrence, J., in Strange v. Lee, 65, 2 Dowl. & Byl. 349 ; Simson v. supra. Cooke, 1 Bing. 453. 990 Eights of Partnehs. that the defendant thereby bound himself to the "widow Moller and Son." It was proved that the widow Moller had been dead some years before the execution of the bond, and that the plaintiffs, her sons, had since continued to carry on trade under the old firm. On its being objected that, although a bill of exchange or a promissory note might be given to a mercantile firm, yet, in such a solemn instru- ment as a bond, the names of the obligees must be specifically men- tioned, Mansfield, C. J., thought it was enough if the plaintiffs were proved to be the persons meant by the widow Moller and Son : and they had a verdict accordingly.' Bonds given to company to indemnify against misoonduct of clerk good, not- withstanding changes in the company. Sec. 659. Where a bond is given to the trustees of a trading com- pany, conditioned to secure the faithful services of a clerk to the company, this bond will remain in full force so long as such clerk acts in such capacity, and notwithstanding the fluctuations of the company." What submission to arbitration covers — Grarland v. Noble. Sec. 660. Where a submission to arbitration is made of all matters in difference between the parties, and one of the parties consists of a partnership fii-m, the submission embraces only matters in difference between the partnership jointly and the other party and not between the partners severally and the other party. Therefore, a submission of this kind will not inure to the benefit of one partner only. In the case of Garland v. Noble,' an action was brought against cer- tain persons, who were partners in Malta, and the plaintiffs pro- ceeded to and obtained outlawry. Afterward, upon the dissolution of the partnership, one of the defendants arrived in London, and was arrested by vir tue of a capias ut lagatum, and imprisoned. The outlawry was reversed, and a bill in Chancery was filed by both the defendants against the plaintiffs for a discovery, in which the action and the outlawry were stated. The cause was referred to an arbitrator, and a submission was entered into in form above men- tioned ; the arbitrator heard evidence of the matters relating to the action, but refused to hear claims for damages sustained by both the defendants, by reason of the outlawry, being of opinion that the sub- mission, which was of all matters between the parties, meant of all ' Moller V. Lambert, 2 Camp. 548. ' 1 Moore, 187. ■'Metcalf V. Bruin, 13 East, 400; 3 Camp. 432. Eights of Partn-ers against Third Persons. 991 matters between the plaintiffs respectively on one side, and both, not one, of tlie defendants on the other ; and that no actual damage had been sustained by the defendants jointly. And the Court of Common Pleas were of that opinion. Poiirer of attorney given to one partner, effect of. Sec. 661. A power of attorney given to one of two partners will not inure to the benefit of the other partner.' Rights of partners under unsealed contracts — Rule in Ex. parte M'Gae. Sec. 662. The limits of the rights of partners, under parol or unsealed written contracts, are determined by the same rules as those which we have endeavored to explain in regard to sealed contracts. These rules may in fact be said to apply to every species of particular arrangement made by a creditor with the firm with which he deals. In Ex parte M'Gae," A, having a banking account with a firm of bank- ers, and being in the habit of receiving bills of exchange from the cap- tains of certain vessels, agreed with the bankers to pay all such bills into thei,r bank, indorsing them, and to take out in exchange their promissory notes, they allowing him, as a consideration for such issue of their notes, twenty-four days' interest on each bill paid in. Com- missions of bankrupt having issued against three of the partners, it was held that the contract was at an end, and, consequently, that the assignees, under a subsequent joint commission against all the part- ners, could not retain bills paid after the bankruptcy of the three. Lord Bldon observed that A's proposal was to deliver the bills to the four bankers, and not to one of tljem and the assignees of the others, and that they should give the promissory notes of the house, but that in this case he did not receive the consideration contracted for, when he received a promissory note purporting to be the security of the four, but which was, in truth, only that of one. So, where A deposited with his bankers several deeds, and signed a memoranduiri, addressed to Messrs. X, Y, & Z, bankers, stating that he had deposited the deeds " as a collateral' security for the balance of any sum or sums of money which you may at any time advance for my account, and which I hereby oblige myself, my heirs or executors, to assign in a legal manner, whenever required so to do," Lord Bldon held that this deposit and agreement alone, without any further agreement, did not extend to advances afterward to be made by the house, whenever the partners should be changed.' ' Edmiston v. Wright, 1 Camp. 83. ^ Es parte Kensington, 3 Ves. & Bea. n9 Ves. 607; SRose, 376. 79. 993 Eights of Partxees. Guaranty given to one partner not a guaranty to the others. Sec. 663. Upon the same principles, a guaranty given to the whole firm shall not, prima facie, inure to the benefit of the remaining part- ners. In the case of Myers v. Edge,' the plaintiffs, Myers, Pielden, and others, partners, brought their action against the defendant, to recover the value of a quantity of cotton twist, supplied by them to one Duxbury on the guaranty of the defendant. At the trial the plaintiffs put in the following letter as evidence of the contract : " To Messrs. Myers, Pielden, Ainsworth & Co. If you please, you may let the bearer, Thomas Duxbury, have six bunches of twist more than I told you, and I will be answerable for them, as before," etc. At the time this engagement was entered into, Ainsworth was a partner with the plaintiffs, but the goods in question were furnished to Duxbury by the plaintiffs alone, after Ainsworth had retired from the partner- ship. It was objected, on the part of the defendant, that this action could not be maintained by the present plaintiffs, because the contract was made, not with them alone, but with them conjointly with Ains- worth, and the Court of King's Bench were of that opinion. Lord Kenyon observing that perhaps the defendant, when he entered into this contract, had great confidence in Ainsworth, and thought that he would use due diligence in enforcing payment of the goods from Duxbury regularly as they were furnished, at least it was too much for the court to say that, after Ainsworth ceased to be a partner, the defendant would have given the same credit to the remaining part- ners, the court could not say that a contract, that on the face of it imported to have been made with five, ought to be construed to be a contract made with four persons only. It was decided in a late case that a guaranty which had been given to the firm of A & B, was put an end to by the retirement of C, a dormant partner, but it is conceived that when the contract was made the guarantor must have known of the existence of the dormant part- ner, otherwise this decisiqn seems questionable.'' It is clear, howevei', that where even a parol contract of a continuing nature is entered into with a person who has a dormant partner, the contract will not inure to the benefit of such dormant partner after the retirement of the ostensible partner. In Eobson v. Drummond,' A, a coachmaker, entered into an agreement to furnjsh B with a carriage for the term of five years, at seventy-five guineas a year. At the time of making > 7 T. R. 354. 8 2 B. & Ad. 303. ■^ Dry V. Davy, 2 Per. & Dav. 349 ; 3 Jur. 315. Eights of Pabtkers- against Thikd Persons. 993 the contract C was a partner with A, but this was unknown to B, the business being carried on in the name of A only. Before the expira- tion of the first three years, the partnership between A and C was dissolved, A having assigned all his interest in the business, and in the contract in question, to C, and the business was afterward carried, on by C alone. B was informed by C that the partnership was dis- solved, and that he, C, had become the purchaser of the carriage then in his, B's, service. The latter answered that he would not continue the contract with C, and that he would return the carriage to him at the end of the then current year, and he did so return it. An action having been brought in the names of A and against B, for the two payments which, according to the terms of contract, would become due during the last two years of its continuance, it was held that the action was not maintainable, the contract being personal, and A having transferred his interest to 0, and having become inca- pable of performing his part of the agreement. Simple contracts may be enlarged or explained by liberal construction or by the contract itself — Ex parte Kensington. Sec. 664. But there are many cases in which unsealed contracts may be enlarged or explained, either by a liberal construction of the con- tract itself or by evidence of matters dehors the contract. The effect, therefore, of such construction or evidence may be to enlarge the rights o'f partners seeking the benefit of such contracts, so as to give them a remedy adapted to the various changes of the firm. Thus, it has been held that eqioitable mortgages, though evidenced by a written memorandum, may be enlarged even by parol.' When, therefore, such a mortgage is made by the members of a firm, if upon the affidavit and examination taken together, aided by the extreme probability of the intention of the parties, it can be collected that what was originally deposited for one purpose should be held as deposited also for another, with reference to the demand of the sub- sequent partners, such an enlargement of the original mortgage, though by parol, will be sufficient. In the case of Ex parte Kensing- ton, before adverted to, after the mortgage to X, Y, & Z, together with the agreement as before stated, a bond was executed by the mortgagor to the same person conditioned for payment to them, and in case of any alteration taking place in their firm, then to the persons composing a new firm, if comprising two of the original members, ■ That legal mortgages cannot, see Ex parte Hooper, 1 Rose, 338. 994 Eights of Paetnees. of all sums thereafter lent by them to the mortgagor. X afterward retired and the question was, whether the deposit of title deeds with the agreement could be held by Y and Z as a security for advances made by them to A after the retirement of X, and Lord Eldon held that they could. The same principles were acted upon in a subsequent case,' in which a security given to a firm by means of a memorandum and deposit of title deeds was continued after an alteration in the members of it, upon the construction of a letter raising an agreement to that effect. So in a more recent case, where title deeds were deposited by way of security with a firm upon a verbal agreement, it was held that the deposit might be extended by a subsequent verbal agreement entered into upon a change of partners for the security of a new sum.' So, where an equitable mortgage was made to a firm of five, one of whom was a nominal partner only, it was held to be extended by subsequent agreement to the actual partnership of four.^ So, where A, B, C, & D, being bankers and partners, and D being the son of C, a cus- tomer of the firm executed a legal mortgage to A, B & 0, to secure the balance due from him to the firm, and afterward addressed a let- ter to Messrs A, B & C, authorizing them to consider all the securi- ties they then held, as responsible for any advances made or to be made by them to the customer; upon the bankruptcy of the customer it was held that this letter must be taken to have been addressed by the bankrupt to the four partners, and amounted to an equitable mortgage to the four of the previous legal mortgage to the three, and that it operated as a security for all the advances made either by the three or the four.* Guaranties given to one partier may in some cases be extended to firm — Gar- rett V. Handley. Sec. 665. Guaranties are another species of contract which it seems are not to be construed strictly according to the letter, but according to what appears generally on the evidence to have been the intention of the parties, and in the absence of much evidence on this head then most strongly against the guarantor." Of guaranties it is evi- dent, notwithstanding what has been already said, that circumstan- •■ Ex parte Marsh, 2 Rose, 239. And « Ex parte Parr, 4 B. and C. 426. see Ex parte Lloyd, 3 Dea. 305. ' See the observations of Park, J., in •'^ Ex parte Lloyd, 1 Glyn & Jam. 389. Hargrare v. Smee, 3 Moore & Payne, - Ex parte Alexander, 1 Glyn and 584, and of Lord Tenterden in Davey v. Jam. 409. Prendergress, 5 Barn. & Aid. 192. Rights of Partners AOAiifrsT Third Persons. 995 ces may arise wliich may very much enlarge the rights of partners to whom a guaranty has been given. Thus, sometimes, a guaranty, though given only to one partner, may inure to the benefit of the whole firm. In Garrett v. Handley,' the plaintiffs. Garret and Bodenham, surviving partners of Phillips, brought their action against the defendant, on the following letter written by the defendant to Garrett: " Sir — I understand from Mr. Gibbons that you had the goodness to consent to advance 5oOl. to discharge immediately a like sum, for which he became security for his cousin, Mr. T. Gibbons, upon my assurance, which I hereby give, that provision shall be made for repaying you this sum under the arrangement now going on for the settlement of Mr. Gibbons' con- cerns." In consequence of the assurance given in this letter the money was advanced by Bodenham & Co. to Gibbons. At the trial the plaintiffs produced a correspondence between Bodenham & Co. and the defendant, for the purpose of showing that the guaranty contained in the letter, though in terms given to John Garrett, one of the plaintiffs, was intended for the benefit of the firm. Upon the case being argued before the Court of King's Bench, they were of opinion, from perusal of the correspondence, that the guai'anty was intended for the benefit of the firm, and not of Garrett alone ; and consequently th^at, corroborated as it was by such correspondence, it was available to the surviving partners. So, in a case at Nisi Prius, Gaselee, J., held that a guaranty given to one of two partners, for goods sold by them in the way of their trade, would inure for the benefit of both ; there being evidence that the partners did not carry on any separate trade. And he likewise ruled that a guaranty without an address would inure to the benefit of those to whom or for wliose use it was delivered.* Alexander v. Barker. Sec. 666. On the authority of the case of Garrett v. Handley, which has been just cited, it was held in Alexander v. Barker,^ that where a person by letter applies to an individual partner in a banking-house for a loan of money, and undertakes to that partner to repay it, and the partner in consequence of such letter advances the money out of the partnership funds, such contract inures to the benefit of the whole banking firm, so as to enable them to sue jointly upon it. But ' 4 Barn. & Ores. 664 ; 7 Dowl. & Ryl. ' Walton v. Dodson, 3 Car. & P. 163. 144. 3 3 Crom. & Jerv. 133. 996 Eights of Partners. in this case it was the opinion of the court that the situation of the lender as one of a firm of hankers made it incumbent on the bor- rower, if he meant to rely on a several contract, to show expressly that when he applied for the advance he agreed to be answerable to no other persons than the individual lender. In other cases it is apprehended that the onus probandi would be the other way; and that partners, who insisted on a joint loan, where the money had been advanced by an individual partner only, would be bound to show that the borrower, at the time of the contract, agreed to be answerable to the partnership, and not merely to the lender of the money. In Sims V. Bond,' a question of this description was decided as to part-owners, and there seems to be no material distinction upon this point between part-owners and partners. There A, the managing owner of a vessel, was permitted by the other owners to have the possession of two warrants or orders of the East India Company to pay to the said owners, or bearer, the sum of money therein mentioned, for freight. A deposited these warrants in the hands of his bankers, and they received the money due on them and gave him credit for it, in an account opened in their books in his name only. It was held in assumpsit brought after A's death, by the surviving part-owners, against the bankers, that on proof of these facts they could not recover the money; because it was not shown that the loan^was on their account; and that the fact of the warrants being the property of all the part-owners, when placed in the banker's hands, was upon the evidence quite consistent with the supposition that the loan of the proceeds to the bankers was A's loan. It is apprehended, however, that in cases of this nature express proof of a joint contract would not be necessary in an action brought by a firm of whicli the partners were all dormant but the lender. Bills and notes generally security only to one to whom it is payable — Ex- ceptions. Sec 667. A hill or note given to a firm is a security only to those to whom it is made payable: but it may be so framed as to compre- hend future as well as present partners; and for that purpose it seems to be sufficient to make the bill or note payable to the partners or their order. In the case, however, where this appears to have been decided, there was strong extrinsic evidence that the note was in- tended to be a continuing security. It appeared that several changes > 5 B. & Ad. 38 ; 3 N. & M. 608. Rights of Paetnees against Thied Peesons. 997 took place in the firm, and that on these occasions the note was trans- ferred in account from the old to the new firm, and interest was paid by the debtor from time to time to the different firms, as if it was a debt due to the persons successively constituting that firm.' Rule Txrhen the contract by mistake is different from the intention of the parties. Sec. 668. We may observe, by way of conclusion to this part of our subject, that where the written contract differs by mistake from that which the parties intended, and on which they have acted, they must be bound by the terms of the actual and not of the written contract. The defendant, Lapage, bought of the plaintiff, Mitchell, and others, through their broker, Metcalf, a quantity of hemp. The bought-and- sold notes made out by Metcalf ran thus: — "Bought for George Lapage, of Todd, Mitchell & Co., 38 tons of hemp, etc." It appeared that '• Todd, Mitchell & Co." was the name of the old firm, which was dissolved in 1814, when Todd retired, but the dissolution was not published in the " Gazette," and at the time of making the contract, in March, 1815, Metcalf had no notice of the change in the firm. However, in August, 1815, the plaintiffs, who composed the new firm, sent the defendant a letter in the name of the new firm, advis- ing him of the arrival of the hemp, which had fallen in price, and calling on him to fulfill his contract. The defendant then expressed a wish to the broker to be liberated from his bargain. He afterward refused to take the hemp, on the ground that the insertion of Todd's name avoided the contract. An action being brought by the. new firm, it was urged by the defendant that they could not recover upon this contract; that the present plaintiffs never traded under the names of Todd, Mitchell & Co., the firm with which the defendant contracted; and that, having made a contract with one set of persons, he could not be prejudiced by having it adopted by another. But Gibbs, 0. J., overruled the objection, observing, that this was only a mistake of the broker, and that the defendant had treated the contract as subsisting with the new firm, who had, therefore, a right to recover. It would have been otherwise, if the defendant had been induced to think that he had entered into a contract with one set of men, and not with any other; or if, owing to the broker, he had been prejudiced or excluded from a set-off." 'Pease v. Hirst, 10 Barn. & Ores, aible for the parpose of contradicting it, 123. It appears by this case, that parol ' see Morsley v. Hanford, 10 B. & C. 729 ; evidence may be admitted to enlarge Price v. Edmunds, id. 581. the effect of a note, but that it is inadmis- " Mitchell v. Lapage, Holt, 253. 998 Rights of Partners. Rights of partners as to accounts current with their debtors — Bodenham v. Purchas. Sec. 669. The rights of partners under accounts current with their debtors will be limited according to the rules of calculation laid down in Clayton's case.' Therefore, when one of several partners dies or retires, and there is a balance due to the firm at that period, such balance will be gradually diminished by the sums paid in subsequently by the debtor, unless such sums be specifically appropriated at the time of payment. In the case of Bodenham v. Purchas," the plaintiffs, Bodenham and Phillips, with Havard, carried on business in partner- ship as bankers. In January, 1804, they took a bond from the defendant, conditioned for the repayment of the balance of an account, and of such further sums as they might advance to the obligor. On the 31st March, 1810, Havard died. The defendant, during all the period between the execution of the bond and the death of Havard, kept an account with the plaintiffs and Havard, and usually balanced his account every three months. At the death of Havard the balance due from the defendant to the firm was 4,404Z. lis. Id. At the end of that year Gari-ett was taken into the firm, and the style of the firm altered, but the accounts were continued in the same manner as before, and the balance carried forward, as if there had been no alter- ation in the firm. In June, 1813, the defendant relinquished his business, and his account was transferred to that of his sons. The sons' account continued open with the plaintiffs and Garrett till 1816, when they stopped payment. The balance at this time was 3, 694Z. 18s. %d., in favor of the plaintiffs. Of this balance the plaintiffs had received a composition of 15s. in the pound from the sons, but expressly without prejudice to their claim for the remainder, namely, 923?. 14s. M. from the defendant. The balance was never reduced below this sum of 923Z. 14s. Sd, which was now sought to be recovered from the defendant in an action on the bond. The case having been left to arbitration, the arbitrator was of opinion, on the authority of Clayton's case, that the balance due at the death of Havard must be considei'ed as discharged by the first moneys paid in after his death, and, therefore, ordered the verdict to be entered for the defendant. The Court of King's Bench held the opinion of the arbi- trator to be right. It does not expressly appear in the foregoing case, whether the moneys paid in by the defendant after the death of Havard, were suffi- ' 3 Barn. & Aid. 39. Eights of Paetneks against Third Persons. 999 cient to cover the balance due at his death before the new partner, Gar- rett, entered the firm; butwhether the fact were so or not would, accord- ing to the case of Pemberton y. Oakes,' be immaterial. There a cus- tomer was indebted to the firm of A, B & C, bankers, upon a running account. A died, and D became a partner in his stead. The account was continued, the customer making Various payments to the firm of B, C & D. It was argued that these payments could not go in dis- charge of the balance due at A's death. That the account between the customer and the bank must be separated into two portions, and that it would be impossible to refer the items of credit in the latter account to the items of debit in the former, for that payments made to one partnership could not go in discharge of a debt due to another partnership. On what principle could the payments made to B, C & D be appropriated by the mere force of legal implication to the sat- isfaction of a debt due to A, B & 0? Clayton's case had no resem- blance to this. There the transactions of the customer were with the surviving partners of the old firm, here the dealings were, not with the surviving partners of the old firm, but with a new company con- sisting of those surviving partners and another person. But Lord Lyndhurst, C, held that the balance due from the customer at A's death was discharged by the subsequent payments to B, C & D. That point he said had been decided by Clayton's case, and Bodenham v. Purchas, and though the facts before him were not in every respect precisely the same with the circumstances of those two cases, yet the decisions in tliem proceeded on a broad general principle equally applicable to the state of circumstances in the principal case. Bodenham v. Purchas questioned in Jones v. Maund. Sec. 670. It may be doubted, however, upon a perusal of the case of Pemberton v. Oakes, whether the observations of those counsel, who argued against the reduction of the debt in the manner above stated, were satisfactorily answered by the learned judge; and in the recent case of Jones v. Maund ^ (in which, however, the case of Pem- berton V. Oakes was not brought to the attention of the court), Lord Abingei", C. B., made a decision which is at variance with that of Lord Lyndhurst. The facts of that case, as admitted by demurrer, were these: A having dealings with B, & D, who traded as coal merchants under the firm of B & Co., and having become indebted to them on several transactions, entered into a covenant with them for the payment of the whole amount. B & D afterward died, and 14 Rubs. 154. ' 3 You. & Coll. 347. 1000 Eights of Partners. retired from the firm and assigned her interest to E. The business of the firm was continued by E & F, under the firm of B & Co., and A continued his dealings with that firm, and made various payments to them. Upon a bill brought to restrain an action on the covenant by C, against A, C put in a general demurrer, and Lord Abinger allowed the demurrer upon vartous grounds, one of which was that the subsequent payments made by A, to E & E, could not be applied in reduction of the money secured by the covenant, unless it could be shown that had assented to the arrangement. It may be remarked that though in this last-mentioned case the partners were coal merchants, the bill treated the account as mutual, and in the nature of a banking account, and, therefore, there seems no material distinction as to the facts between this case and that of Pemberton v. Oakes. Of extinction of right — Payment to and release by one partner — Effect of. Sec. 671. We have already seen in considering the liabilities of partners under deeds, that the release by one partner of a Joint debt is, at least in many cases, binding on the firm. It may here be added that if two partners commence an action one may release the subject- matter of it.' Hence, it has been expressly decided, that if one of two plaintiffs, partners, release a defendant after action brought, without the consent of the other, 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 circumstance alone was not deemed sufficient to make the release fraudulent. But where the release is attended with clear circumstances of fraud, the court will set it aside.' It is, however, to be remarked that the power of one partner to give a release in these cases arises rather from the general practice in actions a't law, than from the privileges of partnership. 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 under- takes to the acceptor to provide for it when due, this is in the nature 2 Per Hullock, B., 1 Younge & J. 366. 471 ; Mountstephen v. Brooke, 1 Chit. »Arton V. Booth, 4 Moore, 193; Fur- 391. nival V. Weston, 7 id. 356. ' Per Dallas, C. J., 4 Moore, 494 ; see •■ Barker v. Richardson, 1 Younge & .T. Ruddock's case, (i Rep. 356 ; Anoa. , 3 365; and .see Legh v. Legh, 1 Bos. & Mod. 109; Haokett v. Heme, 3 Mod. Pull. 447; Jones v. Herbert, 7 Taunt. 135. Eights of Paetn"ers against Thied Persoks. 1001 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 fii-m, 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 orig- inal debt until the bill has arrived at maturity and been dishonored.' Payment to one partner — King v. Smith. Sec. 673. Payment to one partner is payment to the firm.^ 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 arrangement made by the partners pay- ment to the agent might have been a good discharge, without barring either of the partners from their right to receive the money.* And in King v.' Smith, ^ Tord Tenterden held that, after a dissolution of partnership between two partners, either party 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 to that partnership, it was no answer for C to say that, by the terms of the dissolution, A only was to receive the debt of the firm. In a late case,^ A, being entitled to the sum of 4,500/., charged on real estate, and payable at a future time, assigned the 4,500^. to B and C, who were bankers 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 4,500/. was charged. ' Richmond v. Heapy, 1 Stark. 302 ; * Bristow v. Taylor, 6 M. & S. 156 ; 3 Sparrow v. Chisman, 9 Barn. & Cres. Stark. 50; but, see Henderson v. Wild, 341 ; 4 Man. & Ryl. 306. 3 Camp. 561. ''Tomlins v. Lawrence, 3 Moore & ' 4 Car. & Payne, 108. Payne, 555. ' Brasier v. Hudson, 9 Sim. 1, ^Anon., 13 Mod. 446 ; D. Tindal.C. J., 3 Moore & Payne, 555 ; Duff v. East In- dia Company, 15 Ves. 198. 126 1002 Eights of Pahtuees. If a debtor of a partnership, instead of paying wli at he owes, give 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 receiTing them is equivalent to pay- ment. Distinction t^hen debtor ovres both the partner and the firm. Sec. 673. But, where a person is indebted to a firm, and also sep- arately to one of the partners, payment to that partner is not payment to the firm, unless the money be specifically appropriated to such purpose. In a late case, one of two partners, solieitoi's, after the dis- solution of the partnership, received 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 imderstanding that the debtor should have ci'edit for the sum so retained, 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 satis- fied. Judgment taken by one of tvro joint creditors — Effect o£ Sec. 674-. A Judgment taken by one of two joint creditors does not extinguish the debt, unless it be clearly taken with the concurrence of both. Where, therefore, previously to the dissolution of a partner- ship, one of two partners took a warrant of attorney to himself alone from a debtor to the firm, and afterward, with notice of the debtor's insolvency, entered up judgment, levied execution 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 extinguished his power to receive, con- sequently, that the latter was liable to repay to the assignees of the debtor the money so received by the deceased partner.' Payment to one of two houses that are partners in certain transactions. Sec. 675. "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 deprived of the benefit ' Per Sir John Leach, 1 Russ. & Myl. * Biggs v. Fellows, 8 Bam. & Ores. 101 ; Taml. 332. 403 ; 2 Man. &Ryl. 450. ' Pritchard v. Draper, 1 Russ. & Myl. 191. Rights of Paetners against Thibd Peesoks. 1003 of such payment, it cannot sue the acceptor. In Jacaud t. 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 the other affairs of the firm of Blair & Jacaud, 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 provid- ing 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 delivered 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 bill of exchange, and gave no notice to the house of Jacaud & Gordon, of the deposit or payment so made by Farrell. Under these circumstances the ques- tion was, whether Jacaud & Gordon could recover the amount in an action against the acceptor, French, and the Court of King's Bench held they could not. "It is impossible," said Lord EUenborough, 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 0, in another partner- ship, can never be permitted to contravene the receipt of it for that purpose, and apply it to a,nother." ' 13 East, 317. 1004 Eights of Partners- CHAPTER XXVIII. OF ACTION'S BY PAETKBRS. Sbc. 676. General rights of partners to sue. Sbc. 677. Of parties to action ex contractu. Sbc. 678. Must have been partnership when contract was made. Sec. 679. Distinction between specialties and simple contracts. Sec. 680. Parties to actions on bills and notes . Sbo. 681. Right of action cannot be transferred when. Sbc. 682. Parties to actions on deeds. Sec. 683. Dormant partners. Sbc. 684. . Partners not known in firm. Sec. 685. Infant partners. Sec. 686. Bankrupt partners. Sec. 687. Death of partner. Sec, 688. Demurrer in case it appears there should be other parties. Sec. 689. Of the parties to an action ex delicto. Sec. 690. Of the declaration. Sec. 691. Joint interest, joint action. Sbc. 692. Libel. Sec. 693. Of pleas in bar. Sec. 694. Of plea of bankruptcy. Sec. 695- In actions on bonds. Sec. 696. Tender. Sbc. 697. Former recovery. Sec. 698. Statute of limitations. Sec. 699. Proof of partnership. Sec. 700. How proved. Sec. 701. Nominal partners. Sbc. 702. Declarations of one partner. Sec. 703. Proof of dissolution. Sec. 704. Misjoinder may be shown under general issue. Sec. 705. Evidence in actions for tort. Sbc. 706. Indictment by partners. Sec. 707. Equitable remedies against partners. General rights of partners to sue. Sec. 676. From what has 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 body the same power as indiyid- uals have of enforcing those rights by action. In some respects, . however, the power of partners to sue in an action ex contractu is not co-extensive with that of individuals. That power, we have seen. AcTiosrs BY Paetkees. 1005 may possibly be lost by the death or accession of a partner. So, also, where the same person is member of two different firms, an action of assumpsit cannot be brouglit by one person against the other, for, in such case, tlie same person would be both plaintifE and defendant in the same action, and it is a rule of law that a man cannot sue him- self. '■ In the case of Mainwaring v. Newman,* A, B and were partners, and C, D, and E were partners. B drew a promissory note in favor of 0, D, and E, which was indorsed by them to A, B, and C. To an action of assumpsit by A, B. and C against D, as one of the indorsers, D pleaded in bar that C, one of the plaintiffs, was lia- ble 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 life-time, but they may upon transactions which have taken place subsequent to his decease.' There is another particular in which the right of partners to sue in actions ex contractu appears to be limited. We have seen that the • Bosanquet v. Wray, Taunt. 598 ; Moffatt V. Van Millingen, 2 Bos. &Pull. 124 ; De Tastet v. Shaw, 1 Barn. & Aid. 664. ^ 2 Bos. & Pull. 120, and see Jacaud V.French, 12 East, 317. • ' Bosanquet v. Wray, supra. As to firms having a common member, and actions at law and hetween partners. — We have already stated that one mem- ber coald not sue a firm of which he wag a member, as that would be to allow a party to be both plaintiff and defendant in tlie same action. And we have in previous notes indicated the circumstan- ces under which a partner might bring an action against his copartners. We may here refer to the following numer- ical authorities in addition to those ci- ted by Mr. Collyer, that one firm cannot maintain an action against another, where one of the partners is a member of both. Eastman v. Wright, 6 Pick. (Mass.) 320; Belknap v. Gibbons, 13 Mete. (Mass.) 471 ; Graham v. Harris, 5 Gill & J. (Md.) 489 ; Burley v. Harris, 8 N. H. 235; Haven v. White, 39 111. 509; Green V. Chapman, 27 Vt. 236 ; Engliss v. Pur- ness, 4 B. D. Smith (N. Y), 587; Rogers v. Rogers, 5 Ired. (N. C.) Eq. 31 ; Dewey V. Metcalf, 28 Me. 389 ; Portland Bank V. Hyde, 27 Vt. 230. But under the statute of Pennsylvania, it seems that an action may be maintained in such cases. Heburn v. Curts, 7 Watts (Penn.), 3U0; McPadden v. Hunt, 5 Watts & S. (Penn.) 468; Tassy v. Church, id. 468; Went worth V. Raiguel, 9 Phil. (Penn.) 275. The gen- eral rule, however, is, that one partner cannot sue the firm of which he is a member, and for tlie same reason that he cannot be sued by it, except in an action to account or for the balance of an account struck. Dewitt v. Staniford, 1 Root (Conn. ), 270 ; Lamolere v. Gaze, 1 Wash. (U. S. C. C.) 435; Kennedy V. Mc- Faddon, 2 Har. & J. (Md.) 194; Young V. Brick, 3 N. J. L. 663; Murray v. Bo- gart, 14 Johns. (N. Y.) 318; Springer v. Cabel, 10 Mo. 640 ; McKnight v. Mc- Cutchen, 27 id. 436 ; Smith v. Smith, 33 id. 557; Lower v. Denton, 9 Wis. 268 ; Ives V. Miller, 19 Barb. (N. Y.) 196 ; Gridley v. Dale, 4 N. Y. 486 ; Chase v. Garvin, 19 Me. 211 ; Barley v. Harris, 8 N. H. 233 ; Estes v. Whipple, 12 Vt. 373 ; Stalhert v. Knox, 5 Mo. 112 ; Myr- ick V. Dame, 9 Cush. (Mass.) 248; White V. Harlow, 9 Gray (Mass.), 463; Lindell V. Lee, 34 Mo. 103 ; Powell v. Maguire, 43 Cal. 11, where it was held that an agreement for a partnership which was not consummated, but one of the parties entered upon the enterprise alonS, did not entitle the other party to an accounting, but his remedy was at law for a breach of contract; McKenzie V. Dickenson, 43 Cal. 119, where it was held that a partner might purchase with his own funds and outside of the part- nership business, a judgment or other 1006 Eights of Partners. firm is not bound by bills or acceptances given in the name of the firm for the separate debt of one partner, nor "generally by the fraud of any of its members, when the party dealing with such members is implicated in the fraud. But it seems clear that the equity to which the defrauded members are entitled in this case cannot be supported in a court of law when the partners appear as plaintiffs, for, appear- ing as plaintiffs, they must join with them the fraudulent partner, and if, as Lord Ellenborough 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. In Jones v. Yates,'' Sykes and Bui-y being partners, Sykes fraudulently gave the bills of the partnership in discharge of evidence of indebtedness against his copartner, and enforce its collection by a levy upon and a sale of the in- terest of the other in the firm assets. American B. Co. v. Miles, 53 111. 174 ; Pope V. Thompson, 33 Ind. 137 ; Rus- sell v. Grimes, 46 Mo. 410 ; Stanton v. Buckner, 34 La. An. 391 ; Scott v. Ca- ruth, 50 Mo. 130; Leidy v. Messinger, 11 Penn. St. 177 j Sproul v. Crowley, 80 Wis. 187. Action between partners at law. — And ■where a partner expressly promised an- other partner to pay t}ie price of articles to be furnished for the copartnership business, it was held that an action at law would lie for the breach of the agree- ment, as it was a special and peculiar ground of damages, and in which nei- ther the firm nor the other members had no concern, and the judgment when recovered would have to be satisfied out of the defendant's own property, and would inure to the benefit only of the plaintiff. Wills v. Simmonda, 51 How. (N. Y.) Pr. 48. The general rule is that one partner cannot sue another for any matter growing out of or connected with the partnership. But if there has been a dissolution of the partnership, a final settlement of affairs of the firm, a balance struck, and a promise to pay, the partner entitled to such balance may maintain an action at law there- for. Burns v. Nottingham, 60 111. 531 . In some cases it seems to have been held sufficient to aver that there has been a settlement of the partner- ship accounts, and that a balance has been ascertained by mutual agreement. without averring an express promise to pay the same, In such a case it would appear to be consistent with legal prin- ciples to infer a promise to pay. Boss v. Cornell, 45 Cal. 133. And where there was an agreement between part- ners, by a separate agreement, to put into the partnership a specific amount of property, and there was a breach of the agreement on the part of one, it was held that the other might maintain an action at law to recover damages for the breach without a settlement of the partnership affairs. Truitt v. Baird, 13 Kan. 430. BUI in equity. — A bill in equity is the proper remedy to compel a partner holding the title to real estate pur- chased by money of the firm, to convey to each of the other partners his pro- portionate interest according to the terms of the agreement, even where it was entered into on the false represen- tation of the partner holding the same as to th% actual purchase price. Faulda V. Yates, 57 111. 416; see, also, Pray v. Mitchell, 60 Me. 430 ; Bank v. Carrolton Railroad, 11 Wall. 634 ; Hanks v. Bar- ber, 53 111. 393. And where a partner- ship intrusted money to a member of the firm to be used in the partnership business, and such member, without the knowledge or consent of his copartners, forms a new partnership relation with another person in another business and pays over the money to the new firm, which is thereby lost, it was held that such partner wag liable for the money as for a conversion. Beis v. Hellman, 35 Ohio St. 180. 1 1 Stark. 340. * 9 Barn. & Ores. 533 ; and see Biggs v. Lawrence, 3 T. B, 454. Actions by Paktners. 1007 his separate debt. He likewise applied part of the partnership funds to the same purpose. One question was, whether the partners could recover the amount of the bills and of the money in a court of law; namely, by bringing trover for the bills and assumpsit 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 per- son has been allowed, as plaintiff in a court of law, to rescind his own act on the ground that such act was a fraud on some other per- son, 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 Bury 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 defrauded partner may perhaps have a remedy in ecjuity 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 inconsistency 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 the bill of exchange fraudu- lently made or accepted by one partner in the name of the others, and delivered by such partner to a plaintiff, in discharge of his own private debt. In the latter case, the defense is not the defense of the fraudulent party, but of the defrauded and injured party. The latter may without any inconsistency be permitted 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." The case of Jones v. Yates seems to overrule a preceding case before Loa.-d EUenborough upon this particular point. In the case adverted to, it was held that, after a dissolution of partnership between A and B, and notice in the Gazette that all debts due to the partnership should be paid to B, A having collusively given to a debtor of the firm a receipt dated anterior to the dissolution, 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. ' Henderson v. Wild, 3 Camp. 561. 1008 Rights of Paetkers. Yates, it appears that such an action is not maintainable; but possi- bly, under the same circumstances, it would now be held that the action might be maintained by B alone.' Persons engaged in an illegal partnership cannot maintain an action on any contract arising out of their dealings as partners. The ille- gality of the partnership ought to be pleaded specially," but if it appear from the plaintiffs' own case at the trial, it will, it is appre- hended, be ground of nonsuit. Where the partnership is legal, the partners cannot recover upon an illegal contract, although such con- tract, at the time it was made, was known only to one of the mem- bers of the firm." Persons who may legally be partners in foreign countries, 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, conversely, 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 at 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 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 enforcing it." « 1 See Evans v. Silverloct, 1 Peake,31. Mont. & A. 345, and Trimbey v. Vignier, = Reg. Gen. H. T. 1834, Morse v. Wil- 1 Bing. N. C. 151. In De la Vega v. son, 4 T. B. 353. Vianna, it was decided that one for- ^ Biggs V. Lawrence, 3 T. R. 454. But eigner may arrest another in England we have noticed that a member of a for a debt which accrued in the foreign partnership may require the other country wliile both resided there, though members to account, even though the the law of that country does not allow business may have been illegal. arrest for debt. The opinions, likewise ■• Cosio V. De Bernales, Ryan & Moody of Huber and Voet, which are cited in 103. the last-mentioned case, support the 'Shaw V.Harvey, 1 Mood. & Malk. general doctrine that this remedy should 536 ; see Dutch West India Company v. be pursued according to the law of the Van Moses, 1 Str. 613. country where the debtor resides. The 'Melan v. Due de Fitz-James, 1 Bos. latter author, however, observes that in & Pull. 138. The opinion of Mr. Jus- some places, upon the arrest of one for- tice Heath has been adopted in the re- eigner by another, it was the practice to cent cases of The British Linen Com- remit them to their own courts, if both pany v. Drummond, 10 Barn. & Ores, parties were of the same domicile, and 903, and De la Vega V. Vianna, 1 Barn, the defendant asked such relief. By & Adolph. 284; Ex parte Chevalier, 1 the law of France, a foreigner may be AcTioKS BY Partners. 1009 Lastly, 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 con- tractu, 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 part- nership, stop the goods in transitu, 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 partners to sue in an action, let us proceed to examine the several most material points connected with the action itself. of the parties to an action ex contractu. Sec. 677. In an action against a stranger to enforce a contract made with the firm where there has not been any severance of inter- est, 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 court would be in doubt for which of them to give judgment.^ Hence, sued in the French courts by a French- man; or, vice versa, a. Frenchman may be sued there by a foreigner, in respect of contracts arising in a foreign coun- try. See Code Civil, arts. 14, 15. But, except in commercial or criminal mat- ters, 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 Urangers cop-sentent a Mre juges par leg tribunaux franeais, ceux-ci prononcent ' See the next Section. ' Salomons v. Nissen, 2 T. R. 674. ' Mont. Partn. 59 ; Lambert's case, Godbolt, 344; Cabell v. Vaughan, 1 Saund. 291 b, n. 4. * Per Lord Kenyon, Anderson v. Mar- tindale, 1 East, 497. Where moneys are paid out of a joint fund, the joint own- ers of the fund should sue jointly for the money paid. In Osborne v. Harper, 5 Bast, 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 127 plutut (^mme arhiires que comme juges; car ils'n'ont pas une veritnMe jurisdic- tion sur ces etrangers." 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 coincide 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's Conflict of Laws, p. 300 ; Ex parte Pollard, 3 Mont. & A. 840. pleaded his bankruptcy, and a nolle prosequi was entered as to him, but against the two plaintiffs a verdict passed for 1,156Z. The two plaintiffs were never partners after the dissolu- tion before mentioned, but their attor- ney proved that he had discharged the whole demand, 1,156Z., at the request of both plaintiffs. On an affidavit being produced (by direction of the court) that the attorney advanced 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 main- tainable. And, conversely, a promise to pay by partners is a promise to pay out of a joint fund, although they agree to 1010 Eights of Pabtkers. when the contract is under seal, all the partners covenantees must join; and as their legal interest is joint, it matters not though the covenant be in terms joint and several.' Hence, also, when the contract pay equally out of their own private cash ; and they must be sued jointly upon such promise. Byers v. Dovey, 1 H. Bl. 3S6. 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. Pit- tard, 3 Mees. & W. 357. But in respect of a separate fund, a separate action must be brought. Thus, in Brand v. Boulcott, 3 B. & P. 23o, the plaintiffs and defendant had been joint assignees under a bankruptcy. The solicitor's bill was 208^; each of the plaintiffs paid him 104Z., and brought a joint action against the defendant, the other as- signee, for bis share. But Lord Alvan- ley nonsuited the plaintiffs, on the ground that each should have brought a separate action ; and on motion for a new trial, the Court of Common Pleas were of the same opinion. However, in a case in which the plaintiffs brought their action to recover a sum of money paid by the plaintiffs as bail in error for the defendants, to make up which sum each of the plaintiffs had advanced his share, Burrough, J., ruled that, as the payment was made in one sum and as a joint payment, a joint action was maintainable. May v. May, 1 Car. & Payne, 14. "On specialties. — As regards contracts under seal, it is settled that, if such a contract is entered into with one part- ner only, he alone can sue upon it, and that, if it is entered into with more than one partner, all those with whom it is expressly entered must sue upon it and no others can, whatever their in- terest in its performance may be. Bee the note to Cabell v. Vaughn, 1 Saund. 291, i ; Scott v. Godwin, 1 Bos. & P. 67 , Vernon v. Jeffreys, 2 Str. 1146. If a cred- itor's deed is made (as such deeds usually are) between the debtor of the one part, a trustee of the second part, and the several other persons whose hands and seals are set and subscribed thereto (be- ' Anderson v. Martindale, 4 East, 497 ; and see Eccleston v. Clipsham, Saund. 153 ; 1 Chit. PI. 6, n. d. It is a well-set- tled principle that covenants shall not be construed to be joint or several from the particular language in which they may be conceived, but shall be measured ing creditors of the debtor) of the third part, and one partner on behalf of him- self and copartners, being creditors, signs the deed in the name of the firm and seals the deed, that one partner alone can sue for non-payment of the sum covenanted to be paid in respect of the debt due to the firm. Metcalf v. Kycroft, 6 M. & S. 75. When several persons are covenanted with jointly, and it appears from the deed containing the covenant that the covenant, though joint in form, is made with them in respect of several interests, in that case the covenant is construed as entered into with each covenantee severally, and each must therefore sue alone for a breach by which he is damnified. See the note to Eccleston v. Clipsham, 1 Wms. Saund. 155, a. This rale, how- ever, can seldom, if ever, be applicable to a covenant entered into with several partners in respect of any partnership matter, for their interest therein is al- most necessarily joint. It is appre- hended that a covenant entered into with A, B & Co. , might be sued upon by the persons who, when the covenant was made, constituted that firm, but the writer is not aware of any decision pre- cisely to that effect. On hills and notes. — As regards bills of exchange and promissory notes. If they have been indorsed in blank, any person holding them may sue upon them and no objection can be taken on the ground of misjoinder or non-joinder of parties as plaintiffs. See Ord v. Portal, 3 Camp. 239 ; Attwood v. Eattenbury, 6 Moore, 579 ; Lowe v. Copestake, 3 Car. & P. 800. In Law v. Pamell, 6 Jur. (N. S.) 172, it was held that the manager of a banking company could sue in his own name on a bill indorsed' in blank and given to the company. Special circum- stances may, however, exist, showing that the bill or note was given to cer- tain persons for some definite purpose, and if that is the case they cannot, it is said, sue upon it jointly with any other and moulded according to the interest of the covenantees ; and although in terms the covenant may import to be joint, yet, where the interest is several, so shall the covenant be construed. Piatt on Covenants, 123. Actions by Partners. 1011 is in the form of a negotiable security, all the partners payees must join; and where, by the terms of the contract, a note given to the firm is to be a continuing security tliroughout all the changes of the house, if the person. Thua in Macliell v. Kinnear, 1 Stark, 499, a bill indorsed in blank was given to a firm of bankers on account of the estate of an insolvent, and it was held that the trustees of that estate, who were not members of tlie firm, could not, together' with the members thereof, join in suing the indorser with- out showing that the bill had, by de- livery or otherwise, been transferred to all the plaintiffs. This decision is the more remarkable as the bankers them- selves were among the trustees of the estate in question. When a bill or note is not indorsed in blank, the persons, and the only persons to sue upon it are those named in the instrument as draw- ers, payees, or indorsees, as the case may be. See Pease v. Hirst, 10 B. & C. 123. Whether they are partners or not is of no consequence, and, therefore, if a bill is drawn in the name of two per- sons as if they were partners, they must both join in an action on the bill, al- though one of them has no interest in it. Guidon v. Eobson, 3 Camp. 302.- So, it is immaterial whether the bill or note relates to partnership matters or not, for if a debtor to a firm makes his prom- issory note payable to one of the part- ners only, sijch one is the proper person to sue on the note. Bawden v. Howell, 3 Man. & Gr. 638. If a bill is drawn by, or in favor of a firm in its commer- cial name. A, B & Co., and it is neces- sary for the firm to sue on such bill, all the persons who composed the firm when the bill was drawn, ought to be plaintiffs. M'Birney v. Harran, 5 Ir. liaw. Rep. 438 ; Phelps v. Lyle, 10 A. & E. 113. If one partner in his own name accepts a bill drawn on a stranger for his Honor, and pays the bill when due out of the funds of the partnership with the consent of his copartners, the partner who accepted the bill is the proper person to sue the drawee for in- demnity. Driver v. Burton, 17 Q. B. 989. On contracts generally. — With respect to other simple contracts, whether writ- ten or verba], it is a rule that where a contract is entered into with several persons jointly, they must all join in an action upon it. 1 Wms. Saund. 291 k, and 1 Chitty on Plead. 10-15. Formerly mistakes in this respect were fatal, but now amendments are allowed. Wil- liams v. Groves, 1 Foa. & Fin. 341. But the rule which, in the case of deeds, precludes the joinder of any person with whom the contract is not expressly made, has here no application, for it has long been settled that if a simple contract, written or verbal, expressed or implied, has been entered into with . an agent, it may be sued upon by his principal, and this rule holds even in the case of an undisclosed principal if he can show that in point of fact the agent contracted on his behalf. See Phelps V. Prothero, 16 C. B. 370 ; Sims V. Bond, 5 B. & Ad. 389 ; compare Rama- zotti V. Bowring, 6 Jur. (N. S.) 173. This doctrine is constantly applied in partnership cases ; it happens every day that a firm sues on a contract entered into on its behalf by one of its members, and it is not by any means necessary that the person dealing with him should have been aware that the one partner was acting on behalf of himself and other people. The question is, with whom was the contract made . in point of law ? And the true answer to this question does not by any means entirely depend on the answer to be given to the more simple question, with whom was the contract made in point of fact? Thus in Garrett v. Handley, 4 B. & C, 664 (see the same case, 3 B. & C. 462), where an action by the one partner failed. See Hopkinson v. Smith, 1 Bing. 13, as to actions by attorneys not retained by the defendant. All the members of a firm were held entitled to sue on a written guaranty given to one of the partners only, there being evidence to show that the guaranty was intended for the benefit of the firm. So, where a mem- ber of a firm of bankers was asked for a loan, and he made it out of the funds of the bank, it was held that an action for the recovery of the money lent was properly brought by all the members of the firm, although the borrower had not requested any loan from the bank. Alexander v. Barker, 3 Cr. & J. 133 ; Garrett v. Handley, 3 B. & C. 463. See Sims v. Britain, 4 B. & A. 375 ; and Sims V. Bond, Sid. 389. So, where one partner sells goods belonging to the firm. Skinner v. Stocks, 4 B. & A. 437, or does work, Townsend v. Neale, 3 Camp . 189 ; Arden v. Tucker, 4 B. & Ad. 817, of the kind he and his copart- ners undertake, an action for payment may be maintained by Mm and them 1012 Eights of Paetners. 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.' jointly, although the person to whom the goods were sold or for whom the work was done, knew nothing of the other partners. In the recent case of Cooke V. Seeley, 3 Ex. 746, a partner had an account at a bank in his own name, but there was evidence to show that it was a partnership account, and was known to the bankers to be so, and under these circumstances it was held that all the partners were entitled to sue the bankers for dishonoring a check drawn on them by the one partner for partnership purposes. It follows from the principle on which these cases were decided, and although formerly doubted (see Mawman v. Gillett 2 Taunt. 325 ; Lloyd V. Archbowle, id. 324), it is now clearly established, that dormant part- ners may join as plaintiffs in an action on a contract entered into on behalf of the firm of which they are members. This was expressly stated in Cothay v. Fennel, 10 B. & C. 671, where a person who had agreed to sell goods to A was held to be liable to be sued for a breach of his contract by A and others, who were to be jointly interested in the goods with him. The court said that the other plaintiffs might be treated as dormant partners in the transaction, and that a dormant partner in one instance might sue, as well as a dormant partner in the general business of a mercantile house. In this case it does not appear that tlie contract was in writing or had any thing special in it, bat even if it had been in writing, and had been of a spec- ial nature, the same principle would have applied. See Robson v. Driim- mond, 2 B. & Ad. 303, per Littledale, J. The authorities which have been just referred to established the rule, that when an ordinary contract not under seal is entered into with an individual partner, such contract, whether written or verba], express or implied, may be sued upon at law by him and his copart- ners if they can show that the contract was really entered into by the individ- ual partner on behalf of the firm. But it does not necessarily follow that, be- cause all the partners may sue on such a contract, they must do so. Whether they must or not depends upon the nature of the contract and upon whether the firm ' Pease v. Hirst, 10 Barn. & Cres. 122 ; Twopenny v. Young, 3 Barn. & Ores. 308 ; 5 Dowl. & Byl. 359. was in a position of a disclosed or an undisclosed principal. _ The rules on this subject are as follows : Dormant partners need not be joined. — A dormant partner never need be joined as a co-plaintiff in an action on a contract entered into with the firm or with one of its members. Leveck v. Shafto, 2 Esp. 468, action for work and labor. See Phelps v. Lyle, 10 A. & E. 113, as to contracts with the " directors" of a company. All must join. — If a contract is ex- pressly entered into with a firm or with one of its members on its behalf, such contract must be sued upon by all the members composing the firm at the time the contract is entered into, see 1 Wms. Saund. 391 k, and 1 Chitty on Pleading, 10-15 ; Phelps v. Lyle, 10 A. & E. 113 ; Metcalf V. Bruin, 13 East, 400 ; Wool- mer v. Toby, 4 Ra. Ca. 713, excepting only the then dormant partners, if any. On implied contracts. — All the mem- bers of a firm (except the dormant part- ners) must join as plaintiffs in an action on an implied contract with the firm, whether the person sued supposed he was dealing with the firm or not. Thus, if the funds of the firm are lent by one partner, he cannot alone maintain an action for its repayment by virtue of any implied contract with himself, for the promise to repay, which is implied by law, is a promise with the real lend- ers of the money and must be sued upon by them. See Garrett v. Handley, 3 B. & C. 463 : Graham v. Robertson, 3 T. R. 282 ; Teed v. Elworthy, 14 East, 210. On written contracts. — Where a writ- ten contract is entered into with one part- ner and it does not appear on the face of the contract that he was acting on behalf of the firm, he may sue alone on that contract. In such cases the action may be maintained either in the name of the person with whom alone the contract was ostensibly made or in the name of the parties really interested. See Skin- ner V. Stocks, 4 B. & Aid. 437, and Co- thay V. Pennell, 10 B. & C. 671. AcTioKS BY Partners. 1013 Must be partners at the time of the contract. Sec. 678. But, generally, in all contracts, ly parol or otherwise, they only vjho were partners at the time of the contract must join; and, therefore, a person vjho enters the partnershiji after the completion of Nominal partners. — The expression, " members of the firm," as used in the preceding observations, is not intended io include what are called nominal partners, i. «., persons who are not enti- tled to share the profits of the firm, but whose names appear and are used as if they were. Such persons never need join as plaintiffs in an action on a contract not expressly made with them. In Kell v. Nainby, 10 B. & C. 20, the plaintiff prac- ticed as an attorney and solicitor under the name of Kell & Son,and he sued in his own name for business done by him for the defendant. It was objected that the son ought to have been a co-plaintiff, but it was proved that the son was only a salaried clerk and had not been em- ployed by the defendant, and it was therefore held that the action was prop- erly brought by the father alone. There are several other cases to the same ef- fect, Barker v. Stubbs, 1 Man. & Qr. 44; Davenport v. Rackstraw, 1 C. & P. 89 ; Parsons v. Crosby, 5 Esp. 199 ; Harrison V. Fitzhenry, 3 id. 238 ; Glossdp v. Col- man, 1 Stark. 25, and they show that if a partner retires and leaves his name in the firm it is not necessary that he should be a co-plaintiff in an action brought by the continuing partners in respect of what has happened since the retirement. Cox v. Hubbard, 4 C. B. 317. 'B'oX, prima facie, a, nominal part- ner shares profits, and therefore ought prima facie to be joined as a co- plaintiff in an action on an express or implied contract with the firm. This is shown by Teed v. Elworthy, 14 East, 210. There the plaintiff, whose name was John Teed, carried on the business of 'a banker under the name of John and Thomas Teed & Co. He had a son of the name of Thomas, who it was sworn had no concern in the bank, but who, for any thing else that appeared in evidence, might have had some interest in its capital or profits. A customer of the bank, having overdrawn his account, was sued by John Teed alone, but it was held that the evidence was not sufficient to show that Thomas was a merely nominal partner and that he therefore ought to have joined in the action. If a nominal partner is a party to the contract sued upon, he must be a party to the action brought upon it. Thus, in Guidon v. Robson, 2 Camp. 302, the plaintiff carried on business under the name of Guidon & Hughes, and in that name he drew a bill on the defendant, who accepted it, but failed to pay it when due. Hughes was a sal- aried clerk employed by the plaintiff in his business, but he was not a partner, and had no share in the profits. It was nevertheless held that, as his name was on the bill, he ought to have joined in the action. The above cases are sufficient to show under what circumstances a nominal partner must join as a co-plaintiff with the real partners, and under what cir- cumstances he need not do so. But there yet remains this further question, whether he may join in those cases in which it has been established that he need not. Mr. Collyer is of opinion that he may, and he rests his opinion on Bond v. Pittard, 3 M. & W. 357. But this case, when examined, is not an authority in point, for the so-called nominal partner had a share in the profits, and the decision of the court turned on that circumtance and on the necessary consequence that both partners were interested in the fund sought to be recovered. Upon principle the writer ventures to submit that, in all cases where a nominal part- ner need not join he ought not to do so, for, ex hypothed, he is no party to the con- tract sought to be enforced, and he has no interest in its subject-matter. When one may sue alone — It appears from the foregoing statements that un- der certain circumstances an action may be brought upon a contract entered into on behalf of a firm, either by all the partners or by the individual partner with whom the contract was made, and that, under certain other circumstances, an action upon such a contract ought to be brought by all the partners jointly. But there are also circumstances under which an action ought not to be brought by all the partners, and these remain to be considered. When one should sue alone.— One part- ner ought always to sue alone upon an ordinary contract entered into with him- self if such contract is to be regarded 1014 Eights of Partkehs. 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 tivm shall be extinguished, and a contract with the new as made with liim as a principal, and not on behalf of himself and others. Therefore, if each of several partners lends money out of his own funds, each must sue alone for repayment of his advance, although the loans may have been made in pursuance of some ar- rangement with all the partners, for in the case supposed each loan creates a separate debt to each partner, and they do not altogether form one debt to the firm. See Thacker v. Shepherd, 2 Chitty, 652 ; Brand v. Boulcott, 3 Bos. & P. 235. Again, if one partner alone holds a cer- tain oflfice and does work in his official capacity, he alone ought to sue for pay- ment of the work so done. Brandon v. Hubbard, 2 Brod. & Bing. 11. As a partner who, on behalf of him- self and copartners, enters into a con- tract under seal, is alone liable to be sued on such contract he is for all the purposes of that contract, and as be- tween himself and the other parties to it, in the position of a principal and not of an agent. If, therefore, the contract is for the payment of money by him and the money is paid out of the funds of the firm, and it then appears that the contract was invalid on the ground of fraud, the partner who sealed the con- tract is the proper person to sue for the recovery back of the money. This was held in Lefevre v. Boyle, 8 B. & Ad. 877. There a policy of insur- ance had been granted by three trustees of an insurance society, and had been paid out of the funds of the society. An action was afterward brought by the three trustees alone to recover back the money paid, on the ground that the policy had been granted on the faith of false and fraudulent representations, and it was held that the three trustees were the proper parties to sue. The last class of cases in which it is proper for one partner to sue alone in respect of a contract not under seal, entered into by him and relating to the partner- ship business, is where he has repre- sented tiiat he is acting on his own pri- vate account and not for the firm to which he belongs. A leading case on this head is Lucas v. De la Cour, 1 M. & S. 248, in which all the members of a firm brought an action for the loss of some goods belonging to the firm and intrusted to the defendant. It appeared, however, that one of the partners only had been in communication with the defendant, and that such partner had represented the goods to be his own ex- clusively. On this evidence the plain- tiffs were nonsuited, and the court de- clined to set the nonsuit aside, observ-' ing that if one partner makes a contract in his individual capacity, and the other partners are willing to take the benefit of it, they must be content to do so ac- cording to the mode in which the con, tract was made. Actions ex delicto. — With respect to actions by partners not founded on any breach of contract or of quasi contract but on some tort, the general principle is that, where a joint damage accrues to several person ■ from a tort, they ought all to join in an action founded upon it, See 1 Wms. Saund. 291, n ; Addison v. Overend, 6 T. R. 766 ; Sedgworth v. Overend, 7 id. 279; whilst, on the other hand, several persons ought not tojoin in an action ex delicto, unless they can show a joint damage. 2 Wms. Saund. 116 a. These doctrines are well illustrated by actions for libel. A libel can clearly be made the subject of an action in the name of all the partners, if the firm has been damnified. See Cooke V. Batchelor, 3 Bos. & P. 150 ; Forster v. Lawson, 3 Bing. 452 ; Wil- liams V. Beaumont, 10 id. 260; The Metropolitan Saloon Omnibus Co. v. Hawkins, 4 H. & N. 87, and if the libel reflects directly on one partner, and through him on the firm, two actions will lie, viz., one by the partner libeled and the other by him and his copart- ners, but the damage in the first action must not appear to be joint, nor must that in the second appear to be confined to the libeled partner onlv. See Harris V. Bevington, 8 0. & P. 708 ; and Fors- ter V. Lawson, 3 Bing. 452; 2 Wms. Saund. 117 b ; Haythorne v. Lawson, 3 C. & P. 196. If one partner is libeled and the firm cannot be shown to have been damnified, an action for the libel should be brought in the name of the individual partner ag- grieved, and not by the firm, Solomon V. Medex, 1 Stark. 191, and it has been settled that he may sue alone, although the libel more particularly affects him in the way of his business. Harris v. Bevington, 8 C. & P. 708 ; Robinson v. Marchant, 7 Q. B. 918. AcTioKS BY Partners. 1015 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 witli B, and A contracted a f urtiier 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 after- ward, it was lield that B and C might join in an action against A on an account stated.^ Where partners liave 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 It may be observed tliat a firm may- sustain an action for a libel affecting it, without proving the existence of what ia commonly called malice on the part of the defendant. Bromage v. Prosser, 4 B. & C. 247. A person, who utters ■what is untrue of his neighbors and causes tbem damage, is answerable for such damage, whether he bore them any ill-will or not, unless he can show that what he uttered ought to be re- garded as a privileged communication, and in estimating the damages to which they are entitled, regard may be had to the prospective loss. See Gregory v. Williams, 1 Car. & Kir. 568. Moreover, a general statement not clearly pointing to any particular person, but libelous as to an entire class, may be treated by any individual of that class, who can show that he was in fact intended, as a libel on himself, and this principle is as applicable to libels affecting a firm as to those affecting single individuals. Le Fanu v. Malcomson, 1 Ho. Lo. Ca. 637. All the members of a firm ought to join in an action for the recovery of goods of the firm, or for damages for their loss or injury. See Addison v. Overend, 6 T. K. 766; Bleadon v. Han- cock, 4 Oar. & P. 153 ; see Dockway v. Dickenson, Comb. 366, but if one only sues and there is no plea in abatement, he will be entitled to recover damages in respect of his interest in the goods. See Addison v. Overend, 6 T. E. 766 ; Bleadon v. Hancock, 4 Car. & P. 153 ; see Dockway v. Dickenson, Comb. 366, and if, after he has done so, another action is bi'ought by one of his copart- ' Welsford v. Wood, 1 Esp. 183. 2 Moor V. Hill, 3 Peake, 11.' Under what circumstances a debt is assignable at law appears from Tatlock v. Harris, 3 T. K. 180; Wilson v. Coupland, 5 ners, that action cannot be stopped on the ground that all the partners are not co-plaintiffs, for the defendant should have pleaded this in abatement to the first action. Sedgworth v. Overend, 7 T. R. 379. If a person colludes with one partner in a firm to injure the other partners, the latter can jointly sustain an action against such person. Thus, where the bankers of a firm of four partners knew that one of them was in the habit of drawing bills in the name of the firm for his own private purposes and the bankers colluded with him and kept his copartners in ignorance of what was going forward, and paid the bills when due out of the funds stand- ing to the credit of the firm, it was held that an action lay against the bankers at the suit of the other three partners. Longman v. Pole, Moo. & Mai. 33.S. An action of ejectment for the recovery of real property belonging to the firm ought to be brought in the names of all those persons in whom the legal estate is vested. See 1 Chitty on Plead. 74. If, however, one partner only has made a lease of the partnership prop- erty, then, as his title cannot be disput- ed by the lessee, notice to quit may be given and ejectmerit maintained by the lessor alone, and if he alone has the legal estate, the circumstances, that rent has been paid to the firm and receipts for it have been given by all the partners will not affect his right to give the notice and bring the action in his own name. See Doe v. Baker, 3 B. Moore, 189." Lindley on Partnership, pp. 385, 395. Barn. & Aid. 338 ; Fairlie v. Denton, 8 Barn. & Ores. 895, and the cases cited in the last-mentioned case. See, also. Com. Dig., Action on the case upon Assump- sit (B. 3). 1016 Eights of Partners. 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 in- denture 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, etc., that he would pay to the said several creditors, or their respective partners, etc., certain sums in dischai-ge of their several debts, by way of installment. B, of the firm of B & 0, 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 pay- ment of the installments, B alone brought his action on the covenant against A, and the declaration was held good on demurrer. " The defendant," observed Lord Ellenborough, "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 terms 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, gen- erally, where a person is named as a party to a covenant, and assents to it, he may afterward join in an action "on the covenant, although he did not seal.' In cases of this nature, where the partners resort to a higher secu- rity for their debt than that of assumpsit, they must abide by such security,'' and, therefore, when only part of a firm are parties to the • Ex parte Peele, 6 Ves. 604 ; Ex parte action, is contained in a deed, the deed Williams, Buck, 13 ; Harrison v. Fitz- must be declared upon, although, with- henry, 3 Esp. 338. See Berkeley v. out the existence of any deed, the facts Hardy, 5 Barn, & Cres. 355 ; 8 Dowl. & of the case would have supported a Eyl. 103. general action of debt or indebitatus ^ Metcalf V. Rycroft, 6 Man. & Sel. 75. assumpsit. Evans v. Bennet, 1 Camp. See D. Littledale, J., 10 Barn. & Ores. 303, note. See Atty v. Parish, 1 N. R. 137. 104. There is no case where, the inter- 2 Vernon v. Jeffries, Str. 1146 ; Cle- est being the same as that secured by ment v. Henley, 3 Roll. Abr. Fait, (F), the deed, it has been holden that as- pl. 3. sumpsit will lie. Per Lord Ellenborough, ^Chit. PI. Assumpsit. The general Schack v. Antony, 1 M. & S. 574. See rule seems to be that where the con- Lefevre v. Boyle, 3 B. & Ad. 877. tract, which is the foundation of the Actions by Paetneks. 1017 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 facts were that the others who had not sealed had also refused their assent." distinction between sealed and unsealed contracts as to parties. Sec. 679. But although contracts contained in a deed can only be enforced by those who are parties to the deed, yet written contracts, 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.^ 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.* And though the person whose name is used in the policy be inserted jointly with another, the action may be brought in his name separately, if the joint interest Ije stated in the declaration. ' Likewise, where a policy is effected in the names of A and B, but A only is interested, the action may be brought in his name separately, his sej)arate interest being stated in the declaration.* Parties to actions on bills and notes. Sec. 680. 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 ' Scott V. Godwin, 1 Bos. & Pull. 67. ' 4 Barn. & Cres. 666 ; but see contra, 2 Petrie v. Bury, 3 Barn. & Cres. 354 ; per Coleridge, J., 2 P. & D. 251 . 5 Dowl. & Eyl. 152. « Grove v. Dubois, 1 T. R. 112 ; Cum- 3 Hall V. Smith, 3 Dow. & Ryl. 527 ; ming v. Forrester, 1 Mau. & Sel. 497 ; Marchington v. Vernon, 1 Bos. & Pul. Hagedorn v. Oliverson, 2 M. & S 426. 101. D. Bayley, J., 4 Barn. & Cres. 666. * Garrett v. Handley, ante, p. 447 ; 'Cosack v. Wells, 1 Chit. PI. 5. Alexander v. Barker, Id. * Marsh v. Robinson, 4 lEsp. 98. 128 1018 Rights of Partners. the partners of a banking-house. These partners 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 security. Upon none of these occasions, however, was the note indorsed to the new firm. After the retirement of the original payees au action was brought on the note in their names, without joining. the. new partners. It was contended that such action was improperly brought; that the note was considered 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 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 origi- nal payees for the benefit of the parties interested. And Littledale, J., observerd that, although all the securities 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 indorsement 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 alone sues.^ In cases where some only of a firm are parties to a written instru- ment, and sue alone upon it without joining their cojiartners, the defendant is estopped from saying that there are other joint con- tractors who ought to have been plaintiffs.' Right of action cannot be transferred, vrhen. Sec. 681. An agreement between the partners cannot vary their right of action against third persons. Hence, it has been observed that the ostensible members of a firm cannot, by agreement, give ' Pease v. Hirst, 10 Barn. & Cres. 133. person, and, on the bill beings dishon- See Ex parte Greening, 13 Ves. 206 ; ored, pay the party who has discounted M'Neillage v. Holloway, 1 Barn. & Aid. it in equal proportions, they may strike 318. out their own indorsements, and bring '' Per Lord Ellenborough, Ord v. Por- a joint action against- such previous tal, 3 Camp. 239 ; see Attwood v. Rat- indorser to recover the amount of the tenbury, 6 Moore, 570. If several per- bill. Low v. Copestake, 3 Car. & Payne, sons, not partners in business, separately 300. indorse, for the accommodation of the ' See Kieran v. Sanders, 6 Ad. & Ell. drawer, a bill of exchange which has 515. been previously indorsed by another AcTioxs BY Paktners. 1019 authority to any one of them to bring an action in hig name against strangei's.' So, it has been ruled, that if a firm admit a new member upon an agreement that he shall be deemed a partner from a previous day, an action for a debt contracted with the partnership before the day when the new member Avas 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; and he cannot defend the action on the ground that the plaintiffs are not partners inter se." Fartiea' to action on a deed. Sec. 682. In the case of a deed, when the legal interest and cause of action of the covenantees is several, each may sue separately for his particular damage, although the words of the covenant are jomt only.* So, in the case of a simple contract, made with one of several partners acting for the firm, if the person who contracts should after- ward treat the joint contract as several, each member of the firm will then be enabled to sue him severally. Thus, where three persons had employed the defendant to sell some timber for them, in which they were jointly concerned, and the defendant paid two of them their 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 occupation of a house, and it appeared that the house was the pi-operty of six several tenants in common, to all of whom, except the plaintiff, the defend- ant 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 join ; but Lord Mansfield overruled the objection, and the plaintiff recovered.' Sometimes the joint action of partners is severed by dissolution. Where, on the dissolution of partnership between A and B, it is agreed that A shall receive some of the partnership debts, and B ' Radenhurst v. Bates, 3 Bing. 470 ; 857. But the real partners may sae 11 Moore, 421. See Davies v. Hawkins, alone. 3 Man. & Sel. 487 ; Puller v. Roe, 1 * Cliit. PI. 6 ; 1 Saund. 153. Peake, 260. ^^ Garret v. Taylor, 1 Esp. 117. ' Wilsford V. Wood, 1 Esp. 182. ' Kirkman v. Newstead, 1 Esp. 117. 3 Bond V. Pittard, 3 Mees. & Wels. 1020 Eights of Paetnees. others, it has been ruled that each may maintain separate actions for the debts to be received by each respectively." So, where a partner- ship between two persons in trade had been dissolved, and one of them carried on business afterward 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 defend- ant during the existence of the partnership. But in this case Lord Tenterden observed that if the defendant had had a set-off or counter- demand, originating in transactions between himself and the partner- ship, then it would liave 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, with- out joining the assignees of the bankrupt. A partner must sue severally, by reason of an offlce or appointment enjoyed by him, but which, being of a personal nature, is not shared by his copartner. Thus, for the more speedy delivery of cattle taken by way of distress, the statute 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 making 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 partnership, 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, perhaps, Avhere the business has been transacted in Chancery, that such an action may be maintained.* And, at all events, any objection to such an action, arising froift. the stat. 2 Geo. 2, c. 23, must be the subject of a special plea, and cannot be made available under non assumpsit. ' In case of dormant partner. Sec. 68.3. It is not necessary that a dormant partner should join with the ostensible partners of a firm, in an action against a person who 1 Evans v. Silverlock, 1 Peake, 31. ■* Hill v. Sydney, 7 Ad. & EU. 956 ; 2 Atkinson v. Laing, 1 Dowl. & Ryl. Arden v. Tucker, 4 B. & Ad. 817 ; Vin- N. P. C. 16. cent v. Holt, 4 Taunt. 583. 3 Brandon v. Hubbard, 4 Moore, 367 ; * Hill v. Sydney, vi)i supra. 2 Brod. & Bing. 11. AcTioiirs BY Partners. 1021 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 book- sellers had shares in the work, it was held that, as they had not con- tracted with the defendant, and M was the only ostensible man, he was the only proper plaintiff." On the other hand, where one of sev- eral part-owners of a vessel contracted 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 contract 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-ofE did not prevent the action from being maintainable in the names of all the parties interested, though, if the defendant were injured by the loss of his right of set-ofE, he might perhaps apply to the court for relief.' And where money has been lent by a partner, under circumstances from which 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. Upon the whole, 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 ' Leveck v. Sliaftoe, 1 Esp. 468 ; Lloyd liable to be sued shall be sued, dormant V. Arclibowle, 2 Taunt. 324. partners ought always to be* made co- " Ma wman V. Gillett, cited in Lloyd V. defendants in an action on a contract Arclibowle, 2 Taunt. 324. binding the firm. And tliia is the 2 Skinner v. Stocks, 4 B. & A. 437 ; law, subject, however, to the qualifica- and see Rod well v. Eedge, 1 Car. & tion that a person who holds himself Payne, 220; Cothay v. Fennell, 10 Barn, out to another as the only person with & Ores. 671. whom that other is dealing, cannot be ^Dormant partners. — On the subject of allowed afterward to say that such other the liability of dormant partners, Mr. was also dealing with somebody else. Lindley states the common law as fol- The leading cases on this subject are, lows: "It has been seen that they are Dubois v. Ludert, De Mautort v. Saun- liable on all contracts entered into on ders, and Bonfleld v. Smith. In Dubois behalf of the firm to which they be- v. Ludert, 5 Taunt. 609, Ludert was long, and whether such a contract Is employed by one Schroeder to sell written or unwritten, express or im- goods on commission, and was sued plied, it is clear that a dormant partner by his assignees for the proceeds of TTiay be sued upon it. Robinson v. the sale of the goods. Schroeder Wilkinson, 3 Price, 538 ; Beckham v. had become indebted to one Rroning in Drake, 9 M. & W. 79, overruling respect of some other business, and Lu- Beckham v. Knight, 4 Bingh. N. C. dert and Groning were partners, each 234. Of course if a person is sued being a dormant partner as regarded on the ground that he is a dormant the business carried on by the other, partner, that fact must be proved, Ludert, in order to set oif in the action for otherwise no case will be made brought against him the debt due from against him. See Hall v. Bainbridge, Schroeder to Groning and Ludert, 8 Dowl. 583. By the general rule, pleaded in abatement the non-joinder therefore, which requires that all of Groning as a co-defendant. The plea 1032 Eights of Partxers. 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 carried on the business by him- self. He then brought an action for a breach of the contract which was allowed, tlie court expressing their opinion to be that if a man enters into a contract with one person not knowing that he has a partner, and makes his contract with that person alone, it is competent for that person, if sued, to plead in abatement that he has other partners who are not joined, unless the plaintiff is thereby substantially injured. In De Mautort v. Saunders, 1 B. & Ad. 398, a bill of exchange was drawn on and accepted by Saunders Brothers & Co., London. The firm, Saunders Brothers & Co., consisted of two brothers, resident in London (the de- fendants), and of two other persons resident abroad, and not generally known to belong to the firm. The de- fendants pleaded in abatement the non- joinder of their two copartners, and the case of Dubois v. Ludert was relied upon. But it was left to the jury to say whether the holder of the bill might not reasonably suppose that the defend- ants alone constituted the firm, and that, if he had reasonable ground so to think, he must be taken to have contracted with them alone, and to be entitled to a verdict. The jury having found for the plaintiff, the court held- that the question had been properly submitted to the jury, and that Dubois v. Ludert could not be supported. In Bonfield v. Smith, 12 M. & W. 405, the defendant and his brother were partners, and car- ried on business under the firm of Bush & Co., but the defendant was the only person known to the plaintiff as consti- tuting the firm. The plaintiff having sued the defendant for goods sold and delivered, the defendant pleaded in abatement the non-joinder of his brother. The jury were directed that a partner- ship between the defendant and his brother was proved, but that, if the de- fendant gave the plaintiff reason to be- lieve that he alone constituted the firm of Bush & Co., he would be solely lia- ble. The jury found for the defendant. A new trial was moved for on the ground that the real question, as stated in De Mautort v. Saunders, was whether the plaintiff had reasonable ground to con- sider the defendant as Bush & Co., but the court held that unless the plaintiffs belief was founded on the defendant's conduct or representations, the defend- ant had a right to insist on his partner being sued in the action, and a new trial was refused. In Dubois v. Ludert the defendant carried on business in his own name, and there was no reason to sup- pose that he had a partner ; but in each of the other two cases the defendants carried on business under a partnership style, Saunders Brothers & Co., and Bush & Co., and there was, therefore, at all events, reason to suppose that they had partners, it then became a question for the jury whether the defendants had done any thing to lead the plain- tiff to suppose they had not ; in De Mau- tort V. Saunders it was found that they had ; so in Stansfeld v. Levy, 3 Stark. 8; whilst in Bonfield " v. Smith it was found that they had not. It follows from the last-mentioned, cases that, notwithstanding Dubois v. Ludert, if a person carries on business in his own name, and incurs debts in so doing, he may be sued alone for such debts, and that he cannot successfully plead in abatement the non-joinder of a dor- mant partner. See, too, Mullett v. Hook, Moo. & Mai. 88, Baldney v. Ritchie, 1 Stark. 338 ; Doo v. (;hippendeu, Abbott on Shipping, 84; Colson v. Selby, 1 Esp. 452. The same rule holds whenever a partner enters into a written contract in which he does not disclose the fact that he is acting for other people, for al- though they may be sued, he cannot in- sist that they shall be sued. See Hig- gins V. Senior, 8 M. & W. 834, where the plaintiff knew that the defendant was acting as agent." Persons who deal with a firm of which there are dormant part- ners, without any knowledge of them, may still sue aU tlie members of the firm or the ostensible partners only. Ex parte Norfolk, 19 Ves. 458 ; Ex parte Watson, id. 459 ; Ex "parte Hamper, 17 id. 408; Ex parte Hodgkiuson, Cooper, 101. And it has also been held that in a suit by the firm it is at the option of the plaintiffs to make a dormant part- ner a party to the suit. Wilson v. Wal- lace, 8 S. & R. (Penn.) 55 ; Clarkson v. Carter, 3 Cow. (N. Y.) 85 ; Boardman v. Keeler, 2 Vt. 65; Skinner v. Stocks, 4 B. & Aid. 437; Alexander v. Barker, 2 Crompt. & J. 133; Cothay v. Fennell, 10 B. & C. 671. Actions bt Partners. 1023 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.' Nominal partners. Sec. 684. Generally, a nominal partner need not join as a co-plain- tiff in an action on a contract made by the firm. 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 attor- ney carried on business under the firm 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., observed that a party with whom the contract was actually made might sue, without joining others with whom it was apparently made." Where, howe"ver, 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 plaintiffs. 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 Ellenborough nonsuited the plaintiff. And it is to be remarked that his Lordship's observations on this occasion seem applicable 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 j)artner. He is to be considered in all respects a partner, as between himself and the rest of the world. Persons in trade had better • be very cautious how they add a fictitious name to their firm, for the purpose of gaining credit. But where the name of a real person is inserted, with his own consent, it matters not what agreement there may be between him and those who share the profit and loss. They are equally responsible, and the contract of one is I Robson V. Drummond, 2 B. & Ad. 303. 89 ; Glossop v. Colman, 1 Stark. 23. ■2 Parsons v. Crosby* 5 Esp. 199 ; Dav- ' Teed v. Elworthy, 14 East, 210. euport V. Rackstraw, 1 Carr. & Payne, * Kell v. Nainby, 10 B. & C. 20. 1024 Eights of Partners. the contract of all. In this case the declaration states that the defendant promised to pay the money specified in the bill to the plain- tiff jointly with another person. The variance is fatal." ' Infant partners. Sec. 685. Aji 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 con- ' Guidon v. Robson, 2 Camp. 303. Partners as plaintiffs. — The general rule is that all the partners must join to enforce a partnership claim ; Gallot V. McCluskey, 18 La. An. 259 ; Cochran V. Cunningham, 16 Ala. 448 ; Dob v. Halsey,16 Johns.(iN Y.)34; Snodgrassv. Broadwell, 2 Litt. (Ky.) 353; Saul v. Kuger, 9 How. (N. Y.) Pr. 569 ; Hughes v. Boring, 16 Cal. 81 ; and this though the partnership is dissolved ; Wright v. Williamson 3 N. J. L. 678 ; and it has in some states been held that a dor- mant partnerfcust join in the suit ; Se- cor V. Keller, 4 Duer (N. Y.), 416. But a contrary doctrine is held in others.. Speake v. Prewitt, 6 Tex. 252 ; Monroe v. Ezzell, 11 Ala. 603 ; and this doc- trine seems recognized especially where the party dealt solely with the ostensi- ble partner. Wood v. O'Kelly, 8 (Jush. (Mass. ) 406 ; Clarkson v . Carter, 3 Co w. 84 ; Clarkson v. Miller, 4 Wend. (N. Y.) 628 ; Rogers v. Kichline, 36 Penn. St. 293; Curtis v. Belknap, 21 Vt.433; Ward V. Leviston, 7 Blackf. (Ind.) 466. And a partner to whom a note and mortgage is given to secure a debt due the firm may maintain an action thereon in his owuname. Trottv. Irish, 1 Allen (Mass.) 481. And the same' doctrine is held in New York, where the business respect- ing which the action is brought is uni- formly done in the name of the partv suing. Piatt v. Hallen, 23 Wend. (N. Y') 456. Firm name. — The general common- law doctrine is that a partnership can- not sue in the name and style of the firm, but the suit must be in the names of the individuals composing it ; and a complaint or declaration may be de- murred to on this ground. Gilman v. Cosgrove, 22 Cal. 356 ; Dawes v. Black- ford, 4 Blackf. (Ind.) 50; Heaston v. Cincinnati, etc., R. Co., 16 Ind. 275 ; Seeleyv. Schenck,2N. J. L.75 ; Barnes V. Hall, 3 id. 984; Tomlinsonv. Burke, 10 id. 295 ; Potter v. Cresson, 10 S. & R. (Penn.) 257; Pate v. Bacon, 6 Munf. (Va.) 219 ; Smith v. Canfield, 8 Mich. 493 ; Crawford v. Collins, 45 Barb. (N. Y.)S69 ; 30 How. Pr. 398 ; Andrews v. Ennis, 16 Tex. 45. But in various states the statutes provide that partnerships may sue and be sued in the partnership name. Gordon v. Jenny, 1 Mor. (Iowa) 182 ; Johnson v. Smith, id. 105 ; Aber- nathy v. Latimore, 19 Ohio, 286 ; Ham- mersmith V. Espy, 13 Iowa, 439 ; Davis V. Buchanan, 12 id. 575 ; Markham v. Buckingham, 21 id. 535. In Iowa it is provided by statute that where two or more are bound by contract, whether jointly or severally, or severally only, the action may be brought against either or all of them ; and it has been held in that state that an action might be main- tained against one partner alone upon the partnership note executed in the firm name. Ryerson v. Hendrie, 22 Iowa, 480. In a recent case, in the su- preme court of the United States, where the complainant in chancery sued as administrator of a deceased partner, praying an account of partnership con- cerns, and alleged in his bill that he was the sole heir of the deceased part- ner, it was held that the fact that he was not the sole heir did not make the bill abate for want of necessary parties, since a decree in his favor as adminis- trator would not interfere with the rights of others who might claim a dis- tribution after the complainant received the money decreed to him. Moore v. Huntington, 17 Wall. (U. S.) 417. So, in Alabama it has been held that a judg- ment against a partnership in firm name alone will support an action against an individual member of the firm to enforce his individual liability for the firm debts. Cos v. Harris, 48 Ala. 538. When a person is not known in the firm as a partner,, by persons dealing with it, and there is nothing to indicate his connec- tion therewith, he may properly be treated as a dormant partner, and is not a necessary party to an action against the firm. North v. Bloss, 30 N. Y. 874. Actions by Partners. 1025 tracted with the firm, any demand upon it contracted with the infant in the name of the partnership.' Bankrupt partners. Skc. 686. Generally, when one partner becomes bankrupt, the solv- ent partner must sue jointly with the assignees of the bankrupt 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 fol- lows, 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 solv- ent partner, out of his separate property, after the bankruptcy of his copartner, in 2Jursuance of a contract made before the bankruptcy, may be sued for in the name of the solvent partner only, without join- ing the assignees of the bankrupt partner.' ' Teed v. Elworthy, 14 East, 310. D. Bayley, J., Goode v. Harrison, 5 B. & A. 157. Perhaps, it should be said, that the infant ought to joia for the sake of con- formity. The reason given in the text, which is warranted by the authorities referred to, seems inconsistent with the notion that tlie contract of an infant for purposes of trade is void, which is the doctrine laid down in Thornton v. lUing- worth, 3 B. & C. 836. Bayley, J., there says: "In the case of an infant, a con- tract made for goods for the purposes of trade is absolutely void, not voidable only. The law considers it against good policy that he should be allowed to bind himself 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 difference of opinion on the nature and effect of an infant's contract in these cases. See the judgment of Best, J., in Goode v. Har- rison. 5 B. &A. 157. '' Tliomason v. Frere, 10 East, 418. 3 Whitehead v. Hughes, 3 Cromp. & Mees. 318; 4 Tyrwh. 93. But the assignees may stay the proceedings till he gives security for costs. Id. J Eckhardt v. Wilson, 8 T. R. 140. ^Thacker v. Shepherd, 3 Chit. 653. In case of bankruptcy, all actions by the finn should be in the name of the solvent partners and the assignee of the bankrupt. Thompson v. Frere, 10 East, 418; Waugh v. Austin, 3 T. R. 437. Bankruptcy. — But if the bankrupt lias 129 not been discharged it has been held that actions at law miglit be commenced against the firm in the name of all the members, including the bankrupt. Tut- tlev. Cooper, 10 Pick. (Mass.) 391. If one has been discharged in bankruptcy, the others would of course be liable for the claims against the firm, less any sum which might have been received on the same on a dividend of the bankrupt's estate. " If a partner becomes bankrupt," says Mr. Liudley, " his assignees must join in his stead in any action in which, had no bankruptcy intervened, the bankrupt himself would have been necessarily joined as a plain- tiflF. If the assignees decline to join, the solvent partners are entitled to make use of their names upon indemnifying them against the costs of the action. If all the partners are bankrupt, any ac- ction which, if bankruptcy had not in- tervened, it would have been necessary to bring in the name of all the partners, must be brought by their assignees. But this is subject to the qualification that bankrupts, whether partners or not, may sue in their own names as trustees for other people." As regards actions against a firm, one or more of the members of which liave become bankrupt, it need hardly be ob- served that there is no remedy by ac- tion against assignees in respect of lia- bilities of the bankrupt they represent. The only remedy is by proof against his estate, or by proof and by an action against him if he has not obtained his certificate, or if his certificate is no bar." Lind. on Part. 406, and notes. 1026 Eights of Paetnees. Death of partner. Sec. 687. When one or more of several obligees, covenantees, part- ners, or others, having a joint legal interest in the contract, dies, the action must be brought in the name of the survivor, and the executor or administrator of the deceased cannot be joined,' and when the last survivor dies, his executors or administrators alone can sue, and the personal- representatives of the partner who first died cannot be joined.' If a plaintiff die pending tlie action, 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 plaintifE or plaintiffs.' Demurrer in case it appears there should be other parties. Sec. 688. In all cases of contract, it 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 airrest of judgment, or on error. If the objection does not appear on the face of the pleadings, the defend- ant may avail himself of it by plea in abatement, or as a ground of ' Chit. PL 11 ; Hall v. Huffam, 2 Lev. 188 ; Kemp v. Andrews, Cartb. 170; Webber v. Tyvell, 3 Saund. 133 ; Manin V. Crompe, 1 Lord Raym. 340; Com. Dig., tit. Merchant, (D.) ■^ Chit. PI. 11. 2 8 & 9 Will. 3, c. 71, s. 7. In case of deatli of partner " With re- spect to changes caused by deatli, the maxim, jus aocrescendi inter mercatores locum non habet, the real meaning of which will be explained hereafter, has no application to rights of action. If, therefore, a partner dies in the life-time of any one or more of his copartners, all actions brought in respect of any contract entered into by or on behalf of the firm before his death, mu.st. be brought by or against the surviving members of the firm, and by or against them alone, for the representatives 'of the deceased partner can neither sue nor be sued at law in respect of any such contract. Dixon V. Hammond, 3 B. & Aid. 310, which shows that an agent of the firm must account to the surviving partners. See, too, Martin v. Crompe, 1 Ld. Raym. 340, and 2 Salk. 444; and Webber v. Tyvill, 3 Wms. Saund. 131, e. So an ac- tion for the conversion of partnership goods must be brought by the surviving partners; Kemp v. Andrews, Carth. 170; but see Buckley v. Barber, 6 Ex. 164 ; although an indictment for stealing them may be preferred by the surviving partners and the next of kin of the de- ceased partner. R. v. Gaby, Buss & Ry. 178 ; R. V. Scott, id. 13. It follows from the above rule that the last surviving partner, or, if he is dead, his legal personal representative, is the proper person to sue and be sued at law in respect of the debts and en- gagements of the firm. Richards v. Heather, 1 B. & Aid. 39 ; Calder v. Ruth- erford, 3 Brod. & B. 303. In declaring against a surviving partner it is not necessary that he should be described as such. Id. ; Mount Stephen v. Brooke, 1 B. & Aid. 234. But in a declaration by a surviving partner the rule is different. Jell V. Douglass, 4 B. & Aid. 874; 2 Wms. Saund. 131 ; Atwood v. Pattenbury, 5 J. B. Moo. 309. The reason for this is that in actions against partners one may be sued alone subject to a plea in abate- ment, which in the case supposed can- not be pleaded, whilst in actions by partners all must join, and if there is only one left that fact should appear, as otherwise there will be a variance be- tween the contract alleged and that proved. It is, however, apprehended that an amendment would now be al- lowed if in a declaration by a surviving partner he is not described as such." Lind. on Part. 405. Actions by Partners. 102? nonsuit at the trial, upon plea of rhe general 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 indebitatus count, this is an admission that he is content to treat the contract as made with the plaintifiE only, and that the plaintiff in such case is not to be non- suited.* 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 will be nonsuited.* But the misnomer of one of several plaintiffs cannot 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.' Of tnP parties to an action ex delicto. Sec. 689 Where there is a joint damage, or an injury is committed to the Joint property of a partnership, all the partners ought to Join as plaintiffs;" and the rule extends to actions for 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 copartnership be libeled, and the libel contains something which particulaiiy affects the character of one of the firm, a Joint action may be maintained against the libeler, 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.' 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 supjwsed 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 dam- age, although they may have no Joint fund independent of the general 1 . , ' Where the action is brought on a Taunton Market v. Keinberley, 3 W. bill of exchange, the general issue can- Bl. 1120. not be pleaded. Reg. Gen. H. T. 1834. « Bac. Abr. Joint-Tenant (K.) ; Co. Litt. '^ Walker v. Rawson, Moody & Rob. 198, a; Sedgworth v. Overend, 7 T. R. 350, and see 1 B. & Ad. 673. 379 ; Bloxam v. Hubbard, 5 East, 407 ; 3 Kingham V. Robins, 5 M. &W.94. J. S. Saund. Plead. &Ev., tit. Partners, 1. « Wilsford V. Wood, 1 Esp. 183. See ' Cook v. Batchelor, 3 Bos. & Pul. 150; Brandon v. Hubbard, 4 Moore, 367 ; 3 Bromage v. Prosser, 4 Barn. & Cres. 347; Brod. & Bing. 11. 6 Dowl. & Ryl. 396. 5 3 & 4 Will. 4, c. 43, s. 11 ; Jowett v. » Per Best, C. J., 3 Bing. 456. Charnock, 6 M. & S. 45. See Clerk of 1038 Eights of Partners. fund of the partnership.' And where words imputing insolvency in trade are spoken of one of the partners in a firm, such individual part- ner may maintain an action for slander, and recover damages for the injury done to him; and it is not necassarily to be considered as an injury to the partnership, for which a joint action only can be main- tained.'^ ' Longman v. Pole, 1 Mood. & Malk. 233. 'Harris v. Bevington, 8 C. & P. 708. See, further, as to parties in ac- tions for torts. Glover v. Austin, 6 Pick. 209; Robinson v. Mansfield, 13 id. 139'; Patten v. Guerny, 17 Mass. 185 ; Walker V. f'itz, 194. Parties to action ex delicto. — Where inj uries were sustained through the neg- ligence of the employees of a firm, an action may be brought against any one or more, or all its members. Roberts v. Johnson, 58 N. Y. 613.- So one partner may be liable for the acts of another partner, whereby deceptive appearances are created in land which is the subject of the partnership, and whereby the partnership realizes the proceeds of the fraud. Chester v. Dickerson, 52 Barb. (N. Y.) 349. And a partner, innocent in fact, may be liable for a conversion by his copartners in tlie regular course of partnership business. And especially would this be the case where the prop- erty converted or the profits thereof, or benefits derived therefrom, have inured to the benefit of the firm. Castle v. Bullard, 23 How. 172 ; see, also, Locke V. Stearns, 1 Mete. (Mass.) 560 ; Linton V. Hurlev, 14 Gray (Mass.), 191 ; Stock- ton V Frey, 4 Gill (Md.). 406 ; Manufac- turers' Bank v. Gore, 15 Mass. 75; Board- man V. Gore, id. 331 ; Hawkins v. Ap- pleby, 2 Sandf. (N. Y.) 421 ; Reynolds V. Waller, 1 Wash. (Va.) 164; Heirn v. Caughan, 33 Miss. 17 ; Taylor v. Jones, 42 N. H. 25. But a tort committed by one partner will not bind the firm or the other partners, unless the wrong he authorized or adopted by them, or it be within the scope and business of the partnership, and done in the execution of such business. Graham v. Meyer, 4 Blatchf. (Ind.) 129. As to what facts will raise a presumption that a partner was cognizant of and assenting to fraud committed by his copartners, see Town- send V. Bogart, 11 Abb. Pr. (N. Y.) 355. The liability in this case for the tort would indicate the partners thus liable as proper parties defendant in an action therefor. Mr. Folkard observes : " De- famatory words, whether written or spoken, imputing to partners in trade that they carry on their business fraud- ulently and contrary to law, are action- able, and such partners may sue jointly. But in a joint action by two partners (hankers),,damages cannot be recovered for any injury to their private feelings, but only for such injury as they may have sustained in their joint tra^e or business. A libel may be corroined in a mercantile commuuicationmade by one firm to another abroad, reflecting on the mode of business of third party. And although the letter which forms the subject of libel should not reach the person to whom it is addressed, still such is no answer to an action for libel contained in such letter, at the suit of the person libeled." Folkard' s Starkie on Sland. & Lib. 168; Wood's Ed., Notes, § 186 ; Le Fanu v. Malcomson, 1 H. L. Cas. 637 ; Haythorn v. Lawson, 3 Car. & P. 196 ; Ward v. Smith, 6 Bingh. 749; Tait v. Culbertson, 57 Barb. (N.Y.) 9; Taylor v. Church, 1 E. D. S. (N.Y.) 379; Fidler v. Delavan,30Wend. (N.Y.)57. So an action for slander may be main- tained by one partner for words spoken and an injury done to him as a partner, and even though an action might be maintained by the firm for the injury to it. Harrison v. Bevington, 6 C. & P. 708 ; see, also, Robinson v. Mar- chant, 7 Q. B. 918; 15 L. J. Q. B. 134. If the partnership has suffered by reason of a libel or slander, the mem- bers should all join in the action. Wel- ler V. Daker, 3 Wills. 433; 3 Wms. Saund. 116; Maitland v. Goldney, 3 East, 435 ; 3 B. & P. 150 : Foster v. Law- son, 3 Ring. 453 ; Girard v. Beach, 3 E. D. S. (N. Y.) 337. For a libel several persons may be joined as defendants, but for slander, the action can only be against the party speaking the words. Webb V. Cecil, 9 B. Monr. (Ky.) 198 ; Thomas v. Ramsay, 6 Johns. (N. Y.) 36; Harris v. Harrington, 3 Tyler (Vt.), 147. " With respect to actions by partners not founded on any breach of contract ovot quasi contract but on some tort," says Mr. Ljndley, " the general princi- ple is that where a joint damage ACTION'S BY Partners. 1039 When one partner dies the action must be brought in the name of the survivor, without Joining the personal representative of the deceased. Therefore, where trover was brought by the survivor of accrues to several persons from a tort, tliey ought all to join in an action founded upon it. See 1 Wms. Saund. 291, m ; Addison v. Overend, 6 T. R. 766 ; Sedgworth v. Overend, 7 id. 279. whilst on the other hand several per- sons onght not to join in an action ex de- licto, unless they can show a joint dam- age. 2 Wms. Saund. 116 a. These doc- trines are well illustrated by actions for libel. A libel can clearly be made the subject of an action in the name of all the partners, if the firm has been dam- nified. See Cooke v Batchelor, 3 Bos. & P. 150 ; Forster v. Lawson, 3 Bing. 452; Williams v. Beaumont, 10 id. 260. The Metropolitan Saloon Omnibus Co. v. Hawkins, 4 H. & N. 87, and if the libel ' reflects directly on one partner, and through him on the firm, two actions will lie, viz., one by the partner libeled and the other by him and his copartners, but the damage in the first action must not appear to be joint, nor must that in the second appear to be confined to the libeled partner only. See Harris v. Bevington, 8 C. & P."708; and Forster v. Lawson, 3 Bing. 452 ; 2 Wms. Saund. 117 b ; HaytUorne v. Lawson, 3 C. & P. 196. I£ one partner is libeled and the firm cannot be shown to have been damnified, an action for the libel should be brought in the nama of the individual partner aggrieved, and not by the firm. Solomon v. Medex, 1 Stark. 191; and it has been settled that he may sue alone, although the libel more particularly affects him in the way of his business. Harris v. Bevington, 8 0. & P. 708 ; Robinson v. Marchant, 7 Q. B. 918. It may be observed that a firm may sustain an action for a libel aflecting it, without proving the ex- istence of what is commonly called mal- ice on the part of the defendant. Brom- age V. Prosser, 4 B. & C. 247. A person who utters what is untrue of his neighbors /^ud causes them damage is answerable for such damage, whether he bore them any ill-will or not, unless he can show that what he uttered ought to be regarded as a privi- leged communication and in estimating the damages to which they are entitled, regard may be had to the prospective loss See Gregory v. Williams, 1 Car. & Kir. 568. Moreover, a general statement not clearly pointing to any particular person, but libelous as to an entire class, may be treated by any individual of that class, who can show that he was in fact intended, as a libel on himself, and this principle is as applicable to libels affecting a firm as to those affecting single individuals. Le Fanu V. Malcomson, 1 Ho. Lo. Ca. 637. All the members of a firm ought to join in an action for the recovery of goods of the firm, or for damages for their loss or injury. See Addison v. Overend, 6 T. R. 766 ; Bleadon v. Hancock, 4 Car. & P. 152 ; see Dockway v. Dickenson, Comb. 366, but if one only sues and there is no plea in abatement, he will be entitled to recover damages in respect of his interest in the goods, and if, after he has done so, another action is brought by one of his copart- ners, that action cannot be stopped on the ground that all the partners are not co-plaintiffs, for the defendant should have pleaded this in abatement to the first action. Sedgworth v. Overend, 7 T. R. 279. If a person colludes with one partner in a firm to injure the other partners, the latter can jointly sustain an action against such person. Thus, where- the bankers of a firm of four partners knew that one of them was in the habit of drawing bills in the name of the firm for his own private purposes, and the bankers colluded with him and kept his copartners in ignorance of what was going forward, and paid the bills when due out of the funds standing to the credit of the firm, it was held that an action lay against the bankers at the suit of the other three partners. Long- man V. Pole, Mood. & Malk. 223. An action of ejectment for the recovery of real property belonging to the firm ought to be brought in the names of all those persons in whom the legal estate is vested. See 1 Chitty on Pleading 74. If, however, one partner only has made a lease of the partnership property, then, as his title cannot be dis- puted by the lessee, notice to quit may be given and ejectment maintained by the lessor alone, and if he alone has the legal estate, the circumstances that rent has been paid to the firm and re- ceipts for it have been given by all the partners, will not affect his rightto give the notice and bring the action in his own name." Lindley on Part. 394 ; see Doe V. Baker, 2 B. Moore, 189. " It is not every tort which, though committed by 1030 Eights of Paetnebs. 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 pos- sessed of these goods as merchants, and that, by the law of the land, there is no survivorship between joint merchants," because the action must necessarily survive, though the interest doth not.' In actions in form ex delicto, and which are not for breach of con- tract, 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 dam- ages 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 ouglit to have joined.' On the other hand, it should seem that, where the action is sub- stantially and necessarily founded on a contract, the form of it in tort will not prevent the plaintiff from being nonsuited for the non-jojnder of other persons interested.' If one of several part-owners of a chattel sue alone for a tort, and the defendant do not plea in abatement, the other part-owners may after- ward sue jointly, and perhaps severally, for the injury to their undi- vided shares; and the defendant cannot plead in abatement to the latter action.* In the cases referred to, the chattel was wholly several persona acting together, is le- tenants or tenants in common is sued gaily imputable to them all jointly. See for any injury arising from the state 3 Wms. Saund. 117, b and c; 1 Chitty's of their laud, the non-joinder of the Plead. 96-97 ; but supposing a tort to be other co-tenants may be pleaded in imputable to a firm, an action in respect abatement; Lindley on Partnership, of it may be brought against all or any 401 ; 1 Wms. Saund. 291, f and g, and of the partners. If some of them only are Mitchell v. Tarbutt, 5 T. K. 649; and this sued, they cannot insist upon the other rule applies to partners as well as to parti.era being joined as defendants; persons who are not partners. " Sutton V. Clarke, 6 Taunt. 39 ; and ' Kemp v. Andrews, Garth. 170. this rule applies even where the '^ 1 Chit. PI. p 55; Cabell v. Vaughan, tort in question is committed by an 1 Saund. 291 g; INelthorpe v. Dorring- agent or servant of the firm, and not ton, 3 Lev. 113; Blackburn v. Graves, otherwise by the firm itself. There- 1 Mod. 103 ; Coryton v. Litheby, 2 fore, an action may be sustained against Saund. 116. Formerly, if one of two any one or more of the partners for the tenants in common brought an action, recovery of damages for an inj ury aria- and disclosed that' title in. his declara- ing from the carelessness of a servant tion, it was ground to arrest the judg- of a firm, and the partners sued cannot ment. Hamon v. White, Sir W. Jones, plead in abatement the nonjoinder of 142. But see Lord Kenyon's observa- the other partners. Mitchell v. Tarbutt, tiona on that caae, in Addison v. Over- 5 T. R. 649 ; Ansell v. Waterhouse, 6 end, 6 T. JR. 766 ; and Lord Ellenbor- M. & S. 385. But there is a distinction ough's, in Bloxam v. Hubbard, 5 East, between ordinary actions of tort and 407. those which are brought against per- '1 Saund. 291, k(c.) sons in respect of their common interest ■* Addison v. Overend, 6 T. R. 763 ; in land, for if one only of several joint Sedgeworth v. Overend, 7 id. 379. Actions by Partners. 1031 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 acts of trover in respect of it, against a person who unjustly detains it. ' Of the declaration. Sec. 690. 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 & Oo. , if such be the fact ; but it seems that any other additions, not bearing on the merits of the case, will be con- sidered 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. Where a surviving partner sues on a contract made with the part- nership, the fact of his being survivor should appear on the face of the declaration.* Although, however, he should expressly declare as surviving partner, he may include in his declaration a count for a debt due to him in his own right.'' 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 between the partnership 'and the person sued. Thus, A and B were partners. E owed a sum of money to the firm of A & B ; A died ; E's trustees then paid the money to X. It was held that in an action against X for money had and received, B ought to sue in his own right, and not as surviving part- ner 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 exchange 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.' Joint interest. Joint action. Sec. 691. The joint interest in the subject of the action should appear in the declara.tion. ' Bleaden v. Hancock, 4 Car. & P. 153. ' Slipper v. Stidstone, 5 T. E. 493 ; 1 « Aguttar V. Moses, 3 Stark. 499. Esp. 47. 'Longridge v. Brewer, 1 Bing. 143. « Smith v. Barrow, 3 T. R. 476 See 3 & 4 Will. 4, c. 43, s. 11. ' Ord v. Portal, 3 Camp. 339. See At- •• Jell V. Doufflas, 4 B. & A. 374 ; Israel wood v. Rattenbury, 6 Moore, 579. y. Simonds, 3 Stark. 856. 1032 Eights of Partners. In an action on a guaranty, addressed to one of two partners, but made for the benefit of both, the declaration may state that the promises were made to both.' In an action to i-ecover the amount of goods supplied by a partner- ship, the goods must be accurately described as belonging to the partnership. 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." 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 policy was stated to be made to and for the use and benefit, and on the account of the said John Bell. The per- sons 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 policy was made on his account ; and the Court of King's Bench were of opinion that it is not. Lord Ellenboi'ough said, that though an action upon a policy might be brought in the name of the person who efEected 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 declaration of any of them were admissible in evidence against the plaintiff, and what would be a defense against them was, in many instances, a defense against the plaintiff, and with a view to apprise the underwriter, whose declaration 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 lor 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. 3, c. 37, it had always been the practice to state the interest according to the truth. 1 Walton V. Dodson, 3 Car. & P. 163. ' 16 East, 141. ' Ditohburn v. Spracklin, 5 Esp. 31. Actions bt Partneks. 1033 Lord Bllenborough, in the preceding case, took pains to distin- guish it from a ease of Page v. Fry/ decided by the Court of Common Pleas. There the declaration averred, " that certain persons, using trade and commerce under 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 time 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 assurance 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, etc." It«,ppeared at the trial, that Hyde & Hobbs had through the agency of the plaintiff purchased a certain quantity of corn on their own account ; that on the 37th of Decembei', 1798, they informed the plaintiff by letter that, thinking the engagement might perhaps be too large for them- selves, 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 invoices were made out to Hyde & Hobbs; and payment for the cargo was made by them. Upon this evidence the Court of Common Pleas decided that the plaintiff had a sufficient interest throughout the entirety of this cargo, notwithstanding other persons had a beneficial interest in a part, to support the averment in this declaration. Judging, however, from the language of Lord Ellenborough in Bell v. Ansley, the cor- rectness of this decision seems questionable.^ But although it is necessary that the real interest 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 interested, etc.," and "that the insurance was made for the use and benefit, and on the account of the person or persons so interested.' And an averment that A, B, C, D, and cer- tain persons trading under the firm of E & Co. were interested, is sitfficient on motion in arrest of judgment, whatever effect the uncer- tain description of the persons in the firm might have on special ' 2 Bos. & Pull. 240. etc." Whereas, after the insurance, ' And it seems that the case of Per- but before the loss, C was introduced as chard v. Whitmore, 2 Bos. & Pull. 155, a partner with A andB, and became in- n., could not now be supported. There terested in the goods. See Hughes, 467; a declaration on a policy was held good, and see Rhind v. Wilkinson, 4 Taunt. which stated " that A and B, until and 237. at the time of the loss, were interested, ^ Reg. Gen. Hil. T. 1834, Assumpsit, 4. 1034 Bights of Partkers. demurrer.' And where A and B, trading under the firm of A & Co., engaged in an adventure, and afterward 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 proportions several persons are interested.' In an action on a policy hy the assured, an allegation that the policy has been effected for the plaintiff by A, B, and C, will be satis- fied by proof that it was effected by the firm of A & B, there being in fact two firms which have two members in common.* liibel. Sec. 692. 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 Foster v. Law- son,' the declaration charged the defendant with having libeled the plaintiffs, who were bankers and copartners, by publishing of them that tliey 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 dis- closed 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 diflBcult to see how there could be any separate damage; the business injured was the joint business, and the libel only affected the plaintiffs through their business. That, as to proportions of interest 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. 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, dama- ges 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 a maliciously holding 1 Wriglit V. Welbie, 1 Chit. 49. See = 3 ging. 453 ; 11 Moore, 360 ; see Cory- Mellish V. Bell, 15 East, 4. ton v. Lytliebye, 2 Saund. 116, a ; Ward - Carruthers v. Shedden, 1 Marsli. 416. v. Smith, 4 Car. & P. 802. ' Ibid. « Haythorn v. Lawson, 3 Car. & P. 190. * Dickson v. Lodge, 1 Stark. 227. Actions by Paeth-ers. 1035 them to bail, the complaint in the declaration must be confined to the expenses they were Jointly put to in procuring their liberty.' Of pleas in bar. Sec. 693. 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 prom- issoi'y note, he must always plead specially. Thus, in an action on a covenant contained in partnership articles, the defendant 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 defendant, if he wishes to set up a partnership between himself and the plaintiffs, should plead in bar that the pronaises were made by him jointly with one of the plaintiffs,* though in other cases it is appirehended that he might give this in evidence under the general issue. Bankruptcy. Sec. 694. 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 sufficient bar to the action.' And if A be bound to Band G,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 cove- nantee will not be bound by a release given by the others. * In actions on bonds. Sec. 695. 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 defendant W, as surety ' Collins V. Barrett, 3 Bingli. 456, « Bac. Abr. Abatement (N.); Com. cited. Dig. Abatement (K.); Co. Litt. 128, b; « Lees V. Smith, 7 T. B. 338. Bullock v. Dodds, 3 Barn. & Aid. 258 ; ' Morse v. Wilson, 4 T. R. 353. Harmer v. Kingston, 3 Camp. 153. * Mainwaring v. Newman, 3 B. & P. ' Stokes v. Stokes, 1 Ventr. 35 ; Lev. 120; Reg. Gen., H. T. 1834. 273; 3 Keb. 530. 'Eckardt v, Wilson, 8 T. R. 140. * Moore, 64; see Wats. Partn. 336. 130 1036 Rights of Paetkers. for J. S., to secure tlic amount of his overdrawings 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 transferred to the account between W and the new partner- ship.' Tender. Sec. 696. Where tender has been made to any of the partners, it may likewise be pleaded in bar of an action by the firm; but such tender should be described as made to the firm. Where A, B & 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 object- ing to the form of the tender, on account of his being 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 & C' Former recovery. Sec. 697. Where a libel has been published 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 partner more particularly aggrieved.' Statute of Ijimltations. Sec. 698. If the action be not 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.'' Proof of partnership. Sec. 699. 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 - Parker v. Wise, 6 Mau. & Selw. 339. * Perry v. Jackson, 4 T. R. 516. » Douglas V. Patrick, 3 T. R. 68?. ' Evans v. Mann, Cowp. 569. " Forster v. Lawson, 11 Moore, 360. AcTioifS BY Pabtnees. 1037 be brought on a bill indorsed in blank, in which case no joint inter- est need be proved;' it will be incumbent on the plaintiffs to prove that they all were partners at the time of the contract/ 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 plain- tiffs. " 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 component 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, liOrd Ellenborough held that A and B, two of the members of the firm and also trustees, could not conjointly with a third trustee, not a member 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 entitled the parties who brought the action to recover.' Gen- ei'ally, however, where a bill is indorsed to a firm in blank, it is not necessary that all the members should sue, and, therefore, if they sue separately, it is unnecessary that they should prove their partnership.* Partnership, how proved Sec. 700. Partnerships are usually proved by the oral testimony of clerks or other agents or persons who know that the alleged partners have actually carried on business in partnership, and it is unnecessary to produce any deed or other agreement by which the copartnership has been constituted.' And, if a witness called by the partners to prove the partnership is unable at the moment to specify the several names of the partners, a number of names, containing ' Ord V. Portal, 3 Camp. 239. ' Machell v. Kinnear, 1 Stark. 490. 2 Camden v. Anderson, 5 T. R. 709. " Ord v. Portal. 3 Camp. 339 ; Atwood ^ Ord V. Portal supra. v. Rattenbury, 6 Moore, 579. * Waters v. Paynter, Chit. Bills, 389. ' Alderson v. Clay, 1 Stark. 406. 1038 Eights of Paetn^ees. those of the partners among others, may be suggested to him for tlie assistance of his memory.' ' Acerro v. Petroni, 1 Stark. 100. Proof of partnership. — There are many ways of proving the existence of a partnership, as by the mode of making out their accounts, keeping their books, marking their boxes of merchandise, or by an acknowledgment of the partner- ship by the partners composing it. Mo- Neil V. Reynolds, 9 Ala. 313 ; Grew v. Walker, 17 id. 834; Kellcherv. Tisdale, 33 111. 405 ; Bissel v. Hobbs, 6 Blackf. (Ind.) 479 ; Fall River, etc., Co. v. Bor- den, 16 Cush. (Mass.) 458 ; Johnson v. Warden, 3 Watts (Penn.), 101 ; Ricbter V. Selen, 8 S. &K. (Penn.) 360; Frick v. Barbour, 64 Penn. St. 120 ; Tumlin v. Goldsmith, 40 Ga. 231 ; Barcroft v. Ha- worth, 39 Iowa, 462 ; Frost v. Walker, 60 Me. 468. Oral evidence is usually admissible to establish it. Villa v.' Jonta, 17 La. An. 9. And even where there is a written agreement of the part- ners, it may be shown by parol that they held themselves out as partners, and this may be shown to be the fact both before and after the execution of the obligation on which suit is brought. Bry V. Weston, 16 Me. 261; Gilbert v. Whidden, 20 id. 367; Field v. Tenny,47 N. H. 513 ; Fleshman v. Collier, 47 Ga. 2.53; Randal v. Yates, 48 Miss. 685; Anderson v. Loan, 1 W. &S. (Penn.) 334; Dixon V. Hood, 7 Mo. 414 ; King v. Ham, 4 id. 375 ; Widdifield v. Widdifield, 3 Binn. (Penn.) 245. But it has been held that a partnership for the purchase and sale of real estate must be evidenced by writing. Gray v. Palmer, 9 Cal. 616. But, contra, see Chester v. Dickenson, 45 N. Y., and where it was held that it may be established by parol, and such would seem to be the rule now generally pre- vailing. And the proof of a partner- ship as between the partners must be stronger than where the question is raised between the alleged partnership and other parties. Robinson v. Green, 5 Harr. (Del.) 115 ; Gray v. Palmer, 9 Cal 616. In fact, if there is a written agreement between partners, this would furnish the best evidence of the agree- ment between them. Hastings v. Hok- inson, 28 Vt. 108. Where the question arises on a claim of a creditor, any thing tending to show the partnership rela- tion would be admissible in evidence. Thus, where two persons carried on the smithing business together, this was held pfrima facie evidence of a partner- ship between them. McMullan v. Mac- kenzie, 2 Gr. (Iowa) 368. And where there was a written agreement which alone would not constitute a partner- ship, it was held proper to show by parol that the parties have treated it as constituting one, and acted accordingly. Williams v. Sauter, 7 Iowa, 435 ; see, also, Beale v. Poole, 27 Md. 645. So it was held proper to show by a witness that he paid notes of the firm in which were the individual names of the mem- bers, and the declarations of the mem- bers made prior to the institution of the suit as evidence of a partnership be- tween them. Woods V. Quarles, 10 Mo. 170; see, also, Ripley v. Evans, 23 id. 157. But see, as to the burden of proof under the Illinois Statutes, Kenedy v. Hall, 68 111. 165. So a separate admi.s- sion of members of the alleged firm is competent evidence against those that make the admission of the partnership. If all in this way make the admission, it would be satisfactory evidence of the partnership. But this would not be evi- dence against members that did not make the admission of the existence of the partnership. Nor would the ad- mission of one alone be competent evi- dence to prove a partnership. Currier v. Siloway, 1 Allen (Mass.), 19 ; Gordon v. Bankard,37 111. 147; Drennan v. House, 41 Penn. St. 30; Campbell v. Hastings, 39 Ark. 513; Smith v. Hewlett, 67 111. 161 ; Johnson v. Galivan, 53 N. H. 143. And evidence that a person sought to be charged as a partner was often in the store conducted in the name of an- other ; that he bought, sold, and bar- tered goods there ; tGat he went to Bos- ton and bought goods for the store; that he formerly had been a partner and that the old sign of the firm still re- mained upon the building, would be competent evidence as tending to show an existing partnership. State v. Wig- gin, 20 N. H. 449. See, also, as to circumstances from which a partner- ship may be inferred, Farr v. Wheeler, 30 id. 569. So, also, as to third parties dealing with another, if he has held himself out to the world as a member, and permitted persons to deal with the firm, supposing he was a member, he cannot object to the admission of such evidence to show that he was a partner, or the admission of the partnership books and accounts kept or rendered in the name of the firm. Chidsley v. Potter, 31 Penn. St. 390. See, also, Donnawan v. House, 41 Penn. St. 30; AcTiois's BY Partners. 1039 Partners not known in firm. Sec. 701. 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 Benedict v. Davis, 2 McL. 347; Buck- ingham V. Burgess, 3 id. 364 ; S. C, id. 049. But mere entries in the books of a firm are not evidence that one is a member, unless the partner himself made or authorized it to be made. Kobins v. Warde, HI Mass. 518. A holding out by a person as partner would be sufficient to estop him from denying his liability as partner, where another has thereby been induced to give credit to the firm on that account, or where the creditor may reasonably be presumed to have acted on the faith of his being a partner. Dickinson v. Valpy, 19 B. & C. 140 ; Kell v. Rainley, 10 id. 21. Thus, if a person allows his name to remain in the firm, over a pub- lic door where it does business, or in the bills or invoices, or to be published in advertisements, he would ordinarily be held liable to creditors. Fox V. Clifton, 6 Bing. 794. But a part- nership cannot be proved by general reputation. Tumlin v. Goldsmith, 40 Ga. 231; Southwick v. McGovern, 28 111. 533; Halliday v. M'Dougal, 20 Wend. 81 ; Lockridge v. Wilson, 7 Miss. 560; Carter v. Douglass, 3 Ala. 499; Smith v. Griffith, 3 Hill, 333; Sinclair v. Wood, 3 Cal. 98 ; Brown v. Crandall, 11 Conn. 93; Grafton Bk. v. Moore, 13 N. H. 99 ; Inglebright v. Hammond, 19 Ohio, 337; Scott v. Blood, 16 Me. 192 ; Joseph V. Fisher, 4 111. 137 ; Carlton v. Ludlow Woollen Mills. 37 Vt. 496 ; nor can it be shown by surprise or innuendo ; Hudson V. Simon, 6 Cal. 453. And declarations of the alleged partners, un- accompanied with any acts of the parties sought to be charged as such, are inad- missible. Phillips V. Purington, 15 Me. 425. And it has been held that a person could not be charged as a partner merely on the ground of his acts and declarations as such, without showing that they were brought home to the knowledge of the plaintiflF, or t hat the credit was induced on that account. Fitch V. Harrington, 13 Gray (Mass.), 468. See, also, Charman v. Henshaw, 15 id. 393. When the partnership is shown to exist, then all acts and admissions of any partner, within the scope of the partnership business and relating to it, would be binding upon the firm. But we have already considered this sub- ject. Presumptions. — There is a general presumption that all paper to which the name of the firm has been attached by one of the members is the firm paper and binding upon it, and that the trans- fer of such paper by the partner was lawful, and in order to avoid the effect of this presumption it would be neces- sary to furnish some evidence, as by showing that the paper was made and transferred to the holder in fraud of the rights of the other partners, or that it was received by him in payment of a private debt of the partner, without the knowledge or consent of his copartners. Bank v. Winship, 5 Pick. 11; Ethridge V. Binney, 9 id. 374; Barrett v. Swann, 17 Me. 180 ; Vallett v. Parker, 6 Wend. 615; Doty v. Bates, 11 Johns-. 544; Powell V. Mesuer, 18 Tex. 401 ; Hick- man V. Kunkle, 27 Mo. 486 ; Tutt v. Addams, 34 Mo. 186; Haldemann v. Mid- dletown, 88 Penn. St. 440 ; Pierce v. Jackson, 31 Cal. 636 ; Hurd v. Haggerty, 24 111. 171 ; Little v. Fitch, 11 Mich. 535 ; Clay v. Cottrell, 18 Penn. St. 408; Elliott v.Dudley,19 Barb.(N.Y.)326; Dar- ling V. March, 32 Mo. 184; Gansvoort v. Williams, 14 id. 133 ; Joice v. Williams, id. 141 ; Rogers v. Batchelor, 13 Pet. (U. S.) 221: Zuel v.Bowen,78 111.234; Blod- gett v. Weed, 119 Mass. 215 ; National Union Bank v.Landon,66 Barb.(N.Y.)189; Graves v. Kellenbarger, 51 Ind. 66; Smith V. Sloan, 37 Wis. 285 ; Prince v. Crawford, 50 Miss. 344; Carrier v. Cam- eron, 31 Mich. 373 ; but a check previ- ously drawn cannot be issued after a dis- solution so as to bind the firm. Gale v. Miller. 54 N. T. 536. A bill of exchange or promissory note thus affected by the fraud of the imme- diate Jjarties to it would, however, be good against the firm in the hands of a bona fide holder for yalae. But when it is once shown to be fraudulently exe- cuted, the burden of proving that the holder paid a valuable consideration for it, and received it in good faith, would devolve upon the holder. Munroe v. Cooper, 5 Pick. (Mass.) 413 ; Smith v. Lusher, 5 Cow. 689 ; Catskill Bank v. Stall, 15 Wend. (N. Y.) 364 ; Vernon v. Manhattan Co. 17 id. 335; 23 id. 251; Rich V. Davis, 4 Cal. 33 ; Emerson v. Har- ' mon, 14 Me. 371 ; Waldo Bank v. Lum- bert, 16 id. 416 ; Dudley v. Littlefield, 21 id. 418 ; Freeman v. Ross, 15 Ga. 253. 1040 Eights of Partners. plaintiffs in the joint names of the plaintiffs and the nominal part- ner.' And it has been held that a pei'son, who has purchased from the ■plaintiff an interest in the contract in which the action is brought, is a competent witness to prove the contract." By reason, also, of the necessity of the thing, a broker who is to have a share of the f)rofits, 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 copartner with the plaintiff cannot be admitted as a witness to prove the contract, not only for reasons con- nected with the pleadings, but also on the ground of interest. And it appears that he cannot be rendered competent by the provisions of the stat. 3 & 4 Will. 4, c. 42, that statute not applying to partners." It lias 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 .' Declarations of one partner as evidence. Sec. 703. . Evidence of the partnership having been given, the declaration of one partner is evidence against another partner,* and will be good ground of defense at the trial. Therefore, where a con- tract was made by one of several partners in his individual capacity, who at the time declared that the subject-matter of the contract was The fact that a partner, upon being ' Benjamin v. Porteus, 2 H. Bl. 590. informed of the use of a firm note, for * Jackson v. Galloway, 8 C. & P. 480 ; the debt of one of the partners, did not and see Jesus Coll. v. (jibbs, 1 You. & deny liability thereon, is not per se a Coll. 155 ; Braithwaite v. Coleman, 3 ratification or indorsement of the act, Harrison's Index, 1046 ; see post, chap, though it may be a circumstance tend- 6, sec. 8. By 3 and 4 Will. 4, c. 42, s. ing to show it. Rubin v. Cohen, 48 Cal. 26, if any witness be objected to as in- 545. But subsequent ratification may competent, on the ground that the ver- be shown by circumstances to bind the diet or judgment in the action in which other partners. First National Bank v. it shall be proposed to examine him Breese, 30 Iowa, 640; Markham v. Hazen, would be admissible in evidence for or 48 Ga. 570. And it would be a defense, against him, such T^itness shall, never- to it in the hands of an indorsee, if but theless, be examined ; but in that case for his gross negligence he would have a verdict or judgment in that action, in learned of the fraud in the issuing of favor of the party on whose behalf he the bill or note. New York, etc., Co. v. shall have been examined, shall not be Bennett, 5 Conn. 574 ; Smyth v. Strader, admissible in evidence for him, or any 4 How. (U. S.) 404. one claiming under him ; nor shall a 'Parsons v. Crosby, 5 Esp. 199; Glos- verdict or judgment against the party, on sop V. Colman, 1 Stark. 25. whose behalf he shall have been exam- ' Jlawman v. Gillett, 3 Taunt. 825, n. ined, be admissible in evidence against In an action against a certificated con- him or any one claiming under him, veyancer for negligence in managing ', Jackson v . Galloway, supra. the purchase of an annuity for the * Robaon v, Curtis, 1 Stark. 78. plaintiff, a joint purchaser is a compe- tent witness for the plaintiff. Rothery v. Howard, 2 Stark. 68. ACTION'S BY PaETNERS. 1041 his property alone, it was held that this declaration was evidence against the other partners, and that a joint action by the firm was not maintainable.' So, where it appeared 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 defendants.'' So, in an action brought by copart- ners, one of the plaintiffs, being willing 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 is agreed that A shall receive isome of the partnership 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.'' ' Lucas V. De la Cour, 1 Mau. & Sel. 249. '■'Kemblev. Farren, 3 Car. & Payne, 623. ' Norden v. Williamson, 1 Taunt. 378. * Evans v. Silverlock, 1 Peake, 31. So, A might be (jailed to prove that he had received payment contrary to the terms of the agreement, and the defendant would be discharged. See 4 Car. & Payne, 108. Admissions. — The general rule is that where the partnership is shown to ex- ist, the admission of one partner may be received to charge the partnership, in relation to matters during the exist- ance of the partnership, and within the scope of its business. Phillips v. Pur- ington, 1.1 Me. 435 ; Gulic v. Guile, 14 N. J. L. 578 ; Walle v. Brown, 4 Whart. (Penn.) 365 ; Ordiorne v. Maxcy, 15 Mass. 39 ; Cook v. Oastner, 9 Cusli. 366 ; Ander- son V. Wanzer, 6 Miss. 587 ; Griswold V. Haven, 3.5 N. Y. 595 ; Pisk v. Cope- land, 1 Overt. (Tenn.) 383. So partner- ship is liable for the false and fraudu- lent representations of one of its mem- bers, relative to matters following with- in the scope of its business. An inno- cent third party, dealing on the strength of such representations, and being damaged thereby, mav maintain an action therefor, or defend on that ground. Stockwell v. Dillingham, 50 Me. 443. And where there is a partner- ship, the confession of one member of any fact tending to bind the whole, in a 131 , matter relating to the joint concern, is good evidence against the whole. Ordi- orne V. Maxcy, 15 Mass. 39. But a declaration of a deceased partner, that a liability incurred by a third person in borrowing money was at his request, and for the benefit of the firm, was held in the absence of other evidence not suf- ficient to bind the firm. Thorn v. Smith, 31 Wend. 365. It may here be observed that in many, if not most of the States, the interest of a witness does not disqualify him from being a wit- ness, and that parties to suits may be witnesses for themselves, the matter of their interest only going to their credi- bility. And the general rule is, that one partner cannot, by his admission, bind another after the dissolution of the partnership, in any manner. Disp- liam v. Patterson, 3 McLean, 87 ; Lan- sing V. Gaine, 3 Johns. (N. Y.) 300 ; Burns V. McKenzie, 33 Cal. 101 ; Daniel V. Nelson, 10 B. Mon. (Ky). 316; Hamilton V. Somers, 13 id. 11 ; Pope v. Risley, 33 Mo. 185; Conery v. Hayes, 19 La. An. 335; Bank of Vergennes, 7 Barb. 143. Nor can he execute a note or make any new contract in the name of the firm. Bell V. Morrison, 1 Pet. (U.S.) 351 ; Neal V. Hassan, 3 McCord (S. C), 378 ; Chase V. Kendall, 6 Ind. 304; Palmer v. Dodge, 4 Ohio St. 21 ; Perrlne v. Keene, 30 Me. 355 ; Speake v. White, 14 Tex. 864; Bank v. Baugh, 16 Miss. 390; Sutton V. Dillaye, 3 Barb. 539 ; White- head V. Bank, 3 W. & J. 173 ; Canning- ham V. Bragg, 37 Ala. 436 ; Burr v. WU- 104:3 Eights of Partners. In an action of assumpsit or debt brought by partners, the defend- ant 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 appeared in evidence that one of the partners had discharged a prior indorser by a deed of com- position, 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 defense to an action by the firm. But as a receipt is only prima facie evidence of payment, the partners may rebut that evidence by showing that it was fraudulently given by their co-plaintifiE." Proot of dissolution. Sec. 703. Where the defense 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, inasmucli as the partnership will be presumed to have been dissolved by competent means.' It must be observed, how- ever, that, for the purposes of evidence just mentioned, instructions for advertising the dissolution, written in the form of an agreement, and signed by the parties, require an agreement stamp,'' though a notice of dissolution in the Gazette may be given in evidence without a stamp.' Mi^oinder may he proved. Sec. 704. Where an action of assumpsit, other than on a bill of exchange or promissory note, is brought by A against B, the latter may, under a plea of non-assumpsit, give evidence that the subject-matter of the action has arisen out of partnership transactions between A and B, and thereupon the plaintiff may be nonsuited.' Where the defense ■ is that the promises were made to the plaintiff jointly with 0, the defendant may call upon C to prove this defense. Hams. 20 Ark. 171 ; Chamberlain v. ' Doe v. Miles, 4 Camp. 373. Bancroft, 34 Ga. 310; Richardson v. « May v. Smith, 1 Esp. 383. Moies, 31 Mo. 430; Lange v. Kenedy, 30 * Jenkins v. Blizzard, 1 Stark. 430. Wis^ 379. « Pearson v. Skelton, 1 Mees. & Wels. 1 liiilson V. Dezell, 1 Selw. N. P. 364. 501 ; Worrall v. Grayson, 1 id. 166. ' Farrar v. Hutchinson, 1 Per. & D. ' Davies v. Evans, 6 C. & B 619. 437. Actions by Partnees. 1043 Evidence in actions for torts. Sec. 705. As to evidence in actions of tort by partners, there is little 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 declaration 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. Will you give up the necklace, otherwise I will take you to Bow street?" It appeared that the thi-ee 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 EUenborough held this evidence insufficient to support the declara- tion, and nonsuited the plaintiffs. Of indictments by partners. Sec. 706. A few 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 indict- ment or information for any felony or misdemeanor, 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 iu trade, joint ten- ants, parceners, or tenants in common, it shall be sufficient to name one of such persons, and to state such property to belong to the per- son so named, and another or others, as the case may be; and when- ever, in any indictment or information for anj» 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 provis- ion 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 indictment, otherwise the prisoner must be acquitted. * 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,' a • 1 Stark. 193. ' Buss. & Ryan's Cr. Ca. 13. 2 See Arch. Peel's Acts, 11. 1044 Eights of Partners. 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 liimself 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 possession 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 O's death, goods were stolen. A description of them in the indictment as the goods of D and the widow was held correct. ' 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, etc., shall receive or take into his possession any chattel, money or valuable secui-ity, for, or in the name, or on account of his master, and shall fraudulently embez- zle the same, every such offender shall be deemed to have feloniously stolen the same from his master, although such chattel, etc., was not received into the possession of such mastej", otherwise than by the aqtual possession of his clerk, servant," etc. 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 individ- ual partner.' Equitable remedies against partners. Sec. 707. Creditors, or persons contracting with a partnership firm, may, likewise, where "there is a defect of remedy at law, resort to a court of equity and call, in aid its interference. In many instances more effectual relief is administered in equity than the forms and technicalities of the law will allow it to grant. The common law, for example, though it professes to adopt the lex mercatoria, has not adopted it throughout in what relates to partnerships in trade. It holds, indeed, that although partners are in the nature of joint ten- ants, there shall be no survivorship between them in point of interest, yet, with regard to partnership contracts, it applies its own peculiar rule, and because they are fn form joint, holds them to produce only a joint obligation, which consequently attaches exclusively upon the survivors. By the general mercantile law, however, a partnership contract is several as well as joint, and courts of equity, adopting to - Rex V. Gaby, Euss. & Byan, 178. ' Eex v. Leech, 3 Stark. 70. Actions by Paetnees. 1045 its full extent that law for their guidance, have considered joint con- tracts of this description as standing upon a different footing from ordinary joint contracts, and have ascribed a several as well as a joint operation to them. On the ground, therefore, that each partner is liable for a partnership debt, a court of equity not only sanctions the remedy which the law gives against the surviving partner, but will likewise decree satisfaction out of the estate of a deceased partner. To a suit in equity instituted against partners, as in a suit brought by them, all the partners must be made parties. This is necessary in compliance with the general rule, which requires that, to a bill founded on a contract, all those persons should be made parties who are parties to the contract.' It is also essential in order that the court may be enabled to dispense complete justice by deciding upon and settling the rights of all persons interested.' But a strict observance 'of the general rule is not enforced where the parties to be made defendants are too numerous to render it pi*acticable to prosecute a suit, if they were all joined in it; and, therefore, an individual claiming against a numerous partnei'ship or club, who is not himself a partner, is at lib- erty to file a bill against a few of the partners or members only.' And when one partner is resident in a foreign country, and consequently out of the reach of the process of the court, the suit may be brought against the partner who is within its jurisdiction; and if the omission be excused by the bill, the defendant will be precluded from objecting that his copartner is not made a party;* and if a decree be obtained against him, he will be compelled to satisfy the joint demand.' So, where one of the joint owners of a cargo deposited part of the cargo with a factor to sell, and hold a moiety of the proceeds for his ' Humphreys v. HoUis, 1 Jacob, 75 ; ing company, as to the construction of Waggoner v. Gray, 3 H. & M. (Va.) 605; the articles of copartnership, as to a Dozier v. Edwards, 3 Litt. (Ky.) 67 ; see point of general interest in a suit by Hoy's Heirs v. McMurry, 1 Litt. l(Ky.) some of the partners against a commit- 365. tee for the management of the commer- ' Lord Redesdale's Tr. on PI. 138. cial concerns, not otherwise authorized "Baldwin v. Lawrence, 2 Sim. & Stn. to represent the partnership. Baldwin 26; Weale v. West Middlesex Water- v. Lawrence, 3 Sim. & Stu. 26. ■works Company, 1 Jac. & Walk. 358 ; ' Darwent v. Walton, 2 Atk. 510. It Meux v. Maltby, 2 Swanst. 277 ; Cock- is usual where parties are charged by burn V. Thompson, 16 Ves. 321 ; Weld the bill to be out of the jurisdiction of V. Bonham, 2 Sim. & Stu. 91. the court to name them in the prayer of ■■ Weymouth v. Boyer, 1 Ves. Jr. process, because, if they come within 416. In Cockburn v. Thompson, 16 the jurisdiction, process may issue Ves. 335, Lord Eldon said : " There are against them without amending the many instances of justice administered bill. But the omission of their names in this court, in the absence of tho.se, in the prayer of process does not render without whose presence, as parties, if the record defective. Lord Redesdale's they were within the jurisdiction, it Tr. on PI. 134; Haddock v. Thomlinson. would not be administered." The court 2 Sim. & Stu. 219 ; see Simpson et al. v. will not bind all the partners in a trad- Qeddes, 3 Bay (S. C), 533. 1046 Eights of Partners. separate creditor, it was held that the latter, to a bill filed for an account of the proceeds, need not make the other joint owner a party.' And where a bill was filed against two partners, of whom one was abroad, and the partner in this country admitted that he was the agent of his copartner, it was ordered, upon motion, that service of the subpoena upon the partner in England, or upon his clerk in court, should be good service upon both.' The relief to be obtained against partners, through the medium of a bill in equity, corresponds in almost every respect with that which is granted against an individual defendant. The number of the parties, or the fact of their being united as partners, does not necessarily make any difference or varia- tion in the equity administered. That remains immutable, and is as rigorously exacted from those who have formed themselves into an association, as it would be were they the objects of suit in their sep- arate capacities. It is not the parties, but the right, which is regarded. It has been holden that a court of equity has jurisdiction against a cor- poration on a bill for an account of the profits in the nature of a part- nership, and such a bill will be entertained, not only at the instance of a member, but of a stranger." ' Weymouth v. Boyer, ante. and takes no steps to compel an answer ' Carrington v. Cantillion, Bunb. 107, from the other partner. Freelands v. S. P.; Coles v. Gurney. 1 Madd. 187 ; Royal eta]., 3 H. & M. (Va.) 575. and see Ex parte Peyton, Buck, 200. So, ''Adley v. Whitstable Company, 17 the answer of one joint partner in the Ves. 315 ; S. C, 1 Meriv. 107 ; see, also, name of both is suflBcient, provided the Attorney General v. Governors of Found- complainant files a general replication,' ling Hospital. 3 Vea. Jr. 43. Actions against Partners. "1047 CHAPTER XXIX. OF ACTIONS AGAINST PAKTNBES. Sec. 708. Of the process. Sec. 709. Personal service necessary . Sec. 710. One partner may appear for all. Sec. 711. Distringas. Sec. 713. Return of nulla bona, or non est inventus. Sec, 713. When defendant is abroad. Sec. 714. Separate property of one cannot be distrained to compel appearance of the other. Sec. 715. As to bailable process. Sec. 716. Full name of defendant shall be given. Sec. 717. Must be jointly declared against. Sec. 718. In case of tort. Sec. 719. Action on bail bond. Sec. 730. Of parties to action on contract. Sec. 731. Non-joinder must be plead. Sec. 732. Separate contract may be declared on, and joint contract proved when. Sec. 723. When non-joinder may be availed of, although not plead. Sec. 734. Non-joinder of donnant partner. Sec. 735. Of infant partner. Sec. 736. Of bankrupt partner. Sec. 737. When one is dead. Sec. 738. Outlawry of one. Sec. 739. When too many are joined. Sec. 730. Of parties to action for torts. Sec. 731. Of parties to actions ex quasi contractu. Sec. 733. Other actions ex quasi contractu. Sec. 733. All partners must be sued. Sec. 734. Actions against survivor. Sec. 735. Should be declared against, as survivor. Sec. 736. Outlawry Sec. 737. Non-joinder, matter of abatement only. Of the process. Sec. 708. All personal actions in the superior courts of law must now be commenced by writ of summons.' ' Stat. 1 & 3 Vict., c. 110, s. 3. But see some special exceptions mentioned in Arch. Pr., Book I, Chap. 1, edit. Chitty. 1048 Rights of Paeti^ers. The ordinary process by which this writ is followed is simply thsit 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 summons is contained iu the statute 2 Will. 4, c. 39, and requires the defendant, within eight days of service of it, to enter an appearance, or, on default thereof, to take notice that the plaintiff may cause an appearance to be entered for him, and proceed to judgment 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.-' ' Personal service should be had. Sec. 709. It seems that each of the defendants should be served personally with a copy of this writ.''' But it may be remai'ked, that before the Uniformity of Process Act,* a writ of venire facias ad respondefidtim served on one of several partners at the count- ing-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 part- nership.' If the defendant, or in case of several defendants, if all of them be not served with the copy of the writ of summons within four cal- endar months from the day of the date of it, the plaintiff may con- tinue 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. ' One partner may enter appearance for alL Sec. 710. 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 partner cannot be compelled to enter an appearance, or, where the process is 1 Engleliart v. Eyre, 2 Dowl. Pr. C. ' Petty v. Smith, 2 You. & Jer. 111. 145. ' 'Archb. 114; Christie v. Walker, 8 5 Arch. Pr., vol. 1, p. 117 ; Tidd's Pr. Moore, 33. 169. 'Per Dampier, arg. Harrison v. Jack- 3 2 Will. 4, c. 39. son, 7 T. R. 207. ■* Dwerryhouse v. Graham, 8 Price, 366. Actions agaikst Partners. 1049 bailable, to give bail for his copartners. Therefore, if any of the copartners, though resident in England, either abscond, or for other reasons cannot be made to appear to the writ of summons, the plain- tiff must issue a writ of distringas against them. Distringas. Sec. 711. The writ of distringas is authorized by the stat. 3 "Will. 4, c. 39, by which it is enacted that in case it shall be made to appear by affidavit, 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 effi- cacious 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 (jfifi- cer to be named by such court or judge, in order to compel the appear- ance 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 defendant's appearance Avithin eight days after the return of the writ, the plain tiff will cause an appearance to be entered for him and pro- ceed thereon to judgment and execution; but if it is the plaintiff'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. The act which has been referred to,' further provides that if the writ of distringas shall be returned non est inventus and nulla hona, and the party suing out such writ shall not intend to proceed to out- lawry or waiver, according to the authority thereinafter given, and ■ Sect. 3. 132 1050 Eights of Partners. any defendant, against whom such writ of distringas issued, shall not appear at or within eight days inclusive after the return thereof, and it shall be made to 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 appear- ance for such defendant, and to proceed thereon to judgment and execution. Return of nulla bona or non est inventus. Sec. 712. 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 hereinbefore 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 itiventus to apluries writ of capias ad respond- endu7n, issuei aliev an original writ: Provided that every such writ of exigent proclamation, and other writ, subsequent to the writ of distringas, shall be made returnable on a day certain in term, etc. It appears, therefore, from this act, that the distringas issues for one or 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 proceedings the plaintiff moans to take ; for an order for the distringas will not be granted in the alternative, to compel an appear- ance or to proceed to outlawry. » When defendant is abroad. Sec. 713. If a defendant be abroad, it has been held to be nugatory to issue a common distringas, to compel his appearance, and, there- fore, in such case, outlawry will be the only process.* Therefore, in an action against partners, where one partner is abroad, and the others refuse to enter an appearance for him, and the plaintiff is desirous to compel his appearance, he should issue a distringas, with ' Sect. 5. * Sampson v. Lord Graves, 2 Dowl. 'See per Lord Alvanley, Morleyv. Pr. C. 10; Partridge v. Wallbank, 3 Strombom, 3 Bos. & Pull. 254. Mees. & Wels. 893. ' Fraser v. Case, 9 Bing. 404, 2 Moore & Scott, 730. Actions against Partners. 1051 . a view to his outlawry, and if the sheriff return non est inventus and nulla iona as to him, the plaintiff may proceed 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 caiinot 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 forthcoming, a dis- tringas for outlawry will not be allowed.' Separate property of one cannot be distrained to compel appearance of the other. Sec. 714. The separate property of one partner cannot be distrained to compel the appearance 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 distringas and subsequent pro- ceedings thereon against the latter defendant, and ordered the issues levied upon his separate property to be restored. As to bailable process. Sec. ?15. As to bailable process, it has been already stated that all personal actions must now be commenced by a writ of summons. 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, except in the manner pro- vided for by the 3rd section of the stat. 1 & 2 Vict., c. 110. By that enactmentj 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 judgment.'' The 3rd section of the stat. 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, ' 1 Tidd's Prac. 424 ; Slieppard v. Bail- tion of the stat. 1 & 3 Vict., c. 110. See lie, 6 T. R. 327. Chit. Archb., vol. 1, p. 461. ,« Eraser v. Case, 9 Bing. 464. > " Sect. 5. ' Except in cases under the 85th sec- 1052 ■Rights of Partners. 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 defendant or defendants to the amount of 201., or upwards, or has sustained damage to that amount, and that there is probable cause for 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 apprehended, it shall be lawful for such judge, by a special order, to direct that such defendant or defendants so about to quit England, shall 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 exjjressed in such order, but not afterward, 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 t he form contained in the schedule to this act annexed, and shall bear date on the day on which the same shall be issued. And the 4tli section enacts that the sheriff or other officer 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 afterward, proceed to arrest the defendant 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 IQl. 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 putting 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. 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 many of the decisions in — ■ '■ — — ■ — ' As to the cause of action for wliicli course, on an affidavit shortly stating an arrest is allow in general, see Tidd's the cause of action. Tidd, 171 ; 3 Black. Prac, c. 10. Before the stat. 1 Vict. 110, Com. 393. But where the damages were where there was a certain debt to the uncertain, as in assumpsit or covenant to amount of 80Z., or damages to that indemnify, etc., or in actions for a tort amount, which might be reduced to a or trespass, trover or detinue, there certainty, as an assumpsit or covenant could be no arrest without a special for the payment of money, the defend- order of the court or a judge. Id. ant might be arrested as a matter of ACTIOKS AGAINST PaETKERS. 1053 reference to bailable process before tbe 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 cor- respond with the declaration, both in the statement of the number of plaintiffs and defendants, and of the nature of the debt." Where one of three defendants was held to bail on an affidavit of a debt due from the three defendants as surviving partners of Gr, and the dec- laration 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 irregular- ity. It will 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 io 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 proceedings with those in the action, and to prevent the discharge of bail by a variance in the description of the action in which they become bound for the defendant.'' Full name of defendant should be given. Sec. 716. The Christian name of the defendant ought generally to be stated in the writ," otherwise the proceedings may, on motion, be 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 are right, and if the name of the other ' Turner v. Portall, 3 N. B. 331 ; ^ Spalding v. Mure, 6 T. R. 363. Forbes v. Phillips, id. 98. ■• 1 Arch. Pr. 514, edit. Chitty. = Ch. Arch., vol. 1, p. 495. Affidavit ° v. Snow, 1 Chit. 398; Tomlin to hold to bail for money lent by the v. Preston, id. ; Taylor v. Rutherman, 6 plaintiff and his late copartners, C and Moore, 364 ; Lake v. Silk, 3 Bing. 296. D, held insufflcieut, inasmuch as it did « Stat. 3 & 4 Will. 4, c. 43, s. 13. not state that they were dead. Morrall ■ Reg. Gen. H. T., 8 Will. 4, r. 33. V. Parker, 3 Mees. & Wels. 65. 1054 Eights of Paktneks. V be afterward altered and the writ resealed, it is good against all. ' Moreover, the defendants themselves may, by their own acts, waive the irregularity arising from the omission of their Christian names in the writ, as, for instance, by afterward signing a regular bail bond." Must be jointly declared against. Sec. 717. In cases of contract, if the plaintiff hold two defend- ants 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 case of tort. Sec. 718. 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.* Where the process is bailable, and all are arrested under 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 defend- ants 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 sufRcient, it is usual for the plain- tiff to take an assignment of the bail bond. ' Action on bail bond. Sec. 719. In an action on the bail bond by the assignee, the decla- ration must show clearly the assignee's title to sue ; it must, there- fore, state the writ in the original action, the arrest, the bail bond with the condition to appear, the breach of condition, and the assign- ment to the plaintiff." The writ, in the original action, should be stated accurately ; but it seems that a variance between the actual writ and that stated in the declaration will not be fatal, if either are sufiScient to warrant the arrest." ' Anon., 1 Chit. 398. before the late statutes. Whether it '■' Kingston v. Llewellyn, 1 Brod. & still exists may not be quite certain. Bing. 539 ; 4 Moore, 317. * Wilson v. Edwards, 3 Barn. & Ores. » Tidd'sPrac. 149 ; Chapman v. Eland, 734 ; 5 Dowl. & Ryl. 623. 3 N. R. 83 ; Woodcock v. Kilby, 1 M. & ^ Caldwell v Blake, 3 Dowl. Pr. C. 656. W. 41 ; Bellotti v. Barella, 4 Dowl. ' Tidd's Prac. 397. Pr. C. 719. *W. ■" Evans v. Whitehead, 3 Man. & Ryl. " See " Forms," 3 Chit. 453, etc. 367. At least, this distinction existed '» Htendray v. Spencer, 1 T. E. 238. Actions against Partners. 1055 Of the parties to actions ex contractu. Sec. 720. 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 contract, 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. " ' Bristow V. James, 7 T. R. 257 ; Bvers V. Dobie, 1 H. Bl. 236 ; JDitclibum v. Spracklin, 5 Esp. 31. Notwitlistandiiig agreement between partners to tlie con- trary. Lodge V. Dicas, 3 Barn. & Aid. 611. 2 Per De Grey, C. J., Abbott v. Smith, 3 W. Bl. 947. ActionH against tJie firm — Oenerally. — The question, who ought to be sued in respect of a breach of contract com- mitted by a firm, or some or one of its members ? turns principally on the question, upon whom is that contract legally binding? This question has been already discussed at length, and it is needless to repeat what has there been said. Assuming, therefore, the question of liability to be determined, it remains only to consider whether all the persons who are liable must be sued jointly, or whether any and which of them may -be sued without the others. With reference to this question, it is necessary to premise that even where all the members of a firm are liable, and where all ought to be sued, still, if some of them only are sued, the non- joinder of the others can only be taken advantage of by plea in abatement. See the note , to Cabell v. Vaughan, 1 Wm. Saund. 291 b ; and Rice v. Shute, 5 Burr. 2611 ; and 1 Smith's L. C. 287 ; Hawkins v. Ramsbottom, 6 Taunt. 179 ; Abbot V. Smith, 2 W. Blacks. 947. When, therefore, in the following ob- servations it is said that all the partners ought to be, or must be sued, what is meant is, that if they are not, their non- joinder can be made the subject of a dilatory plea. The defendant must state in his plea who ought to be joined with him, and must, if required, give the addresses of the persons named. See Taylor v. Harris, 4 B. & Aid. 93 ; Newton v. Verbeke, 1 T. & J. 357. But it is not meant that their omission will be fatal to the plaintiff if the action proceeds to trial without any such plea being pleaded. It is not easy to see the reason why, if some only of several persons, jointly entitled, sue, it should be fatal to the action; whilst if some only of several persons jointly obliged are sued, it is of no consequence, unless the non-joinder is pleaded in abatement. It is indeed urged that a person who is bound jointly with others cannot say that he is not bound at all, Whelpdale's case, 5 Co. 119 a ; but surely he can truly say that he is not bound in the manner and form alleged ; and this is precisely the objection which is so fatal in an action by some only or several persons jointly entitled. However, tho distinction was firmly settled in Rice v. Shute, and has been acted on ever since, although the power of amendment con- ferred by modern statutes has rendered it of less importance than formerly. But when it is said that some or one only ought to be sued or must be sued, or that some or one ought not to be or must not be sued, a diiferent meaning is intended to be conveyed ; for an action ex contractu brought against too many persons, and failing as to one of them, fails as to all. See Weal v. King, 12 East, 452 ; Max v. Roberts, 2 Bos. & P. K. R. 454 ; Robeson v. Qunderton, 9 C. & P. 476; Mulford v. Griffin, 1 Fos. & Fin. 145. And this rule applies, not- withstanding recent improvements in the law, unless the name of the defend- ant as to whom the action fails can be struck out, by virtue of the authority to amend conferred by the Common Law Procedure Acts. See Mulford v. Griffin, 1 Fos. & Fin. 145. Actions ex contractu. — Passing now to the question, who ought to be sued in re,spect of contracts entered into by or on behalf of a firm ? and assuming the question of liability to have been determined upon the principles before laid down, it may be stated as a general rule that all who are jointly liable must be sued jointly ; see the note to Cabell V. Vaughan, 1 Wms. Saund. 291 b; Bvers V. Dobey, 1 H. Blacks. 236; Bonfield v. 1056 Rights of Partners. So, also, in an action against partners on a Joint bond, or joint cov- enant, or other instrument in writing, although they alone can be sued ■who are parties to the instrument,' yet all the co-obligors or co-cove- nantors should be made defendants." Smitli, 12 M. & W. 405 ; even thougli some of tliem may be abroad. Sheppard V. Baillie, 6 T. R. 327. This rule applies to actions against partners for the recovery of penalties imposed upon them by statute ; Bristowe v. James, 7 T. R. 257; and to actions in form ex delicto, but founded in substance on a breach of contract express or implied ; Powell V. Layton, 2 Bos. & P. N. R. 365 ; Buddie V. Wilson, 6 T. B. 369 ; but it is subject to certain real or appareut exceptions which require notice. In the first place an infant partner, not being bound by any contract entered into by or on behalf of the firm, ought not to be joined as a defendant in an action on any such contract ; if his non- joinder is pleaded in abatement, infancy should be replied. See 1 Wms. Sannd. 207, a; Chandler v. Danks, 3 Esp. 76 ; BurgesM v. Merrill, 4 Taunt. 468 ; JatFray V. Trebain, 5 Esp. 47. Formerly it was thought that an infant partner ought to be made a co-defendant. See Ex parte Henderson, 4 Ves. 164; Gibbs v. Merrill, 8 Taunt. 307. Secondly, as regards dor- mant partners. It has been seen that they are liable on all contracts entered into on behalf of the firm to which they belong, and whether such a con- tract is written or unwritten, express or implied, it is clear that a dormant part- ner may be sued upon it. Robinson v. Wilkinson, 3 Price, 588 ; Beckham v. Drake, 9 M. & W. 79, overruling Beck- ham V. Knight, 4 Bing. N. C. 234. Of course if a person is sued on the ground that he is a dormant part ner, that fact must be proved, for otherwise no case will be made against him. See Hall v. Bainbridge, 8 Dowl. 583. By the general rale, therefore, which requires that all liable to be sued shall be sued, dormant partners ought always to be made co-defendants in an action on a contract binding the firm. And this is the law, subject, however, to the qualification, that a person who liolds himself out to another as the only person with whom that other is dealing, cannot be allowed afterward to say that 1 Shack V. Anthony, 1 M. & S. 574. Per Lord Tenterden, Lefevre v. Boyle, 3 B. & Ad. 877 ; Beckham v. Knight, 4 Bing. N. G. 243. such other was also dealing with some- body else. The leading cases on this subject are Dubois v. Ludert, De Mau- tort V. Saunders, and Bonfield v. Smith. In Dubois v. Ludert, 5 Taunt. 609, Ludert was employed by one Schroeder to sell goods on commission, and was sued by his assignees for the proceeds of the sale of the goods. Schroeder had be- come indebted to one Qroning in respect of some other business, and Ludert and Groning were partners, each being a dormant partner as regarded the busi- ness carried on by the other. Ludert, in order to set off in the action brought against him the debt due from Schroe- der to Groning and Ludert, pleaded in abatement the non-joinder of Groning as a co-defendant. The plea was allowed ; the court expressing their opinion to be that if a man enters into a contract with one person, not know- ing that he has a partner, and makes his contract with that person alone, it is competent for that person, if sued, to plead in aba,tement that he has other partners who are not joined, unless the plaintiff is thereby substan- tially injured. In De Mautort v. Saun- ders, 1 B. & Ad. 898, a bill of exchange was drawn on and accepted by Saun- ders Brothers & Co., London. The firm, Saunders Brothers & Co., consisted of two brothers, resident in London (the defendants), and of two other persons resident abroad, and, not generally known to belong to the firm. The de- fendants pleaded in abatement the non- joinder of their two copartners, and the case of Dubois v. Ludert was relied upon. But it was left to the jury to say whether the holder of the bill might not reasonably suppose that the defendants alone constituted the firm, and that it he had reasonable ground so to think, he must be taken to liave con- tracted with them alone, and to be en- titled to a verdict. The jury having found for the plaintiff, the court held that the question had been properly sub- mitted to the jury, and that Dubois v. Ludert could not be supported. In Bon. ' Horner v. Moore, 5 Burr. 2611 ; Ver- non v. Jeflfries, 2 Str. 1146. Actions against Partners. 1057 Non-joinder must be plead in abatement. Sec. 731. The omission of a party as co-defendant in these cases is not ground of nonsuit, and can only be taken advantage of by plea in abatement, verified by affidavit, unless it appear on the face of the field V. Smitli, 12 M. & W. 405, the de- fendant and liis brother were partners, and carried on business under the firm of Bush & Co., but the defendant was the only person known to the plaintiff as constituting the firm. The plaintiflf having sued the defendant for goods sold and delivered, the defendant jilead- ed in abatement the non-joinder of his brother. The jury were directed that a partnership between the defendant and his brother was proved, but that if the defendant gave the plaintiiF reason to believe that he alone constituted the firm of Bush & Co., he would be solely liable. The jury found for the defend- ant. A new trial was moved for on the ground that the real question, as stated in De Mautort v. Saunders, was whether the plaintiff had reasonable ground to consider the defendant as Bush & Co., but the court held that, unless the plain- tiflfs belief was founded on the defend- ant's conduct or representations, the de- fendant had a right to insist on his partner being sued in the action, and a new trial was refused. In Dubois v. Ludert, the defendant carried on busi- ness in his own name, and there was no reason to suppose that he had a partner, but in each of the other two cases the defendants carried on business under a partnership style, Saunders Brothers & Co., and Bush & Co., and there was, therefore, at all events, reason to pup- pose that they had partners, it then be- came a question for the jury, whether the defendants had done any thing to lead the plaintiff tO' suppose they had not ; in De Mautort v. Saunders, it was found that they had (so in Stansfield v. Levy, 3 Stark. 8), whilst in Bonfield v. Smith it was found that they had not. It follows from the last-mentioned cases that, notwithstanding Dubois v. Ludert, if a person carries on business in his own name, and incurs debts in so doing, lie may be sued alone for such debts, and that he cannot successfully plead in abatement the non-joinder of a dormant partner. See, too, Mullett v. Hook, Moo. & Mai. 88 ; Baldney v. Ritchie, 1 Stark. 338 ; Doo v. Chippenden, Abbott on Shipping, 84; Col son v. Selby, IBsp. 4.i3. Tlie same rule holds whenever a partner enters into a written contract in which he does not disclose the fact that lie is acting for other people, for al- 133 though they may be sued, he cannot in- sist that they shall be sued. See Hig- gins V. Senior, 8 M. & W. 834, where the plaintiff knew the defendant was acting as agent. Thirdly, to the general rule that all persons jointly liable on a con- tract must be sued jointly, there are a few statutory exceptions. Thus, by the Carriers Act, a person sued a common carrier, and not on any special agree- ment, cannot plead in abatement the non- joinder of other persons who may be his partners, 11 Geo. IV. & 1 Will. IV., c. 68, f s. 5, 6, and,by the Joint Stock Companies . Act, 1857, if a partnership required to be registered is not registered, any mem- ber may be sued alone in respect of the debts or engagements of the firm, and he cannot plead in abatement that his co- partners ought to be sued with him. 30 & 31 Vict., c. 14, s. 3. With respect to joint and several contracts, it is a rule as old as any in the law that on a con- tract binding several persons jointly and severally, each or any of them may be sued separately, or all of them may be sued together, but that an action against more than one and less than all is im- proper in point of form, and may be met by a plea in abatement. See the note to Cabell v. Vauglian, 1 Wnis. Saund. 391 g ; 1 Chitty on Plead. 50, and as to staying one action when the creditor has been satisfied in another, see Carne v., Legh, 6 B. & C. 134 ; Nes- bitt V. Howe, 8 Ir. Law Rep. 373. The previous remarks have been addressed to the case of actions on contracts bind- ing the firm. But a contract may be entered into, by a partner and not bind the firm, either because it was not 'en- tered into on behalf of the firm, or be- cause if it was, the partner entering into it exceeded his authority expressed and implied. In such cases the partner contracting and no one else ought to be sued. If he contracted as a principal, he ought to be sued on the contract ; whilst, if he contracted as an agent, he ought to be sued for having done so without authority. See Jenkins v. Hutchinson, 18 Q. B. 744 ; Lewis v. Nicholson, 18 id. 503; Randell v. Tri- men, 18 C. B. 786 ; Collen v. Wright, 7 B. & B. 301, and 8 id. 647. If a partner enters into a contract on behalf of the firm, but exceeds his authority, aud the contract does not bind the firm, and the 1058 Eights of Paetkees. declaration, or some other pleading of the plaintif, that the party omitted jointly contracted and is still living, and also, as it is con- ceived, is resident within the jurisdiction,' in which case the defend- firm repudiates it, tlie partner contract- ing, and not the firm, ought to be sued for money paid to him under it, and sought to be recovered back. See Hud- son V. Robinson, 4 M. & S. 475. The rules which require all the members of a firm to join as plaintiffs in an action ex contractu brought by tliem, and to be joined as defendants in an action ex contractu brought against them, lead occasionally to most inconvenient re- sults. Supposing a partner to be in- debted to his own firm, the firm cannot bring an action against him as if he were a stranger, because he must by virtue of the rules in question appear as a plaintiff on the record, and he can- not sue himself. See Main waring v. Newman, 2 Bos. & P. laO; Moffat v. Van Millengen, id. 134. The same reasoning precludes a person from bringing an action against a firm of which he is a member. Nor does the in- convenience stop here,for if there are two totally distinct firms, having one common partner, neither of these firms can bring an action on contract agains the other. Bosanquet v.Wray, 6 Taunt. 598; 1 Wms Saund. 291, A. See as to the non-applica- tion of this principle to companies, Bo- sanquet y. Woodford, 5 Q.B. 310. As to es- timating damages sustained by one firm by reason of being prevented from com- pleting a contract made with another firm, some members being common to both, see Waters v. Towers, 8 Ex. 401. In the case of negotiable instruments, this inconvenience is, it is true, often avoided by taking care so to indorse them that the person suing on them is not amongst those sued ; but in the case of ordinary contracts this cannot be done, and the consequence is that an action will not lie. Actions ex delicto. — It is not every tort which, though committed by several persons acting togetlier, is legally im- putable to them all jointly. See 2 Wms. Saund.117, b and c; 1 Chitty's Plead. 96, 97 ; but supposing a tort to be imputa- ' In 1 Saund. 391 c, note 4, it is stated, as a general principle, that un- less those facts which are absolutely necessaiy to be averred by the defend- ant in his plea be admitted by the plain- tiff in his declaration or other pleading, ble to a firm, an action in respect of it may be brought against all or any of the partners. If some of them only are sued they cannot insist upon the other partners being joined as defendants, Sutton V. Clarke, 6 Taunt. 29, and this rule applies even where the tort in question is committed by an agent or servant of the firm, and not otherwise by the firm itself. Therefore an action may be sustained against any one or more of the partners for the recovery of damages for an injury arising from the carele.ssness of a servant of a firm, and the partners sued cannot plead in abatement the non-joinder of the other partners. Mitchell v. Tarbutt, 5 T. K. 649 ; Ansell v. Waterhouse, 6 M. & S. 385. But there is a distinction between ordinary actions of tort and those which are brought against persons in respect of their common interest in land ; for, if one only of several joint tenants or tenants in common is sued for any in- jury arising from the state of their land, the non-joinder of the other co- tenants may be pleaded in abatement, 1 Wms. Saund. 391,/ and g, and Mitch- ell v. Tarbutt, 5 T. R. 649, and this rule applies to partners as well as to persons who are not partners. Actions hy and against partners where a change in the firm has occurred. — In the preceding remarks upon the persons who ought to sue and be sued when a right is sought to be enforced by or against a firm, it has been assumed that no change in the members of the firm has occurred between the period when the right in question accrued and the time when the action to enforce it is brought. It is proposed in the next place to consider to what extent the rules above established require modifi- cation, when some such change hag taken place by reason either of the in- troduction of a new partner, or of the retirement, death, or bankruptcy of an old-one. First, with respect to changes caused by the introduction of new part- 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 3 & 3 Will. 4, c. 43, s. 8. ACTIOKS AGAINST PARTNERS. 1059- ant may demur, or move in arrest of judgment, or sustain a writ of error.' If, except under the circumstances just mentioned, the defendant does not plead the non-joinder in abatement, it is a waiver ners and tlie retirement of old ones. As, by tbe law of this country, the right to sue, or obligations to be sued in respect of a contract, cannot, as a general rule, be so assigned as to enable the assignee to sue or be sued in liia own name, it follows that if, after a contract is en- tered into with a firm, a new partner is introduced, no action upon that contract can be brought either by or against him. Ex hypothesi, he is not a party to the contract sued upon, there is no agreement with him of which he can avail himself, except through the me- dium of other people, and there is no agreement by him by virtue of which he has incurred any liability to the per- son supposed to be suing him. See ac- cordingly Wilsford V. Wood, 1 Esp. 182 ; Ord V. Portal, 3 Camp. 339, note ; Wa- ters V. Paynter, Chitty on Bills, 406, note 5, ed. 10 ; Vere v. Ashby, 10 B. & C. 388 ; Young v. Hunter, 4 Taunt. 583. As regards negotiable instruments, in- deed, any persons who can agree to sue jointly, upon them may do so, provided the instrument is in such a state as to pass by delivery, therefore, if a bill or note indorsed in blank is given to a firm consisting of certain individuals, who afterward take in a new partner, they and he, or some or one of them, may sue on that bill or note, see Ord v. Por- tal, 3 Camp. 389 ; but as to other con- tracts the rule above laid down invaria- bly prevails, even though the partners may have agreed amongst themselves that all debts owing to or by the old firm shall be taken and paid by the new firm, Wilsford v. Wood, 1 Esp. 183 ; for no agreement between partners as to which of them shall sue or be sued in respect of debts owing to or by the .^rm, is of any avail as between them and non-partners. See Eadenhurst v. Bates, 3 Bing. 463. So, as regards changes occasioned by the retirement of a partner. It has -been already shown, at considerable length, that the retirement of a partner in no way aifects his rights or obligations to strangers in respect of past transactions. Notwith- standing his retirement, therefore, he must join as a plaintiff, and be joined as a defendant, in every action to which, had he not retired, he would have been a necessary party. This rule holds good even where a contract is entered into before and the breach of it occurs after the retirement of a partner. See Dob- bin V. Foster, 1 Car. & K. 833. In one case, indeed, it was held at Nisi Prius that where two partners sold goods, and they afterward dissolved partnership, an action for the price of those goods was sustainable by the one partner who continued to carry on the business of the late firm, Atkinson v. Laing, Dowl. & Ry. N. P. Ca. 16 ; but the propriety of this decision is more than questionable. Sometimes one partner retires and a new partner comes in and an agent of the firm, in ignorance of the change that has occurred, enters into a contract on behalf of the old firm; in such a case it seems that the members of the new firm may adopt a contract and sue on it, unless the defendant is prejudiced by their so doing. Mitchell v. Lapage, Holt's N. P. Ca. 353, but see Boulton v. Jones, 3 H. & N. 564. Although a change in a firm, whether by the introduc- tion of a new partner or the retire- ment of an old one, cannot confer upon the partners any new right of action against strangers, or mce versa, as regards what may have occurred be- fore the change took place, it may, nev- ertheless, operate so as to discharge a person from a contract previously en- tered into by him. Thus, as was pointed out in the seventh chapter of the first book, a person who is surety to a firm is discharged from his suretyship by a change amongst its members, and cannot, therefore, be sued either by the old or by the new partners for any default of the principal debtor occurring subsequently to the change. Again, if a person enters into a contract with a firm, and that contract is of a purely personal character, to be per- formed by the individuals who have entered into it,and not by any one else, a change in the firm may operate as a dissolution of the contract, so that nei- ther the new nor the old partners can sue in respect of an alleged breach which may have occurred since the change took place. An illustration of this is afforded by RobBon v. Drum, mond, 3 B. & Ad. 303. '1 Chit. PI. 32. lOGO Eights of Paetners. of the objection. For lie 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 in the merits of the In that case A and B were partners aa coachmakers. C, who knew nothing of B, entered into a contract witli A for tlie hire of a carriage for five years, at so much a year, and A undertook to keep the carriage in proper order for the whole five years. Before the five years were out A and'B dissolved part- uersliip, and A assigned the carriage and the benefit of the contract relating to it to B. B gave C notice of the dis- solution and arrangement respecting the carriage, but C declined to continue the contract with B, and returned the carriage. An action was then brought by A and B against C, for not perform- ing the contract ; but it was held that the action would noi lie, the contract having been with A alone, to be per- formed by him personally, and he hav- ing disabled himself from continuing to perform it on his part. In the recent case of Stevens v. Beiiuing, 1 K. & J. 168, and 6 De G. Mc. & G. 323, the same principle was applied to a contract be- tween an author and a firm of publish- ers, and it was held that the contract was one of a personal character, and that consequently the author was dis- charged from it by a change in the firm, »nd an assignment of the benefit of the contract to persons of Whom the author knew nothing. Glianges caused hy death. — With re- spect to changes caused by death, the maxim.Jus accrescendi inter mercatores locum non hdbet, the real meaning of which will be explained hereafter, has no application to rights of action. If, , therefore, a partner dies in the life-time of any one or mere of his copartners, all actions brought in re- spect of any contract entered into by or on behalf of the firm before his dtath, must be brought by or against the surviving members of the firm, and by or against them alone ; for the representatives of the deceased part- ner can neither sue nor be sued at law in respect of any such contract. Dixon V. Hammond, 2 B. & Aid. 310, which shows that an agent of the firm must account to the surviving partners See, too, Mariin v. Crompe, 1 Ld. Raym. 340, and 2 Salk. 444 ; and Webber v. Tyvill, 3 Wms. Saund. 131 e. So an action for the conversion of partnership goods must be brought by the surviving part- ners ; Kemp v. Andrews, Carth. 170 ; but see Buckley v. Barber, 6 Ex. 164 ; altliough an indictment for stealing them may be preferred by the sur- viving partners, and the next of kin of the deceased partner. R. v. Gaby, Russ. & Ry. 178 ; R. v. Scott, id. 13. Surviving partners. — It follows from the above rule that the last surviving partner, or if he is dead, his legal per- sonal representative, is the proper per- son to sue or be sued at law in respect of the debts and engagements of the firm. Richards v. Heather, 1 B. & Aid. 29 ; Calder v. Rutherford, 3 Brod. k Bing. 302. In declaring against a sur- viving partner it is not necessary that he should be described as such ; Rich- ards V. Heather, 1 B. & Aid. 29 ; Mount- Stephen V. Brooke, id. 334. The earlier authorities are not uniform. See Hyat V. Hare, Comb. 383 ; Tissard v. Warcup, 3 Mod. 379 ; Spalding v. Meere, 6 T. R. 363 ; but in a declaration by a surviving partner the rule is different. Jell v. Doug- lass, 4 B. & Aid. 374 ; 2 Wms. Saund. 131 e ; Attwood v. Rattenbury, 5 J. B. Moo. 209 ,■ an;i 6 id. 570 ; Fitzgerald v. Boehm, 6 id. 333; but see, contra, Ditchburn v. Spracklin, 5 Esp. 31. The reason for this is, that in actions against partners one may be sued alone subject to a plea in abatement, which, in the case sup- posed, cannot be pleaded ; whilst in ac- tions by partners all must join, and if there is only one left, that fact should appear, as otherwise there will be a va- riance between the contract alleged and that proved. It is, however, appre- hended that an amendment would not be allowed, if in a declaration by a sur- viving partner he is not described as such. Changes caused by bankruptcy. — With respect to changes caused by bank- ruptcy. If a partner becomes bank- rupt, his assignees must join in his stead in any action in which, had no bankruptcy intervened, the bankrupt himself would have been necessarily joined as a plaintiff. Eckhardt v. Wil- son, 8 T. R, 140 ; Thomasou v. Frere, 10 East,418; Graham v. Robertson, 2 T. R. 282. If the assignees decline to join, the solvent partners are entitled to make use of their names upon indem- Actions against Partners. 1061 case, but on the form of the proceeding.' Nor is he entitled even to a plea iu abatement, where the contract on which he is sued was entered into in fraud of his copartners.'' It seems scarcely necessary to observe that although the plaintiff may sue one of several joint debtors separately, leaving the defendant to plead in abatement, he has no right to sue all the parties sepa- rately for one and the same demand.^ The necessity of pleading the non-joinder of defendants in abate- ment 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 Whelpdale,* was in accordance with this doctrine. There the plaintiff had declared on a bond made by the defendant, to which the defendant pleaded non est factum; ohe 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 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." nifying tliem against tlie costs of the action. Wliitebead v. Hughes, 2 Cr. & M. 318. If all the partners are bank- rupt, any action which, if bankruptcy liad not intervened, it would have been necessary to bring in the name of all the partners, must be brought by their assignees. See Kay v. Jjavies, 8 Taunt. 134. The assignees of a firm may sue for debts owing to the members thereof individually. Stonehouse v. De Silva, 3 Camp. 399 ; Hancock v.' Haywood, 3 T. R. 488 ; Scott v. Franklin, 15 East, 438. But this is subject to the qualifi- cation that bankrupts, whether partners or not, may sue in their own names as trustees for other people. See Budding- ton V. Castelli, 1 E. & B. 66 ; Winch v. Keeley, 1 T. R. 619. As regards actions against a firm, one or more of the mem- bers of which Iiave become bankrupt, it need hardly be observed that there is no remedy by action against assignees in respect of liabilities of the bankrupt they represent. The only remedy is by proof against his estate, or by proof and by an action against him if he lias not obtained his certificate, or if his certifi- cate is no bar. When, therefore, it is desired to recover a debt due from a firm, and all the partners are bankrupt. an action is not the remedy unless the partners have not obtained tlieir certifi- cates, or unless the debt could not have been proved in bankruptcy. If, how- ever, some only of the partners are bankrupt, the solvent partners may be sued. Hawkins V. Ramsbottom, 6 Taunt. 178. And they may, and should be, sued alone, if the bankrupt partners are discharged from the debt in question, and jointly with tliem if they are not. It is necessary to join a person as de- fendant who has been discharged in bankruptcy. Bovill v. Wood, 2 M. & S. 33 ; Hawkins v. Ramsbottom, ante; Moravia v. Glass, 2 M. & S. 444 ; Lind- ley on Part., pp. 396-404. ■' Rice V. Shute, 5 Burr. 3611 ; 2 W. Bl. 695. ^Hudson V. Robinson, 4 Man. & Sel. 475. ^ Carne v. Legh, 6 Barn. & Cress. 124; 9 Dowl. & Ryl . 136. "Y. B. 38 Hen. 6, 8 a, pi. 11 ; Y. B. Mich. 35 Hen. 6, pi. 38 ; Bro. Briefe, 37. * 5 Rep. 110 ; see Stead v. Mohun, Cro. Jac. 153 ; Cabell v. Vaughn, 1 Saund. 399; 3 Keb. 535 ; Ascue and Hollings- worth's case, Cro. Eliz. 494; Sayer v. Chaytor, Lutw. 595. 1062 Eights of Partners. The rule of law so aj)plied to joint bonds has, since the case of Eice V. Shute, been extended to all joint contracts, not only to mere parol contracts made with partners, in which case the plaintiff may not know accurately all the parties with whom he dealt, but to writ- ten contracts in which the parties who may be sued appear on the face of the paper, and are, therefore, known to the plaintiif. In such, case, so long as the plaintiff does not declare jointly, the defect can only be pleaded in abatement, and in default of such plea, the joint contract may be giyen in evidence of the separate contract declared on. Thus, in Germain t. Frederick,' 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 produced 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 non- suited. 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 good if the fact had been pleaded in abatement. The court stopped the argument and made the rule absolute for a new trial, observing that the contract proved was the same as that laid, and the case was precisely that of Eice v. Shute. So, in Dixon v. Bowman,' which was "an action against two defend- ants on a promissory note made by them jointly and severally, in evi- dence 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 def endan t as drawer of a bill of exchange. On non-assumpsit pleaded, it appeared in evi- dence 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, but permitted the cause to proceed with liberty for the defendant to move for a new trial. A verdict 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 abate- ment that another person drew the bill jointly with the defendant 1 1 Wms. Saund. 391, o. ^ Id.; Wilson v. Reddall, Gow. 161. ■' Id. 391, d. Actions against Paetnbks. 1063 who is still alive. So, where a declaration against the acceptors of a bill of exchange stated the bill to be drawn upon 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 thi^ was no variance.! ' Mountsteplaeu v. Brooke, 1 Barn. & Aid. 234. Parties. — When a bill or note is made, tlie only proper parties to a suit upon it are those named in it aa drawers, payees or indorsees, as the case may be. Pease V. Hurst, 10 B. & C. 133 ; McBirney v. Harrau, 5 Ir. L. R. 438 ; Philps v. Lyle, 10 A. & E. 113. The rule would be the same whether they were partners or not, and where the names of two persons appear as payees, in a bill, both should join although one has in fact no inter- est in the bill. Guidon v. Robson, 3 Camp. 303. But where a bill has been indorsed in blank, any person holding it may sue upon it. Ord v. Portal, 3 Camp. 339 ; Attwood f. Rattenbury, 6 Moore, 579 ; Lowe v. Copestake, 3 C. & P. 300; Law v. Parnell, 6 Jur. (N. S.) 173. And it has been held in England that where one partner in his own name accepts a bill drawn on a stranger for his honor, and pays the bill when due out of the partnership fund's, with the consent of his partners, the party who accepted the bill is the proper party to sue the drawee for indemnity. Driver V. Burton, 17 Q, B. 989. The general common-law doctrine in reference to common contracts, verbal or written is, that where the contract is joint, all par- ties to it must be joined in a suit upon it. 1 Wms. Saund. 391; 1 Chit. PI. 10. But liberal provisions are now made for amendments in such cases by the English statutes, 15 and 16 Vict., c. 76, S3. 84, 35. And similar provisions for amendments may be found in the statutes of most of the states. Mr. Liudley on the subject of parties ob- serves: " The authorities which we have just referred to establish the rule that when an ordinary contract not un- der seal is entered into with an individ- ual partner, such contract, whether written or verbal, express or implied, may be sued upon at law by him and his copartners if they can show that the contract was really entered into by the individual partner on behalf of the firm. But it does not necessarily follow that because all the partners may sue on such, contract they must do so. Whether they must or not depends upon the na- ture of the contract, and upon whether the firm was in the position of a dis closed or an undisclosed principal. The rules on this subject areas follows : 1. A dormant partner never need be joined as a co-plaintiff in an action on a contract entered into with the firm or with one of its members. Leveck v. Shafto, 3 Esp. 468, action for work and labor. See Phelps v. Lyle, 10 A. & E. 113, as to contracts with the " directors" of a company. 3. If a contract is expressly entered into with a firm or with one of its mem- bers on its behalf, such contract must be sued upon by all the members com- posing the firm at the time the contract is entered into. See 1 Wm. Baund. 291 k, and 1 Chitty on Pleading, 10-15 ; Phelps V. Lyle, 10 A. & E. 113; Metcalf V. Bruin, 13 East, 400 ; Woolmer v. Toby, 4 Ra. Ca. 713, excepting only the then dormant partners, if any. 3. All the members of a firm (except the dormant partners) must join as •plaintiffs in an action on an implied contract with the firm, whether the per- son sued supposed he was dealing with the firm or not. Thus, if the funds of the firm are lent by one partner he can- not alone maintain an action for its re- payment by virtue of any implied con- tract with himself for the promise to repay which is implied by law, is a promise with the real lenders of the money and must be sued upon by them. See Garrett v. Handley, 3 B. & C. 463; Graham v. Robertson, 2 T. R. 383 ; Teed V. El worthy, 14 East, 310. 4. Where a written contract is en- tered into with one partner, and it does not appear on the face of the contract that he was acting on behalf of the firm, he may sue alone on that contract. In such cases the action may be main- tained citlier in the name of the person with whom alone the contract was os- tensibly made, or in the name of the parties really interested. See Skinner V. Stocks, 4 B. & Aid. 437, and Cothay V. Fennell, 10 B. & C. 671, The expression, " members of the firm," as used in the preceding observa- tions, is not intended to include what 1064 Rights of Partners. Separate contract may be declared on and joint contract proved — When. Sec. 722. 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 are called nominal partners, i. «., per- sons who are not entitled to share the profits of the firm; but whose names ap- pear and are used as if they were. Sach persons never need join as plaintifEs in an action on a contract not expressly made with them. In Kell y. Nainby, 10 B. & C. 20, the plaintiff practiced as an attorney and solicitor under the name of Kell & Son, and he sued in his own name for business done by him for the defendant. It was objected that tlie son ought to have been a co-plaintiff, but it was proved that the son was only a salaried clerk, and had not been employed by the defendant and it was therefore held that the action was properly brought by the father alone There are several other cases to the same effect. Barker v. Stubbs, 1 Man. & Gr. 41 ; Davenport v. Kack- straw, 1 C. & P. 80 ; Parsons v. Crosby, 5 Esp. 100; Harrison v. Pitzhenry. 3 id. 238 ; Gloasop v. Colman, 1 Stark. 25, and they show that if a partner re- tires and leaves his name in the firm.it is not necessary that he should be a co- plaintiff in an action l^rought by the con- tinuing partners in respect of what has happened since the retirement. Cox v. Hubbard, 4 C. B. 317. But prima facie. a nominal partner shares profits, and therefore ought prima facie to be joined as a co-plaintiff in an action on an ex- press or implied contract with the firm. This is shown by Teed v. Elworthy, 14 East, 310. There the plaintiff, whose name was John Teed, carried on the business of a banker under the name of John and Thomas Teed & Co. He had a son of the name of Thomas, who, it was sworn, had no concern in the bank, but who, for any thing else that appeared in evidence, might have had some inter- est in its capital or profits. A customer of the bank having overdrawn his ac- count, was sued by John Teed alone, but it was held that the evidence was not sufficient to show that Thomas was a merely nominal partner and that he, therefore, ought to have joined in the action. If a nominal partner is a party to the contract sued upon, he must be a party to the action brought upon it. Thus, in Guidon v. Robson, 2 Camp. 302, the plaintiff carried on buisiness under the name of Guidon & Hughes, and in that name he drew a bill on the defendant, who accepted it, but failed to pay it when due. Hughes was a salaried clerk, employed by the plaintiff in his busi- ness, but he was not a partner, and had no share in the profits. It was never- theless held that, as his name was on the bill, he ought to have joined in the action. The above cases are sufficient to show under what circumstances a nominal partner must join as a co-plain- tiff with the real partners, and under what circumstances he need not do so. But there yet remains this further question, whether he may join in those cases in which it has been established that he need not ? Mr. Collyer is of opinion that he may ; Coll. on Part. 467; and he rests his opinion on Bond v. Pittard,3M.& W. 357. But his case, when examined, is not an authority in point, for the so-called nominal partner had a share in the profits, and the decision of the court turned on thai circumstance, and on the necessary consequence that both part- ners were interested in the fund sought to be recovered. Upon principle, the writer ventures to submit that in all cases where a nominal partner need not join, he ought not to do so, for, ex hypo- thesi, he is no party to the contract sought to be enforced, and he has no in- terest in its subject-matter. It appears from the foregoing state- ments that, under certain circumstances, an action may be brought upon a con- tract entered into on behalf of a firm either by all the partners or by the indi- vidual partner with whom the contract was made, and that, under certain other circumstances, an action upon such a contract ought to be brought by all the partners jointly. But there are also circumstances under which an action ought not to be brought by all the part- ners, and these remain to be considered. One partner ought always to sue alone upon an ordinary contract entered into with himself, if such contract is to be regarded as made with him as a prin- cipal, and not on behalf of himself and others. Therefore, if each of several partners lends money out of his own funds, each must sue alone for repay- ment of his advance, although the loans Actions against Partnebs. 1065 any of those who joined in the contract are omitted as defendants, or some reason is not assigned why they cannot be inchided, such as that they are dead, or are outlawed, or have become bankrupt. There a difference appears upon the face of the record, the plaintiff himself shows that another ought to be joined, and as it would be absurd to call upon the defendant to plead facts which are already admitted, no plea in abatement is necessary, but the omission maybe taken advan- tage of by demurrer, in arrest of judgment, or upon a writ of error. Thus, in Horner v. Moore,' which was debt on a joint bond against one obligor, to which the defendant pleaded 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 tj^at both had sealed the obligation, and both obligors were living. When non-joinder may be availed of without plea. Sec. 723. 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 abatement, the declaration should in some manner expi'essly 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 argument, on the ground that where it appears, by the plaintiff's own showing, that there is a co-obligor 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 fact of the co-obligor being alive could not appear on the declaration.' Supposing this opinion to be correct, the case of The may have been made in pursuance of tween himself and the other parties to some arrangement with all the part- it, in the position of a principal and not ners, for in the case supposed each loan of an agent. If, therefore, the contract creates a separate debt to each partner, is for the payment of money by him, and they do not altogether form one and the money is paid out of the funds debt to the firm. See Thacker v. Shep- of the firm, and it then appears that the lierd, 2 Chitty, 653 ; Brand v. Boulcott, 3 contract was invalid on the ground of Bos. & P. 335. Again, if one partner fraud, the partner who sealed the con- atone holds a certain office and does tract is the proper person to sue for the work in his official capacity, he alone recovery back of the money." ought to sue for payment of the work ' Cited in Rice v. Shute, 5 Burr. 2614. ao done. Brandon v. Hubbard, 2 Brod. '' 1 Wms. Saund. 391 c. ; 1 Chit. PI. & Bing. 11. 46 (6th ed.) As a partner who, on behalf of him- ' Per Marryatt, arg.. Rex v. Chapman, self and copartners, enters into a con- 3 Anstr. 818 ; see, also, Blackwell v. tract under seal, is alone liable to be Ashtou, Aleyn, 31 ; South v. Tanner, 3 sued on such contract, he is for all the Taunt. 354, and Wats. Part. 488. purposes of that contract, and as be- 134 1066 Rights of Paetners. 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 persons to be living), by bond sealed with their seals, became jointly and severally bound to the King in 4,000^., and stating non-perform- ance, etc., the court were of opinion that, as abatable matter appeared on the scire facias, it was not necessary for the defendant to plead in abatement, aind they gave judgment that the scire facias should be quashed. But although, from the pleadings of the plaintiff, it may possibly be presumed in favor of the defendant who is sued, that another person who ought to be a co-defendant is' still alive, yet in no case can it be presumed that such otlier person has sealed the bond. An express averment must be made of that fact, on one side or the other.' Non-joinder of dormant partners. Sec. 734. The non-joinder of a dormant j)artner as co-defendant cannot even be pleaded in abatement, where the plaintifE has no means of knowing of the partnership, for, if I deal with A, he can- not, in reference to that transaction, say there is a contract between him and B, of whom I know nothing, thus compelling me to be a joint creditor ofthose 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 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 part- ner 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 Broth- ers & Co. It was pleaded in abatement that the promises were made by two other persons named in the plea, jointly with the defendants; '6 T. R. 769. In 2 Anstr. 448, it is Baldney v. Ritchie, 1 Stark. 338 ; Doo v. said to liave been a «a>e /«CiVis on a re- Chippenden, Abbott on Shipping, 76; cognizance, not on a bond. See 1 Wms. Crellier v. Neale, 1 Peake, 146 ; Ex Saund. 391, and note c. parte Hamper, 17 Ves. 412; Robinson ■' Cabell V. Vaughan, 1 Saund. 291, v. "Wilkinson, 3 Price, 538. note i. But proof of a party's signa- * Ex parte Layton, 6 Ves. 438. ture is presumptive evidence of his hav- ^ Mullett v. Hook, 1 Mood. & Malk. 88; ing sealed. Grellier v. Neale, 1 Peake, Stansfield v. Levy, 3 Stark. 8. 145; Fasset V. Brown, id. 23. 'IBarn. & Ad. 396, overruling Du- 2 Ex parte Norfolk, 19 Ves. 455 ; bois v. Ludert, 1 Marsh. 248. APTIONS AGAINST PaRTKERS. 1067 and the defendants proved that tlie two other persons named in the plea were partners Avith them, and resided at the Mauritius where the bill was drawn, and where the plaintiff also resided. Lord Tenter- den told the jury that it was clearly established in proof that all the four persons were in partnership 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 defendant alone constituted the house of Saunders Brothers & Co. If he had reasonable ground so to think, then he must be taken to have contracted 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 " & 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 refused 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. ' It is to be borne in mind that the rules just stated as to dormant partners apply only to cases of implied contract, such as a partner- ship contract usually is. Where a contract in writing is entered into by the ostensible partners of a firm only, without the dormant part- ner, the party contracted with cannot sue the dormant partner on this contract. ' Non-joinder of infant partner. Sec. 725. If one partner was an infant at the time of the contract, and has not, since the attainment of his majority and before the commence- ment of the action,' ratified the contract by some writing with his sig- nature affixed/ he ought not to be made a co-defendant. For if he be joined in the action, and plead his infancy, the plaintiff cannot 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 commence a new action against the adult defendant, he being the sole contracting party according to the legal effect of such a contract." ' Per Lord Kenyon, Saville v. Robin- Cres. 834 ; 4 Dowl. & Ryl. 545 ; but see son, 4 T. R. 720. Ex parte Henderson, 4 Ves. 164. ' Beckham v. Knight, 4 Bing. N. C. ^9 Geo. 4, c. 14, s. 5. 243. 5 Cliandler v. Parkes, 3 Esp. 76 ; Jaf- 3 Thornton v. Illingworth, 2 Barn. & fray v. Frebain, 5 id. 47. 1068 Eights of Partners. On the other hand, if the plaintiff omit to sue the infant partner, then, although the defendant may plead the non-joinder of his copart- ner in abatement, such plea will not prevail if the plaintiff reply that the defendant omitted is an infant.' 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, and if the defendant pleads in abatement that the other partner ought to be sued, the plaintiff 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 defendant solely, and not by him and the infant jointly.' If an infant partner be made a co-defendant in an action of assump- sit or debt, and intend to resist the action on the ground of infancy, he must plead his infancy specially.'' Nonjoinder of bankrupt partner. Sec. 736. Where one partner has become bankrupt and obtained his certificate, it is not necessary to make him a co-defendant, for if the nonjoinder of him as defendant be pleaded in abatement, the plaintiff may reply that he has been discharged by bankruptcy and certificate," and the same sort of replication will be admissible if the party omit- ted has been discharged under the Insolvent Act.' But if the bank- rupt have not obtained his certificate, he should be joined as a co-de- fendant.' When one partner is dead. Sec. 727. If one of several partners die, the action must be brought against the survivors.' And if the executor of the deceased partner be sued, he must plead the survivorship in bar. " Upon the death of the last surviving partner, an action on the partnership account must be brought against the executors only, without joining the executors of the other partners." If a partner defendant die pending the action, the writ or action shall not be thereby abated, but such death being ■Gibbs V. Merrill, 3 Taunt. 307; * Richards v. Heather, 1 Barn. & Ald.29. Chandler v. Parks, nupra. 'Postan v. Stan way, 5 East, 261 ; God- ' Burgess v. Merrill, 4 Taunt. 468. sou v. Good, 6 Taunt. 587 ; Reg. Gen. H. 'Chandler v. Parks, SMpra. T. 1834, jl«SM»ips8< 3. * Reg. Gen. H. T. 1834 ; Assumpsit, 3; '» Calder v. Rutherford, 1 Brod.& Bing. Debt, 3. 802 ; 7 Moore, 158. * Stat. 3 & 4 Will. 4, c. 43, s. 9. ^ Stat. 3 & 4 "Will. 4, c. 43, s. 9. ' 1 Chit. PI 44. Actions agaikst Partners. 1069 suggested on the record, the action shall proceed against the surviv- ing defendant or defendants.' Outlawry of one partner. Sec. 728. On 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. There- fore, -where the plaintifE brought an action against two defendants, and proceeded to outlawry against one, and went on with the action against the other, who died after interlocutory and before final judg- ment, it was held that he could not have a scire facias against the administrator of the deceased partner; for, notwithstanding the out- lawry, the action remained joint, and, therefore, survived against the other defendant.* When demurrer lies because too many persona are sued. Sec. 72.9. If too many persons be made defendants, and the objection 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 on the pleadings, the plaintiff may be nonsuited upon 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 there are several defendants, the nonsuit of the plaintifE is for the benefit of all.' It is, however, enacted by the 10th session of the stat. 3 & 4 Will. 4, c. 42, that in all cases in which, after a plea in abatement, the plaintiff shall, without havmg proceeded to trial upon an issue thereon, commence another action against the defendant or defendants in the action in which such plea in abatement shall have been pleaded, and the person or persons named in such plea in abatement as joint con- tractors, 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 one or more of the persons named in such plea in abatement, or any subsequent plea in abatement, are not liable as a ' 8 & 9 W. 3, c. 11, s. 7. ' Shirreff v. Wilks, 1 East, 48. 5 Guv V. Goddard, 1 Keb. 643 ; 1 Sid. ' 1 Chit. PI. 36 ; Cooper v. Wliitehouse, 173. •■ 6 Car. & P. 595. 3 Fort V. Oliver, 1 Mau. & Sel. 343. ' Blake's case, 1 Sid. 378. * Noke V. Ingham, 1 Wils. 89 ; Eliot v. Morgan, 7 0. & P. 334. 1070 Eights of Partkers. 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 plaintiffs, who shall be allowed the same as costs in the cause against the defendant or defendants 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 tlie trial to adduce evi- dence of the liability of the defendants named by him in such plea in abatement. 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 objection for misjoinder at the trial. ' f Of the parties to action ex delicto. Sec, 730. 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; thei'efore, 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 tlie general issue. A plea in abatement can only be where regularly all the par- ties 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 negligence of their servant in running down a ship of the jilaintiffs' laden with sugar, whereby 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 declara- tion, or other pleading, that the tort was jointly done dy the defend- ant and A B, the action shall abate; * but Mr. Serjeant Williams observes that there is no good ground for this distinction.' ' Ravenscroft v. Wise, 1 C. M. & R. Belclier, 4 Barn. & Cres. 704 ; but see 303. Wallis v. Savil, Lutw. 41. 2 1 Wms. Sannd. 291 e ; Wats. Part. ^ Mitchell v. Tarbut, 5 T. R. 649. 424 ; Ricli V. Pilkington, Cartb. 171 ; ■* Brickhead v. Arclibisliop of- York, Child V. Saund, id. 294, 1 Salk. 32 ; Sut- Hob. 199. ton V.Clarke, 6 Taunt. 29; Nicoll v. n Wms. Saund. 291 f. Glennie, 1 Maa, & Sel. 588 ; Morrow v. ACTIOJS'S AGAINST PARTNERS. 1071 Actions against common carriers for a breach of duty in their capacity of carriers may be either laid down in case, charging them with a breach of duty imposed by the custom of the realm, the breach being in such case considered as a tort, or they may be laid in assumpsit, the breach being then considered as a breach of contract. Both of these modes of declaring have been established by precedent, but as all actions of this nature involve considerations of contract, they ■will be the subject of discussion in the ensuing section. "What has been said regarding the joinder of one or more defend- ants 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 all be made defendants, or the party who is sued alone may plead in abatement.' There are various torts which in legal consideration may be commit- ted by several, and for which a joint action may be supported against all the parties. But if several persons be made defendants jointly, where the tort 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 plaintiffs' taking a verdict against one only, or, if several dam- ages 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 one, and a verdict against the others." Of the parties to actions ex quasi contractu. Sec. 731. It may, perhaps, be laid down, 1, that in all actions ex quasi contractu, except against common carriers for breach 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 applicable to actions against common carriers, when the declara- tion states a special contract; 3, tliat, otherwise, an action against a common carrier is to be considered as entirely laid in tort, and attended with all the consequencdte 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 public duty. In regard to actions against common carriers, it was held in a series of decisions that if the declaration was grounded on contract, and ' 1 Wms. Saund. 391 f ; Bro. Action ' Revett v. Browne, 3 Moore & Payne, on the case, 33 ; 1 Saund. 391. 18. •' 1 Chit. PI. 77. 1073 Eights of Paktneks. not on tort though the contract as stated was only general and aris- ing by implication, the action must be considered as in the nature of an action ex contractu, and, therefore, liable to a plea in abatement, if all tfie joint contractors were not sued. Thus in Boson y. Sandford,' the plaintiff declared : " That, whereas, on the 10th day of May, 1685, the plaintiff had, at Loudon, delivered and laden, on board the ship j^ called, etc., 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, etc., in good order and well conditioned, to be safely transported, etc., 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, etc., then and there had and received, and them to transport and carry, in form aforesaid, did undertake, nevertheless the defend- ants, not regarding their duty in this behalf, fraudulently intending to injure, etc., the said goods and wares, in such good order and con- dition 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, etc. , so improvidently and negligently did place, carry, and keep in the said ship, in the said voyage, that by the default of the defendants and their servants, etc., the said goods, by the sea water 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," etc., — 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 defendant super se susceperunt, and that it was the same as if it had been said super se assumpserunt, in consideration of a promise to pay the hire, that the«goods should be safe carried. So in Powell v. Layton,' the declaration stated that the plaintiff, " at the special instance and request of the said defendant, had caused to be delivered to the said defendant divers goods, to wit, etc., to be carried and conveyed by him, the said defendant, on board, etc., to ' 2 Show. 478 ; 1 Id. 101. Lev. 69. The contrary is said arguendo, ' Shipowners may be common car- 2 Chit. 3. riers. Morse v. Slue, 1 Ventr. 190 ; 2 »3 N. R. 370. Actions against Paetkeks, 1073 be delivered in the like good order, and well conditioned, all and every the dangers and accidents of the sea, and of navigation, etc., excepted, unto order, for certain freight to be therefor paid to the said defendant, and although the said defendant took and received tiie said goods, etc., and although the dangers, etc., did not prevent, etc., yet the said defendant, not regarding his duty, did not, etc., carry, convey and deliver the said goods, or any part thereof, according to his said duty, but wholly failed and neglected so to do, and so care- lessly and negligently, etc., that the goods were lost." The defend- ant 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 suscejni was not used in the declaration, yet the nature of the charge was, that the defendant agreed to carry the goods to Sicily, and had failed in the performance .of his agreement. In Max V. Eoberts," the point in the cause was decided on the same principle, although the question arose in a dijBEerent shape. There, the declaration stated that the defendants were owners of a ship, and that the goods were shipped on account of the plaintiff, to be carried, etc. On the trial he failed in proving that the defendant Eoberts, and the eight other defendants, were part-owners; by his evidence he affected the eight only; The court gave evidence of nonsuit. But the doctrine contained in the foregoing cases, unless any of them be considered to involve special contracts," must now, if appli- cable in any case, be confined to carriers by water ; for with respect to carriers by land, unless a special contract appear on the declara- tion, 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 and 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-proprietor or copartner in such mail, stage coach, or other public conveyance by land for hire. Pro- ' 3 N. R. 365. ferred to terms of express contract, for ^ Lord Ellenborough considered tlie it alleged that the goods were to be contract in Powell v. Layton to be of a delivered, all dangers and accidents of special nature. " The ship," he said, the seas and of navigation of whatever " was neither alleged to be a common kind excepted, which exception could ship, nor the defendant to be a common only have subsisted by virtue of an ex- carrier. The declaration, moreover, re- press contract." 6 Mau. & Selw. 389. 135 1074 Eights of Partners. vided 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. 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 declaration state very explicitly a case of contract. This observation is, of course, applica- ble 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 passengers 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 carefully to have conveyed her ; yet the defend- i ant, 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 Ellenborough 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 some- where about the time of Dale v. Hall ; ' since then it had been usual not to declare in this form, but in contract ; yet, the modern 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-feasors, 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, averring that judgment should have been given either against all or for all the defendants, but the court affirmed the judgment, holding that the declaration in this case was laid ia tort. '6 Mau. & Selw. 385; 2 Chit. 1. It man may be sued jointly. Whitamore seems that in an action on the case v. Waterhouse, 4 Car. & Pay. 385. against stage coach proprietors, for an '1 Wils. 281. injury from mismanagement in driving ' 6 Moore, 141 ; 3 Bred. & Bing. 52. the coach, the proprietors and the coach- Actions against Partners, 1075 Again, in the late case of Pozzi v. Shipton,' the declaration con- tained no words of contract, but, on the other hand, it did not ex- pressly 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 declaration, which was in case, stated that the plaintiff delivered to the defendants, and they accepted and received from him, goods, to be taken care of and con- veyed by the defendants from Liverpool to Birmingham, and there delivered to A, for the plaintiff, for reasonable reward to the defend- ants in that behalf ; and thereupon it became the duty of the defend- ants 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, etc., did not nor would take due care, etc., and that the goods were injured, to the plaintiffs' 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 been good on special demurrer. Other actions ex quasi contractu. Sec. 733. However, as to actions ex quasi contractu against part- ners, other than those which we have just noticed, it seems most con- sistent with principle, and most agreeable with the tenor of modern authorities, that they should be considered as actions ex co7itractu, and that the form of the action is not to vary the right of defense.^ The case of Govett v. Eadnidge,' which is at variance with this doe- trine, appears to be no longer law. That was an action against three, wherein the plaintiff declared that they had the loading of a liogshead of the plaintiffs', for a certain reward to be paid to one of ' 8 Ad. & Ell. 963 ; 1 Per. & D. 4. ' 1 Chit. PI. 36, note 5. => 3 East, 63. 1076 Rights of Partstees. them, and a certain other reward to the other two, and that the defendants so negligently conducted themselves in the loading, etc., 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 disapproved of,' and Lord EUenborough, who delivered the judgment of the court in Govett v. Radnidge,'' seems himself on a subsequent 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 warranty by one only, as of his separate property. It is to be observed that in the case just cited an express joint contract appeared on the face of the declaration, and, indeed, the alle- gation of a joint contract of sale was not only material, 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 were stated on the declaration, such action would be considered as laid in tort or in contract; but, upon the whole, it is conceived that the court would look to the real nature of the case, without reference to the form of the declaration, and would hold the action to be attended with the consequences of tort or contract, according as tort or contract was the essence of the actual transaction between the parties. ■> All partners must be sued. Sec. 733. We have seen that under a contract made with the firm all the partners must be sued,- but that where a separate security is > 3 N. R. 373. Barn. & Cres. 589 ; Newberry v. Colvin, 2 13 East, 454. 7 Bing. 190. ' 13 East, 453. ' But the fact that a dormant partner * See and consider Jennings v. Eun- is not joined as a defendant is no ground dall, 8 T. R. 335 ; Green v. Greenbank, for an abatement of the action, and a 3 Marsh. 485 ; Marzetti v. Williams, 1 judgment against the known members Barn. & Adol. 415 ; Burnett v. Lynch, 5 of the firm may be collected out of the Actions against Pautners. 1077 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 ease, if it be intended to sue all the partners, the security must be abandoned and the declaration must be confined to money counts against all the partners.' The liability of partners upon a partncrshiji debt is joint and not joint and several.' In equity, however, the liability is treated as being partnership property. Van "Valm v. Russell, 13 Barb. {N. Y.) 590. His non- joinder as a plaintiflf is not a ground of abatement by those who were not aware oj his relation to the firm when they dealt with it. Waite v. Dodge, 34 Vt. 181 ; Wood V. O'Kelly, 8 C'ush. (Mass.) 406 ; Roger v. Kichliue, 36 Penn. St. 393 ; Clark v. Miller, 4 Wend. (N. Y.) 1 Emly v. Lye, ante ; Denton v. Rodie, ante, '^ Of the nature, extent and duration of the liability of individual members of 2)artnerships and companies to creditors as regards contracts. — An agent who contracts for a known principal is not liable to be himself sued on the con- tract into which he has avowedly en- tered only as agent. Consequently, a partner who enters into a contract in behalf of his firm, is not liable on that contract except as one of the firm : in other words, the contract is not binding on him separately, but only on him and his copartners jointly. See Ex parte Buckley, 14 M. & W. 469 ; Re Clarke, De Gex, 153 ; Ex parte Wil.son, 8 M. D. & D. 57. One partner may render him- self separately liable by holding him- self out as the only member of the firm, Bonfield v. Smith,'l3 M. & W. 405 ; De Mautort v. Saunders, 1 B. & Ad. 398, or by so framing the contract as to bind himself not only as be- longing to the firm, but independently of his connection with it, Higgins v. Senior, 8 M. &W. 834 ; Ex parte Wilson, 3 M. D. & D. 57, but unless there are some special circumstances of this sort, a contract which is bindingon the firm is at law binding on all not excluding dormant partners, Beckham v. Drake, 9 M. & W. 79; Brett v. Beckwith, 8 Jur. (N. S.) 31, M. R. the partners jointly and on none of them severally. The same prin- ciple aj^plies to directors of companies. Contracts entered into by them only as agents of the company are binding, if at all, on the company, and the directors cauubt be made individually liable upon them as principals. Lindus v. Melrose, 2 H. & N. 393, and 8 id. 177 ; Aggs v. Nicholson, 1 H. & N. 165; Russel v. Reece , 3 Car. & Kir. 669. The only exception to this rule is, that a director contracting for a limited company and suppressing the word limited, is liable personally on the contract. Penrose v. Martyn, 5 Jur. (N. S.)362, Q. B. For- merly it was thought that it' an agent entered into a contract on behalf of a principal, and such contract did not bind the principal, he not having authorized it, the agent was himself bound by the contract. According to this doctrine, a contract ostensibly entered into by A through B is twisted into a contract by B, although it was not the intention of either party to the contract that B should be in any way bound by it. The propriety of thus making contracts for persons has been of late very properly questioned and denied, and it is now held that an agent, contracting as such without authority, is not bound by the contract at all, but that he is liable in damages for the consequences ensuing from hia having assumed to act with an authority which in fact he did not pos- sess. It is also most properly held that he is thus liable although he acted bona fide and in the belief that he had the authority he assumed. See, on this sub- ject, Jenkins v. Hutchinson, 18 Q. B. 744; Lewis v. Nicholson, 18 id. 508; Randell v. Trimen, 18 C. B. 786 ; Collen V. Wright, 7 E. & B. 801 ; and 8 id. 647; Simons v. Patchett, 7 id. 568; Eastwood V. Bain, 3 H. & N. 738, where the plain- tiff had not sustained damage. It re- sults from the foregoing observations that a partner who enters into a con- tract 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 ; whereas if he enters into a similar contract which for want of authority does not bind the firm, he ia individually and separately answerable for the damages sustained by the other party to the con- tract by reason of the unwarranted as- 1078 Rights of Pautneks. both joint and several, but at law it is joint, and an action cannot be brought against one partner alone, but all must be joined as defendants.' The obligation is joint, and not joint and several, and all the part- Bumptiou of authority. Tlie liabilities of directors of companies are precisely similar iu tins respect to those of part- ners, with the exception already noticed iu tlie case of limited companies. But although the liability of the members of au ordinary partnership iu respect of the debts and engagements of the firm is at law joint only, their liability is iu equity not only joint, but also several, except under special circumstances. In equity, if several persons contract a debt, they are not only jointly but also severally liable to repay it. Bishop v. Church, 3 Ves. Sr. 100, .871; Primrose V. Bromley, 1 Atk. 90 ; Simpson v. Vaughan, 3 id. 31 ; Clavering v. West- ley, 3 P. W. 403; Darwent v. Walton, 3 Atk. 570; Lane v Williams. 3 Veru. 393 ; and see Sleech's case, 1 Mer. 539, and Devaynes v. Noble, 3 R. & M. 495, and the cases there commented on, un- less their obligation is created by some instrument which in terms imposes upon them a 'oint obligation only. Upon this subject it may be useful to refer to one or two leading cases. In Bishop V. Church, 3 Ves. Sr. 100, 371 (Simpson v, Vaughan, 3 Atk. 31, is a very similar case) two partners bor- rowed 8,000^., for which they afterward gave their joint bond. One of them then died, aud the other became bank- rupt. A bill was filed by the creditor for payment of the bond out of the es- tate of the deceased partner; and it was held that his estate continued liable notwithstanding that it was discharged at law, the bond being joint and not joint and several. In this case it was also held that the bond ought to be treated as joint and several So as to make the estate of the deceased part- ner liable as for a specialty debt and not as for a simple contract debt, as would have been the case without the bond. The following cases are to the same effect as Bishop v. Church, viz., Simpson v. Vaughan, 2 Atk. 31 ; Thomas V. Frazer, 3 Ves. 399; Burn v. Burn, id. 573 ; Orr v. Chase, 1 Mer. App. 739. In Jacomb v. Harwood, 3 Ves. Sr. 265, two persona were partners, aud were as such indebted on simple contract to the plain- tiflF. One of them died, having made the other his executor. The plaintiff afterward sued the surviving partner as such, and obtained j udgment against him, and not obtaining satisfaction, filed a bill claiming payment as a creditor out of the assets of the deceased. It was held that the assets were liable notwithstanding the judgment, the debt being all along a partnership debt, only bettered by beiug converted from a simple contract into a judgment debt. In this case there was an agreement between the cr(?ditor and the surviving partner that the judgment should not affect the creditor's right of obtaining payment from the assets of the deceased partner ; but this circumstance does not appear to have been relied upon by the court. The doctrine acted on in Bishop V. Church, and other cases of the same sort, is applied not only for the benefit of creditors against the partners and their representatives, but also as be- tween competing creditors. This was settled in Burn v. Burn, 3 Ves. 573, and see Simms v. Barry there cited. In that case, partners being indebted to a large amount, gave to their creditor a joint bond ; one of the partners died ; the others afterward became insolvent; and a bill was filed by the bond creditor for payment out of the estate of the deceased partner. Two questions then arose between the plaintiff and the simple contract creditors of the de- ceased partner, viz., first, whether the plaintiff could rank as a creditor at all against the assets of the deceased 1 and secondly, whether, if he could, he should rank as a specialty or only as a simple contract creditor? The court decided both questions in favor of the plaintiff, and held that he was entitled to rank as a specialty creditor, although the consequence was that, after satisfy- ing his demand, little remained for pay- meut of the other creditors. But it must not be supposed that in equity every liability contracted by partners is several as well as joint. It is a ques- tion of intention on the part of the firm and on the the part of those with whom it deals. If, therefore, partners enter into a contract binding themselves jointly and not severally, and if such contract is not a mere security for the payment of a pre-existing debt, or for the performance of a pre-existing joint and several obligation, and if it has not been made joint in form by mistake, the effect of the contract will be in ACTIOKS AGAINST PARTNERS. 1079 ners must be made defendants. Even where the contract is made upon the credit of one of the partners, the plaintiff not knowing at the time of giving credit that it was for the benefit of the firm, he may, upon discovering the fact, proceed against all.' equity as at law to impose a joint obligation and no other. See, in ad- dition, Richardson v. Horton, 6 Beav. 185; Jones V. Beach, 2 De G. Mc. & G. 886; Other v. Iveson, 3 Drew. 177; Rawstone v. Parr, 3 Russ. 434, 539. A leading case on this head is Sumner V. Powell, 3 Mer. 30, affirmed on appeal, T. & R. 433. There one of a firm of partners died, the firm being at the time of his death liable for a breach of trnst committed by one of its members. A new partner was admitted into the firm, and a deed was executed between the executors of the deceased partner and the surviving partners and the new partner, whereby, in consideration of certain payments by the executors and of a release by them of all demands, the surviving partners and the new partner covenanted jointly to indemnify the executors from the debts and lia- bilities of the old firm. A suit was afterward instituted in respect of the breach of trust, and the executors were ordered to make good the same out of the assets of their testator. The execu- tors then filed a bill to be indemnified out of the estate of the new partner, and contended that the covenant into which he had entered, though joint in form, ought to be considered as joint and several. But it was held otherwise, for the obligation of the new partner to indemnify the plaintifls existed only by virtue of his covenant, and the extent of the obligation could, therefore, be meas- ured only by the words of such cove- nant. Again, in Clark v. Bickers, 14 Sim. 639, a lease was made to two partners jointly of land wanted by them for partnership purposes. The demise and lessefes' covenants were all joint. After the death of one of the partners his executors were sued in equity in respect of various breaches of covenant, and it was contended that the covenants ought to be treated as joint and several. But it was held on demurrer that no equity arose to the lessor from the fact that the lessees were- copartners ; that the lessors were domini factorum, and determined for themselves how their leases should be granted. The demurrer was consequently allowed. The same doctrine was acted on and even carried further in Wilmer v. Currie, 3 De G. & Sm. 347. In that case three partners dissolved partnership, one of them, the plaintiff, retiring. By a deed made be- tween the three partners, the plaintiff assigned all his share and interest to the other two, and they jointly cove- nanted to pay the debts of the firm and indemnify the plaintiff therefrom, and to pay the plaintiff certain sums of money. One of the' two contiiiuing partners having died, and the covenants not having been performed, the plaintiff filed his bill against the surviving part- ner and the executors of the deceased partner, in order to obtain the sums remaining due to him, and to have the unliquidated partnership debts paid. But it was held on demurrer that the plaintiff had no equity against the estate of the deceased partner ; for although that partner was,irrespectively of the deed, liable to contribute toward payment of the partnership debts, that was different from the obligation which arose by virtue of the covenant of which the plaintiff sought the benefit. As regards torts. — For torts imputa- ble to a firm all the partners are liable jointly and severally. Mitchell v. Tar- butt, 5 T. R. 649 ; 1 Wms. Saund. 391, f and g; Com. Dig. Abatement, F. 8. To this general rule an exception occurs where an action in form ex delicto is brought against several persons in respect of their ownership in land, for then they are liable jointly, and not jointly and severally. See 1 Wms. Saund. 391, f and g. Although for gen- eral purposes it may be convenient to distribute acts of forbearances which give rise to obligations under the heads breach of contract and tort, it would not be difficult to show the impossibility of always distinguishing between the two. And yet if it be held, as it is at law, that a breacli of a contract binding on the firm imposes a joint liability only, whilst a tort imputable to the firm im- poses a joint and several liability, the importance of being able accurately to distinguish between a breach of con- tract and a tort becomes apparent. The ' Farr v. Wheeler 30 N. H. 575. 1080 Rights op Partners. Action against surviving partner. Sec. 734. Upon the death of a partner the plaintiff may, in his declaration against the surviving partner, include a demand against liim as survivor, with a demand against him as if he were solely liu- difficiilty, however, of doing so is in- creased by the doctrine that there are cases in which the same wrong may be regarded from two different points of view, and may, at the option- of the person injured, be made tlie foundation eitlier of an action ex contractu or of an action ex delicto. See, on tliis subject, Brown v. Boorman, 11 CI. & Fin. 1, and the cases there referred to, and especially Powell V. Layton, 2 Bos. & P. N. K. 365 , Bretherton v. Wood, 3 Bred. & Bing. 54; Pozzi v. Shipton, 8 A. & E. 963; Boson V. Sandford, 2 Show. 29 and 101. Suppose, for example, that property is intrusted to a firm of bankers for the purpose of sale and investment, and that some member of the banking firm misapplies the property so intrusted. This breach of duty is a breach of the contract which was tacitly, if not ex- pressly, entered into by the bankers when they received the property. But the misapplication of the property is a wrong independently of any contract, amounting in effect to a conversion or destruction of that which belonged to the customer. Regarded as a breach of contract, the liability arising therefrom would be joint, whilst regarded as a , wrong independently of contract, the consequent liability would be joint and several. In a court of law the tendency would apparently be to consider the wrong as a breach of contract. See the cases last cited. But be this as it may, in equity the wrong would be held to impose a joint and several liability on all the partners, on the ground that each partner was bound to see to the proper application of what was in- trusted to the firm. See Blair v. Brom- ley, 2 Ph. ,B54 ; Sadler v. Lee, 6 Beav. 324. In such cases as these the several liability of each partner to the creditors of the firm is not affected by the cir- cumstance that the act imposing such liability was done by one only of the members of the firm, without the knowl- edge or consent and in fraud of the others. If the act in question imposes a liability which, upon the principles of agency, can be imputed to the firm, each member thereof will in equity be held severally liable for such act just as much as if there had been no fraud in the case. See VuUiamy v. Noble, 3 Mer. 619 ; Clayton's case, 1 Mer. 576 ; Warde'a case, id. 624, and it is well established in equity that a breach of trust, which is imputable to several persons, imposes upon them a liability which is both joint and several. Devaynes v. Noble, Sleech's case, 1 Mer. 563 ; Baring's case, id. 614 ; Sadler V. Lee, 6 Beav. 324 ; Brydges v. Branfil, 12 Sim. 369; Blair v. Bromley, 2 Ph. 359 ; Wilson v. Moore, 1 M. & K. 137 &337. Extent of liability. — By the common law every member of an ordinary part- nership is liable to the utmost farthing of his property for the debts and en- gagements of the firm. The law, ignor- ing the firm as any thing distinct from the persons composing it, treats the debts and engagements of the firm as the debts and engagements of the part- ners, and holds each partner liable for them accordingly. Moreover, if judg- ment is obtained against the firm for a debt owing by it, the judgment creditor is under no obligation to levy execu- tion against the property of the firm be- fore having recourse to the separate property of the partners ; nor is he un- der any obligation to levy execution against all the partners ratably, but he may select any one or more of them and levy execution upon him or them until the judgment is satisfied, leaving all questions of contribution to be settled afterward between the partners themselves. See per De Grey, C. J., in Abbot V. Smith, 2 Wm. Bl."949, and Woolley V. Kelly, 1 B. & C. 68 ; Com. Dig. Execution, H. This doctrine of unlimited liability applies by common law not only to ordinary partnerships, but to all unincorporated companies without exception. See Keasley v. Codd, 2 Car. & P. 408 n; Carlen v. Drury, 1 V. & B. 157 : R. v. Dodd, 9 East, 516 ; Robinson's Executors' case, 6 De G. Mc. & G. 573, but not to incor- porated companies. The doctrine in question, however, has been extended by the statute to all companies incorpo- rated by mere registration, with the ex- ception of those expressly registered with limited liability. Omitting for the present all reference to statutes, it is proposed to notice the attempts Actions against Paetners. 1081 ble. ■ An action also on the partnership account may be maintained against the survivor without describing liim as snch, for if both had been alive and one only had been sued, itv^fould^ as we have seen, have wliicli from time to time have been made with more or less success to form partnerships, in which the liability of the members should be less extensive thaii it would be under ordinary cir cumstances. These attempts may be ranged under two heads, according as there has or has not been some special agreement with the creditors. So in- flexible is the doctrine of unlimited lia- bility, and so important is it that no doubts shall be cast upon it, that judges have frequently denounced in thestrong- est terms the conduct of those who have endeavored to inveigle the public iuto taking shares iu concerns by asserting that " no one shall be liable beyond the amount of his subscription." Nothing can be more delusive or worthless than such statements as applied to unincor- porated bodies, for although the sub- scribers themselves may stipulate witii each other for such a contracted liabil- ity, nothing is more clear than that, as to the rest of the world, each partner is liable for the whole amount of the debts of the partnership. R. v. Dodd, 9 East, 516. Nor will notice that a stipulation of this kind has been en- tered into between the partners prevent a creditor from holding each of them liable to the full extent of his demand. See Greenwood's case, 3 De G. Mc. & G. 459. Notwithstanding, however, this general rule by which each partner is liable for all the debts and engagements of the firm, it is competent for any one dealing with the firm to contract not to hold the partner s liable to an unlimited extent. For example, if one person in- duces another to enter into partnership upon the assurance that he shall not be liable to the former for any of the debts of the firm, this will have the effect of limiting the liability of the partner in question to those debts of the firm which are not owing to the person who induced him to become a partner. See Batty v. McCundie. 3 Car. & P. 303 ; Connop V. Levy, 11 Q. B. 769 ; Compare Bill v. Richards, 3 H. & N. 311 ; and see as to the fraud of the plaintifE in getting up a company, Pilbrow v. Pilbrow's Atmospheric Co., 5 C. B. 440. Again, if a person chooses to deal with a part- nership or company upon the terms that its funds, and they only, shall be avail- able to make good his demands, he can- rot afterward depart frem those terms and hold the members individually liable as if no such restriction had been agreed to. Alchorne v. Saville, 6 Moo. 202 : Halket v. The Merchant Traders' Loan Assoc, 13 Q. B 960; Hallett v. Dowdall, 18 Q. B. 2 ; Durham's case, 4 K. & J. 517. It is, however, to be borne in mind that partners, who contend for restricted liability, have the onus pro- bandi on themselves, and that if, owing to any circumstance, they fail in estab- lishing their case, the general rule of unlimited liability applies to them as a matter of course. The ordinary mode of restricting liability is to contract that the funds of the company shall alone be liable to the demands against it. Upon contracts in this form, it is to be observed that — 1. A contract by a person to pay out of his own property without limitation is in fact an absolute contract to pay, for expressio eorum qum tacite insunt nihil operatur. 2. Upon the same principle, a con- tract by a corporation to pay out of its funds is, as regards the corporation, neither more nor less than a contract to pay absolutely, for a corporation as such has nothing except its funds to pay out of. Sunderland Marine Ins. Co. v. Kearney, 16 Q. B. 925, in which the lia- bility of the individual members of the company was not in question. 3. An express contract to pay out of certain funds excludes an implied con- tract to pay in some other manner. See Giles v. Smith, 11 .Tur. 334, C. P.; Landman v. Entwistle, 7 Ex. 632 ; Mathew v. Blackmore, 1 H. & N. 763 ; Taft V. Harrison, 10 Ha. 489 ; compare Cope's case, 1 Sim. (N. S.) 54. 4. But a person who undertakes to pay out of certain funds is absolutely bound to pay if those funds exist and are available ; so that, if the funds exist- ing and being available, he does not choose to pay out of them, he must pay out of his own property. Higgins v. Hopkins, 3 Ex. 163 ; Hallett v. Dowdall, 18 Q. B. 3. But if an incorporated com- pany promises to pay oat of its funds only, and it has funds, it does not follow that the shareholders are personally liable. Be The Athenssum Soc. and ' Golding V. Vaughan, 3 Chit. 436. 136 1082 Eights of Partners. Deen no defense upon the general issue, but only on a plea in abate- ment. Therefore, it has been held that under a declaration, charging the defendant in his own right only, the plaintiff may recover one Prince of Wales Soc, 1 Johns. 80 ; af- firmed 5 Jur. (N. S.)558. 5. On the other hand, a person who uudertake.s to pay out of certain funds ia under no obligation to pay unless those funds exist, or unless their non- existence is owing to his own willful act, or unless he has also undertaken that they shall exist, in which last case his undertaking amounts to an absolute undertaking to pay, and the qualifica- tion as to the funds goes for nothing. See Pilbrow v. Pilbrow's Atmospheric Co., 5 C. B. 440. A contract to pay out of certain funds imposes no obligation to preserve those funds so as to have them available for payment when the time arrives. See Kinar v. The Accu- mulative Ass. Co., 3 C.B. (N. S.) 151, where a company who had granted poli- cies payable out of its funds, had trans- ferred its business and its property to another company. In conformity with these principles, it has been held that the promoters of a company are not liable to persons em- ployed by them upon the terms of look- ing to payment to certain specified funds, and not to the promoters individ- ually, Giles V. Smith. 11 Jur. 334, G. P.; Landman V. Bntwistle, 7 Ex. 632; com- pare Cope's case, 1 Sim. (N. S.) 54 ; Cul- len V. Duke of Queensborough, 1 Bro. C. C. 101, and Horsley v. Bell, id. in the note ; S. C.,3 Amb. 770; that upon a con- tract to pay out of the funds of a joint stock company all those who in point of law are bound by the contract are personally liable to satisfy the demands to which those funds are applicable, if any such funds there be, see Andrews V. Ellison, 6 J. B. Moore, 199 ; Gurney V. Eawlings, 2 M. & W. 87 ; Dawson v. Wrench, 3 Ex. 859 ; Reid v. Allan, 4 id. 326 ; Hallett v. Dowdall, 18 Q. B. 3 (the judgment on demurrer), but if there are no such funds, then the event on which alone payment has to be made not hav- ing arisen, no one is liable to pay See, in addition to the above cases, Dur- ham's case, 4 K & J. 517'; Halket v. The Merchant Traders' Loan and Insur- ance Association, 13 Q. B. 960 ; Hassell V. Ditto, 4 Ex. 525 ; The Worcester Corn Exch. Co., 3 De G. Mc. & G. 180 ; King V. The Accumulative Assurance Co., 3 C. B. (N. S.) 151, and compare Cope's case, 1 Sim. (N. S.) 54. The latter proposition, however, supposes that the contract is not so framed as (notwith- standing what is said about the funds of the company) to amount to an under- taking to pay at all events. The im- portance of attending to this point ap- pears from Hancock v. Hodgson, 4 Bing. 269. In that case, the projectors of a mining company purchased a copper and tin mine, and covenanted to pay the purchase-money by quarterly install- ments out of the funds of the company, but it was provided that in case there should not have been received by the bankers of the company or by the di- rectors for the time being, the deposits or installments due from the several shareholders, so as to enable the direct- ors to pay the purchase-money at the times thereinbefore mentioned, then and in such case the said directors should be allowed a further time to pay such balance, until six months after the time or times when the said quarterly installments became due. Upon this covenant and proviso it was held that the covenantors were personally liable to pay the whole purchase-moneys, although the company had no funds, for that whatever might have been the case without the proviso, that clearly showed that after the expiration of the further period therein mentioned the payment was to be made by the cove- nantors at all events, whether tlie com- pany had funds or not. The extent to which partners are liable on contracts, in which it is stipulated that the funds of the company. alone shall be answer- able, and that no member shall be lia- ble beyond the amount of his share, has been made the subject of much dis- cussion in several recent cases. The difficulty which has to be encountered in dealing with such contracts is, so to construe them as to give effect to the stipulation for limited liability, and at the same time not to deprive the claim- ant of the only means of redress which the law affords. Where the company is an incorporated company, so that judg- ment can be obtained against it, and execution on such judgment can be is- sued against the company, the diificulty is not so great as when the company is, in fact, nothing more than an ordinary partnership. Accordingly, in the case of registered joint-stock companies it has been held that its members are not liable to have execution issued against ACTIOKS AGAIS8T PARTNERS. 1083 demand due from the defendant individually, and another due from him as surviving partnei'.' Should be declared against as survivor. Sec. 735. But, although in a declai'ation against the surviving part- ner it is not absolutely necessary to state the survivorship, yet, Lord ■whom after judgment lias been obtained against tlie company on a contract of the description in question, but that the property of the company is alone liable to make good the demands of the judg- ment creditor, and this has been held at law even in cases where the sub- scribed capital had been exhausted bat the whole capital had not been paid up. Halket v. The Merchant Traders' Loan and Insurance Association, 13 Q. B.960; Hassell v. Ditto, 4 Ex. 528 ; Durham's case, 4 K. & J. 517 ; re The Athenaeum Life Soc, 1 Johns. 80, and 5 Jur. (N. S.) 558, on appeal. The same principle is a6ted on in equity, except that a court of equity will compel the shareliolders ratably to pay up so much of the capi- tal as has not already been subscribed. Talbot's case, 5 De Q-. & Sm. 386 ; Dur- ham's case, 4 K. & J. 517 ; Evans v. Coventry, 3 Jur. (N. S.) 557. But when a court of law has to deal with ordinary partnerships, the only remedy it can afford is by means of a j udgment against one or more of the members thereof, and then arises the question for what the judgment must be. If the judg- ment is joint and for the whole of the plaintiff's demand, any one of the share- holders may be compelled to pay the whole without reference to what he may have paid before or be liable to pay hereafter. If, on the other hand, the judgment is to be several, and aa against each shareholder only for so much as he undertook to contribute and has not already contributed, the com- mon law rules of pleading require each shareholder to be sued separately, and to sue each separately would involve the creditor of the company in endless litigation. Whichever way therefore the question is decided, it seems impos- sible at law to do justice to all parties. At the same time, courts at law have done their best to meet the difficulty, and in the celebrated case of Harlett v. Dowdall, 18 Q. B. 3, in which the whole subject was elaborately discussed, a majority of judges upheld the principle of limited liability and left the creditor to take the consequences of entering into a contract for a breach of which a court of law could afford him no ade- quate redress. In Hallett v. Dowdall, 18 Q. B. 3, several persons forming an unregistered joint-stock company, and carrying on business under the name of The General Maritime Assurance Com- pany, had granted a policy of insurance lieaded, The General Maritime Assur- ance Company, London; Capital, One Million, and in which it was, amongst other things, " declared and agreed by and between the company and the as- sured that the capital stock and funds of the company should alone be liable to answer and make good all claims and demands whatsoever under or by virtue of the said policy, and that no propri- etor of the company should be in any- wise subject or liable to any claims or demands, nor be in anywise charged by reason of the said policy beyond the amount of his share or shares in the capital stock of the company, it being one of the original and fundamental principles of the said company that the responsibility of the individual propri- etors should in all cases, and under all circumstances, be limited to their re- spective shares in the said capital stock." The policy purported to be made be- tween the assured and the company and was signed by three directors. An ac- tion was brought upon the policy against five of the shareholders of the company, none of whom, however, signed the policy. The declaration al- leged that the defendants were ehare- holders in the company, and, after set- ting out the policy, averred payment of the premium ; that the defendants then became insurers to the plaintiff, and duly subscribed the policy as such in- surers; that the plaintiff was interested; that a loss had occurred, and that, al- though the capital stock and funds of the company had been from the time of the making of the policy, and still were, sufficient to pay the plaintiff, yet the defendants had not paid. To this dec- laration one of the defendants put in a de- 1 Richards v.Heather, 1 Barn. & Aid. 39, overruling upon this point Spalding V. Mure, 6 T. R. 363. 1084 Eights of Paetners. Ellenborougli observed that it would be more convenient in all cases ■where a debt accrues from a surviving partner to declare against him accordingly, because it is more convenient to make the forms of deo- murrer, principally on the ground that the declaration showed no joint contract by the defendants and that the action should have been against each one sev- erally in respect of tlie shares held by him. By the demurrer it will be ob- served the averments, and amongst them the averment of a promise by all the defendants, and of sufficiency of funds, were admitted to be true, and it was held, first by the Court of Queen's Bench, and afterward on appeal, that the contract, as stated in the declara- tion aud admitted by the demurrer, was a joint contract by all the defendants to pay tlie full amount of the plaiutifTs claims, and the demurrer was overruled. In the game case, however, another of the defendants pleaded non assumpnit, and traversed the averment that there were suificient funds. The question as to liability, therefore, again arose and had to be decided, not, as before, on the supposition that the facts averred in the declaration were true, but on the evi- dence adduced on the trial, and which showed that none of tlie defendants signed the policy; that one of them only was a director of the company ; that all the subscribed capital had been ex- pended, but that the whole of the nom- inal capital had not been subscribed. Lord Campbell, who tried the cause, di- rected the jury that there was a con- tract binding on the defendants jointly, and that although the company had no funds in hand, yet in point of law they liad available capital stock and funds, for more than sufficient to pay the plaintiff remained not called up. On a bill of exceptions, it was decided by five judges against two- that there was no evidence of a joint contract by the de- fendants to pay the plaintiff, and a venire de novo was awarded. It is very difficult, however, to discover what, in the opinion of the court, the real con- tract amounted to, although it would appear that the majority were of opin- ion that each shareholder might have been sued separately to the extent of his share of the capital not paid up. The decision of the court seems to leave iu .doubt, 1. Whether the directors who signed the policy were in a different position from the shareholders who did not. 2. Whether, according to the true moaning of the contract, the funds of the company were sufficient to pay the plaintiff, the subscribed capital hav- ing been expended, but the nominal capital not having been paid up. 3. Whether the true effect of the contract %vas not, vnder the circumstances proved at the trial, to deprive the plaintiff of any remedy at law, and to compel him to resort to a court of equity to have the unsubscribed capital called up and applied in payment of the plaintiff's demand. 4. Whether the contract was not inconsistent and unintelligible, and whether the proviso limiting the liabil- ity of the shareholders ought not to be ignored altogether, as iu Furnival v. Combes, 5 Man. & Gr. 736. Upon the doubts thus raised the fol- lowing remarks suggest themselves : 1. The directors who signed the pol- icy signed it only as agents of the com- pany, and could not, therefore, if they did not exceed their autliority, be liable either on the policy or otlierwise to a greater extent than the other members of the company. 3. The policy stated that the capital of the company was 1,000,0002. This, so far as it was not exliausted, was therefore the fund to which, by the terms of the policy, the assured was to look for payment. To hold that he had no claim except against so mucli of the capital as had been subscribed and was still unexhausted would be to depart from the very terms of the policy, and to limit the liability of each share- holder to even less than his share of what was held out to the public and to the assured as the capital of the com- pany. Lastly, whether there is or is not any method by which at law a contract of the kind in question can be enforced, it is unnecessary, and therefore wrong, to defeat the intention of all parties by holding the proviso limiting the liabil- ity of the shareholders to be repugnant to the rest of the contract and therefore void, for in equity, effect can be given to the proviso as well as to the rest of the contract. If the court had declared that the contract was one with which they could not deal, and that the plaintiff's remedy was in equity only, it could hardly have been said thai the intention of any of the parties would have been to any extent defeated, and a precedent for such a decision might have been found in the case of Alchorne v. Saville, Actions agaikst Paktners. 1085 laration subservient to the inf oi'mation of the party charged, and i t is certainly more usual to declare on a contract with the deceased partner and the snryivors, rather than with the survivors alone.' And where A was co-executor with B, and B copartner with C, and B paid into the flrm money received by him as co-executor, upon the death of B a declaration in assumpsit for this money was held bad, in which A declared in his own right, and not as surviving executor against in his own right, and not as the surviving copartner. ° Outlawry. Sec. 736. 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 commencement 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-defendant 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 recordum. ^ Non-joinder, matter of abatement only. Sec. 737. The omission of one of several joint contractors as a defendant in assumpsit being matter of abatement only, if it be 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 certificate, and an action is brought against the 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 prom- ises by the defendant solely, since the other became a bankrupt, will stand good if the defendant omit to plead the joint contract in abate- ment. 6 J. B. Moore, 303, where it was held ' Per Le Blanc, J., 2 Mau. cSe Selw. 35. that there was no remedy at law on ^ Fitzgerald v. Boehm, G" Moore, 333. a policy by which the funds of a com- ^ 3 Chit. Arohb. Pr. 934. pany were appointed to answer all ^ Saunderson v. Hudson, 3 East, 144. claims against it. That in equity the * M'Michael v. Johnson, 7 East, 50. plaintiff in Hallett v. Dowdall would ' Per Gibbs, C. J., Hawkins v. Rams- have succeeded in making the share- bottom, 6 Taunt. 179. holders pay up the unsubscribed cap- '' Hawkins v. Eamsbottom, 6 Taunt, ital, and in obtaining satisfaction there- 179. But per Gibbs, C.J., "I say nothing out if such capital proved sufficient, on the question what would be the case, scarcely admits of doubt. Evans v. if, before a judge at Nisi Prius, the Coventry, 3 Jur. (N. S.)557; Lind. on plaintiff had offered evidence applicable Part. pp. 394-308. to both demands." 1086 Eights of Paetneks. CHAPTEE XXX. OF THE PLEADINGS IN. Sec 738. Of pleas in abatement. Sec. 739. For misnomer. Sec. 740. Plea sliould be accurate and certain. Sec. 741. Plea for non-joinder; what must be stated in. Sec. 743. How must conclude. Sec. 743. Plaintiff not allowed to amend. Sec. 744. Demurrer to plea. Sec. 74S. When plaintiff sbould reply to plea. Sec. 746. Effect of finding under issue raised, by plea and replication. Sec. 747. Of pleas in bar, nature of. Sec. 748. Release. Sec. 749. Covenant not to sue. Sec. 750. Payment or tender. Sec. 751. Former recovery. Sec. 753. Joint and several debts. Sec. 753. Set-off. Sec. 754. Torts cannot be set off. Sec. 755. Must be debts due in same right. Sec. 756. Enough, if rights are essentially the same. Sec. 757. Demands essentially separate. Sec. 758. Effect of agreement to sever. Sec. 759. Court will sometimes order judgments to be set off. Sec. 760. Infancy, plea of. Sec. 761. Bankruptcy. Sec. 762. Joint tort. Sec. 763. When defense is joint. Of pleas in abatement. Sec. 738. Pleas in abatement to the writ are so termed, rather from their efEeet, than from their being strictly such pleas; for, as oyer of the writ can be no longer craved, no objection can be taken 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 declara- tion, which is presunied to correspond with the writ, be incorrect in respect of some intrinsic matter, it is then open to the defendant to Of the Pleadings. 1087 plead in abatement to the writ, and there is no plea to the declaration but in bar.' Misnomer. Sec. 739. We have seen in what cases the non-joinder of partners as co-defendants ought to be taken an advantage of by plea in abatement. It may here be added that the misnomer of one partner, who is sued Jointly with others, can no longer be made available by plea in abate- ment, but that the defendant who is misnamed may cause the declara- tion to be amended at the plaintifE's costs, by inserting the right name. ' Flea should be accurate and certain. Sec. 740. 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 partnership between himself and B, and, after issue Joined, a partnership is proved between A, B & 0, this is conclusive against the defendant.'' And it has been decided that a plea in abatement that the defendant Jointly with six- teen 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 liable with himself, and refused upon application to give their residences and additions unless the action were discontinued, the court made tlie rule absolute for the defendant to deliver such particulars, or in default thereof for setting aside the plea.'' Moreover, although the defendant may plead in abatement to part of a writ or declaration, and demur or plead in bar to the resi- due,* yet a plea which professes to be an answer to the whole declara- tion, 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 borrowed by the defendant of the plaintiff; and in a second count for the residue of the sum for inter- est of money lent by the plaintiff to the defendant, and the defendant ' 1 Chit. PI . 390. * See infra, note 8. 2 Stat. 3 and 4 Will. 4, c. 42, s. 11. ' Taylor v. Harris, 4 Barn. & Aid. 93; 8 1 Chit. PI. 395. see Newton v. Verbeke, 1 Youn^e & « Per De Gray, C. J., 3 Sir W. Bl. 947. Jerv. 257. ^ Godson V. Good, 6 Taunt. 507. * Godfrey's case, 11 Bep. 45 b. 1088 Rights of Partners. 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 l^laintiff," was borrowed by defendant and others, and not by the defendant separately, the court, on demurrer, held the plea bad, because it answered only the cause of action mentioned in the first count.' Plea for non-joiu(|er, ■what should be stated in. Sec. 741. 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 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 plea." How must conclude. Sec. 742. The plea must conclude, as it also usually commences, by praving 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 abate- ment of part of the writ, and the cause of abatement arises from some of the counts of the declaration, the defendant must plead in abate- ment 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 such plea do by affidavit prove the truth thereof or show some probable matter to the court to induce them to believe that the fact of such dilatory plea is true. Plaintiff not allowed to amend. Sec. 743. Where the non-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, ' Herries v. Jameson, 5 T. E. 553. * Roberts v. Bate, 6 A. & E. 778 ; con- 'i 1 Saund. 291 a, note 3. tra, Lakin v. Watson, 2 C. & M. 685. ' Stat 3 and^ Will. 4, c. 42, s. 8. Under the practice existing in most of * Neale v. De Garay, 7 T. R. 243. the states the court may, upon applica- '' Stat. 3«and 4 Will. 4, c. 42, s. 8. tion, and generally will permit an * Atwood V. Davis, 1 Barn. & Aid. amendment as to parties, and will per- 173. mit the plaintiff to cite in omitted de ' 2 Saund. 210 c, note 1 ; Powell v. fendants. This is the practice even Fiillarton, 2 Bos. & Pul. 430, where see where there is no statutory provision to the precedent. that effect, hut in many of the states, Of the Pleadings. 1089 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.' Semvirrer to plea. Sec. 744. If the plea be insufficient in point of law, the plaintiff may demur generally ; ' but it is more advisable to demur specially, ■vvhere the plea is merely informal.'' If on demurrer to a plea in abate- ment, or a replication thereto, judgment be given for the plaintiff, it is generally only interlocu-tory that the defendant answer over; ' but where the plea in abatement improperly commences or concludes in bar, the judgment may be final." If the judgment be for the defend- ant, 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 judgment 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.' When plaintiff should reply to the plea. Sec. 745. If the plea be untrue in fact, the plaintiff should' reply.'" Thus, in assumpsit, the plaintiff may reply to a plea of non-joinder, that the defendant undertook solely to pay, etc.," or that the promises were not made jointly, etc. ; 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 delivered, it was held that the defendant clearaly established his plea in abatement, by showing that a partner- provision is made by statute for such '" 1 Chit. Pi. 403 ; Qibbs v. Merrill, 3 contingencies. The question as to Taunt. 307 whether the payment of costs shall be " Young v. Bairner, 1 Esp. 103 ; and a condition precedent, is one that rests see Ewer v. Andrews, 3 Barn. & Cres. largely in the discretion of the court, 146. / and will depend upon the circumstances. "Where the plea is that the promises ' 1 Chit. PI. 402. were made jointly with A, and the rep- ' Stat. 3 & 4 Will. 4, c. 42, s. 84. lication that they were not made jointly ^ Mitchell V. Tarbut, 5 T. R. 549 ; with A, on the trial of this issue the de. Lloyd V. Williams, 2 Mau. & Sel. 484 ; fendaut begins. Fowler v. Coster, 3 Rex V. Shakespeare, 10 East, 83. Car. & Payn«, 463. But see, contra, « 1 Chit. PI. 404. Robey v. Howard, 2 Stark. 556, where ^2 Saund. 210, n. 3; Bowen v. Shap- Abbott, C. J., said that the plaintiff cott, 1 East, 543 ; Lloyd v. Williams, 3 ought to begin, since, at all events, it Mau. & Sel. 484 ; Wade v. Stiff, 2 was incumbent on hiin to prove his Moore & Payne, 26 ; Com. Dig. Abate- damages. See, also. Hare v. Muun, 1 ment, (L 14). Mood, & Malk. 241. There, an action 'Nowlanv. Geddes, 1 East, 634. for money lent was brought against ' Bac. Abr. Abatement (P). one of the members of a club, and the 8 Per Lord Ellenborough, 10 East, 87. defendant pleaded in abatement the ' Stat. 3 & 4 Will. 4, c. 42, s. 34. non -joinder of one hundred and sixty- 1090 Rights of Partneks. » ship existed between himself and others, and that the bill of particu- lars delivered by the plaintifE contained some items furnished 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 invalidate this evidence by showing that the con- tract was several. Therefore, where, in an action of assumpsit, the defendant 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 copartners, who were, in fact, resident in America. Lord Ellenborough held the letters con- clusive 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 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 under this issue, by showing that the defendant has made himself separately liable for a demand origi- nally joint.'' Effect of finding under the issue raised by plea and replication. Sec. 746. 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 to costs.' We have already seen, incidentally, that it may be advisable for a plaintiff, after a plea in abatement for non-joinder of defendants, not to proceed to trial on an issue thereon, but to commence a fresh action against the defendants named in the plea, together with the original defendants. In cases of this nature the three persons, members of the club, ' Colsonv. Selby, 1 Esp. 452. the plaintiff's evidence being stated to ' Murray v. Somervi]le,3 Camp. 99, n. be that he had refused to lend the ' Robey v. Howard, 2 Stark. 555. money on the credit of the club and '' Ex parte Ross, Buck, 125. that the defendants had thereupon con- ' Com. Dig. Abatement (I. 15) ; 1 sented to make themselves personally East, 544. liable. Lord Tenterden allowed the ' Colson v. Selby, supra. plaintiff's counsel to begin. Bnt in this ' Garland v. Exton, 1 Ld. Eaym. case the defendant's counsel did not ob- 992 ; and see 1 Salk. 194. ject. Of the Pleadings. 1091 proper commencement of the declaration is set forth in the general rules of Hilary Term, 1834.' Of pleas in har — nature of. Sec. 747. 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 sufBced. Thus, in actions upon bills of exchange and promissory notes, a plea of non asstimpsii 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, etc. 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 jpromise may be im- plied. All matters in confession and avoidance, both in asstimpsit 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, etc., bills by way of accommo- dation, set-off, mutual credit, etc. And although in actions of debt on simple contract, except on bills of exchange and promissory notes, the defenda-nt 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 non assumpsit, in indebitatus assumpsit ; and the plea of nil debit is not allowed in any action. To this may be added that in debt on specialty or covenant the plea of non est factum operates only as a denial of the execution of the deed in point of fact. Release. Sec. 748. We have seen that a release to one of several partners inures to the benefit of all.'' A release, therefore, to one of several ' Rule 30. implied, tliat a release of one sliall 'But this is not so in those States operate as an extinguishment of the where, by statute, it is provided that a debt, would of course have that effect in release of one joint debtor shall not dis- any of the States. Where no such charge the whole, as in Vermont and statute exists, a release of one partner several of the States, nor in those States may operate as a- release of all, even where by statute partnership debts are though it is expressly provided therein made joint and several. Evans v. Carey, that it shall not have that effect. Brown 39 Ala. 99; Gardner v. Baker, 35 Iowa, v Marsh, 7 Vt. 827; Wiggin v. Tudor, 343. But by agreement, express or 23 Pick. (Mass.) 444 ; Gray v. Brown, 23 1092 Eights of Paetnees. partners, may be pleaded in bar of an action of debt against the firm, either on a joint,' or joint and several bond.* It may also be pleaded in bar of an action of assum2}sii.' But if the defendant plead a Ala. 262; Bosson v. Kincaid, 3 Penn. St. 57. But it is held tbat tlie release must be under seal. Lunt v. Stevens, 24 Me. 534 ; Shaw v. Pratt, 22 Pick. (Mass.) 305 ; Zeng v. Bailey, 9 Wend. (N. Y ) 336 ; but it is not believed tbat ibis technical requirement is now re- garded as indispensable, but that an actual release, whether under seal or "by parol, is sufficient. Selease. — " Both at law and in equity," says Mr. Lindley, vol. 1, p. 351, " " re- lease of one partner from a partnership debt discbarges all the others." Bower V. Swadlin, 1 Atk. 294 ; Ex parte Slater, 6 Ves. 146 ; Cheetbam v. Ward, 1 Bos. & P. 630 ; Cocks v. Nash, 9 Bing. 341, for where several persons are bound jointly, or jointly and severally, a re- lease of one is a release of them all. See the last note, and as to joint and several obligations, Co. Lit. 232, a ; Lacy V. Kinaston, 1 Ld. Raym. 690 ; Kiffin v. Evans, 4 Mod. 379. But in this respect a covenant not to sue differs from a release, for, although where there is only one debtor and one creditor, a covenant by the latter never to sue the former is equivalent to a re- lease, it has been decided on several oc- casions that a covenant not to sue does not operate as a release of a debt owing to, or by other persons besides those wlio are parties to the covenant. Clay- ton V. Kinaston, 2 Salk. 573 ; Lacy v. Kinaston, 1 Ld. Raym. 688, and 2 Salk. 575 ; Button v. Eyre, 6 Taunt. 289; Dean v. Newhall, 8 T. R. 168; Walmsley v. Cooper, 11 A. & E. 216 ; and see Price v. Barker, 4 E. & B. 760 ; Couch V. Mills, 21 Wend. (N. Y.) 424 ; Mason v. Jonett, 3 Dana (Ky.), 107 ; Goodnow v. Smith, 18 Pick. (Mass.) 416; McClellan v. Cumberland Bank, 24 Me. 566. If a release is so drawn as to show beyond all doubt that it was in- tended to inure only for the benefit of the releases personally, and not to, avail even him in an action by the releasor against the releasee, jointly with other 1 Cora . 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 questionable. ^ Com. Dig. Pleader (2 W. 30) ; Clay- people, then persons jointly liable with liira in respect of the debt released will not be discharged therefrom. In such 11 case the deed will itself show that it was not in fact intended to operate as a release. In Solly v. Forbes, 2 Brod. & Bing. 38, the defendants, Forbes and Ellerman, were partners, and were in- debted to the plaintiffs, and had stopped payment. In consideration of a sum paid by Ellerman, the plaintiffs released him from all further demands, but it was declared in the release (to which, however, Forbes was not a party) that nothing therein contained should" affect the plaintiffs' rights against Forbes, either separately or as partners with Ellerman, or against the joint estate of the two, and that it should be lawful for the plaintiffs to sue Ellerman, either jointly with Forbes, or separately, for the purpose of obtaining satisfaction of their debt, either out of the joint estate of the two, or from Forbes. In an ac- tion brought by the plaintiffs against Forbes and Ellerman to recover the debt owing by them, it was held that this deed was no bar to the action. Price V. Barker, 4 E. & B. 760 ; see, too, Thompson v. Lace, 3 C. B. 540 ; Wills V. De Castro, 4 C. B. (N. S.) 216, is a de- cision on a similar deed, and is to the same effect. Again, in Hartley v., Man- ton, 5 Q. B. 247, where a bill was drawn by a firm oil, and was accepted by, one partner, it was held that a release of the drawers did not discharge the ac- ceptor, the object of the release being to discharge the joint liability of the firm, but not to affect the several liabil- ity of the accepting partner. In constru- ing releases, particular attention must be paid to the recitals, for, however general the operative words of the deeds may be, they will be confined so as not to affect more than the parties appear from the deed Itself to have con- templated. See, for illustrations of this rule, Lindo v. Lindo, 1 Beav. 496 ; Pay- ler V. Homersham, 4 M. & S. 423 ; Sim- ons V. Johnson, 3 B. & Ad. 175 ; Boyes ton V. Kynaston, Salk. 574; D. Holroyd, J, Burleigh v. Stott, 2 Man. & Ryl. 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. Forbes. Of the Pleadings. 1093 release, and the release is in fact limited in its operation, and not inconsistent with, the plaintiff's right to sne the defendant for a par- ticular purpose, the j)laintifE may crave oyer of the release, and aver in his replication that he is suing for the purposes stated in the release.' V. Bluck, 13 C. B. 653; Lampton v. Corke, 5 B. & Aid. 606. If se veral per- sons are bound by a bond jointly, or jointly and severally, and their creditor removes the seal of one of them from the bond, all the others are discharged; but if the obligors are only bound sev- erally, and in no sense jointly, then the removal of the seal of one of them does not aflect the liability of the others. See Collins v. Prosser, 1 B. & C. 682. An arrest of a debtor, followed by discharge of him by the arresting creditor, is equiv- alent to a release by the latter of his debt, whence it follows that if a cred- itor of a firm obtains judgment against it, and arrests the partners, and then lets one of them go, the others are en- titled to be discharged from custody. Ballam v. Price, 3 Moo. 335. Substitution of debtors and securities. — A liability, which is originally joint and several, may be extinguished by being replaced by a liability of a diiferent nature, and this may happen in one of two ways, viz., either by an agreement to that eliect come to between the par- ties liable and the person to whom they are liable, or by virtue of the doctrine of merger, independently of any such agreement. Of substitution by agreement. — In or- der that one liability may be extin- guished by being replaced by another by agreement, it is essential that the person in whom the correlative right resides should be a party to the agree- ment, or should, at all events, show by some act of his own that he accedes to the substitution. If A, being indebted to B, transfers his liability to C, and B does not assent to the transfer, his rights are wholly unaffected, he will never acquire any right against C nor lose his former right against A. As regards B, the agreement between A and C is res inter alios acta, and it does not in any way benefit or prejudice him. But if B assents to the arrangement come to' between A and C, and adopts C as his debtor instead of A,then A's liability to B is at an end, and B must look for payment to C, and to him alone. See per Buller, J., in Tatlock v. Harris, 3 T. li. 180. To apply this to cases of part- nership, let it be suppo'sed that a firm of three members. A, B, and G, is in- debted to D, that A retires, andBand C, either alone, or together with a new partner, E, take upon themselves the liabilities of the old firm. D's right to obtain payment from A, B and C is not affected by the above arrangement, and A does not cease to be liable to him for the debt in question. But if, after A's retirement, D accepts as his sole debtors B and C, or B, C and E (if E en- ters the firm), then A's liability will have ceased and D must look for pay- ment to B and C, or to B, C and E, as the case may be. When, therefore, a partner has retired and a creditor of the firm continues to deal with the continu- ing partners and such other persons, if any, as may have become associated with them in partnership, it is of great importance to ascertain whether the creditor has or has not accepted the new firm as his debtors in lieu of the old firm. If he has, the retired partner's liability will have ceased, whilst, if he has not, it will still coittinue. Nothing is more common than for promoters of companies to put forward a prospectus in which it is said that all liability on the part of a shareholder will cease on a transfer of his share, but the hope thus held out is as false and delusive as that intended to be raised by the asspr- tion that the liability of the sharehold- ers will be limited to the amount of their shares. See Blundell v. Winsor, 8 Sim. 613. It cannot be too often re- peated that, merely by retiring, a part- ner or a shareholder gets rid of no lia- bility as to past transactions, unless there is some statutory enactment ap- plicable to his case, and the same obsei'- vation applies to a total dissohttion. To use the words of Mr. Justice Heath, " when a partnership is dissolved, it is not dissolved with regard to things past, but only with regard to things future. "With regard to things past, the partner- Id. And see Payler v. Homersham, 4 Mau. & Sel. 423 ; Simons v. Johnson, 3 B. & Ad. 175. 1094 Eights of Paktitees. Covenant not to sue. Sec. 750. Where the obligee has covenanted with a sole obligor not to sue him, there, to prevent circuity of action, the covenant may be pleaded qua a release to an action on the bond.' But a distinction is taken betvi^een a covenant not to sue a sole obligor, and a covenant sliip continues, and always must con- tinue." Wood V. Braddick, 1 Taunt. 104. Therefore, partners continue lia- ble on the covenants entered into by them in aleaseof tlie partnership prem- ises, although the firm may have been dissolved since the lease vpas granted. See Hoby v. Eoebuck, 7 Taunt. 157 ; Graham v. Wichelo, 1 Cr. & M. 188. Moreover, although the partners them- selves may agree that on the retirement of one of them the others shall take upon themselves all the debts and lia- bilities of the old firm, such an agree- ment in no way affects the creditors, it is a mere contract of indemnity ; see Rogers v. Maw, 4 Dowl. & L. 66 ; valid, indeed, as among the parties to it, but not in any way varying the rights of others, as to whom it is res inter alios acta. A good illustration of this is af- forded by Smith v. Jameson, 5 T. R. 601. See, too, Dickenson v. Lockyer, 4 "Ves. 36 ; Cummins v. Cummins, 8 Ir. Bq. 723. There the two defendants were partners ; one of them, with the privity of the other, improperly carried some trust moneys to their joint ac- count, therebjf incorporating them with the partnership assets. Afterward, on a dissolution of partnership, the part- nership assets were assigned to the first partner, and he took upon him the debts of the firm, but this was held in no way to alter, as against the cestui que trust, the liability of both partners to make good the trust moneys. Turning now to those cases which bear upon the question of discharge by virtue of a substitution by a creditor of one debtor for another, it will be found that not- withstaijding some conflict between tliem they are all professedly based on a few simple principles, the most im- portant of which are as follows : 1. There is no a priori presumption to the effect that the creditors of a firm ' Ayliff V. Scrimshire, 1 Show. 46 ; Smith V. Mapleback, 1 T. E. 446. An agreement or covenant not to sue one partner or the firm cannot be set up as a release. Wormsley v. Cooper, 3 P. & D. 149. Thus, in Roberts v. Strong, 38 Ala. 567, the plaintiff, upon considera- tion of personal security given by one do, on the retirement of a partner, enter into any agreement to discharge him from liability. 3. An agreement by a creditor of seve- ral persons, liable to him jointly, to dis- charge one or more of them and look only to the others, is not necessarily in- valid for want of consideration, for in some respects the security of one per- son liable solely is, or, at all events, may be preferable to the security of that same person if only liable jointly with others, e. g., in case of bankruptcy or death. See per Parke, Baron, in Kir- wan V. Kir wan, 3 Or. & M. 617. If, therefore, one partner retires, and a creditor of the old firm goes on dealing with the continuing partners, it is for the j ury to say whether, in point of fact, the creditor abandoned the security of the retired partner and looked only to the continuing partners ; and if the jury find in the afl[irmative, the court will not disturb the verdict on the ground that the abandonment cannot be sus- tained in point of law for want of con- sideration to support it. Thompson v. Percival, 5 B. & Ad. 935, correcting Lodge V. Dicas, 3 B. & Aid. 611, and David V. Ellice, 5 B. & C. 196. 3. Except under special circumstan- ces, a creditor who discharges one part- ner discharges all. Consequently, if a creditor discharges a retired partner, and acquires no new right to obtain payn ment from the others, either alone or with a new partner, the creditor will be altogether remediless. One test, there- fore, by which to determine whether a retired partner has been discharged is, to see whether the creditor has obtained a new right to demand payment, for if he has not, no discharge can possibly be made out by any evidence whicli fails to establish an extinguishment of the cred- itor's demand altogether." of the partners for a portion of the debt, covenanted not to sue him there- on for twenty years. The court held that this did not discharge the other partner, nor operate as an extinguish- ment of his liability, except to the extent of the amount assumed by the other partner. Op the Pleadings. 1095 not to sue one of several obligors.' Thus, if A is bound to B, and B coyenants never to put the bond in suit against A ; if, afterward, D sue on the bond, A may plead the covenant by way of release. But if A and B be jointly and severally bound to in a sum certain, and 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. ISTewhall,' before Lord Kenyon, where it was held that, to an action against one of two obligors in a joint 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.* Payment or tender. Sec. 750. Payment by one of two partners may be pleaded as pay- ment by both. So a tender by one of two partners may be pleaded us a tender by both. But, after a tender of what is due from two per- sons on a joint contract, a subsequent application to one of them is sufficient to support a replication to a plea of tender, that the plaintiff subsequently demanded payment from the defendants." 'Hutton V. Eyre, 1 Marsh. 608. D. ger, 1 Yerg. (Tenn.) 81 ; United States Holroyd, J., Tliomaa v. Courtnay, 1 v. Astley, 3 Wash. (U. S. C. C.)612; Barn. & Aid. 8. McNaughton v. Partridge, 11 Ohio, 333. ' Lacy V. Kynaston, 13 Mod. 551 ; 1 So where money is borrowed or goods Ld. Eaym. 690. A deed inter parte,/* purcliaaed by one partner, of one who cannot operate as a release to strangers, knows of the partnership and under- Storer v. Gordon, 3 Man. & Sel. 308. standingly gives credit to him alone, 3 8 T. R. 168. he cannot subsequently pursue the firm ^ See 1 Marsh. 608 ; Dowes v. Jeft'ries, for the debt. Ross v. Lawton, Dudly And. 307 ; Turner v. Daveis, 3 Wms. (S. C), 860 ; Dispatch Line of Packets Saund. 150, note 3. v. Bellamy Mfg. Co., 13 N. H. 334. But * Peirse v. Bowles, 1 Stark. 331. The it may undoubtedly be shown that such taking of the security of one partner, was not the intention or agreement of under an agreement express or implied, the parties, from the circumstances to discharge the other partners, dis- attending the transaction. Collier v. charges them from the debt. Robinson Leech, 39 Penn. St. 404 ; Wallace v. Fair- V. Hurlburt, 38 Vt. 463; Millard v. man, 4 Watts (Penn.), 378. In Stone v. Thorne, 56 N. Y. 403, or the taking of a Chamberlain, 30 Ga. 363, one of the higher security from one partner as a partners, after dissolution, gave his own bond. Low v. Goodrich, 3 Johns (N. note for a firm debt, and it was held a Y.) 314; Ward v. Tohnson, 13 Mass. payment as to the other partners, and 150 ; Williams v. Hodgson, 3 H. & J. the same doctrine was held in Evans v. (Md.) 474 ; Patterson v. Brewster, 4 Drummond, 4 Bsp. 89. In Le Page v. Edw. Ch. (N. Y.) 352; Waugh v. Carri- McCrea, 1 Wend. (N. Y.) 173, the mem- lO'JG Eights of Paetkers. Former recovery. Sec. 751. A foiincr recovery for the same debt may be pleaded by partners, though the recovery was against cue only. But it must be shown by the plea that the plaintifi took the fruits of that 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 recovered, 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 satisfaction of the debt, omitting to aver that the bill had been accepted as satisfaction, or had in fact produced satisfac- tion.' Where an action is brought against some of the partners of a firm, and the defendants recover a verdict, and afterward a new action is brought agains the other partners for the same demand, they may plead 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 bers of a firm made an assignment for the benefit of creditors, and the plaintiff agreed to and did receive the note of a third person for a sum less than the firm owed him, in full discharge thereof, and the court held that the taking of the note under the circumstances was a valid accord and satisfaction. See, also, Glasgaw v. Hobbs, 33 Ind. 443. So the liability of the firm as such may be discharged by the creditor accepting the individual note of each member for his share of the debt. Crocker v. Crocker, 53 Me. 169; Maxwell v. Day, 45 Ind. 505-. So when a creditor, knowing of the dissolution of the firm, and the formation of a new one, accepts the note of the new firm for a debt due from the old, or even the note of one partner who continues the business. Townsend v. Stevenson, 4 Rich. (S. C.) 59. At least it is for the jury to say whether the new note was not taken in discharge of the debt against the old firm. Thompson v. Percival, 3 N. W. & N. 167. In Ohio, in Leach v. Clmrch, 13 Ohio St. 173, and in an earlier case, Merrick v. Bussy, 4 id. 68, it was held that in order to have that effect it must appear that it was agreed to take the ■new note in discharge, and that from the mere fact that it was taken such an inference could not be drawn. A simi- lar doctrine is held in Kentucky, Sneed v. Wiester. 2 A. K. Marsh. (Ky.) 277; in Missouri, Yarnell v. Anderson, 14 Mo. 619 ; Pennsylvania, Mason v. Wicker- sham, 4 W. & S. (Peun.) 101, and Maine, Chase v. Vaughn, 30 Me. 413. While the partnership is on foot, the mere taking of the note of one partner for a firm debt does not, in the absence of an express agreement, discharge the other partners. Davis v. Desanque, 5 Whart. (Peun.) 531; Thompson v. Briggs, 38 N. H. 40; Polk v. Wilson, 21 Md. 549; Van Epps v. Dillaye, 6 Barb. (N. Y.) 352 ; Schallenberger v. Seldonridge, 49 Penn. St. 85 ; Williams v. Donaghue, 6 Munf. (Va.) 304; Arnold v. Camp, 13 Johns. (N. Y.) 409 ; Wilson v. Jennings, 15 N. C. 94. But an agreement to accept it in discharge, particularly if the other partners have in good faith acted upon the agreement and accounted to the other partner for their share of the debts, is obligatory. Robinson & Church V. fiurlburt & Miller, 88 Vt. 463. See cases cited ante. But a mere agreement to look to one partner for a firm debt is not obligatory, being with out consideration. Lodge v. Dicas, 3 B. & Aid. 611. Nor does the taking of a mortgage from one partner, unless agreed to be in discharge. Pierce v. Cameron, 7 Rich. (S. C.) 414 ; Fulton v. Williams, 11 Cush. (Mass.) 108. See, holding that the taking of note of one partner after dissolution, under an agreement to discharge the firm, is obligatory, Niday v. Harvey, 9 Graft. (Va.) 469. ' Drake v. Mitchell, 3 East, 251 ; and see Higgins' case, 6 Rep. 46 a; Ask- brooke v. Snape, Cro. Eliz, 340. Of the Pleadings. 1097 would thus be made circuitously to pay tlie plaintiffs after having obtained a verdict in the action brought directly against them.' Joint and several debts. Sec. 752. Where a debt is several as well as Joint, as in the case of a joint and several bond or promissoi'y note, judgment recovered against one of the joint debtors will be no bar to an action against the other. But it should seem that where tlie debt is joint only, a judgment against one joint contractor would be a bar to an action against another ; because the latter might plead that he made no promise, except with the former.' Set-off. Sec. 753. Another matter which the partners may now plead in bar of an action, and which indeed, they must plead, ^ although formerly ' See arg. Wilson v. Hirst 4 B. & Ad. 76a. '' See Leclimere v. Fletclier, 1 C. & M. 639. ' Graham v. Partridge, 5 Dowl. Pr. C. 108. Of set-off h^ and against partnersliips. — Tlie right of setting one claim against another appears only to exist at common law, where a person seeks to avail him- self of a lien on goods in his possession, but of which he is not the owner. But, by statute, if two persons are indebted to each other, and either sues the other for the debt owing by him, the defend- ant can plead, by way of set-ofF, the debt due to him from the plaintiff. The statute in question declares "that where there are mutual debts between the plaintiff and the defendant, or if either party sue or be sued, as executor or ad- ministrator, where there are mutual debts between the testator or intestate and either party, one debt may be set against the other." 2 Geo. II, c. 33; and see 8 id. 24, as to setting off simple contrsict debts against specialty debts ; and see generally 3 Chitty's Statutes, 1025, and Chitty on Contracts. The statute, it will lie observed, only men- tions mutual debts, and this expression has been held to be confined, first to debts in the narrow sense of the word, i. «., definite and ascertained sums of money, owing by each party to the other, see Castelli v. Boddington, 1 E. & B. 6G and 879 ■ AttwooU v. Attwooll,id. 23; Luckie v. Bushby, 13 C. B. 864; and Hutchinson v. Sydney, 10 Ex. 488, and, secondly, to debts owing to and by each party in one and the same capacity!' See Hutchinson v. Sturges, Willes,36i ' Watts V. Reese, 9 Ex. 696, and 11 id' 410; Mardall v. Thelusson, 6 E. & B. 976. It follows from the last propo- sition that a debt owing to a firm of partners cannot (except by the consent of all parties, see Kinnerly v. Hosack, 3 Taunt. 170 ; Cheethani v. Crook, McLel. & Y. 807; Vulliamy v. Noble, ;i Mer. 618, or under special circumstan- ces) be set off against a debt owing by one of its members, or vice versa. It scarcely requires to be pointed out that to allow a set-off of such debts would be to enable a creditor to obtain pay- ment of what is due to him from per- sons in no way indebted to him. As a rule, therefore, a debt owing by one of the members of a firm cannot be set off against a debt owing to him and his co- partners, Gordon v. Ellis, 2 C. B. 831 ; France v. White, 8 Scott, 3.57 ; nor can a debt owing to one of the members of a firm be set off against a debt owing .by him and his copartners. Arnold v. Bainbridge, 9 Ex. 153 ; M'Gillivray v. Simson, "3 Car. & P. 830; Bos well v. Smith, 6 id. 60. And this rule ap- plies even where one partner only has been dealt with, and the debts sought to be set against each other are a debt owing by him, and a debt owing to him and others, but arising out of. trans- actions with him alone. This last point is well illustrated by the recent case of Gordon v. Ellis, 3 C. B. 831, and see the same case, 7 Man. & ttr. 607, where it will be observed the plea was materially different. There an action was brought by three partners, for the 10'J8 Rights op Partners. they miglit liare given it in evidence under the general issue, is that of set-off. As tlic rules of law regarding set-off are equally applica- ble, whether the action be brought by or against partners, the obser- vations which follow are directed to either of these cases. recovery from the defendant of money received by him for goods of the plain- tiff's sold by the defendant on their account. The defendant pleaded in ef- feet, that he had been employed by A only; that A sent the goods for sale as if they were his own; that the goods were sold by the defendant ag A's goods, and that A was indebted to the defendant in a larger amount than that sought to be recovered in the action. It was ad- mitted, that if B and C had by their conduct induced the defendant to be- lieve that A was the sole owner of the goods in question, and to deal with A on that supposition, the defendant would have had a good defense to the action ; but it was held that, as the de- fendant did not allege that such had been the case, his plea was a mere at- tempt to set off a debt due from one member of the firm against a debt due to the firm itself, and was bad. To the general rule which precludes the set-off of a debt due to a firm against a debt owing by one of its members, and vice 'Versa, there are, however, a few excep- tions. The first is. where one partner has rendered himself, or has become, by having survived his copartners, the only person capable of suing or of being sued in respect of the demand which forms the subject-matter of the action. For example, if a joint and several promissory note is made by partners, and one of them sues the payee for some separate demand, the defendant can set off the note ; for ex hypothesi, it is the several note of the partner suing him, see Owen v. Wilkinson, 5 C. B. (N. S.) 53G. So, if a covenant is entered into by one partner only, he can, in aiv action against him on the covenant, set off a deljt due to him alone from the plaintiff; and if one partner only is covenanted with, and he sues upon the covenant, the defendant may plead, by way of set-off, a debt due to him from the plaintiff in hip separate capacity. See Fletcher v. Dyche, 3 T. K. 33. In such a case the partner who is party to the deed is the only legal debtor or creditor, as the case may be, and he is treated ac- cordingly for all the purposes of an action on the deed. Again, when a partner survives his copartners, he alone can sue and be sued at law in re- spect of debts owing to or by the late firm ; and it has been held that, in an action against a surviving partner for the recovery of a debt owing by him, but not as partner, he can set off a debt owing by the plaintiff to him as sur- viving partner. Slipper v. Sidstone, 5 T. R. 493 ; Oolding v. Vaxighan, 2 C'hitty, 436, and that, in an action by a sur- viving partner for a debt due to him in his own right, tlie defendant can set off a debt owing to himself by the plain- tiff as surviving partner. French v. Andrade, 6 T. R. 582. In deciding these cases, it is submitted that courts of law have too closely adhered to technical rules of pleading, and have not paid sufficient attention to the fact that the partner suing or sued is in truth a trus- tee for himself and others. If it be said that prior to the Common-Law Proced- ure Act, 1854, courts of law always ig- nored trusts, the answer is twofold, viz., first, that in some cases courts of law did allow a person to sue as a trustee for others when he could not have sued in any other character. Winch v. Keeley, 1 T. R. 619 ; Castelli v, Boddington, 1 E. & B. 60 ; and secondly, that as regards set-off, courts of law did recognize the justice of the rule that mutual debts could not be set off unless they were owing to and by the same person in the same capacity. It need scarcely be ob- served that equity does not follow the law in such cases as those here alluded to. A second exception to the rule in question, and one as little sa'tisfactory as that last noticed, arises from tlie doc- trine which precludes a joint action by several persons if one of them has de- prived himself of his right to sue. In accordance with this doctrine it has, in effect, been held that if a partner, being indebted to a person who is indebted to the firm, agrees with him that the one debt shall he set off against the other, and the two settle their accounts to- gether on this footing, the firm is bound by this transaction, and the debt owing to it extinguished. Wallace v. Kelsall, 7 M. & W. 264. See Mot- tidge V. Prichard, 2 CI. & Fin. 379. This is certainly going very far ; for, first, a general authority to receive pay- ments of debts does not include an authority to settle them in any other Of the Pleadings. 1099 At the common law, if the plaintiff was indebted to tlie 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 mode, see Youug v. White, 7 Beav. 506 ; Uuderwood v. NichoUs, 17 C. B. 239, and Story on Agency, t; 98 ; and, second- ly, the implied autliority of every part- ner to bind the firm can hardly be held to justify him iu paying his own debt with his ])artuers' money if his creditor is aware that this is being done. Indeed it is clear that there is no such implied authority. See Shirreffi v. Wilks, 1 East, 48. Where a debt to a firm has been contracted in dealings with one partner alone, and the debtor to the firm be- lieves that lie is debtor only to the part- ner with whom he has dealt, it might perhaps have been held to be competent for the debtor and that partner to set against the debt thus contracted, an- other debt due from the partner in question to the debtor in question, and to bind tlie firm by that arrangement. Upon principle indeed it would be diffi- cult to go so far as this, unless the other partners had by Their conduct induced the belief that their copartner was act- ing for himself alone. But even if it were otherwise, such a case would fall far short of Wallace v. Kelsall, 7 M. & W. 28i, where it was held that a debtor to a firm, knowing himself to be such, can at law get rid of his liability to the firm by discharging a debt due to him- self by one only of the members of that firm. The case is not, it is conceived, supportable on any other doctrine than that noticed above, and cannot be con- sidered as an instance illustrating any branch of the law of agency. The third exception to the general rule under con- sideration is supported as well by reason as authority, and occurs where one psrt iier has been allowed by his copartners to act as if he were jjrincipal and not ai> agent of the firm. It lias been seen that dormant partners may join their copartners in suing on contracts entered into in form with the latter only. But dormant partners cannot, by coming for- ward and suing on such contracts, de- prive the defendant of any right of set- off which he might have availed himself if the non-dormant partners only had beer* plaintiff's. This was held by Lord Keuyon iu Stacey v. Decy, 7 T. K. 361, note, and 3 Esp. 469. See, too. Teed v. Elworthy, 14 East, 213, where the plain- tiffs, Stacey, Ross, and others, were in partnership as grocers, and Ross was the only person who appeared to the public as concerned in the partnership business. The defendant had dealt with Ross, and had become indebted for gro- ceries supplied by him. On the other hand, the defendant had expended money for Ross, and had done so on the supposition that the moneys thus ex- pended could be setoff against what was due for the grocery. The plaintiffs, however, contended that this set-ofF could not be made, but Lord Kenyon held that as the defendant had a good defense by way of set-off" against Ross, and had been by the conduct of the plaintiffs led to believe that Ross was the only person he contracted with, they could not pull off the mask and claim payment of debts supposed to be due to Ross alone, without allowing the de- fendant the same advantages and equi- ties in his defense as he would have had iu an action brought by Ross solely. See George v. Clagett, 7 T. R. 359. In this case, all the partners except Ross were dormant, and by the terms of tlie agreement into which all had entered, Ross alone was to be the apparent trader. His copartners were therefore simply in the position of undisclosed principals, and were treated accordingly by the court. In Gordon v. Ellis, 3 C. B. 821, which has been before referred to, an attempt was made to extend the princi- ple on which Lord Kenyon decided Stra- cey V. Decy to all cases in which one partner only transacts the business of the firm, and becomes himself indebted to the person with whom he deals. But it was held, and it is conceived rightly, that a person liable to be sued by a firm cannot set off a debt due from one only of its members, on the ground that he only was dealt with by the defendant, unless it can be shown that the other members of the firm induced the de- fendant by their conduct to treat their copartner as the only person with whom the defendant had to do. See Baring v. Corrie, 2 B. & Aid. 137. But here again it is to be observed that if the debt due from one partner can he treated as due from the firm, that debt may be set off against another debt due to it. This is illustrated by the same case of Gordon V. Ellis, 7 Man. & Gr. 607, where, in an action by a firm for money due to it from the defendant for goods of the firm sold by him, the latter was held entitled to set off" a debt due to 1100 Eights of Partneks. brought by the phiintiff for the recovery of liis debt.= To obviate this inconvenience, and to i^revent circuity of action, or a bill in equity, it was enacted by statute 3 Geo. 2, c. 22, s. 13, that " where there are him for an advance made by him to one of the partners on account of those goods. The court thought that, although the money was advanced to one partner only, the defendant had a right to treat it as an advance to the firm made on that partner's requisition whilst acting within the scope of his apparent author- ity as agent of the firm. In jwint of fact, the defendant, instead of waiting ' Selwyn's N. P. 573. See, also, D. Littledale, J., May v. Brown, 3 Barn. & Ores. 134. A judgment against one partner, whether he is a real or merely an ostensible partner, discharges the firm. Peters v. Sandford, 1 Den. (N. Y.) 234 ; Spear v. Qillett, 1 Dev. Eq, (N. G.) 466; Thompson v. Emmert, 17 111. 415 Gibbs V. Bryant, 1 Pick. (Mass.) 118 Smith V. Black, 9 S. & R. (Penn.) 143 Willings V. Consequa, 4 Johns. Ch. (N. Y.) 566 ; Trafton v. United States, 3 Story (U. S. 0. C.^, 698 ; Bell v. Banks. 3 M. & G. 267 ; Olmstead v. Webster, 8 N. Y. 414; Ward v. Matter, 2 Robt. (Va.) 536; National Bank v. Sprague, 20 N. J. 31; Suydam v. Barber, 6 Duer(N. Y.), 34; Lewis v. Williams, 6 Whart. (Penn.) 264 ; United States v. Cushman, 2 Sum. (U. S.) 487; Anderson v. Swan, 1 W. & S. (Penn.) 334 ; Pearce v. Kin- ney, 5 Hill (N. Y.), 83 ; Simonds v. Cen- ter, Mass. 18. Such former recovery should be plead in bar, and not in abate- ment of the action. King v. Hoare, 13 M. & W. 494. This is the first English case in which a former recovery against one joint debtor wag held to discliarge the other. In the case cited by the au- thor this doctrine was intimated, but the question was not actually before the court. In such a case a court of equity will not release the creditor against the efiect of the judgment. Pinny v. Mar- tin, 4 Johns. Ch. (N.Y.) 566. But a judgment against one upon a firm debt may be levied upon the partnersliip property. Briukerhoff v. Marvin, 5 Johns. Ch.(N. Y.) 338. It must be borne in mind that in those states where by statute a creditor may proceed against one or all the joint debtors, judgment against one does not discharge the others. Lyons v. Hamilton, 3 Miss. 474 ; McLaiu v. Carson, 4 Ark. 164 ; Griffin v. Samuel, 6 Mo. 50 ; McCulloch v. Judd, 30 Ala. 703; Scott v. Colmes- nil, 7 J. J. Marsh. (Ky.) 418. Where until he had sold the goods, ' and then handing over the money produced by their sale, made a payment on account, and he sought nothing more than to have the amount so prepaid deducted from the sum for which he sold the goods. It sometimes happens that, in order to avoid a plea of set-off, a jjlaintifF who is indebted to a firm sues one of its mem- , ! an ostensible partner purchased for the firm a quantity of cotton, and gave his notes for the amount, and after suit brought and judgment obtained against the ostensible partner the vendor first discovered there was a dormant partner, and then commenced a suit against the dormant partner for goods sold, it was held the suit could not be sustained. The judgment against one partner ex- tinguished the original debt. Moale v. Hollins, 11 Gill & J. (Md.) 11. Where one partner gives a note under seal, in the name of the firm, without the authority of the other partners, the original debt is discharged, but the other partners are not liable. After a decision to this ef- fect, the partners in the partnership name purchased goods and gave a note including the amount due on the sealed note. It was held this latter note was good as to the goods purchased, but void as to balance, as the old debt had been discharged by the new note. Waugh V. Carrier, 1 Yerg. (Tenn.) 81. One partner has no authority to execute a sealed contract in the name of the firm. But it is binding on the partner signing, and the simple contract of the partners is merged by the instru- ment. Morris v. Jones & Spencer, 4 Harr. (Del.) 438. A suit and judgment against one partner, upon an individual acceptance given by him in payment of an account against the firm, merges the original debt of the firm, and precludes a suit against the other members of the firm for the same debt. Nichols & Co. V. Burton, 5 Bush (Ky.), 330. Judg- ment rendered against one of several partners, on promissory notes, merges the claim so that another suit on the notes against a partner not sued in the original action cannot be sustained, nor can a suit be sustained on the judgment, against the partner for whom an attorney appeared without authority. Thompson V. Emmert, 15 111. 415. Of the Pleadings. 1101 mutual debts between the plaintiff and defendant, or if either party sue or be sued as executor or administrator, where there are mutual, debts between the testator or intestate and either party, one debt may bers alone for a debt owing to tlie plain- tiff by the firm. In such a case the de- fendant should plead the non-joinder of his copartners in abatement. See Stack- wood V. Dunn, 3 Q. B. 833. Again, if a firm holds the note of a person to whom it is itself indebted, and in order to de- prive him of his right of set-oflF, in- dorses the note to one of its members, and he alone sues on it, a plea disclosing the facts and setting off the debt owing to the defendant by the firm will be- good. See Puller v. Roe, 1 Peake (N. P.), 360. Courts of equity, although governed in questions of setoff by prin- ciples similar to those which govern courts of law, go further than courts of law in applying tliose principles, admit- ting set-off in some cases wliere courts of law do not and disallowing it in others where they do. See, generally, as to set-off in equity, Rawson v. Samuel, Cr. & Ph. 161 ; Freeman v. Lomas, 9 Ha. 104. This arises partly from the circumstance that at law the right to set off depends entirely on a statutory enactment, which admits it only to a very limited extent, and partly from tlie freedom of courts of equity from those technical rules of pleading by which the courts of commou law have been so greatly fettered. As regards set-off in cases of partner- ship, it will be sufficient, after what has been already laid before the reader, to show that in equity mutual debts may be set off, if in substance they are both joint or both several, although they are not so in point of form, aud that, on the other hand, debts whicli are not both joint or both several in substance, al- though they are so in form, cannot be set off against each other. As illustrat- ing the first of these propositions, ref- erence may be made to Smith v. Parkes, and Cavendish v. Geaves. In Smith V. Parkes, 16 Beav. 115, a firm of three partners covenanted to pay a cer- tain sum of money to the defendant Parkes, who was indebted to the firm in certain other sums on another account. By the death of two of the members of the firm, the plaintiff Smith had become the sole surviving partner, and he was sued by Parkes on the covenant, and judgment was obtained. It was held that, notwithstanding the judgment and its effect at law, Smith was entitled in equity to set off against the j udgment debt the amount of what was due from Parkes to the late firm, and it was also held that Smith had this right not only as against Parkes, but also against per- sons to whom he had assigned the debt due to him. In Cavendish v. Geaves, 34 Beav. 163, the plaintiff was indebted on bonds to a firm of bankers. Many changes in the constitution of the firm took place, and the bonds in question were on each change assigned by the old to the new firm. The plaintiff had an account with the bank as one of its customers, and when the bank stopped payment, a bal- ance was owing to him on that account, but the bonds had been previously as- signed to third parties without notice, however, to the plaintiff. The question then arose, whether, notwithstanding the various changes in the firm and the assignment of the bonds, the plaintiff was entitled lo set off against the debt clue from him on the bonds, the amount due to him as a customer of the bank, and it was held that he was. The judg- ment in this case is peculiarly instruct- ive, and the following extract from it is submitted to the reader without apology: " If a customer borrow money from his bankers and give land to secure it, and afterward on the balance of his general banking account a balance is due to the customer from the same bankers who are the obligees of the bond, a right to set off the balance against the money due on the bond will exist both at law and in equity. If the firm were altered and the bond assigned by the original obligees tcj the new firm and notice of that assignment were given to the debtor, and if after this a balance were due to him from the new firm (the as- signees of the bond), then no right of set off would exist at law, because the assignment of the chose in action would be inoperative at law, and the obligees of the bond and the debtor on the gen- eral account would be different persons; but as in equity the persons entitled to the bond aud the debtors on the general account would be the same persons, a right of set-off would exist in this court, and the customer would in equity be entitled to set off the balance due to him against the bond debt due from him. If after the bond had been given it had been assigned to strangers, and no notice of the assignment had been 1102 Rights of Partners. be set against the other." This was made perpetual by 8 Geo. 2, c. 24, s. 4; and to remove any doubt as to whetlier debts of a different nature couhl be set off, it was further enacted by that act that "mutual given to the origiual debtor (the obligor of tlie bond), then his rights would re- main the same. Thus, if the assignment hadbeen made to the stranger before any alteration of the firm, then the right of set-ofE would still remain at law, where the obligees of the bond and the debt- ors on the general account would be the same persons, and in equity also if the matter of account were brought here, as the assignees of the chose in action would be bound by the equities affecting their assignors. But if notice of the assignment had been given to the orig- iual debtor, no right of set-off would exist in this court for the balance sub- sequently due by the bankers to the obligor, because the persons entitled to the bond would, as the obligor knew, be different persons from the debtors to liim on the general account with whom he had continued to deal. " If the assignment of the bond had been made to the new firm with notice to the obligor, they would, if debtors on the general account, be liable to the same rights of set-ofE in equity as if they had been the obligees. " If, after the alteration of the firm and after the assignment of the bond to the new firm, with notice to the debtor or obligor of that assignment, an assign- ment had been made of the bond to strangers, and no notice of that second assignment given to the obligor, then the rights of set-off would still remain to him in equity as against the first as- signees, of whose assignment he had notice, and the second assignees would in equity be bound by it, bacause, as I have stated, the assignees of the bond take it subject to all the equities which affect the assignors." The court, after laying down these general propositions, came to the con- clusion on the evidence in the case, that the plaintiff was informed that tlio suc- cessive firms with which he dealt as customers were his creditors in respect of the bonds, but that he had no notice of their assignment by the firm which stopped payment to the holders of them and that, therefore he was entitled, even as agiinst such holders, to set off what was due to him as a customer of the bank when it stopped payment. The above decisions are sufficient to show that in allowing debts to bo set off against each other courts of equity go far beyond courts of law, although they do not introduce any new principle of set-off. The truth of this is still more apparent from the cases in which set-off ia not allowed, one of the debts being joint and the other several only. In strict analogy to the rule which ob- tains at law, it has been decided in equity that if the members of a firm have separate private accounts with the bankers of the firm, and a balance is due to the bankers from the firm on the partnership account, the bankers have no lien for such balance on what may be due from themselves to the members of the firm on their respective separate accounts, and that the debt due to the bankers from the partners jointly can- net be set off against the debts due from the bankers to the partners separately. See Watts v. Christie, 11 Beav. 540 ; Cavendish v. Geaves, 34 id. 173. But courts of equity do not altogether fol- low the rules of law in administering the estate of a deceased member of a firm, for although, on the priuciple that a debt due from a firm is due from all the partners severally as well as jointly, a creditor of the firm is in equity re- garded as a creditor of its deceased members, yet, when a creditor of a firm seeks to obtain payment of his debt out of the estate of a deceased partner, that creditor cannot set off a debt due from him to the deceased on a separate account, but must pay this last debt in full, and then, as regards the debt in respect of which he sues, rank as any other creditor of the firm against the assets of the deceased. See Addis v. Knight, 2 Mer. 117. It is obvious that, if in such a case the two debts were set against each other, the separate 'credit- ors of the deceased would be paying a joint creditor of the firm, unless the as- sets of the deceased were sufficient to pay both classes of creditors in full. Again, in a case which underwent much litigation, it was held by Lord Brougham, both in the Court of Chan- cery and in the House of Lords, that a debt due to a firm was not satisfied by an arrangement made by one of the partners with the debtor to the firm, to the effect thtit moneys of the debtor come to the hands of the partner in question, should be set against the debt due to him and his copartner. Nottidga v. Prlchard, 3 CI. & Pin. 879, and 8 Bli. Of THTi; Pleadings. 1103 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 b}"" reason of a penalty contained in any bond o-r 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." Torts not subject of set-off. Sec. 754. 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, tres- pass, replevin, or detinue.' The only actions on which a set-off is allowed are assumpsit, debt, and covenant for the non-payment of money; '^ and it has been laid down that debts, to be set off, must be such as an indeiitatus assumpsit will lie for; and thatiincertain dam- ages, or un unliquidated demand, cannot be made the subject of a set-off.' Must be debts due in same right. Sec. 755. As mutual debts only can be set off against each other, the debts sought to be reeovei-ed, and those sought to be set off, must (N. S.) 493, affirming Pritcliard v. Dra- of dealing witli eacli other. For if it per, 1 R. & M. 191, as decided on appeal can be shown that all parties concerned from the decision of Sir John Leach, have expressly or impliedly agreed that reported in the same place, and in Taml. a debt owing by one of them only shall 333 be set off against a debt owing to them If this case had occurred at law, and all, or nice versa, eifect will be given to the firm had been plaintiff, the set-off that agreement, and the application of would probably have been allowed, on the general doctrine in question will the ground that one of the members of thereby be precluded. See VuUiamy the firm at all events was precluded v. Noble, 3 Mer. 593 ; Downam v. Mat- from suing the defendant. See Wallace thews, Prec. in Ch. 580 ; Cheetham v. V. Kelsan,7M. & W. Crook, McLel. & Y. 307; Kinnerly v. The last three decisions sufficiently Hosack, 3 Taunt. 170. illustrate the application in equity of '1 Chit. PL 486: B. N. P. 181. the general doctrine, that joint debts 'H Chit. PI. 486; B. N". P. 181. and separate debts cannot be set off ' Per Ashurst and Aston, J. How- against each other. But in applying land v. Strickland, Cowp. 56. They this doctrine regard must be had to any may be recouped, however, in cases agreement which the parties themselves where they arise out of the transaction may have come to, and to their course in suit. 1104 Eights of PARTifERS. be due iii the same riglit. 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, eflEectcd 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 bankruntcy, the defend- ant cannot set off a demand which he has against the firm to a larger amount.' Sufficient tljat the rights are essentially the game. Sec. 756. 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 afterward indorse it to one of their members as his separate pi'operty, in an action by such indorsee against the maker the latter may set off any debt due to him from his bankers against the demand on the note, for her6 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 cus- tomer, 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 partner contract a debt, yet, if it be contracted in the partnership name, such debt may be set off in an action by the firm.' ' Tidd's Prac. 717; J .S. Saund. Pl.,tit. (Mass.), 463; even tliough so agreed "Set-off;" M'Gillivray V. Simson,2Gar. with such partner, Evernghim v. Eua- & Payne, 330 ; Jones v. Fleeming, 7 worth, 7 Wend. (N. Y.) 336 ; Rogers v. Barn. & Ores. 217. Batchelder, 12 Pet. (U. S.) 331 ; Dob v. " Grant v. Royal Exchange Ass. Co., 5 Halsey, 16 Johns. (N. Y.) 34 ; unless the Mau. & Sel. 439. other partners knowing of such agree- ^Thomason v. Frere, 10 Bast, 437; ment have assented thereto, either ex- Stanniforth v, Fellowes, 1 Marsh. 184. pressly or by fair inference. Homer v. ^ Puller V. Roe, 1 Peake, 197. Wood', 11 Cash. (Mass.) 63. This was ' Crosse v. Smith, 1 Mau. & Sel. .545. expressly held in Williams v. Brimhall, In bankruptcy it has been held that, ante, in which it appeared that the de under certain circumstances, distinct fendant employed the firm of Bigelow banking-houses, having some members & Smith to erect a house for him. The in common, may set off the amount of contract was made with Bigelow alone, the bankrupt's notes in their hands, and it was ajfreed between him and the against the amount of all their respect- defendant that the house should be ive notes in the bankrupt's hands. Ex built in payment of a private debt due parte Huckey, 1 Madd. 577. from Bigelow to the defendant. The «Teed v. El worthy, 14 East, 313; see court held that if the defendant knew Booth V. Hodgson, 6 T. R. 405. of the partnership between Bigelow & Smith, and both performed the labor. Set off. — A debt due from one partner the amount to be paid therefor might be cannot be set off against a debt due the recovered of the defendant, notwith- firm, Williams v. Brimhall, 13 Gray standing the agreement between him Of the Pleadings. 1105 Demands essentially separate. Sec. 757. A similar observation may be applied 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 oif a separate debt from that person against the debt for which he is sued.' So, if a factor, who sells goods for a firm under a del credere commis- sion, sells them as his own, and the buyer knows nothing of the own- ers, 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.' Effect of agreement to sever. Sec. 758. And although joint demands cannot ordinarily be set off against separate demands, or vice versa, yet, where there is an express agreement between a person dealing with a firm, that the debts seve- rally due from the members of the firm to that j)erson shall be set off against any demands which the firm may jointly have on him, it has been held that such agreement will bo binding.-* 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 him- self to the plaintiff in his own right.* And, conversely, a debt due to a defendant as surviving partner, may be set off against a demand on him in his own right." 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.' and Bigelow that it sliould be applied son, wlio sold property to one partner to in payment of his private note, as sucli be paid for in groceries of the firm, contract was a fraud upon and void as could not set-off such claim against an against the firm, and that the note could action by the firm to recover the price not beset off against such claim. "In the of the groceries. This is consistent and present case," said Bigelow, J., " the de- in conformity with the principle that fendant knew of the copartnership and one partner cannot apply the partner- of the nature of the business carried on ship funds or securities to the payment by the firm, and that the work that was of his private debts without the assent to be done for him was within the scope of his copartners. Caldwell v. Scott, of that business. Prima facie, it was 54 N. H. 414 ; Rogers v. Batchelor, 13 work to be done by the copartnership. Pet. (U. S.) 221 ; and it makes no differ- and the agreement to set off his private ence whether the creditor knew of the debt^or the work to be performed by partnership or not. Caldwell v. Scott, the firm was prima facie a contract for ante. the misappropriation of that which he ' Stacey v. Decey, 1 Esp. 469 ; 7T. R. knew belonged to the firm. As this was 3C1. done without the knowledge or assent ^ George v. Claggett, 7 T. R 3.59. of the other partner, it was evidence of " Fletcher v. Dyche, 2 T. B. 33 ; and a fraud on the firm, and as the defend- see Elliott v. Davis, 2 Bos & Pull. 338. ant offered no evidence to rebut this ''Kinnersley v. Hossack, 2 Taunt. 128. prima facie case * * he failed to es- ' French v. Andrade, 6 T. R. 583. tabliah his set-off." See, also, to the « Slipper v. Slidstone, 5 T. R. 493. same effect, Cadwallader v. Kroesen, 22 ' Bourne v. Bennet, 4 Bing. 433; 1 Md 200 where it was held that a per- Moore & Payne, 141 . 139 1106 Eights of Partnehs. Court will sometimes order set-off of judgments. Sec. 7od. The courts of common law will, upon motion, in some cases order opj)osite demands arising upon judgments to be set off against each other, although the i)!irties to the different records are not the same.' Thvis, in Mitchell v. Oldfield,'' the plaintiff recovered a judgment against the defendant, but the defendant, having also recovered in another action against the iilaintifl 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 "vvas 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 remittitur in the cause in which he was plaintiff. Lord Kenyon 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 joart of their jurisdiction, and had been frequently exei-cised. 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 plain- tiff, it was held that the judgment in 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 afterward a judgment was recovered against A, by the assignees of B, under an insolvent debtors' 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 jiersons intervened. And Lord EUenborough expressed a strong dis- inclination 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.' Infancy, plea of. Sec. 760. If one of the partners is an infant, we have seen that he may plead his infancy. To an action brought against, two persons ' Mont. Partn. 87. ' Doe v. Darnton, 3 East, 149; and see ■•'4 T. R. 123. Hewitt v. Pigott, 8 Bing. 61. 3 See Reg. Gen. 93, Hil. T. 1833. " Dennie v. Elliot, 3 H. Bl. 587. Of the Pleadings. 1107 on their joint and several covenant, one of tlie covenantors cannot plead the infancy of the other.'' Bankruptcy. Sec. 761. If one of the partners is a bankrupt, he cannot give this in evidence under the general issue; * but if the act of bankruptcy took place before the suit commenced, he may plead his bankruptcy generally, under the ] 36th section of the statute. The plaintiff may then enter a nolle prosequi as to him, and proceed against the others." If, hovcever, the bankruptcy took place after the suit commenced, he must plead his bankruptcy and certificate specially.* And if the cer- tificate were not obtained until after plea pleaded, he must plead his bankruptcy and certificate specially ^jjmj's darrein continuance^' In such cases the plaintiff may enter a nolle prosequi as to the bank- rupt, and proceed against the rest ; but he cannot, at Nisi Prius, upon a plea of bankruptcy puis darrein continuance, by one of two defendants, confess the plea to be true, and go on with the case as to the other defendants , la case of joint tort. Sec. 762. "We have seen that if a joint tort be committed, the plaintifE may, at his election, sue all or any of the tort feasors." But if divers commit a trespass, though this be joint or several at the elec- tion 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 judg- ' ment, it will dischai-ge 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, and the other pleaded a release, and a verdict was found for him, on a motion for a judgment against him who was found guilty, it was denied, because the trover being joint, a release of all actions discharged both.' ' Gillow V. Lillie, 1 Bing. N. C. 695. phreys v. Knight, 4 Moore & Payne, « Gowland v. Warren, 1 Camp. 363. 375 ; 6 Bing. 573. ^Noke V. Ingham, 1 Wila. 89. Bat « Pascall v. Horsely, 3 Car. & Payne, bankruptcy is no bar to an action of 372. trover. Parker v. Norton, 6 T. E. 695. ' Co. Litt. 333 ; Bac. Abr. Release, g. * Arch. PI. 371. « Parker v. Lawrence, Hob. 70. »Todd V. Maxfield, 6 Barn. & Cres. » Kiffiu v. Willis, 4 Mod. 379. 105 ; Steph. PI. 89. But see Hum- 1108 Rights of Partners. When def0n8e is joint. Sec. 763. In general, when the de-fense is in its nature joint, sev- eral 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 tort one may plead not guilty, and the other a justification." If the defendants plead severally, the plaintiff may demur to one plea, and join issue on the other.' ' 1 Chit. PI. 480 ; Com. Dig., Pleader, ' Com. Dig. Pleader (E. 35). (3 A. 3). 2 1 Chit. PI. 482 ; Com. Dig., Pleader (3 A. 3). Of the Evidence, 1109 CHAPTER XXXI. OF THE EVIDENCE. Sec. 764. Evidence must be sufficient to hold all. Sec. 765. Strict proof required. Sec. 766. May be by parol. Sec. 767. That bills were drawn or accepted in particular way. Sec. 768. Acts and conduct of the parties. Sec. 769. Answer to bill in equity, when admissible. Sec. 770. Records in former suits. Sec. 771. Declarations or admissions, how far admissible. Sec. 772. Statements made by others in presence of defendants. Sec. 773. Admission of one partner. Sec. 774. Evidence required to sustain plea of non-joinder. Sec. 775. When admissions of one partner are admissible. Sec. 776. Admissions after dissolution. Sec. 777. Admissions by agent after retirement of one partner. Sec. 778. What must be shown to hold the firm. Sec. 779. Admission does not make person a partner, may show that he was not. Sec. 780. When estopped from denying. Sec. 781. May show admissions had no reference to partnership. Sec. 782. Eule in Ridgway v. Phillips. Sec. 783. Wlien one partner may be called to prove partnership. Sec. 784. Interest of witness. Sec. 785. No party examined without consent. Sec. 786. Evidence in actions for tort. Evidence must be sufficient to hold all the defendants. Sec. 764. It is essential, in an action ex contractu against partners, that there should be snflBcient evidence to affect all the defendants, 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 partnership ; we have likewise examined the various liabilities which attend the connection between ' Young V. Hunter, 4 Taunt. 582 ; Noke v, Ingham, 1 Wils. 89 ; Cooper v. Whitehouse, 6 C. & P. 595. 1110 Eights of Partxees. partners; it now remains to consider in what manner and by what witnesses evidence of the partnership may be established. Strict proof required. Sec. 765. In order to charge persons as partners, the utmost strict- ness of proof of the partnership is not required. It is sufficient to show that they Iiave 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. 1 See 3 Stark. Ev. 1070. How liability as partner may be estab- lished. — " The question," says Mr. Lincl- ley, vol. 1, p. 84, " whether a partner- ship does or does not exist' between any particular persons, is a mixed question of law and fact, and not a mere question of fact. It is, nevertheless, a question to be decided by a jury, who, taking their own view of the effect of the evi- dence before them, are bound to apply to the facts established to their satis- faction those legtil principles which the court may lay down for their guidance. See FoxV. Clifton, 9 Bing. 117. If the question of partnership or no partner- ship is raised before a judge in chan- cery, he will direct an issue, if in his opinion there is room for reasonable doubt, Travis v. Milne, 9 Ha. 157; M'Qregor v. Bainbridge, 7 id. 164, n ; Ex parte Matthews, 3 V. & B. 135; Ex parte Langdale, 18 Ves. 800 ; Peacock v. Peacock, 16 id. 53, and 3 Camp. 45; Binford v. DommRtt,4 Ves. 756; Whately v. Menheim, 3 id. 608 ; but if the evi- dence is such as to satisfy him beyond doubt, he will decide the question him- self and not put the parties to the ex- pense of a trial' at law. Robinson v. Anderson, 7 De G. Mc. & O. 389 ; Dale v. Hamilton, 2 Ph. 266 ; Poster v. Hale, 5 Ves. 308; Metcalf v. Royal Ex. Co., Barn. 343, and 2 Mont. Part. 84. Aa to summoning a jury instead of directing an issue, see Bradley v. Bevington, 4 Drew. 511, where V. C. Kindersley de- clined to oraer a question of partnership or no partnership to be tried by himself and a jury before the hearing of the cause. In considering the evidence which it is necessary to adduce in order to establish the existence of a partner- ship, two perfectly distinct questions immediately suggest tliemselves, viz. : 1. 'What is to be proved ? 2. How is it to be proved ? 1. With reference to the first ques- tion, the distinction between partner- ships and 9?iaisi-partnerships is all im- portant ; for it by no means follows, that persons who are not partners are not liable as if they were ; nor does it follow that persons who are liable as if they were partners are partners in re- ality. This has been already explained ; and, in fact, the answer to the first of the above two questions will be found in that portion of the present work in which the nature of the contract of partnership was discussed, and it will therefore only be necessary to recapitu- late as shortly as possible the proposi- tions there established. The existence of a partnership may be established by showing : — 1. A distinct agreement for a partner- ship in so many words ; or, 2, an agree- ment to share profit and loss ; or, 3. An agreement to share profits ; or, 4, such a state of things as is suiiScient to es- tablish a gMflsai-partnership. That this is prima facie evidence of a real part- aership, see Peacock v. Peacock, 3 - Camp. 45. The first two of these will be conclusive ; the third will be strong, and the fourth prima facie evidence of the evidence of a partnership. The distinction, however, between existing and contemplated partnerships must not be overlooked, and it may be useful to remind the reader that evi- dence which would fail to establish a g!«ffi«i-partnersliip must, a fortiori, iaXi to establish a real partnership between the same persons. For the purpose of proving the existence of a ^ijasi-part- nership between several persons, it is sufficient to show either. That they share profits — attending to the distinc- tions already pointed out between prof- its, payments varying with them, and gross returns — or, that there has been a holding out to the plaintiff. The dis- tinction between existing and contem- plated partnerships is of as much im- portance here as before ; and it is obvi- ous that if, in attempting to establish a guasi-partnership, a real partnership^ Of the Evidence. 1111 it appear that two persons have in many instances traded jointly, that will be prima facie evidence of a general partnership, particu- larly if the instances of joint dealing greatly outweigh the instances should be shown to exist, the liability of the persona sought to be charged will only be established the more completely. What has to be proved in order to show that a person is a member of a company, and to establish his liability to be placed on the list of contributories, or to be sued for calls, or to have execution for a debt of the company issued against him, or, on the other hand, to establish his rights as a shareholder, will be poin- ted out hereafter. 3. With reference to the means of proof, it is the province of a writer on evidence to discuss the metliod by which facts to be established may be proved, and it is not consistent with the plan of this work to examine the principles relative to the production or admissi- bility of evidence. At the same time, a few observations on some points of practical importance with respect to the mode of proving the existence of a part- nership are laid before the reader, in the hope that they may be found of use. As partnerships very often exist in this country without any written agreement at all, the absence of direct document- ary evidence of any agreement for a partnership is entitled to very little weight. As between the alleged part- ners themselves the evidence relied on, where no written agreement is forth- coming, is their' conduct, the mode in which they have dealt with each other, and the mode in which each has, with the knowledge of the others, dealt with other people. This can be shown by books of account, by the testimony of clerks, agents, and other persons, by letters and admissions, and, in short, by any of the modes by which facts can be established*. As to the presumption arising from the joint retainer of solicit- ors, see Ilobinson v. Anderson, 30 Beav. 98, and 7 De G. Mc. & G. 339 ; Webster v. Bray, 7 Ha. 159 ; M'Gregor v. Bain- bridge, id. 164. And for cases in which a partnership has been inferred from a number of circumstances, see Nerot v. Bernand, 4 Buss. 247, and 3 Bli. (N. S.) 315 ; Jacobs%n v. Hennekinius, 5 Bro. P. C; 483 ; NichoUs v. Dowding, 1 Stark. 81 ; Peacock v. Peacock, 3 Camp. 45 ; Worts V. Pern, 3 Bro. P. C. 548, where there was a draft agreement which had been acted on. See, as to obtaining evi- dence from the solicitors of the alleged partners, Williams v. Mudie, 1 Car. &P. 158. An agreement for a partnership may be continued in one document or many, as, for example, in a series of letters. Moreover, a prospectus or ad- vertisement issued by one person and assented to by another, is abundant evi- dence of a contract upon the terms con- tained in the prospectus or advertise- ment. Fox V. Clifton, 6 Bing. 797, 798 ; and the contract thus established cannot be departed from by either party with- out the consent of the other, Black- burn's case, 3 Drew. 409 ; and any sub- sequent contract based upon the prospec- tus or advertisement will be construed as carrying out the terms therein con- tained, unless it can be shown that those terms were intended by both parties to be varied. Fenn's case, 4 De G. Mc. & G. 285; Mowatt v. Londes- borough, 3 E. & B. 307, and 4 id. 1 ; but see Watts v. Salter, 10 C. B. 477, When it is sought to make a person lia- ble as if he were a partner, evidence must be adduced of his acts, or of what has been done by other people with his knowledge and with his consent. The statements and acts of his alleged co- partners are no evidence against him until he and they are shown to have been connected in some way with each other, and it is obviously reasoning in a circle to infer a partnership from any acts of theirs, unless those acts can be imputed to him for some other reason than that he and they are partners. See 1 Tay. Ev., § 533 ; Grant v. Jackson, Peake, 368. Upon this principle it has been held that the registers of ships are no evidence of ownership except as against the persons upon wliose affida- vit the entries in the registers were made. Tinkler v. Walpole, 14 East, 336; Flower v. Young, 3 Camp. 340 ; and see M'lver V. Humble, 16 East, 174 ; that entries in the office in Somerset House for licensing stage-coaches are no evi- dence to prove that the persons named in the license are the owners of the coach, Strotlier v. Willan, 4 Camp. 24 ; Weaver v. Prentice, 1 Esp. 369 ; and that the acts, letters and statements of one promoter of a company are no evi- dence against another, who cannot be shown to have authorized them. See Drouet v. Taylor, 16 C. B. 671 ; Burnside V. Dayrell, 3 Ex. 334 ; W'atson v. Charle- mont, 12 Q. B. 856. This will be again alluded to in a subsequent chapter. It 1112 Rights of Partners. of separate dealing. In a case where A and B had dealt as jiartners in two transactions only, it was urged that this would raise such a strong presumption of a general partnership, as to dispense with need scarcely be observed that the prin- ciple now under discussion does not ap- ply to exclude the testimony of a per- son deposing to the existence of a part- nership between himself and another. Such testimony was not excluded even before the alteration of the law relating to the competency of witnesses, Hall v. Curzon,9 B. & C. 646 ; Blackett v. Weir, 5 id. 385 ; and there is no pretense for excluding such testimony now. If a partnership is alleged to exist between A and B, and A is called to prove it, and he denies it, then, although the person calling A as a witness cannot adduce further evidence to show that his testi- mony is generally unworthy of credit, yet such person may adduce other evi- dence to show that the partnership de- nied by the witness does in point of fact exist. Ewer v. Ambrose, 3 B. & Cr. 746. Further it is to be observed that, not- withstanding the principle above stated, after sufficient evidence has been given to raise a presumption that several per- sons are partners, then the acts of each of those persons are admissible as evi- dence against the others for tlie pur- pose of strengthening the prima fade case already established. Thus in Nor- ton V. Seymour, 3 C B. 792, in order to prove a partnership between the de- fendants Seymour & Ayres, the plaintiff called a witness who deposed that Ayres had in conversation admitted the part- nership, and then the plaintiff gave in evidence a circular and invoice issued by Seymour, and headed Seymour & Ayres, and stated that the business would in future be carried on in those names. Ayres objected to the admissi- bility of this document, there being, as she contended, no evidence to connect her with it, bat the court held it to be admissible, for, before the document was put in, evidence of a partnership had been given, and the document tended to confirm that evidence. So in Nich- olls V. Dowding, 1 Stark. 81, prima facie evidence of a partnership having been given, the declarations of one of the defendants were inquired into for the purpose of binding the" others, and it was held that such evidence was admis- sible, a foundation for it having been previously laid. See, too, Alderson v. Clay, 1 Stark. 405. A person may be made liable as if he were a partner without the proof of any partnership articles or deed which he may have exe- cuted. Alderson v. Clay, 1 Stark. 405, where a person was proved to be a mem- ber of a company without the produc- tion of the company's deed. And al- though in order to prove an actual part- nership it may be necessary by the law of some other country to show that some formality has been observed, the non-observance of that formality will not prevent persons who in fact trade as partners, from being so treated in ques- tions arising between them and third partners. Shaw v. Harvey, Moo. & Mai. 526 ; Maudslay v. De Blanc, 3 C. 6 P. 409, note. An admission made by any one that he is a member of a par- ticular partnership or company is of course evidence of that fact against him, Sangster v. Mazareddo, 1 Stark. 161 ; Studdy V. Saunders, 3 D. & Ry. 347 ; Clay V. Langslow, 1 Moo. & Mai. 45 j and such an admission renders it unnec- essary for the purpose of fixing him with the liabilities of a partner, to show that he executed any document whereby he became a partner. Harvey v. Kay, 9 B. & C. 356 ; Ralph v. Harvey, 1 Q. B. 845, and.see Tredwen v. Bourne, 6 M. & W. 461. Thus it has several times beeu held that a person, who had admitted himself to be a shareholder in a com- pany constituted by deed, may be ren- dered liable as a shareholder without any evidence being given as to that deed. Admissions, however, are not necessa- rily conclusive, and little weight ought to be attached to them if it is shown that they were made under erroneous suppositions. This seems to have been the true ground of the decision in the much debated case of Vice v. Anson, 7 B. & C. 409. See, on this case, Owen v. Van Uster, 10 C. B. 818, and query, if it is law; for though the defendant had no legal interest in the mine, was she not entitled as a partner to share the profits obtained by working the mine ? and what more was necessary to make her liable to the supplier? There the defendant supposed herself to be a share- holder in a mine ; she had in private letters and in private society written and spoken of herself as a shareholder ; she had received certificates stating that her name was registered in the act-book of the mine, and that she was entitled to share the profits of it ; and, lastly, she had paid deposits on her shares. Of the. Evidence. 1113 proof that the particular debt sought to be recovered was contracted on the joint account. Lord Ellenborough appears to have held other- wise, but he said that had the instances of joint-dealing preponderated, But Lord Teuterden held that she had not in point of fact any interest in the mine, and that as she never repre- sented to the plaintiff that she was a shareholder therein, she could not be made liable to him simply because of her erroneous suppositions and admis sions. The inconclusive tiature of an admission was distinctly recognized in Ridgway v. Philip, 1 Cr. M. & R. 415, where Parke, B., said, " It frequently happens in cases where the liability of persons as partners comes in question that the juries are induced to give too much eflfectto slight evidence of admis- sions. An admission does not estop the party who makes it ; he is still at liberty, as far as regards his own interest, to con- tradict it by evidence." In that case one of the defendants was allowed to ex- plain an admission made by him to the efi&ct that he was in partnership with the others. See, too, Newton v. Belcher, 12 Q. B. 921, 925, as to the admissions made by promoters of companies as to their liabilities. So, where the freight- ers of a ship addressed a letter to the captain, instructing him on his arrival at the Cape to call upon their managing partner, Mr. W. G. Anderson, it was held competent to the freighters to show that Mr. Anderson was not a part- ner of theirs. Brockbank v. Anderson, 1 Man. & Gr. 295. The real question was, whether Anderson was an inter- ested witness, which he would have been had he been a partner. See Mant V. Mainwaring, 8 Taunt. 139 ;. Brown v. Brown, 4 Taunt. 752. An admission by one person, that he and another are partners, may be open to the explanation that they are part- ners to some limited extent or with re- spect to gome particular transaction, but not to the extent or with re- spect to the business necessary to sus- tain the case made against him. Per- sons may be partners in some particular concern or business and yet not be in partnership generally so as to render them liable as partners in cases not con. nected with that particular business, and a person who has admitted that he and others are partners is allowed to show that he and they are not partners to the extent or for the purposes relied upon by those seeking to avail them- 140 selves of his admission. See Ridgway V. Philip, 1 Cr. M. & R. 415, and De Berkom v. Smith, 1 Esp. 39. Again, persons may agree that as be- tween themselves the partnership be- tween them shall be deemed to have commenced at some time before its ac- tual commencement. Proof of such an agreement as this would not enable a stranger to make the parties to it liable to him as partners for what took place before the partnership in point of fact began. As to third parties, such an agreement is res inter alios acta, which does not affect them in any way, Wils- ford V. Wood, 1 Esp. 182 ; 'Vere v. Ash- by, 10 B. & C. 288, and it is obvious that an admission of the existence of a part- nership might be explained in the man- ner here suggested, and that in such a case the admission might be worth nothing. The following is the kind of evidence usually had recourse to for the purpose of proving the existence of an alleged partnership or gMa«i-partnership : Agreements in writing and deeds,* showing the right to share profits. Hickman v. Cox, 18 C. B. 617 ; Barry v. Nesham, 3 id. 641 ; Battley v. Lewis, 1 Man. & Gr. 155 ; Bloxham v. Pell, 3 Wm. Blacks. 999; Waugh v. Carver, 3 H. Blacks. 135. If the signature to a deed is proved, its due execution is inferred. Grellier v. Neale, 1 Peake, 198. To prove who constituted ^ firm of A& Co., the attorney of B & Co . cannot be com- pelled to produce an agreement made between A & Co. and B & Co., if he ob- jects on the ground of professional con- fidence. Harris v. Hill, Dowl. & Ry. N. P. Ca. 17. Admissions. — Sangster v. Mazareddo, 1 Stark. 161 ; Harvey v. Kay, 9 B. & C. 356; Ralph v. Harvey, 1 Q. B. 845; Clay V. Langslow, 1 Moo. & M. 45. Advertisements, Prospectuses, etc., containing the names of the alleged partners. Lake v. Argyll, 6 Q. B. 477 ; Bourne v, Freeth, 9 B. & C. 682 ; Maud- sley V. De Blanc, 3 C. & P. 409, note ; Reynell v. Lewis. 15 M. & W. 517; Wood V. Argyll, 6 Man. & Gr. 928. In Ex parte Matthews, 8 & B. 135, an ad- vertisement of dissolution was read on, and names over doors, Williams v. IIU Eights of Partners. he thought the onus would have been upon the defendants to have shown that there was not a general partnership.' May be proved by parol evidence. Sec. 766. Where a plaintiff is provided *with ample evidence of the acts or dealings of the defendants as partners, it will be unnecessary for him to prove the execution of a deed of partnership by the defend- ants. Therefore, where an action for goods sold and delivered was brought against a person as being a member of the company to whom they were supplied, it was held sufficient 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 Keats, 2 Stark. 290, and on carts. Sta- bles V. Eley, 1 C. &P. 614. Answer in Chancery containing ad- missions. 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. Blacks. 242 ; Norton v. Seymour, 3 C. B. 792. Bills of S/Xchange. — The mode in which these have been drawn, accepted, or in- dorsed, has frequently been relied on with success. Spencer v. Billing, 3 Camp. 810; Guidon t. Robson, 2 id. 302 ; Duncan v. Hill, 2 Brod. & Bing. 682 ; Gurney v. Evans, 3 H. &.N. 122. Letters and Memoranda, sliowing an intention to give a person a share of profits, coupled with evidence tliat such intention was 'acted on. Heyhoe v. Burge, 9 C. B. 431. Meetings, — Attending and taking part in them, Lake v. Argyll, 6 Q. B. 477 ; Wood v. Argyll, 6 Man. & Gr. 928 ; Peel V. Thomas, 15 C. B. 714, and requiring them to be called. Tredwen v. Bourne, 6 M. & W. 461. Begisters. — An entry in customs house books made by one of three .lleged partners, to the efiect that he and the other two were jointly interested in cer- tain goods, though conclusive as be- tween them and the crown, is not so as between them and other persons. Ellis v. Watson, 2 Stark. 453. Melease executed by all the alleged partners. Gibbons v. Wilcox, 2 Stark. 43. Sliares. — The acceptance of shares in a projected company is by no means conclusive even when followed by the payment of deposits. See Vice v. An- son, 7 B. & C. 032 ; Bourne v. Freeth, 9 id.; Fox v. Clifton, 6 Bing. 776; Pitchford v. Davis, 5 M. & W. 2. It becomes important, however, when coupled with cfther facts, showing an interference by the shareholder with the management of the concern. Tred- wen V. Bourne, 6 M. & W. 467 ; Peel v. Thomas, 15 0. B. 714. Verdict. — A verdict of a jury finding the existence of a partnership upon the trial of an issue directed out of chan- cery was held by Lord Kenyon conclu- sive evidence against the partners in a subsequent action brought against them by a creditor. Whatty v. Menheim, 2 E.sp. 608. Use of property by several jointly. — Weaver v. Prentice, 1 Exp. 309. -A witness may be asked not only who composes such and such a firm, but also whether certain individu- als do. Acerro v. Petroni, 1 Stark. 100. In the last case it was held that the counsel may suggest to the witness, called to prove the partnership, the names of the component members of the firm. To prove a partnership between A, in Eng- land, and B, iu Spain, it was held not enough to show that A once dwelt in a town in Spain, and that B resides and carries on business there in the name of A, B & Co., and that there is no one there by the name of A. Burque v. De Tastet, 3 Stark. 53. ' Newnham v. Tetherington, Boss' V. & P. 134, ed. Harrison. Of the Evidence. 1115 defendant had attended several meetings of the society, and had acted as chairman.' And CA-en if a deed be produced to prove that the defend- ants 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 exchange, in order to prove the liability 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 composition, 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 witness, who was attorney to the Middlesex Water Works Company, 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 Tenterden, "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 dis- closure of his title." " Where assumpsit was brought against partners on a written agreement to underlet premises, which agreement was signed in their name and style of II, 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.' That bills vrere drawn and accepted in a particular way. Sec. 767. 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 has been one invariable course of deal- ing between the parties to these bills, according to which they were drawn and accepted. To use the words of Lord Ellen borough — " Parol evidence may be received of one invariable mode of dealing 1 Alderson v. Clay, 1 Stark. 405. ' Evans v. Curtis, 3 Car. & P. 396. ! Harris v. Hill, Dowl. & Ryl. N. P. 0. 17; 3 Stark. 140. 1116 Eights of Partners. between parties by means of bills of exchange. If the mode of deal- ing varies, the bills must be produced, otherwise we should be receiv- ing parol evidence of an individual written instrument, which is not admitted. But wliere bills are sworn to be always drawn and accepted in the same firm, I think the course of dealing so established may be proved by the parol examination of a witness, for the purpose of show • ing in what relation the parties stood to each other." ' Acts and conduct of the parties. Sec. 768. In proving a partnership from the acts of the parties in the conduct of their business, a witness may be asked, whether one defendant has intei'fered in the business of the other, and the question cannot be objected to as a leading question." Answer to suit in equity not admissible, except. Sec. 769. The plaintiff, in order to prove the partnership of th^ defendants, cannot produce the answer to a bill in chancery filed by one partner against the other, if the latter object to the production. For there would be the same objection to the admission of this evi- dence 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 exchange, it was held that the plaintiff could 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 dis- solved before that time.* On the other hand, in an action against partners, where there is no dispute between 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 account, is admissible evidence to establish the partnership, without producing the original. Aud in the case where this was decided, it was likewise held that, in order to prove the identity of the defendants, the clerk of their solicitor was a com- petent witness to that fact, though ho knew nothing of the defend- ants, but from his intercourse with them professionally in the con- duct of the suit in chancery.'' Records in former suits. Sec. 770. The record of an issue to try the fact of partnership has ' Spencer v. Billing, 3 (.amp. 310. ■• Rooth v. Quin, 7 Price, 193. = Nichols v. Dowding, 1 Stark. 406. ^ Studdy v.Sanders,2 Dowl. & Ryl.347; 3.See Wych v. Meal, 8 P. W. 310. see Henuell v. Lyon, 1 Barn. & Aid. 183. Or THE Etideis^ce. 1117 been admitted as evidence of that fact, in an action against certain persons as partners. An action was brought against L and M as partners for goods sold and- delivered. L suffered judgment to go by default, but M, who denied the partnership, pleaded 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 directed to try "whether L and M were partners at any or what time." The issue was tried, and a ver- dict found, "that a partnership had subsisted between L and M from the 29th September, 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.' But 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, secondly, that it might have been obtained on the evidence of the party who afterward took advantage of it. He, therefore, questions 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. ' Declarations or admissions evidence against partner making them. Sec. 771. 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 partneiship.* Therefore, words ' Whately v. MenUeim, 3 Esp. 608. Y. C. P.) 36, and in Ohio, Marks v. In Vermont, a bill in e juity setting up Sigler, 3 Ouio St. 360. But a contrary a partnership, Carlton v. Ludlaw, 28 doctrine was held in an early case in Vt. 507. In Ohio, a mortgage deed ex- Maine, where the fact of partnership ecuted in the name of the firm, Crowell was put in issue and passed upon by a V. Western Reserve Bank, 3 Ohio St. jury. Burgess v. Lane, 3 Me. 165. 414. In Maine the record of a judgment ^ Stark. Ev., vol. 1, p. 195 ; vol. 3, p. by default against, persons as partners 1074. has been held sufficient to prove that ' De Berkom v. Smitli, 1 Esp. 29 ; they held themselves out as partners. Gibbons v. Wilcox, 8 Stark. 43 ; Parker Ellis V. Jameson, 17 Me. 237 ; Cragen v. v. Barker, 3 Moore, 226 ; Shott v. Streal- Carleton, 21 id. 493 : Lynch v. Swan- field. 2 Mood. & Malk. 9- Whitford v. ton, 53 id. 102 ; so, also, in New Tutin, 6 C. & P. 338. York, Downing v. Mann, 3 E. D. S. (N. 1118 Eights of Partners. uttered, or letters written, in the course of commercial transactions, are constantly received in evidence, to charge the speaker or writer as a partner,' or as having delegated powers to his copartner in relation to the partnership concern.^ statements made by others in presence of defendants. Sec. 772. Where a person is charged as having held himself out as a partner, a witness may be called to show that he, the witness, reported the defendant a partner, in consequence of a statement or admission made to the witness in the defendant's presence.' And, upon the same larinciple, an entry made according to the statute, at the excise office, by one partner in the names of himself and copart- ners, as dealers in beer, is prima facie evidence of a partnership against the party making it.'' In an action against several partners, if all are outlawed but one, the plaintiff will be entitled to a verdict against that one, upon his admission that he was in partnershiji 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 defendants, all are liable upon that admission alone. Where, in assumpsit 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.' Admissions of one partner. Sec. 773. But the act, admission, or declaration of one partner is not evidence to prove the partnership against tlie other defendants.' 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 evidence 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 resided there, and there was no other person of that name.' In like manner, an affidavit for 'Id. Even if the communications be * Ellis v. Watson, 2 Stark. 453. made to tlie attorney of the defendants ' Sangster v. Mazarredo, 1 Stark. 161. they will be evidence against the latter, " Gibbons v. Wilcox, 3 Stark. 43. if made previous to the action, and not 'Whitney v. Ferris, 10 Johns. 66; for the purpose of defending it. Wil- Tuttle v. Cooper, 5 Pick. 414; Contra, liama v. Mudie, 1 Car. & Payne, 158. Evans v. Drummond, 4 Esp. 89; Heath 'Thicknesse v. Bromilow, 2 C. & J. v. Sansom, 4 B. & Ad. 175. 535. 8 Burgue v. De Tastet, 3 Stark. 58, ' Shott v. Strealfleld, 2 Mood. & Eob. 8. Op the Evidence. 1119 the registry of a ship made by A, stating that A and B are the own- ers, 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 acts. Therefore, to charge two persons as joint-purchasers of a cart, an entry of such cart in the tax gatherer's book is not evidence, unless it be shown that the parties authorized the entry.' Same class of evidence to sustain plea for non-joinder. Sec. 774. 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 j)urpose 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. Admissions of one partner admissible, ivhen. Sec. 775. As soon as evidence of the partnership is established, the acts, admissions, and declarations of one partner, in matters relating to the affairs of the partnership, will be evidence 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 afterward held that in an action against one partner for money paid to his use, the admission of the debt by another partner was evidence against the defendant.' He likewise ruled, on another occasion, that if a nolle prosequi be entered as to one defendant who pleads his bankruptcy, an admission made by him before he obtains his certificate is evidence against the other defendants." Admissions after dissolution. Sec. 776. Even where the partnership has been dissolved, we have ' Tinkler v. Walpole, 1 East, 226 , ■* See D. Lord Kenyon, Grant v. Jack- Flower V. Young, 3 Camp. 240; Smith son, 1 Peake, 203 ; Smith v. Pickering, V Fuge, id. 456. i<3. 69. As to the declarations of one 2 Weaver v. Prentice, 1 Esp. 369. See joint-trespasser, see post. Strother v. Willan, 4 Camp. 34 ; Fraser ' Thwaites v. Richardson, 1 Peake, 16 V. Hopkins, 3 Taunt. 5. * Grant v. Jackson, 1 Peake, 203. 3 Clay V. Langston, 1 Mood. & Malk. 45. 1120 Rights of Partners. seen that an admission made by one of the quondam partners may be binding on the rest. But there seems reason to contend that state- ments by partners in the shape of admissions should be received with greater caution after the dissolution than during the continu- ance of tke 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 an action of debt on a joint bond, that the admission made by a defendant in a suit filed against him after action brought, was not receivable against the co-defendant to the action.' Admissions by agent after retirement of one partner. Seo. 777. Where a change has taken place in the constitution of a firm by the retirement 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.' What must be shovm to hold the firm. Sec. 778. We have already seen in what cases a firm is bound by the contracts of its individual partners. To recapitulate the evidence 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 copart- ners in abatement, a joint contract 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 exchange purporting to have been drawn by the partners, and to bear date previous to the dissolution, the date of the bill,- until the contrary be shown, must be taken to be the date of the drawing of it, consequently all the defendants, prima facie, will be liable, and ' Sullivan v. Evans, 2 Huds. & Bro. ^ If a man and his partner are separ- 461. Diss. Bushe, C. J. ately sued for some demand, and both ' Jones V. Shears, 4 Ad. & Ell. 832. In employ the same attorney, it seems this case the retiring partners were dor- clear that the attorney cannot sue the mant as to the world in general, but partners jointly for the amount of his not as to the party who contracted with bill. Hellings v. Gregory, 1 Car. & them. Payne, 637. Of the Evides-ce. 1121 it will not be necessary for the plaintiff to prove that the bill was drawn and indorsed before the dissolution." Admission does uot make person a partner — may show that he was not. Sec. 779. 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 purpose, prove a previous dissolution. However, his subsequent acknowledgment that he was a partner, if in fact he were not so, will not render him liable to be sued at law by virtue of the original contract ; though if, in addi- tion to his acknowledgment, he gives a bill as a security for that trans- action, this raises a new contract, upon which he may be sued." It will not be necessary to recapitulate, the various defenses which may be set up by a person charged as a partner, but we may shortly observe, that the defendant may prove a disclaimer of the alleged con- tract, and that he gave notice to the plaintiff that he would not be answerable. He may likewise give evidence that he was not a part- ner 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 contract 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.' When person is estopped from denying a partnership. Sec. 780. 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, purporting 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 ' Anderson v. Weston, 3 Jur. 105. * Jones v. Hunter, Dan. & Lloyd, 215. ' Ellis v. Watson, 2 Stark. 453. Where In this case the non-liability in respect this defense is offered to an action of the particular trade was attempted against partners on a bill of exchange, to be proved by parol ; but the evidence a subsequent bill of exchange may be was not admitted, there being a rough given as auxiliary evidence of the con- sketchin writing of the terms of the part- tinuation of the partnership, and that nership, which had been assented to by although the subsequent bill be de- the parties, though not signed by them, clared on ; provided the plaintiff, by the and only made with a view to future terms of his particular, confine his right articles. to recover to the first bill only. Dun- ^ Birt v. Hood, 1 Esp. SO. . can V. Hill, 2 Brod. & Blng. 682 ; 5 « Eliot v. Morgan, 7 C. & P. 384. Moore, 567. s Saville v. Robertson, 4 T. R. 120. 141 1123 Eights of Parth^eks. partner, this is not a variance of which the defendant can take advan- tage, because, by accepting the bill, he is estopped from saying that it was improperly drawn.' So, where a bill 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 iip as a defense any irregularity in the drawing. Under such circumstances, proof that the bill was accepted is sufficient evidence of its having been regu- larly drawn." Defendant may show that admissions had no reference to partnership. Sec. 781. Where the partnership of the defendant is not disputed, and the plaintiff, in order to fix him with the contract, gives evidence of the declaration or admission of the defendant's copartners, he may show that such declarations or admissions had no reference to the partnership. Thus, if he belongs to a society of persons who are both partners and part owners, he may give evidence that the admis- sion 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 becoming a partner ; for, before he can be affected by such admission, his i-esponsibility 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 unfrequently arise in cases of partnership, in particular adventures. Rule in Ridgway v. Philip. Sec. 782. An instance of the line of defense last adverted to occurred in Kidgway v. Philip.^ 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 in Cambridgeshire. Tlie draft agreement being drawn up in the name of Brown & Co., the plaintiff asked Brown what other persons beside himself composed the firm, upon which Brown wrote on the back of the draft, "John Broadhurst, Esq., and Di\ Wilson Philip." The contract being broken, the plaintiff brought his action for the breach againt Philip & Broadhurst ; but previously to the action his son called on the 'Bass V. Clive, 4 Camp; 78; Wilde worth v. Hunter, 10 Barn. & Cres. 455. V. Keep, 6 C. & P. 335. In a late case, ' Porthouse v. Parker, 1 Camp. 82. Littledale, J., reprobated the introduc- ' -Taggers v. Binning, 1 Starls. 64. tiou of the doctrine of estoppel into * Catt v. Howard, 3 Stark. 8. transactions taking effect by the usage ' 1 Cr., M. & Ros. 415. and custom of merchants. See Holds- Of the Evidence. 1123 defendant, Broadhurst, and asked him whether Brown was coiTect in making the indorsement upqn the draft of the agreement, to which Broadhurst replied in the affirmative, and stated that he had bought his original interest from the other defendant, Dr. Philip. In order further to fix Bi'oad hurst as a partner, evidence was given at the trial that, while the engine was in progress, he attended very frequently at the manufactory to inquire how it was going on, and that he gave advice and made suggestions with regard lo its construction. In answer to this evidence, an agreement or license 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 engines in certain parts of Cornwall only, and it was contended that the admissions of Broadhurst were to be taken with reference 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. Gaselee, J., who tried the action, 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 transaction. 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. When one partner may be called to prove partnership. iSEC. 783. 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 delivered 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," observed 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 1124 Rights of Partners. be remembered ihat tbe admission of the witness was tlie only proof of his own liability ; it was, therefore, only reasonable to take the whole of his evidence together, and that showed the defendant to be jointly liable."' So, in an action bronght to charge A as a part- ner in a trading company, a witness, who was proved to be a share- holder by other evidence than his own, and, therefore, might a for- tiori be considered interested in increasing the number of partners, was nevertheless held competent to prove that A was a partner.' When the partnership is proved or admitted, the plaintiff may, in like manner, but with the same restrictions, call one of the partners to prove other parts of his case. Thus, in assumpsit on an attorney's bill, where the charges were for business done for two persons (part- ners) and one only was sued, and there was no plea in abatement, it was ruled that the other might 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 contribu- tion 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 defend- ant 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 defendant was not authorized by the partners to make the contra'ct, 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 ' Blackett v. Weir, 5 Barn. & Cres. to prove the execution of the bond by 385 ; 8 Dowl. & Ryl. 143. the defendant. See 1 Str. 35. « Hall V. Curzon, 9 Barn. & Cres. 646. ' Fawcett v. Wratball, 3 Car. & Pay. In Luckett v. Graham, which was an 305. action against one of three obligors, a ■• Cossham v. Gfolduey, 3 Stark. 414. co-obligor was allowed to be a witness Of the Evidence. 1125 liable to contribution, increased by the costs. In one way, therefore, the verdict would be indifferent, in the other, prejudicial.' Interest of vritness. Sec. 784. 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." Thus, in an action against one of two joint makers of a promissory note, it was held that T S, the other joint maker, might prove the defendant'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 indifferent.' 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 liable 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 the defendant, the acceptor, and with respect to the other partner, though he would have been liable to the defendant if the plaintiff recovered, he would have had his remedy over against his joint part- ner. ° In a recent case, where an action was brought against the maker of certain notes which had been indorsed by 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 plaintiffs, although B had been a partner in the firm of A & Co., and had given A author- ity to indorse these notes for the purpose of winding up the concerns of the partnership .° To party examined without consent. Sec. 785. Where a partner is a defendant on the record, that fact ' Hudson V. Eobinson, 4 Mau. & Sel. ' 1 Phil. Ev. 69. In most, if not all 476. the States, the parties to a suit may be .^1 Phil. Ev. 68. witnesses for or against each other. 3 York v. Blott, 5 Mau. & Selw. 71. " Smith v. Winter, 4 Mees. & Welsh * Ridley v. Taylor, 13 East, 175. 454. 1126 Eights of Partners. alone, in the opinion of many judges, has been an objection to his being called as witness to the plaintiff.' In Mant v. Mainwaring, BuiTongh, 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 par- ties to the record must consent; and without such consent none can be called. In this case the co-defendants objected to the examination of a defendant in behalf of the plaintiff, and, therefore, the witness is properly rejected." But it is to be observed that such consent has not always been thought necessary ; * and, in the leading cases on this subject, as much stress 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,' 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 plain- tiff 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 applicable to the case of Mant v. Mainwaring,* where it was held that a release from the plaintiff to the defendant under these circumstances would not render him a competent witness for the plaintiff. 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 conditioned for the payment of rent to the plaintiff, brought against three persons, two of whom suf- fered 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 tinder the agreement continued till 1829. His testimony being objected to, the point was reserved for the opinion of the Court of Common Pleas, who decided that he was a competent witness. "No case," said Tindal, 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 interest, / ' ' Dallas. J., and Burrough, J., 8 Tainrt.' ' ' 4 Taunt 753. 141 ; Abbott, C. J., 5 Barn. & Cres. 387. ■'8 Taunt. 139 ; 2 Moore, 9. * Norden v. Williamson, 1 Taunt. 378; "7 Bing. 895 ; 5 Moore & Pay. 241. Doe V. Green, 4 Esp. 198. Of the Eviden-ce. ll^? 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 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." ' In an action ex contractu against one or more partners, a copartner cannot' be admitted as a witness for the defendants. For he has a direct interest in defeating the action, inasmuch as in the event of its succeeding he is liable to contribution both for the money recovered and the costs.'' And he cannot be rendered competent by the provis- ions of the S'tat. 3 & 4 Will. 4, c. 42, s. 36, 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 ; ^ and such direct advan- tage 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 that the debt due to the plaintiffs whilst the defendant was a partner, has prima facie 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.' 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 pur- chase except as his servant, for, said Lord Kenyon, by discharging the defendant he benefits himself, as otherwise he will be liable to pay a ' See Gilbert's Law of Evidence, 130, In most of the states, the parties may 4th ed. be witnesses and the circumstances of * Phil. Ey. 71 ; Bac. Abr. , Evidence interest does not disqualify a witness, (b.) ; Co. Litt. 6 ; Young v. Bairner, 1 but may be shown to affect the degree Esp 103. of credibility to be attached to it. » Slegg v. Phillips, 4 Ad. & Ell. 853. * WUson v. Hirst, 4 B. & Ad. 760. 1128 Rights of Partneks. share of the costs to be recovered by the plaiatiflE.' So, in an action against a part owner for work and labor, etc., 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 be ordered the work to be done; ^ and, generally an the plea of abatement 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 competent 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 pleaded in abatement. The ground of the decision was, that if the seller had recovered a verdict against B, which he might have done but for the testimony of A, the latter would be liable to contribution.^ In an action on a joint contract against two defendants, 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, in an action against one of two joint con- tractors, Lord'Denman refused to admit the other joint contractoi" 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 sub- sequent action be proved illegal as against the other, and so both might get rid of the liability altogether, and this ruling was confirmed by the Court of King's Bench.' But where one of several defendants is deprived of all interest in the event of the action, he may be . examined as a witness for the co-defendants. Thus, if upon the retirement of a partner mutual releases of all demands are executed between' him and remaining i>art- ners, the retiring partner may, though the accounts between him and ' Goodacre v. Breame, 1 Peake, 175 ; ' Young v. Bairner, 1 Esp. 103. Hall V. Hex, 6 Bing. 181. Upon the » Hare v. Munu, 1 Mood. & Malk. 241. principles upon which this class of * Evans v. Yeatherdt 9 Moore, 372 ; 2 cases has been decided, it has been held Bing. 133. that the joint acceptor of a bill of ex- ' Brown v. Fox, 1 Phil. Bv. 78. change is not competent to prove a set- * Slegg v. Phillips, 4 Ad. & El. 853. off in an action by the holder against the drawer. Mainwaring v. Mytton, 1 Stark. 83. Of the Evidence. 1129 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 competent witness for the defendant if released by him, though the rest do not join in the release,'' Again, if one of several partners, defendants, pleal his bank- I'uptcy, 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 ?iolle prosequi having been entered as to him, he was allowed, in defense of A, to give evidence that he had indorsed the bill to the plaintiff without A's privity, in discharge of his separate debt. * So, where A and B were partners, and accepted an accommodation bill drawn in their name, and to an action against A and B the latter pleaded his bank- ruptcy, and a nolle prosequi was entered as to him, it was held that as A was, under the circumstances, barred of all claim upon B for con- tribution, in the event of the plaintiff's success, B was, therefore, dis- interested, and might be called to prove that the bill was accepted for his own accommodation only, and not that of A.' So, where A and B were sued on a bill of exchange accepted by them while in partner- ship, 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 obligation 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 th§ surplus of his effects, was a competent witness for A. « 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. ' • Wilson V. Hirst, 4 B. & Ad. 760, over- was drawn a day or two after the part- ruling upon this point Uheyne v. Koops, nership had ceased as between the part- 4 Bsp. 112 ; see Young v. Bairner, 1 ners themselves, and the court seems to id. 103. have laid some stress on this circum- 2 Duke V. Pownall.l Mood. & Malk. stance; but it was Immaterial, as the 430. 49 Geo. 3, c. 131, s. 8, extended to part- a 16 East, 171 ; Dans. & Lloyd, 315. ners as well as sureties. « Green v. Deakin, 3 Stark. 347. « Aflalo v. Fourdrinier, 6 Bing. 306 ; 5 Moody V. King, 3 Barn. & Ores. 558 ; 3 Moore & Payne, 743. 4 Dowl. & Eyl. 30. In this case the bill ' Jones v. Hunter, Dans. & Lloyd, 315.. 1130 Rights of Partkbes. 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-defendants. 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 circum- stances, his Lordship observing that in case of a verdict for the plain- tift, the bankrupt was liable to the costs of the action, and was, there- fore, 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 likewise barred, even though they may not be prova- ble 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 judge, and that although, upon issue joined, it may be clear from the evidence that the defendant who has pleaded his bankruptcy must have a ver- dict in his favor, yet he is not entitled to have tnat 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 sufiered 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." A copartner of the defendant may likewise be examined in liis behalf by consent of the plaintiff. But in a case where a defendant pleaded the non-joinder of his copartner in abatement, and, by con- sent of the plaintiff, called his copartne^' to prove the plea, and, upon examination , the copartner denied the partnership, it was held that although the defendant might call other witnesses 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.* Where the plaintiff wishes to object to the testimony of a witness on ' Raven v. Dunning, 3 Esp. 283. Carrie v. Child, 3 Camp. 383 ; Carpen- "^Ex parte Poucber, 1 Gly. & Jam. ter v. Jones, 1 Mood. & Malk. 198; but 385 ; and see the cases there cited ; but see Bate v. Eussell, id. 833. see 4 Bing. 57. * CoUey v. Smith, 4 Bin^. N. C. 285 ; ' Bate V. Russell, 1 Mood. & Malk. 5 Scott, 700. 333. The witness had a release from ^ Ewer v. Ambrose. 3 Barn. & Ores, the co-deiendants, ex majori cavteld. 746; 5 Dowl. & Ryl. 629. * Bmmett v. Bradley, 1 Moore, 333 ; Of the Evidence. 1131 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 competent to the plaintiff to examine other witnesses in order to establish the partnership, if he think that such evidence will have weight with the jury." But in order to deprive the defendant of a witness, on the ground just stated, a part- nership must be satisfactorily proved Therefore, where, to an action against a person as a trader, the defense 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 could not, by merely suggesting a partnership between A and the defendant, deprive the defendant of A's testimony to this fact.' Evidence in action for tort. Sec. 786. 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 trespass, and then proved a second trespass against three only, expecting afterward 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 h^^d that they should be acquitted, before the three went into their defense.' It seems to be scarcely settled how far, in actions of tort, the decla- rations of one defendant are to be received in evidence against another. In the King v. Hardwick," Lord Ellenborough observed that when a joint trespass has been established, the declaration of one defendant as to the motives and circumstances 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 declara- tions are only admissible as have been made with reference to a con- certed plan, and in pursuance of a common olject.'' And this opinion has been adopted in a subsequent case. An action was brought ' Cheyne v. Koops, 4 Esp. 112. 588 ; Holroyd v. Breare, 4 Barn. & Aid. iiSee "Ewer V. Ambrose, ante, and 1 700. To find all guilty in trover, a joint Phil. Ev. 131. Formerly, it was held conversion by all must be proved. 3 that he could not resort to both methods Phil. Bv., tit. " Trover." to establish the partnership. 10 Mod. * Wynne v. Anderson, 3 Car. & Payne, 151 ; Ambler, 593. 596. " Birt V. Hood, 1 Esp. 30. " H East, 385. ^Nichol V. Glennie, 1 Mau. & Sel. '1 Phil. Ev. 96. 1132 Rights of Partners. against several defendants for placing the flap of a cellar, for the pur- l^ose of unloading wine, so negligently that it fell upon the plaintiff, and injured his leg. One of the defendants having sufEered judg- ment by default, a statement made by him was offered in evidence not only against himself, but also against the other defendants, and The King v. Hard wick 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 farther. It seems to me the authority relied on on both sides applies to a case where there is a common object to be furthered, but here there was no common object, it is mere negli- gence. 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 defendants.' But, where a joint trespass has been proved to have been willfully 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 defend- ants, made some weeks after, in the absence of the others, tending to show that the imprisonment arose from •malice, was ruled to be admis- sible in evidence, in an action for false imprisonment brought against all three.*' If a joint tort be committed by several 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 informa- tion for a misdemeanor the plaintiff may enter a nolle prosequi as to one defendant and then examine him.' But a particeps criminis, who is not made a defendant, inay be a witness for the plaintiff, although left out x)f the declaration for that 'Daniels v. Potter, 4 Car. & Payne, 'B. N. P. 385. 363 ; 1 Mood. & Malk. 501. •* Chapman v. Graves, 3 Camp. 333, n. ^ Wright v. Court, 3 Car. & Payne, ' B. N. P. 385. 333. Of the Evidence. 1133 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. ' It has been ruled that a defendant in an action of trover, who suf- fers judgment by default, may be a witness for the co-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 maybe a witness for another defend- ant.* In an action of replevin against a broker, it has been ruled that a person wheat the time of the distress was in partnership with the broker, is a competent witness for him." If in tort any person be arbitrarily made a defendant to prevent his testimony, the plaintifE shall not prevail by that artifice ; but the defendant against whom nothing is proved shall be sworn notwithstand- ing, for he does not swear in his own justification but in juscification of anothei". However, this rale 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 the event of the verdict.' If there be no case what- ever against him, it seems, according to some authorities, to be in the discretion 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 acquit- ted for such purpose until all the other evidence for the defendants is furnished. ' We may conclude this section by referring to thfe statute 3 ' Id. 286. against both defendants, so that a wit- ^ 5 Barn. & Ores. 387. • ness who has suffered judgment by de- 2 B. N. P. 286. fault, as in the principal case, is moat * Ward V. Haydon, 2 Esp. 553. See materially interested in absolving the S. 0., 2 Peake, 126. In a note to the other defendant from his liability. latter report it is observed that the de- ' Dormer v. Fortescue, B. N. P. 285. cision in this case is doubtful, inasmuch * Duncan v. Meikleham, 3 Car. & as Lord Kenyon supposed that the wit- Payne, 173. ness was only liable to costs down to ' B. N. P. 285. the time of signing the interlocutory ^ Davis v. Living, Holt, 275 ; Bouser judgment, and no further; but that the v. Curtis, 3 Car. & Payne, of)7, n. practice is to tax the whole costs jointly ' Wright v. Paulin, Ry. & Mood. 128. 1134 Eights of Partjjees. and 4 Will. 4, c. 42, sect. 26, which readers certain witnesses compe- tent who would otherwise be rejected on the ground of interest. That statute, "in order to render the rejection of witnesses 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 judg- ment 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 judg- ment 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 rec- ord or document on which the trial shall be had, together with the name of the party on whose behalf he was examined, by some officer of the court, at the request of either party, and shall be afterward 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.' Whore he has a direct interest in the subject- matter of the action, or the result of the suit, or where he may after- ward proceed or be proceeded against, without the production of the verdict or judgment, the statute does not apply." It seems clear, therefore, that in most, if not all the cases which have been men- tioned, in which the witness was held incompetent, and which, with but few exo8ptions, were decided before the passing of this act, the witness could not have been rendered competent by his name being indorsed on the record. >Per Parke, B., 2 Mees. & Wels. 421. 671; Green v. Warburton, 1 Mood. & »Bowmaa v, Willis, 3 Bing. N. C. Rob. 106. Nonsuit ; Veedict; Costs. 1135 CHAPTER XXXII. OF NONSUIT : Sec. 787. Nonsuit, when directed. Sbc. 788. Verdict must be for or against all. Sec. 789. Costs, who entitled to. Nonsuit, when directed. Sec. 787. The plaintiff will be nonsuited if he is nnable 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 judg- ment, or on a writ of error.' There is this advantage attending a nonsuit, that the plaintiff, though subject to the payment of costs, may afterward bring another action for the same cause, which he cannot do after verdict against him.^ In actions against partners, we have seen that the plaintiff may be nonsuited for the mis-joinder 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 non- suit.* 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 defendant may elect to be nonsuited. "Judgment by default," observed Lord Tenterden, " is either by own sum informatus or nil dicit. In the former case, the defendant's attorney having appeared, says that he ' 3 Tidd's Prac. 867. •Jones v. Gibson, 5 Barn. & Cres 768 ; 2 a Tidd's Prac. 868. 14 Geo. 2, c. 17. But the rule must be 2 Blake's case, 1 Sid. 378. In some of entitled in the cause ag'ainst all the de- the states the court has no power to fendants. Temple v. Hamilton, Snxith direct a nonsuit, but on motion may & Batty, 27. permit a party to become so. * M'lVer v. Humble, 16 East, 109. 1136 Rights of Partners. is not informed of any answer to be given to the action. In the latter, the defendant himself appears, but says nothing 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 action of assumpsit, one or two defend- ants suffers judgment by default, the other is entitled to judgment as in case of a nonsuit, for not proceeding to trial." Verdict must be for or agziinst all. Sec. 788. 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 found guilty;* there cannot, 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." 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 dam- ages — tarn ad triandum quam ad inquirendum, and the jury who try the issue shall assess the damages against all the defendants.' In actions upon contract, as covenant, assumpsit, etc. , the plea of one defendant, for the most part, inures to the benefit of all; for the contract being entire, the plaintiff must succeed upon it against all or none, and therefoi'e, if the plaintiff fail at the trial upon the plea ■ Murphy v. Donlan, 5 Barn. & Ores. ' Revett v. Brown, 3 Moore ^ Payne, 178; 7 Dowl. & Ryl. 619. - 18. Provision is now made by statute ' Stuart V. Rogers, 4 Mees.& Wels. 649. in nearly all the states that a verdict ^ Porter v. Harris, 1 Lev. 63. may be rendered against a part of the '' Nichol V. Glennie, 1 Mau. & Sel. defendants and /or a part. 588 ; Holroyd v. Breare, 4 Barn. & Aid. « Bishop v. Kaye, 3 Barn. & Aid. 605. 700; Sutton v. Clarlie, 6 Taunt. 29. ' 11 Rep. 5. Nonsuit; Verdict; Costs. 1137 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, etc., where the wrong is joint and several, the distinction seems to he this: that where the plea of one of the defend- ants is such as shows that the plain tifE 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 defendants demur, and others plead to issue, the jury who try the issue shall assess the damages against all the defend- *ants.^ If the defendants sever in pleading, the jury who try the first issue shall assess damages against all with a cesset ezecutio. In tres- pass, 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.* Costs, vrho entitled to. Sec. 789. The plaintiff who succeeds has prima facie a right to costs in all cases where he was entitled to damages antecedent to, or by the provisions of the st^itute of Gloucester;" as in assumpsit, cov- enant, debt on contract, case, trover, trespass, replevin, ejectment, etc. However, by the provisions of the statute 43 Bliz., 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 bat- tery," 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.' ' Porter v. Harris, 1 Lev. 63 ; Hann!.y him. He is not bound to admit the is- V. Smith, 3 T. R. 662. sue of the cause generally. Child v. ■' 2 Tidd'a Prac. 895. Chamberlain, 6 C. & P. 213. 3 Id. , '6 Bdw. 1, c. 1, s. 2. * Id. 896. A defendant in an action ' Dand v. Sexton, 8 T. R..87. of tort is entitled to be acquitted imme- ' Harris v. Duncan, 2 Ad. & Ell. 158 ; diately after the close of the plaintiff's 4 Nev. & M. 63. case, if there is no evidence against 1138 Rights of Partners. By the 4 Jac. 1, c. 3, defendant is entitled to costs on a nonsuit or verdict in his favor, in all cases where the plaintiff would have been entitled to them if he had obtained judgment.' He is, likewise, under the provisions of other acts," entitled to costs, either upon judgment of own pros, against the plaintiff for not declaring, or upon judgment in his own favor on demurrer, or in case the plaintiff does not recover the sum for which the defendant was, without probable cause, arrested. The defendant is likewise, in certain cases, entitled to costs under the 8 Eliz., c. 2, s. %, upon the discontinuance of the action by the plaintiff, and in tort, whei'e there is no contribution between several defendants for costs, this enactment has been held to extend to the csLfie ot nolle prosequi. Thus, where in trespass against two defend- ants, one of them suffered judgment by default, and a writ of inquiry was executed as against him, and the plaintiff 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, wherein assumpsit against two defendants one of them pleaded his bankruptcy, and the plaintiff entered a nolle 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 and 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 sliall have a verdict pass for him or them, every such person shall have judgment for and recover his reasonable costs, unless the judge certify that there was a reasona- ble cause for making him a defendant. On the authority of the several statutes to which reference has been made, the CQurts have by a general rule established 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 plaintiff's costs.* Hence, where in trespass a plaintiff failed against one of two defendants, and suc- ceeded against the other, the successful defendant's costs were set off against the plaintiff's costs without regard to the alleged lien of the ' But this statute does not extend to 'Jackson v. Chambers, 8 Taunt. 463. actions brought by executors or admin- 'Harewoodv. Matthews, 2 Tidd'sPrac. •istrators. 981. « 13 Car. 2, stat. 2, c. 2 ; 8 and 9 Will. 3, « And see 8 and 9 Will. 3, c. 11. c. 11 ; 43 Geo. 3, c. 46 ; 3 and 4 Will. 4, « Reg. Gen. 74, H. T. 1832. c. 43. Nonsuit; Verdict; Costs. 1139 plaintiff's attorney under Reg. Gen., H. T., 2 Will. 4, the attorney- being substantially the plaintifE. ' So, where several defendants were sued in trespass, and a verdict was found for the plaintifE on some' of the issues against some of the defendants, and against him on all 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 verdict, he will be entitled to all his separate costs, and also prima facie to an aliquot portion of the joint costs of the defense, unless the Master is of opinion that a smaller portion should be allowed.* When one of several defendants lets judgment go by default, and the other pleads a plea which goes to the whole declaration, and shows that the plaintiff had no cause of action, if this plea be found for the defendant who pleaded it, he shall have costs, and being an abso- lute bar, the other defendant shall have the benefit 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 plaintiff 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 answerg,ble for the whole costs.' It 'has been already observed that a plaintiff cannot sue more than one joint debtor separately for the same demand.' In a case where separate actions were brought against several persons for the same debt, who (if at all) were jointly liable, 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 without costs.' ' Pooock V. O'Shaunessy, 6 Add. & ^ Per Bayley, J., Dickins v. Jarvis, 5 Ell. 867. Barn. & Cres. 531 ; see Smith v. Camp- •' Starling v. Cozens/S C. M. & R. 445 ; bell, 4 Moore & Payne, 469. 1 Gale, 159. « B. N. P. 335. 3 Griffiths V. Jones, 4 Dowl. Pr. C. 159. ' Came v. Legh, 6 Barn. & Cres. 134; ■• Per Bayley, J., Baylis v. Dynely, 3 9 Dowl. & Ryl. 136. Chit. 153, and see 3 Tidd's Prac. 986, and the cases there cited. lUO Eights of Pakineks. CHAPTER XXXIIL OF EXECUTION. Sec. 790. Joint execution must be predicated on joint judgment. Sec. 791. What may be taken on. Sec. 792. Plaintiff may have several executions. Sec. 793. Executions in favor of separate creditors. Sec. 794. As to the interest passed by seizure and sale. Sec. 795. As to the relief of the solvent partner against the effect of the execu- tion. Joint execution must be predicated on joint judgment. Sec. 'iJQO. When a joint judgment has been given against several defendants, partners, the execution, which must agree with the judg- ment as to the parties, must also be joint,' for upon judgment 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 pro- portional part, and equity must be called in to make the rest con- tribute.* Moreover, if any of the defendants in a personal action die within a year after judgment, joint execution on the footing of this judgment may be had against the survivors.' What may be taken on. Sec. 791. 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 nulla bona, an action will lie against him. And if the plaintiff declare against the ' Penoyer v. Brace, 1 Ld. Eaym., 244; see D. Lord Eldon, 6 Ves. 119 ; Herries' 2 Wms. Saund. 72 i; Clerk v. Cle- v. Jameson, 5 T. R. 556; Woolley v. ment, 6 T. R. 526. Kelly, 1 Barn. & Cres. 68 ; Allen v.Wills, ■' Clerk V. Clement, 6 T.«R. 525. 32 Pick. (Mass.) 451 ; Newman v. Baiiey, 'Rol. Abr. 88; Bac. Abr., Execution 16 id. 570. (G). ' Penoyer v. Brace, 1 Ld. Eaym. 244 ; * Per De Grey, C. J., 2 W: Bl. 947, and 1 Salk. 319. Ov Execution. 1141 sherifE for a false return of AuUa bona to a fieri facias against the goods of A and B, alleging that " although A and B had goods within his bailiwick, etc., yet defendant,"' etc. ; thi.s allegation is sustained, though the plaintifE do not prove that B had any goods, for such alle- gation is severable, the legal effect of it being that both or either of them had goods.^ Plaintiff may have several executions, but only one satisfaction. Sec. 793. A plaintifE suing out execution for debt, damages, or costs, may at his election have a, fieri facias, capias ad satisfaciendum, or elegit against the goods, person, or lands of the party chargeable.^ Or he may have several writs of the same sort running at the same time, in order to take the defendant or his goods in different coun- tries. If nulla bona be returned to a fieri facias or non est inventus to a capias ad satisfaciendum, or niliil to an elegit, the party may after- ward 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 a. fieri facias, the plaintiff cannot sue out a capias ad satisfaciendum till ihQ fieri facias has been returned, though he should have withdrawn his execution under it.* Execution by capias ad satisfaciendum is a satisfaction of the debt.' 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 defendants ; it appearing that the plaintiff's object was merely to obtain payment of his debt, and that he was willing to allow the defendants the full benefit of all moneys levied tinder 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 writs he would proceed under, and also refused to set aside the other for irregularity.' The mode of seizing and sale by the sheriff — EKecutions in favor of separate creditors. Sec. 793. By the law of England, the creditor of any one partner may take in execution that partner's interest in all the tangible prop- ' Per Lord Eldon, 6 Ves. 12G. ' See Harbert's case, 3 Rep. 12 a, note " Jones v. Clayton, 4 Mau. & Sel. 349. (c), ed. Thomag & Fraser ; Ellis, Dr. & ' Bac. Abr. Execution (D), stat. 1 Vict , Cr., c. 13 : 2 Tidd's Prac, tit. Execution, c. 110, s. 11. « Cooper v. Rowe, Tidd's Pr., 9th ed. " Miller v. Parnell, 3 Marsh. 78. 995. 1142 Rights of Partkees. ertyof the partnersliip. ' He is to sell for such interest as the defend- ant has as partner, not for the degree of right which he may be found to have on the winding up of the affairs, otherwise the sale might be ■ Per Lord Alvanley, 3 Bos. & Pull. In Church v. Knox, 3 Conn. 533 ; Swift, C. J., laid down what seems to be the true rule as to the interest ol one partner in the partnership stock, and the rights of a separate creditor under a levy upon the interest of one partner therein. He said, "the ground taken by the plaintiff is, that the tangible property of tenants in common, and copartners, can be taken and sold on execution for the payment of their individual debts, that in case of a partnership, each part- ner is, in law, considered to be an owner, in proportion to the number of the whole, that the purchaser becomes ten- ant in common with the other partners and is entitled to the possession ; of course, on analogous principles, a cred- itor 'may, by foreign attachment, take the same proportionable part of a debt due to the partnership for the private debt of an individual partner. The tan- gible property of tenants in common may be taken and sold by execution against ei'ther of them, such part can only be sold as belongs to the party against wliom the execution issued ; and the purchaser will become co-tenant with the rest. But this rule does not apply to the case of copartners * * * An execution against a partner for his separate debt can take only the interest of the partner, in the partner»hip prop- erty, subject to the partnership debts ; that the interest of the partner, only, is sold, and not the effects. The pur- chaser will stand in the place of the partner ; the interest taken will con- tinue, subject to the same responsibili- ties; and the amount can be ascertained, only on a final settlement of the part- nership accounts. Moody v. Paine, 2 Johns. Ch. (N. Y.) 548 ; Taylor v. Field, 4 Ves . Jun. 396 ; Barker v. Goodair, 1 1 id. 85 ; Dutton v. Morrison. 17 id. 209 ; The King v. Sanderson, 1 Wightwick's Ex. Rep. 50; 1 Madd. Chan. 113. This doctrine is not only supported by au- thority, but is founded in the plainest principles of justice. The creditor can, by a foreign attachment, take nothing but what the absconding debtor was entitled to ; and the property of one man ought not to be taken to pay the debt of another. But the rule claimed by the plaintiffs would violate both these principles. It is well known that in partnerships the effects do nut usually belong to the partners equally, in proportion to their number. Some- times, one will advance the capital, which is to be returned, while the other is to transact the business ; and the profits, only, are to be shared be- tween them. The effects might be wan- ted, not only to pay the partnership debts, but, on a settlement of the ac' counts, the partner in the execution might be a debtor to the partnership. If, then, we consider them as tenants in common and permit a creditor to sell one-half to pay the separate debt of one partner, we shall, in many instan- ces, suffer the property of one man to be taken, to pay the debts of another ; and give to a separate creditor of a partner a right over the effects of a partnership, which such partner could not exercise ; and if the purchaser should be allowed to take possession of the effects, he might dissolve, or destroy the partnership. The only mode of doing justice is to sell the interest of the partner, who is the debtor in the execution ; and though this may be un- certain, and ditficult to come at, yet this can be no reason, why a rule, mani- festly unjust, should be adopted. The doctrine, then, contended for by the plaintiffs is not supported by precedent or principle ; and furnishes no analogy applicable to the present case. It may be asked, oa what ground could the judgment, in this case, be rendered for one-third of the debt due from the de- fendants to the partnership, of which the absconding debtor was one ? There was no evidence respecting the state of the partnership concerns ; what capital each partner advanced ; what each owed; and whether the partnership was solvent. Suppose the whole debt due from the defendants should be wanted to pay the partnership debts, or, that Joseph Hart should be found a debtor, on settling his account, then the judgment could not be right. While the interest of Joseph Hart was a matter of uncertainty, how could a judgment be rendered for a sum cer- tain ? It is, however, insisted, that the defendants are bound to state the ac- counts of Joseph Hart, with the partner- ship, and ascertain the balance due to him. But this would be to require an Oe Execution. 1143 postponed for an indefinite time.' And it is laid down by Lord Holt that in an action against one of two partners the sheriff must seize all the goods, because the moieties are undivided, for, if he seize bu t a impossibility ; for tliey have no coatrol of tlieir books, and no possible legal mode of compelling a settlement of their accounts. It is further said, if the plaintiflfs have recovered more than the proportion o' Joseph Hart in this debt, and it should be wanted for the pay- ment of partnership debts, the other partners may call them to account, and recover back such money. At this rate, a judgment may be rendered in favor of a man for a sum certain, with a lia- bility to refund the whole, or a part of it, on some contingency. It is sufficient to state the proposition, to show the ab- surdity of it. What right can a court have to say, that a certain part of a debt due to a partnership may be taken to pay the private debt of a partner, in a suit where the partners are not par- ties ; and then, if wanted to pay the debts of the partnership, to oblige them to resort to- the creditor ? But it fur- ther appears to me, from the nature of partnerships, that one partner cannot have a separate right, in any particular debt, or article of property, belonging to the partnership, liable to his indi- vidual debt ; but all the effects are a joint interest; and each partner can have a separate interest only in hisi share, upon the winding up and settle- ment of the partnership concerns. It is said that, at this rate, the property of partners may be placed beyond the reach of their individual debts, by for- eign attachment. If the legislature has not made provision, by which the actual interest of a partner, in the partnership property, can be reached, it would be proper for them, by a new law, to sup- ply the defect ; but this will not war- rant a court to introduce a remedy, which violates the principles on which partnerships are founded, for contracts of this kind are recognized by law, and no principle ought to be adopted which may terminate in their utter destruc- tion." It is true, that the doctrine in this case was established by a divided court, there being only a bare majority in favor of the rule established, but in a later case, before the same court, Witter V. Richards, 10 Conn. 37, the doctrine was reiterated and unanimously affirmed, and extended so as to prevent 1 Per Lord Denman, 4 Ad. & Ell. 131. Moody v. Payne, 3 Johns. Ch. 548. the creditors of a dormant partner from attaching his interest in the stock, even though the partnership creditors, at the time of giving credit to the firm, had no knowledge of his connection there- with. " That the partnership credi- tors,' said Williams, J.," generally have a preference to the creditors of an indi- vidual partner, has not been contested. It was settled by Lord Hardwicke in West V. Skip, 1 Ves. 239. It was recog- nized in New York in Nicoll v. Mum- ford, 1 Johns. Ch. (N. Y.) 523 ; in Mas- sachusetts, in Pierce v. Jackson, 6 Mass. 242, and by this court in Brewster v. Hammett, 4 Conn. 540. But it is claimed that, as this partnership was a dormant one, and as the creditors did not know of its existence, they ought to stand upon the same ground as separate cred- itors of Hutchinson whom they all trus- ted. Now, if the partnership creditors had done any act to hold out Hutchin- son as the sole owner of the goods, or if there was any fraud in the case, or even if they could be made responsible for the declaration of Kinne , (the other partner), there certainly would be some foundation for this argument. But no fraud is found * * * The partners, therefore, must stand upon their rights as recognized by a court of equity. And the rights of the separate creditors depend upon the interest which each partner had in the partnership property ; and such creditor can take nothing but what his creditor had therein, Ex parte King, 17 Ves. 119, and neither partner has any thing separately in the corpus of the partnership property ; but the interest of each is only his share of what remains after the partnership ac- counts are taken, Church v. Knox, 3 Conn. 523. And therefore, if a sepa- rate creditor takes out his execution against the partnership effects, he must take the undivided share in the same manner as the debtor himself had it, and subject to the right of the other partners. Taylor v. Fields 4 Ves. 396." See to same effect. Rice v. Austin, 17 Mass. 206 ; Morrison v. Blodgett, 8 N. H. 253; TredwHll v. Roscoe, 3 Dev. (N. C.) 50; Commercial Bank v. Wilkin.s, 9 Me. 33 ; Barber v. Hartford Bank, 9 Conn. 407; Place v. Switzer, 16 Ohio, See Ex parte Smith, 16 Johns. 106 ; 1144 Rights of Partners. moiety, 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 undi- vided.' So, in case of replevin, it was argued for the plaintiffs that 142 ; Douglass v. Winslow, 20 Me. 89 ; Mahley v.Lambat, 8Miss. 318; Sitter v. Walker, Freem. Cli. (Miss.) 77; United States V. Hack, 8 Pet. (U. S.) 271; Ex parte Smith, 16 Johns. (N. Y.) 103 ; ' Fisk V. Herrick, 6 Mass. 271 ; Pierce v. Jackson, id. 271 ; Moody v. Payne, 3 Johns. Ch. (N. Y.) 548 ; Scrugham v. Carter, 13 Weud. (N. Y.) 131 ; Winston V. Ewing, 1 Ala. 139; Gibson v. Stevens, 7 N. H. 352 ; Page v. Carpenter, 10 N. H. 81 ; Cammack v. Johnson, 1 Green's Ch. (N. J.) 163 ; Howard v. Jones, 50 Ala. 67; Boss v. Estell, 50 Miss. 300; Luce V. Hartsli^rn, 7 Lans. (N. Y.) 331 ; Menagh v. Whitwell, 53 N. Y. 146 ; Burpee v. Burn, 33 Cal. 195 ; Conroy V. Woods, 13 Cal. 630 ; Bullock v. Hub- bard, 38 Cal. 500 ; Cook v. Arthur, 11 Ired. (N. C.) 407; In re Smith, 16 Johns. (N. Y.) 103; O'Bannan v. Miller, 4 Bush (Ky.), 35 ; McCarty v. Emlin, 3 Yates (Penn.), 193 ; Deas v. Summer, 4 id. 477 ; Frazer v. Thorpe, 9 La. An. 518. The strict legal relation of partners to the partnersliip stock is not that of ten- ants in common. They are joint tenants so long as any outstanding obligations of the firm exist, and tenants in common only in the residue after all such obli- gations are paid. Eice v. McMartin, 39 Conn. 573 ; and this applies as well to real estate as to personalty. In Hiscox V. Phelps, 49 N. Y. 97, it was held that where land is deeded to the members of a copartnership individually, and paid for out of partnership funds, the land being used for partnership purposes, although the legal effect of the convey- ance is to constitute the purchasers ten- ants in common, yet equity will treat the land as copartnership assets. The same rule applies where partnership funds have been expended in improving land so deeded, to the enhanced value of the land so improved — the partner- ship creditors take priority over the in- dividual creditors — the creditors of a > Heydon v. Heydon, 1 Salk. 393. In Burton v. Green, 8 Car. & Payne, 308, which was an action against the sheriff for a false return of nullahonato a writ of fieri facias sued out against T C, it was proved that T Chad 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, and it was contended, on the member who has contributed more than he was bound to contribute, are to be preferred to those of the other members, and the member who contributes more than his share is to be preferred to the other members, and their creditors to the extent of the excess contributed over his share. 1873, Deveney v. Ma- honey, 23 N. J. Eq. 347. It is upon this theory that preference is given to firm creditors as to firm property, coupled with the fact that they, whose money or property has gone into the concern upon the joint credit of the partners, are equi- tably entitled to payment out of such joint fund, and in the attachment of the firm property, in equity are treated as prior creditors although their attach- ment of the property may be subsequent to that of separate creditors. Shedd v. Wilson, 37 Vt. 480 ; Kuss v. Fay, 39 id. 386; Haskins v. Johnson, 34 Ga. 635. The preference extends to shoes in ac- tion or debts due the firm, as well as to other property, and a creditor of one partner cannot hold a debtor of the firm nor the other members of the firm as trustee of one partner to the extent of such partner's apparent interest in the debt. In equity he has no interest ex- cept that which exists after the firm flebts are paid. Bullfinch v. Winchen- bach, 3 Allen (Mass.), 161 ; Johnson v. King, 6 Humph. (Tenn.) 333 ; Covenly v. Brainard, 38 Vt. 789 ; Benson v. Ela, 35 N. H. 409. The partners may, as we have seen in a previous note, by a hona fide agreement, convert the joint estate into the separate estate of each partner ; Allen V. Center Valley Co., 31 Conn. 130 ; Menagh v. Whitwell, 53 N. Y. 16; and when the joint interest is thus sev- ered, the preference of the joint credit- ors is lost; Dimon v. Hazard, 32 N. Y. 65 ; Menagh v. Whitwell, ante; but, if the severance was fraudulently made, the preference still exists, Menagh v. Whitwell, ante. part of the plaintiff, that the sheriff should have levied on this joint prop- erty to the extent of one-third. One ground of defense was, that partnership property could not be seized under a writ oi fieri facias sued out against one partner only. It was not necessary, un- der the circumstances of the case, to en- ter further into this subject ; but the case of Heydon v. Heydon seems to render such a defense untenable. Of Execution. 1145 they were partners, and the defendant took the goods of 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 other hand, upon judgment against one of two partners, and execution 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 execution." Prom these cases it follows that, although, ordinarily, when goods are seized by the sheriff, they can- not 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 afterward return nulla iona 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.* 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 relief under i^he Interpleader 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 Interpleader Act.* As to the interest passed by the seizure and sale. Sec. 794. As soon as the goods are taken in execution, the partner- ship in goods so taken is at an end, and the creditor (not the sheriff) becomes tenant in common with the other partner.' The sheriff, however, has a special property in the goods, may, therefore, maintain trespass or trover for them," and may be considered as a legal agent for the sale. When the goods are sold, the vendee will be tenant in common with the other partner.' As to the relief of the solvent partner against the effect of the execution. Sec. 795. It is laid down by Lord Hardwicke, and. is clearly consist- ent with all the doctrines of partnership, that if a creditor of one part- ' Harriot v. Shaw, Cora. Bep. 377. ' D. D. Lord Hardwicke, 2 Swanst. 2 Jackey v. Butler, 3 Ld. Raym. 871. 587 ; Lord Alvanley, 3 Bos. & Pull. 289; s Baekhurst v. Clinkard, 1 Show. 173. Lord Tenterden, 8 Car. & P. 809. <3Ves. &Bea. 301. s Gilbert's Executions, 15 ; 3 Wms. 6 Stat. 1 & 2 Will. 4, c. 58, s. 6. Saund. 47. e Holmes v. Mentz, 4 Ad. & Ell. 137. » Per Lord Holt, 1 Salk. 393. 144 1146 Eights of Partners. ner takes out execution against the partnership effects, he can only have the undivided share of his debtor, and must take it in the same man- ner as the debtor himself had it, and subject to the rights of the other partner.' The question then is in what manner the rights of the other partner may be ascertained, and it seems that an account for that purpose may be taken at law, that is to say, in the Court of King's Bench as well as in equity. We have seen that in ordinary cases under an execution against partnership effects for a separate debt, the sheriff sells the undivided share of the debtor without reference to the partnership 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 belong- ing to them as if it were perfectly 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, there- fore, it is better that the apparent interest of each should be con- sidered as his actual interest. But whatever be the merits or demerits of this mode of execution, when the proceeding is unopposed by the solvent partners, it 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 Court of King's Bench has sometimes 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 ' Skip V. Harwood, Oowp. 451. So, the court will not on motion grant an upon an extent against one of several amoveas manus without a previous ref partners for a separate debt, tlie Cro wn erence to the remembrancer. Rex v. has no right to retain more than that Eock, supra. partner's share of the partnership prop- '' 17 Ves. 206. erty. Rex v. Sanderson, 1 Wightwick, ' Doug. 650. Before this period it 50; Rex v. Rock, 3 Price, 198; D. Hul- was laid down by Lord Holt that the lock, B., Rex V. Hodge, 13 id. 551. How- debtor's copartner had no remedy at ever, where partnership property is law otherwise than by retaking the seized under an extent for a debt due goods if he could. Pope v. Haman, from one of the firm, who on taking the Comb. 317. accounts is indebted to the partnership, Of Executiost. 1147 of the defendants for 700/., and the sheriflE had levied on the partner- ship effects. Bernie's assignees obtained 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 Ber- nie's, that he was entitled to an equal share of the partnership effects as partner with Davidson. The plaintiff's affidavit, on showing cause, denied that Berni'e 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 Ohambre 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 levying.' But this position seems doubt- ful, and in a subse4uent case before Lord Kenyon a similar account was taken without the consent of the parties.'^ 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 princi- ple, 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 ? " ^ ' 3 Bos. & Pull. 288, and see Mr. Serj't ^ Waters v. Taylor, 3 Ves. & Bea. 301 ; Frere's note, Doug. 650. Bee, also, Barker v. Goodair, 11 Ves. 78; ' At least without their real consent. Young v. Keighly, 15 id. 557; Button See the case as stated by Best, Serj't, in v. Morison, 17 id. 306; In re Wait, 1 Parker v. Pistor, 3 Bos. & Pull. 388. Jac. & Walk. 605. 1148 Rights of Paktneks. The diflBculties in taking these accounts at law, so frequently men- tioned by Lord Eldon, occurred also to Lord Alvanley. 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 partners, 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 diffi- culties were to be encountered in equity.' In the other case ' a rule had been obtained, calling on the plaintifi' 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 applica- tion was made by all the copartners of the defendant, in number twenty-five, who stated that the defendant was indebted to the con- cern in more than the amount of his share. But the court discharged the rule, and Lord Alvanley expressed a hope that this would be the last application to that court of a similar nature. Upon the whole, where the partnership has not long been estab- lished, or where the concern is so small that the greater part of its effects have been taken in execution, so that what remains may be easily valued, there seems no sound reason why the accounts imder 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, according 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 resist it, they must resort for relief to a court of equity, " equity having the means of taking the complicated accounts of the partnership and reducing the concern into that state in which the property would be divisible as a clear surplus." "Where, therefore, the separate creditor of one partner has taken partnership goods in execution, in discharge of his separate debt, the other partners may file their bill against the creditor, the debtor ' Parker v. Pistor, 3 Bos. & Pull. 388. ' Cliapman v. Koops, 3 Bos. & Pull. 289. Of Execution. 1149 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.' ' See i Madd. Ch. 131; Eden on Injunc. 31 ; Bevan v. Lewis, •! Sim. 376 ; Lown- des V. Taylor, 1 Madd. 433 ; Newell v. Townsend, 6 Sim. 419. Same relief in favor of the assignees of bankrupt part- ners. Taylor v. Field, Wats. Partn. 100; 15 Ves. 559 ; 4 id. 396. The creditors of a partnership can- not in equity proceed for relief against the sale of the interest of one partner in the firm until they have in some man- ner acquired a lien thereon by attach- ment or levy. Greenwood v. Brodhead, 8 Barb. (N. Y.) 596. The mere fact that he has a legal claim against the firm, which he may be unable to collect if the separate creditor is allowed to pro- ceed to enforce his claim, gives him no claim to the interference of a court of equity. Freeman v. Finnall, 1 S. & M. Ch. (Miss.) 637; Eobb v. Stevens, 1 Iowa, 198 ; Eeese v. Bradford, 13 Ala. 847. If they desire to secure the aid of a court of equity they must acquire a lien thereon either by an attachment, levy, judgment, or some other mode provided by law. In those states where attachment upon mesne process are not permitted they must pursue their claim to judgment in order to obtain a lien upon the real estate. Greenwood v. Brodhead, asraie, and as to personal prop- erty must take out execution and levy the same thereon. Lawton v. Levy, 3 Bdw. Ch. (N. Y.) 199 ; Young v. Freer, 9 N. J. Eq. 466 ; Griffin v. Ormau, 9 Fla. 53 ; Sanderson v. Stockdale, 11 Md. 573 ; Mittnight v. Smith, 17 N. J. 363 ; Parish V. Lewis, Preem. Ch. (Miss.) 307 ; Tread well v. . Brown, 43 N. H. 390 ; Pearson v. Keedy, 6 B. Monr. (Ky.) 139. Partnership creditors, as such, have no lien on partnership eifects for payment of partnership debts until they have obtained judgment and issued execu- tion. But as each partner has a lien on the partnership effects to pay partner- ship debts, this lien may be made avail- able in favor of the creditors. But as the creditors have no lien, if their debts are not reduced to judgment, they can- not come into chancery for relief. Reese V. Bradford, 13 Ala. 847. In Mississippi it is held that in or- der to reach equitable assets the credi- tor must show he has obtained judg' ment at law and a return of execution on property, and no state of facts will excuse the omission of such a return. Parish & Co. v. Lewis, Freem. Ch. (Miss.) 307. Where one partner dies, the survivor cannot be sued in chancery to subject clioses in action until judg- ment and execution returned no prop- erty, nor to set aside an assignment. Pearson & Henderson v. Keedy, 6 B. Monr. (Ky.) 139. An exception exists, however, to this rule, where the firm is dissolved either by the death or retirement of a partner, and the survivor or remaining partners are insolvent ; Vance v. Cowing, 13 Ind. 460 ; or where it appears that the prop- erty, or a part of it, was purchased from or improved by funds obtained from the creditor seeking relief, and the partners are fraudulently preferring other cred- itors, or has been fraudulently disposed of by them. Conro v. Port Henry Iron Co., 13 Barb. (N. Y.) 58 ; Sanderson v. Stackdale, 11 Md. 573. In Bank of St. Mary's v. St. John, 35 Ala. 567, the note holders of a foreign banking corpora- tion which has suspended payment and become insolvent, may, without first ob- taining judgment at law, proceed in equity against the bank, its directors, stockholders and agents, charging them with fraud and misapplication of the as- sets and seeking a discovery and account. Such a bill may be sustained under the general powers and jurisdiction of the court, which regards the capital stock of the company and all its assets as a trust fund for the payment of its cred- itors, and the directors, stockholders and agents as trustees. Such a bill may also be sustained under the attachment law of 1846. If a president of a foreign corporation is required by its charter to be a resident of the state in which it is located, when sued by the creditors in Alabama, he cannot be heard to deny the character in which he held himself out to the world, nor aver that he was not qualified to hold the office by reason of his residence in Alabama. The sur- render to a bank agent of its notes, and the acceptance from him of his draft on a third party, is but the substitution of 1150 Rights of Partners. If, in cases of this nature, execution be executed before an injunc- tion can be obtained, the court will stay the money in the hands of the sheriff. For this purpose, also, the sheriff should be made a party one security for anotlier, and does not extinguisli liability on tlie notes unless drawn in good faith and accepted as payment. In Wasliburne v. Bank of Bellows Falls, 19 Vt. 283, some credit- ors of a partnership on behalf of them- selves and such other creditors as would join, etc., filed a bill in chancery, setting forth that they were creditors of an in solvent firm named A. Lawton & Co.; that plaintiffs had attached the prop- erty of the firm for payment of partner- ship debts ; that creditors of the Indi- vidual partners had also attached firm property to pay individual debts ; and asking that the property might be sold and proceeds applied to satisfy copart- nership debts. It was held that the co- partnership must prevail (over separate creditors) by virtue of a lien which a partner is supposed to have by implied contract upon all the partnership effects until all the partnership debts are paid. By calling in aid this equity, the part- nership creditors are enabled to main- tain their claims. The fund made under such proceedings is to be dis- tributed pro rata among the creditors. Bardwell v. Perry, 19 Vt. 297. The fact that a separate creditor has lev- ied upon, and sold the interest of his debtor, does not defeat equitable relief. The purchaser does not acquire any greater interest than his debtor had which is simply such interest as re- mains, after the partnership claims are fully satisfied Little v. Walker, ,Freem. Ch. (Miss.) 78. The other part- ners may bring a bill to enjoin the sale of one partner, until an account is taken and the exact extent of such interest can be ascertained, and if it turns out that all the property is required to pay the firm debts, the injunction will be made absolute. Place v. Switzer, 16 Ohio, 143; Sutcliffe v. Dorman, 17 id. 185; Schraggham v. Carter, 12 Wend. (N. Y.) 134 ; Williams v. Smith, 4 Bush (Ky.), 540. In Sanders v. Young, 31 Miss. 112, what would seem to be the true rule was established. In that case, it was held that the legal interest of a partner may be levied on and taken possession of by the sheriff on execu- tion or attachment, which is the part- ner's proportionate share of the part- nership property, and not his share of what remains after the firm debts are paid, but that the solvent partners may. while the sheriff is proceeding, file their bill in equity, and upon proper showing, limit the creditor to the actual interest of such partner, after a settle- ment of the .partnership debts. In Hubbard v. Curtis, 8 Clarke (Iowa), 13, it was held that after such a levy or at- tachment, the solvent partner might file his bill in equity against the other partner and the sheriff for a settlemeni of the partnership accounts and the appointment of receiver, and that the sheriff would be directed to turn the property over to the receiver, and that the creditor and sheriff would be en- joined from proceeding under the exe- cution until the partnership affairs were fully settled. See, also, to same effect, Watson v.Gobley, 18 B. Monr. (Ky.) 463; Jones V. Thompson, 12 Cal. 199. In some states it is held that, in order to warrant the interference of a court of equity, it must be stated in the bill that the partnership is insolvent, or that after the payment of partnership debts there will be nothing remaining for him, Johnson v. Sanford, 13 Conn. 467; Mowbray v. Lawrence, 13 Abb. Pr. (N. Y.) 318 ; Reed v. Johnson, 24 Me. 333; but it is certainly difficult to see how this can affect the rights of the parties in the first instance. Is it necessary that the rights of the partners shall be jeopardized and imperiled simply be- cause they are unable to state that the firm is insolvent ? It would seem rather that the true ground of interference is the riglit of the partners to have the firm debts first paid out of the joint property, and that, too, whether the firm is solvent or insolvent, and that it is simply absurd to hold that the right only exists where the firm is insolvent. It is held, even by the courts that hold the doctrine stated above, that the in- terest of each partner in the partner- ship stock is simply that moiety re- maining after the partnership debts are paid, which his interest in the capital bears to the whole capital invested. If this is so, it is extremely difficult to understand how his copartner's right to have the firm debts first paid out of the firm property can in any measure be dependent upon the question of solv- ency or insolvency. It is a right, and as such should be enforced. Equity it is said postpones the debts of separate creditors, until after the firm Of Executios'. 1151 to the suit in equity, by original bill, if the money were in his hands at the 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 interests of the plaintiff." Where partnership goods have been seized for a separate 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 interested to contest the matter in equity, where a bill might be filed, stating that he had taken pos- session of the property, and praying that it might not be disposed of until all the claims were arranged.' debts are paid, upon the application of a solvent partner, or a firm creditor hav- ing a lien upon the property, and the creditor of an individual partner takes only the interest of his debtor in the residue. If that be so, how can the question of solvency affect the matter ? The rights of the parties should control. See Morrison v. Blodgett, 8 N. H. 353; Tappan v. Blaisdell, 5 id. 193 ; Page v. Carpenter, 10 id. 81 ; Witter v. Rich- ards, 10 Com. 27; Barber v. Hartford Bank, 9 id. 407. When one partner sells out his interest in the stock of a firm to a new partner, debts contracted by the new firm must be first paid out of the goods afterward purchased, and the old creditors out of the proceeds of the goods on hand at the time When the new partner went in. Hurlburt v. John- son, 74 111. 64. If any portion of the property of a firm on hand was formerly the individual property of one of the firm, his individual creditors, who gave him credit during the period he owned it, will be entitled to priority over the firm creditors. Hurlburt v. Johnson, 74 111. 64. Private property of partners in equity goes first in satisfaction of pri- vate debts, and the balance will be ap- plied to payment of partnership debts. Bailey v. Kennedy, 3 Del. Ch. 12. ' Franklyn v. Thomas, 3 Mer. 33.5 ; Hawkshaw v. Parkins, 3 Swanst. 549. 'Id., and consider Axe v. Clarke, 2 Dick. 549 ; 3 Mer. 334. 3 Parker v. Pistor, 3 Bos. & Pull. 388. iib-z Eights of Paktxebs. CHAPTER XXXIV. OF SUITS IN EQUITY BY AND AGAIITST PAKTNEES. Sec. 796. Who should be parties plaintifE. Sec. 797. When suit may be maintained against partners. Sec. 798. Who should be made defendants. Sec. 799. When separate creditors may bring suit for administrator. Sec. 800. Who must answer. Who should be parties plaintiff Sec. 796. It is obTious that the subject of suits in equity by part- ners can involve but little that is not incident to suits by individu- als. One instance of a bill peculiar to partners is where the major- ity of the firm seek to restrain execution against the partnership effects for the separate debt of one partner.' ' Suits in equity. — Suits by and against partnerships for the specific performance or the rescission of a contract for taking agency accounts for repairing breaches of trust, (see Blair v. Bromley, 3 Ha. 543, and 2 Ph. 354), as to recovering money in equity from living partners who might have been sued at law, as well as for other matters, are by no means unusual, and a suit by a creditor of a firm to ob- tain payment out of the estate of a de- ceased partner is a matter of almost daily occurrence. When a company has entered into a contract to pay money out of its funds, a suit in equity is main- tainable by the creditor against the company, although he might have sued the company at law, for the remedy by suit in equity on such a contract is more complete than the remedy at law. See Eobson V. M'Creight, 35 Beav. 273; Law V. The London Indisputable Pol. Co., 1 K. & J. 233 ; Durham's case, 4 K. & J. 517 ; Talbot's case, 5 De G. & S. 386. As a general rule a suit by or against an ordinary partnership will be defective for want of parties, unless all the partners are before the court. But if the number of partners is considera- ble, some of them may sue on behalf of themselves and their copartners for the purpose of enforcing a right common to tiiem all. Small v. Atwood, Younge, 456, et seq.; Fenn v. Craig, 3 Y. & C. Ex. 216 ; Clay v. Rufford, 8 Ha. 381, and see Douglas v. Horsfall, 2 Sim. & Stu. 184; Lloyd v. Loaring, 6 Ves. 778. Moreover, owing to recent improve- ments in the law, trustees for a firm may sue and be sued in equity in respect of real or personal estate vested in them, without making the members of the firm, or any of them as such, parties. 15 & 16 Vict., c. 86, s. 43, rule 9, and see Horsley v. Fawcett, 11 Beav. 565. In other cases, however, trustees for part- nerships do not represent them in equity, and suits by or against the trustees on behalf of the firm will still • be objectionable in point of form, un- less the partners or some of them are also before the court. See Douglas v. Horsfall, 3 Sim. & Stu. 184; Fenn v. Craig, 3 Y. & C. Ex. 216. Some of a firm may sue on behalf of themselves and the others for an ao- Suits in Equity against Paktneks. 1153 Where a bill is filed by partners to enforce a partnership demand, all the partners must be parties to the suit, unless they are so numer- ' ous that it would be inconTenient to join them, in which case the bill may be filed by some of them on behalf of themselves and all others count, if the memtJers are numerous, and they have a common interest in the matters in question between the firm and the person sued. Gordon v. Pyne, 3 Ha. 233 ; Lund v. Blanshard, 4 id. 390. And an agent of the firm may be sued for an account by all the partners, al- though he only knew of one of them, and was employed by and has transacted business with that one alone. See Kil- lock V. Greg, 4 Russ. 385 ; Anon., Godb. 90. At the same time an agent is only liable to account to his principal, and therefore if a person has been employed by one partner only as principal, or has been induced by that partner to believe that he alone was the principal, in such a case the other partners have no right to call the person so employed to ac- count with them. See Killock v. Greg, 4 Russ. 285 ; Maxwell v. Greig, 1 Coop. Ca. in Ch. 491. On the other hand, if a person has throughout dealt with some partners only, and has all along treated them as principals, he can be compelled by them to account, and lie cannot suc- cessfully insist that the other partners ought to be partners to the suit. Ben- son V. Hadfield, 4 Ha. 33 ; and see As- pinwall V. The London and N. W. Rail. Co., 11 Ha. 335. A surviving partner may sue an agent of the firm for an account without mak- ing the executors of the deceased part- ners parties, Haig v. Gray, 3 De G. & Sm. 741, for in equity, as well as at law, the surviving partners are the proper persona to get in and give receipts for debts owing the firm. See Philips v. Philips, 3 Ha. 281 ; Brasier v. Hudson, 9 Sim. 1. Where it is necessary for a stranger to sue a partnership or unin- corporated company in equity, it seems that if the right which he seeks to en- force is a right against the whole body, and one which all the members thereof have a common interest in opposing, he need not, if those members are numer- ous, make them all parties to the bill ; it will be sufficient if he makes so many of them parties as to insure a fair and honest trial of the questions in dispute. See Adair v. The Ne"w River Comp., 11 Ves. 429 ; Meux v. Maltby, 2 Swanst. 377; Fenn v. Craig, 3 T. & C. Ex. 216 ; Cullen V. Duke of Queensbury, 1 Bro. C. C. 101, and 1 Bro. P. C. 396 ; The 145 City of London v. Richmond, 3 Vern. 431. But in a suit against some only of the members of a large partnership or company, difficulties occasionally arise which prevent the plaintiff from obtain- ing all that he is entitled to, even though a decree is made in his favor. The case of Meux v. Maltby, 3 Swanst. 377 (see, too, Lund v. Blanshard, 4 Ha. 390, where an injunction restraining a defendant from suing the plaintiflfs was held not to preclude the defendant from suing other persons on behalf of whom the plaintiffs filed their bill), illustrates this. A suit was there instituted against the treasurer and the directors of a com- pany, to obtain the benefit of an agree- ment made with the plaintiflF by the former owner of property which had become vested in the company. The agreement was an agreement for a lease and the court made a decree in the plaintifTs favor, but found itself unable to decree the execution of any lease to him. The defendants had no power to convey the legal estate in the land, and all the court could do was to declare the plaintiff entitled to a lease and to re- strain the officer from bringing any ac- tion to disturb the plaintiff's possession. Although a suit in equity against some only of a number of persons having a common interest may be sustained, and such a suit may be more advantag- eous than an action at law, which is lia- ble to be met by a plea in abatement, it seems that a person seeking to enforce a legal right against a company has no locus standi in a court of equity, merely because he cannot conveniently proceed at law. In Allison v. Herring, 9 Sim 583, a solicitor who had been engaged by a number of persons to obtain an act for constructing a dock, and who had paid considerable sums out of his own pocket to surveyors, engineers and others, filed a bill against some of the persons by whom he had been employed, for an ac- count and payment. The bill alleged that the other persons liable were numerous; that some were out of the jurisdiction, and some were dead, and that the rep- resentatives of the latter were unknown. The defendants put in a demurrer, which was allowed, on the ground that the plaintiff's remedy was at law. This case must not be confounded with those 1154 Rights of Pakxs^ers. the partners.' If any of the partners die, it may be doubted whether it is necessary to make the personal 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 deposited with a firm of which A was a member the title-deeds of an estate of which they were joint owners, as a security for 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 filed by the surviving partners of the firm against B, and the heir of A, for a sale of the estate. ' Where an action is brought against some only of the members of a partnership, all the members may file a bill of discovery in aid of the defense 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." When suit may be maintained against partners. Sec. 797. A bill may be sustained against partners in respect of mutual unsettled accounts between them and any particular creditor, or to enforce the execution of a trust deed entered into between them and their creditors generally, or any particular class of creditors, or in which there is some ground for com- a stranger on the other. See Pendle- ing into equity, other than the difficulty bury v. Walker, 4 Y. & C. Ex. 424; arising from the legal rules relating to Meux v. Maltby, 2 Swanst. 377. But, parties to actions In CuUen v. The as will be seen hereafter, a public officer Duke of Queensbury, 1 Bro. C. C. 101 ; does not represent one set of sharehold- affirmed in 1 Bro. P. C. 396, and in ers as against another set, for he is only Horaley v. Bell, 1 Bro. C. C. 101, and 2 the representative of the shareholders Amb. 770 (Query if this case can be con- as a body. A change in a public officer, sidered law at the present day), suits p«ndenfe foYe, does not abate a suit insti- were instituted against some of a num- tuted by or against him. See Butchart ber of persons to obtain payment from v. Dresser, 11 Jur. 196, L. C. But, if a them of money which the plaintiff suit is instituted by a public officer, and might have recovered at law ; but in he dies or is removed, and no steps are the first of these cases, a decree was taken by his successor to prosecute the sought for the sale of a house and pay- suit, the bill may, after the lapse of the ment of a mortgage, and in the other usual time, be dismissed with costs for discovery was required, so that in each want of prosecution. Burmester v. Von case there was a legitimate ground for Stentz, 23 Beav. 33. coming into equity. A company which ' Small v. Atwood, 1 You. 407. And is incorporated must sue and \>e sued, see Chancey v. May, Prec. Ch. 593 ; in equity as well as at law, by its cor- Cockburn v. Thompson, 16 Ves. 331. porate name. As to security for costs, * Story on Kquity Pleading, p. 130, in see ante. A company which, without notis. being incorporated, is empowered to ' Norris v. Kennedy, 11 Ves. 565. sue and be sued by a public officer, * See Slater v. Wheeler, 9 Sim. 156 ; is sufficiently represented by that offi- Scholefield v. Heafield, 7 id. 667. cer in all suits between the com- ' Scholefield v. Heafield, supra. pany as a body on the one side, and * Darthez v. Lee, 3 You. & Coll. 13. Suits m Equity ASAi^q-ST Parth-ers. 1155 for the specific performance of contracts entered into by the partners jointly, or to compel the partners to interplead in cases where they have delivered goods to a bailee, and subsequently dispute amongst themselves as to the ownership of those goods.' Other instances of suits in equity against partners will occur to the mind of the learned reader. Where a bill is filed against partners for an account and payment in respect of mutual dealings and transactions with the plaintiff, it must appear upon the bill specifically that the dealings and transac- tions were mutual, for it is not sufficient to charge that fact gener- ally.^ And where the bill is brought against the members of success- ive partnerships, it must appear that the mutual dealings have been carried on through all the partnerships, otherwise the bill is demur- rable. ' Where the bill is filed against partners to enforce the execution of a deed of trust, a few of the creditors will be permitted to sue on behalf of themselves and the other creditors named in the deed. Where both joint and separate creditors are par ties to a composition deed, the bill may be filed either by the joint or the separate credi- tors, or some of both. In a case where A and B were partners, and a bill was filed by some separate 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 have 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 sepa- rate creditor of B, was entitled to represent all who clainied 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 bill.'' Who should be made defendants. Sec. 798. Where a bill is filed against partners, the general rule is that all the individual members of the firm should be made defend- 1 On this last point, Pearson V. Garden, Newton v. Earl of Egremont, 4 Sim. 2 Russ. & Myl. 606. 574. '' Frietas v. Dos Santos, 1 You. & Jer. ' Weld v. Bonham, 2 Sim. & Stu. 91. 574 « Leigh V. Thomas, 2 Ves. 313; Bod- ^ Jones v. Maund, 3 You. & Coll. 347. dy v. Kent, 1 Mer. 361. ■* Story's Eq. PI., ^5 102; 2 Ves. Sr. 113; '3 Sim. & Stu. 93. 1156 Eights of Partners. ants. So, also, in a suit against partners for specific performance of an agreement, they who were parties to the agreement must be made defendants, although some may have since parted with their interest in 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 disso- lution 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 bill for specific performance of the agreement was properly filed against all.' But the rule as to joinder of parties will not be enforced in all cases. Thus, a person, claiming against a numerous partnership or club, may, if he be ,not a partner, file a bill against a few of the partners or members only," but it should seem that 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, however, it is conceived, will be unnecessary where the society against which the bill is filed contracts by means of a committee.5 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 part- ner before the court will be liable to pay the whole of the joint demand.' 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 instance, a dredger of oysters who receives from the boat-owners wages proportioned to the number of oysters taken.* When one of the partners becomes bankrupt or dies, his assignees,' executors, or trustees must be made defendants. It will not generally be necessary to make persons claiming under the executors or trustees parties to the suit, but it has been laid down that persons having spe- cific charges on the trust property are in many cases necessary par- ' Van V. Corpe, 3 Myl. & K. 269. » CouBins v. Smith, 13 Ves. 544. ' Baldwin v. Lawrence, 3 Sim. & Stu. ' Cowslad v. Celey, Pre. Ch. 83 ; Wey- 26 ; Meux v. Maltby, 3 Swanst. 277 ; mouth v. Boyer, 1 Ves. 416. Adair v. New Kiver Company, 11 Ves. ' Darwent v. Walton,3 Atk. 510. 439. *Perrott v. Bryant, 3 You. & Coll. 61. * Lanchester v. Thompson, 5 Madd. ' But of course if an uncertificated 13. bankrupt enter into partnership, the *Cullen V. Duke of Queensbury, 1 creditors of that partnership have no Bro. C. C. 101 ; Meux v. Maltby, supra; equity against his assignees. Everett v. Fenn v. Craig, 8 You. & Coll. 316. Backhouse, 10 Ves. 94. Suits in Equity against Paktners. 1157 ties.' In the case of Baring v. Noble,' the trustees (who were like- wise the executors), under the will 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 oat of the deceased part- ner's assets, Sir John Leach held that the surviving partner was prop- erly made a defendant, though no decree could be had against him, he being interested to contest 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 contract- ors only. "Where the bill states the same case against all the! partners, 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 representatives of a deceased partner and the assignees of the surviving partner, proving fraud in those whom the defendants represent, the plaintifE will be allowed his costs, which will be apportioned between the estate of the deceased partner and that of the bankrupt. ' When separate creditors may bring suit for administration. Sec. 799. 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 has appointed no executor, and the next of kin of such partner are una- ble or refuse to act in the administration of his estate, his separate creditor may have recourse to a bill against the su rviving partners for an account of the partnership dealings, and for payment of the debts of all the creditors, provided he offer by his bill to put himself in the situation and submit to the liabilities of the deceased partner.'' The iMitf. 170; and see Oldaker v. Lav- ' Burroughs v. Elton, 11 Ves. 29. ender, 6 Sim. 343. Lord Eldon, considering the great ad- '' 1 Mer. 530. vantages under which the plaintifE ' 1 Myl. & K. 589 . stood as between himself and the de- *2 You. & Coll. 553 ; but see Slater fendant, at first hesitated whether he V. Wheeler, 9 Sim. 156. should not inisist upon the plaintiff giv- ^ Tarleton v. Hornby, 1 Tou. & Coll. ing security to answer the result of the 333; Attorney- General v. Cradock, 8 account, but finding no precedent of Sim. 466. such a proceeding, he did not adopt this ' Vulliamy v. Noble, 3 Mer. 621. course. 1158 Rights of Partners. plaintiff, however, under such circumstances, ought to procure from the Ecclesiastical Court a limited administration for the purpose of substantiating proceedings in chancery.' But even where the deceased partner has appointed an executor, his separate creditor or residuary legatee may, in certain cases, make the surviving partners of the testator parties to a suit filed by such sepa- rate creditor or legatee, for the administration of the testator's assets. This may be done either where there has been collusion between tlie executor and the surviving partner, or where the surviving partner has in his hands specific assets of the testator, in which latter case the bill need not charge any collusion between the executor and surviving partner. ' In Newland v. Champion,' Lord Hardwicke made an observation, from which it might be inferred that bills of this nature might be sustained in all 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. R., was disinclined to sanction this doctrine, and said that the case of Bowsher v. Wat- kins, which was supposed to establish that general proposition, had been, in some degree, misunderstood, and was determined very mucli on its special circumstances. Where, however, the surviving partner is himself one of the executors, it seems clear that, in a suit for the administration of his testator's assets, the partnership accounts may be taken, although no collusion be charged between liim and his co-executor ; * though it should appear that the masters 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.' Who must answer. Sec. 800. Where a bill is filed against partners, all must answer the bill either jointly or separately ; and, a fortiori, if they have com- menced 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 dissolve an injunction ' Cawthorne v. Clialie, 3 Sim. & Stu. ■• Davies v. Da vies, 3 Keen, 534. 139. 5 Cropper v. Knapman, aupra. ■' Gedye v. Traill, 1 Russ. & Myl. 381 « Id. ; Wooley v. Gordon, 1 Taml. 11. n ; Bowsher v. Watkins, id. 377 ; Crop- ' Kilby v. Stanton, 3 You. & Jerv. 77. per V. Knapman, 3 You. & Coll. 338; « Prince v. Haydin, 3 You. &. Jerv. and see Seeley v. Boelim, infra. 190. ^Ves. 106. Suits in Equity against Partxers. 1159 till all the defendants had answered. The bill was filed against two partners for an account, and an injunction to restrain proceed- ings at law. The common injunction Avas 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, admitting 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 admitted 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 believed the merits to be with the defendants, thinking that, to adopt a contrary course, would be the means of letting in a very objectionable practice. Considerable doubt, however, has been thrown upon this case by the observations of Lord Abinger, C. B., in Bowles V. Orr. ' And it is clear that in chancery, where some of the part- ners 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. ^ We may conclude this chap- ter 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 attor- neys to collect the property in England, and the partners in a house of agency, who, it was alleged, had considerable funds of the testa- tor 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 matters which the acting partner had trans- acted.^ According to a late decision, a partner, resident in Eng- land, of a house carrying on business abroad, is not bound to set forth in his answer a schedule of books, etc., relating to and in the custody of the foreign house. ■* ' 1 You. and Coll. 475. ' Seeley v. Boehm, 3 Madd. 176. '■' Naylor v. Wellingtoii, 8 Sim. 396. * Martineau v. Cox, 3 You. & Coll. 638. 1160 Particular Partnerships. CHAPTEK XXXV. OF partnerships in mines. Sec. 801. Subject to rules o£ ordinary partnership. Sec. 802. Rights of co-adventurers. Sec. 803. Rights of mortgagees of shares. Sec. 804. Shares in, assignable. Sec. 805. Implied conditions of the relation. Sec. 806. Person liable as partner in, by holding out, when. Sec. 807. No implication as to power of directors or agents to draw bills. Sec. 808. Provisions of codes and ordinances. Subject to rules of ordinary partnership. Sec. 801. Courts of equity haA'e uniformly considered the working of a mine as a species of trade." In those cases, therefore, where co-adventurers in a mine have applied to courts of equity for relief, they have been guided in their decisions by the rules which apply to ordinary partnerships. Thus Lord Hardwicke held that a bill would lie for an account of the profits of a colliery, although for an account of the rents and profits of real estate no bill could be maintained." His Lordship was also of opinion, and that opinion has been acted upon by Lord Brougham,' that an account may be decreed of the profits of a mine, though no injunction lies to restrain the working of it, a doctrine which distinguislies the case of mines from that of tim- ber and other cases connected with the realty, in which an injunction is inseparable from an account. So it has been determined that the sale of a colliery is not like the sale of a landed estate, and that a pur- chaser, under the decree of a court of equity, is not entitled to call for an account of the profits of a colliery from any particular quarter- day, as upon the sale of a landed estate he is entitled to do.^ So, also, it has been held that the rules which regulate the practice of opening ' Upon the subject of mines, see Mr. Bishop of Winonester v. Knight, 1 P. Sweet's edition of Jarmau's Conveyanc- W. 406. ing, vol. 4, p. 663. s Parrott v. Palmer, 3 Myl. & K. 632. 'Per Lord Eldon, Turn. & Euss. 73. « Wren v. Kirton, 8 Ves. 503. See Story v. Lord Windsor, 2 Atk. 630 Partnerships in Mines. 1161 biddings upon a sale of landed estate, do not apply when a colliery is the subject of sale,' Moreover, a joint interest in iron mines and works has been held to be a partnership in trade, and a sale of the property has been decreed accordingly.^ And, again, a receiver has been appointed of mines, in which several persons were interested, on the ground of the mining concern being a species of trade, and not a mere tenancy in common in land.^ In short, to use the words of Lord Eldon, when persons, having purchased an interest of this nature, manu- facture and bring to market the produce of the land, as one common fund, to be sold for their common benefit, it may fairly be contended that they have entered into an agreement, which gives to that interest the nature, and subjects it to the doctrines, of a partnership trade.'' Rights of co-adventurers, cases illustrating. Sec. 803. The mutual rights of the co-adventurers must be the same as regards the trading, whether they have merely a license to work the mines, or whether they have taken an actual lease of the mines and surface lands. But material distinctions exist between mining and other part- nerships, both as regards the power of each adventurer to assign his share, and also the effect of the bankruptcy or death of any adven- turer. " The first of these distinctions is referred to by Lord Bldon in Jefferys v. Smith ; ° but both of them are expressly mentioned by Sir John Leach in the case of Pereday v. "Wightwick.* There, six persons having taken a lease for years of certain mines, and also another lease of the surface lands under which the mines were situated, worked these mines and occupied the surface lands as a joint and partnership concern, dividing the same among them in certain shares. One of these six persons, Turton by name, assigned his shares, by way of security for money advanced, and then became bankrupt. He had been manager of the concern, and was greatly indebted to it at the time of his bankruptcy. The bill was tiled by such of the original partners as continued to be in the concern, and by other persons, who either were the representatives of deceased original partners, or claimed as purchasers of shares. The prayer was that the partner- ship property might be sold, and the partnership accounts taken ; and that it might be declared that the shares of the partner who > Williams v. Attenborough, Turn. & ''1 Swanst. 518. Euss 70. '1 Jac. & Walk. 301. ••'Crawsliay v. Maule, 1 Swanst. 495. « Mioh. T. 1829; S. C, Buss. & Myl. ■' Jeffreys v. Smith, 1 Jac. & Walk. 398. 45 ; Taml. 350. 146 1162 Particular Partnerships. had become bankrupt ought, in the first place, to be applied in repay- ing to the partnership the debt which he had incurred in the manage- ment of the concern. The principal question in this cause was, whether the plaintiffs were entitled to the relief last stated ; the defendants, who claimed under the bankrupt partner, insisting that the common principles of partnership were not applicable to the case of mines, which were of the nature of real property. Sir John Leach: "In the year 1799 a lease was taken of certain mines, the lessees consisting of six persons ; at the same time a lease was taken of the surface of the property. The mines and surface were used with a communion of expense and a communion of profit. The first question ' is, whether this is a partnership property, liable to be sold and disposed of to pay the partnership debts, and whether a part- ner having sold part of his share, his interest is to be considered subject, in the first place, to repayment of what is due from him to the partnership. This question is concluded, by authority, but I am willing to decide it upon principle. Mining concerns are, to some purposes, trading concerns, but they are not so to all; thay are not so in this particular — namely, that they are not, as an ordinary partner- ship trade, subject to dissolution on the death or bankruptcy of any of the partners, and the shares are transferable without the ftonsent of the other partners. In these particular instances they have not all the incidents of a trading concern; in other respects, it has been repeatedly held that they have. Now, it is a universal principle, in regard to all property, whether real or personal, acquired for the pur- poses of partnership, that property so acquired is, upon dissolution of the partnership, subject to sale and accounts between the partners, and to payment of the partnership debts. That is a universal princi- ple. To apply the rule to this particular case, this property was acquired by these partners for the purposes of the partnership con- cern. Therefore, though in the nature of real property, it is sub- ject to all the debts of the partnership, and subject to the debts of one partner incurred in the administration of that property. There can be no doubt, therefore, that the plaintiffs have a right to make this claim." The right of a shareholder in a mine to assign his share, so as to constitute the assignee a partner with the other shareholders, does not seem to have been always recognized. Thus, in Jeffreys v. 'There was anotiier point, see 1 Russ. & Myl. 50. Partkerships in Mines. 1163 Smith,' Lord Lyndhtirst seemed to admit tlie power of the remaining shareholders to refuse to accept the assignee as a partner; the express point, however, did not arise in that case. In a previous stage of the same cause,' the opinion of L6rd Eldon was in favor of the right of the assignee. In a late case,' the express point came before Lord Abinger, and his Lordship held clearly that the delectus personm has no place in mining partnerships; that a shareholder, therefore, may assign to whom he pleases, and that the assignee thereujwn becomes partner with the other shareholders, that is to say, may call the other shareholders to an account ; for, practically speaking, as the whole concern is generally intrusted to a manager, the right to an account is the leading privilege of a partner in a mine. In the same case, Lord Abinger held it to be unnecessary for a mining partner, in praying for an account in equity, to pray for a dis- solution, inasmuch as his power to assign is, as far as regards himself, a power of dissolution. As to the effect of bankruptcy we may here remark, that although, if one of several miners become bankrupt, the partnership accounts may, in a court of equity, be taken as in the case of an ordinary partner- ship, yet, in a court of bankruptcy it is otherwise, because the accounts there taken of the partnership depend on the hypothesis th'at the part- nership has been dissolved by the bankruptcy.* Rights of mortgagees of mining shares. Sec. 803. Another point which demands our attention is that of the rights of mortgagees of mining shares. It was strenuously argued in a late case' that whatever were the rights of absolute assignees of mining shares, mortgagees had no rights but those of mort- gagees simply ; and, consequently, that a mortgagee in possession of shares could not file a bill against the other shareholders for an account. Lord Abinger, however, held that, as regarded all other persons but the mortgagor, the mortgagee stood in the same position as any abso- lute assignee of shares, and, consequently, that he could maintain such a bill. It may be remarked, also, -that in the case of Eowe v. Wood,* Lord Eldon seemed clearly to recognize the right of a mort- gagee in possession to become partner, subject to the question in what manner the accounts were to be taken between him and the mortga- gor, and subject to the rights of the mortgagor, as partner as well as mortgagor. ' 3 Russ. 169. "Ex parte Broadbent.l Mont. & A 635. " 1 Jac. & Walk. 301. * Bentley v. Batep, supra. « Bentley v. Bates, 4 Jur. 553. " 3 Jac. & Walk. 559. 1164 Particular Partnerships, The substance of the doctrine to be gathered from the last-mentioned case is this: that a mortgagee in possession of mines is not bound to spend more upon them than a prudent owner, but that, if he become partner, the management must be considered with reference to the benefit of the other partner, as well as to the rights of the mortgagor and mortgagee, and that the mortgagee, though his mortgage be unsatisfied, cannot wholly exclude his partner from interference in the partnership. That, although on the one hand a court of equity will not deprive the mortgagee of his possession by appointing a receiver, unless it be clearly shown, and that almost by his own admission, that he has been fully paid, yet, on the other hand, the mortgagor, subject to the equities which may ultimately be declared between the parties, has a clear right to insist that regular accounts shall be kept of all receipts, payments, and transactions relative to the mine and to have constant access for the purpose of inspecting the accounts; that, subject also to those equities, he has a clear right to control the working of the mines; and that, if he is impeded in the exercise of any of these rights he may receive relief in a court of equity. Shares in, assignable. Sec. 804. As the shares in a mining partnership are assigable at the will of the owner, it follows that a court of equity will entertain suits for the specific performance of an agreement to purchase or to sell such shares. It has been held that a purchaser of a share in a mining business does not waive objections to the title by taking possession of the property and acting as a partner, when a contract stipulates that a good title shall be made by a specified day, and it appears to have been the intention of the parties that the purchaser should immediately, and before that day, have the possession.' And where, upon the bill of a vendor against the purchaser, charging gross mismanagement, specific performance of a purchase of a share in mines is refused for want of a good title, the court, upon a record so framed, will refuse to direct accounts or inquiries as to the defendant's possession or management of the property, with a view to ascertain whether any and what sum ought to be paid, and compensation made, by him to the plaintiff.'^ Implied conditions of the relation. Sec. 805. The mutual rights and duties of mining adventurers ' Stevens V. Guppy, 3 Rubs. 171. « Id. Paetneeships in Mikes. 1165 must be determined by the general rules of partnership. And, although the shares of each are separate and some possess a greater number of shares than others, yet a contract is implied between them that the concern is to be carried on in a practicable and feasible way. Therefore, all ought to work jointly and equally, or they ought to appoint a manager to conduct the business for them. Lord Eldon, referring to the collieries in the north, observed: "In my country, where there ai'e frequently twenty owners of the same mine, if each is to have a set of miners going down the shaft to work his twentieth part, it would be impossible to continue working tlie mine.' However, if the part-OAvners of a mine cannot agree to appoint a manager, a court of equity will manage it for them. And, generally, where disputes arise between the miners, of such a nature as to require judicial interference, a court of equity, as we have before mentioned, will apply the same remedies as are usually adopted in partnership matters. Therefore, if need be, it will decree a dissolu- tion, an account, and a receiver.^ Nor will the equities subsisting between the miners themselves be affected by the circumstance that some of them have not a good title to their shares. Thus, in the case of JefEerys v. Smith, ^ A being, as a partner, entitled to a share of extensive iron works, and of the lands and promises on which they were carried on, agreed for valuable consideration to assign to B his interest in the property and business; B interfered and acted as a partner ; but afterward he assigned his share, and gave notice to the other partners, that he had withdrawn from the business ; and, when called on to complete his purchase, resisted the jDerformance of the contract successfully, on the ground that a good title could not be shown. It was held that B, as between him and the other partners, was to be treated as a partner, and was ' 1 Jac. & Walk. 302. On this subject, and disputes of the workmen and la- so far as it affects the mining laws of borers, and the second from the parties Spain and her colonies, see Vol. 1, p. being apt to work out the vein and cut 187, of the Commentaries of Qamboa, away the pillars of support in order to as translated by Richard Heatlifield, make the most of their time, yet they Esq., of Lincoln's Inn. " In deep serve to quiet disputes between the mine," says the learned jurist, "ad- owners, and the latter plan, that of mitting of a variety of works, we have working alternately, is a correct and occasionally met with instances where legal one, as may be seen by the text of the partners have agreed to work the Ulpian (Dig. lib. 33), for, as the result mines by regions, so that one should is uncertain, and the chances of each work in one direction and the other in part are equal, there can be no objection another; or, where they have taken it to its justice or legality, in turn to work upon the vein at alter- ' JefEerys v. Smith, 1 Jac. & Walk, nate periods of time. Neither of these 398. plans is free from inconvenience: the ^SRuss. 158. first being inconvenient from the thefts IICG Particular Partkerships. to contribute to the partnership losses, until the time when he gave notice of his withdrawal from the concern, and assigned his share. It ought to be noticed, that in the case of Senhouse v. Christian,' Lord Loughborough advanced a doctrine of great importance, respect- ing the equities of miners. He held, that if a pei'son, not having the legal interest in a mine, permit another to incur, great risk and expense in working it, without giving such other person notice of his claim, he shall not afterward be permitted to come into a court of equity for the jjurpose of substantiating such claim. Person liable as partner in, when holds himself out as such. Sec. 806. A person will be chargeable as a partner in a mining company, either on the ground of being an actual partner, or of hav- ing held himself out to the world as such. But, to prove a person an actual partner in a mine, there must be some evidence that an actual interest has been conveyed to him, unless the co-adventurers work the mine by virtue of a license only. In Vice v. Lady Anson,' an action was brought against the defendant, as one of the adventurers in a mining company, to I'ecover the price of goods sold, and work and materials furnished by the plaintiff for the working of the mine. The plaintiff, when he furnished the goods, had no knowledge of Lady Anson as a shareholder. It appeared, however, that she had spoken and written of herself in society and privace letters, as being one ; but she never signed any deed. She paid her deposits on her shares, and received certificates, stating that she was a proprietor of certain shares, and that her name was duly registered in the act- book of the mine. Upon this evidence. Lord Tenterden directed the jury, that, as the plaintiff did not give credit to Lady Anson, and as she had never held herself out to the world as a partner, she must be chargeable, if at all, on the ground of being really interested. Was there then any evidence from which it might be inferred that Lady Anson ever had any interest in the mines conveyed to her ? He thought not. The partnership, if any, was not strictly a trading partnership ; it was one formed for the purpose of working a mine, a species of real estate. An interest in real estate could only pass by certain formalities ; and it was clear that the certificates were not suflBcient to pass it, nor would the registration in the act-book of the company be sufficient. It did not appear that Lady Anson had derived any interest in the mines from any other person ; and the '19 Ves. 159, cited. s? Barn. & Ores. 409; 1 Man. & Ryl. 113; 1 Mood. & Malk. 43; 3 Car. & P. 19. Paetnebships in Mines. 1167 certificiites, which clearly did not in themselves pass any interest, furnished no evidence that an interest had passed. Under these cir- cumstances, he thought that it was not satisfactorily made out that Lady Anson had any interest in the mine. After this charge, the plaintifE's counsel elected to be nonsuited, and the Court of King's Bench refused to set the nonsuit aside. From this case it should seem, that, in order to charge a person as an actual partner in a mine, the deed of assignment of the shares must be proved. On the other hand, it has been inferred from the Vords of Lord Tenterden, that it would be sufficient, in an action of t\is nature, to give some evidence, from which the jury would be warranted in concluding that such a deed had been executed by the deiendant.' ^"^here the shares of a mining company stand in the name of a person who executes the deed of association, and holds the shares as trustee for another, then, if the latter becomes bankrupt, his assignees have only an equitable right against the trustee to compel an assign- ment (if the shares, and, consequently, cannot maintain an action of trover 'or them.^ I No implcation as to power of directors or agents to draw bills. Sec. S)7. In the case of an ordinary trading partnership, the law implies 4iat one partner has authority to bind another by drawing and accepting bills, because the drawing and accepting of bills is nec- essary for ^he purpose of carrying on a trading partnership. But, as this power is not generally necessary for the purpose of carrying on the busines of a mining company, the law will imply no authority in the directo\s of a company to bind the shareholders by bills of exchange." And, a fortiori, the agent of a mining company has no implied authority to bind the shareholders by bills drawn or accepted by him in thf name of the company.* Provisions of C(ides and ordinances. Sec. 808. B; several statutes in different Spanish Codes, and par- ticularly by thd Ordinances, chap. 7, sec. 1, foreigners are prohibited from acquiringi or working and supplying mines. These disabling laws were repealed to a certain extent by a law of the Sovereign Con- gress of Mexico \n 1823. But it seems clear from the argument of a ' Lloyd & Welsbj^ig. » Dickinson v. Valpy, 10 Barn. & Ores. ^ Dawson v. KialWorth, 1 Barn. & 128 ; Lloyd & Welsby, 6. Adolpli. 574. * Ducarry v. Gill, 1 Mood. & Malk. 450; \ 4 Car. & Payne, 120. llfiS Particular Partnerships. learned writer,' that the repeal of these disabilities does not extend to give foreigners a right of acquiring any absolute property in the Mexican mines. They stand, therefore, with respect to the native mine owner in the situation of mine supi^liers, or persons supplying capital for carrying on the mine, and taking a share of tlie metals as a remuneration. The 15th chapter of the Ordinances just referred to, contains a great variety of provisions for the regulation of the contracts between mine owners and mine suppliers. Notwithstanding, however, these specific provisions, it seems clear that the general laws of partnership must sometimes be resorted to in order to adjust a?l differences between the parties. The laws which regulate mining partnerships are contained in the 11th chapter of the same Code.' Since the repeal of the disabling laws before mentioned, the Anglo- Mexican and other English companies have been established for the purpose of working the American mines. ' Tlioirison on the Ordinances of the 'This code of laws was framed in the Mines of New Spain, p. 29, etseq. The reign of Charles the Third, and during learned writer, however, admits that the ministry of Joseph de Gavez, in there are persons of great intelligence the year 1783. Mr. Heathfleld remarks and experience in the mines of Mexico, that in the regulations which concern who think that they have a right of ac- the worliing of the mines, lhis code quiring such absolute property. The very closely follows the forner ordi- author is informed that where foreign nances, but that where altentions are adventurers intend to enjoy the abso- made, they are not uufrequently adop- lute interest, it is frequently the custom ted from the suggestions of Senor to take the mines in the name of a na- Gambo'a. See Heathfield's preface to tive as trustee for such adventurers. the Commentaries of Gamb Good V. Blewitt, 13 Ves. 897. 1198 Paeticplab Paktkeuships. CHAPTER XXXVII, OF PARTICULAR PARTNERSHIPS. Sec. 835. Of joint-stock companies in general. Sec. 826. Of tlie Bubble Act. Sbc. 827. Later acts. Sec. 828. Repeal of the statute and its consequences. Sec. 829. Who are to be treated as usurping powers of a corporation. Sec. 830. Test of legality as to joint-stock companies. Sec. 831. What makes one a partner in. Sec. 833. What constitutes au actual partner in. Sec. 833. By holding out. Sec. 834. Liability of promoters or provisional directors. Sec. 835. Liability of the company. Sec. 836. Legal remedies affecting companies, members of, and strangers. Sec. 837. Of the formation of — Evidence to charge one as shareholder. Sec. 838. Where there has been no waiver of formalities. Sec. 839 Where the prescribed formalities have been apparently waived. Sec. 840. As between company and alleged shareholder. Sec. 841. As between alleged shareholder and a creditor. Sec. 842. Cost-Book Mining Companies. Sec. 843. Of chartered companies. Sec. 844. Of companies under letters patent. Sec. 845. Of the mutual rights of shareholders. Sec. 846. When company is projected, but never formed. Sec. 847. Every party suing must be named. Sec. 848. Deed of settlement, what it should set forth. Sec. 849. The general law of partnership applies when the deed of settlement does not provide remedies. Sec. 850. When shareholders may proceed in equity against the directors. Sec. 851. Of the relative rights of shareholders. Sec. 852. Liability of shareholder of unincorporated company. Sec. 853. Powers of agent or manager of company. Sec. 854. Unincorporated companies — Liability of. Sec. 855. Of the management of companies. Sec. 856. Of companies under 7 & 8 Vict. — Managing body. Sec. 857. As to shareholders. Sec. 858. As to managing body. Joint-Stock Companies. 1199 Sec. 859. As to shareholders of statutory companies. Sec. 860. Of the sale and transfer of shares. Sec. 861. Of the relinquishment of shares, and of the right to retire. Sec. 863. Of the forfeiture of shares and the right to expel. Sec. 863. Of suits in equity between company and strangers. Sec. 864. Grounds on which equity will interfere. Sec. 865. When will enjoin. Sec. 866. Ex parte injunctions Sec. 867. Will restrain company from acting in excess of authority. Sec. 868. When injunction will be refused. Sec. 869. Suits in equity among the shareholders of joint-stock companies. Sec. 870. Dissolution when all partners cannot be present. Sec. 871. Account without dissolution. Sec. 872. General discussion of question. Sec. 873. Demurrer; Sec. 874. Plea. Sbc. 875. Answer. Sec. 876. Injunctions against directors, etc. Sec. 877. An inj unction has been refused to restrain. Sec. 878. Actions at law against companies . Sec. 879. Of the recovery back of subscriptions to companies. Sec. 880. Of actions between companies and their shareholders. Sec. 881. Of actions for calls. Sec. 882. Of actions for dividends. Sec. 883; Of set-off, by and against companies. Sec. 884. Of executions against companies and their shareholders. Sec. 885. As to executions against company or person named in judgment. Sec. 886. As to proceedings against shareholders upon judgment against com- pany. Sec. 887. As to shares. Sec. 888. Termination of liability. Sec. 889. When shares in companies are specifically bequeathed. Sec. 890. Profits — Division of. Of joiiit-stook companies in general. Sec. 835. Companies not trading upon a joint-stock, or, in other words, regulated companies, have existed. from very early^ times. Per- haps the most ancient is that of the Merchants Adventurers, better known in modern times by the name of the Hamburgh Company.' ' Anderson's Hist. Commerce, Vol. 1 , called regulated companies. Smith's p. XXV. When companies do not trade Wealth of Nations, Book 5, chap. 1 ; upon a joint-stock, but are obliged to and see Encyc Brit., tit. Company; admit any person properly qualified, Montefiore, tit. Company. Dr. Adam upon paying a certain fine, and agreeing Smith enumerates several regulated to submit to the regulations of the com- companies, which are all for foreign pany, each member trading upon his commerce ; but he observes that regu- own stock and at his own risk, they are lated companies resemble, in every re- 1200 Pabticular Partnerships. The privileges of this company, which were obtained from John Duke of Brabant, were confirmed by letters patent of King Edward tlie Third, and have been, it is believed, uniformly recognized by succeed- ing monarchs.' The East India Company, which was established in 1599, was one of the first which traded upon a joint-stock. That company, however, likewise partakes of the nature of a regulated company, and it has not been, until comparatively modern times, that joint-stock companies, in the popular sense of the expression, have been in any degree encouraged. These, however, have become, of late years, so numerous and important, that it seems proper to trace the legal opinions which have from time to time existed respecting them, and to that end to examine, as concisely as possible, the cir- cumstances of their origin, suppression, and revival. In subsequent sections we shall endeavor to point out in what manner and to what extent they are affected by the general law of partnership. It ought, however, to be premised, that our remarks on trading associations will be confined to this last class of companies, they alone coming within the scope and design of this treatise. By joint-stock companies, therefore, is here intended those which are unincorporated and which trade upon a joint-stock." History of the bubble act, and remarks on the legality of joint-stock companies. Sec. 826. In the year 1711, the debts of the Navy being found to amount to more than five millions, and there being other public debts of a large extent, Harley formed a scheme of raising a fund for the payment of 61. per cent interest on those debts, by making perma- nent all the duties on wines, vinegar, tobacco, India goods, wrought silks, whale fins, etc. With a view to give further satisfaction to the public creditor, he formed the additional project of granting a monop- oly of a trade to the South Sea, or coast of Spanish America, to the several proprietors of this funded debt, and of incorporating them for the purposes of such trade.' Accordingly, by the 9 Anne, c. 21, s. 1, reciting the various debts, and that " her Majesty's most dutiful and faithful subjects, the Com- spect, the corporation of trades so com- cited. It appears that these companies mon in tlie cities and towns of all the may now be sued in indebitatus assump- countries of Europe. In fact, there seems sit for goods sold and delivered, though to be no difference between them. the contract be not under seal, but that ' Malyne, Lex Mercat. chap. 43. they cannot be sued on their accept- " As to the rights and liabilities of ance, unless they have a power given companies which are incorporated and to them expressly or impliedly from the trade upon a joint-stock, see Beverley object of the corporatiou to accept bills. V. Lincoln Gas Light Company, 6 A. & * Coxe's Walpole, Vol. 1, p. 136 ; Tin- E. 838, and the several cases there dal, Vol. i, p. 304. Joint-Stock Companies. 1201 mons, being duly affected with the deepest sense of the happiness they enjoyed under her Majesty's most gracious and wise administra- tion ; and being truly desirous to do all that became dutiful and faithful subjects, to render happy and glorious the reign of the best of sovereigns ; and having taken into their most serious consideration all the. said debts and deficiencies, and the many ill consequences which might arise to the public thereby if not timely remedied ; and being heartily zealous to preserve the honor of her Majesty and the nation, and to establish the public credit, and to enable her Majesty to prosecute the war so necessarily entered into, with the utmost vigor, until such a peace should, by the blessing of Almighty God, be obtained, as might be for the honor of her Majesty and the lasting security of her kingdoms," etc., it was enacted, that the impositions we have mentioned on wines, etc., should be in full force for ever. By the 3.5th section of the same act, reciting that it would be for the great ease and advantage of the persons concerned in the said debts and deficiencies, that they should be made one company; and to "the end and intent that the trade to the South Seas, and other parts within the limits thereinafter mentioned, jnight be carried on, for the honor and increase of the wealth and riches of the realm," it was enacted that her Majesty might, by letters patent, incorporate the persons interested in the public debts intended to be provided for by the act. The subsequent sections relate to the powers, constitution, and man- agement of the company, and the limits of their trade. Such was the origin of the South Sea Company. But the advantages expected from this act of Parliament turned out to be visionary. By the peace of Utrecht, Spain and the Indies being confirmed to Philip the Fifth, that monarch was too jealous to admit the English to a free trade in the South Sea ; and instead of the advantageous com- merce which Harley had held forth, the company obtained only the assiento contract, or the privilege of supplying the Spanish colonies of America with negroes for thirty years, with the permission of sending to Spanish America an annual ship, limited both as to ton- nage and value of cargo : of the profits of which the King of Spain reserved to himself one-fourth, and bl. per cent on the other three- fourths.'' It is manifest from this, that the hopes which had been held out to the company, of a free trade to the South Seas, were delu- sive. The company was accordingly, from time to time, bolstered up by acts of favor on the part of the Monarch or of the Legislature,' ' Coxe, vol. 1, p. 137. * Anderson's Hist. Commerce, vol. 3, pp. 366, 367. 151 1202 Particulae Partnebships. and ultimately was made the means of the most notorious deception and the most extensive ruin The King, at the commencement of the session of 1719-20, had recommended the Commons " to turn their thoughts to all proper means for lessening the debts of the nation." To attain this end, the primary object of the government was the reduction of the irre- deemable annuities created in the reigns of William and Anne, for long terms of years, amounting to 800,000Z. per annum. ' A scheme was laid to reduce all the public funds into one. The South Sea Company and the Bank of England presented their several proposals to the House of Commons. The liberty of taking in the national debts, and, consequently, of increasing their capital stock and yearly fund was looked upon as a very valuable benefit. The contest, there- fore, between these two companies was very great, but the South Sea Company, being resolved at all hazards to enjoy the privilege held forth to them, made an offer amounting in the whole to 7,567,500?. The offer was accepted by the Minister, and, accordingly, the act of 6 Geo. 1, c. 4, was passed "for enabling the South Sea Company to increase their present capital stock and fund, by redeeming such pub- lic debts and incumbrances as are therein mentioned," etc. At the time when this act was passed the public rage for specula- tion was at its greatest height. It cannot, perhaps, be said that the conduct of the South Sea Company was the sole cause of the spirit of adventure which was abroad, because a few years before this period we read of bubbles sufficiently important to attract the notice of the Legislature.' It is certa,in, however, not only that the acts of this company increased the prevailing excitement, but that they were unable to fulfill their engagement with government without farther availing themselves of that love of gainful enterprise which had seized the public mind.* Imaginary advantages were accordingly held forth; groundless and mysterious reports were circulated con- cerning valuable acquisitions in the South Sea; dividends of ten, thirty, and even fifty per cent were voted, which the directors knew could never be paid and for which there was no foundation. Nor were boastings and exaggeration confined to the profits of the scheme. Rumors were spread that the company, by monopolizing the national debt, would reduce the government to the necessity of applying to them for loans, and might possibly even obtain a majority in the ' Anderson, 285. ' Anderson, 250. « Tindal, vol. 4, book 27. * Coxe, 134. Joint-Stock Gompan-ies. 1303 House of Commons, and m»ke and depose ministers at pleas- ure. ' The artifices which were thus resorted to to support the credit of the Soutli Sea adventurers were attended for a short time with almost incredible success. Even then, however, says a judicious historian, there happened such sudden fluctuations in their stock, sometimes even in the space oi a few hours, as might have given clear indica- tions of its precarious value, notwithstanding the various acts daily practiced to keep it constantly rising." But the immediate cause of the company's destruction is well known. The thirst for speculation was not confined to the proprietors of the South Sea scheme. The whole nation had become adventurers, and every day produced new commercial companies, some for useful, others for most chimerical purposes; some founded on obsolete charters, and others, the most numerous, not affecting the least authority of that nature.' The South Sea Company became jealous of these societies, which they denominated bubbles, and being desirous to monopolize all the money of the speculators, obtained writs of scire facias,*' against the con- ductors, and thus put an end to them. But, observes another histo- rian, in opening the eyes of the deluded multitude they took away the main prop of their own tottering edifice. Suspicion once excited was not to be suppressed, and the public, no longer amused by pompous declarations and promises of dividends, which they were convinced , could never be realized, declined all further purchases of stock; and those who had bought at large premiums were involved in distress and ruin. Amongst the numbers who suffered by these speculations were not only persons of the first rank, but merchants and traders of every class, and bankers, who having advanced the moneys committed to them on the subscription receipts, by their temporary stoppages augmented the general calamity. ° Later acts. Sec. 827. "We have entered thus minutely into the history of the South Sea Company in order to show more clearly under what cir- cumstances the famous bubble act originated. It has just been - Id. and see Anderson, 287. for the two years, 1824 and 1825) may ' Anderson, 287. be stated tlms : established, 127 ; aban- 3 Id. 288. Tindal, Vol. 4, book 27. In doned, 118 ; projected, 379 ; total, 624. Anderson, several hundred of these See a Complete View of the Joint-Stock speculations are enumerated. The re- Companies, by H. English. London, cent bubble years were equally product- 1827. Boosey & Sons, ive. At the end of 1825 the number * 5 Bro. P. C. 492 ; 2 P. W. 317. of the various companies (calculating ° Coxe, 135. 1204 Particular Partnerships. observed that the South Sea Company, conscious of their own weak- ness, caused writs of scire facias to be issued against the minor bub- bles. But this took place a few months after the j^assing of the act in question, and because the provisions of that act and of the proclama- tion which accompanied it, had not been fully obeyed. It may, there- fore, be fairly conjectured that the bubble act itself was passed at .the instigation of the South Sea Company, and was, therefore, a mere machine for propping up the credit of that company; consequently, that it was made with no real view to the interests of trade in gen- eral, and is not to be considered, so far as the intentions of the framers were concerned, as declaratory of the common law in regard to mer- cantile companies. The act (6 Geo. 1, c. 18, s. 18) reciting that "whereas it is noto- rious that several undertakings or projects of different kinds have at times,- since June, 1718, been publicly contrived and practiced or attempted to be practiced within London and other parts of the kingdom, as also in Ireland and other dominions of the King, which manifestly tend to the common grievance, prejudice, and inconvenience of great numbers of subjects in their trade or com- merce, or other their affairs; and the persons who contrive or attempt such dangerous and mischievous undertakings or projects, under false pretenses of public good, do presume, according to their own devices and schemes, to open books for public subscriptions, and draw in many unwary persons to subscribe therein, toward raising great sums of money ; whereupon the subscribers or claimants under them do pay large proportions thereof, etc., which dangerous and mischievous projects relate to several fisheries and otber affairs, wherein the trade, commerce and welfare of the subjects, or great numbers of them, are interested. And whereas, in many cases, the said undertakers or subscribers have presumed to act as if they were corporate bodies, and have pretended to make their shares transfera- ble or assignable, without any legal authority," etc. (Then, after stating some instances of illegal acting under obsolete or pretended charters) — " And many other unwarrantable practices, too many to enumerate, have been and may hereafter be contrived, set on foot, or proceeded upon, to the ruin of many subjects, etc. And whereas it is absolutely necessary that all public undertakings and attempts, tend- ing to the common grievance, prejudice, and inconvenience of the sub- jects in general, or great numbers of them, in their trade, commerce or other lawful affairs, be effectually suppressed," etc., for remedy Joint-Stock Compakies. 1305 enacts "that all and every the undertakings and attempts described as aforesaid, and all other public undertakings and attempts tending to the common grievance, prejudice and inconvenience of his Majesty's subjects, or great numbers of them, in their trade, commerce or other lawful affairs, and all public subscriptions, receipts, payments, assign- ments, transfers, pretended assignments and transfers, and all other matters and things whatsoever, for furthering, countenancing, «r pro- ceeding in any such undertaking or attempt, and more particularly the acting or presuming to act as a corporate body, the raising or pre- tending to raise transferable stock, transferring or pretending to transfer or assign any share in such stock, without legal authority, etc., shall be deemed illegal and void." Section 19 enacts that "all such unlawful undertakings and attempts, so tending to the common grievance, etc., shall be deemed public nuisances, and subject the offenders to the penalties of jit't^niunire, in addition to the iines, pen- alties and punishments of persons convicted of common and public nuisances," And a subsequent clause gives other remedies in respect of these grievances, with a proviso (s. 35) that the act shall not be con- strued to prohibit or restrain the carrying on of partnerships in trade, in such manner as has been before usually and may legally be done. The supposition which has been hazarded as to the primary motive for passing this act is not weakened by the circumstance that, from the time of Lord Raymond to the time of Lord Ellenborough, no pro- ceeding upon it appears to have taken place. About two years after the statute was passed, a person was found guilty on an information under th'e act, "for setting up a bubble called the North Sea." The court declined giving the whole judgment, as in a case of prmmun- ire, against him, but sentenced him to a fine of ^l., and imprison- ment during the King's pleasure." From the time when this case was decided till the year 1808, an interval of about eighty-seven years, the statute ap]fears to have been forgotten ; but, in the year just mentioned, a criminal information was moved for against the framer and proprietor of a trading scheme, on the ground that it was expressly against the provisions and policy of the statute." Afterward, several other cases of the same kind occurred before Lord Ellenbor- ough and other judges, all of which are well known and have been frequently discussed.' ' Rex V. Cawood, 2 Ld. Kaym. 1361. Rex v. Stratton, id. 549, n. ; Pratt v. ' Rex v. Dodd, 9 East, 516. Hutchinson, 15 East, 511 . See, alao, 'See Buck v. Buck, 1 Camp. 547; Brown v. Holt, 4 Taunt. 587. 120G rARTICULAR PARTNERSHIPS. Repeal of the statutes, and the consequences. Sec. 828. The statute having been repealed, it will be unnecessary to state those cases at length, yet it seems necessary to notice shortly the manner in which the act has been construed, because it has been said that the ofEenses there mentioned are likewise offenses at the com- mon law. Tl)^ ofEenses which are more particulary pointed out by the statute are, the presuming to act as a corporate body ; the raising transfer- able stock ; the transferring such stock. One would have supposed, from the wording of the statute, that, in order to complete these ofEenses, they must have been committed for furthering some danger- ous and mischievous undertaking, to the common grievance of the public, for the act says that all such undertakings, etc., "and all other matters and things for furthering such undertaking, and more particularly the acting or presuming to act as a corporate body, the raising or pretending to raise transferable stock, etc., shall be deemed illegal and void," the latter proceedings being mentioned only as par- ticular instances of acts done in furtherance of such undertakings. And in The King v. Webb, liOrd Ellenborough seems to have been of that opinion. " It may admit of doubt," said his Lordship, " whether the mere raising transferable stock is, in any ease, per se an offense against the act unless it had some relation to some undertaking or project, which has a tendency to the common grievance, prejudice, or incon- venience of his Majesty's subjects, or of great numbers of them." And the whole of his Lordship's judgment in that case is in accordance with the opinion conveyed in this dictum. In later eases," however, it has been considered that the act intended to denounce all societies acting as coi-porstte bodies, or raising transferable stock, and that pro- ceedings of that nature must be held to render the body a common grievance within the meaning of the act, whether it be or be not mis- chievous in its avowed object and general tendency."' With regard to the specific offenses mentioned by the act, it seems to have been universally agreed that the acting as a corporate body is an offense very difficult to be defined. It may perhaps be inferred from other parts of the statute, that this enactment was directed' against persons who pretended to be in possession of some charter of incorporation, and not -against every species of society. But however this may be, it seems to be unquestionable that there are particular ' Josephs V. Pebrer, 3 Barn. & Ores. 384 ; Ellison v. Bignold, 3 Jac. & Walk. 639 ; 5 Dowl. & Ryl. 542 ; Duvergier t. 503. Fello wes, 5 Bing. 348 ; 3 Moore & Payne, Joikt-Stock Companies. 1207 offenses of this nature for which an indictment will lie, not only under the statute, but even at common law. It is apprehended, how- ever, that the more general charge of acting as a corporation would not be sufficient to support an indictment at common law, but that there uust be additional aTerments, stating with particularity the nature of the offense. It is conceived, that the opinion on this sub- ject, reported to have been expressed by Lord Eldon,' must be received with this limitation. As to the particular offenses alluded to, it seems more easy to say what is not, than what is an act of assuming a corporate capacity. It is clear that the assuming a common name for the purpose of desig- nating the society, the using a common seal, and making i-egulations by means of committees, boards of directors, or general meetings, were not illegal within the statute, and are not illegal at common law. In The King v. Webb, Lord Bllenborough said — "As to the fourth point, that the subscribers have presumed to act as though they were a body corporate, how is this made out ? It was urged that they assumed a common name (which, however, does not appear to have been the case), that they have a committee, general meetings, and power to make by-laws ; but are these the unequivocal indicia and characteristics of a corporation ? How many unincorporated insur- ance conipanies, and other descriptions of persons are there, that use their common name, and have their committees, general meetings, and by-laws ? Are these all illegal, or which of these particulars can be stated, as being of itself the distinctive and peculiar criterion of a corporation?" So, in the case of Ellison v. Bignold,' where it appeared that the directors of an insurance company had, by their deed of settlement, the power of making orders and by-laws, and that a seal was to be fixed upon for the use of the company, it was urged that this amounted to an assumption of a corporate character ; but Lord Eldon appears to have taken no notice of this objection, and to have considered the legality of the association as depending entirely on the manner in which the shares were made transferable. In addi- tion to these authorities we may add that the numerous acts of Par- 1 In Kinder v. Taylor, see Index. See, utility or inutility of each association as also, McCallum v, Turton, 3 Yoiinge & they passed in review before liim. He Jerv. 183. seems to have considered, that the mis- ' 2 .Tac. & Walk. 503, and see Pearse chievous tendency of the associations V. Piper, 17 Ves. 1 ; Carlen v. Drury, 1 was a question for the judge and not for Vea. & Bea. 157. But Lord Eldon's the jury. See Kinder v. Taylor, pod; opinions in these cases seem to have Lloyd v. Loaring, 6 Ves. 773. been guided by his own notion of the 1208 Particular Partnerships. liament for enabling certain companies to sue and. be sued by their secretary seem to assume the legal existence of the various powers of which we have just been speaking. Who are to be treated as usurping powrers of a corporation. Sec. 829. It seems clear, therefore, that whether we view this sub- ject with reference to the repealed statute, or the existing common law, they alone are to be considered as assuming to act as a corporate body, who usurp the " unequivocal indicia and characteristics which form the distinctive and peculiar criterion of a corporation." It is not to be doubted, however, that they who 'are parties to proceedings of this nature are guilty of an offense in law. Thus, corporate bodies alone can use a common name for the purpose of suing, contracting, conveying, or accepting conveyances; and to affect the use of a com- mon name for these purposes "would, perhaps, in every case, be con- trary to law. Again, corpoi-ate bodies have the power of binding their members by the acts resolved upon in the manner prescribed by their charters, which power they derive from their corporate character, and not from contract and agreement between themselves; ' an the other hand, voluntary associations are governed entirely by the rules which the parties have themselves agreed to. Hence, if the committees or meetings of an unincorporated society were to assume to exercise, independently of any contract or agreement for that purpose, a general power of binding their members, it might reasonably be contended that such an act was illegal and indictable. The only acts, however, which have been expressly decided to be an assuming to act as a cor- poration, are, first, that of making the shares transferable, without any restriction, at the mere will of the holder, and, secondly, holding out to the public that the shares are so transferable. That the first of these acts is illegal at common law seems to be a fair conclusion from the case of Josephs v. Pebrer," in which, not- withstanding Lord Ellen borough's doubts before adverted to, it was held that the making shares generally assignable was illegal, not only under the words of the statute on that particular point, but with ref- erence to the more general offense of acting as a corporation; and the observations of Best, C. J., in a subsequent case, are confirmatory of this opinion. "There can be no transferable share of any stock, except the stock of corporations, or of joint-stock companies created ' See Adley v. Whitstaple Company, ^ 3 Barn. & Ores. 639 ; 5 Dowl. & Ryl. 17Ves. 815. 543. Joint-Stock Companies. 1309 by acts of Parliament. Indeed, the members of corporations cannot assign their interest, and force their assignees into the corporation, witliout tlie authority of an act of Parliament. Such authority is expressly given by the bank acts, the South Sea acts, and by other statutes, creating companies that possessed stock, which it was deemed proper to render transferable. The pretending to be possessed of transferable stock is pretending to act as a corporation, and pretend- ing to possess a privilege which does not belong to many corporations.' In the late case of Blundell v. Winsor,^ Sir Lancelot Shadvvell held an association to be illegal at common law upon both the grounds above stated. In that case the company was established for working gold mines in America, and by the deed of settlement it was stipu- lated that it should be lawful for the shareholders, at a meeting to be called for that purpose, at any time, and from time to time, to increase the capital to any amount that might be agreed upon by creating an additional number of shares; and further, that " the shares, as well original as additional, should and might be assigned and disposed of by deed or will or otherwise to any other person or persons at the dis- cretion of the holders thereof." The bill having been filed by one of the shareholders against the others for a dissolution and general set- tlement of the affairs of the concern, and one &f the defendants hav- ing demurred generally for want of equitjr. Sir Lancelot Shadwell allowed the demurrer, observing that the fair inference to be drawn from the deed was that certain persons were to form a company which might be increased to an unlimited extent, with power to the share- holders to transfer their shares to whomsoever they pleased, without any sort of control; in other words, the deed represented that the per- sons who should assign their shares would get rid of all the liabilities attached to them, and that the persons who should take their shares would take them just as the assignors held them. This, his honor said, could not be done; and his notion was that the deed was illegal, not only because it trenched on the prerogative of the King by attempting to create a body who without the protection of the King's charter might assign their shares without any restriction, but because it held out to the public a false and fraudulent representation that the shares could be so assigned; and his honor allowed the demurrer with costs. The second reason here given for the allowance of the demurrer is well worthy of consideration, inasmuch as it is inconsistent with »5Biiig. 267. 53 Sim. 601. 152 1210 Particular Partnerships. the opinion of Lord Brougham in the previous case of Walburn v. Ingleby,' in which his Lordship, in referring to tlie prospectus of tlie company engaged in that suit, said that a certain clause intimating that each subscriber was only to be liable to the extent of his share was not enough to make the association illegal, but was merely nugatory as between the company and strangers, and that whoever became a sub- scriber upon the faith of the restricting clause, or of the limited responsibility which that held out, would have himself to blame and be the victim of his ignorance of the known law of the land. Without attempting to judge of the respective merits of these con- flicting opinions, it may be observed that in the case before Lord Brougham the prospectus did not go to the length of stating that the liability of the shareholders was restricted to the amount of their own shares, but only that provision was to be contained in all engagements to be entered into by the directors in behalf of the association, " that no shareholder should be subject or liable beyond the amount of his share or shares." Test of legality as to joint-stock companies. Sec. 830. Where the shares are not transferable at the mere unre- stricted option of the holder, the association, as far as relates to that matter, will be legal. In the case of The King v. Webb, which has been so often referred to, the shares could not be transferred to any person who would not enter into the original covenants; nor could more than twenty be held by the same person, unless they came to him by operation of law, and the object of the society which was to supply the inhabitants of Birmingham, being shareholders, with bread and flour, virtually limited the transfer of shares to persons residing in the neighborhood. And the Court of King's Bench gladly availed themselves of these circumstances in order to hold the association legal. So, in Pratt v. Hutchinson,'' which was the case of a building company, no person could become a member of the company until he had made himself a party to the partnership articles, nor until he had been proposed and approved by a certain majority of persons present at the meeting of the society. And the court held that these restric- tions on the transfer of the shares preserved the legality of the asso- ciation. And, perhaps, these restrictions might be still further relaxed in cases where it can be shown, as in The King v. Webb, that the object of the undertaking was not to raise stock for the purposes " 1 Myl. & K. 61. Hawkins, 3 Mau. & Selw. 488.' ° 15 East, 511 ; and see Davies v. Joikt-Stock Compakies. 1211 of transfer, nor to make such stock a subject of commercial specula- tion or adventure. Upon tlie whole it may be laid down generally that all trading asso- ciations, however numerous, and although unsupported by charter or act of Parliament, are legal, provided their purposes and their mode of dealing are honest, and consistent with the general policy of the country, and provided they usurp none of the exclusive privileges of a corporation, but in order to render the rights of public companies definite, the majority of them are invested with general or special privileges under various acts of Parliament. These will be shortly noticed in a subsequent chapter. What makes a man a partner in a joint-stock company. Sec. 831. As the law in England makes every member of a joint- stock company liable in solido for debts contracted on account of the copartnership, it will be necessary to consider accurately what makes a man a partner in such a company, both as between himself and the other shareholders, and also as regards the world in general. For, in order to charge a person as a partner, it must be shown either that he was an actiial partner and as such entitled to share the profits and liable to contribute to the losses, or that he held himself out to the world as a partner and thereby gave the company the credit of his name.' What constitutes an actual partner in a company. Sec. 833. In joint-stock companies, more than in any other kind of partnership, a variety of acts are done before the partnership is act- ually commenced. Notices are published, prospectuses are distributed, meetings are held, officers are chosen, deposits are paid, and scrip receipts are given long before the business is commenced, or the deed of settlement is executed. Indeed, many of these acts are necessarily done before even the full complement of the intended shareholders is made up. Hence, although the prime movers and agitators of the scheme will undoubtedly be liable in respect of the contracts into which they enter for the purpose of latmching the company, yet they cannot by such proceeding bind those who merely answer their invitation ; those, for instance, who name themselves subscribers, and even pay deposits, and do other acts showing an intention of becoming partners,' but who, by neglecting to observe the rules, or to comply with the demands of the society, never become entitled to share the profits. The contract of ' Per Lord Tenterden, 9 Bam. & Cres. 638. 1212 Particular Partnerships.' l^artncrsliip, as regards tliese passive subscribers, is executory only, and may be abandoned, if the terms of tlie partnership are not reasonably fulfilled by the projectors. Under such circumstances, tliey never have become actual partners in the concern, and, consequently, have never rendered themselves liable for its debts. In the language of a learned judge — " If there is a contract to carry on business by way of present partnership between a certain definite number of persons, and the terms of that contract are unconditional or complete, then the partners give to each other an implied authority to bind the rest to a certain extent. But if a person agree to become a partner at a future time with others, provided other persons agree to do the same, and advance stipulated portions of capital, or provided any other i)revious conditions are performed, he gives no authority at all to any other individual, until all those contracts are perfoj'med. If any of the other intended partners in the mean time enter into contracts, it seems to me to be clear that he is not bound by them, on the simple ground that he has never authorized them. " ' The law upon this subject is ably expounded by Lord Chief Justice Tindal in the case of Fox v. Clifton,' the facts of which were as fol- 'D. Parke, J., 10 Barn. & Cres. 142. See Howell V. Brodie, ante. » 6 Bing. 776 ; 4 Moore & Payne, 713 ; 9 Bing. 115. At the common law part- nerships are sometimes divided, among other divisions, into these kinds: 1, pri- vate partnerships, which are composed of two or more partners for some merely private undertaking, trade, or business; and 2, public companies, where a large number of persons are concerned, and the stock is divided into a large number of shares, the object of the undertaking being of an important nature and often embracing public as well as private in- terests and benefits. The latter are also subdivided: 1, into unincorporated com- panies or associations; and, 2, into in- corporated companies and corporations existing under a charter of the govern- ment, and having special powers and rights conferred thereby. In both cases, however, the partnership, although called a public company or association, is not, in contemplation of law, more than a mere private partnership ; for in the sense of the law no company is a public company or association whose in- terests do not exclusively belong to the public and are not exclusively subject to the regulation and government of the legislature or other proper public func- tionaries. Thus, for example, a college, a bank, a bridge company, a manufactur- ing company, a company for mining, or foreign trade or commerce,wliether incor- porated or not, is still but a mere private association. Whereas, a town, a parish, a hundred, a board of trade, or a treasury department created by the government for public purposes and exclusively regulated thereby, would be strictly a public company, whether incorporated or not. Unincorporated companies and associations differ in no material respect as to their general powers, rights, du- ties, interests, and responsibilities, from merely private partnerships, unless otherwise expressly provided for by stat- ute, except that the business thereof is usually carried on by directors or trus- tees, or other ofBcers, acting for the proprietors or shareholders, and they usHally extend to some enterprise in which the public have an ultimate con- cern. But incorporated companies or corporations are governed strictly as to their powers, rights, duties, interests, and responsibilities, by the terms of their respective charters, and the share- holders, or stockholders, are not person- ally or individually liable in their pri- vate capacities, unless expressly so de- clared by their charters, for the acts, or doings, or contracts of the officers or members of the company or corpora- Joikt-Stock Compawiks. 1313 lows: — Certain persons met together in March, 1835, and resolved that a company should be formed, to be called " The Imperial Dis- tillery Company." After a preliminary announcement of their inten- tion; whereas in unincorporated compa- nies or associations the sliareliolders aud stockholders are personally respon- sible in their individual capacities for all acts of the officers and company, or association, in the same manner and to the same extent as private partners are." Story on Part., pp. 107-109 ; Babb V . Read, 5 Rav^le (Penu.), 157 ; Tappau V. Bailey, 4 Mete. (Mass.) 535 ; Cox v. Badfish, 35 Me. 302 ; Henry v. Jackson, 37 Vt. 481 ; Oorman v. Russell, 18 Cal. 688; Williams v. The Bank of Michi- gan, 7 Wend. (N. Y.) 54'3 ; Tenuey v. The N. E. Protec. Union, 37 Vt. 64; Robbins v. Butler, 34 111. 887; Penn. Ins. Co. V. Murphy, 5 Minn. 36 ; Irvine v. Forbes, 11 Barb. (N. Y.) 588 ; Pipe V. Bateman, 1 Iowa, 369 ; Skinner v. Dayton, 19 Johns. (N. Y.) 537. In joint stock and other large compa- nies which are not incorporated, but are a simple, although an extensive part- nership, their liabilities to third persons are generally governed by the same rules and principles which regulate common commercial partnerships. How far any stipulation in the articles of such companies, which limit the respon- sibility of the members to the mere joint funds, or to a qualified extent, will be binding upon their creditors, who have notice of such stipulation, and contract their debts with reference thereto. Justice Story deemed an open question, so far as judicial decisions go, though his opinion seems to be that creditors, with such notice, cannot pro- ceed against the members upon their general responsibility as partners where they have expressly contracted to look to the social funds ; and that, if they have notice of the qualifying stipula- tion and contract with reference to it, they are bound by it as much as if it were expressly agreed to. Story on Part., pp. 354-255. See cases cited, ante. Semble, that subscribers, as for build- ing a meeting-house, are partners quoad hoe, so that one cannot recover against the others, or such as act as the building committee, for services performed. Cheeny V. Clark, 3 Vt. 431. If an individual enter into contract with a company transacting busines.s under articles of association, one of which provides for an application to the legislature for a charter, which is after- ward granted, the style and general or- ganization of the association continuing the same, and nothing is performed un- der the contract until after the charter was granted, the company are responsi- ble as partners, notwithstanding the act of incorporation declares that all con- tracts made by the association shall be as obligatory on the same and on other parties thereto as if they had been made subsequently to the act of incorpora- tion, aud that it shall be lawful for the corporation and such parties to main- tain actions to enforce the performance thereof as effectually as if the same had been made by or with the corpora- tion. Witmer v. Schlatter, 3 Rawle (Penn.), 359. The private association of stockholders of the North River Steam- boat Company is not a copartnership, but the parties are tenants in common of the property and franchises belong- ing to the company. And in such asso- ciation the majority cannot bind the minority, unless by special agreement. Livingston v. Lynch, 4 Johns. Ch. (N.Y. ) 573. An association for mutual benevo- ' lence among its members only is not au association for charitable uses under the common law of Pennsylvania or the Stat, of 43 Eliz. Baab v. Reed, 5 Rawle (Penn.), 151. Its members, if not in- corporated, are considered as partners in their relations to third persons, and the property of the association must be applied to pay the debts of the associa- tion before it can be appropriated to the payment of the claims of those who are members. Id. Articles of association. — The doctrine of the common law, as to the right of a majority to govern in all cases where the stipulations of the articles of the partnership do not import the contrary, must be strictly confined to acts done within the scope of the business of the partnership, and does not extend to the right to change any of the articles thereof. In such a change it is essen- tial that all should unite, otherwise it is not obligatory upon them. This is em- phatically true in cases of joint associa- tions and joint-stock companies of au extensive nature, in the constitution of which certain articles are treated as fundamental, and cannot be altered or varied without the consent of all the 1214 Particulae Partkerships. tion by advertisement, a meeting was held, and a further advertise- ment appeared, as follows :^" Imperial Distillery Company, capital 600,006Z., 12.000 shares, at 50/. each." (After a list of names of trus- members, for the rule which applies to public bodies, strictly so called, that the majority shall govern in all cases, is in- applicable to private associations where the terms originally subscribed for the association must and ought to remain in full force until abrogated by the con- sent of all the associates. Story on Part. 186-7. It ia now well settled, that in matters of mere private confidence, or personal trust or benefit, the majority cannot conclude the minority. Livingston v. Lvnch, 4 Johns. Ch. (N. Y.) 573-579 ; Green v. Miller, 6 Johns. (N. Y.) 39. Resolutions which were passed at a meeting of the stockholders of an asso- ciation by vmanimous vote and sub- scribed by all of them, and which were thereby constituted the fundamental articles of the association, cannot be al- tered but by the unanimous voice of all the stockholders. Livingston v. Lynch, 4 Johns. Ch. (N. Y.) 573. Where a joint-stock company was formed for the purpose of effecting fire and life insurance, it could not, without the consent of all the shareholders,be ex- tended to marine insurances. With re- spect to the nature, extent, and kind of business of a partnership, as stated in the articles, courts of equity construe the articles strictly, and do not permit the business to be extended by any of the partners without the consent of all of them, either express or implied, to any other business or branch of busi- ness of a different nature, extent, or kind, and if it is attempted they will interpose by way of injunction to re- strain the offending parties. Story on Part. 290-1 j 3 Story on Eq. Juris. 618. What constitutes a person a partner in such a company.— 'Where,, previous to the formation of a company, a prospectus, signed by the defendant, was issued, in- dicating that it was in contemplation to form the company, and the defendant solicited others to become shareholders, and was present at a meeting of the subscribers, when it was proposed to take certain premises to carry on the business of the concern, which were afterward taken, hut he never paid his subscription, it was held that the de- fendant was not chargeable as a partner for goods supplied to the company, for he did not hold himself out to the world as a partner in a company already formed, but to one which was to be, or might thereafter be formed. It would have been otherwise if he had held himself out as a partner in a company already formed, or had contributed to its funds, or had been present at a meet- ing of the company, and a party to a resolution to purchase goods. Story on Part, 234-0. Transfer of shares. — The articles of partnership of a distillery company provided that a partner might assign his share by a certificate in writing, which being lodged with the clerk of the company, should entitle the as- signee to all the privileges and subject him to all the liabilities of a partner. It was held that a valid assignment might be made without such certificate, notwithstanding the articles. Alvord v. Smith,.') Pick. (Mass.) 233. Where a joint- stock company, for the purpose of run- ning stage-coaches, issued to its members certificates of their shares in the joint stock, containing a provision that the shares should not be transferred without the consent of the directors and treas- urer, and the plaintiff, to whom a share had been assigned without such con- sent, brought a bill in equity to compel the company to account, alleging him- self to be a partner, it was held tha- he was not a partner but only a tenant in common, and the bill was dismissed. Kingman v. Spurr, 7 Pick. (Mass.) 235. A stockholder may transfer his interest to a purchaser, though the transfer be not made conformably to the rules and by-laws of the corporation. Gilbert v. Manchester Iron Manufacturing Co., 11 Wend. (N. Y.) 637 ; Quinner v. Marble- head Social Ins. Co., 10 Mass. 476; Ser- geant v. Essex Marine Bailway, 9 Pick. (Mass.) 304. Liability of shareholders. — By articles of agreement between the members of an insurance company, each member covenanted for himself, severally and not jointly, that the policies should be binding on all the members in propor- tion to the sums subscribed by them re- spectively ; but there were no negative words that they should not be liable for more in case of the insolvency of some of the members. Several of the mem- bers afterward became insolvent. It was Joikt-Stook Companies. 1315 tees, directors, auditors, etc., it proceeded tliiis):— " The affairs of. the company are Under the management of a board of directors ; the capital is 600,000?., in 13,000 shares, at 601. each. A deed of settle- held that the members were liable as partners to pay any loss, not only as to strangers but also to any member of the company who had procured insurance to be effected by such company, but that, in the latter case, his proportion of the losses occasioned tjy the insolvency of the members was to be deducted from the amount to be paid to such members. Shubrick v. Fisher, 2 Desaus. (S. C.) 148. Notwithstanding that the terms of the promise of a note issued by an unincor- porated banking association are to pay "out of their joint funds, according to their articles of association," yet the members are liable in their separate es- tates. Hess V. Werts, 4 S. & R. (Penn.) 356. Where a charter renders stock- holders individually liable for all debts contracted by the company to the nom- inal amount of stock held by them, one who subscribes for a certain number of shares is liable for the company debts to the nominal amount of those shares, though he has paid no part of his sub- scription, nor done any act as a stock- holder. Spear v. Crawford, 14 Wend. (N. Y.) 20. Where an act of incorpora- tion provided that "the persons and property of the members of the corpo- ration should at all times be liable for all debts by said corporation," it was held that the members were liable in an original manner as if no such corpora- tion existed, and, therefore, no scire fa- cias could be maintained against them on a judgment against the corporation. Southmayd v. Russ, 3 Conn. 53. In Bourne v. Freeth, 9 B. & C. 633, it being in contemplation to form a com- pany for distilling whisky, the follow- ing prospectus was issued in May, 1835: " The conditions upon whicll this estab- lishment is formed are — the concern will be divided into twenty shares of 1001. each, five of which belong to A B, the founder of the works ; the other fif- teen subscribers to pay in their subscrip- tions to M. & Co., bankers, Liverpool, in such proportions as may be called for. The concern to be under the man- agement of a committee of three of the subscribers, to be chosen annually on the 10th of October ; ten 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 com- pany was to be formed, not that it was actually formed, and that a person who subscribed his name to this prospectus- and who was present at a meeting of subscribers when it was proposed to take certain premises for the purpose of carrying on the distillery, which were afterward taken, and solicited others to become shareholders, but never paid his subscription, was not chargeable as a partner for goods supplied to the company. In Pitchford v. Davis, 5 M, & W. 2, a project having been formed for the e.s- tablishment of a company for the man- ufacture of sugar from beet-root, a prospectus was issued stating the pro- posed capital to consist of 10,000 shares of 251. each. The directors began their works, and entered into con- tracts respecting them, and manufac- tured and sold some sugar; but only a small portion of the proposed capital was raised, and only 1,400 out of the 10,000 shares were taken. It was held that a siibscriber who had taken shares and paid a deposit on them was not lia- ble upon such contracts of the directors without proof tha,t he knew and assented to their proceeding on the smaller capi- tal, or expressly authorized the making of the contract. But it will be different if there is evi- dence to show that the subscriber ex- pressly authorized the directors to pro- ceed with the smaller amount of capi- tal. Thus, where a mining company was formed, the capital to be 30,000^., in 300 shares of 101. each ; and 3,000 shares only were actually subscribed for, of which the defendant took 100, it was held that letters subsequently written by the defendant to the direct- ors, requiring them to call a meeting for the purpose of changing a director, were evidence to go to the jury to show that he authorized the directors to pro- ceed in the management of the concern with the smaller amount of capital, so as to render him liable tor the price of articles supplied for the use of the mines, on the order of the directors. Tredwen v. Bourne, 6 Mees. & W. 461 ; 4 Jur. 747. The result of these cases is, that in a scheme for a company which has not advanced to completion, that is, whicli has not arrived at the point held out by the promoters or provisional directors to the subscribers as the starting point, which point may be stated to be com- 1216 Paeticulak Paktneeships. ment will be prepared forthwith, which must be executed within thirty days after the same shall be ready for that purpose ; and every person who shall neglect to execute the same within that time will forfeit all share and interest in the company. The deed is to contain all such clauses and conditions as the standing counsel and solicitors to the company shall deem necessary for carrying on the business of the company, and for enforcing the observance and performance of the several rules and regulations to be contained therein, or in any by-law that shall be from time to time made by the directors. Appli- cation is intended to be made to Parliament for an act to enable the company to sue and be sued in the name of one of its officers ; and the said deed of settlement, when settled and approved by the stand- ing counsel and solicitors, and the act of Parliament, when passed, shall be the deed of settlement and act of Parliament for managing the affairs of this company. The shares will be forthwith allotted, and until offices are taken, all communications are requested to be plete registration and incorporation re- spectively, there is no partnership ex- isting quoad strangers ; and, therefore, tliat the subscribers 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 di- rectors to proceed with the smaller or incomplete subscription or capital, and where they have not in any way held themselves out as personally responsi- ble. The case of Woolmer v. Toby, heard before Rolfe, B., at Exeter, cannot be said to have in the least shaken the above conclusion. When reference was made to it in the Court of Exchequer in Easter Term, Rolfe, B., said, "Woolmer V. Toby can hardly be said to have been tried at all. In one sense of the word it no doubt was tried; but nothing at all was decided in it." 10 Jur. 319. But where there is no partnership quoad strangers, there is necessarily none inter se, since, as has been shown, there cannot be a partnership inter se without one quoad strangers, though there may be one quoad strangers with- out there being one inter se. The re- sult of the cases fully agrees with this, and establishes that there is here no partnership existing either quoad stran- gers or inter se, together with all the consequences of that proposition, one of which is the non-liability of the sub- scribers or allottees; another, the liabil- ity of the promoters or provisional di- rectors both to the subscribers or allot- tees and to strangers. In cases of goods supplied, or work and labor done, or services performed, for persons who are about engaging in a joint undertaking, and are taking preliminary steps for es- tablishing the same, the joint liabilities will, of course, commence only from the time wLen the parties have agreed to act together for the common purpose. There is a gradual progress even in the formation of schemes of this nature, and preliminary acts are sometimes done, and orders given by several per- sons, before they have absolutely fixed upon being concerned in the joint un- dertaking ; and yet it rests in negotia- tion whether they shall or shall not be- come partners. In such cases the ques- tion resolves itself, ultimately, rather into a question of fact than of law ; and until the partnership is definitely fixed and agreed on, those only are lia- ble who have acted and ordered the materials, or work, or labor, or services. Story on Part. 232-4. Subscribers for stock, who sign an agreement, after the passing of an act of incorporation, to pay all legal assess- ments that may be made after the cor- poration shall be organized, are person- ally liable for an assessment laid to de- fray the preliminary expenses incurred in obtaining such act, though the com- pany was not authorized at the time of laying such assessment to lay them. Salem, etc., Co. v. Ropes, 6 Pick. (Mass.) 23 ; Centl. T. Co. v. Valentine, 10 id. 147. Joint-Stock Companies. 1217 made to the directors, at the City of London Tavern. (Signed, W. Lane, Sec.)" On the 23d of March, a meeting was held, at which 7,000 shares were appropriated. A few days after, the defendants, seven in number, paid their deposits, and took their scrip receipts. On the 4th and 16th days of July, notices were given of a call for a second installment, and, on the 25th of the same month, a letter was sent by the secretary to the subscribers, stating that the deed of set- tlement awaited their signature, " and unless the same be signed, and the second installment of bl. per share paid immediately, the shares unpaid for will be forfeited. In August, an advertisement appeared, declaring .that deposits on the outstanding sci'ip were for- feited. In the latter end of the year, a third call was made by the directors. Of the seven defendants, four neglected to pay the second and third installment, two paid the second and neglected to pay the third, the other paid all the installments and signed the deed. Xone of them interfered in the affaii's of the concern. The speculation ultimately failed. The contract, which was the subject of the action, was entered into by the directors with the plaintiff on the 18th of July, and the work done in pursuance of the contract was done between the 2d of August and the 13th of July, in the following year. On the argument of this case before the Court of Common Pleas, one question was, whether the defendants were liable for the price of tlie work on the ground of being actual partners in the concern, and the court hel'd that they were not. Tindal, C. J., in delivering the judgment of the court, said : " The question is whether at the time of this contract made by the directors the relation between the defendants and them was such that the directors were constituted the agents of the defendants -to bind them by their contracts. Now, the advertisement describes the proposed undertaking as ' The Impe- rial Distillery Company.' It is said, this description assumes that it is a company already formed, but the very circumstance of publishing an advertisement proves that it was only a project for a company, not a company actually formed, for, if the 600,000Z. had been sub- scribed, and the 12,000 shares allotted, why publish an advertisement ? It could only be intended for the purpose of inducing others to sub- scribe. Now, this advertisement is the basis of the contract between the parties ; it is upon the footing of this prospectus, that the seven defendants had their shares allotted to them, and paid their deposits, if they are not partners under this agreement, they are not partners 153 1218 Particular Partnerships. tinder any, for they neither exchanged their scrip-receipts or certifi- cates of shares, nor executed the deed when prepared, nor paid a second call when made, nor appeared at any meeting, nor interfered "with any concerns of the company, nor did any act subsequent to the making this contract, nor any act before, other than applying for shares and paying the deposit of 5?. per share, when they learned, from the letter of the secretary, that a certain number of shares was appro- priated to them. The paying of the deposits must undoubtedly be taken to imijlyan assent to the terms of the advertisement, that is, an assent to become partners in a company, raising a capital of 600,000?., consisting of 12,000 shares, and to be governed by a deed which should contain the clauses and conditions to be agreed on in future ; but we think it implies nothing more, and that it cannot be construed as an assent to the terms of the partnership already formed. When, therefore, instead of an allotment of 12,000 shares, the utmost that were ever allotted scarcely exceeded 7,500 ; when, out of that number, no more than 2,300 ever paid the first installment; when not half the latter number paid the second installment, and only sixty-five sub- scribers signed the deed — we think the subscribers were at liberty to say : This was not the trading company upon which we paid our deposit, neither the capital, nor the number of shares, bearing any reasonable proportion to the original plan and project." Another important case upon this subject is that of Pitchford v. Davis,' which was an action for goods sold and delivered, etc. At the trial before Lord Abinger, C. B., it appeared that in the early part of the year 1836 a project was formed for the establishment of a com- pany under the name of " The United Kingdom Beet-root Sugar Association," and prospectuses were issued, stating the proposed capi- tal to be in 10,000 shares of %bl. each, and the names of the directors were announced. In the month of April in that year, the defendant applied for shares, which were accordingly allotted to him, and he paid the deposit on them in June following. In the course of the sum- mer the company commenced building their works with the defend- ant's knowledge, and, shortly afterward, a call was declared and paid. The goods for which the action was brought consisted of certain quantities of charcoal and lump alum, which were supplied by the plaintiffs to the directors, on the order of the secretary, for the use of the company, in December, 1836, and January, 1837; aud in 1837, sugar, to the value of 500Z., had been made and sold. The defend- ' 5 Mees. & Wels. 3. Joint-Stock Companies. 1319 ant -was not shown to haye interfered in the management of the concern, but he was proved to have been on one occasion at the manufactory, and to have said that he understood the nature of the works, and the .mode of manufacturing sugar. The plaintiffs' counsel contended that, under these circumstances, the defendant was a partner in a trading company, and a part owner of the goods supplied, and as such was liable in this action. It was proved on cross-examination of the plaintiff's witnesses that only a small part of the proposed capital had been 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 hav- ing, under this direction, found a verdict for the defendant, a motion was made for a new trial, but the Court of Exchequer refused the appli- cation. Lord Abinger, C. B., " The question is, whether the direct- ors were the agents of the defendant 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 collected 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 tiie 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 1 am satisfied with the finding of the jury." Parke, B., "1 think the case was properly left to the jury. The defendant, by taking shares in this speculation, gives authority to the directors to bind iiim by their contracts, in the event of the proposed number of shares being disposed of, and the proposed capital obtained. The secre- tary, who gives the order to the tradesman, is the party primarily lia- ble ; the directors, also, who give 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 pro- posed capital is raised, no such authority is shown." Alderson, B., " The authority given by the subscribers to the directors is a condi- 1230 Particular Partnerships. tional one, depending on the terms of the prospectus being fulfilled. In this case, that condition has not been fulfilled, and, therefore, the defendant is not bound by the contract of the directors." There are other cases upon this subject which it will be unnecessary to notice, except in the shortest possible manner. In Nockles v. Crosby," the point in issue was between the subscribers themselves, and not between the subscribers and third persons ; but the leaning of the court was in favor of the doctrine which has Just bee;i consid- ered. In Bourne v. Preeth,'' the prospectus indicated that a partner- ship was to be established at a future time, subject to certain conditions, one of which was that the subscribers were to pay in their subscrip- tions to certain bankers, in such proportions as might be called for. The speculation failed. It was held that a person who had signed the prospectus, but who never paid his subscriptions, was not enti- tled to a share oE the profits, and, therefore, not an actual partner. In Dickinson v. Valpy,' the evidence was that a person applied to a sec- retary of the company for thirty shares, which were appropriated to him, and upon which he paid the bankers of the company an install- ment of 61. per share, and took scrip receipts. He afterward took these scrip receipts to the company's house, where there was a meet- ing of the directors, and paid a second installment of IQl. per share, and signed a deed, which, however, was not produced. He subse- quently attended a general meeting of the shareholders. The court were strongly of opinion that there was not suflBcient 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 1835. Since the case of Fox V. Clifton, that of Perring v. Hone, and others of a like com- plexion, may be considered as overruled. Whether the company turn out successf al or otherwise, if the share- holder neglect to perform the conditions which enable' him to share the profits, he is not to be considered an actual partner. 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 admissions that he was a part- ner according to the terms of that deed.^ And a fortiori, if he can 1 3 Barn. & Ores. 81 4 ; 5 Dowl. & Eyl. ^ iq Barn.& Cres.133 : Loyd & Welsby, 751. 6. ' 9 Barn & Ores. 633 ; 4 Man. & Ryl. * Harvey v. Kay, 9 Barn. & Ores. 336. 513. Joint-Stock Companies. 1231 be shown to have done acts of management, more especially if he became a director, he will be deemed an actual partner and chargea- ble 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 partner- ship against those who sign it," and they will be considered as part- ners from the time of the payment of their respective deposits." By holding out. Sec. 833. Again, as we have already noticed, a man will become chargeable as a partner in a joint-stock company by holding himself out to the world in that character. There is but little to distinguish 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 applicable to the present subject. For, without question, they who appear as the active f ramers or carriers on of a company, they who canvass for subscriptions, who call the meet- ings, who hire the premises, who take pains to show the world that they are the conductors 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 ren- der a man a partner. The being present at a meeting where premises are proposed to be hired for carrying on the company, which premi- ses are afterward hired, and even, in addition to this, the soliciting other persons to become members of the company, will 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 contribu- ted to the funds of a building society, and had been present at a meeting of the society and party to a resolution that certain houses should be built, it was held that this made him liable 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.' Signing a prospectus of a future company does not make a man a ■ Doubleday v. Muskett, 7 Bicg. 118. '^ Bourne v Freeth, 9 Barn. & Ores. 3 Per Bosanquet, J., id. 632 ; 4 Man. & Ryl. 512. 3 See Bird v. Aston, 6 Bing. 786, 788, « Braithwaite v. Skofield, 9 Barn. & cited; D. Tindal, C. J., Pox v. Clifton, Cres. 401. id. 800; Shep. Touck 71. * Lawler v. Kershaw, 1 Mood. & Malb. 93. 1223 Particular PartneIiships. partner to the world. Thus, in Bourne v. Freeth,' the prospectus of a company, after stating that the legislature had authorized the dis- tilling of whisky in England, proceeded as follows: "The conditions upon which this estahlishment is formed are, first, they pledge them- selyes they will distil nothing but the purest malt spirit in the small- est stills that government will license, and on the same plan practiced in the Highlands of Scotland, for which purpose an eminent distiller from Inverness-shire will be engaged; secondly, the concern will be divided into twenty shares of lOOZ. each, which are transferable, five of which belong to Sir W. Fairlie, 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 of the profits made twice a year at Lady-day and Michaelmas; fifthly, 101. per cent to be paid into the bank on or before the 1st day of Jiine 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 Bay ley, J., observed that the plaintiffs, when they saw the defendant's name to the prospec- tus, 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 delivered goods on his credit, to have inquired whether he had become a partner subsequently, and, if they had so inquired, they would have found that he had not. Again, in order to charge a person successfully 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 secretary of the company upon the plaintiff's application to know their names. But Tindal, C. J., held that the communication of this book was no act done by the defendants them- ■ Supra. ' 6 Bing. 776. Joint-Stock Companies. 1323 selves, or by their authority or permission, so as to make them nomi- nal or ostensible partners. There was no evidence, he said, that the defendants knew of the existence of any copy of the list at the count- ing 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-distinguished from the actual relation of partnership, imported at least the voluntary act of the party so holding himself out. It implied the lending his name to the partnership and was altogether incompatible with the want of knowledge that his name had been so used. Iiiability of promoters or provisional directors. Sec. 834. N"ot only have the subscribers or allottees in a scheme for a company which has not advanced to completion been held not liable for debts incurred to strangers in the name of the company, but it has been decided in some important cases both' before and since the passing of the Joint-Stock Companies Eegistration Act, 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 promoters to the sub- scribers as the starting point, the subscribers may recover back their deposits. Thus, 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 directors, in whom the management of the concern was vested, 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 the deduction of any part toward the payment of the expenses incurred.' In Blain v. Agar,' it was held by the Vice-Chancellor that the shareholders in a joint-stock company are entitled to relief where the conduct of the directors has been a violation of the terms on which the company was formed, and that some of the shareholders may file a bill to have their deposits repaid without making all the other share- holders parties, if they are ignorant of their names. The case since the statute is Walstab v. Spottiswoode,' determined in the Court of Exchequer in Trinity term last. The facts of this case will fully appear from the following judgment of the Court of 1 Nockels V.Crosby, .3 B. & C. 814. The » 3 Sim. 2g9 ; see, also, Green v. Bar- three following sections are from Bis- rett, 1 Sim. 45. sett on Partnership. ' 10 Jur. 460, 498. 1224 Particular Partnerships. Exchequer, delivered by Pollock, C. B.: "This was aa aption of assumpsit. The declaration contained a special count founded on an alleged contract to deliver scrip ; there was also a count for money had and i-eceived. At the trial before me on the 27th February, it appeared that the defendant was a member of the provisional commit- tee of the Direct Birmingham, Oxford, Reading and Brighton Rail- way Company, registered provisionally under the 7 & 8 Vict., c. 110. The prospectus announced the capital to be 2,000,000?., in 80,000 shares of 251. each share. The deposit required was stated to be 21. 12s. 6d. per share. On the 7th October, 1845, theplaintitf applied to the provisional committee for shares, according to the form directed by the committee (which form it is not necessary now to state). On the 18th October, the plaintiff received a letter of allotment in the following form: " ' Letter of allotment — (not transferable). Direct Birmingham, Oxford, Reading and Brighton Railway Com- pany. Deposit, 21 12s. 6d. No. of letter, 128. No. of shares, 30. 46, Moorgate-street, London, 18th October, 1845. " ' The committee of management have allotted to you thirty shares in this undertaking, and I am directed to request you will pay the deposit of 21. 12s. Qd. per share, amounting to 78Z. 15s., into one of the under-mentioned banks, on oir before Friday, the 24th day of October, 1845, or this allotment will be null and void. This letter, with the banker's receipt appended hereto, will be exchanged for scrip on your presenting it at the office of the company and executing the parliamentary contract and subscriber's agreement, which will lie at the above offices on or before the 27th October, and due notice will be given when the deeds will be sent into the country.' " This letter was signed by the secretary, and set out the names of several bankers, and the plaintiff in due time paid the deposit on the thirty shares into the London Joint-Stock Bank, the bankers of the company, and on the 27th October applied for scrip. The time for delivering scrip was extended by the provisional committee to the^ 6th November. On the 12tli November the plaintiff applied again ; and after several other fruitless applications at the office of the com- pany, the plaintiff was told by the secretary that the directors did not mean to issue scrip ; and upon the plaintiff requiring her money Joiitt-Stock Companies. 1335 to be repaid, the final answer given at the office, by one of the provis- ional committee, not the defendant, was, that a statement would be made of the concerns of the company and the surplus would be divided. It was admitted at the trial that 400,000 shares had been applied for ; 70,000 had been allotted ; but about the 35th October, 1845, public confidence in railway schemes having been much shaken, the deposit was paid on 4,000 shares only, a number much too small to justify proceeding with the scheme. The plain tifE, failing to get scrip or her money again, brought the present action. "At the trial it was contended by the defendant's counsel that the defendant was not liable under either of the counts in the declar- ation, — that the special count could not be supported, and that the defendant was not liable on the count for money had and received. A verdict was found for the plaintiff under my dii'ection, with liberty for the defendant to move to enter a nonsuit if there was no evidence to support the verdict, all the points raised by the defendant's coun- sel being reserved. Accordingly, Mr. Martin in Easter Term obtained a rule which was argued on the 39th and 30th May last, before me and my brothers, Anderson, Rolfe, and Piatt. "For the defendant it was contended that the contract as laid in the special count was not proved, and that the defendant was under no contract to deliver scrip. But the argument chiefly turned on the count for money had and received ; and it was alleged that the sub- scribers became a quasi partnership, and that their subscriptions went into a common fund to be applied for the general benefit, and in con- sequence that the plaintiff could not sue the defendant at law. A further point made was, that the application being for an allotment of shares, which in fact had been allotted, the plaintiff had really obtained all 'she asked for, and had no grounds of complaint ; and lastly it was said, that there was no evidence of the concern being at an end, as the defendant was not bound by what another member of the committee stated; and unless the concern was abandoned, money had and received would not lie. " For the plaintiff it was argued that the special count was proved, and that there was an evidence that the concern was at an end ; and the case of Nockels v. Crosby' was cited as an authority. " We do not think it necessary to give any opinion on the special count, as to which some doubt may well be entertained, because we are all of opinion that the plaintiff is entitled to recover on the count 1 3 B. & C. 814. 1226 Particulae Partnerships. for money had and received, and as the plaintiff cannot be entitled in a case like the present to damages on the first count, for not deliver- ing scrip, as upon a contract broken, and also to have her money returned as on a contract rescinded, we are of the opinion that the ver- dict for the plaintiff on the count for money had and received ou^ht to stand, but that the verdict for the plaintiff on the first count should be set aside, and a verdict entered for the defendant. "With respect to the first point made for the defendant, 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 publication of the prospectus by the pro- visional committee (of which the defendant was one), of the applica^ tion for shares, and the allotnient, 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 pro- spectus 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 prospectus 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 subscribed for are so few that the concern cannot proceed and the scheme must necessarily be abortive. "With respect to the point that the plaintiff applied for shares, and that shares were actually allotted, and therefore no action can be sustained, it is a sufficient answer to say that the allotment of shares in an abortive scheme, which does not correspond with what the pro- spectus held out, is really not a compliance with the application. If the scheme has wholly failed and has ceased even as a speculation, nothing whatever has been allotted to the subscriber. " But it was urged that there was no evidence of the concern being at an end. We think that the answer given at the office by one of the provisional committee, that a statement would be made and the sur- plus would be divided, was evidence to go to the jury that the concern was abandoned, and unopposed as this was by any evidence on the part of the defendant, we think that the jury were well warranted in find- ing that the scheme was at an end. If so, we think, on the authority ' 5 M. & W. 3. Joint-Stock Compatsties. 1227 of Nockels V. Crosby, that the plaintiff is entitled under the count for money had and received to recover back her deposit. " A question was raised, though not much argued, whether there was any difference between one portion of the deposit and another. It being, as we think, manifest that the deposit of 21. 12s. Gd. con- sisted of 2s. 6d. being 10s. per cent on the 251. in pursuance of the 23d clause of the act referred to, and the residue being Wl. per cent required to be deposited by the standing orders of Parliament — we think it is clear, beyond all doubt, that the amount paid iu oi'der to be deposited in pursuance of any standing orders must be returned to the plaintiff. There is no foundation whatever for a claim to retain this, which was paid for a specific purpose — and the concern aban- doned before the money could be applied for that specific purpose. But we think that the i-emainder of the money may also be claimed back, and that the language of Littledale and Holroyd, JJ.,in Noc- kels V. Crosby, applies to this part of the case. To use the language of Holroyd, J., in that case, ' the concern was never really set agoing, and the expenses incurred in setting a scheme on foot are not to be paid out of the concern, unless they are adopted when it is in actual operation. All the steps taken were only pi-eparatory to carrying the project into effect, and as it never was carried into effect, the plaintiff was entitled to have back the whole of the money that he advanced.' " On these grounds, we think that the verdict ought to be entered for the defendant on the first count, but that the verdict for the plaintiff on the count for money had and received ought to stand. Our judgment, therefore, must be for the plaintiff." Thei'e being clearly no partnership in the stage of the proceedings which we are now considering, it is the fact of appearing in the char- acter of a promoter or director, and exercising some degree of personal superintendence that determines the question of liability. Thus, in Doubleday 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 installment upon shares required to qualify them to act as directors. The resolutions entered into at the first formation of the company, and the prospectus subsequently issued, stated that an act of Parlia- ment would be applied for to regulate and establish the company. After the defendants had ceased to attend meetings of the company, t*ie directors advertised for tenders for the excavation of reservoirs, ' 4 M. & P. 750 ; 7 Bing. 110. i;d28 Particular Partstbrships. and employed the plaintiff to do the necessary work. It was held that the defendants (they having once accepted the office of directors, and not having since done any act to divest themselves of the respon- sibility attached to that character), were liable to the plaintiff for the work done by him, although they were not actually parties to the con- tract, and although no act of Parliament for incorporating the com- pany had been obtained. And in Maudslay v. Le Blanc ' it was held that a person was liable for an enginSbr's bill, although it was not proved that he had executed a deed as a director, or was present at the meeting at which the order was given, but his name appeared as a director in a printed prospectus, and he had attended at subsequent meetings, and also inspected the works while they were in progress. But if it can be shown that the plaintiffs agreed to look to some par- ticular 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 agree- ment to take shares in a company which was proposed to be formed under the name of the British-American Association for emigration and colonization ; but one condition of that agreement was that a deposit of 51. was to be paid when shares to the amount of 50,000Z. had been subscribed for. The proposed amount was never realized, 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 Cockbum as a member of what was called the consulting council. By the prospectus it also appeared that the whole management of the undertaking was to be placed in the hands of six commissioners ; and further, that no peer or baronet who should become a vice-president should be liable, as such, to the expenses of the association. Upon these facts, the Lord Chief Justice left to the jury to say, whether there was any evidence of a direct contract 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, entered for the defendants, which the Court of Common Pleas on a motion for a new trial refused to set aside. ■ 3 Car. & P. 409, n. '8 Jur. 63. » Kerridge v. Hesse, 9 Car. »& P. 200. Joinx-Stock Companies, 1329 In the subsequent case of Lake t. Duke of Argyll,' in aa 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 iit to be considered by the jury, in order to determine whether he had incurred any indi- vidual liability, 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 defendant, 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 defendant; observing, also, that, upon the evidence in the cause, there was strong reason for supposing that credit had been given by the plaintiif to other persons, who had previously been the plaintiff's customers, and not, m 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 to consider the application for a new trial. It appears 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 a-fterward obtained the consent of the defendant to be named president,— that involving a consent to the publicity of such appointment. Some meetings were afterward held, at one of which the defendant acted as president, and signed certain resolutions there agreed upon, and, among others, a resolution that the proceedings of that meeting should be printed. The defendant was also publicly held out to the world as president of the intended association, in papers which were regularly transmitted ' 9 Jnr. 295. 1230 rAUTICTTLAK PARTNERSHIPS. to liim; and lie 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 articles furnished, to the company; and they thought he had, aud fixed him with the amount. An objection was made to that mode of putting 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 per- sons meet together for the purpose of preparing measures necessary for calling a society into existence, their attendance at siich meetings, and their concurrence in such resolutions as may be deemed necessary for the intended purpose, would be strong evidence that any indi- vidual there present held himself out as a paymaster to all who exe- cuted their orders; for though he might not be liable as a member or shareholder, since no shares were in actual existence, yet, 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 preliminary 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 constituent body; that proof was given here. In this case the work done by the plaintiff was obviously necessary for the exist- ence 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 defendant might only be giving his attendance as a spectator, and the plaintiff might possibly have been infoi-med, or might have believed from cir- Joint-Stock Companies. 1231 cumstances, that other persons were to pay. But the defendant here had the benefit of that possible presumption; for the circumstances which might fairly have led to such an inference were fully com- mented 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 particulars 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 accom- plishment 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 difEerence 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 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 lia- bility to every contract made by the supposed company, the appre- hension of which was stated to be the main reason for' resistance to Mr. Wood's demand. Each case must depend upon its own circum- stances, and must be determined with reference to the defendant's own language and conduct. On the whole, therefore, we are of opin- ion that the direction was right, and that the jury exercised their judgment on matters properly submitted to their consideration." In regard to the clause in the prospectus above cited, which pre- tends 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 unwary); 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 1333 Particular Partnerships. Lord EUenborough, in the case of Eex v. Dodd,' are fully applicable: " This is a mischievous delusion, calculated to ensnare the unwary public. As to tlie subscribers themselves, indeed; they may stipulate with each other for this contracted responsibility ; but as to the rest of the world it is clear that each partner is liable to the whole amount of tlie debts contracted by the partnership." * In Bartlett v. Lambert,' the action was brought against the defend- ant, as a member of the provisional committee of the Great Welsh Junction Railway Company, to recover the price of stationery sup- plied to the company. Some time after the formation of that com- pany, the defendant intimated by letter his consent to become a mem- ber of the provisional committee. His name was accordingly pub- lished as one of the persons constituting that committee, and he afterward took the chair at one of its meetings. It was held by the Court of Exchequer that he might be sued for so much as had been furnished after the date of the letter declaring his willingness to act on the provisional committee." 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 company for preparing their copartnership deed, it was proved that at a meeting of the com- pany 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 inthe draft. Lord Denman, C. J. : " The question is, whether the defend- ant Francis so acted before he became 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 them- selves liable, and other persons may do so if they interfere in the management, and hold themselves out as persons giving the order." ' '9 East, 516. ju8Ho.Lo.Ca.497. Joint-Stock Companies. 1257 of settlement of a company required certain acts to be performed by eveiy purchaser of shares, before he could become entitled to exer- cise the rights of a shareholder. A purchaser of shares did not com- ply with the terms of the deed, but he, nevertheless, paid some calls made on his shares, and he was registered as a shareholder. It was held that he could not resist an action for further calls on the ground that he was not a shareholder. Again, in a case where an act of Par- liament' required that the shares in a company should be transferred by deed, and a person purchased shares without taking a proper trans- fer, but he, nevertheless, signed a paper describing himself as a shareholder, and procured himself to be registered as such, it was held that, in an action for calls by the company, he was estopped from deny- ing that he was a shareholder.' These authorities are suflScient to establish the doctrine of estoppel as applied against alleged shareholders. The application of the same doctrine as against companies involves the necessity of imputing to companies the irregular and unauthorized acts of their agents, and it is, therefore, attended with some difficulty. This will be apparent from the cases to which it is proposed now to refer. As between an alleged shareholder and a creditor. Sec. 841. Whether a person is liable, as a shareholder, to be proceeded against by the creditors of an incorporated or quasi-incorporated com- pany, has been held at law to depend upon whether such person is or is not entitled by the regulations of the company to exercise the rights of a shareholder therein. The doctrine of estop^Del has not at law been applied in these cases, so as to enable a creditor to proceed against a per- son who, though not a shareholder, has been treated by the company as if he were one, or so as to prevent a creditor from proceeding against a person who, though he has not ceased to be a shareholder, according to the company's regulations, has been treated by the company's offi- cers as no longer a shareholder in point of fact. In Moss T. The Steam Gondola Company,^ a person who had acted as a director of a company was held not to be liable to creditors as a shareholder unless he had executed the company's deed, that being necessary to render him a shareholder as between himself and the company. Upon the same principle, where a married woman was a 'Sheffield, etc.. Rail. Co. v. Wood- Jane. Rail. Co. v. Graham, id. 271; cock, 7 M. & W. 574 ; see, too, Chelten- Cromford, etc.. Rail. Co. v. Lacey, 3 Or. ham Rail Co. v. Daniel, 2 Q. B. 281 ; & J. 80. Birmingham, Bristol, etc., Rail. Co. M7 C. B. 180; see, too, Bailey v. Uni- V. Locke, 1 Q. B. 256; London Grand versal Prov. Life Ass.,1 C. B. (N. S.) 557. 158 1258 Particular Partnerships. shareholder in company, and her husband was not entitled to act as a shareholder until he had complied witli certain regulations, it was held that he was not liable to be proceeded against as a shareholder by cred- itors, as he had not complied with those regulations, although he had received his wife's dividends, and had voted at meetings, and other- wise acted as a shareholder.' Tlie principles thus recognized and acted upon in courts of law were pushed to their utmost extent in a late case, where a person who liad, iu fact, retired from a company, was sought to be proceeded against as if he were still a shareholder. The case in question is instructive, as it was litigated both at law and in equity, and was car- ried to the House of Lords ; it, moreover, shows, better than any other, the different tendencies of the courts of law and equity to hold companies bound by the conduct of their managers and directors in matters of mere form. The case in question was decided at law under the name of Bosanquet v. Shortridge, in equity under the name of Shortridge v. Bosanquet, and in the House of Lords under the name of Bargate v. Shortridge. In Bosanquet v. Shortridge, as it first came before the court, the plaintiff, who had obtained judgment against the public officer of a banking company, sought to enforce that judgment against the defendant, who was alleged to be a member of the company. The defendant had been a shareholder, but he had sold his shares to another person, and the transfer thereof to him was registered in the company's register. By one of the rules of the company no person was to be registered as a shareholder without the consent of a board of directors, and in this case no such consent had been obtained; and some time after the transfer had been registered the directors declared the transfer void, and they put the defendant again on the list and returned him as a shareholder. They did this for the express purpose of enabling the plaintiff, as a creditor, to proceed against him. It appeared that in point of fact transfers had been for years registered like the one iu question, viz., without the observance of the formali- ties required by the company's deed. The Court of Exchequer held that the defendant hud not ceased to be a shareholder, that he still was a shareholder within the true intent of the company's deed, and that he was, therefore, liable to be proceeded against by the creditors of the company. 'See Ness v. Angas, 3 Ex. 805 ; Ness »4 Ex. 699. V. Armstrong, 4 id. 21. Joint-Stock Companies. 1259 In consequence of this decision, the suit of Shortridge v. Bosan- quet ' was instituted for the purpose, first, of having it declared that the plaintiff {i. e., the defendant at law) was no longer a shareholder in the company, that liis name might be erased from its books and not he returned to the stamp-oflBce as if he were a member; and for the purpose, secondly, of restraining the creditor from j)roceeding to execution against the jDlaintiff. The Master of the Rolls held that after what had taken place the company could not insist that the plaintiff was still a shareholder, or that his transferee was not; and, it being established that the creditor was proceeding at the instigation of the company, an injunction was granted as prayed by the bill. From this decree the creditor appealed to the House of Lords, but the decree was there affirmed upon the ground that the company could not take advantage of the non-observance by its own officers of formalities required by its own deed.' The decision thus affirmed is in conformity with a prior decision made in Ireland in a case where it was held that a shai-eholder in a banking company had, as between himself and the company, ceased to be a member thereof, although he had retired irregularly, and that, having ceased to be a member as between himself and the company, he was not liable to be sued as a member by a creditor of the com- pany instigated to sue him by its directors.' These cases in equity are authorities for the application to compa- nies of the doctrine of estoppel by conduct, and for the proposition that if the directors of a company in transacting such business of the company as they are authorized to transact, neglect to observe the formalities prescribed by the regulations of the company, and treat an infoi-mal act as a formal one, and thereby induce others to do the same, the company is estopped from afterward disputing the validity of what has thus been treated as valid by all parties. This proposi- tion is also supported by many decisions upon the question, who are and who are not contributories under the winding-up act.'' The proposition thus established is perfectly consistent with the doctrine that companies are not bound by the conduct of their direct- ors in matters as to which they are not the company's agents. The extent to which directors have power to bind their respective compa- ' 16 Beav. 84. 'See Straffon's Executor's case, 1 De ' Bargate v. Shortridge, 5 Ho. Lo. Ca. G. M. & G 576 ; Bagge's case, 13 Beav. 297, decided by Lord St. Leonards, af- 162, and other cases of the same kind, firming the judgment of Sir John Rom- which will be examined when treating illy. Lord Cranworth not concurring. of the winding up of companies. " Taylor, v. Hughes, 2 Jo. & Lat. 34. 1260 Pabticulab Pabtnerships. nies will be examined hereafter. It is sufficient to draw attention in the present place to the distinction between irregular acts of an authorized class, and acts which are altogether unauthorized, and to warn the reader not to conclude, from the decisions just adverted to, that a company is estopped from disputing the validity of acts done and treated as valid by its directors, if those acts are such as the directors have no authority whatever to perform on behalf of the com- pany. It will be seen hereafter, first, that arrangements between shareholders and directors, whereby the former have been permitted to retire, liave frequently been held invalid upon the ground that the arrangements were such as the directors had no authority to make; and, secondly, that in such cases the company is not estopped from showing that shareholders treated as having retired are, in fact, share- holders still.' With reference to the question whether a person is or is not a share- holder in a company, the state of its register of shareholders is of considerable importance. Shares in companies being marketable commodities, transferable from one person to another, some method of registration is indispen- sable, in order that the pei'sons who are at any given time members of the company may be known. But a register of shareholders would be of little use if it were not admissible in evidence both for and against every person whose name is upon it, and it is, therefore, neces- sary not only to have a register, but to make it evidence in Judicial proceedings. The simplest, and at the same time most just way of accomplishing this is to compel every member either to write his name in a book kept by the company, or to give some officer of the com- pany a written authority to insert his name therein. Another, but much more arbitrai-y way is, to make it the duty of every company, or of some official, to keep a register of shareholders, and to make that register evidence against any one whose name may be upon it with- out the necessity of showing by what authority it was put there. The former of the modes is commonly had recourse to in mining districts where partnerships with transferable shares have long been known, but the latter mode has been adopted by the legislature and prevails in most companies governed by acts of Parliament.' A ' See Morgan's case, 1 M. & G. 235 ; ' The making of companies' books Lawe's case, 1 De G. M. & G. 431 ; Dan- evidence against their members is not a iel's case, 23 Beav. 43 ; Munt's case, id. new device, see Bristol and Taunton, 55; Bennett's case, 5 De G. M. & G. 284, etc., Co. v. Amos, 1 M. & S. 569. and 18 Beav. 339. Joint-Stock Companies. 1'261 parliamentary register of shareholders thus becomes a most important document, for, speaking generally, unless a person is on it he is not entitled to the rights of a shareholder, whilst if he is on it he is sub- ject to all the liabilities of a shareholder, unless he can show that his name ought not to have been on the list. The acts of Parliament relating to registers of shareholders are unfortunately numerous and difierently worded, and it is necessary, before determining the efEect of being on or off the register of a particular company, to examine the provisions of the act which applies to it. One or two general rules relating to these registers regarded as evi- dence of membership may, however, be usefully adverted to: 1. The register or the official return, as the case may be, will be admissible, although it may be proved to be in some respects inaccu- rate or informal.' 2. A person whose name is inaccurately stated, but whose identity can be established, cannot escape liability as a shareholder on the ground of the inaccuracy," and the use of a fictitious name only increases the difficulty of proving identity.^ 3. The register or return is no evidence of the' membership of a person except at and after the date at which the register or return becomes official.* 4. Unless the statute making the register or return evidence clearly and indisputably makes it conclusive evidence, the register or return . -will he prima facie evidence only of the truth of the statements in' it, so that not only may a person whose name is in the register or return show that his name ought not to have been there, but a person , whose name is not in it may be shown to have been in fact a member when the register or return became official.* ' Willis v. Murray, 4 Ex. 843. See as « Thompson v. Harding, 1 C. B (N. S.) to banking companies governed by 7 555 ; Clowes v. Brettell, 11 M. & W. Geo. 4. c. 46, Harvey v. Scott, 11 Q."B. 461. 93; Field v. Mackenzie, 4 C. B. 705; » Arthur v. Midland Eail. Co., 3 K. & Bosanquet v. Shortridge, 4 Ex. 699 ; and J. 204. as to companies incorporated by statute * Aylesbury Eail. Co. v. Thompson, Southampton Dock Company v. Rich- 2 Ra. Ca. 668 ; Cheltenham Rail. Co. v. ards, 1 Man. & Gr. 448 ; London and Price, 9 C. & P. 55. Compare Bosan, Grand June. Rail. Co. v. Freeman, 2 id. quet y. Shortbridge, 4 Ex. 699. 606 ; London and Brighton Rail. Co. v. ' See 1. As to persons named in th« Fairclough, id. 647; Birmingham Bris- register or return, Powis v. Butler, 3 C. tol etc., Rail. Co. v. Locke, 1 Q. B. 256 ; B. (N.S.) 645, and 4 id. 469 ; Galvanized London and Grand June. Rail. Co. v. Iron Co. v. Westoby, 8 Ex. 17 ; Water- Graham, id. 271 ; Bain v. Whitehaven ford, Wexford, etc., Eail. Co. v. Pid- Co., 3 Ho. Lo. Ca. 1 ; Dorritt v. Harding, cock, 8 Ex. 379 ; Carmarthen Eail. Co. 1 C. B. (N.S.) 534 ; Powis v. Harding, id. v. Wright, 1 Fos. & 'Fin. 282 ; Shrop- 551 ; Daniell v. Royal Brit. Bank, 1 H. shire Un. Canal Co. v. Anderson, 3 Ex. & N. 681; Henderson v. Royal Brit. 401;Bailey v. Universal Prov. Life Ass., 1 Bank, 7 E. & B. 356. C B. (N. S.) 557 ; Moss v. Steam Gondola 1262 Particular Partnerships. 5. It follows from the last proposition that a company is not estop- ped by its own register. This was assumed by the Court of Exche- quer in the Waterford and Wexford Railway Company v. Pidcock,' where the defendant was held not to be liable to calls because, though on the register, he had been placed there before he had become a shareholder, and because, notwithstanding the register, he was not entitled to exercise the rights of a shareholder." G. A person improperly registered as a shareholder in a com- pany cannot be considered as holding himself out as a shareholder, merely because he takes no steps to have his name removed.' But as regards some companies, it is enacted that a person once properly registered as a shareholdei', is to be deemed a shareholder so long as his name remains on the register.* « Where a company or its officers are required to keep a register of shareholders, it is their duty bo keep such register accurately, and if they refuse to insert the name of a person entitled to be registered, or to erase the name of a person improperly registered, in either case, upon complaint being made to the proper tribunal, the company or its officers will be ordered to correct the register.' The Court of Queen's Bench will grant a mandamus to compel the company to insert a name improperly excluded,' and the Court of Chancery will grant an injunction to compel the company to remove a name improperly inserted.' A mandamus will not, however, go to compel a company to remove its seal from a register which it has sealed, although it may be shown that the register is incorrect, and that it has been sealed without authority.' Neither is a company bound to regis- ter complicated deeds of transfer, e. g., marriage settlements, by which Co., 17 C. B. 180 ; Birch's case, 2 De G. * See Ex parte Prescott, Mon. & Ch. & J. 10. See 2. As to persons not named 611 ; Harvey v. Scott, 11 Q. B. 92, 448. in the register or return, Rastrick v. This subject will be reverted to here- Derby.shire, etc., Rail. Co., 9 Ex. 149 ; after. Prescott V. Buffery, 1 0. B. 41 : Bank of ' The register of companies governed England v. Johnson, 3 Ex. 598 ; Wolver- by the acts of 1856-58 will be corrected hampton Waterw. Co. v. Hawkesford, 5 if necessary in order to render a person Jur. (N. S.) 1104; Whittet's case, 2 De a contributory or a non-contributory. G. & J. 577. The question whether a See Whittet's case, 2 De G. & J. 577 ; person is a contributory or not in con- Birch's case, id. 10. sequence of being on or off the register * Norris v. Irish Land Co., 8 E. & B. will be adverted to in a subsequent 512. chapter. ' Taylor v. Hughes, 3 Jo. & Lat. 24 ; ' 8 Ex. 279. Shortridge v. Bosanquet, 16 Beav. 84. ' See, too, Shropshire Union, etc., Co. In Bullock v. Chapman, 2 De G. & S. V. Anderson, 3 Ex. 401. 211, the court declined to interfere, the ' See i Bullock ,v. Chapman, 2 De G. case not being sutBciently clear. & S. 211 ; Birch's case, 3 De G. & J. * Ex parte Nash, 15 Q. B. 92. 10. Joint-Stock Companies. 1263 shares are assigned to trustees upon the usual trusts for bhe husband and wife and their children.' A person entitled to be registered as a shareholder by a company can maintain an action against the company, or those of its officers whose duty it is to register him as a shareholder, if they wrongfully refuse to register him. In such an action it is no defense that the register is full, if it is so improperly; 5 and if the plaintiff complains that, in consequence of his name not being registered, his shares have been forfeited without notice to him, it is no defense that the forfeiture is a mere nullity, and that the plaintiff has, therefore, sustained no damage." It is to be observed that a person, asserting his right to be on the register, must prove his title to the shares in respect of which he claims to be registered," and his right to be on the register; ° and a man- damus will not be granted to a person who seeks to become a regis- tered shareholder for the purpose of being troublesome.' In addition to the evidence of membej:ship obtainable from registers of shareholders, many companies are required by statute to give every shareholder, on demand, a sealed certificate of liis ownership of the shares to which he is entitled.'' The object of this is to enable a shareholder to prove that he is such, and particularly to enable him, upon a sale of his share, to prove his title to them to the satisfaction of a purchaser.' No person is entitled to demand a certificate of title to shares in a company until he has done every thing necessary to constitute himself a shareholder in the full sense of the word.' Cost-book mining companies. Sec. 84Ji. Cost-book mining companies are sometimes represented as differing essentially from ordinary partnerships, but there is no authority for this statement; and it may be said with more truth that cost-book mining companies are mere partnerships governed by the general law of partnership, except so far as that law is excluded by local custom or by siDecial agreement referring to and embodying * Reg. V. General Cemetery Company, ' 7 & 8 Vict., c. 110, Bs 51, 52 ; 8 & 9 6 E. & B. 415 ; Copeland v. North East- Vict., c 16, ss 11, 13 ; 19 & 20 Vict., c. ern Rail. Co., id. 277. 47, s 31. •■' Daly V. Thompson, 10 M. & W. 309. » gee upon this subject, Hare v. War- ^ Catchpole v. Ambergate, etc.. Rail, ing, 3 M. & W. 362 ; Curling v. Flight, Co., 1 E. & B. 111. 6 Ha. 41, and 3 Ph. 613; Shaw v. Fisher, * Daly V. Thompson, 10 M. & W. 309. 2 De G. & S. 11 . * British Sugar Co., 3 K. & J 408. ' Wilkinson v. Anglo Californian Gold ' See Reg. v. Liverpool, Manchester, Co., 18 Q. B. 728 : Stewart v. Ang. Cal. etc.. Rail. Co., 21 L. J. Q. B. 384. Gold Co., ib. 736. 159 • 1264 Particular Partnerships. such custom.' A cost-book mining company is formed by agreement. A number of adventurers who have obtained permission to work a lode, agree to form a capital, to divide that capital into a certain num- ber of shares, and to distribute the shares amongst themselves. They appoint an agent commonly called a purser for the purpose of man- aging the affairs of the mine, subject to the control of the sharehold- ers. They write in a book called the "cost-book," the agreement into which they have entered, and in this same book are inserted from time to time the receipts and expenditure of the mine, the names of the shareholders, their respective accounts with the mine and transfers of shares. The sliares are transferable, and may be relinquished ; they may also be sold for non-payment of calls; and these circumstances, rather than any other, distinguish cost-book mining companies from common partnerships. It is sometimes • represented, not certainly by lawyers, that the lia- bility of shareholders in cost-book mining companies is limited; that both their past as well as their future liability is got rid of as soon as they have transferred their shares, and that they are in no case liable for the debts of the mine if they have paid the calls which may have been made upon their shares. All this is mere delusion, and although it is true that a shareholder can as between himself and co-sharehold- ers get rid of his liability by transferring or relinquishing his shares,' there is no authority whatever for saying that the liabilities of the shareholders to creditors are governed by principles in any respect different from those which apply to ordinary partnerships." Whoever alleges that a cost-book mining company is in any respect governed by a local usage which excludes the application of the gen- eral law of partnership, must prove the existence of sucli usage, for the courts do not take judicial notice of what the cost-book principle is, and they invariably apply the general law of partnership to com- panies formed on that principle, unless it is proved that the application of such law is excluded as alleged.* ' See as to cost-book mining compa- 581 ; Peel v. Thomas, 15 C. B. 714 ; nies, the Readwin Prize Essay on the Toll v. Lee, 4 Ex. 230. Cost-Book, by Tapping; Collier on ■* See Hawkin's case, 3 K. & J. 253 ; Mines, 2. p. lU, et seq. Bodmin United Mines, 23 Beav. 370; ' Fenn's case, 4 De G. M. & 6. 285; May- Fenn's case, 4 De G. M. & G. 285 ; Hart hew's case, 5 id. 837 ; Bodmin United v. Clarke, 6 id. 232, and 6 Ho. Lo. Ca. Mines, 33 Beav. 870 ; Birch's case, 2 De 633 ; Sibley v. Minton, 27 L. J. Ch. 53, (i. & J. 10 ; Lofthouse's case, id. 69. V. C. Kindersley. The purser cannot ^ Sliareholders in » cost-book mine sue a shareholder for calls, Hybart v. were held liable to creditors for goods Parker, 4 C. B. (N. S.) 209, unless the supplied in Tredwen v. Bourne, 6 M. & mine is within the jurisdiction of the W. 461 ; Newton,v. Daly, 1 Fos. & Fin. Stannary court, and the purser pro- 36 ; see, too, Ellia v. Schmoeck, 5 Bing. ceeds in that court. Joint-Stock Companies. 1265 The question whether a person is a shareholder or not in a cost- book mining company must be determined in precisely the same way as the question whether a person is or not a member of an ordinary partnership.' The usual mode of proving that a person is a share- holder in a cost-book mine is by showing that he has signed the cost- book or an authority for the insertion of his name in it ; and it has been said to be part of the cost-book principle that a register of share- holders should be kept, and that every member should sign either the book itself or an authority for the insertion of his name in it.' At the same time, a person clearly may, as between himself and third parties, incur the liabilities of a shareholder without signing the cost- book or any such authority as that referred to ; nor is the writer aware that a person cannot be a shareholder as between himself and the other members in the absence of his signature to the cost-book or to an authority for the insertion of his name in it. Indeed there is reason for going further, and for denying that any such signature is essential, for an attempt to prove it to be so is reported to hare failed, the evi- dence adduced amounting only to this, that it was usual for every member to testify his acceptance of shares by writing under his hand.* In Vice v. Anson,* the court seems to have thought that a person could not be a shareholder in a cost-book mining company unless he acquired some interest in the mine, treating it as land, and that some deed conveying him an estate in the land was requisite. But this opinion cannot be supported, and it seems clear that shares in a cost- book mining company are transferable by entries in the cost-book, and that a person who is entered therein as a shareholder in respect of shares accepted by him is a shareholder, although no deed or writ- ing at all has been executed.' Shares in cost-book mining companies are ordinarily transferred by a document in which the transferor acknowledges that he has transferred, and the transferee acknowl- edges that he has accepted the shares mentioned. This document is signed by both parties, is addressed to the purser, is sent to him by the transferee, and is the authority to the purser to register the trans- feree as a shareholder.' 'See Peel v. Thomas, 15 C. B. 714 ; ' See Tippfet v. Johns, Tapping's Es- Tredwen v. Bourne, 6 M. & W. 461; say, p. 187; Reynolds v. Bassett, Collier Thomas v. Clark, 18 C. B. 663. on Mines, 134, note : Northey v. John- 2 See Tippett v. Johns, Tapping's Es- son, 19 L. T. 104 ; Toll v. Lee, 4 Ex. 230; say, p. 187 ; Toll v. Lee, 4 Ex. 230. Compare Curling v. Plight, 5 Ha. 243 ; « Northey v. Johnson, 19 L. T. 104, Q. 6 id. 41 ; and 3 Ph. 643. B. 1853. That this is usual there can « Toll v. Lee, 4 Ex. 330 ; Walker v. be no doubt ; it is expressly required by Bartlett, 18 C. B. 845. See as to parol the rules of most mines. transfers, Northey v. Johnson, 19 L. T. *7B. &C. 409. 104, Q. B. 159 VZiSii Particular Partkeeships. It has been decided that an authority to the purser to insert a name in the cost-book does not require to be stamped,' and it is said to haA'e been decided that the cost-book itself requires no stamjj.' Companies engaged in working mines within and subject to the jurisdiction of the Stannaries, need not be registered under the Joint- Stock Companies Acts of 1856 and ISoT,' but they may be so regis- tered, with or without limited liability, if there are seven or more shareholders. Chartered companies. Sec. 843. The Crown has at common law the power of incorporating by charter any number of persons who assent to be incorporated; and. a chartered company is, therefore, formed as soon as a charter is granted to and accepted by two or more individuals, enabling them, alone or with others, to trade as a body corporate. The Crown, how- ever, has no power to incoi-porate persons against their will;' nor after a corporation is once established can the Crown force a new charter upon it. A charter which has been confirmed by act of Parliament cannot be varied by the Ci'own; » but a charter which lias not been so confirmed may, without being formerly surrendered,' be varied by a subsequent and inconsistent charter,® provided the new charter is accepted by the body corporate,' i. e., by a majority of the members composing it. '" A chartered company is a corj^wration existing for the purposes for which it is created and no others ; and those persons only are mem- bers of it who are rendered so by the charter, or by having been admitted in compliance with the charter and the by-laws made in pursuance of it." The charter of a company is a law set to it and to the individuals composing it, and they have no power by any agree- ment amongst themselves to annul or legally do any thing at variance with their charter.''' This subject will be adverted to hereafter. • Walker v. Bartlett, aud Toll v. Lee, s i^.; and R. v. Haytliorne, 5 B. & C. uU supra. 410 ; Royal Exch. Ass. Co. v. Vaughan, " Coll. on Mines, 153, note, citing Viv- 1 Burr. 155. yau V. Mowatt, 8 L. J. Ex. 480, which, » Bull. N. P. 213, c; R. v. Pasmore, 3 however, is a wrong reference. T. R. 240. » 20 & 21 Vict. , c. 14, s 3. '" R. v. Hughes, 7 B. & C. 708 ; in •" See as to charters, Grant on Corpora- Ward v. The Society of Attorneys, 1 tions, pp. 9, et seg. Coll. 370, an injunction was granted to ' Grant, pp. 13 aud 18; Dr. Askew's restrain the majority from accepting a case, 4 Burr. 2300, per Yates, J. ; and new charter, see Rutter v. CUapnaan, 8 M. & W. 1. " Dr. Askew's case, 4 Burr, 2200, per 8R. V. Miller, 6 G. R. 268; but see Yates, J. Royal Exch. Ass. Co. v. Vaughan, 1 ''^ See The Society of Practical Knowl- Burr. 155. edge v. Abbott, 2 Beav. 559. As to ' R. v. Larwood, 1 Salk. 168. giving effect to the practice of the Joikt-Stock Companies. 1367 A chartered company, being a corporation, is not a partnership, although the company may have gain for its object, and the members of the company may share profits. A charter is not necessarily of any legal value, for it may have been obtained from the Crown by misrepresentation, or it may have been granted by the Crown in excess of its prerogative, and in either case the charter will be void. In a recent case a charter which had been obtained from the Crown by false and fraudulent statements was for- mally annulled by scire facias,^ but although a charter which has not been thus annulled is to be treated as valid until the contrary is proved, there is apparently no rule to the effect that its validity is not to be disputed except in a formal proceeding instituted for the pur- pose of procuring its cancellation." At the same time those persons who have accepted or acted on a charter and treated it as valid cannot, unless in a proceeding to annul it, object that it was obtained from the Crown irregularly, or by the misrepresentation of themselves or their fellow members, or of their predecessors.' Indeed, it is said, that neither those who liave accepted a charter, nor their successors, can dispute its validity ; but this is very doubtful.'' Charters are obtained by petitioning the Queen in council. The petition and draft of the proposed charter are left at the council ofiBce, and are then referred to the board of trade. The Colonial office. Foreign office, and India office are also referred to, if the proposed company falls within their dejDartments. If it is determined that a charter shall be granted, it issues under the great seal.' A charter may be surrendered to the Crown, but a surrender is of no effect unless accepted and enrolled in chancery.' After the sur- render has been accepted and enrolled the corporation ceases to exist.* Companies formed under letters patent. Sec. 844. Letters patent and cliarters are both Literm Patentes sealed with the great seal, and are, in fact, the same thing. But the crown is enipowered by the Act 7 Will. IV, & 1 Vict., c. 73 ' to grant by letters patent to any company or body of persons, although not members and allowing that to control * See Grant, 20-23. the charter, see Somes v. Currie, IK. * See Wordswcfrth on Joint-Stock & J. 605. Companies, p. 235 ; see, as to advertise- ' K. V. The Eastern Archipelago Co., ments, 7 Will. IV, and 1 Vict. ,c. 73, a. 32 1 E. & B. 310 ; 2 id. 856, and 4 De G. M. « See R. v. Osbourne, 4 East, 826. & G. 199, See as to sei. fa. to repeal ' Grant, 46. patents, 2 Wm. Saund. 72, u, et seq. * Repealing and replacing, 6 Geo. IV, ■' Grant on Corp. 39, etc. c. 91, s. 3, and 4 &5 Will. IV, c. 94. ' See MacBride v. Lindsay, 9 Ha. 574. 1-2G8 Particular Partnerships. incorporated by such letters patent, any privileges which the Crown might at common law grant to any company or body of persons by any charter of incorporation. Letters patent under this act are obtained on application to the Queen in council, and notice of the apjilication must be inserted three times in the "London Gazette," and in one or more of the newspapers circulating in the country in which it is proposed that the principal place of business of the com- pany shall be established, at intervals of not less than one week.' Every company formed under this act is required to be entered into by agreement under seal, in which are to be specified the number of shares in the company, the name of the company, the names of its members, the date of its commencement, the nature of its business, the place or principal place where such business is to be transacted, and also the names of two or more officers to sue or be sued on behalf of the company.' Within three months after the grant of the letters patent, a return is to be made to the enrollment office of the Court of Chancery ■* of all the above particulars, and of the date of the letters patent,' and returns are required to be made of every change in the company's principal place of business, and of every change amongst its shareholders,' and in the officers by which it is to be sued.' These returns are directed to be registered and to be open to the inspection of any person upon payment of a small fee.'' A certified copy of the return is made evidence both in civil and criminal proceedings.' Companies formed under this act are not corporations, but are essentially partnerships. Their privileges depend on the letters patent obtained by them. The possession of a common seal is taken for granted in the act itself,' but there is nothing requiring the seal to be affixed to a contract, in order to bind the company, and the act is express that members of the company are to be liable to its debts and engagements, except" so far as that liability may be limited by the letters patent.'" "Who are to be deemed members is not stated, that question there- fore must, it is conceived, depend in each case upon the provision of the deed of settlement, and of the letters patent by which the par- ticular company in question may be governed, but when once a person has become a membei', his liability as a member continues, until a '7 Will. IV, and 1 Vict., c. 73, 8. 32. « Id., s. 13. nd., s. 5. 'Id.,s. 17. ' In the case of an English company, ' Id., h. 18, see, too, ss. 20 and 31. see B. 36. » See s. 27. * Id., s. 6. '" See ss. 2-4 and 24. » 7 Will. IV, and 1 Vict., c. 73, 7 to 10. Joiutt-Stock Compakies. 1269 return of the means whereby he has ceased to be one is registered.' The aet does not state with any precision how shai-es are to be transferred, but a transfer, by deed or writing, is evidently contem- plated.' , Oi the mutual rights of shareholders. Sec. 845. The partners in a joint-stock company are of two chisses; one consists of directors, trustees, and others, who are actively em- ployed in conducting the concern; the other, of a number of persons who take little or no part in its management, and many of whom .become shareholders for the sake only of obtaining a profitable investment for their money. The general conduct of the trade falls upon the directors, while the more particular transactions are usually managed by paid agents who are not shareholders. The funds and other property of the company are vested in the trustees. When company is prelected, but never formed. Sec. 846. If a company be projected, but never come into actual operation, a person who has advanced his money upon the faith of the completion and continuance of the project is entitled to recoA'er his deposit in an action against the directors for money had and received to his use.' 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 directors, 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 toward 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 afterward abandoned before anything was done in pursuance of the project, it was held that B might recover the amount of the shares in an action against A.' 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 ' See s. 31. it, B may recover from A the amount of ' See ss, 8 and 9. The foregohig seven the shares. Kempson v. Saunders, 4 sections are from Lindley on Partner- Bing. 5. ship. " Nockles v. Crosby, 3 Barn. & Ores. Ht has been held that if A sell B 814; 5 Dowl. & Ryl.'751. certain shares in a projected joint-stock * Kemp.son v. Saunders, 13 Moore, 44; company, and the undertaking is aban- 4 Bing. 5. See Watkins v. Huntley, 2 doned before any thing is done under Car. & Pay. 410. 1270 Particular Partnerships. concocted in fraud. Thus, in the well-known case of Colt v. Wool- laston,' the defendant, WooUastou, 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 201., in order to raise 100,OOOZ. As an encouragement and security for the contributors, Woollaston likewise conveyed to Arnold and his heirs an estate which .he had bought for 31,800^. , subject to a mortgage of 28,000Z., upon trust in the first place to pay ofE the mortgage and afterward to pay to him, "Woollaston, 57,200Z (in all 85,200?.); and as to the surplus which the estate would raise, it was to be for the benefit of the contributors. 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 contributors' with some resentment, called for their money, upon which the pro- jectors promised to return the money with interest, within six months, but afterward this was refused. The plaintifEs, who had each con- tributed 120Z. for six shares a-piece, then brought their bill to be repaid these several sums, and the court granted the relief. Sir Joseph Jekyll said that this was an imposition, to propose the surplus of the value of an estate (which cost but 31,800Z.), after 85,000Z. charged upon it — more than double its value — as a security to the contributors who laid out their money upon thisproject, 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 plaintiff's own use; for, that in cases of fraud, a court of equity has a concurrent jurisdiction with the common law, matter of fraud being the great subject of relief there. Modern cases in equity have been decided on the same principles. In Green v. ' Barrett.' the plaintifE 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 distributed, stating the capital of the company to be 600,000Z., in 12,000 shares of 501. each, naming certain persons as directors, etc., 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. ' 3 P. W. 154. See Stent v. BaUis, ^ 1 Sim. 45. id. 317. Joint-Stock Companies. 1371 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 believing that it would be adhered to and carried into effect, purchased twenty shares, and paid his deposit of 100?. That the plaintiff afterward discovered that a small part only of the 12,000 shares was in fact disposed of; that the deposits on several of the shares which had been disposed of had not been paid; yet, that the defend- ants determined to proceed in the scheme, and advertised for the pur- chase of premises for carrying on the distillery business on an exten- sive scale. That the ten defendants before mentioned had, of their own sole assumed authority, chosen the two other defendants to be directors in the place of two persons who, although named in the prospectus as directors, refused to act ; and that thereupon another prospectus was published 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 Parliament had been attempted or was intended to be obtained for the i-egulation of the company. That the plaintiff was informed, by means of a circular letter sent by order of the defendants, that they had purchased very valuable distillery premises, and he was required to pay the further sum of lOOZ., being oZ. 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 number of shares had been allotted by them to themselves, and that they had sold them at very considerable premiums. That the money paid by the plaintiff had been obtained from him by fraud, and by means of misrepresenta- tion, and for a purpose which had failed of effect; and prayed that the defendants might be decreed to repay to the plaintiff, with inter- est, the lOOZ. paid by him for the shares. To this bill two of the defendants demurred generally, but the demurrer was overruled. Sir John Leach : " Assuming the several statements in this bill to be true (which the demun-er does in form admit), I am of opinion that the plaintiff is entitled to recover back from the defendants tlie 1001. 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 1272 Pakticular Partnerships. to form any ojiinion 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 princii^les there stated, but as a snai'e to per- sons who might unwarily become subscribers, and for the purpose of enabling the directors to make a profit by the sale of shares which they thought fit to assume to themselves, it does appear to me that the case is go.verned by Colt v. Woolaston, and, upon the authority of that case, I overrule this demurrer." Every party suing must be named. Sec. 847. 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 appeal- 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 became shareholders precisely at the same time and stand in other respects precisely in the same situation in regard to each other. In Colt v. AVoollaston 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 Eio,' Lord Eldon expressed a strong opinion on the sub- ject. 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 account, repayment of the moneys advanced, and an injunction to restrain the bankers from parting with the moneys, etc. 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 give for the loan. The bill also alleged, and the answer of the contractor admitted, that the Peruvian government had not been acknowledged as an independent state by Great Britain. Upon motion to dissolve the injunction, < Lord Eldon said that the plaintiffs, if they had any demand 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 hold- ers of scrip, and, as they were unable to do that, they could not, ' Turn. & Rass. 297. Joint-Stock Companies. 1273 having three distinct demands, file one bill ; and upon that ground alone, his Lordship, without adverting to the question of public pol- icy, dissolved the injunction. It is, however, to be observed that, in the late case of Blain v. Agar,' of which the facts were very similar to those of Green v. Bar- rett, three shareholders were permitted to join as co-plaintiffs in a bill filed for the recovery of their deposits. 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 undertaking. In the case of the Kidwelly Canal Com- pany v. Eaby,'' the defendant, Eaby, was one of the original subscrib- ers to proposals for uniting for the purjDOse of 'impi'oving the harbor of Kidwelly, and making a canal, etc., 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. Afterward, at a meeting of the committee of the House of Commons, during the progress of the bill, the defendant, disappi-oving of 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, omitted. He, never- theless, attended a meeting of subscribers in ]!fovember following, and seconded a motion for the appointment of a clerk. On this evi- dence, it was held at nisi prints that the defendant was not at liberty to withdraw his name without the consent 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 afterward confirmed by the Court of Exchequer. We have already observed that they who sign the deed of settle- ment are, to all intents and purposes, partners. They, therefore, who have subscribed the deed of settlement and wish to retire from the 1 3 Sim. 389. In the case of Thomp- the whole of this class of cases in son V. Powles, decided, on appeal, by equity. Lord Brougham, his Lordship took oc- * 3 Price, 93. casion to express his disapprobation of 160 1274 Paeticulae Pautxeeships. concern, must conform to the stipulations of the deed; which usually jirovides -that any proprietor shall be permitted to retire upon pay- ment of a certain sum in respect of his share, and upon giving notice to the directors. Supposing the company to have been properly and legally formed, we have next to consider the rights and remedies as between the share- holders, either by virtue of the deed of settlement, or hy 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 between 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 per- formance 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 limitations under which pro- prietors are to hold their property in the concern — namely, as regards the number, the power of assignment, and the mode of descent of each share ; the remedies given to the directors for breaches of cove- nant ; and a vai'iety of other provisions, which are better understood by a perusal of the instrument itself, and which, therefore, it will be unnecessary to mention more in detail in this place. Whether a company be constituted by deed only, or with the additional security of an act of Parliament, it is of the utmost im- portance to the safety of the adventurer that the provisions 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 docu- ments in such manner as to guard, as far as possible, the interests of the public. Therefore, where an act of Parliament 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.' The same principles appear to have guided the Court of King's Bench in the case of the Thames Tunnel Company v. Sheldon.' By ' Norwich and Lowestoft Navigation 278. And see Stratford and Moreton Company v. Tlieobald, 1 Mood. & Malk. Railway Company v. Stratton, 3 B. & 151. Ad. 519. ■■' 6 Barn. & Ores. 341 ; 9 Dowl. & Byl. Joikt-Stook Companies. 1375 an act of Parliament passed for making a tunnel under the Thames, the company of proprietors were enabled to raise a sum of 200,000Z. 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 toward making the tunnel, should pay the sums by them resjpectively subscribed, at such times and places, and in such manner as should be directed by tlie directors ; and in case any of such subscribers should neglect to pay the same at the time and place and in manner so required for that purpose, the company, or their directors, were empowered to sue for and recover the same. By an- other section, reciting that the probable expenses would amount to 160, 000^., and that the sum of 140,000?., being more than four- fifth parts of such expenses, had already been subscribed for defraying such expenses by several persons, under a contract binding them, their heirs, executors, and administrators, for payment of the several sums so subscribed by them respectively, it was enacted that the whole sum of 160,000Z. 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 passing of the act the contract was left at the company's office for the signatures of the subscribers, but was not signed by the defendant, although his name was men- tioned at the foot of it as a subscriber for eight shares, and a space left opposite each subscriber's name for his signature and seal thereto. A short time after the act of Parliament had passed, when the com- pany were procuring additional signatures and seals to the contract for completing 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 nec- essary and this action was brought against the defendant for the amount 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 applj to all those who had already advanced money, but only to those who, by signing the contract, had stipulated that they would make payment. The same principles must likewise be applied in adjusting the inter- nal arrangements of the company, according to the terms of the deed. In Moore v. Hammond," it was provided by the deed of settlement » 6 Barn. & Ores. 456 ; 9 Dowl. & Ryl. 483. 1276 Pakticulab Partkerships. 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 direct- ors 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 countei'signed by the sec- retary, and to be sent to him two days prior to the time appointed for such meeting. It was held that in order to constitute a good weekly meeting without notice or summons the day and hour of meeting must have been previously agreed upon by the directors, and, there- fore, that a meeting of three directors without previous agreement on their part to meet on any fixed day or hour was not a meeting duly convened within the meaning of the deed of settlement. Lord Ten- terden: " It is of great importance to a partnership consisting, as this does, of a large number of persons who place the management and control of their affairs in a small number, and by the deed by which they so place their affairs under the management of that small num- ber, 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 summons. The class that may be held without sum- mons or notice are weekly meetings, and they are to be held at sucli 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 resolution 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 meet- ing shall be held, it appears to me that a meeting on any other day is not a good weekly meeting within the meaning of this clause. If it were held to be so, it would be in the power of any three of the directors, the chairman or dejDuty chairman being one, to hold a meet- ing to make an order for payment on shares, or to do any other act whatsoever regarding the affairs of the company, without any notice Joint-Stock Companies. 1277 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 preyiously agreed to meet at a certain time and place in order that every director may know the day on whicli such business will be transacted, and that he may have an opportunity of attending." To constitute a person a legal officer of the association, 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 complied with. In a case where there was a general resolution of the directors (having powers 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 pres- ent, it was ruled that such appointment was invalid.' The justice and expediency of these decisions is manifest when we consider the extent of liability which the law of England imposes on the members of the company, and the confidence with which the majority of those members place tlieir most important interests in the hands of a few. It has been well observed that though the for- mal constitution of a joint-stock company may invest the body of its members with powers of superintendence and control, in practice they are inevitably passive. They contribute capital and receive accruing profits in proportion to their respective interests; but the conduct of the enterprise is abandoned to a few of the partners or delegated to laired agents. These acting partners or agents represent the company in its dealings with strangers and the company, or the great and passive majority of its members, must trust to their hon- esty and discretion; there being little security besides that they will not abuse their power of binding their constituents." " Deed of settlement, what it should set forth. Sec. 848. The mutual rights and remedies between the company and individual shareholders are, or ought to be, set forth and provided for in the deed of settlement, or in such deeds as every shareholder is bound to execute on becoming a member of the company. All 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. 'Diicarry v. Gill, 1 Mood. & Malk. the directors of the company in favor of 450. However, as between an officer the officer are irregular. Clarke v. Irn- of the company and the company, it will perial Gas Co., 4 B. & Ad. 315. not be presumed that any acts done by ^ Pari. Hist. Sess. 1835, p. 711 . 1278 Particulak Partxersiiips. It has sometimea been matter of doubt how far, consistently 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 partnei'ships, actions of covenant may be maintained between partners, except, perhaps, where tlie damages, when recovered, are payable to a firm or partnership fund. A fortiori, thei'efore, 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 company, upon their express covenant to pay a sum of money to the plaintiff, although there was a remote right in the com- pany to contribution in respect of the damages to be i-ecovered in the action. It appeared that the plaintiff had demised land to the defend- ants as trustees of a building company, of which the plaintiff was a mem- bei", for the purpose of building a certain number of houses, and that by that deed the defendants covenanted to pay the plaintiff 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 defendants that each of the mem- bers 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 Avhich they might sustain in the execution of the trusts. The plaintiff having brought his action on the covenant for rent, the defendants pleaded, amongst other matter's, that the plaintiff and the other persons named in the last-mentioned deed were jointly liable with the defend- ants to pay the damages, if any, to be recovered by reason of the alleged breach of covenant, 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., m delivering the judgment of the court said, that the answer to the objection was, that 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 Avere to be held quarterly, aiid that it never was intended that the landlord should wait till the quarterly meeting, when the day of ' 1 Bing. N. C. 399 ; 1 Scott, 345. Joint-Stock Cojipanies. 1279 payment occiuTed before it. His Lordship added that this case dif- fered from that of a common parfcnei'ship in two important points, namely, that the damages, when recovered by the plaintiff, did not go to any partnership fund, but were his owa separate property, and the damages were not to be paid out of any partnership fund, but by the trustees on their personal contract. In the case just cited the court adverted to that of Andrews v. Ellison,' as a strong authority to show that an action of this nature is maintainable. There, in an action of covenant npon a policy under the seal of the defendants, it appeared upon the record that the defendants were jointly interested with the plaintiffs in the funds which were ultimately to satisfy the plaintiff's loss by lire, 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 remune- ration out of the society's funds in case of loss by fire. It seems that an action is maintainable on the part of the com- pany against an individual member, for goods supplied by the com- pany for thab 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 company shall be brought in the name or names of one or more members of the company, exclu- sively. But 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 persons formed themselves into a company for brewing ale, and entered into a deed, by which it was agreed that the conduct of the business should be confided to two j)ersons, and the trade carried on in their names, and that they should be trustees for the company, so far that the right of action for goods delivered should be in them, and that all actions for ale delivered should be brought iir their names, and that all ale delivered should be con- sidered as their j)roj)erty, and that the directors, for the time being, should have power to regulate the general business of the company, 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 recommendation of the directors, to con- duct the business iti 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 plaintifi", who had been so appointed without the consent of, or notice to the ' 6 Moore, 199. '' 3 Mau. & Sel. 488. 1380 Pauticular Partnerships. dciendant, wl-io was an original subscriber, and executed the deed, could not maintain assumpsit for ale of the company delivered to the defendant. 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 to assign or transfer his shares. But, as these shares must not be made transferable entirely at the will of the liolder, there mast also be provision for giving due notice to the directors of the intended transfer or assignment. Upon the death of a shareholder, although his legatees or next of kin will be beneficially entitled to his interest in the company, yet neither they nor his executors will be entitled to stand in his situa- tion 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 tliose claiming under them) and the company, the executors of a deceased jiartner shall be the only persons considered as standing in the situation of the deceased^ even with respect to the more power of disposing of the testator's shares. In some cases the Act of Interpleader ' will be useful in determin- ing the rights of parties claiming, under distinct interests, 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 cer- tain dividends due on the testator's shares in a public company.' The general law of partnership applies when deed of settlement does not pro- vide remedies. Sec. 849. In matters which miglit 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 productjpn of the deeds in a suirf; brought by him against the company." In matters which are beyond the control of the parties themselves, ' 1 & 3 Will. 4, c. 58. ' Baldwin v. Lawrence, 3 Sim. & Stu. ' Cooper V. Smelting Lead Company, 18. K. B., East. T. 1833. ■* Hall v. Connell, 3 You. & Coll. 707. Joint-Stock Companies. 1281 and ■which are not regulated by admitted custom, it seems almost unnecessary to say that the general rules of partnership must be applied. In referring to cases of actions between shareholders, in which the courts have acted upon that general principle of partnership, that one partner cannot maintain an action against his copartner on a con- tract relating to the partnership, we may notice in the first place those which have been brought by attorneys, surveyors, etc. , being also shareholders, against the company for work and labor done in establishing the company. On the general principle above stated, these actions are not maintainable,' and, therefore, 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 establishing a company that all the money to be raised should bo 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.^ Other instances of the application of the general rule to joint-stock companies may here be adverted to. In Neale v. Turton,'' the plain- tiff brought his action against the members of the London Patent Steam Washing Company, on two bills of exchange, which were drawn by him on " The Directors of the London 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 1151., for value received, — William Heniy Neale. Accepted, payable at the Bank of England, per procuration of the directors of the London Steam Washing Com- pany — Isaac Buxton." The plaintiff was a holder of twenty shares in the company. It was objected that he was a partner in the concern, and, therefore, could not sue his copartners; and the Court of Com- mon Pleas held the objection valid. Best, C. J.: "The bills are drawn on the directors of the company, and accepted for the direct- ' See Holmes v. Higgins, ante. pany, 5 Bing. N. C. 353 ; Tilson v. War. 2 Ante. wick Gas Liglit Company, 4. B. & C. 902. "Garden v. General Cemetery Com- ^4 Bing. 149; 13 Moore, 365. 161 1282 Particular Partnerships. ors. They ave the agents of the company, and accept as agents of the company. The case, therefore, is that of one partner drawing on the whole firm, including himself. There is no principle by which a man can be, at the same time, plaintiff and defendant. We are clearly of opinion that these bills, being drawn on the directors, are in effect drawn on the connoany, of which the plaintiff is himself a mem- ber. He cannot be, at the same time, drawer and acceptor, and the rule, therefore, which has been obtained for entering a nonsuit, must be made absolute." 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 Cornish Tin-Smelting 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 credere commission. The defendant, 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 200Z., value received, — Zach. Hubbard, for Cornish Tin-Smelt- ing 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 evidence, the Court of King's Bench held that, as the plaintiff and defendant were both members of the joint-stock company, and, therefore, joint contractors, the defendant was not lia- ble to the plaintiff in an action on the bills. During the argument of the preceding case in the Court of King's Bench, Lord Tentorden suggested 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 received part of it from the debtor, the other part- ners might not recover against him for the money so received. " May not," he added, " the plaintiff' say that the money received by the defendant, 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, pro tanto, from his liability to the firm upon his ' 1 Mail, & Ryl. 369 ; 8 Barn. & Cres. would the decision have been the same? 345; Dans. & Lloyd, 118. — Qu. ; and see D. Best, C. J., Neale ^ The form of the drawer's signature v. Turton, 4 Bing. 151 ; also, arg. Tad- seems not to have been noticed by the dy, S. C; Preston v. Strutton, ante. court. Suppose the drawer had drawn and indorsed in his own name only. Joint-Stock Companies. 1283 guarantee ? Though the plaintiff may not be entitled to recover on the bills, by reason of the jDartnership, may lie not recover the sum actually received by the defendant, the receipt of that sum not being a partnership 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 hi-s character of partner; and, consequently, that he was not liable on the counts for money had and received. We may observe that the transactions in the several cases just mentioned occurred in the course of conducting the aflfairs of the company. But with regard to insulated transactions, though possibly arising out of the affairs of the company, an action may be main- tained between proprietors. And it seems that where goods are sup- plied 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.' When shareholders may proceed in eqxiity against directors. Sec. 850. 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 relief 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 enforced against a few individuals, members of the partnership, as, for instance, against the directors, or against a common fund, the court will allow some of the shareholders to sue on behalf of themselves 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, unless all the jiarties ai^e on the record." As instances of bills being allowed to be filed on behalf of a class of persons to enforce a common benefit, we may mention the cases of Cockburn v. Thompson,' and Ilichens v. Uongreve.'' In the former ' Davies v. Hawkins, 3 Mau. & Sel. ■* 4 Buss. 562 ; and see Society of 488. Practical Science v. Abbott, 4 Jurist, « 2 Sim. 376. 453. 3 16 Ves. 831. 1284 Particular Partnerships. of these eases the bill was filed by several persons on behalf of them- selves and all others, the proprietors of a charitable institution, against the solicitor and the bankers of the institution, praying an account of moneys received by the defendants, and that the institu- tion might be dissolved. In the latter 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. Salmon,' in which it was held that a bill might be sustained by the directors of a mining company on behalf of themselves 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 per- son, 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 affairs of the whole concern wound up, it was not a case of trading partnership) ; and in Hichens v. Congreve 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. But where in a trading j)artnership the bill seeks to have the whole affairs of the partnership wound up, the case has been con- sidered to be within the second branch of the distinction above adverted to, namely, as involving the interest of other parties besides those who are specially charged; for here all j)arties are equally account- ing ]Darties, 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. Upon these considerations the case of Long v. Yonge ' was decided. There the bill 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 survivors of the original directors and trustees of the company, and certain other members of the com- pany who had been appointed by them in the room of the deceased directors and trustees, and also against the executors of the late sec- ' 4 Myl. & C. 134 ; and see Gray v. ' 2 Sim. 369, and see Davis v. Fisk, Chaplin, 2 S. & S. 267. Farren on Insu-rance, 128. Joint-Stock Companies. 1285 retary or registrar, praying for a dissolution of the establishment in consequence of the misconduct of the trustees and secretary, and that the necessary accounts might be taken. Sir Lancelot Shad well allowed the demurrer on the ground that all the shareholders should have been made parties, and his Honor, in the course of the argument, distin- guished the case before him from that of Cockburn V.Thompson, observ- ing 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 bona fide raised, whether the partnership should be dissolved 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. So in Evans v. Stokes,' where the bill was brought by three per- sons on behalf of themselves and all other members of the French Brandy Distillery Company, except the defendants, against the direct- ors and two shareholders who were not directors, suggesting that a dissolution had been brought about by the fi'aud 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 defend- ants, that all the shareholders were not partners; 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 themselves and under the various cir- cumstances in which they stood in relation to each other, some of them for instance having paid their calls, and others having omitted to do so, could not be prosecuted in the absence of any of those part- ners. But notwithstanding these last-mentioned decisions, which are unquestionably founded on the true principles of equity pleading, it is ajoprehended that the court would be disposed to allow some relax- ation in cases where an absolute failure of justice would otherwise ensue.^ And where a sliareholder files a bill against his coshareholders ' 1 Keen, 34. InMacmahon v. Upton.S the chairman only," did not extend to Sim. 473, it was decided that an act of suits between the partners themselves. Parliament giving to a company very and, therefore, did not affect the gene- extensive rights of suing and being ral rule as to parties, sued, and by which it was provided ^ See the observations of Lord Cot- "that in all proceedings, in which it tenham, 1 Myl. & C. 579; 4 id. 141, and would have been before necessary to Mr. Baron Alderson, 3 You. & Coll. 321, state the names of the partners, it 234 ; and see Story's Eq. PI., § 97. should be sutBcient to state the name of 1386 Paeticulae Paetneeships. for relief in respect of the joiut contract between them, it is clear that he is not bound to make persons with whom he has no privity of contract parties to the bill, as for instance, persons who claim an interest in the concern by means of an irregular or fraudulent assignment. Nor as it seems, is he bound to make those persons parties who have assigned their shares, if he allege that they have duly accounted for tlie profits. These points seem to be decided by the case of Mare v. Malachy. ' There a bill was filed by a person who claimed a certain definite inter- est in a mine and mining adventare, as one of a number of copart- ners, stating that the defendants, who were the legal owners of the mine, and also copartners in the adventure, had subsequently, unknown to the plaintiff, but with the consent of the other copartners, and after fully accounting to such copartners for the shares of the profits up to that time, sold and conveyed the mine to trustees for a Joint- stock company, the property of which was held by a numerous body of proprietors in transferable shares, and had received the considera- tion 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 of the joint-stock company in their hands, might transfer to him such a number of shares as would be equivalent to the interest which the plaintiff had in the original adventure. Lord Cottenham, C, held, upon demurrer for want of parties, that it was unnecessary to make the other copartners in the original adventure, or the trustees or shareholders in the joint-stock company, parties to the suit. In cases where a bill is permitted to be filed by some of the share- holders on behalf of themselves and others, there should be an alle- gation in the bill that it is so filed,'' and it is usual to allege that the bill is tiled on behalf of all the shareholders except the defendants, ' but the omission of the exception is immaterial, as the defendant in his character of shareholder has a joint interest with the plaintiff, and therefore, in that character, the bill may be filed in his behalf. ' Where, however, a bill is filed by the trustees of a company, such trustees having, to a certain extent, distinct interests from the s^hare- holders, it seems better, although the bill may be filed on behalf of the shareholders, to make the shareholders defendants; or, if they are very numerous, to make some of them defendants, and to allege that ' 1 Mvl. & C, 559. => Chancey v. May, Prec. Ch. 593 ; Gray « Baldwin v. Lawrence, 3 S. & S. 18 ; v. Chaplin, 3 S. & S. 267. Douglas V. Horsfall, id. 184. * Taylor v. Salmon, 4Myl. & C. 143. Joint-Stock Companies. 1287 the plaintiffs do not know and are unable to ascertain the names of the other shareholders.' Of the relative rights of shareholders and third persons. Sec. 851. The law of England, unlike that of France, gives no power to unincorporated trading companies to limit the responsibility of any of their members. In Fi-ance, a commanditaire, or partner en commandite, is not liable to creditors or other claimants upon the society beyond the amount of the capital which he has contributed, or engaged to contribute, to the joint stock.'' In England, on the contrary, every member of an unincorporated trading company, no matter of what number of persons it consists, is answerable to the full extent of his private property for the whole of the debts of the company.' This doctrine was strongly inculcated by Lord Eldon in the case of Carlen v. Drury.* Some years afterward, when joint-stock companies became so prevalent, many cases materially affecting the interests of individuals were decided in conformity with the known rules of English law upon this subject.' Of these cases, several of which will be found in the Annual Register as well as in the Eeports, it will be sufficient for our purpose to notice the following: An action of assumpsit was brought for goods sold and delivered. The jolaintifE was a harness maker, and the defendant one of the members of a com- pany called the "London Carrier Company," and the action was brought to recover a sum of bl. 8s. &d., for articles delivered by the plaintiff at the premises of the company in Great Queen Street, Lincoln's Inn Fields. No evidence was adduced as to who gave the order for the goods. The company was insolvent, and the action was brought against the defendant alone. It was objected, on the part of the defendant, that the company was never i-egularly constituted. But, ' Fenn v. Craig, 3 You. & Coll. 216. tent for the partnership debts and en- ^ On the other hand he is prohibited gagements. Pari. Hist. 1825, p. 710. from acting for the partnership in its ' Keasley v. Codd, 2 C. & P. 408, n. dealings with third persons. Its trade •• 1 Ves. & Bea. 157. or business is exclusively conducted " In the Parliamentary History, to in the name or names, and by or under which we have more than once referred, the control of one or more of the there is' an extremely able article, set- partners, who are liable without limita- ting forth the advantages which would tion. The name of a commanditaire is arise from the introduction of partner- not permitted to appear in the name or ships en commandite into this country, firm of the society, and if he engage or See Pari. Hist. 1835, p. 709, et seq. And intermeddle in any dealing with Strang- see Mr. Bellenden Ker's Report on Fart- ers, either in his character of partner iiership Law ; Jurist, Vol. 1, p. 967. The or as agent of the partners who are lia- statute 1 ,Vict., c. 73, which gives power ble without limitation, he instantly to the Crown to limit the responsibili- loses his immunity, and is theuceforth ties of partners, will be found in the responsible to the same unlimited ex- Appendix. 1388 Particular Partiterships. per Lord Tenterden: "That will make no difference. It is important that the public should know, that if persons connect themselves with a company of this description, they are every one of them liable to pay the demands upon it." Verdict for the plaintiff, damages, 51. 8s. 6d> laability of shareholder of unincorporated company. Sec. 852. Howevei', 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 authority in a member of a joint- stock company to bind the company, or even the directors, by bills of exchange. A power to accept bills is sometimes given to the direct- ors 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 com- pany in ready money. As between the company and third persons, it seems clear that a bill negotiated in the nanre of the company by any one of the mem- bers, will, in the hands of a bona fide indorsee for value, be available against the whole body of the propi-ietors, provided 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 com- pany generally, but only against the actual drawer or acceptor. In Bramah v. Koberts,'' C, who was a director in a joint-stock company, drew a bill upon the directors payable to his own order, which was addressed as follows: — "Messrs. A, B, 0, and other directors of the South Metropolitan Gas-Light and Coke Company, No. 3, Crosby Square." The form of 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 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 ' Keasley v. Codd, 3 Gar. & Payne, ' 3 Bing. N. C. 963. 408. Jois-t-Stock Companies. 1389 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 permitted to stand. Tindal, C. J., in delivering the judgment of the court, said that the right of one director to accept a bill for himself 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 purposes 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 con- stituted, or some other agreement between th6 parties, whether a bill so drawn and accepted shall or shall not have that legal effect. Again, although it has been decided upon the construction of cer- tain 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 mem- ber of an ordinary joint-stock trading company 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 ownership of the bankrupt, either if they be actually of a personal natui'e, or declared to be so by the act of Parliament or deed constituting the company. In the latter case, although they might not be personal for ail purposes, yet they will be so as to all persons claiming through the bankrupt, and, consequently, as to the mortgagee.' Where, how- ever, by a clause in the deed of settlement of a banking company, it was stipulated that the company should have a lien on the shares of such proprietors as were customers and indebted to the bank, and that no shares should be transferred without the consent of the direct- ors, and an abstract of these provisions was indorsed on the certifi- cate of the share held by each proprietor, it was held, upon the bank- ruptcy 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.' ' Ex parte Hall, 3 Deac. 405 ; 1 Mont. & A . 324 ; Ex parte Spencer, id. 693 ; & Cli. 365. Nelson v. London Assurance Company, ' Ex parte Lancaster Canal Company, 2 S. & S. 292. Mont. 116 ; Ex parte Vallance, 3 Mont. ' Ex parte Plant, 4 D, & C. 160. 162 1290 Particular Partnerships. A mortgagee of shares in a company must give notice of his incum- brance to the secretary, or his lien will be lost as against a subsequent purchaser for valuable consideration without notice.' Powers of agent or manager of company. Sec. 853. But the powers of a general agent for a mercantile com- pany must be determined by tlie 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 the absence of express directions, fre- quently determine a doubt as to the liability of the latter.' If, there- fore, 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 com- pany by bills of exchange. But then the agent must be careful that he draws, accepts and indorses as agent ; for, otherwise, he will be personally liable for such bills. In the case before Lord Holt,' a bill was drawn by one Mildmay, a servant of the York Buildings Com- pany, payable 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 ujjon the defendant. Bishop. Bishop accepted the bill generally, in his own name, without taking any notice of the company. 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 defeudent, as drawer. The bill was addressed to Messrs. S. & Co., bankers, requiring them to pay to J. L., or order, 3901. sterling, for value received, and to place the same to the account of the trustees of the Chilian 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 defend- ant was one of the directors and shareholders of the company. Bag- nold and Andrews were the agents. It appeared that th'ey were not properly constituted the agents of the company ; but Lord Tenterden said that, even supposing the agents had authoi'ity tobind the defend- 1 CummiDg v. Prescott, 3 You. & Coll. ^ Thomaa v. Bishop, 7 Mod. 180 ; 1 Str. 488. 9.'55. = Chitty on Contracts, 63. * 1 Mood. & Malk. 450. Joint-Stock Companies. 1291 ant by their bills, they had not done so in this case, inasmuch as they had drawn the bill in their own name and not as agents. Unincorporated companies, liability of^ Sec. 854. Joint-stock companies, unless privileged by an act of Par- liament, are amenable to the ordinary law of partnership, which makes it necessary that all the members should be parties to actions or suits brought either by or against them ; for no company, however large, can, without the aid of the legislature, depute a person to act on their behalf, as a party to an action or suit.' Joint-stock compa- nies, therefore, stood under a peculiar disadvantage in this respect,'' before it became the habit to obtain for them, by express enact- ment, the right of suing and being sued through the medium of one of their officers. The acts of Parliament which give them this privilege generally contain, in substance, the following provis- ions : 1st, that all actions and suits at law and in equity, and all jjetitions to found any commission in bankruptcy, to be com- menced or instituted on behalf of the company or copartnership against the debtoi-s of the partnership, whether members of the partner- ship or otherwise, shall be commenced or instituted in the name of the secretary for the time being, or in the name of the person act- ing or officiating as such, or in the name of any one member for the time being, for that purpose to be appointed as the nominal plaintiff, or petitioner on behalf of the company; 2d, that all actions, etc., to be commenced or instituted against the company or copartnership, by any person or persons, whether members of the partnership or other- wise, shall be commenced, etc., against the secretary for the time being of the company, or the person acting or officiating as secretary, or against any one member of the company as the nominal defendant on behalf of the company; 3d, that it shall be lawful and sufficient to state the name of the secretary for the time being, or of the person acting or officiating as such, or of any one member of the company so appointed as aforesaid, and that the death, resignation, removal, or any act of their secretary, or of any one member so appointed, shall ' Radenliurst v. Bates, 3 Bing. 471. standing the fluctuating nature of the 'One case, however, may be noticed, body to whom the bond ia given. For in which a joint-stock company has it must be presumed that the contract- a greater facihty of suing than an ing parties understood the word " com- ordinary partnership has Thus, if a pany" to mean a fluctuating company, bond be given to the trustees of an un- and not that they intended to enter into incorporated company, conditioned for a jiugatory contract. Metcalf v. Bruin, the faithful discharge of certain ser- 12 East, 400. But this will not be the vices to the company, the trustees raa,y, construction of a bond given to a firm in at any time, sue on this bond, notwith- general. ia93 Particular Partnerships. not abate or prejudice any such action, suit, or other proceeding, commenced against, or by, or on behalf of the company. It has been ah-eady remarked that, in the absence of express words giving a right of suit by and against shareholders, these enactments would not be deemed to extend to suits between the partners them- selves. And it may also be noticed, that under these clauses the secretary or clerk by or against whom the actions are to be brought, cannot, if he has any claim for wages against the company, sue him- self, but must, notwithstanding the provisions of the act, sue the company.' The rule that proceedings at law cannot be restrained, except upon the default of the defendant in equity, should seem to be productive of considerable hardship to plaintiffs, who file bills to restrain actions brought against them by the public officer of a company; for compa- nies are always on the watch for any bills that may be filed against them, and the j^ublic officer may readily put in such an answer as shall prevent the common injunction issuing against him. In Thorpe V. Hughes," the plaintiff filed his bill, alleging that he had been fraudulently induced by the defendants, who were the public officer and directors of a banking company, to purchase shares, and that the defendants, the directors, had authorized the public officer to bring an action for the calls. The bill prayed discovery in aid of the defense to the action, and for an injunction in the meantime. The public officer answered, but the common injunction issued against the other defendants for want of an answer. The plaintiffs afterward moved that the injunction might be extended to stay the trial of the action on the ground, which was supported by affidavit, that the action was virtually that of the defendants who had made default. But Lord Cottenham, 0., overruling a previous order of the Vice-Chancellor, refused the motion, on the ground that the injunction could only be sustained against defendants who had actually made default. It seems probable that cases of this nature, as well as questions of equity pleading connected with joint-stock companies, will, amongst many other matters, be made the subject of the new rules to be issued in pursuance of the stat. 3 & 4 Vict., c. 95. Of the management of companies. Sec. 855. One of the great f)eculiarities of companies, as distin- guished from partnerships, is that the management of a coihpany's ' Per Best. C. J., 3 Blug. 471. ^ 4 Myl. & C. 742. Joint-Stock Companies. 1293 business is intrusted to a few chosen individuals, and that the share- holders are deprived of that right of personal interference which is enjoyed by the members of ordinary firms.' The members of com- panies form two bodies, whose interests are or should be the same, but whose powers and functions are different, the one body, consists of the directors, in whom the general powers of management are ves- ted, and the other body consists of the great bulk of shareholders, to whom the directors are accountable, and by whom they are generally appointed. Each of these bodies has its own sphere of action, and its own rights and duties, as will be seen more particularly hereafter. In companies which are not governed either by the Joint-Stock Companies Registration Act, or by the Companies Clauses Consoli- dation Act, or by the Joint-Stock Companies Act, 1856, the special act, charter, or deed of settlement of every company determines how its managing body is to be constituted, and what the powers of that body are. If there is no provision in the special act, charter, or deed of settlement bearing upon the subject, then the majority of the shareholders of the company must determine how its affairs are to be conducted, and to whom, and under what restrictions, the manage- ment of those affairs shall be intrusted." This is the rule which pre- vails in cost-book miniog companies,' and it is not easy to conceive what, except the will of the majority, can determine a matter of this description under the circumstances now supposed. The number of persons composing the managing body of a company is generally fixed by the company's special act, charter, deed of settle- ment, or regulations, and the number making a quorum is also usu- ally thereby fixed. As a general rule, there is no doubt that a power intrusted to a given nnmber of individuals cannot be properly exer- cised by any less number, and, there are several eases in which this principle has been applied to companies, and in which the acts of directors have been held invalid on the ground that they were not done by the requisite number of directors." But it does not, therefore, follow that the number of directors, as originally fixed, cannot be altered by the majority of a meeting of the shareholders, and where the number is not fixed by the legislature or the Crown, it seems that ' See Buraes v. Pennell, 2 Ho. Lo. Ca. * See Kirk v. Bell, 16 Q. B. 390 ; Bo- 520 and 521. This section, as well as the sanquet v. Shortridge, 4 Ex. 699 ; Brown six followiug, are from Lindley on v. Andrews, 13 Jur. 938, Q. B. ; Kings- Partnership . ridge Flour Mill Co . v. Plymouth Grind- » The powers of majorities will be ex- ing Co., 2 Ex. 718 ; Ridley v. Plymouth amined hereafter. Grinding Co., id. 711. See, too, Ex 3 See Tapping on the Cost Book, p. 64. parte Morrison, De G. 589. 1294 Particular Paktxerships. the shareholders may alter it.' Even where tlie number is fixed by an act of Parliament or a charter, the act or charter may be so worded as to be in this respect directory only, and in a case where a call had been made by five out of seven directors, when it ought to have been made by five out of twelve, the Court of Common Pleas refused to set aside a Judgment obtained by the company against a shareholder for the call, although he deposed that when the judgment was obtained ho did not know that there were, in fact, only seven directors instead of twelve, as required by the company's act.' It is to be observed thai the directors of a company are not those only who choose to act, but all those persons who are constituted directors by a company's act, charter, or deed of settlement, and that whether a person once a director has or has not ceased so to be depends (except in the case of his death) upon the rules of the com- pany.' A director who becomes bankrupt, or ceases to attend to his duties, does not thereby necessarily vacate his office. ■* Generally speaking, the members of the managing body are required to possess certain qualifications, and to be apijoiuted in some pre- scribed manner. But it by no means follows that persons who are in fact acting as duly qualified directors will be prevented from so doing by a court of equity, simply because they have been irregularly appoiuted,^ or that the irregularity of their appointment will render all their acts null and void. Persons dealing with them as directors iona fide, and without notice of the irregularity, would, it is con- ceived, be entitled to treat them as the agents of the company, and to hold the company bound by their acts, as if they were its duly appointed directors. But, as between themselves and the sharehold- ers, the ifregularity is of greater importance, and it would be going far to hold that persons de facto, but not (Zc/wre directors, could make valid calls and forfeit shares for their non-payment,* unless there were some provision rendering valid the acts of those de facto in power. Where a person is required to hold a certain number of shares ' Smith V. Golds worthy; 4 Q. B. 430. ' See Miles v. Bough, 3 Q. B. 845 ; 'Thames Haven Dock, etc., Co. v. EdiuburgU, etc., Rail. Co. v. Hebble- Bose, 4 Man. & Gr. 552. See, too. Bar- white, 6 M. & W. 707 ; South Eastern gate V. Sliortridge, 5 Ho. Lo. Ca. 297. Rail. Co. v. Hebblewhite, 12 A. & E. ' Phelps V. Lyle, 10 A. & E. 113. 497 ; Swansea Dock Co. v. Levien, 20 ■" Id. ; see Wilson v. Wilsou, 6 Scott, L. J. Ex. 447 ; Howbeach Coal Co. v. 540. Teague, 8 W. R. 264. 'See Foss v. Harbottle, 3 Ha. 461, and Mozley v. Alston, 1 Ph. 79^. These cases will be noticed hereafter. Joint-Stock Companies. 1395 as a qualification for the office of director, he is not disqualified for the office, simply because he may have mortgaged his shares.' Where the shareholders have power to remove a director for "any reasonable cause," the shareholders are themselves the judges as to what is and what is not a reasonable cause for removal, and their decision will not be intei'fered with, unless a clear case of fraud on their part can be established;^ The shareholders cannot usually exercise any control over the man- agement of the company, except at meetings duly convened. Pro- vision is consequently generally made for the holding of meetings, and it is not a little important that the right to convene them should, to some extent at all events, be exercisable by the shareholders themselves. It is, however, to be observed that, where those who have the right to call a meeting of the shareholders, refuse to exercise that right, for the express purpose of preventing the shareholders from duly assembling, a court of equity will, if necessary, interfere to protect the shareholders against an abuse of power on the part of those intrusted with "the management of the affairs of the comi^any.' In order that a resolution come to at any meeting, whether of directors or of shareholders, may have any legal effect, it is necessary that the meeting should be duly convened, that the resolution should relate to a matter which the meeting is competent to pass a resolution upon, and that the resolution should be duly passed."* As a general rule, a meeting is not duly convened unless every person entitled to attend has notice of the time and place at which it is to be held, so that he may have it in his power to attend or not.' A person who does attend a meeting cannot dispute the validity of what is done on the ground that he had not due notice that the meeting was about to be held ; and if all entitled to notice have it in fact, but not in the precise form in which it ought to have been given them, the proceed- ings of the meeting will not necessarily be invalid.* But still it is absolutely requisite for the protection of those who are to be affected by the resolutions of others that such resolutions shall have no effect ' Cuniming v. Prescott, 3 Y. & 0. Ex. •• It does not follow that because a 488. majority of shareholders can bind the ^Inderwick v. Snell, 3 Mc. & G. 316. minority, the majority present at any See, as to becoming bankrupt, Phelps v. particular meeting can bind the com- I.iy]e, 10 A. & E. 113; absconding from pany. See Howbeach Coal Co. v, creditors, Wilson v. Wilson, 6 Scott, 540. Teague, 8 W. R. 364. 3 See Foss v. Harbottle, 3 Ha. 461. ^R. v. Laughorn, 4 A. & E. 538. Tlie occasions on which a court of ' See British Sugar Refining Co,, 3 K. equity will interfere to control the & J. 408. management of the affairs of a company will be examined hereafter. 1296 Particular Partnerships. unless all entitled to a voice in making them had an opportunity of expressing their views. In a case where directors were empowered to meet once a week at their oflBce, without notice or summons, but on and at such day and hour as they should from time to time agree upon, it was held that a resolution come to by a quorum assem- bled without notice was invalid, inasmuch as no day or hour for the meeting of the directors had ever been fixed. ' The mode in which notice is to be given varies with almost every company. Such general enactments as exist upon the subject will be noticed hereafter. The only general rule which can be laid down is that notice must be given in the manner prescribed by each com l^any's act, charter, deed of settlement, or regulations. It seems that it is not necessary to give notice of the holding of an adjourned meeting to the persons entitled to attend it; it is apparently sufficient if they had notice of the holding of the original meeting.'' But nothing can, without notice, be transacted at an adjourned meeting except the unfinished business of the first meeting.' There are two kinds of meetings, viz.: ordinary and extraordinary.* Ordinary meetings are usually held at stated times and for the trans- action of business generally. Extraordinary meetings are held as occasion may require, for the transaction of some particular business, which ought to be specified in the notice convening the meeting. A resolution passed at an extraordinary meeting, upon a matter for the consideration of which it was not avowedly called, or which was not specified in the notice convening the meeting, is altogether inopera- tive; and although such resolution may have been confirmed at a subsequent ordinary meeting, it will still be invalid, unless it might have been properly passed in the first instance at an ordinary meet- ing, without previous notice of any intention to enter upon the matter to which the resolution relates." One and the same meeting may be both ordinary and extraordinary; ordinary for the purpose of transacting the usual business of the company, and extraordinary for the transaction of some particular business, of which special notice may have been given.' If an ordi- nary meeting is held and adjourned, the adjourned meeting continues to be an ordinary meeting, although special notice is given that it is about to be held for special business.' • Moore v. Hammond, 6 B. & C. 456. ' Lawes' case, 1 De G. Mc. & G. 421. ' See Wills V. Murray, 4 Ex. 843, 863. . « See Cutbill v. Kingdom, 1 Ex. 494 ; ^ R. V. Grimsliaw, 10 Q. B. 747. Graham v. Van Diemen's Land Co., 1 ■• Sometimes called general and H. & N. 541. special. ' Wills v. Murray, 4 Ex. 843. JOIKT-StOCK COMPAIflES. 1297 The power of making by-laws for the regulation of the affairs of a company is not unfrequently reposed in its shareholders ; and it is not uncommonly required that all by-laws shall be sealed with the seal of the company. In such a case nothing which is not so sealed can be regarded as a by-law ; ' nor is an unsealed resolution passed at a meeting of the shareholders of an incorporated company equivalent to a contract under the seal of such company.' At the same time it is clear that, as a general rule, the resolutions of meetings of members of a body corporate do not require to be sealed in order to be binding on its members, as between themselves, and as members. Acts relat- ing to the internal affairs of a corporation, affecting members only, and affecting them merely as members, do not in genei-al require the common seal to I'ender them valid.' By-laws not warranted by the authority which empowers them to be made are altogether illegal. * Where there is no special provision to the contrary, the resolution come to by the majority of those present at a meeting is the resolu- tion of that meeting. Absentees are not entitled to vote by proxy unless they are specially empowered so to do.' "Where voting by proxy is allowed, the appointment of the proxy must be stamped,' and the appointment should specify the particular meeting at which the proxy is empowered to vote, for otherwise the proxy paper will require a thirty-shilling instead of a half-crown stamp.' Absentees cannot effectually urge their ignorance of what took place at meetings which they might have attended had they thought proper so to do, and they are bound by the resolutions come to at a duly convened meeting, provided such resolutions relate to matters upon which the meeting was competent to decide.^ The limits of the power of a majority will be examined hereafter. Minutes of meetings, and the contents of books kept by the officers of a company, are not, as against third persons, evidence for the com- pany, unless expressly made so by act of Parliament." Partnership books are, as a i-ule, evidence against every partner, because every ' Dunston v. Imperial Gas Co., 3 B. & ly this was doubted, Monmouthshire Ad. 135. Canal Co. v. Kendall, 4 B. & Aid. 453. 2 Id. ' See Trinity House of Hull v. Beadle, 3 Grant on Corp. 65. 13 Q. B. 175. * See Calder, etc., Nav. Co. v. Pilling, « See Norwich Yarn Co., 23 Beav 165. 14 M. & W. 76 ; Adley v. Whitstaple ' Hill v. Manchester Water Works Co., 17 Ves. 315 ; 19 id. 304, and 1 Mer. Co., 5 B. & Ad. 866. Compare Alder- 107. son V. Clay, 1 Stark. 405, and The Thet- 6 See Grant on Corp. 256, note q; Com. ford case,' 13 Vin. Ab. 90, pi. 16 ; Ma- Di^. Franchise, F. 11. guire's case, 3 De Q. & S. 31. « R. V. Kelk, 13 A. & E. 559. Former- 163 1298 Particular Partnerships. partner is entitled not only to see them, but, in conjunction with his coiDartners, to determine what shall be inserted and what not ; but this is not the case with shareholders of companies, and consequently tlie books of a company are no more evidence against ordinary mem- bersof the company, than theyare as against strangers. Theinconven- icnce resulting from this principle is obviated in modern acts of Par- liament by making certain things, e. g., the registers of shareholders, and signed minutes of meetings, prima facie evidence as well against shareholders as against strangers. With respect to minutes of meetings, it is usual for acts of Parlia- ment to require that the minutes of every meeting shall be entered in a book, and be signed by the chairman of the meeting, and to declare that the minutes so entered and signed shall be admissible in evidence in courts of justice. In practice, the minutes of a meeting are com- monly made up and entered by the secretary after the meeting is over, and the chairman signs such minutes at a subsequent period (gener- ally the next meeting). It has been frequently urged that a reso- lution made at a meeting, the minutes of which were entered and signed after the meeting was over, could not, by such minutes, be proved to have been made. But this objection has always been over- ruled, even where the minutes of each meeting ouglit in strictness to have been signed at that meeting. ' Companies governed by 7 & 8 Vict., c. 110 — as to the managing body. Sec. 856. The deed of settlement of every company registered under this act is required' to contain provisions: For prescribing the maximum number of directors to be appointed, the number of shares or the amount of interest by which they are to be qualified, the period for which they are to hold oflBce, so that at least one-third of such directors, or the nearest number to one-third, shall retire annually, subject to re-election if thought fit, and for the determination of the persons who shall so retire in each year; For filling up vacancies in the office of the directors as they occur, but not so as to enable the board of directors (if the filling up be assigned to them) to fill up such vacancy for a longer period than until the next general meeting of the company; ' Miles V Bough, 3 Q, B.845 ; South- 675 ; Inglis v. Great Northern Bail. Co., ainpton Dock Co. v. Richards, 1 Man. & 1 M'Queen, 112. Gr. 448; West I.ondon Rail. Co. v. Ber- ' 7 & 8 Vict., c. 110, § 7, sched. A, 13 nard, 3 Q. B. 873; London and Brigli- to 30. ton Bail Co. v, Fairclough, 3 Man. & Gr. Joint-Stock Companies. 1299 For the continuance in oflBce of directors in default of election of new directors ; For regulating the meetings of directors, the quorum thereof, the proceedings thereat, and the adjoui-nment thereof ; For recording the attendance of directors, and reporting the same to th-e shareholders; For the determination of questions upon which the Yotes of the directors may be equally divided; For the appointment of a person to take the chair of the directors, and for supplying any vacancy in the office of chairman; For the appointment of the chairman of the directors, at meetings at which the permanent chairman may nob be present; For regulating the appointment by the directors of officers, clerks, and servants; For recording the proceedings of the directors; For keeping and entering of minutes of such proceedings; For insuring the safe custody of the seal of the company, and for regulating the authority under which it is to be used; For providing for the remuneration of the auditors of the accounts of the company; For providing for the appointment of a secretary or clerk (if any) of the directors; For providing for the receipt, custody, and issue of moneys belong- ing to the company; For providing for the keeping of books of account, and f^ir periodi- cally balancing the same; For keeping the records and papers of the company; For prescribing and regulating the duties and qualifications of offi- cers; For determining what books of account, books of registry, and other documents may be inspected by the shareholders of the com- pany, and for regulating such inspection.' The act requii'es that there shall be three directors at least, and that five years shall be the extreme limit of their appointment.' The act also makes it indispensable that every director shall hold in his own right one share at least in the company/ and shall cease to be a director by becoming bankrupt or insolvent, suspending payment, 'See 7 & 8 Vict., c. 110, ss. 3a, 37, 50, = ij., g. 38 ; as to the effect of mort- and 57 aa to inspection. gaging shares, see Gumming v. Pres- - Id., a. 25, Nn. 13 ; compare this with cott, 3 Y. & C. Ex. 488. sched. A. No. 13. 1300 Particular Partkkbships. compounding with his creditors, being declared lunatic, or by ceasing to hold the number of shares which a director may be required to hold by the company's deed of settlement.' But provision is made for rendering valid the acts of directors notwithstanding some defect in their appointment, or some ground of disqualification may after- ward be discovered." It is expressly declared that a director shall not vote or act as a director on the subject of any contract proposed to be made by or on behalf of the company, and in which he is personally interested ; and that if any contract (other than such as the act speci- fies) is entered into in which a director is interested, the terms of it shall be submitted to the shareholders, and it shall not have any force until approved by them.' This last enactment is very important. Its effect is two-fold. (1) It It renders the interested director incompetent to vote upon or td act as a director with reference to the matter in which he is interested ; and (3) it renders the contract void unless confirmed by the share- holders at such a meeting and in such a manner as are prescribed by the act.'' The meeting must be either the next general meeting, or a meeting specially summoned for the purpose of taking the contract into consideration.' It has been held that a loan by a director to the company is within the enactment, and that if ttie loan has been kept from the knowledge of the shareholders, the company is not bound to repay the money advanced," Unfortunately, however, the propriety of this decision has been questioned. ' The act * expressly declares that the shareholders are not to act in their own behalf in the ordinary management of the concerns of the company otherwise than by means of directors, and provides that, subject to any special provisions in the company's deed, the directors are to have power — To conduct and manage the affairs of the company according to the provisions and subject to the restrictions of the act, and of the deed ■ Id., s. 39. ' Teversham v. Cameron's, etc.. Rail. = I(i., s. 31. Co., 3 De G. & S. 296. ' Id., s. 29. ' See Murray's Executors' case. 5 De ' Ernest v. Nicholls, 6 Ho. Lo. Ca. G. M. & G. 746. See, too, Sheffield and 401; Cartels V. Anchor Ins. Co., 3 H. & Manchester Rail. Co. v. Woodcock, 7 N. 537 ; Poole v. National, etc.. Ass. M. & W. 674. In Bluck v. Malalieu, 5 Soc, id. 687 ; Stear's case, 7 W. B. 665; Jur. (N. S.) 1018, the directors were em- no w reported, 1 Johns. 480. See, as to powered to lend money to the company, the purchase of shares bv directors, hut they were held to have no right to Hodgkinson v. Nat. Live Stock Ins. Co., borrow money from it. 5 Jur. (N. S.) 478, and 969, and in 26 » 7 & 8 Vict., c. 110, s. 37. Beav. 473. 'Murray's Executors' case, 5 De G. M. & G. 746. Joint-Stock Compaxies. 1301 of setHement, and of any by-law, and for that purpose to enter into all such contracts, and do and execute all such acts and deeds as the circumstances may require; To appoint the secretary, if any ; To ajopoint the clerks and servants, and also from time to time, as they see fit; To remove such secretary, clerks, and servants, and to appoint others, as occasion shall require; To appoint other persons for special services, as the concerns of the company may from time to time require; To hold meetings periodically and from time to time, as the con- cerns of the company shall require ; ' To appoint a chairman to preside at all such meetings, and in his absence to appoint a chairman at each such meeting. But it is unlawful fOr the directors, ivithout the sanction of the shareholders, to purchase any shares of the company," or to sell any shares except those forfeited for non-payment of calls, or to lend to each other or to any officer of the company any of the money of the company.' The company's deed is required to contain provisions as to the company's capital and the borrowing of money, and for determining whether the directors may contract debts in conducting the affairs of the company, and if so, whether to any definite extent, and whether, and to what extent, the directors may make or issue promissory notes or accept bills of exchange.* The act requires that, with some few exceptions, all contracts entered into on behalf of the company shall be in writing and signed by two at least of the directors, and be sealed with the seal of the company; and that all such contracts shall be reported to tlie secretary and be entered by him in proper books to be kept for that purpose.' All bills of exchange and promissoi-y notes accepted or made on b6half of a company are requii'ed to be signed by two directors, and to be countersigned by the secretary; indorse- ments may be made by any officer appointed for the purpose; and every bill or note accepted, made, or indorsed on behalf of the com- pany, is required to be reported to the proper officer of the company, who is to enter the same in proper books to be kept for the purpose. * ' The meetingg here referred to are * Id., s. 7, and sched. A.. 33 and 38. meetings of directors. The capital of the company will be ad- 2 See as to the purchases of shares, verted to hereafter. Hodgkinson v. Nat. Live Stock Ins. Co., ' Id. , s. 44. 5 Jur. (N. S.) 478, and 969. « Id , s. 45. «7 & 8 Vict., c. 110, s. 27. 1302 Particular Partnerships. All instruments bearing the seal of the company are required to be signed by at least two of its directors.' As was seen in an earlier part of the work, it is the duty of the directors to keep the " register of shareholders," ' and to allow any shareholder to see it and to have a copy of it or any parb of it on pay- ment of a small fee/ and to give every shareholder entitled to it and requiring it, a certificate of his proprietorship of any share held by him.'' It is also the duty of the directors to keep at every princi- pal place of business of the company an index or abstract of the company's deed of settlement approved by the registrar of joint-stock companies, and a list of the shareholders of the company, and the number of shares held by each, and a list of the directors and officers of the company, and a copy of its by-laws; and any shareholder or person authorized by him in writing is entitled at any reasonable time during the usual hours of business to inspect these documents. ' The shareholders are also entitled to inspect the books in which the proceedings of the company are recorded. ' The duties of the directors as regards the accounts of the company and the transfer of shares, and their power to increase the company's capital to borrow money, make calls, and forfeit shares, will bo alluded to hereafter. As to the shareholders. Sec. 857. It has been already seen that the shareholders must intrust the management of the afTairs of the company to directors.' The company's deed is required to contain, amongst other things, ' provisions: For holding ordinary general meetings of the company once at least in every year at some appointed j)lace and time; For holding extraordinary meetings, either upon the convening of the directors of the company or upon the requisition of not less than five shareholders; For the adjournment of meetings; For the advertisement and notification of meetings and the busi- ness to be transacted thereat; ' Id . , s. 46. holder is not under this section entitled ' 7 & 8 Vict., c. 110, a. 49. as a matter of course to inspect the " Id., s. 150. minutes of the meetings of the direct- ■■ Id., ss. 51, 53. ors. R. v. Maraquita Mining Co., 5 Jur. * Id., s. 57. (N. S.) 725, Q. B. « Id., s. 33. The proceedings of the ' 7 & 8 Vict., c. IIO, s. 27. company are not the same as the pro- " Id., s. 7, and sched. A. 1 to 11. ceedings of the directors, and a share- Joint-Stock Companies. 1303 For defining the business which may be transacted at meetings ordinary and extraordinary, or at adjournments thereof. For the appointment of the chairman at any meeting of the com- pany. For insuring that each shareholder shall have a vote, and, where it is not provided that each shareholder is to have a vote in respect of each share, the appointment of the number of votes to be given by shareholders in respect of any number of shares held by them; For enabling guardians, trustees and committees to vote in respect of the interests of infants, cestuis que trust, lunatics, and idiots; For ascertaining what shall be the majorities or numbers of votes requisite to carry all or any questions, and where a simple majority is to decide ; For prescribing the mode and form of the appointment of proxies to vote in the place of absent shareholders, and for limiting the num- ber of proxies which may be held by any one person; For determining questions where the votes are equally divided, whether by the casting vote of the chairman or otherwise. No shareholder who has not signed the company's deed or a deed referring to it, and paid all his calls, and been registered as a share- holder, is entitled to receive any dividends or profits or to exercise any of the rights conferred by the act upon shareholders; but every registered shareholder who has executed the deed and paid his calls is entitled to be present and take part in the discussions at all general meetings of the company, and to vote in the determination of any question thereat, either in person or by proxy (unless the company's deed precludes shareholders from voting by proxy), and to vote in the choice of directors and of every auditor to be appointed by the shareholders.' "Where, however, a share is registered in the names of more than one person, the one whose name is first on the register is regarded as the holder of such share for the purpose of voting and exercising the privileges conferred on shareholders, and it is to him that all notices required to be given to shareholders are to be given. » The power of making by-laws for the regulation of the shareholders, members, directors, and officers of the company is vested in the share- holders, but no by-law is valid if repugnant to the act or the com- ' 7 & 8 Vict., c. 110, s. 26. The share- less the company's deed declares that holders In companies governed by this they shall not. act are empowered to vote by proxy un- " 7 & 8 Vict., c. 110, s. 56. 1304 Particular Partnerships. pany's deed of settlement.' Every by-law must be in writing, sealed with the seal of the company, and be registered at the oflBce for reg- istering joint-stock companies, and until registered no by-law is of any force.' The appointment of the directors " and of at least one of the audit- ors,' lies with the shareholders, but the directors may be empowered temporarily to fill up vacancies occurring in their office.* Subject to the provisions of the company's deed and to any by-law, every shareholder has a right to inspect as mentioned in the act: 1. The books in which the proceedings of the company are recorded; ' 2. The books of account of the company;' 3. The register of shareholders; ' 4. A copy of the index or abstract of the company's deed approved by the registrar of joint-stock companies; ' 5. A list of the shareholders of the company, and -the number of shares held by each;' 6. A list of the directors and officers of the company; " 7. A copy of its by-laws; ' The shareholders are also entitled to, or can on payment procure, copies of — 1. The company's deed and every thing else registered by or returned to the registrar of joint-stock companies." 2. The company's accounts; " 3. The balance sheets and reports prepared by the company's au- ditors; " 4. The company's by-laws; '^ 5. The register of shareholders; " Companies governed by 8 and 9 Vict., c. 16, as to the managing body. Sec. 858. The Companies Clauses Consolidation Act contains seve- ral important provisions I'elating to the appointment, rotation, powei'S, and proceedings of directors of the companies to which the act applies." The special act of such a company is supposed to fix the number of its directors, and this number cannot be varied except within such limits as may be thereby allowed,'* a certain number of ' 7 and 8 Vict., c. 110, s. 25, No. 11. « Id., s. 50. i'ld., B. 47. »Id., D. 57. ' Id., ss. 25, 26. '" Id., d. 18. * Id., B. 38. " Id., 8. 37. ' Id. Bched. A. No. 13. " Id., ss. 42, 43. • 7 and 8 Vict., c. 110, s. 33 ; see R. v. "W., s. 47. Maraquita Mining Co., 5 Jur. (N. S.) '■'Id.,s. 50. 725, Q. B., and ante. '' See 8 and 9 Vict, c, 16, ss. 81 to 100- 'Id., s. 37. "Id., ss. 81, 82. Joint-Stock Companies. 1305 the directors are required to retire from office in rotation every year, so that all the directors may be changed every three years; the per- sons to retire are to be determined by the directors by ballot if they do not otherwise agree, but the persons to take their place are to be elected by the shareholders." Occasional vacancies are to be supplied by the directors themselves.^ In order that a person may be eligible as a director he must be a shareholder, and hold as many shares as may be required by the company's special act.' Moreover, it is expressly declared that no person holding an office or place of trust or profit under the company, or interested in any contract with the company, is capable of being a director;' and that if any director accepts or holds any other office or place of trust or profit under the company, or is directly or indirectly concerned in any contract with the company, or participates in the profits of any work to be done for it, or ceases to be the holder of the prescribed number of shares, then his office shall become vacant, and he shall cease from voting or acting as a director.' But an exception is made as regards a director whose only interest in a contract with the company arises from his having shares in another company with which such contract is made.^ It will be observed that these provisions do not, like those in 7 and 8 Vict., c. 110, render void a contract made between a director and the company, unless such contract is confirmed by the shareholders; and it was held by the Court of Common Pleas, in Foster v. The Oxford Eail. Co.,' that such a contract was not void. But it must not be forgotten that, although the act does not expressly invalidate con- tracts of this description, there is in equity a well-established princi- ple which precludes any person whose duty it is to take care of others from binding them by any bargain entered into on their behalf with himself, unless all the circumstances relating to such bargain are fully and clearly explained to them. And upon this ground it was held by the House of Lords in The Aberdeen Eail. Co. v. Blaikie,* that a con- tract made between a Scotch railway company and a firm of iron- foufliders, of which one of the company's directors was the managing partner, could not be enforced against the company. It is much to be regretted that the principles on which this case was decided should not be recognized and enforced by courts of law, as they invariably are by courts of equity. 1 8 and 9 Vict., c. 16, ss. 83, 84, 88. 6Id.,s.8t). «Id., S.89. «Id.,s. 87. 3 Id., s. 84. ■" 13 C. B. 200. Id., s. 94. 28&9 Vict., C.16, s. 90; see, as to this, «Id., ss. 95, 96. s. 91. 'Id., s. 97. ' 8 & 9 Vict., c. 16, s. 90. "> Id., s. 98. * Id., s. 93. •• Id. See as to this, Miles v. Bough, 'Id., s. 93. 3Q. B. 845. Joint-Stock Companies. 1307 The proceedings of de facto directors are not invalid, although it may afterward be discovered that there was some defect in their appointment, or that they were disqualified. ' The directors are not personally liable for what they may lawfully do on behalf of the company, and they are entitled to be indemnified by the company against all costs, charges and expenses properly incurred by them in the exercise of the powers intrusted to them/ The directors are required to take se»urity from every person intrusted with the custody or control of the moneys of the company,' and they are empowered to demand from every officer employed by the company an account of all moneys received by him on behalf of the company, and the delivery up of all receipts and vouchers, and payment of the balance which may appear to be owing from him on such account.* A summary remedy is jDrovided in case such a demand is not complied with,* and also against any officer believed to be about to abscond without accounting. As to the shareholders of statutory company. Seo. 859. Ordinaiy general meetings of the shareholders are to be held twice a year, viz., in February and August, unless the com- pany's act otherwise directs.' Extraordinary general meetings may at any time be convened by the directors;" but provision is also made for convening such meetings at the instance of the shareholders.' In order to constitute a meeting, thei-e must be present, either person- ally or by proxy, the quorum prescribed by the special act; and where no quorum is i^rescribed, then shareholders, holding in the aggregate not less than one-twentieth of the capital of the company, and being in number not less than one for every 500?. of such required propor- tion of capital, unless such number would be more than twenty, in which case twenty shareholders, holding not less than one-twentietli of the capital of the company, shall be the quorum.'" Every meeting is to be presided over by a chairman, viz., by the chairman of directors, or in his absence, by the deputy chairman, or in the absence of both, by a director chosen by the meeting, or in the absence of all the directors, by a shareholder similarly chosen." ' Id.,s. 99. 'Id., s. 66. . .2 8 & 9 Vict., c. 16, s. too. * Id., s. 68. 3 Id., s. 109; see Evans v. Coventry, 2 'Id., s. 70. Jur. (N. S.) 5.^7, V. C Kindersley. '" Id., s. 73. For some purposes a less ■■8 & 9 Vict., c. 10, s. 110. quorum is suflBcient, see section 73. 'Id., ss. 111,113. 'ild.,s. 73. « Id., s. 113. 1308 Particular Partiterships. Fourteen days' public notice, at least, of all meetings are to bo given by advertisement; ' and every notice of an extraordinary meet- ing is to specify the purpose for which the meeting is called; " and if any matters, except such as are authorized by the legislature to be done at an ordinai-y meeting, are to be transacted at such a meeting, the notice convening that meeting must state what those matters are.' The shareholders present at any meeting are to proceed with the busi- ness to transact which the meeting shall have been convened, and with no other business; and no business is to be transacted at an adjourned meeting, except that left unfinished at the first meeting.* No shareholder is entitled to vote, unless all the calls upon his shares have been paid; • but with this qualification, and except where the company's special act otherwise provides, every shareholder is entitled to one vote for every share he holds up to ten, and to one additional vote for every additional five shares up to one hundred, and to an addi- tional vote for every ten shares beyond the first hundred. ' Voting by proxy is allowed, subject to certain regulations, easily complied with,' and every proposition is determined by a majority of votes, the chair- man having the casting vote in case of an equality.* Where a share is registered in the names of more persons than one, he whose name stands first on the register is to be treated as the shareholder for all purposes of voting. Lunatic shareholders are entitled to vote by their committees, and infant shareholders by their guardians.'" lu case of a dispute as to whether any resolution has been passed by the required majority, a poll may be demanded ; but, if no poll is demanded, the decision of the chairman is final. " The shareholders elect the directors," but occasional vacancies occurring among them may be filled up by the continuing direct- ors.'* The shareholders also appoint the auditors, and determine the remuneration of the directors, auditors, treasurer and secretary, the amount of money to be borrowed on mortgage, and the extent to which the company's capital may be augmented. '■* Dividends, more- over, can only be declared at a general meeting of the shareholders.'^ ' Id., s. 71, and Bee a. 138. " Id., as. 83, 91. •' Id. " Id., s. 89. ^ Id., and s. 67. "Id., s. 91. See, too, as to auditors, ■•Id., B. 74, and see ss. 67, 69. ss. 101 and 104, and, as to borrowing ' Id., o. 75. money, s. 38, etc. A company must ' Id. pay its secretary for his services, al- ' Id., s. 76, 77. though his remuneration may not have ' 8 & 9 Vict., c. 16, s. 76. been fixed at a. general meeting. Bill "Id-.s. 78. V. Darenth, etc.. Kail. Co.,1 H. & N. ■» Id., s. 79. 305. " Id., s. 80. " 8 & 9 Vict., c. 16, s. 91. Joint-Stock Compakies. 1309 The shareholders can, also, at a meeting specially convened for the purpose, make regulations for the conduct of the directors.' The power of making by-laws may be exercised by the directors, subject to the control of the shareholders. ^ The company's register of shareholders is to be authenticated by the seal of the company at the ordinary general meetings of share- holders. * Shares cannot be forfeited for non-payment of calls without the sanction of a general meeting of shareholders.' The shareholders have a right to inspect : 1. The shareholders' address book ; » 2. The register of mortgages and bonds ; ' 3. The register of consolidated stock ; ' 4. The' company's books of account ; " 5. The company's special act. ' They have also a right to have copies of, or any part of the share- holders' address book, and the company's books of account, and spe- cial act.'" Copies of the company's special act may always be seen by any per- son interested." Of the sale and transfer of shares. Sec. 860. When persons enter into a contract of partnership, their intention ordinarily is that a partnership shall subsist between them- selves and themselves alone. The mutual confidence reposed by each in the other is one of the main elements in the contract, and it is obvious that persons may be willing enough to trust each other, and yet be unwilling to place the same trust in any one else. Hence it is one of the fundamental principles of partnership law that no person can be introduced as a partner without the consent of all those who for the time being are members of the firm. If, therefore, a partner dies, his executors or devisees have no right to insist on being admitted into partnership with the surviving partners, unless some agreement to that efEect has been entered into by them.'" •Id.,B. 90. 'Id.,s. 161. « Id., ss. 90, 124. The by-laws must '» Id., ss. 10, 119,161. be under seal. " Id., s. 161. Printed copies can be ^ Id., a. 9. bought of the queen's printers. '' Id., ss. 31, 33. '^ Pearce v. Chamberlain, 2 Ves.Sr.33; 'Id., s. 10. Crawford v. Hamilton, 3 Madd. 254; * Id., s. 45. Bray v. Fremont, 6 id. 5 , Crawshay v. ^ Id., s. 63. Maule, 1 Swanst. 495; Tatam v. Wil- 8 Id., ss. 117, 119. liams, 3 Ha. 847. 1310 Pahticulae Partxerships. An apparent exception to this rule exists in the case of mining partnerships. Mines are a peculiar species of property, and are in some respects governed by the doctrines of real property law, and in others by the doctrines which regulate trading concerns. Regarding them as real property, and their owners as joint tenants or tenants in common, each partner is held to be at liberty to dispose of his interest in the land without consulting his co-owners; and a transfer of this interest confers upon the transferee all the rights of a part-owner, including a right to an account against the other owners.' But even here, if the persons originally interested in the mine are not only part-owners but also jjartners, a transferee of the share of one of them, although he would become a part-owner with the others, would not become a partner with them in the proper sense of the word. If partners choose to agree that any of them shall be at liberty to introduce any other person into the partnership, there is no reason why they should not, or why, having so agreed, they should not be bound by the agreement.' Persons who enter into such an agreement consent prospectively and once for all to admit into partnership any person who is willing to take advantage of their agreement, and to observe those stipulations, if any, which may be made conditions of his admission. Such an agreement as this is the basis of every part- nership the shares in which are transferable from one person to the other. Those who form such partnerships, and those who join them after they are formed, assent to become partners with any one who is willing to comply with certain conditions.^ As observed in Lovegrove v. Nelson,* " to make a person a partner with two others, their consent must clearly be had, but there is no particular mode or time required for giving that consent ; and if three enter into partnership by a contract which provides that on one retiring, one of the remaining. two, or even a fourth person who is no partner at all, shall name the successor to take the share of the one retiring, it is clear that this would be a valid contract which the court must perform, and that the new partner would come in as entirely by the consent of the other two as if they had adopted him by name." As an ordinary jDartnership is not distinguishable from the persons composing it, and as every change amongst those persons creates a new partnership, it follows that every time a partner transfers his ' See Bentley v. Bates, 4 Y. & C. 182. ^ See Fox v. Clifton, 9 Bing. 119. '' Lovegrove v. Nelson, 3 M. & K. 20. ■■ 3 M. & K. 1. Joint-Stock Companies. 1311 share to a non -partner, the continuity of the firm is broken. In this respect such companies as are not mere partnerships on a large scale differ from ordinary firms, their continuance not being interrupted by changes amongst their members.' Again, the assignee of a share in an ordinary partnership obtains nothing more than a right to have what is due in respect of the transferred share paid to him ; ' whereas the" assignee of a share in a company acquires a right to become a partner to all intents and pur- poses, provided only he complies with such conditions, if any, as may be necessary for the admission of new shareholders generally. Whether a share in a company is transferable at the will of its owner for the time being, or whether its transfer requires the consent of the other shareholders, or of the directors of the company, depends upon the constitution of each company. Speaking generally, even in those cases in which the consent of directors to a transfer is necessary, the obtaining of their consent is regarded so much as a mere matter of form, that the necessity for it does not practically affect the marketable value of the shares. Nor, it is conceived, can directors withhold their consent to a transfer without good reason ; for the power of assenting or dissenting to a transfer is reposed in them as trustees, and they must exercise that power accordingly, and not capriciously.' At the same time, if, in refusing their consent to a transfer, they act bona fide, with a view to the protection of the inter- ests of the company, the exercise of their discretion will not be interfered with.* A consent to a transfer given and acted upon is not invalid on the ground that it has been given informally.' In most companies payment of calls is a condition precedent to the exercise of a right of transferring shares. This subject will be ad- verted to hereafter. As- between a buyer and seller of shares, it is, by the rules of the Stock Exchange, the business of the buyer to procure the consent of the dii'cctors to a transfer." Shares in companies are not all legally transferable in the same way; some are transferable by deed only, some by writing not under seal, ' See Mayhew's case, 5 De Q. Mc. & ' Bargate v. Sliortridge, 5 Ho. Lo. Ca. G. 8S7. 397; Taylor v. Hughes, 3 Jo. & Lat. 34. 2 See Smitli v. Parkes, 16 Beav. 115. " Stray v. Russell, 5 Jur. (N. S.) 1295 ; 3 See Pinkett v. Wright, 3 Ha. 130. affirmed on appeal, see 6 Jur. (N. S.) 168. * Taft V. Harrison, 10 Ha. 489 ; R. v. It was a very hard case. Compare Wil- Liverpool and Manchester Rail. Co., 31 kinson v. Lloyd, 7 Q. B. 37. L. J. Q, B. 884. 1312 Particular Partnerships. some apparently by parol. The mode in which the shares of a given company are transferable depends on the constitution of the com- pany, and on the statute if any, by which it is governed. Shares in companies governed by the Joint-Stock Companies' Acts of 1856-8 are transferable by a writing which is required to be in a given form, and to be executed by the transferor and the transferee.' Shares in companies governed by 7 and 8 Vict., c. 110, or the Com- panies' Clauses Consolidation Act, arc transferable by deed only, and the same was true of shares governed by the Banking Act of 7 and 8 Vict., c. 113. Forms of transfer are given by each of these acts.' The transfer of shares in other companies is not regulated by any general act of Parliament; and shares in cost-book mining companies, although usually transferred by some written document, are appar- ently transferable by parol only. Shares in what are called scrip com- panies are apparently transferable by the delivery of the scrip cer- tificate.^ Whatever may be the legal method of transferring shares, and whether a formal deed is or is not requisite, it is the common prac- tice in the share market for a seller of shares to sign a deed or instru- ment of transfer with the name of the transferee in blank. The buyer then inserts his own name, or without doing so, resells, and hands the blank transfer to the new purchaser who again either inserts his own name as the transferee, or resells and delivers the transfer, still in blank, to the 2'>irchaser from him and so on. The effect of executing transfers in blank, and handing them from one person to another, is very different with respect to different classes of shares. A deed executed by A, and purporting to transfer property to ;— , i. e., to nobody, is altogether inoperative, and consequently, if a share- holder in a company, the shares in which are transferable by deed only, executes a transfer of his shares in blank, he remains owner of the shares and the holders of the deed acquire no other title to the shares than a right to have them properly transferred.* The instru- ment in blank does not at law transfer the ownership in the shares to ' 19 and 30 Vict., c. 47, s. 20. parte Grisewood, 5 id. 1191 ; Ex parte ' 7 and 8 Vict., c. 110, s. 54 ; 8 and 9 id. De Pass, 7 W. H. 683 ; now reported in c. 16, s. 14; 7 and 8 id., c. 113, s. 33. 5 Jur. (N. S.) 1191. As to the neces- Several shareholders may transfer their sity of stamping written agreements for shares to the same person by one deed, the sale of shares transferable without stamped as if the total consideration writing, see Knight v. Barber, 16 M. & money was paid to them jointly. Wills W. 66. V. Bridge, 4 Ex. 193. " Hibblewhite v. M'Morine, 6 M. & W. ' See Ex parte Barclay, 4 Jur. (N. S.) 300 ; Humble v. Langston, 7 id. 517. 1030, now reported in 36 Beav. 177 ; Ex Joint-Stock Compakies. 1313 which it relates, even as between the vendor and the purchaser; nor does the purchaser, by taking such a transfer, contract any obligation at law to procure himself or any one else to be registered as a share- holder, or to indemnify the seller from the consequences of his con- tinuing to be a shareholder as between himself and the company.' But although a blank deed is invalid as a deed, it by no means follows from the cases of Hibblewhite v. McMorine, and Humble v. Langstou, that all transfers in blank are worthless. Those cases decide nothing more than that some shares, viz., those which can only be transferred by deed are not transferable by a document in which the name of the transferee is omitted. The principle of the cases in question may pos- sibly extend to shares in companies governed by the Joint-Stock Com- panies Act of 1856; for the transfer of such shares is by statute required to be executed both by the transferor and by the transferee;" but there are shares, e. g., shares in cost-book mining companies which are transferable without the intervention of any formal document, and a letter signed by a shareholder, and transferring his shares to , amounts, if delivered to a purchaser, to a transfer to him, and authorizes him to fill up the blank with any name he likes.^ A deed of transfer with a blank for the name of the transferee is, as a deed, as invalid in equity as at law, and the shares referred to in it remain in equity as at law the property of the transferor, unless the equitable ownership in them has been changed by some contract into which he has entered by himself or his agents.* But the inva- lidity of a transfer in blank does not invalidate a contract of sale, and it is that contract which determines the equitable ownership of its subject-matter. Now, as there is no law requiring a contract for the sale of shares to be by deed or even in writing, there is nothing to prevent a court of equity from holding a purchaser of shares to his bargain, and from decreeing him to accept the shares he has agreed to buy, and with, them all the liabilities incident thereto. Conse- quently, whether a transfer in blank has been executed or not, a pur- chaser of shares will in equity be decreed at the instance of the seller to take his place as from the time of the making of the contract, or, in other words, to accept a proper transfer of the shares, to procure himself to be registered as a shareholder in respect of them, and to ' Humble v. Langston, 7M. & W. 517; ■* See Tayler v. Great Indian Rail. Co., Sayles v. Blane, 14 Q. B. 305. 5 Jur. (N. S.) 331, and 1087, on appeal. 2 19 and 20 Vict, c. 47, s. 20. 8 See Walker v. Bartlett, 18 C. B. 845. 1314 Particular Partnerships. indemnify the seller from all liabilities accruing in respect of the same shares since the time when they were agreed to be sold.' The forms of transfer given by the various acts are short, and are framed with a view to convenient registration, and although shares may be transfei'red by instruments in other forms, still if they are complicated, and differ substantially from those prescribed, the com- pany need not register them." A t-ransferee of a share does not become a shareholder, nor does a transferor of a share cease to be a shareholder until those forms and ceremonies, which by the constitution of each company are necessary to be observed, have been either duly complied with or waived by com- petent authority. The decisions on this subject having been already examined, need not be again adverted to. The transf e ree of a share in a company acquires, as between him- self and the company no greater rights than the transferor; and this doctrine has been carried so far that it has been held that a transferee is precluded from objecting to conduct which has been sanctioned or acquiesced in by his transferor.' The extent to which a transferee of shares takes upon himself the liabilities of the transferor is exam- ined in other parts of the treatise; it may, however, be observed gen- erally, that the transferee, as between himself and his transferor, takes the place of the latter, not only as regards what is j)assed, but also as regards what is to come. The law relating to the sale of shares may usually be further adverted to in the present place, although in strictness its discussion belongs rather to a treatise on the contract of sale than to a work on partnership. There is nothing illegal at common law in the sale of shares or scrip.' At the same time, if a company or projected company is itself illegal, the sale of its shares or scrip is illegal also." The statute of 7 & 8 Vict. 110, prohibited the sale of shares in a company governed by it until ' after the company had obtained a cer- tificate of complete registration, and even then by any person not ■ See Cheale v. Kenward, 3 De G. & J. ' Ffooks v. South Western Kail. Co., 27 ; Wynne v Price, 3 De G. & S. 310 ; 1 Sm. & G. 168. Shaw V. Fisher, 5 De G. Mac. & G. 596, * See Mayhew's case, 5 De G. Mc. & affirming S. C, 1 Jur. (N. S.) 971, and 3 G. 837. De G. & Sm. 11. In Jackson v. Cocker, ' See Ex parte Barclay, 4 Jur. (N. S.) 4 Beav. 59, a purchaser of scrip was 1080 ; Ex parte Aston, 5 id. 615 and held to be under no such obligations ; 779 ; Ex parte Grisewood, id. 1191 ; but see Beckitt v. Bilbrough, 8 Ha. 188. Bagge's case, 13 Beav. 162. ' Copeland v. North Eastern Rail. Co., « Josephs v. Pebrer, 3 B. & C. 639j 6 E. & B. 377; R. v. General Cemetery Buck v. Buck, 1 Camp. 547. Co., id. 415. Joikt-Stock Companies. 1315 registered as a shareholder;' but the statute is now repealed, except us to insurance companies, and the prohibition in question never extended to railway or other companies requiring the authority of Parliament.' Shares in companies do not fall within the description " public or joint-stock or other public securities" contained in what is commonly called the Stock Jobbing Act, 7 Geo. II, c. 8.' But a contract for their purchase and sale where neither party intends to accept or deliver them, and they only intend to pay " differences " according to the rise or fall of the market, is void as a gaming or wagering contract within 8 & 9 Vict., c. 109, s.-lS." Neither scrip nor shares are goods or chattels or interest in land within the Statute of Frauds, and a contract for the sale of them is therefore valid, although not reduced to writing and signed by either buyer or seller, or by any agent of eiither of them.' At the same time, if a contract for the sale of shares is reduced into writing, that writing is the proper evidence of the contract, and must, there- fore, be properly stamped.* An agreement for the sale of scrip has been decided not to be an agreement made for or relating to the sale of goods, wares, or merchandise within the exemption in the Stamp Act, 55 Geo. Ill, c. 184, sched. pt. 3, tit. Agreement.' Shares and scrip are properly described as goods and chattels in actions for their price.* Scrip and shares are usually bought and sold through brokers,' and a person employing a broker to buy or sell shares for him is, in the absence of evidence to the contrary, presumed to authorize such bro- ker to buy or sell in the manner and upon the terms usual amongst brokers. Now, brokers on the stock exchange are always, in their dealings with each other, treated as principals, and are as between each other considered as personally responsible for all contracts they ' 7 & 8 Vict., c. 110, s. 26 ; Ex parte these last case, Bligh v. Brent, 2 Y. & Neilaon, 3 De G. Mc. & Q. 556. C. Ex. 268 ; Powell v. Jessop, 18 C. B. ■' Young v. Smith, 15 M. & W. 131 ; 336; Walker v. Bartlett, id. 845 ; Brad- Bousfield V. Wilson, 16 id. 185 ; Lawton ley v. Holdsworth, 3 M. & W. 432. v. Hickman, 9 Q. B. 563. « See Knight v. Barber, 16 M. & W. 8 Hewitt v. Price, 4 Man. & Gr. 355 ; 66. Williams v. Tyre, 18 Beav. 366. See, ' Id. too. Ex parte Turner, 3 De G. & J. 46, * Lawson.v. Hickman, 9 Q. B.563. and the cases there cited. ' See as to brokers, Robinson v. Kitch- ■• Grisewood v. Blane, 11 C. B, 539. in, 31 Beav. 365; Baring v. Corrie, 2 B. ^ Not goods and chattels. Humble v. & Aid. 137. In this last case, it is said Mitcliell, 11 A. & E. 205 ; Tempest v. brokers have no business to contract as Kilner. 3 C. B. 349 ; Bowlby v. Bell, id. principals ; but has no application to 384 ; Watson v. Spratley, 10 Ex. 333 ; share-ljrokers, as is evident from the Duncuft V. Albrecht, 13 Sim. 189. Not cases alluded to in the text, interests in land ; see, in addition to 1316 Particular Partkership. may make with each other. If, therefore, a person employs a broker to buy or sell shares for him, he impliedly authorizes such broker to contract to buy or sell as if he were himself a principal, and must consequently indemnify the broker against any loss which he may incur by reason of his having contracted in his own behalf, and of being afterward, without any default of his own, unable duly to com- plete his contract.' The following cases will serve to illustrate this doctrine: In Sutton V. Tatham,' a person ordered a broker to sell for him 350 shares. The broker entered, into a contract for their sale, and was afterward informed that a mistake had been made, and that fifty only were intended to be sold. The broker, not being enabled to deliver the shares which he had agreed to sell, was compelled to make good to the purchaser the difference between the price agreed upon and the price at which the purchaser had procured shares elsewhere. It was held that the broker was entitled to recover this difEerence from his employer. In Baylifle v. Butterworth,' the defendant instructed the plaintiff, a broker, to sell shares for him, which the plaintiff accordingly did. When the time came for the delivery of the shares to the purchaser, the defendant made default and did not furnish them. The plaintiff having been compelled by the rules of the stock exchange to pay the difference between the price agreed to be paid by the purchaser, and that actually paid by him for other shares, was held entitled to recover such difference from the defendant. In these two cases the broker was employed to sell shares. In the next three he was employed to buy them. In Bayley v. Wilkins,* the defendant requested the plaintiff, a bro- ker, to buy shares for him, which the plaintiff accordingly did. At the time of their purchase a call had been made, but such call had not become payable. The plaintiff paid the amount of the call to the selling broker in pursuance of the rules of the stock exchange, and was held entitled to recover the money so paid from the defendant. . In Taylor v. Stray,* the defendant instructed the plaintiff, a broker, ' See, in addition to the cases cited, * 7 C. B. 886. See, as to tlie evidence infra. Young v. Cole, b Bing. N. C. to be adduced by a broker who seeks 724: Child v. Morley, 8 T. R. 610; to recover a call paid by him, M'Ewen Bowlby V. Bell, 3 C. B. 284 ; Simpson v. v. Woods. 2 Car. & K. 330 Band, 1 Ex. 688. '2 C. B. (N. S.) 175 ; see, too. Stray v. « 10 A. & E. 27. Russell, 5 Jur. (N. S.) 1295. ' 1 Ex. 435. Compare this with Bowl- by V. Bell, 3 C. B. 284. Joint-Stock Companies. 1317 to buy some Eoyal British Bank shares for him. The defendant accordingly bought the shares, which were to be paid for on a future day. Before that day arriyed the bank stopped payment, and the defendant refused to take or pay for the shares. The plaintiff there- upon paid for them in compliance with the rules of the stock exchange, and was held entitled to recover the money so paid from the defendant. In Pollock V. Stables,' the plaintiff, in pursuance of the defendant's instructions, bought shares for him which the defendant neglected to take up. The broker who sold them consequently resold them, and thereby a loss was sustained. The plaintiff, who was also a broker, made good this loss, as he was compellable to do by the rules of the stock exchange, and he was held entitled to recover the amount he had paid from the defendant. The above cases establish as a general doctrine that what a broker, employed in buying and selling shares for another person, is compelled by the rules of the stock exchange to pay, in consequence of the non- performance by his employer of the contract entered into on his behalf, is recoverable from him by the broker. The principle of the decisions in question does not, however, extend further than this, viz., that brokers are impliedly authorized by those who employ them, to do what is usual and customary amongst brokers in matters such as those they are employed about. The cases which have been noticed do not show that pei'sons who employ members of the stock exchange are effected by the rules of the exchange without reference to the ques- tion of what is customary amongst its members; and in truth, to non- members, such rules are only important so far as they evidence usage. This is shown by the case of Westropp v. Solomon.' There, the defendant employed the plaintiff, a broker, to sell ten scrip certifi- cates, which the plaintiff did. It afterward appeared that these cer- tificates were forgeries, although neither the plaintiff nor the defendant had any suspicion that such was the case. The committee of the stock exchange made a rule to the effect that the purchasers of the spurious scrip should have a right to demand from the sellers not only repayment of the purchase-money, but also payment of an addi- tional fixed sum. In compliance with this rule, the plaintiff paid to the purchaser from him the money which he had received from the purchaser, and also the additional sum fixed by the rule; but it was held that the plaintiff was only entitled to recover from the defend- ant the money which the purchaser himself could have recovered at > 13 Q. B. 765. 5 8 C. B. 345. 1318 Paeticulae Paetneeship. law, namely, the amount paid by him with interest; and it was held that the rule, having been made after the sale, formed no part of that usage of brokers by which the defendant was bound . A broker instructed to buy shares of a particular kind fulfills his instructions if he buys what are commonly bought and sold as such shares in the share market. Thus, where a broker was instructed to buy " Kentish Coast Kailway Scrip," and he bought what was known as such and was paid for it, it was held that he was not liable to. refund the money he had received, although it turned out that what he had bought was scrip issued without due authority, and was, in fact, utterly worthless.' Upon the same principle, if a broker is told to buy shares and he buys scrip, he will be held to have pursued his authority, if nothing but scrip has found its way into the market, and such scrip has been usually bought and sold as shares, and there is nothing to show that the broker was to wait until shares were issued.^ If a broker is employed to buy shares, he impliedly undertakes that he will either procure them within a reasonable time, or return the money which may have been furnished to him for the purpose of pay- ing for them. And until he has acted upon his authority to buy, it may be revoked, and the money paid to him be demanded back.' But this cannot be done after he has entered into a contract for their pur- chase, and become personally responsible for the due performance of that contract." Accounts sent in by share-brokers to their employers may be shown not to have included charges which ought to have been included, and this is true even where the persons to whom such accounts are sent have dealt with other people upon the faith of the accounts being full and correct.' A broker employed to buy or sell shares in an illegal company, or in a company which by law is not in a position to issue shares, can- not recover from his employer either any commission on the pur- chase or sale, or any money expended for him on account of such shares.' In an action by a purchaser of shares against a seller, for not transfer- ring the shares bought, the purchaser must aver, and if the averment is traversed, prove — (1) that he was ready and willing to pay for the ■ Lambert v. Heath, 15 M. & W. 486. Ex parte Neilson, 3 De (J. Mc. & Q. 556; ^ Mitchell V. Newhall, 15 M. & W. 308. see further as to Illegal sales through 'Fletcher V. Marshall, 15 M. &W. 755. brokers. Buck v. Buck, 1 Camp. 547, ^M'Bwen V. Woods, 11 Q. B. 13. and Bousfield v. Wilson, 16 M. & W. 'Dails V. Lloyd, 12 Q. B 531. 185, both of which have been noticed « Josephs v. Pebrer, 3 B. & Cr. 689 ; already. Joint-Stock Companies. 1319 shares, ' and (2) that he tendered to the seller for his execution a proper instrument of transfer.'-' The necessity for such tender, how- ever, only exists upon the supposition that some formal document is required to render the transfer of the shares complete, and upon the further supposition that the seller has not discharged the purchaser from making the tender.' Again, a seller suing a purchaser for not accepting shares must aver, and if necessary, prove, readiness and will- ingness on his, the seller's part, to transfer those shares to the pur- chaser.* The circumstances that a call is due upon shares agreed to be sold, and that they are not transferable so long as the call remains unpaid, do not disprove readiness and willingness on the part of the seller to transfer, if he was in fact ready and able to pay the calls in question.^ But if the seller cannot obtain the assent of the directors to a transfer to the purchaser, and such assent is necessary by the company's regulations, the seller cannot be treated as ready and will- ing to transfer, he not being in fact able to do so.' A reasonable time for the transfer of shares bought and sold is implied in the contract for sale, and where the sale is made through brokers, the rules of the Stock Exchange fixing the time within which shares sold are to be delivered are admissible in evidence upon the question what is reasonable time, although the buying and selling brokers are not proved to be members of the exchange.' A contract for the sale and purchase of shares does not bind the purchaser to accept what does not answer the description of the shares which he agreed to buy. If, therefore, such sliares do not exist, he is not compellable to pay the price agreed upon, and if he has paid it, he can recover it back as money paid for a consideration ' which has failed.* In Kempson v. Saunders ' it was held that a purchaser of shares in a projected company which was never formed, was entitled to recover back his money from the vendor, although the vendor was not an original subscriber, and had himself purchased the shares from other persons. This case was decided upon the ground that the subject- ' Lawrence v. Knowles, 5 Bing. N. ^ See Wilkinsoa v. Lloyd, 7 Q. B. 27. C. 399. In Tempest v. Kilner, 2 C. B. But, see as to its being the duty of the 300, the averment of readiness and will- seller to obtain tlie consent of the direct- ingness was traversed too largely. ors, Stray v. Eussell, 5 Jur. (N. S.) 5 Stephens v. De Medina, 4 Q. B. 422; 1295, post. Bowlby V. Bell, 3 C. B. 284 ; Green v. ' Stewart v. Cauty, 8 M. & W. 160. Murray, 6 Jur. 728, Q. B. * Watkins v. Huntley, 2 Car. & P. 410; 3 Franklyn v. Lamond, 4 0. B. 687. Westropp v. Solomon, 8 C. B. 345. ■•Hanuuic v. Qoldner, 11 M. & W. '4 Bing. 5. Campare Stent v. Bailis, 849. 2 P. W. 217, 5 Shaw V. Rowley, 16 M. & W. 810. 1320 Particular Partnership. matter of the contract had no existence, there being no company, and consequently no shares in it to buy or sell. Had the contract been for the sale and purchase of the right of the vendor to shares in the company when it should be formed, it could hardly have been held that there was nothing to buy or sell, or that the purchaser could have recovered back his money, although he might not in fact have got any thing of the slightest value for it. A person who sells shares in a company which he knows has no existence is guilty of a fraud for which he is criminally responsible.' But the rule caveat emptor renders it lawful for a person holding shares in an insolvent company to sell them to any one willing to buy them, and it is presumed that, in the absence of misrepresentation by the seller, the buyer is without remedy against him.' Upon the sale of the shares the vendor is bound to do whatever is necessary to enable him to transfer them to the purchaser, and if the vendor makes default, so that the purchaser in fact never gets the shares, he is at liberty to rescind his contract and recover back his money. In Wilkinson v. Lloyd," the defendant had sold shares to the plain- tiff, and had executed a deed transferring them, and signed a certifi- cate stating that the plaintiff was the proprietor of them. The direct- ors of the company, however, refused to recognize any transfer of any shares by the defendant, until an action pending between him and the company should be settled, and it was held that under these circumstances the plaintiff was entitled to have his purchase-money repaid to him. The recent case of Stray v. Russell, however, shows that by the rules of the Stock Exchange it is not the duty of the seller of shares to procure their transfer to the purchaser, and that a person who buys shares through a broker may be compelled to pay for them, although the company may decline to accept him as a shareholder. This ease, it is submitted, requires reconsideration. It has been already seen that shares which are transferable only by deed do not pass by an instrument sealed by the seller, but having a blank for the name of a purchaser.'' If , therefore, a person purchases such shares, and takes a transfer of them in blank, and then resells them, and the purchaser from him refuses to pay for them, an action ',See Macallum v. Turton, 2 Y. & J. '^ 7 Q. B.27. See, also, Lloyd v. Crisp, 183. 5 Taunt. 349. But compare Stray v. 5 See Remfrey v. Butler, 2 Jur. (N, S.) Russell, 5 Jur. (N. S.) 1395. 1297 ; Stray v. Russell, id. 1395. ■• See the cases in the next three notes. Joint-Stock Companies. 1321 by him for the purchaso-money will fail,' as will also an actioa against the purchaser for not procuring himself to be registered as a share- holder and for not indemnifying tlie seller against subsequent calls. ^ Whether shares are transferable by deed or without deed, it is the clear duty of a purchaser to whom shares have been, in fact, trans- ferred, to procure himself to be registered as a shareholder in the place of his vendor, and to indemnify the latter against all calls made subsequently to the transfer, and although it has been held that sub- sequent calls paid by the seller cannot be recovered from the pur- chaser as money paid to his use,' it has been decided that they are recoverable in an action for not registering the transfer, and not indemnifying the transferor against the consequences of his name remaining on the books of the company.* Shares are not unfrequently sold by auction. If the auctioneer sells shares, without disclosing the persons on whose behalf he sells, he will be personally responsible for the due completion of the sale, and will be liable to the purchaser in damages for the non-transfer of the shares . to him.' Moreover if in such a case the auctioneer, when called upon to transfer the shares, refers the purchaser to the owners, it becomes unnecessary for the purchaser to tender a deed of transfer to the auc- tioneer bolpre suing him, for by such a reference the auctioneer dis- charges the purchaser from tendering any deed of transfer to him.* If shares are sold subject to a condition that if they are not paid for by a certain time, the seller shall be at liberty to resell them, and shall be entitled to recover from the purchaser any loss sustained by the resale, and the shares are sold and resold under this condition, the first purchaser cannot be sued for shares bargained and sold, but the contract entered into by him must be declared on specially.' In an action by the seller of shares against the purchaser for not accepting them, the damages are measured by the difference between the conti'act price and the market price at the time of the purchaser's breach of contract,* and it is for the jury to determine when this time ' See Hibblewhite v. M'Morine, 6 M. 5 De Q. Mac. & G. 596, affirming S. C, & W. 300. 1 Jur. (N. S.) 971, and compare Jackson ' Humble v. Langston, 7 M. & W. v. Cocker, 4 Beav. 59. As to the right 517 ; and see Sayles v. Blane, 14 Q. B . of a mortgagee to indemnity from his 305, and 6 Ra. Ca. 79. mortgagor, see Phene v. Gillan, 5 Ha.l. ' Sayles v. Blaue, 14 Q. B. 205, and 6 ' Franklyn v. Lamond, 4 C. B. 637. Ba Ca. 79. ' Id. ^" Walker v. Bartlett, 18 C. B. 845, re- ' Damond v. Davall, 6 Q. B. 1030. versing 8. C, id. 446. See, too. Humble * Shaw v. Holland, 13 M. & W. 136 ; v. Langston, 7 M. & W. 517, and see the Stewart v. Cauty, 8 id. 160 ; Pptt v. following cases in equity, Wynne v. Flather, 5 Ra, C^. 85. Price, 3 De U. & S. 310 ; Shaw v. Fisher, 1322 Particular Partnerships. was.' So, in an action by the purchaser of shares against the seller for not delivering them, the damages are measured by the difference between the contract price and the market price at the time when they ought to have been delivered.^ Where, however, an action is brought for not re-delivering shares lent and agreed to be returned on a given day, the damages are measured by the market price of the shares at the time of the trial,' and the same rule is adopted in esti- mating damages in actions against companies for not delivering shares at the time they ought.'' A court of equity will decree a specific performance of a contract for the purchase and sale of shares,' and will compel the purchaser to pay the price, although it may have been expressed to be paid in the deed of transfer, if, in fact, it was not thus paid,* and will compel him to accept a transfer of the shares he has bought, and to indemnify the seller from all liabilities accruing subsequently to the sale,' and will compel the seller to account for any moneys he may have received .from an improper subsequent sale to another person.' The court has, however, refused to compel a purchaser of scrip to accept shares, and indemnify the selkr from calls upon them,' and to compel an allottee of shares to accept them, and execute the company's deed in respect of them,'" and to compel the promoters of a company to d#iver shares to a subscriber to the company." Before leaving the present subject it will be convenient to allude to the nature of the title a vendor of a share can be required to show. In Morris v. Kearsley," the administrator of a deceased partner agreed to sell the share of the deceased in the partnership to his surviving partner, and to furnish him with an abstract of title to such share. The partnership property consisted in part of land, and it was held that the purchaser was entitled to such evidence of title as is usually given in sales of land, and that the letters of administration were not all that the vendor could be called upon to produce. In Stevens v. ' Id., and see Earned v. Hamilton, * Wilson v. Keating, 5 Jur. (N. S.) 2 Ra. Ca. 624. 815, M. R. 2 Tempest v. Kilner, 3 C. B. 353. ' Wynne v. Price, 3 De G. & S. 810. » Owen V. Routh, 14 C. B. 327. If tlie "' Beckitt v. Bilbrough, 8 Ha. 188. shares have been returned, the damages ' Jackson v. Cocker, 4 Beav. 59. Com- must be limited to the loss caused by pare this with the last case, their detention. Williams v. Archer, '" Sheifield, etc.. Gas Co. v. Harrison, 5 C. B. 818. 17 Beav. 294. •> Cockerell v. Van Dieman's Land Co., " Columbine v. Chichester, 2 Ph. 27. 18 C. B. 454, and 1 C. B. (N. S.) 782. In this case, however, the promoters did ' Cheale v. Kenward , 3 De G. & J . not appear to have any shares which 37 ; Duncuft v. Albrecht, 13 Sim. 189 ; they could allot. Shaw V. Fisher, 3 -De G. & S. 11, and 5 '« 2 Y. & C. Ex. 139. De G. Mc. & G. 596. Joint-Stock Companies. 1323 Guppy,' a partner in a mine had agreed to sell his share to a stranger, and the usual abstract and evidence of title were held to be requisite, and the piirchaser was held not to have waived his objections to the title by entering into pessession of the mine. In Curling v. Flight,^ the executor of a person, registered in the cost-books of several Cornish cost-book mining companies as the owner of shares therein, agreed to sell such shares, and he filed a bill against, the purchaser for specific performance of the agreement. The execu- tor contended that, in support of his title, he was only called upon to prove the entries in the cost-books, and the probate of the deceased shareholder's will ; whereas the purchaser contended that he was entitled to evidence of the title of the companies themselves to the mines alleged to belong to them. The court partially adopted this view; and held that although the purchaser was not entitled to such evidence as is usually given on the sale of real estates, he was never- theless entitled to know what title the companies had to the property they worked, and to be satisfied that the vendor really had something to sell besides shai'es on paper. In Shaw v. Fisher,' a suit was instituted against the purchaser at an auction of certain railway shares, to compel him to complete his purchase ; it was held that the defendant was not bound to complete without evidence of the vendor's title, and that a purchaser of shares was entitled to have the details of a chancery suit gone through, and a reference as to the plaintifE's title was accordingly directed. The vend- or's bill was ultimately dismissed, on the ground that, after the sale to the defendant, the plaintiff had re-sold the same shares to another person, and had, therefore, abandoned the contract -sought to be enforced against the defendant. The case of Curling v. Flight is quite suiBcient to render it prudent for a vendor of shares in a company to stipulate that he shall not be required to adduce any evidence of the title of the company to any property whatever, or any evidence of his own title, except the reg- istry of himself as a shareholder in respect to the shares offered for sale. Of the relinquishment of shares and of the right to retire. Sec. 861. Subject to a qualification which will be presently men- ' 3 Russ. 171. '3 De G. & S. 11, and 5 De G. Mac. i' 6 Ha. 41, and 2 Ph. 613. See Hare &a.596,whereaMaster's report is given. V. Waring, 3 M. & W. 362, as to evi- dence of title by entries in a company's books. 1324 Particular Partnerships. tioned, a member of an ordinary firm can surrender his share and interest in the firm to his copartners, or any of them, upon any terms to which he and they may agree. But there is only one method by which a partner can retire from a firm witliout the consent of his copartners, and that is, by dissolving the firm. In order to avoid the necessity of a general dissolution when a partner may wish to retire special provisions are frequently introduced into partnership articles, but it is not unfrequently found that, owing to unforeseen circum- stances, these provisions cannot be carried into effect, and, when that is the case, a dissolution, with its usual consequences, must take place if a partner is to retire otherwise than by the consent of his copartners.' The qualification above alluded to has relation to a partner's retire- ment froni an insolvent firm. A partner desirous of retiring from an insolvent firm is at perfect liberty to sell his interest in it for any sum the continuing partners think proper to give him, and a sale by him to them cannot be set aside or impeached as a fraud upon the creditors of the firm, unless there be clear evidence aliunde- of such fraud.' At the same time, the present share of a partner in an insolv- ent firm' is obviously less than nothing, whatever may be the amount of the capital brought in by him. Consequently, a partner who retires from an insolvent firm and withdraws from it a sum of money which he is pleased to call his share, is defrauding the creditors of the firm, and such a transaction cannot stand, and it may be impeached by the assignees in bankruptcy of the continuing firm." To proceedings instituted by the assignees to impeach such a trans- action it is no answer to say that the bankrupts themselves were bound by it, for the assignees represent the creditors, and can impeach any transaction which is a fraud as against them, although the bankrupts themselves might not be in a position to do so.' Upon similar grounds, if a party relinquishes his share in a part- nership to his copartners upon such terms and under such circum- stances as to render that relinquishment a fraud upon his creditors, ' See Cook v, Collingridge, Jac. 607 ; the joint assets are less than the joint Kershaw v. Matthews, 3 Euss. 62 ; liabilities. Such a firm is insolvent Madgwick v. Wimble, 6 Beav. 495; whatever the wealth of the individual Downs v. Collins, 6 Ha. 418. Compare partners composing it maybe. See Simons v. Leonard, 3 Ha. 581 ; Pettyt Mont. & McAr. V. Janeson, 6 Madd. 146. * See Anderson v. Maltby, 4 Bro. C. ■■^ See Ex parte Peake, 1 Madd. 346 ; C. 423, and 3 Ves. Jr. 344. Parker t. Ramshottom, 3 B. & C. 357; 'Id., 3 Ves. Jr. 255; and see Biliter Ex parte Birch, 2 Ves. J. 360, note ; Ex v. Young, 6 E. & B. 40; Tyrrell v. parte Carpenter, Mont. & McAr. 1. Hope, 3 Atk. 562. ^An i*isolvent firm is one in which Joint-Stock Companies. 3325 and he ' then becomes bankrupt, his assignees will be entitled to rescind the transaction. Laying aside, however, all such considerations as these it may be said : 1. That it is competent for a partner to retire with the consent of his copartners at any time and upon any terms ; 2. That it is competent for him to retire without their consent by dissolving the firm, if he is in a position to do so ; 3. That it is not competent for a partner to retire from a partner- ship which he cannot dissolve and from which his copartners are not willing that he should retire. A shareholder may retire either by transferring his shares to a per- son who takes his place, or by relinquishing his shares to the company. The first mode of retiring was sufficiently considered in the last sec- tion, and it is, therefore, only necessary to allude in the present place to the subject of relinquishment or surrender of shares. There can be no question that a shareholder may surrender oj.- relin- quish his shares, if all his coshareholders agree to his so doing, and, as regards cost-book mining companies, the right of a shareholder to retire from the company upon the relinquisment of his shares and payment of what may be due from him to the company is established by custom, and is, therefore, imported into the contract by which the members of such company are mutually bound.' The assent of the shareholders to the retirement of any of them may be given generally, and once for all, or specifically on every occasion on which a shareholder seeks to retire, and it may, in either case, be given expressly or impliedly. Hence, the importance of ascertaining the practice of a company as regards the retirement of its members, for, although the written regulations of the company may be silent upon the retirement of members, and, although no express consent to some particular retirement may even have been obtained from all the members, yet such retirement may be valid on the .ground that it is authorized and warranted by an agreement between all the shareholders evidenced by the practice of the com- pany in other cases. Upon this principle it was held, in a recent case, that a shareholder in a cost-book mining company who had been allowed at a general meeting to surrender his shares without ' See as to this Fenn's case, 4 De G. Birch's case, 3 De Q. & J. 10; Loft- Mac. & G. 385, and 1 Sm. &G.36; Bod- house's case, id. 69; Northey v. John- win United Mines, 33 Beav. 370; son, 19 L. T. 104. 1326 Paeticulae Paetnerships. paying the arrears of calls upon him, had ceased to be a shareholder ;' for it was shown to have been the practice of the company to allow shareholders 'to retire upon any terms agreed upon at general meet- ings. It must not, however, be concluded from this case that the retire- ment of a shareholder by surrendering his shares is one of those matters as to which a majority of members binds a minority, or as to which directors have any implied authority to represent the company. Both principle and authority are clearly opposed to any such doctrine.'' Every partner and every shareholder is under obligations to all the others, from which he cannot be released without their consent, expressed or implied; and in the absence of evidence to the contrary, it cannot be inferred that the giving or withholding of consent to such an important matter as the discharge of a partner or shareholder from those obligations, has been intrusted by all the shareholders to some of them only, or to the persons deputed to carry on the business in which all are interested. The authorities upon this point are numerous and conclusive. They relate more particularly to the question whether a shareholder who has relinquished his shares upon terms agreed upon between him- self and the directors, or the majority at a meeting of the shareholders of a company, is or is not, upon the winding-up of the company, lia- ble to be made a contributory ; and the authorities alluded to have established that such a shareholder is liable to be a contributory unless his retirement is warranted by the constitution of the company, or has been authorized or sanctioned by all the members composing it. The following are the leading authorities upon this subject:" Morgan's case.^ The company's deed authorized the directors to buy up, out of certain specified funds of the company, any shares which might be offered for sale. An extraordinary general meeting resolved that if any shareholder should be desirous of withdrawiiig from the company, the directors should be at liberty to purchase his shares upon certain specified terms. A shareholder acted upon this ' Bodwin United Mines, 23 Beav. 370. 3 Jo. & Lat. 34, and Bargate v. Short- ^ The Plate Glass, etc., Co. v. Sunley, ridge, 5 Ho. Lo. Ca. 397. 8 B. & B. 47, is not inconsistent witli *1 De G. & S. 750, and 1 Mac. & G. this or with the cases referred to in the 235. Richmond's Executor's case, 3 De text ; in that case the demurrer admitted G. & Sm. 96, and Lawes' case, 1 De G. that the company had accepted the sur- Mac. & G. 431 , were similar decisions reader of the shares then in question, with respect to other sliareholders in ' Compare them upon the effect of the same company. Compare Kent v . acquiescence, and the doctrine of estop- Jackson, 14 Beav. 867, and 3 De G. Mac. pel by conduct, with Taylor v. Hughes, & G. 49. Joint-Stock Companies. 1327 resolution, complied with the terms, and sold his shares to the com- pany. But it was held that the resolution was not binding on the com- pany, and that the shareholder in question was properly made a con- tributory, although nearly five years had elapsed since his withdrawal. Stanhope's case.' The directors had power generally to act as might appear to them best for the interest of the company. A dispute arose amongst them, and one of them retired, and his shares were surrendered and canceled. It was held that his retirement was un- authorized, and he was put on the list of contributors ten years after his shares had been canceled. Hunt's case.' The directors of a company, disagreeing as to the mode of managing its affairs, and being divided into two parties, it was resolved that one of the two parties should retire, and that the other should take the management of the company and relieve the first from their liabilities. The directors composing one of the two parties did accordingly retire and relinquish their shares in favor of the company; but it was held that their retirement was altogether unauthorized and invalid, and that they were contributories on the winding up of the company. These cases sufficiently establish the doctrine that in the absence of a special authority enabling them so to do, directors have no power to bind the company by buying each other out, or by buying out shareholders, or by accepting the surrender or relinc^uishment of shares to the company.' Moreover, if the directors of a company misapply its funds by buying up shares in the company, they are compellable to make good to the company not only the money actually so expended, but also the whole amount which was or would have become jpayable to the company by the holders of the shares bought up.* The company is entitled to require that the directors shall stand in the place of those whose shares they have wrongfully pur- chased with the moneys of the company.' '3 De (J. & H. 198. See, too, Daniell's Bail. Co., 20 Beav. 384; Walker's case, case, 23 Beav. 43, affirmed 3 Jur. (N. S.) 3 Jur. (N. 8.) 1316, L. J.; Playfair v. 803; Walter's case, 3 De G. & S. 244; Birmingham, Bristol, etc., Co., 1 Rail. Holt's case, 1 Sim. (N. S.) 389 ; and com- Ca. 640 ; Hodgkinson v. National Live pare Cockburn's case, 4 De G. & S. 177, Stock Ina. Co., 5 Jur. (N. S.) 478, and and Busk's case, 3 id. 267, and observe 960, now also reported in' 36 Beav. 478 ; the larger powers of the directors in the Burt v. British Nation. Co., id. 355 and first, and the adoption of their acts in 6i3. the last, of these two cases. ■• Evans v. Coventry, 2 Jur. (N. S.) 557, * 33 Beav. 55. See, too, Bennett's V . C. Kindersley ; compare Kent v . case, 18 Beav. 339, and 5 De G. Mac. & Jackson, 14 Beav. 367, and 3 De (J. Mac. G. 384; Richmond's case, and Painter's & G. 49. case, 4 K. & J. 305. » Id. ^ See, further, Harris v. North Devon 13;i8 Paeticular Partnerships. It is necessary, however, to distinguish the retirement of a share- holder from the refusal of a person to be a shareholder in a concern which he never agreed to join;' and it has very properly been held that the principle of the above decisions does not apply to the case of a person who, having taken shares in a company formed for given objects, relinquishes such shares and retires from the company upon a change being made in those objects without his consent." It is further necessary to distinguish the retirement of a share- holder by relinquishing his share to the company, from his retirement by transferring his shares to some or one of the directors of the company upon their own individual account. Por whilst in the absence of special authority, it is not competent for directors to accept on behalf of a company the surrender of shares held in the company, it is as competent for the directors of a company as for anybody else, to accept shares in the company from such sharehold- ers as may be willing to transfer them in the ordinary way. Conse- quently an agreement between the directors and some of the share- holders of a company, to the eflect that the latter shall relinquish their shares and transfer them to the directors, is not ultra vires, or in any way illegal, if the agreement is with the directors as individ- uals, and no; with them as representing the company.' Upon the same principle, if a shareholder transfers his shares to a director as to an ordinary individual, and without notice that the director is act- ing on behalf of the company, the transferor does effectually retire from the company, although had he known that he was in fact sur- rendering his shares to the company, the surrender would have been invalid.'' Of the forfeiture of shares and of the right to expel. Sec. 863. In the absence of an express agreement to that effect, there is no right on the part of any of the members of an ordinary part- nership to expel any other member. Nor, in the absence of express agreement, can any of the members of an ordinary partnership for- feit the share of any other member, or compel him to quit the firm on taking what is due to him. As there is no method except a disso- lution by which a partner can retire against the will of his copart- ' See Pirn's case, 3 De G. & S. 11, and ' Haddon v. Ayres, 5 Jur. (N. S.) 408; 1 Mac. & G. 391 ; Henessy's case, 2 Mac. see, too, Jessopp's case, 3 De G. & J. & G. 301, and 3 De G. & S. 191, as to 638. See Barker y. Allen, 8 W. H. 137. placing shares in a person's name with- * See HoUwey's case, 1 De G. & S. out authority. 777; Bagge's case, 13 Beav. 163; Es « Mey er'a case, 16 Beav. 383. parte Nicol, 3 Jur. (N. S.) 305. Joint-Stock Compasties. 1339 ners, so there is no method except a dissolution by which one partner can be got rid of against his own will.' The consequence of this is, that when partners disagree and cannot dissolve except with the concurrence of all, it is not unusual for some of them so to conduct themselves toward another as, if possible, to drive him to agree to a dissolution. But it need hardly be said that a scheme of this kind will, if possible, be frustrated by a court of equity, which in such a case will interfere without dissolving the partnership.' With a view to facilitate the removal of a partner who misconducts himself, it is not unfrequently agreed that a power to expel shall be exercisable in certain events and under certain restrictions. These expulsion clauses, as they are termed, will be alluded to hereafter in the chapter on the construction of partnership agreements; but it may be observed in passing, that such clauses are always construed strictly, and that no expulsion under them will be effectual unless the expelling partners have acted with the utmost good faith.^ Companies have no power to forfeit the shares of their members, or of subscribers who have not yet become members, unless such power is specially conferred upon them.* Moreover, a power to for- feit, specially conferred, must, in order tp be effectually exercised, be pursued with the greatest exactness,' and must be exercised with per- fect lona fides; for it is a trust the execution of which will be nar- rowly scanned by a court of equity.* The right to forfeit shares is generally arrogated in cases where a shareholder will not pay to the company what is due to it from him in respect of his shares; and it is not an uncommon opinion amongst non-lawyers that a right to forfeit in such a case is possessed as a matter of course by directors. But this opinion is erroneous, for, as already stated, a right to forfeit exists only when specially conferred, ' See Hart v. Clarke, 6 De G.' Mac. & * See as to the insufficiency of notices, G. 233, and on appeal, Clarke v. Hart, 6 etc., Watson v. Bales, 23 Beav. 294 ; Ho. Lo. Ca. 633 ; Crawshay v. Collins, Van Diemen's Land Co. v. Cockerell, 1 15 Ves. 336 ; Featherstonliaugh v. Pen- C. B. (N. S.) 733 ; affirming Cockerell v. wick, 17 id. 309. Van Diemen's Land Co., 18C. B. 454; ' See Fairthorne v. Weston, 3 Ha. Edinburgh, Leith, etc., Rail. Co. v. Heb- 387. blewhite, 6 M. & W. 707 ; Loudon and 8 See Blisset v. Daniel, 10 Ha. 493. Brighton Rail. Co. v. Fairclough, 2 * Hart V. Clarke, 6 De G. Mac. & G. Man. & Gr. 674. Compare Graham v. 333, and 6 Ho. Lo. Ca. 633 ; Norman v. Van Diemen's Land Co., 1 H. & N. 541. Mitchell, 5 De G. Mac. & G. 648 ; Bar- « Harris v. North Devon Rail. Co., 20 ton's case, 4 Drew. 535. As to com- Beav. 384 ; Richmond's case, and Pain- panies partly English and partly for- ter's case, 4 K. & J. 305 ; Stubbs v. Lis- eign, see Ludlow v. Dutch Rhenish ter, 1 Y. & C. C. C. 81. Rail. Co., 31 Beav. 43. 167 ] 330 Particular Partnerships. and even a majority of shareholders cannot confer it unless ecipow- cred so to do by the company's act, charter, deed of settlement, or regulations.' There is no authority for the proposition that by the custom which governs cost-book mining companies, the shares of a member of such a company can be forfeited for non-payment of calls or for not con- tributing to the expense of working the company's mine.' The only general legislative enactments now in force,'* which con- fer on companies the power of forfeiting the shares of their members, are the Ogmpanies Clauses Consolidation Act and the Joint Stock Companies Act of 1856, both of which require notice. Suits in equity between joint-stock companies and strangers. Sec. 863. The difficulties attendant upon suits in equity, in which joint-stock companies are concerned, arising from the great number of persons whose interests are affected, have as regards suits between the company and strangers, been g;reatly diminished by the power now very generally granted to them, to sue and be sued in their reg- istered name or in the name of some public officer, and by the prin- ciple now recognized by the court of equity 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 them- selves 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 companies by the authority of Parliament. Grounds on w^hich equity will interfere. Sec. 864. In reference to the powers given to such of these compa- nies as are incorporated by act of Parliament, Lord Oottenham made ' Barton's case, 4 Drew. 535, aflB.rmed niau Co., 18 Q. B. 736 ; Beresford's case, on appeal, 5 Jur. (N. S.) 430. 2 Mac. & G. 197, and 8 De G. & S. 175 ; = See Hart v. Clarke, 6 De G. Mac. & Bailey's case, 15 .Tur. 39 ; but if there is Q. 233. and 6 Ho. Lo. Ca. 633. no such clause it will be otherwise, Bar- ^ The 7 & 8 Vict., c. 118, s. 37, provided ton's case, 4 Drew. 535, and on appeal, for forfeiture, but the 7&8Vlct.,c. 5 Jur. (N. S.) 430. 110 did not. Companies governed by ^ " That where the parties interested this act possess the right of forfeiting are numerous, and the suit is for an ob- shares under their deed of settlement, ject common to them all, some of the if they possess it at all. It may be law- body may maintain a bill on behalf of fully provided in the deed that the themselves and of the others, is estab- shares of subscribers who will not exe- lished." Lord Cottenham in Taylor v. cute it may be forfeited, and a forfeiture Salmon, 4 Myl. & Cr. 143 ; see, also, the of the shares of a subscriber who has Vice- Chancellor's observations in Long not oxecuted the deed will in such a v. Yonge, 2 Sim. 385. case be valid, Stewart v. Anglo-Califor- Joijs-t-Stock Companies. 1331 the following observations in Webb v. The Manchester & Leeds Rail- way Company:' "The powers are so large, it maybe necessary for the benefit of the public, 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 rea- sonable doubt as to the extent of their powers, they must go else- where and get enlarged powers, but they will get none from me by way of construction of their act of Parliament. These observations indicate the general principles upon which 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 Robinson v. Lord Byron,' and Lane v. Newdigate,* 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 Glamorgan- shire 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 ease relating to a street near the exchange), 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 procee'd upon the ground of nuisance, but agree- ment, and appears to have been, like Franklin v. Tuton,* not a case of injunction, but a decree on a bill for specific performance. On the other hand, 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 Byron," and urged to direct that a ditch should be filled up, as well as the frirther 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 1 4 Myl. & Cr. 120. ' 2 Atk. 83. ^Ede'n on Injunctions, 331. '5 Mad. 469. 3 1 Bro. C. C. 588. '1 Ves. Sen. 543. •> 10 Ves. 192. '" 1 Ves. Jun. 140. ' 1 Myl. & K. 183. " 1 Bro. C. C. 588. » Ambler, 160. 1J32 Pakticular Partnerships. 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 utter- most verge of all th'e former cases, and indirectly to order something to be 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 difiQculty of mak- ing an order that the repairs should be done. Sir Samuel Eomilly said it was no more, in effect, than Lord Thurlow had ordered in Eob- inson v. Lord Byron; but Lord Eldon appears to have thought other- wise, and he refused the order as prayed, directing 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, Blackmore v. The Glamorganshire Canal Navigation, it Avas 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. In an earlier stage of the same case,^ Lord Eldon made the follow- ing observations respecting the interference of the Court of Chan- cery with certain of these companies which have obtained the author- ity 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 gi-eat authority, and say that, when I look upon these acts of Parliament, I regard them all in the light of con- tracts made by the legislature, on behalf of every person interested in any thing to be done under them; and I have no hesitation in assert- ing 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 administration under our constitution. Such acts of Parliament have now become extremely numerous, and from their number and operation they so much affect individuals that I aj)prehend those who come for them to Parliament do, in effect, undertake that they shall do and submit to whatever the legislature empowers and compels them to do, and that they shall do nothing ' 10 Ves. 192. keep the canals, banks or works out of ^ In Lane v. TSTewdigate, 10 Ves. 193, repair, by diverting the water, or pre- an order specifically to repair the banks venting it by the use of locks from re- of a canal, and stop-gates, and other mainiug in the canals, or by continuing works, was refused. But the effect the removal of a stop-gate, was obtained by an order to restrain, ' Blakemore v. Glamorganshire Canal impeding the plaintiff from navigating. Navigation, 1 Myl. & K. 163. using and enjoying, by continuing to Joint-Stock Companies. 1333 else; that they shall do and shall forbear all that they are thereby required to do and 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 opera- tions, where a canal is in progress of formation. In such a ease it may be of very little consequence to A B, whether the canal isbrough.t to his lands through the lands of D, or through those of E F; nev- ertheless, if the legislature has said the canal shall be brought to the lands of A B from the lands of B F, and not of D, this court would never permit the parties to bring- the canal to the lands of A B from the lands of C D ; 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 sub- jects 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 B 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 acts. There is another con- sideration to which, I apprehend, this court would feel very much inclined to attend. Individuals 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 line through which the canal or railway is to pass. I agree that parties must submit to that, if such be the will of the legisla- ture : but I say that if individuals go to Parliament, and Parliament, on being satisfied that the railway or canal can be made at an expense of J say 100,000?., closes with their application, and forms them into a 1334 Particular Partnerships. company, with power to raise money to that amount; that authority is given them by Pai-liament, 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 undertaking, on a representa- tion that 100,000?. would enable them to complete it, and if they find afterward that 100,000Z. is not enough for that purpose, this court would, I think, find it very difiicult to allow them to proceed with the work until 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 tlieir powers. There is an agreement on the part of those who. satisfy Par- liament that they can and will do such a work for such a sum of money ; and, ujjon 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 with the deception?" In Lee v. Milner,' Alderson, B., said: "These acts of Parliament have been called Parliamentary bargains made with each of the land- owners. Perhaps, more correctly, they ought to be treated as condi- tional powers given by Parliament to take the' land of the different proprietors through whose estates the works are to proceed. Each landholdei', therefore, has a right to have the powers strictly and lit- erally 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 car- rying into effect the bargain between 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 Blakemorc v. The Glamorganshire Canal Com- pany,' 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 Pj but if the legislature has said it shall be brought through the lands of E P, the Court of Chancery would enjoin them from bringing it through the lands of C D.' But this expression, I apprehend, means this, that only those lands of A B, which the legislature has given them authority to take, viz., those adjoining the lands of E P, shall be taken. This is, therefore, but the first branch of the proposition which I have stated, that the power given by Parliament as regards the lands of A B shall be strictly and literally performed. But Lord Eldon went further in that case and ' 3 You. & Coll. 611 . n Myl. & K. 163. Joint-Stock Compaities. 1335 directed issues to be tried. Those issaes 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 proposition 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 Eegent's Canal Company could not, for the sum which they had to raise, complete their works, and if that were clearly made out, Lord El don says, in the case before referred to, that the 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 contemplated 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 railway 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 performed, 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. This is the case here, and on this ground I should be prepared to discontinue the injunction." But in Salmon v. Eandall,' 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 Cambridge, for the purposes of the act, is not entitled to restrain them by injunc- tion from taking the steps prescribed by the acts for obtaining posses- sion of the property, until they shall have shown a sufficient fund in hand to satisfy the price which may be awarded to him, or until they shall have shown the means by which they propose to procure it. In this case the Vice-Chancellor 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 Cotten- ham observed: "In support of his view the Vice-Chancellor referred to cases before Lord Bldon, The Mayor of King's Lynn v. Pemberton," > 3 Myl. & Cr. 439. = 1 Swanst. 244. 1336 Paiiticular Partnerships. and Agar v. The Regent's Canal Company, which is mentioned in the note to that case. In the judgment of Lord Eldon, The Mayor of King's Lynn t. Pemberton, we have a statement by Lord Eldon him- self of the ground on which he proceeded in the case of Agar v. The Eegent's Canal Company. Lord Eldon there said: 'In the case 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 undertaking, 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 specula- tors 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 undertaking." His Lordship then refers to another case which does not appear to me to have any application to the pres- ent. 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 installments, 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 practiced 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 principle 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 bur- thens on individuals by interfering with their private rights and pri- vate property, for the purpose of obtaining some great public good, if the court sees that the undertaking cannot be completed, and, therefore, 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 sac- rifice, under the circumstances, and until it appears that the pub- lic will derive the proposed benefit from it. It is impossible to sup- pose that Lord Eldon could have meant that, after an act of Parlia- ment has been passed giving certain powers, and authorizing a body of persons to carry on certain works, those against whose rights such works are to be carried into effect are to come into this court and say, ' 1 Swanst. 350. Joint-Stock Companies. 1337 ' "We will undertake to prove that you cannot, with the money which you have in hand, carry those works into effect;' and that, therefore, and immediately, in that state of circumstances the court is to inter- fere. 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 decis- ion 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 plaintiffs, and Lord Eldon refused the injunction. One reason stated in answer to the applica- tion was that, although there appeared to be a deficiency of funds to enable the company to complete their work, they were applying to Parliament to get further powers — not that they had obtained further powers, but that they were applying for them. Lord Eldon upon that observed, 'A peculiarity in this case is the pending application to Parliament.' I do not perceive how that can make any difference, because it is open to all companies, and to all parties, to apply to Parliament. If they get a new act, that might alter the case ; but how the circumstance 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 supposed to have laid down in Agar v. The Regent's Canal Com- pany. "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 princi- ple of that case, taking it in the way assumed, was not that the com- pany had no power to purchase the land they proposed to purchase, 168 1338 Paeticulae Partneeships. but that they did not appear to have the means of carrpng into effect the whole of the plan they had projected, and that, therefore, tlie ground on which they acted in taking from the individual 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 purpose 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 princi- ple, 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, where- ever 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 paying for the property so proposed to be purchased or taken, but that the money which they have, and mean 'to apply for the purpose, 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 Lordship, and it would be quite a new principle to con- tend 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 ask the purchaser, where did you get the money from, with which you are to pay for the property you are purchasing of me ? " ' When will enjoin. Sec. 865. The ordinary case of interference by injunction is where the company commit a direct breach of the contract they have made with the legislature, as by attempting a deviation of the line m irked out by Parliament,' or taking land which they do not require for a bona ' In regard to partnerships in general, can proceed against his ultimate share when a judgment has been obtained in the property of the firm, which can against the firm, a court of chancery be only ascertained upon a final settle- will compel the creditor to exhaust the ment of accounts. In Ohio. Walker's firm property before proceeding against Introd. to Amer. Law, 218-9. that of the individual partners. In like ^"I have stated, and I have already manner, when a judgment has been re- more than once acted upon the doc- eovered against an individual partner, trine, that, if a deviation from the line chancery will compel the creditor to marked out by Parliament were at- exhaust his private property, before he tempted, I would (unless the House of Joint-Stock CoMPAi«riEs. 1339 fide purpose sanctioned by their act of Parliament.' The eases 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 proceedings of the company, are very numerous.' In Bell V. The Hull and Selby Eailway Company,* it w^as 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 company from prosecuting any works which would I'ender the plaintiff'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 continued until after the trial of an action at law, on the question whether the plaintiff was entitled to have a wharf, such as he claimed, made for him, in which 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 meantime, per- mit 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 a 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 advanced that such prosecu- tion thereof would not be further prejudicial to the plaintiff, and the only effect would be to restrain the company from completing the railway. Although an injunction ex parte upon a statement lu which mate- rial facts are concealed or misrepresented, would, on a speedy appli- cation, 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 concealment or misrepre- sentation 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 costs reserved.' Lorda were to correct me) stop the 1 Ra. Ca. 135 ; Spencer v. The London further making of a canal which was and Birmingham Railway Company, id. in progress." Lord Eldon in Blakemore 159 ; Lord Petre v. The Eastern Couu- V. Glamorganshire Canal Navigation, 1 ties Railway Company, id. 463 ; Gordon Myl. & K. 163. V. The Cheltenham and Great West- ' Webb V. Manchester and Leeds ern Railway Company, 3 Ra. Ca. 800 Railway Company, 4 Myl. & Or. 116. and 873. ' The River Dun Navigation Company ' 1 Ra. Ca. 616. v.The North Midland Railway Company, ■* Id. 134:0 Particular Partnerships. Ex. parte injunctions. Sec. 866. An injunction ex parte may be granted, notwithstanding that the defendant has appeared to the bill.' The general rule is that, after the defendant has apjteared, a special injunction can be moved for only upon notice.' In Perry v. Weller,' a distinction is taken between a gratis appearance and an appearance entered upon service of the subpcena, but, where the threatened mischief is imminent, and would be irremediable, it seems the court has not required notice, even though the appearance has been the consequence of a subpmia.* Will restrain excess of power. Sec. 867. The Court of Chancery will also interfere by injunction 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 acting on behalf of the subscribers to a railway, who were then soliciting a bill in Parliament, for the purpose of forming them into an incorporated joint-stock company, entered into a contract with the trustees of a road, whereby it was stipulated, that in consideration of the trustees withdrawing their opposition in Parliament, and consenting to forego certain clauses of which they had intended to, press for the insertion in the act, a formal instrument to the effect of the clauses should be exe- cuted 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 case it was also decided that an agreementto 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. In the case of Stanley v. The Chester and Birkenhead Kailway Company,' the Birkenhead and Chester Railway Company agreed with 1 Bell v. The Hull and Selby Railway =3 Russ. 519. Company, 1 Ra. Ca. 623, and the cases * See the note to Acraman v. Bristol there cited. In Allen v.Jones, 15 Ves. 605, Dock Company, 1 Russ. & Myl. 331. Lord Eldou observed that if a person ' Edwards v. The Grand Junction about to commit waste, and against Railway Company, 1 Myl. & Cr. 650. whom a bill was filed, could, by appear- * It has since been decided by the ing the evening before the motion, pre- Court of Exchequer Chamber, reversing vent it, he would get two days for cut- a judgment of the Court of Queen's ting the timber. Bench, that such an agreement entered " See the learned reporter's note to into by a Peer of Parliament is not ille- Acraman v. Bristol Dock Company, I gal. Lord Howden v. Simpson, 3 Per. Russ. & Myl. 821, and the cases there & D. 781 ; 1 Railway Cases, 347. cited ; see, also, Eden on Inj. 333. ' 9 Sim. 364 ; 3 Myl. & Cr. 773. Joint-Stock Companies. 1341 the plaintiff to give him, for fourteen acres of land, 20,000Z., to be paid by installments ; other parties, called the Chester and Birken- head Eailway Company, at the same time started a rival line, 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, aud also of the plaintiff was subsequently obtained, and was signified by a written memo- randum of approval. The Chester and Birkenhead Company was adopted, and was incorporated 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 lauds belonging to him, till after payment of the first installment, which was already due, and from proceeding, after subsequent installments became due, till such installments should have been paid. To this bill the defendants put in a general demur- rer, which was overruled first by the Vice-Ohancellor, and then on appeal by the Lord Chancellor, the latter (Lord Cottenham) observ- ing that "the case, as it appeared on the face of the bill, was one of the grossest frauds he had ever seen attempted. " ' Ifor will tiie 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 plaintiffs for niqety-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 intention 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 ' 3 Myl. & Cr. 781. See, also, Doo v. ' Rigby v. The Great Western Rail- The Loudon and Croydon Railway Com- way Company, 10 Jur. 488. pany, 1 Railway Cases, 257. 1342 Particulab Pabtneeships. 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 trains carrying passen- gers, 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 intention." And the lease also contained cove- nants 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 erected by the les- sees and those at the terminal stations. The plaintiffs, after expend- ing considerable sums upon the premises, granted an underlease thereof 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 fulfillment by the company of the agreements in their lease to the plaintiffs contained, and for giv- ing full benefit and advantage to G- of the refreshment rooms and premises thereby granted, in the same manner as if G were the as- signee 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 fulfillment by the company of the agreements contained in their lease to the plaintiffs. Certain trains, which differed in no respect from the other trains of the company except in the rate at which they traveled, having passed the Swindon station by the direction of the company, without stopping for the refreshment of the passengers, the plaintiffs, without consulting G, filed their bill against the company, and moved for an injunction : It was held, first, in accordance with the decision of a court of law in an action directed for the purpose of the motion, that the clause in the plaintiff's lease providing for the stoppage of the trains at Swindon was a legal covenant, binding upon the defendant ; secondly, that, as it would be impossible accurately to measure, in damages, the loss arising from a breach of the coven- ant, the case being one in which the plaintiffs could only recover such speculative damages as a jury might give them in repeated actions Joint-Stock Companies. 1343 against the company, the court had jurisdiction to enforce the specific performance of the covenant by injunction; thirdly, that the circumstance, that the lease contained covenants by the plaintiffs which might possibly thereafter be broken, was not a ground for refusing protection to them in the matter of the covenant in question; fourthly, 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 plaintiffs upon the ground of convenience to the public ; and, fifthly, that the fact that the suit was instituted without the previous authority or subsequent adoption of G- was not a bar to the plaintiff's right to proceed therewith. When injunction vrill be refused. Sec. 868. But whatever 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 agreement, the court will not interfere on his behalf by injunction.' A railway company will not be prevented by injunction from tak- ing lands for purposes warranted by their act, on the ground 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.^ Where a railway company, under the powers of their act, purchased a subsisting lease in lands, and gave a notice to the plaintiff, the owner of the reversion iu 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-Chancellor, that inasmuch as the contemplated proceedings would, if the com- pany were not authorized by their act to take the land in question, be a nullity, and inasmuch as the entry and possession of the plain- tiffs as derivative lessees was lawful, and no case being made of any sudden grievous injury don& to the inheritance, the motion for the injunction must be refused with costs.^ ' Greenhalgh v. The Manchester and Railway Co., i Myl. & Cr. 116; 1 Ra. Birmingham Railway Co., 1 Ra. Ca. 68: Ca. 576. 3 Myl. & Cr. 784. 'Mouchet v. The Great Western * Webb V. The Manchester and Leeds Railway Co., 1 Ra. Ca. 567. 1344 Particular Partne-rships. 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 occasion the obstruction of a private road, and the plain tifEs, who wei'e 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.' Where the contract as regards the land of the plaintiff is exactly performed, any variation made at a distant point, and with the con- sent pt the land-owner there, and producing no real injury to the plaintiff's land, will not be ground for an injunction in a court of equity, to be granted at his application. ' In the case of Eton College v. The Great Western Eailway Com- pany,' 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. Suits in equity among the shareholders of joint-stock companies. Sec. 869. The general rule with respect to parties, together with the exceptions to it, is thus stated by the Vice-Chancellor in the case of Long V. Yonge: ■* " The general rule is that all parties interested in the subject of the suit shall be parties to the record. Then there are certain exceptions, and those exceptions, as far as this particular point is concerned, may be divided into two parts. One exception is where several persons having distinct rights against a common fund, or against one individual, are allowed, a few of them, on behalf of themselves and the rest, to file a bill for the purpose of prosecuting their mutual rights against the common fund, or the individual liable to their demand. The other exception is, where a person may have a right against several individuals, who are liable to common obliga- ' Illingworth v. The Mancliester and " Lee v. Milner, 3 You. & Coll. 611. Leeds Kail way Co., 3 Ka. Ca. 187 ; see, '' 1 Ra. Ca. 300. also, Aldred v. The North Midland > 3 Sim. 385. Railway Co., 1 id. 404. Joint-Stock Compakies. 1345 tions. Ill that case a bill is allowed to be filed by a single plaintifE against some but not all of those persons who are bound to make good the plaintiff's demand. This is the general division of the exceptions to the general rule." His Honor then came to the conclusion that the case before him, where some of the members of a partnership filed a bill on behalf of themselves and others, for a dissolution of the part- nership, did not fall within either of those exceptions, but that all the members must be parties to the suit. " The cases that have been alluded to," said his Honor, '' from Chancey v. May,' down to the present time, show to me, most distinctly, that if this bill asks to deprive 4,000 persons of their present rights, the plaintiffs ought not to be at liberty to stir in the case, until they have made every one of those individuals parties. That is my clear opinion, and I have no doubt whatever about it, and I think, therefore, that the demurrer must be allowed, and the costs must follow in the usual way." ^ In Evans v. Stokes,' where the bill prayed that the affairs of a dissolved joint-stock company might be settled and wound up under a decree of the court, that accounts might be taken of the partnership p)-operty received by the defendants, the directors, and that the sale of the partnership property might be declared fraudulent and void, the Master of the Rolls said : " This is a bill in which it is sought that the affairs of the partnership may be wound up and settled by and under the decree of this court, and that accounts may be taken of the partnership property. The bill also prays that a sale of part of the partnership property by the directors to the defendant Betts may be set aside. It is perfectly obvious that a suit, where all the accounts of the partnership are to be taken, and the rights of all the partners are to be determined, as between themselves, and under the various circumstances in which they stand in relation to each other, some of them, for instance, having paid their calls, and others having omitted to do so, cannot be prosecuted in the absence of any of those partners. The cases in which suits have been permitted to be insti- tuted by a few persons on behalf of themselves and a numerous body of other persons, have been cases in which there was plainly a com- munity of interest between the plaintiffs and those whom they repre- sented; but this is a case in which it is not disputed that there is a ' Prec. Ch. 592. Gray v. Portland Bank, 3 Mass. 885 ; '' A member of a corporation lias a Waring v. Catawba Comp., 3 Bay (S. C), right of action against a corporate body, 109. for any injury he sustains from the ' 1 Keen, 34. misconduct of its agents or ofiBcers. 169 1346 Particular Partm-erships. great diversity of interests as between different classes of the members of this partnership, and yet the court is called upon to wind up the whole transactions of the partnership in the absence of a great num- ber of the partners. The frame of the suit is plainly defective, and the cause must stand over, therefore, with liberty to the plaintiffs to amend by adding parties." In Kichardson v. Hastings,' Lord Langdale said : "I cannot say that I entertain any doubt of the propriety of the decision 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 liabil- ities as between the parties themselves, and as they may be in con- flict with regard to these rights and liabilities, the partnership cannot be finally wound up in the absence of all the partners. This may be attended with very great inconvenience, even to the extent of pre- venting the due administration of justice between the parties; but this appears to me necessarily to 'follow from the established rule of this court, which I have stated,' and which cannot be corrected with- out a general authority." The "act to facilitate the dissolution of certain railway companies" is an example of the interposition of this "general authority" to correct this established rule of the court. Dissolution tirhen all partners cannot be present. Sec. 870. But the statute above referred to only applies to " certain railway companies; " and the question naturally arises, "is there then no remedy for cases in which the plaintiff may be entitled to have a dissolution, and at the same time it may be impossible to have all the partners present? " To this question the following answer was given by Vice-Chancellor Knight Bruce in Eichardson 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 573 members, made certain calls, which the major- ity of the shareholders paid, but six of them, on the ground that the calls were improperly made, refused to pay them, and filed their bill on behalf of themselves and all others the shareholders, etc., 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 ' 7 Beav. 333. subject-matter of the litigation ought to »1 Keen, 34. be parties." * That all persons interested in the ^7 Jur. 691. Joint-Stock Companies. 1347 all officers and servants of the company, from dealing with the partner- ship property, for an account of the debts and liabilities of the com- pany, and to have the property applied toward the payment of its debts and liabilities; it was held, that some at least of the absent shareholders, who had paid up the disputed calls, ought to be made parties to the suit. In the course of his judgment Vice-Chancellor Knight Bruce said : " One object of this bill is to obtain a dissolu- tion, another. to exempt the plaintiffs from the payment of a larger capital; but the larger body of dissentients are those who have con- tributed the increased amount of capital which is in dispute; and those plainly have, it seems to me, an interest that the plaintiffs should further contribute to the capital; but the plaintiffs desire that they should not contribute. It is too much to say that such an important proposition should be decided without an adequate num- ber to maintain the other side. But only the directors 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 in this bill, assuming 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 con- ceive a case in which the plaintiffs may be entitled to have a dissolu- tion 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 dissen- tient should be here, but there must be enough to candidly and freely discuss and agitate the question, more so than the present defendant can do." In the recent case of Sharp v. Day,' also before Vice-Chancellor Knight Bruce, on a bill filed by one of the provisional committee, on behalf of himself and all other parties, except the defendants, inter- ested as partners,' in a railway company which had been projected, but in which no shares had been allotted, and which had been abandoned, for an account of the partnership debts and credits, and for winding up' ' 10 Jur. 469. miglit be taken of the moneys and prop '•' But according to the present state of erty belonging to the company or part- the law on this subject, there would, in nership, which had come to their hands this case, be clearly no partnership or or the hands of any person by their quasi partnership. See the recent order or for their use, in trust for the cases in the Court of Exchequer, partnership or company, and of all Reynell v. Lewis, and Wyld v. Hopkins, moneys which, by virtue of the resolu- 10 Jur. 973. tions come to by the parties, had been 3 The bill prayed that an account paid to or possessed by the defendants 1348 Particular Partnerships. 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 understood as alleging that the defendants are in possession of funds, in effect as trustees for purposes in the fulfillment of which the plain tiil and other persons, who are so numerous as to render the junction of them individually in a suit substantially incompatible with its prosecution, and on whose behalf and on his OT^n he sues, are interested; and that the defendants have acted, and intend to act, in contravention of those purposes, and it jDrays relief 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 introducing 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 prosperous, a long, or an easy life, is a different question. It is not, however, without doubt that I hold it to be at the present stage sustainable ; nor is the question of the applicability of the principle upon which I proceeded in Kichardson V. Larpent the only ground of doubt that I have. But doubting, I must allow the plaintiif to call for answers. Let the demurrers be overruled without costs, without prejudice to any question in the cause." Account without dissolution. Sec. 871. Lord Eldon did not evince any inclination to relax the strict rules of the Court of Chancery in favor of partnerships or comj)anies consisting of a large number of members." Succeeding for the purpose of discharging the debts nership, or any part thereof, or from in- and liabilities of the company; that an terfering therewith, or from applying account might be taken of the debts any moneys or property paid or sub- and liabilities of the partnership or scribed or hereafter to be so, in conse- company now remaining unsatisfied ; quence of the resolutions, otherwise that the outstanding property of the than under the direction of the court, in company or partnership might be col- discharge of the debts of the company, lected and applied, under the direction and for the purposes for which such of the court, so far as it would extend, moneys had been subscribed ; and that toward the discharge of the debts and the defendants might be restrained from liabilities, and that, if necessary, a re- prosecuting an action at law against ceiver might be appointed by the court the plaintiff, or any other proceeding at to carry into effect the above purposes; law touching the matter aforesaid, that the defendants might be restrained ' See his Lordship's observations on from collecting or recovering the prop- joint-stock companies in Van Sandau v. erty or moneys of the company or part- Moore, 1 Russ. 441. Joint-Stock Companies. 1349 equity judges have, however, shown a disposition to adapt the practice and course of proceeding of the court, as far as possible, to the exist- ing 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 copartners, stating that the defendants, who. were the legal owners of the mine, and also copartners in the adventure, had subsequently, unknown to the plaintiff, but with the consent of the other copartners, and after fully accounting to such copartners for their shares of the profits up to that time, sold and conveyed the mine to trustees for a joint-stock company, the property of which was held by a numerous body of proprietors in transferable shares passing by deliveiy 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 number 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, or the trustees or share- holders of the joint-stock company, are not made parties. In this case Lord Cottenham said: " I am clearly of opinion that the plaintiff has sufficiently stated upon the face of his bill a case which entitles me to hold that the persons 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 relaxation of the strict rules of the court with respect to parties." Again, in Taylor v. Salmon,^ Lord Cottenham said, with reference to the same subject: "The appellant, however, sets up certain objec- tions 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 1 1 Myl. & Cr. 559. ^ Mare v. Malachy, 1 Myl. & Or. 659. 2 4 Myl. & Cr. 141. 1350 Particular Partnerships. 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 circumstances, 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 plaintiffs' right to sue in the form they have adopted. That where the jjarties 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." In the case of "Wallworth 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 defendants, against the directors, some of whom were bankrupt, and the trustees and public officers of the company, and certain shareholders, 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 out- standing might be got in by a receiver, and the whole converted into money, and applied toward the satisfaction of the partnership debts, a demurrer for want of equity, want of parties, and multifariousness, was overruled. In his judgment 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 plaintiffs 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 defendants, is shortly this: that they are shareholders, and have jDaid all the calls made, which amount to 151. 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 all the directors, except one, have be- come 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 ' 4 Myl. & Cr. 619. Joint-Stock Companies. 1351 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 Geo. 4, c. 46, who is one of the defendants. " When i t 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 np of -the affairs of the company. How far this court will interfere between partners, except in cases of dissolution, has been the 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 ; 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 bills praying a disso- lution, 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 eases in which the partners or shareholders are too numerous to be made parties, which, in the present state of the transactions of man- kind, would be an absolute denial of justice to a large portion of the subjects of the realm in some of the most important of their affairs. This result is quite sufficient to show that such cannot be the law, for, as I have said upon other occasions,' I think itthe 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 estab- lished under different circumstances, to decline to administer justice, and to enforce rights for which there is no other remedy. This has always been the principle of this court, though not at all times suffi- ciently attended to. It is the ground upon which the court has, in many cases, dispensed with the presence of parties who would, accord- ing to the general practice, have been necessary parties. In Oockburn 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 possible toward justice than to deny it altogether." If, therefore, it were necessary to go much > See Mare v. Malachy, 1 Myl. & Cr. « 16 Ves. 321. 559 ; Taylor v. Salmon, 4 id. 134. 1352 Particular Partnerships. 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 company 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 i-eferred; 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 plain- tiffs in 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 partners, 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 circumstanced against other persons, whether trustees and agents for the company or strang- ers being possessed of property of the company, 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 subsisting establishment. In Knowles v. Houghton, 11th July, 1805, reported in Vesey," but more fully in CoUyer on the Law of Partnership," the bill prayed an account of jDartnership transactions, and that the partnership might be estab- lished, and the decree directed 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 ' Prec. Cai. 593. ' 11 Ves. 168. « 17 Ves. 15. * P. 198, 3d ed. Joint-Stock Companies. 1353 between the plaintiff and the defendant had at any time, and when, been dissolved, showing that the court did not consider the dissolu- tion of the partnership as a preliminary necessary before directing the account. In Cockbnrn v. Thompson' the bill prayed a dissolu- tion, 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 the 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 defend- ants, and Sir Anthony Hart overruled a demurrer, and his decision was affirmed by Lord Lyndhurst. In Walburn v. Ingilby' 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 "(vant of parties, because a dissolution was not prayed. In Taylor v. Salmon* the suit was by some share- holders, 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 dis- solution, and the company was a subsisting and continuing partner- ship. 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 attributed in part to the withholding that property 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 admitted that this court exercises its jurisdiction. This case also differs from the two last-mentioned cases in this, that the difficulty in which the plain- tiffs are placed, and the consequent necessity for the assistance of this court is greater in this case; no reason, certainly, for withholding that assistance. " How far the principles upon which these cases have proceeded is consistent "with the doctrine in Loscombe v. Kussell,' 'that in occa- sional breaches of contract between partners, when they are not of so grievous a nature as to make it impossible that the partnership should > 16 Ves. 331. « 4 Myl. & Cr. 184, 2 4 Russ. 563. ■■ 4 Sim. 8. 3 1 Myl. & K. 61. 170 1354 Particular Partnerships. continue, the court stands neuter, will 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 dealings and trans- actions, 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 the supposed rule is directly opposed to the decision of Sir J. Leach in Harrison v, Armitage," and Eichards y. Davies." ' The principles thus enunciated by Lord Cottenham have been recognized and acted upon to their fullest extent by the Master of the Rolls in Eichardson 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 qase Lord Langdale, M. E., made the following obser- vations: " All cases of this kind are attended with some degree of difQculty, 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 foixndation, 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 litigation 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. However, excep- tions 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.' ' 4 Mad. 143. ' 7 Beav. 333. ' 3 Russ. & Myl. 347; see, also, Mitf. •" Id. 301. PI. , 4th ed. 170, n. a, and the cases there cited. JoiifT-STOCK Companies. ' 1355 The assumption that necessity could admit of any qualification may seem to imply that exceptions to the ordinary rule were admitted with difficulty. " It has, however, become necessary to extend the cases of excep- tion, so as to keep pace with the progress and complications of the transactions of mankind, and every body who reads what Lord Cot- tenham has said on more than one occasion, must be perfectly satis- fied with the justice of his observation,' and see how necessary it is for this court, acting always within the limits of its jurisdiction, by an application of its powers, so liecessary for the 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 admin- ister justice. In no class of cases has the extension of the exception been more frequent than in cases like the present. " I cannot say that I entertain any doubt of the propriety of the decision 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 liabilities as' between the parties themselves, and as they may be in conflict with regard to these rights and liabilities, the part- nership cannot be finally wound up in the absence of all the partners. This may be attended with very great inconvenience, even to the exten t of preventing the due administration of justice between the parties ; but this appears to me necessarily to follow from the established rule of this court, which I have stated, and which cannot be corrected without a general authority. 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 between partners, unless the partnership was to be dissolved and finally wound up and settled ; and there are several conflicting cases in the books on that subject, different judges having 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, 'See Mare v. Malacliy, 1 Myl. & Cr. Richards v. Davies, 2 Rusa. & Myl. 347 ; 579 ; Taylor v. Salmon, 4 id. 141 ; Wall- Loscombe v. Russell, 4 Sim. 8 ; Knebell worth V. fiolt, id. 685. v. White, 2 Y. & Col. (Exch.) 15 : Bent- 2 1 Keen, 24. ley v. Bates, 4 id. 182 ; Miles v. Thomas, ' See Porman v. Homfray, 2 Ves. & B. 9 Sim. 609 ; Fairthorne v. Weston, 3 829 ; Harrison v. Armitage, i Mad. 143 ; Hare, 387. Marshall v. Coleman, 2 Jac. & W. 366 ; 1356 Particular Partkerships. adverse to all the rest, and claim for themselves the benefit of that inter- est, 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 interested are not brought before the court; however, it is not much more remarkable than the cases where one credi- tor or one 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 dissolved, it has permitted a bill to be filed by one or more on behalf of the rest, against the governing body, to have the assets collected, and applied as far as they would go toward the discharge of the debts, and that without seeking to ascertain the rights and liabilities of the parties as between themselves, and consequently leaving 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 partnership debts, as far as the deficient assets would extend, and then leave all the members of the partner- ship 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." The principle that in cases of joint-stock companies a bill may be sustained for an account without seeking a dissolution and without making all the shareholders of the company parties has been subse- quently 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 members of the provisional committee complaining of the conduct of the com- mittee in abandoning one line of railway in favor of another, and pray- ing 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, with- out prejudice to any question 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 around alleged by way of demurrer is the want of parties. The bill states various circumstances of alleged misconduct on tlie part of the persons ' 10 Jur. 421. Joikt-Stock Companies. ISo? to whom the whole scheme, and the steps toward the perfection 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 wholly failed. The latter part of the record runs thus: ' Charges that the number of shareholders in the said London and Manchester Direct Independent Kailway (Eemington's Line) is so great, and the rights and liabilities of the shareholders are so subject to change and fluctuation by death and otherwise, that, save as herein stated, plaintiff does not know, and is wholly unable to discover the names of the other shareholders, and, even if plaintiff were able to discover their names, 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 this suit to a hearing. Charges that the interest of the said shareholders, except the said defendants, are iden- tical with those of the plaintiff in respect of the matters herein 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 companies. 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 allega- tion would be too vague and loose, yet, when it is considered as apply- ing 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 necessary to overrule the demurrer for want of parties. It is not, however, necessary posi- tively to decide that because it is the rule of the court formerly prac- ticed more generally than it is at present, or has been of late years, that upon a demurrer where the question is one of any nicety or diifi- ' 16 Vee. 331. 1358 Paeticulae Paetnerships. cnlty, it is not necessary to pronounce a final or conclusive opinion, but that if the court sees that it ia matter of difficult argument or of reason- able discussion, it may and often does overrule the demurrer, saving the benefit of the question raised by it till the hearing of the cause, or, in other language, without prejudice to the question. That is the course I propose to take here to overrule the demurrer without preju- dice to any question in the cause, and shall reserve the costs, unless the plaintiff can show that they ought to be disposed of now." " In Lewis V. Billing,' a demurrer for want of equity and for multifarious- ness was overruled. In Columbine v. Chichester,' a demurrer for want of equity was overruled by the Vice-Chancellor: but allowed' on appeal by the Lord Chancellor,* on the ground that it did not appear from the statements in 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 dis- tinctly alleged that the defendants had in their hands the scrip cer- tificates asked to be delivered to the plaintiff, the case would probably have fallen within the decision of the Master of the Eolls in Jack- son V. Cocker." 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 cor- responding shares from his vendor, or to indemnify him from the amount of calls subsequently made. As to the difference between scrip and shares, see, also, Mitchell v. Newark." In Bell v. Lord Mex- borough,' a demurrer, for want of equity, was allowed by the Vice- Chancellor. As to the specific performance of an agreement for the sale of railway shares, see Duncuft t. Albrecht.' General discussion of question. Sec. 872. It will be observed that neither Lord Cottenham nor Lord Langdale confines his observations to any particular class of partner- ships, as lai-ge partnerships commonly called joint-stock, as distin- guished from ordinary partnerships. Lord Cottenham indeed says, " It might be suggested that the supposed rule tl^at 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 ' See, also, Pareons v. Spooner, 16 Jur, ' 4 Beav. 59. 423. « Exch. 10 Jur. 318. 2 10 Jar. 851. ' 10 Jur. 893. 'Id. 606. "13 Sim. 189. •"Id. 636. Joint-Stock Companies. 1359 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 partnerships 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 between partners, without proceeding to wind up the affairs of the partnership." ' "But in all cases of this sort, where an injunction is sought to restrain improper acts by a partner, a very serious question may arise whether the court will interfere, unless the bill not only asks for an injunction, but also for a dissolution of the partnership. Indeed it has been a matter of no small diversity of judical opinion, how far a court of equity ought to interfere in such cases, unless for the pur- pose of dissolving the partnership and winding up the whole concern, since it may involve the court in perpetual controversies to enforce the observance of the articles, as often as during the long continu- ance of the partnership, any specific breach may occur, which is a species of jurisdiction which courts of equity are not at all disposed to entertain."'' In respect to such duties and obligations of partners, as are of a positive and personal nature, it seems difficult to perceive how courts of equity can enforce a specific performance of them, and therefore, in case of a breach thereof, the injured party must be left to his remedy, if any, at law. But the same objection does not seem to apply to cases where the relief sought is to enforce the due observ- ance of negative duties and obligations, for here all that is required is, that the court should restrain the partner from violating them, or, in other words, from doing acts which violate the express or implied obligation which he is under to forbear. Thus, for example, although a court of equity could not compel a partner to bestow his skill and diligence, and services, faithfully in the partnership business, yet it may interpose by injunction to restrain him from wasting the part- nership property, from misusing the partnership name, from interfer- ing to stop the partnership business, or from fraudulent practices injurious and ruinous to the partnership, in violation of his express duties or express contracts. ' 4 Myl. & Or. 639. " Story on Part. 334, and see chap. 11 '•' 7 Beav. 328. of that work ; 1 Story on Eq. Jur. § 671. m. 307. 13U0 PaKTICULAR PARTNEESHirS. Courts of equity in interfering by way of injunction in cases of l^artnership, act upon a sound discretion, and will not interfere tO' i-emedy any breaches of duty, unless they are of such a nature as may produce permanent injury to the partnership, or involve it in serious perils or mischiefs in future. The courts will not interfere in cases of frivolous vexation, or for mere differences of temper, casual dis- putes, or other minor grievances between the parties. On the other hand, where one partner has imj)roperly involved the partnership in debt, or has become himself insolvent, or has otherwise grossly misconducted himself, courts of equity will interpose and restrain him from drawing, accepting or indorsing bills or notes in the name of the firm, or from contracting or receiving partnership debts. So, an injunction will be granted against a partner, who wantonly and grossly obstructs, injures, or prevents the carrying on of the partnership business, or who designedly misapplies the part- nershij^ property to purposes not warranted by the articles, or the objects of the trade. If, therefore, a partnership negotiable security is misapplied to the payment of the separate debts of one partner, an injunction will be granted to restrain its farther negotiation, and to require it to be restored to the partnership, or canceled, as the case may require, unless, indeed, it has passed into the hands of a bona fide holder, without notice of the misapplication. Courts of equity will, in some instances, interpose, and appoint a receiver of the joint effects, during the continuance of the partner- ship. But to authorize a partner to call for a receiver of the stock of a subsisting partnership, he must be prepared to show a case of the grossest abuse and the strongest misconduct on the part of the man- aging partner; for, except under such circumstances, the court will not interfere, inasmuch as the probable result of its interposition will be the destruction of the trade. Nor will a receiver be appointed upon a summary application, where there is a covenant to refer, and no attempt has been made to submit the matter in dispute to arbitration. But if in the ordinary course of the trade any 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 ; because such con- duct will warrant a dissolution. The principle upon which the Court of Chancery interferes between partners, by appointing a receiver, is merely with a view to the proper relief, by winding up and disposing of the concern, and dividing the produce, and not for the purpose of carrying on the partnei-ship. Joint-Stock Compakibs. 1361 Eelief, also, will be granted where the partnership has been entered by one partner, under circumstances of gross fraud or gross misrepre- sentation by the others ; for in such cases courts of equity will not only decree the same to be void, but will interpose and restore the injured party to his original rights and property, as far as is practicable. Story on Part. 327-333, 341; 3 Kent's Com. p. 60, 4th ed.; 2 Story's Eq. Juris., § 722. In accordance with this position his Lordship appears to have directed an account in the case of Hills v. Nash, which has been briefly noticed before, but which must now be stated somewhat more at length. In 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 elsewhere, that they should engage in a joint speculation in the purchase 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 parties were to be interested in the adventure according to the proportions in which they held foreign wheat at the time of the agreement. 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 English wheat, in pursuance of the agreement, out of his own funds, upon the joint account; and all the English wheat so j5urchased was afterward 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 accounts of all the moneys received and paid on account of the said purchases and sales, it appeared that a loss was incurred, amounting to 18,180?. 18s. &d. 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 plaintiffs had then no claim against them, nor had they, the said Carpenter, 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 Sheppard, or 158 1362 Particular Partnerships. any of them, in respect of Nash's share of the purchases and sales. That Nash never paid any sum whatever on account of tlie 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 executors, and, in the month of August following, the plaintiffs delivered in their claim against his estate to the defendants, and requested payment, which was refused. In May, 1842, the plaintiffs filed their bill against the defendants, pray- ing an account of all sums received and paid by the plaintiffs on account of the purchases and re-sales of English wheat on the joint account of Carpentei', 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 he 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 i-e-sales; 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 inquiries might be directed accordingly. Carpenter admitted having 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 Car- penter had been settled under an award, and that they had released Wedd and Sheppard, who were examined as witnesses on the part of the plaintiffs. In July, 1843, the cause was heai-d before the Master of the Eolls, who overruled the objection for want of parties, declared the estate of Nash to be liable for one-eighteenth part of the loss sustained in the adventure, and directed an account accordingly. Joint-Stock Companies. 1363 From this decision an appeal was brought by the representatiyes of Nash, and Lord Lyndhurst decided that the objection for want of parties oug+it to have been allowed. His Lordship said: "If the plaintiffs 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 obtain payment of his proportion of 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 mei'e case of partnership in a particular transaction, or a series of transactions, 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 plaintifEs; and that the case between Carpenter and the plaintiffs was referred to arbitration, and the sum awarded has been paid to the plaintifEs. But none of these transactions are bind- ing 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 obtained 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 contributions or of their obligation to contribute to the loss, or respecting any other matter arising out of this transaction. I think, therefore, 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 Eolls upon a point of this nature." ' We are not aware of any case precisely in point having been deci- ded by Lord Cottenham, but from the dicta which have fallen from his Lordship, it seems not improbable that had the appeal in this ' Hills V. Nash, 10 Jur. 148. 1364 Particular Partnerships. case of Hills v. Nash come before him the decision of Lord Lang- dale 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 presen t the rule must be considered still to be that in ordinary partnerships, all the partners must be made par- ties to a suit seeking an account, without having regard to the ques- tion of dissolution at all, that is, either with or without dissolution. Demurrer. Sec. 873. The causes of demurrer being upon matter in the bill which ought not to be therein, or upon the omission of matter which ought to be therein or attendant thereon,' either the omission of par- ties who ought to be parties, or the insertion of parties who ought not to be parties to the suit, will be a cause of demurrer. It may be observed that in most of the cases cited, the defense to the bill has been by demurrer for want of parties. In regard to the allegation in the bill that the parties are too numerous to be individ- ually named," it is to be observed that since the Joint-8tock Compa- nies Eegistration Act,' 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 pos- sible, 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.' So, if persons are made co-plaintiffs who have no interest in the subject-matter of the suit, the defendants may demur.' In some of the cases cited above the defendants have also demurred for want of equity and multifariousness.' In reference to the next division it may be observed that in many cases what is a good defense by way of plea is also good as a demurrer, if the facts appear sufficiently by the bill.* Plea. Sec. 874. If the defect as to parties do not appear on the face of the bill, that may be the subject of a plea.' So, if a person having an interest joins with him as a co-plaintiff a party having no inter- est, the bill is demurrable, if that fact appears on the bill; if the fact ' Mitf. PI. 108, 4th ed. Russ. 225 ; Cuff v. Platell, 4 id. 242. •' See Mitf. PI. 170, n. a, 4tli ed. ' Wallwortli v. Holt, 4 Myl. & Cr. ' 7 & 8 Vict., c. 110, App. p. 89. 619 ; Wilson v. Stanhope, 10 Jur. 431. " Per Knight Bruce, V.C. , in Winslow » Mitf. PI. 316. T. Stanhope, 10 Jur. 431. 'Per Lord Eldon in Cockburn v. ' Id. Thompson, 16 Ves. 325. « The King of Spain v. Machado, 3 Joint-Stock Companies. 1365 does not appear on the bill, but is brought forward by plea, such a plea is a good defense to tlie suit. To a bill for an account the defendant may put in the negative plea of no partnership in bar to the discovery and relief prayed.'' But a plea which negatives the plaintifE's title, though it protects a defendant generally from answer and discovery as to such matters as are specially charged as evidence of the plaintifE's title, therefore, where circumstances are specially charged as evidence of the partner- ship, the plea must be accompanied by an answer and discovery as to the matters so charged.' Where a partnership is denied the court will sometimes direct an issue at law. A plea of a stated account is a good bar to a bill for an account. It must show that the account was in writing, or at least it must set forth the balance." There is no absolute necessity that the account should be signed by the parties, as the person to whom it is sent keeping it by him any length of time without making any objection, will make it a stated account.' If the plaintiff allege that he has no counter- part of the stated account, the defendant must annex a copy thereof to his plea.' If error or fraud is charged, it must be denied by the plea as well as by way of answer;'' and if neither the error nor fraud ' Per Sir John Leach in Makepeace ordinary plea admits the truth of the V. Haythorne, 4 Russ. 344, where the bill, but states some matter dehors, defendant pleaded in bar that one of which destroys the effect of the allega- the two co-plaintiffs was au uncertified tion, and which, assuming the allega- hankrupt, and the plea was allowed. tion to be true, would be a defense." 3 * Drew V. Drew, 3 Ves. & B. 159; v. Myl. & Cr. 334. Harrison, 4 Madd. 253, in which case the * Mitf. PI. 359. defendants by their answer denied the * Per Lord Hardwicke, Willis v. Jer- partnership and refused to set forth any negam, 3 Atk. 351. In Tickel v. Short, account. Exceptions were taken to the 2 Ves. Sen. 339, Lord Hardwicke said: answer for insufficiency in not having " If one merchant sends an account cur- set forth the accounts. The Vice-Chan- rent to another in a different country, cellor said : " That point is settled. If a on which a balance is made due to him- defendant answers he must answer self, and the other keeps it by about fully. They should have pleaded ;" two years without objection, the rule of and see Mitf. PI, 280, 331, n. Jc. this court and of merchants is, that it is ^ Saunders v. King, Madd. & G. 61, considered as a stated account." But in (S. C), cited by Sir John Leach from a Irvine v. Young, 1 Sim. & Stu. 333, Sir MS. note of his judgment in Thring v. John Leach held that the mere fact of Edgar, 8 Sim. & Stu. 374 ; Yorke v. Pry, the delivery of au account, without evi- Madd. & Or. 65. See Lord Cotteuliam's dence of acquiescence, does not afford observations on Thring v. Edgar, in the sufficient legal presumption that the ac- case of Denys v. Locock, 3 Myl. & Cr. count was settled. 805. In this case where it was held « Hankey v. Simpson, 3 Atk. 303 ; and that a negative plea, which professes to see Mitf. PI. 360, n. h. be a plea to the whole bill, except cer- ' Mitf. PI. 360 ; 6 Ves. 596. Though tain specified parts, but yet proceeds to to a bill preferred generally for an ac- tra verse some of the parts so excepted, count, an account stated is a good plea; is bad, Lord Cottenham said : " A nega- yet if the bill set forth that there was tive plea is a mere traverse ; it differs an acsount, and that there was a nfis- from an ordinary plea, inasmuch as the take, and set forth the particular mis- 1366 Particular Partnerships. is charged, the defendant must by the plea aver that the stated account is just and true to the best of liis knowledge and belief.' The delivery up of vouchers at the time the account was stated seems to be a proper averment iu a plea of this nature, if the fact was such.'^ If there be any promise or agreement to rectify mistakes, an account stated and a receipt in full of all demands for the balance will not constitute a plea in bar to a bill seeking to open the accounts, there being mistakes in them.' On the ground of fraud a stated account has been opened after the lapse of twenty-three years, the person guilty of the fraud being dead likewise." But, generally speaking, the court is averse to unraveling an old account, though settled upon an erroneous principle.* In one case, the Master of the EoUs held that the account should stand as a stated account, with liberty to the rep- resentatives of any of the partners to surcharge and falsify.' And, where specific errors were alleged and proved, the court refused, after an acquiescence of eleven years, to open the account 'entirely, but only allowed the plaintiff to surcharge and falsify.'' The expression " errors excepted" will not prevent an account from being a settled account, that being always implied in the settlement of an account." A release pleaded to a bill for an account must be under seal, but it need not be signed ; a release not under seal must be pleaded as a stated account only.' An award may also be pleaded to a bill to set aside the award and open the account, and it is not only good to the merits of the case, but, likewise, to the discovery sought by the bill.'" But, if fraud or partiality is charged against the arbitrators, or any other equitable objection to the award is charged in the bill, those take, there an account stated is no good ''Vernon v. Vawdry, 3 Atk. 119 ; see, plea, as it would leave the particular also, Wharton v. May, 5 Ves. 37; Beau- mistake unanswered. Anon., 3 Freem. mont v. Boultbee, id. 485; and Mitf. 63 ; see also Clarke v. Earl of Ormonde, PI. 359, n. /. Jac. 116. See Lord Eldon's observa- 'Gray v. Minnethorpe, 3 Ves. 103; tions on the necessity of denying by Chambers v. Goldwin, 5 id. 837. plea and answer in Bayley v. Adams, 6 ' Morris v. Harrison, Colles' P. C. 157. Ves. 596. For the purpose of surcharging and ' Mitf. PL 360. falsifying accounts, some specific error ' Id. must be charged. Chambers v. Gold- '■' Proud V. Combes, 3 Freem. 183 ; ing, 9 Ves. 266 ; Kinsman v. Barker, 14 Chandler v. Dorset, Rep. temp. Finch, id. 579. 431 ; Walker v. Consett, Forrest's Bxch. ' Brownell v. Brownell, 3 Bro. C. C. R. 157 ; Robert's v. Kuffin, 3 Atk. 112 ; 63. and see Mitf. PI. 259, n. e. A party * Johnson v. Curtis, 3 Bro. C. C. 366 ; seeking to open an account must point and n. 1. out specific errors by his bill, otherwise ' Mitf. PI. 263. he will not be permitted to prove them " Mitf. PI. 360. at the hearing. Taylor v. Hayling, 1 C%x., 435 ; 3 Bro. C. C. 310; Dawson v. Dawson, 1 Atk. 1 Joint-Stock Companies. 1367 charges must not only be denied by way of averment in the plea, but the plea must be supported by an answer showing the arbitration to have been incorrupt and impartial." Similarly, if fraud, surprise, or any other equitable objection to a release, be charged in a bill seeking to set it aside, the plea must deny those charges by averments, and must also specifically negative^ them by answer.' The statute of limitations '' is likewise a good plea in bar to a bill for an account,-" the exceptioTi in the statute as to merchants' accounts,' having been held to apply only to accounts open or cur- rent, and not to cases where the account is closed and concluded between the parties.' The plea of the statute of limitations will also apply to the case of a suit against the representatives of a deceased partner for an account, but, if the deceased partner has devised his estate for payment of his debts, the statute of limitations cannot be pleaded in bar of demands which had legal existence at the time of his death.' In regard to a plea of the arbitration clause of the articles of part- nership to a bill by one partner against his copartner for discovery and relief. Lord Eedesdale has the following observations in his Treatise on Pleadings in Chancery : "To a bill by one partner in trade against his copartner for discovery and relief relative to the partnership transactions, a plea of the articles of partnership, by which it was agreed that all the differences which might arise between the partners should be referred to arbitration, and that no suit should be instituted in law or equity until an ofEer should have been made to leave the matter in difference to abitration, and that ofEer had been refused, has been allowed.* This case has been much questioned, and it now seems to be determined that such an agreement cannot be pleaded in bar of a suit.' Nor will the court compel a specific performance of the agreement.''" Indeed, it seems impossible to maintain that such a lid. Hamilton, SOthMarch, 1711." See.also, ' Beams' Pleas in Equity, 319. As to Robinson v. Field, 5 Sim. 14 ; and the practice of the court in regard to Beames' Pleas in Eq. 167. pleas upon awards, releases, etc., see ''Ault v. Goodrich, 4 Russ. 434. Lord Eldon's observations in Bayley v. ' Half hide v. Penning, 3 Bro. C. C.336. Adams, 6 Ves. 595, 596, 597. Contra, Wellington v. Mackintosh, 3 331 Jac. I., c. 16. Atk. 569. •• Welford v. Liddel, 3 Ves. Sen. 400 ; » Satterly v. Robinson, Exch. 17 Dec. Barber v. Barber, 18 Ves. 386. 1791 ; Mitchell v. Harris, 3 Bro. C. C. 531 Jac. I., c. 16, s. 3. 311 ; S. C, 3 Ves.. Jun. 139 ; Street v. « Welford v. Liddle, 3 Ves. Sen. 400. Rigby, 6 Ves. 815, 14 id. 370; Wat- Mr. Gow. (Fartn. 103, 3d ed.) quotes the ers v. Taylor, 15 id. 10. following note from Harcourt MS. Ta- "O Ves. 818; Milnes v. Qery, 14 id. bles : " Currency of accounts prevents 400. the statute of limitations. Qrmston v. 13G8 Particular Partnerships. contract should be specifically performed, or bar a suit, unless the parties had first agreed upon the previous question, what were the matters in difference, aud upon the powers to be given to arbitrators, amongst which the same means of obtaining discovery upon oath, and production of books and papers, as can be given by a court of equity, might be essential to justice. The nomination of arbitratoi-s, also, must be a subject on which the parties must previously agree, for, if either party objected to the person nominated by the other, it would be unjust to compel him to submit to the decision of the per- son so objected to as a judge chosen by himself. It must also be determined that all the subjects of difEerence, whether ascertained or not, must be fit subjects for the determination of arbitrators, which, if any of them involved important matter at law, they might not be deemed to be." ' Answer. Sec. 875. If the defendant mean to deny the partnership and refuse to set forth any account (though formerly he may have done so by answer),' he must do so by plea, for, if he answers, he must answer fully," except that he may refuse to answer as to what may subject him to a penalty.* On a motion by the defendant to a bill for a partnership account, for a production of the accounts before answer. Lord Eldon said : " I do not recollect a single instance of such a motion granted, but the object may be obtained in another way. * * * j think I remem- ber this kind of motion by the defendant, stating by his answer that the bill calls for a discovery which he cannot make completely with- out seeing the partnership books and accounts, and he verily believes those books and accounts, to the joint possession of which both were entitled, are in the hands of the plaintiff, that the court would stay p roceedings against him for not putting in his answer, until he has been assisted with that inspection. That sort of motion will do with- out a cross-bill, but this motion must be refused." ' Where the defendants are numerous, each, it seems, is entitled to put in a separate answer, although they should have but one common defense.* ' Mitf . Pi. 3t)4, 265; and see ante, note; Curzon v. De la Zouch, 1 Part I, Ch. VII, pi. 4; Cli. VIII, pi. Swanst. 193; Ewing v. Osbaldiston, 6 17. Bim. 608. 'See Mitf. PI. 313, and the cases 'Pickering v. Rigby, 18 Ves. 484. there cited. » Van Bandau v. Moore, 1 Rusa. 441 ; ' V. Harrison, 4 Madd. 253; Bissett on Partn. 306-355; Mitf. PI. Somerville v. Mackay, 16 Ves. 382. 306, n, d. *Nelme v. Newton, 4 Madd. 253, Joint-Stook Companies. 1369 Injunctions against directors, etc. Sec. 876. With respect to injunctions against companies and their directoi's, little remains to be added. In order, however, to facilitate reference, it will be convenient to collect those cases in which an injunction has been granted or refused, although they may have been noticed in previous pages. In relying upon the authorities here collected, it is to be borne in mind that, before the hearing of a cause, a court of equity will not restrain the exercise of a clear legal right, unless it is satisiied that it will be compelled to do so at the hearing ; ' nor will it interfere if it is not in possession of all the material facts, and convinced that an immediate injunction is imperatively required.'' 1. An injunction has been granted to restrain the improper inser- tion or continuance of a person's name on the register of sharehold- ers ; ' the registry of an improper transfer of shares ; * the improper making of calls ; ' the illegal forfeiture of shares ; « the unfair use by a company of a creditor's name in an action against a shareholder ; ' the illegal suspension of a shareholder from his rights ; " the illegal payment of dividends ; » the making of loans to directoi"s ; '" the departure of a company from the prosecution of the objects to attain which it was formed; viz., to restrain a fire and life insurance com- pany from engaging in marine insurances ; '' a railway company from guaranteeing the payment of 'dividends by a steam packet company ; " so from taking an unauthorized number of shares in another railway company; "so from making a different railway from that which it was incorporated to make ; " or part only of such railway ; " or one only out of several railways which it has been formed to make ; " the ' Playfair v. Birmingham, etc., Rail. ' Carlisle v. South Eastern Rail. Co., Co., 1 Ra. Ca. 640. 1 Mao. & G. 689; Henry v. Great North- ^ Fielding v. Lancashire, etc., Rail, em Rail . Co., 4 K. & J. 1, and 1 De G. Co.,2DeG. & S. 531. & J. 606. 3 Taylor v. Hughes, 3 Jo. & Lat. 24 ; '» Blue v. Melalue, 5 Jur. 1018. Shortridge v. Bosanquet, 16 Beav. 84 ; " Natusch v. Irving, compare Bullock v. Chapman, 3 De G. " Colman v. Eastern Counties Rail. & S. 211. Co. 10 Beav. 1. ■* Fife V. Swaby, 16 Jur. 49. " Salomons v. Laing, 13 Beav. 377. ' Preston V. Grand Collier Dock Co., '* Bagshaw v.Eastern Union Rail Co. , 11 Sim. 327; compare Bailey v. Birken- 7 Ha. 114, and 2 Mac. & G. 389 ; Simp- head, etc., Rail. Co., 12 Beav. 438. Son v. Denison, 10 Ha. 51. « Watson V. Bales, 33 Beav. 394 ; '* Cohen v. Wilkinson, 12 Beav. 135, Norman v. Mitchell, 5 De G. Mac. & G. and 1 Mac. & G. 481 ; Logan v. Cour- 648 ; Naylor v. South Devon Kail. Co., town, 13 Beav. 33. 1 De G & Sm 33. " Hodgson v. Powis, 12 Beav. 393 and ■> Taylor v. Hughes, 3 Jo. & Lat. 24. 539, and 1 De G. Mac. & G. 6. SAdley v. Whitstable Co., 17 Ves. 315; 19 id. 304, IMer. 107. 172 1370 Particular Partnerships. transfer, by one company, of its business to another company ; ' the amalgamation of two companies having similar objects; * a company and its directors from applying to Parliament at the expense of the company, for power to do what it was not formed to do; ' a chartered company from surrendering its charter ; " the publication of the contents of books and documents inspected under an order.' An injunction has been refused to restrain — Sec. 877. The non-registry of a transfer of shares;' the making of calls by a comjxiny commencing business with less capital than that originally contemplated; ' the making of necessary calls by directors who had been guilty of improper conduct; ' the making of calls on some only of the members of an amalgamated society; « the making of calls on all the members of two amalgamated companies to pay the debts of one of such companies ; '° actions for calls on improperly relinquished or forfeited shares ; " the borrowing of money by a limited company ; ''' the issuing of preference shares ; " the application of the money raised by the issue of preference shares to a purpose different from that for which it was raised ; '* the return of deposits to sub- scribers ; " the payment of dividends before payment of debts; '* the payment of dividends before the completion of the company's works; " the continuance in office of directors appointed in the place of others removed; " the management of a company's affairs by directors whose conduct was complained of, no sufficient attempt having been made to control them before applying to the court; " the sailing of a ship 'Charlton v. Newcastle and Carlisle Co., 6 Ea. Ca. 136 ; S. C, 13 Jur. 443 ; Rail. Co., 5 Jur. (N. S.) 1096 ; Beman v. see No. 14 infra. Rufford, 1 Sim. (N. S.) 550; Winch v. " Harris v. North Devon Rail. Co., 20 Birkenhead, etc., Rail. Co., 5 De G. & Beav. 384; Playfair v. Bristol, etc.. Rail. S. 562 ; see, too, Salomons v. Laing, 12 Co., 1 Ra. Ca. 640. Beav. 377. " Bryon v. Metropolitan Saloon Om. 'Gilbert v. Cooper, 10 Jur. 580, V. C. Co., 4 Jur. (N. S.) 680, and on appeal, 3 E. De G. & J. 133 ; see No. 14. ^ Munt. V. Shrew,sbury and Chester "Edwards v. Shrewsbury, etc.. Rail. Rail. Co., 13 Beav. 1 ; Simpson v. Deni- Co., 2 De G. & Sm. 537 ; see No. 14. son, 10 Ha. 51 ; Vance v. East Lane. " Yetts v. Norfolk Rail. Co., 3 De G. & Rail. Co., 3 K. & J. 50. Sm. 393. * Ward V. Society of Attorneys, 1 "' Kent v. Jackson, 14 Beav. 367, and 2 Coll. 370. De G. Mac. & G. 49. ' See Williams v. Prince of Wales "> Stevens v. South Devon Rail. Co., 9 Co., 23 Beav. oUS. Ha. 336. See No. 14. 'Taft V. Harrison, 10 Ha. 489. " Brown v. Monmouthshire, etc., Rail, 'Norman V. Mitchell, 19 Beav. 278, Co., 13 Beav. 33. See No. 14. and 5 De G. Mac. & G. 648. '» Inderwick v. Snell, 3 Mac. & G. 216. * Logan v. Courtown, 13 Beav. 22. " Carlen v. Drury, 1 V. & B. 142 ; Wa- 'Bailey v. Birkenhead, etc.. Rail. Co., ters v. Taylor, 15 Ves. 10 ; Fobs v. Har- 12 Beav. 433; compare Preston v. Grand bottle,3 Ha. 461; Mozley v. Alston, 1 Ph. Collier Dock Co., 11 Sim. 337. 790. '"Cooper V. Shropshire Union Rail. Joint-Stock Companies. 1371 on a voyage disapproved of ; ' the assignment of a company's prop- erty to trustees ujjon trust to sell and pay the company's debts; ^ the total abandonment by a railway company of its works, it not having funds to complete them ; ' the application to Parliament, otherwise than at the expense of the company, for power to enable the company to do what it was never intended it should do; * a railway company empowered to purchase a canal, from exercising the powers of a canal company.' "With reference to injunctions against companies, it may be observed that if an injunction is sought only by a nominee of a rival company, for the benefit of that company, it is at least doubtful whether the court will interfere.' Actions at laiv by and against companies. Sec. 878. The rights and obligations of companies as between them- selves and non-members ai"e determined by the principles examined in the preceding chapters of the present book. What contracts are to be regarded as contracts of a company, what frauds and torts are imputable to it, and what to its directors or agents individually, are questions which have already been answered. In the present section it is proposed to advert to the mode in which companies can sue and be sued at law. ' Witd reference to this question, compaeiies maybe divided into two classes, incorporated and unincorporated. An incorporated company, whether it is incorporated by charter, special act of Parliament, or registration, can and must sue and be sued by its corporate name.' But an unincorporated company, however numerous its members, is fundamentally a partnership, and the rules relating to parties to actions discussed in the preceding pages apply to all unincorporated companies without exception, save where some statutory enactment to the contrary can be shown to exist.' ' Miles V. Thomas, 9 Sim. 606. ^ See section as to proceedings against ^ Lord V. Governor and Co. of Copper individual members. Miners, 3 Ph. 740. « See Fell v. Burchett, 7 E. & B. 537, ' Logan V. Courtown, 13 Beav. 22. where a shareholder in a registered com- * Ware V. Grand. -June. Waterw. Co., pany was unsuccessfully sued. Compare 2 R. & M. 470 ; see, too. Bill v. Sierra Barton v. Hutchinson, 2 Car. & K. 712. Nevada, etc., Co., 6 Jur. (N. S.) 184, The company should be sued in its cor- where the court declined to restrain the porate name simply. Pilbrow v. Pil- directors of a company from applying brow's Atmospheric Rail. Co., 3 C. B. to a foreign state for authority to alter 730. the constitution of the company. ' This observation is not intended to 'Rogers v. Oxford, etc.. Rail. Co., 8 apply to proceedings in the Stannary Pe G. & J. 662. courts. ' See the last case ; Lindley on Part pp. 846-849. 1372 Particular Partkeeships. Although the necessary consequences of this is to throw considera- ble difficulties in the way of unincorporated companies when they have to sue at law on contracts entered into with them, it does not practically offer much obstruction to a creditor who seeks to obtain payment of a debt owing by the company. For although it is very true that if he does not sue all the shareholders who in strictness ought to be sued, he may be met by a plea in abatement, yet, inas- much as such a plea is of no avail unless it discloses the names of all the persons who ought to be made defendants, and unless it is verified by affidavit, and unless it is strictly proved if issue is taken upon it, is practically impossible for a member of a large company seriously to obstruct or embarrass a creditor by having recourse to a plea in abate- ment, founded on the non-joinder of the other shareholders.' A creditor, therefore, may with comparative safety take his chance of a plea in abatement, and sue any shareholder he likes. But he may do more, for if he brings twenty different actions against twenty differ- erent shareholders for the recovery of the same demand, the court will not interfere and stay all actions except one," although after the credi- tor has been paid his debt and the costs of one action, the other actions will be stayed without payment of any costs.^ When an unincorporated company takes legal proceedings to enforce its rights, it has to encounter many formidable obstacles arising from the rules relating to parties to actions before explained. The natural consequence has been that various devices are had recourse to, in order to evade the rules in question. Most of these, however ingenious, are utterly worthless. Attempts to enable actions to be brought by the chairman for the time being of the directors of a company,'' or by the directors for the time being of a company,' or by the purser for the time being of a cost-book company,' have all been made in turn, and have all been made in vain.' A contract entered into with the chairman of directors for the time being, or the directors for the time being, or the purser for the time being is, in point of law, a contract with the chairman, the directors, or the purser, at the time the contract is entered into, and must be ' Crellin v Calvert, and Crelliu v. * Hall v. Bainbridge, 1 Man. & Gr. 43. Brooke, 14 M. & W. 11, may be referred ' See Phelps v. Lyle, 10 A. & E. 113; teas illustrating the above observation. Woolmer v. Tobey, 4 Ra. Ca. 713, as to * Giles V. Tooth, 3 C. B. 675 ; Newton who ought to sue on contracts with " di- v. Belcher, 9 Q. B. 613. rectors." 3 Newton v. Blunt, 3 C. B. 675 ; Carne « Hybart v. Parker, 4 C. B. (N. S.) 209. V. Legh, 6 B. & C. 124 ; Nesbitt v. Howe, ' See as to all such attempts, Eaden- 8 Ir. Law Rep. 273 ; see as to costs, hurst v. Bates, 3 Bing. 470. Henry v. Nash. 1 Ex.826. Joint-Stock Companies. 1373 sued upon accordingly. Moreover, if the contract is in writing, but not under seal, and it has been expressly entered into on behalf of the company so as to be the contract of the company, the company, i. e., all the shareholders in it, will, as before explained, be the proper pari- ties to sue upon it, and an action in the name of less than all will |ail. Generally, therefore, it may be said, that where the rules of the common law have not been modified by statute, unincorporated com- panies must sue and be sued just as if they were ordinary partnerships.'' Turning now to the statute book it will be found that there are only two kinds of unincorporated companies to which the ordinary yules are rendered inapplicable by general enactments. These are banking companies governed by the 7 Geo. IV, c. 46, and companies formed under the Letters Patent Act, 7 Wm. IV, & 1 Vict., o. 73." Each of these kinds of companies is empowered to sue and be sued in the name of an individual appointed to sue and be sued on its behalf ; and proceedings taken by or against him may be continued, without abatement, by or against his successor in office . But although these are the only general enactments bearing upon the present question, there is a large number of private acts ' applicable to particular companies, and substantially to the same effect as those which have been mea- tioned. It is customary to designate such companies as companies empowered to sue and be sued,"* and amongst them will be found most existing unincorporated companies formed for other than min- ing purpose before the passing of the Joint-Stock Companies Eegis- tration Act of 1844. With respect to these companies, the first observation to be made is that it does not follow that, because they may sue and be sued by a public officer, therefore a creditor may not su,e any one or more of the shareholders, if he chooses so to do, and to run the risk of a plea in abatement. Creditors are not to be deprived of their common law rights by an act of Parliament which is consistent with their reten- tion of those rights. ' A contract made with an agent of a ^ There are also some colonial statutes company may be sued on by the agent, to the same eSect. The validity of one unless the contract is on the face of it of them was unsuccessfully disputed in made with the company through its Bank of Australasia v. Nias, 16 Q. B. agent. See Clay v. Southern, 7 Ex. 717. 717. 8ee, too, Bank of Australasia v. '•'Industrial and Provident Societies Harding, 9 C. B. 661, and Kelsall v. are empowered to sue and be sued by a Marshall, 1 C. B. (N. S.) 241. public oificer by 17 & 18 Vict., c. 35. "A good account of the progress of These societies do not fall within the legislation relating to these companies scope of the present treatise. See as to will be found in Van Sandau v. Moore, 1 their public officers, Barton v. Tanna- Kuss. 441. hill, 5 E. & B. 797. 1374 Particular Partnerships. In Blewitt v. G-ordon,' an action was brought against a member of a company on a bill of exchange and the common counts. The com- pany had obtained a special act of Parliament which enacted that actions against the company should and lawfully might be commenced, issued, and prosecuted against the secretary, or any one of the elected directors of the company. The defendant was not the secretary or a director of a company, and he put in a plea to that effect ; but the plea was adjudged not issuable ; for it appeared from other sections of the act that it was not intended to relieve shareholders from any of the common-law obligations or liabilities of partners ; and it was therefore held that, although a creditor might sue the secretary or a director of the company, it was not incumbent on him to do so. Similar decisions have been made in other cases on other acts of Parliament." Another observation to be made with respect to these private acts is, that the public officers created by them have no powers except those expressly conferred upon them. Where, therefore, a company was empowered to sue and be sued in the name of its secretary, and to institute actions and suits in his name, it was held that he had no power to petition on behalf of the company for a commission of bank- ruptcy against one of its debtors.^ Questions sometimes arise as to whether a public officer can sue or be sued in respect of a contract not> expressly entered into with the company. These questions will all be found to turn on the language of the act applicable to the company to which the questions relate ; but speaking generally, it may be said that a public officer may sue or be sued upon contracts which are contracts of the company in point of substance, although nofpei'haps in point of form. In Soulby v. Smith,^ the directors of a company had caused some goods to be put up for sale by auction and the plaintiff had purchased them ; but not being able to obtain possession of them, he sued the secretary of the company, there being an act of Parliament empow- ering it to be so sued. The declaration alleged promises by the directors of the company, and a plea was put in denying promises by the company, and it was argued that the directors and not the secre- ■ 6 Jur. 825, per Coleridge, J.; S. C, 1 companies to sue by their public officers, Dowl. (N. S.) 815. and are altogether silent about their ' Pentland v. Gibson, 1 Ale. & Nap. being sued. See the act which was in 310; Beech v. Byre, 5 Man. & Gr. 415. question in Meux v. Maltby, 2 Swanst. * Guthrie v. Fisk, 3 B. & C. 178, and 377. Modern acts are much more corn- see Ex parte Guthrie, 1 Gl. & Jam. 245. preheusive in their terms. Some of the order acts only empower * 3 B. & Ad. 939. Joint-Stock Companies. 1375 tary ought to have been used. But it was held that the contract declared on was in effect the contract of the company, and that the action was proper in point of form. In Smith v. Goldsworthy, the defendant had entered into a cove- nant with three persons, who were in fact trustees for a company, but the covenant was not expressed to be made with them in any official capacity. The company's act empowered it to sue by its secretary upon any covenants entered into with the company, or wherein the company was or should be interested ; and it was held, tiat under these circumstances the secretary on behalf of the com- pany had power to sue the defendant upon the covenant into which he had entered. Wills v. Sutherland '' is a still stronger case, for whilst the covenant there sued on was similar to that in Smith v. Groldsworthy, the act contained no words referring to contracts in which the company might be interested, but merely declared that in all actions by or on behalf of the company, it should be sufficient to state and proceed in the name of its secretary. A promissory note payable to the order of a person who is in fact a trustee for a company empowered to sue by a public officer, must, if unindorsed, be sued upon by the payee and not by the public officer.' A public officer may sue for a libel on the company represented by him, although it is not a corporate body.'' By far the greater number of decisions to be met with in the books relating to public officers have turned upon the Banking Act of 7 Geo. IV, and to these decisions, so far as they relate to actions be- tween companies governed by the act on the one hand and strangers on the other, it is now proposed to direct the reader's attention. The Banking Act of 7 Geo. IV, c. 46,' has been decided to require imperatively, that all actions by or against companies governed by it, shall be brought by or against their public officers and not otherwise. For this act does not, like those in Blewitt v. Gordon and other cases of that class, leave the obligations and liabilities of the partners the same as they would be at common law, but materially modifies them, and effect cannot be given to the various provisions of the act if actions are allowed to be brought by or against the company otherwise than in the manner prescribed by the act itself.' ' 4 Q. B 430. Skinner v. Lambert, 4 * Williams v. Beaumont, 10 Bing. 260,. Man. & Gr. 477, is substantially a simi- ' Amended by 1 & 2 Vict., c. 96, and 3 lar case. & 4 Vi«t., c. 11. 2 4 Ex. 311. * Steward v. Greaves, 10 M. & W. 711; 'See M'Dowell v. Doyle, 7 Ir. Com. Chapman v. Milvain, 5 Ex. 61. Corn- Law Kep. 598. pare Robertson v. Slieward, 1 Man. & 1376 Particulak Partnerships. Even if there is no public oflScer, it is doubtful whether any action can be brought against the company until one is appointed, and whether, therefore, a person desirous of suing the company must not, before he can bring an action, compel the company to appoint an officer whereby it may be sued." The fact that the company has stopped payment does not prevent it from suing and being sued by its public officer,'' and if a banking company changes its name the public officer of the new company rep- resents the old company.' Whatever number of public officers a com- pany may have, one only should sue or be sued.* The bankruptcy of a public officer does not prevent his being sued as such.' The change of public officers j^endente lite does not, whether he is plaintiff or defendant, abate the action. If an action is brought by a public officer, the fact that judgment is entered up in his name after he has been removed from office does not entitle the defendant to set aside the judgment, and the subsequent proceedings upon it, but leave will be given to enter on the roll nunc pro tunc, a suggestion of the plaintiff's removal and the appointment of a fresh officer, and to amend the judgment and writ of execution by the insertion of the name of the new officer.* It is to be observed, that if a person who is not a public officer sues as if he were, the company which he assumes to represent is not a party to the action, and consequently will not be affected by the judgment in it ; hence the fact, that the plaintiff is what he pretends to be, is material and traversable,' and declarations by public officers have been held bad on special demurrer for not stating with sufficient precision the character in which the plaintiff on the record was suing, and the existence of the company he assumed to represent.* At the same time, unless the fact that the plaintiff is suing on behalf of a company having a public officer appears on the declaration, or unless Gr. 2] 1. See as to laying intent to de- « See Webb v. Taylor, 8 Jur. 39 ; Todd fraud in indictment for forgery, R. v. v. Wright, 11 id. 471 ; and as to the Carter, 1 Car. & K. 741 ; R. v. Beard, 8 proper mode of entering the suggestion Car. & P. 143 ; R. v. James, 7 id. 553 ; on the roll, see Barnewell v. Sutherland, R. V. Burgiss, id. 490 ; and as to an aiB- 9 C. B. 380, and Paterson v. Ironside, davit to hold to bail, Spencer v. Newton, 14 Jur. 723, note. 6 A. & E. 630. The Industrial Provi- ' See Barnewell v. Sutherland, 9 C. dent Societies Act is also imperative, B. 380 ; Steward v. Dunn, 11 M. & W. Burton v. Tannahill, 5 E. & B. T97. 63. ' See Steward v. Graeves, 10 M. & W. » See Esdaile v. Maclean, 15 M. & W. 711. 377; M'Intyre v. Miller, 13 Id. 725; ' Davidson v Cooper, 11 id. 778 ; Need- Fletcher v. Crosbie, 9 id. 252 ; Christie ham V. Law, id. 400. v. Peart, 7 id. 491 ; Spiller v. Johnson, '' Wilson v. Craven, 8 id. 584. 6 id. 570 ; Davidson v. Bower, 4 Man. & < Holmes v. Binney,4 Bing N.C. 454. Gr. 626. Steward v Dunn, 11 M. & W. 63. Joint-Stock Companies. 1377 the defendant raises the objection that the plaintiff is so suing, so as to put that fact in issue, it will not be material that the action is brought on behalf of a banking company subject to the statute of 7 Geo. IV, c. 46, by a person not appearing to be its public officer.' This was held in a case where an action was brought by the general manager of a bank on a promissory note made payable to its manager, and given to the manager of a local branch ; it was objected, 1st, that this last person ought to have sued ; or, 2nd, that the public officer of the bank ought to have sued in his representative capacity. Both objections were overruled ; the 1st, because the plaintiff was the man- ager of the bank in the proper sense of the phrase ; and the 2nd, because the defendant had only put in issue the fact that the plaintiff was manager, and the objection in question was not, therefoi'e, open to him." Although, as has been seen, a public officer may sue on behalf of a company which has stopped payment, as otherwise the company could not get in its debts, there can be no public officer under the 7 Geo. IV, c. 46, of a company which has not begun to carry on the business of bankers under that act. Therefore a plea to an action by a public officer denying that the company he represents carried on business as alleged in the declaration, has been allowed to be pleaded with other pleas,' and declarations by public officers have been successfully demurred to for not stating that the companies represented by them do or did carry on the business of bankers as contemplated by the act.' In an action against a public officer as a nominal defendant, he may deny that he fills the office he is assumed to fill.^ But this plea will be of no avail if the only evidence to support it is that the com- pany has ceased to carry on the business.* A plea of the bankruptcy of a person sued as a public officer will not be allowed to stand, if the plaintiff will give an undertaking not to issue execution against the person or property of the defendant himself.' Of the recovery back of subscriptions to companies. Sec. 879. When a company is projected, it is usual to advertise it, to state its proposed capital and the number of shares into which it ' Robertson v. Slieward, 1 id. 511. not be supported by affidavit. Wood v 2 Id. Marston, 7 Dowl. 865. 3 Roe V. Fuller, 7 Ex. 320 ; Steward v. « See Needham v. Law, 11 M. & W Dunn, 11 M. & W. 63. 400 ; Davidson v. Cooper, id. 778 ' Fletclier v. Crosbie, 9 id. 242 ; and ' Steward v. Dunn, 11 M. & W. 63 ; compare Davidson v. Bower, 4 Man. & Wood v. Marston, 7 Dowl. 865. The (Jr. 626. foregoing from s. 874, is from Lindley • Qu. whether the plea of denial must on Part. pp. 408-415, 173 1378 Particular Partxerships. is to be divided, and to offer those shares to the public. When shares are applied for and allotted, the allottee is generally called upon to pay a deposit of so much per share, as a first installment of the total amount which he undertakes to pay by his acceptance of the shares allotted to him. In the present section it is proposed to consider the circumstances under which an allottee of shares, who has paid a deposit upon them, has a right to have this deposit returned, upon the ground that the consideration for its payment has failed. It has been recently decided by the House of Lords that if a number of persons, meaning to join in a common undertaking, raise a common fund, eventually to be increased, but commencing by a deposit, and they put these deposits for a common object into the hands of a committee, with directions to them to do certain acts, it is not competent for any one or more of the subscribers, against the will of the others, to withdraw and say, "I think, or we think, you ought not to go any further." Any one subscriber who is not of that opinion has a right to say, " I gave my money upon the faith that we were all embai'ked in one common undertaking, and till that has been done, which we agreed should be done, none have a right to withdraw and say you shall not go any further." ' It follows from this that no subscriber to a projected company can recover back his money on the ground that the consideration for his subscription has failed, nntil the formation of the company upon the terms assented to by him ' has been abandoned or has become impracticable. But further, when a person apj)lies for shares and has them allotted to him, a contract is entered into between him and others, and before any question as to failure of consideration can be discussed, the terms of this contract must be examined for the purpose of ascertaining precisely for what the deposit was paid.' If the contract shows that the deposit was paid for a share in a company to be formed for cer- tain purposes and upon certain conditions, and no such company is formed, and the time for its formation (which, if no time is limited, must be taken to be a reasonable time) has elapsed, then the consid- ' Baird v. Hoss, 2 Macqueen, 61 ; see, Clarke v. Chaplin. 1- Ex. 26 ; it does not too, Burnes v. Pennell, 2 Ho. Lo. Ca. require a stamp, Vollans v. Fletcher, 1 497 ; compare Kent v. Jackson, 14 Beav. Ex 30 ; Willey v. Parratt, 3 id. 311 ; 367, and 3 De G. Mac. & G. 49. Mo watt v. Londesborough, 3 E. & B. ^ See Johnson v. Goslett, 18 C. B. 738 ; 307 ; and other cases cited infra. The and 3 C. B. (N. S.) 569. defendants will, if necessary, be ordered ^ Hence in an action for the recovery to produce the agreement between them back of the deposit, the letter allotting and the plaintiff, Steadman v. Arden, 15 the shares in respect of which the M. & W. 587. deposit was paid must be produced, Joint-Stock Companies.' 1379 eration for which the deposit was paid has failed, and the deposit is returnable, unless the original contract has been varied with the con- sent of the subscriber of the deposit. But if the contract shows that the deposit was made for some other purpose (c. g., for the purpose of being employed in attempting to start the company) then the cir- cumstance that the company has not been and cannot be formed is no reason why the deposit should be returned. In support of the first of these propositions numerous cases may bo cited. In Noekels v. Crosby,' the defendants, in circulars published by them, had proposed to receive subscriptions of 10s. a week for the space of one year, and to invest these subscriptions and to divide the interest twice a year equally amongst the subscribers or the survivors of them. The plaintiff subscribed to this scheme, but there not being a sufficient niTmber of other subscribers nothing was ever invested, and the defendants came to a resolution to proceed with it no further, and to return to each subscriber the amount of his sub- scription, less a percentage for expenses Incurred. The plaintiff demanded to have the whole amount subscribed by him returned, and he brought an action against the defendants for its recovery and was held entitled to a verdict. He had subscribed his money for one purpose only; it had not been applied, nor was there any longer any intention to apply it for that purj)ose, and it was, therefore, the duty of the defendants to return it to him in full. The judgment of Littledale, J., upon the right of promoters of abortive schemes to charge the subscribers with expenses, is particularly valuable, and was as follows : " I am also of opinion that the plaintiff is entitled to recover, upon this general principle, that if persons set a scheme afoot, and assume to be the directors or managers, all the expenses incurred before the scheme is in actual operation must in the first instance be borne by them. When it is in operation, the expenses and charge of management should be borne by the concern, and then it may be fair that the preliminary expenses should be paid in the same way, for then the subscribers have the benefit of them. The prospectus put forth by these defendants stated that the money sub- scribed was to be placed out at interest. The plaintiff's sole object in paying the money must have been to have it so placed out, but during eighteen months it remained idle at the bankers. Suppose there had been no subscribers, the projectors must have paid all the ' 3 B. & C. 814. 1380 Particular Partu-erships. expenses. If, then, one person only subscribes, are all those expenses to be east upon him ? The hardship and injustice would be mon- strous, yet that would be the consequence in such a case were we now to hold that the plaintifE was liable to a proportion of the expenses incurred by those defendants. With respect to the supposed partner- ship, it is plain that there could be none until the money was laid out in execution of the proposed scheme. I am, therefore, clearly of opinion that the plaintifE was entitled to recover." A more recent case, to the same effect, is Walstab v. Spottiswoode,' in which it was held that a person, who had applied for shares in a projected railway company, and had agreed to sign the parliamentary contract and subscribers' agreement, was entitled to recover back the whole of the deposits paid in respect of the shares allotted her, it being proved that the formation of the company had been abandoned. The deed she undertook to execute does not appear ever to have been prepared. These cases have always been considered as leading authorities, and they have been constantly recognized and followed." Their principle applies, whatever the object of the company when established may be, and to companies formed on the cost-book system as well as to others.' Moreover, if an allottee of shares undertakes to sign some deed which is referred to and that deed is not in existence, but a deed said to be the one referred to, is afterward prepared, he is not bound to execute that if it is inconsistent with the contract into which he has already entered. Consequently, where a person applied for shares in a projected railway and paid his deposits, and undertook to sign the parliamentary contract and subscribers' agreement, and one was afterward prepared authorizing the promoters of the company to apply the deposits in defraying preliminary expenses, it was held that this was not such a deed as it was obligatory upon the allottee to exe- cute, and that the company having proved abortive he was entitled to recover his deposits although it would have been otherwise had he executed the deed."* It need hardly be observed' that if a person has agreed to pay a deposit as a consideration for certain shares, and the consideration for 1 15 M. & W. 501. C. B. (N. S.) 569. In this case the com- ° See Moore v. Garwood, 4 Ex. 681 ; pany was actually at work and its Ashpitel V. Sercombe, 5 id. 147 ; Coup- formation had never been abandoned, land V. Challis, a id. 688; Owen v. But its formation, on the terms origi- Challis, 6 C. B. 115; Ward v. Londes- nally agreed upon, was abandoned, and borougJ , 13 id. 252; Mowatt v. Lon- the plaintiff had not assented to any desborough, 3 E. & B. 307. others. 3 John V. Goslett, 18 C. B. 728 ; and 3 < Ashpitel v. Sercombe, 5 Ex. 147. Joint-Stock Companies. 1381 his agreement has failed, he is not compellable to pay the deposit.' But if a person undertakes to pay deposits by a certain day, it is no defense to an action for not paying them on or before that day, that since that day the projected company has become abortive, for, per- haps that would not have been its fate if the subscriptions had been paid as promised, and ex hypothesi, the promise was broken before the circumstances relied on as an excuse for its breach occurred.' In the cases referred to above, the deposits were held returnable upon the ground that they had been paid for one purpose only, and that such purpose had become unattainable. In those about to be referred to, the deposits were held not returnable, although the company sub- scribed to had proved abortive, for the contract of the parties showed that the deposits were properly applicable in discharge of the expenses incidental to tlie attempt to form the company.' Garwood v. Ede* is a case of this description. There the plaintiff had paid deposits on shares in a projected railway, and had signed a deed which authorized the promoters to defray the expenses incidental to the undertaking out of the deposits paid for shares.' Under these circumstances it was held that, although the scheme for the railway proved abortive, the deposits paid by the subscribers for shares in it were not returnable. Clements v. Todd* was decided on the same principle, for although the plaintiff had not signed any such deed as that signed in the last case, there was a deed which he had undertaken to sign, and he had accepted scrip certificates which stated that he had signed it. He was, therefore, held to have authorized the application of his deposits in the discharge of preliminary expenses as mentioned in the deed. Jones v. Harrison ' is another instance of the same kind, only the authority to defray preliminary expenses out of the deposits was con- ferred by the terms of the letter of allotment, and not by any deed intended for execution after the allotment was made. Upon precisely the same principle it was held in the recent case of Aldham v. Brown,* that where a person had covenanted to pay a ' Duke V. Andrews, 3 Ex. 290. See Willey v. Parratt, 3 Ex. 311 ; Baird = Duke V. Dive, 1 Ex. 36; Duke v. v. Ross, 2 M'Queen, 69. Forbes, id. 356 ; Aldham v. Brown, 7 B. * 1 Ex. 368 ; compare Ashpitel v Ser- & B. 164 ; see Woolmer v. Toby, 10 Q. combe, 5 Ex. 147 ; Slbson v. Edgworth, B. 691, as to who ought to sue in such 3 De G. & Sm. 73. cases. ' 3 Ex. 53 ; see, too, Willey v. Par- 3 See Baird v. Ross, 3 M'Queen, 68, 69. ratt, 8 Ex. 311; Baird v. Ross, 3 M'Queen, * 1 Ex. 364 ; see too. Watts v. Salter, 61 . 10 C. B. 477 ; Vane v. Cobhold, 1 Ex. 'TE.& B. 164 ; see, too, Duke v. Dive, 798 ; Atkinson v. Pocock, id. 796. 1 Ex . 36 ; Duke v. Forbes, id. 356. 'Meaning the preliminary expenses. 1382 Pahticulab Partnerships. deposit which was to be applicable, among other things, to the dis- charge of the expenses of forming a company, he was bound by his covenant, an(J was liable to an action upon it, although, before the action was brought, the formation of the company had become impos- sible. The cases of Garwood v. Ede,' and "Watts v. Salter,' which decided that a person who had paid deposits and executed a deed authorizing their application in payment of preliminary expenses, could not recover the deposits so paid, are not to be regarded as authorities for the proposition that the execution of such a deed necessarily, and under all circumstances, precludes the recovery back of the deposits. If the execution of the deed has been induced by fraud, the right to recover the deposits is unaffected by such execution,' and although it was said in Watts v. Salter that in the absence of fraud the deed, and that alone, regulated the rights of the contracting parties, yet this doctrine has not altogether met with approbation, and in a late case where the promoters of a railway company had in their circulars and letters of allotment expressly undertaken to return their deposits in full, if the necessary act of Parliament could not be obtained, it was held, first by the Court of Queen's Bench, and afterward by the Exchequer Chamber, that the deposits paid were recoverable in full, even by persons who had executed a deed whereby it was expressly stipulated that the promoters should be indemnified out of the funds of the company and by the subscribing shareholders against all expenses." The promoters, in order to induce persons to take shares, to pay deposits, and execute the deed, promised to return all deposits in full in a given event, and it could never have been intended that a person by executing the deed should lose the benefit of that promise. Before leaving this subject it may be as ivell to observe that in order that an action for the recovery back of deposits may be successful, the plaintiff must prove that the money he seeks to recover was paid to the defendants or to their agents. For, in the absence of such proof, however clear the right of the plaintiff may be to have his money back, he will have established no case against the individuals from whom he seeks to recover it. In Nockels v. Crosby, Welstab v. Spottiswoode, and the cases of '1 Ex. 264. nOC. B. 477. ^ Wontner v. Shairp, 4 C. B. 404; * Mowatt v. Lord Londesborough, 3 E. Jarrett v. Kennedy, 6 id. 319 ; compare & B. 307. In this case interest on the Vane v. Cobbold, 1 Ex. 798, and Atkin- deposit had been demanded, and was son V. Pocock, Id. 796 : Watts v. Salter, recovered from the time of the demand. 10 C. B. 477. Joint-Stock Companies. 1383 that class already referred to, the plaiutifE proved that he had paid his deposits to the bankers appointed by the defendants to i-eceive them, and this was quite sufficient.' But it must be borne in mind that the promoters of companies are not partners, and that in order that any particular promoter may be liable to return deposits paid into a bank to the account of the company, it must be shown that he authorized the bank to receive the deposits on the account to which they have been paid. The following cases illustrate this : In Watson v. The Earle of Oharlemont,'' the plaintiff brought an action against three persons to recover deposits paid by him for shares in an abortive company. The three defendants were members of the committee of management. The letter of allotment sent to the plain- tiff was signed by the secretary to the company, and contained a list of banks into any of which deposits might be paid. The plaintiff had paid his deposits into one of these banks, and had received from the bankers a receipt on account of certain persons as trustees for the company. Only one of the defendants was amongst the persons whose receipt of the money was thus acknowledged ; and it was held that this evidence was insufficient to show a receipt by all the defendants, and the action therefore failedc Burnside v. Dayrell,^ is another instance of the same sort. The action there failed, because there was no evidence that the money sought to be recovered had ever been received by the defendant, or by any person on his behalf, except the fact that he was a member of the provisional committee, and of the committee of management, which was not enough. In Drouet v. Taylor,* the plaintiff sued four directors, whose names appeared in the prospectus of a company. The prospectus stated who the bankers of the company were, and contained a statement that the deposits would be returned in full in the event of the non-prose- cution of the undertaking. The plaintiff proved that he had paid his deposits to the bankers, but he did not prove when. One of the defendants was not shown to have been a director when that money was paid. His name was in the company's pass-book, but how it came there did not appear. The defendant in question denied" that he had ever consented to be a director, or to be held out as such ; he denied that he knew that his name was in the pass-book or in any ' See Maitland's Case, 4 De G. M. & tt. * 16 C. B. 571. The preceding matter 769. from p. 1373, is from Lindley on Part., = 12 Q. B. 856. pp. 108-118. 8 3 Ex. 364. ]384 Particular Partnership. prospectus; he denied that he had ever acted as a director, although he had at times been with the other directors in their board-room. The jury found a verdict for the plaintiff, but the ruling of the judge at Nisi Prius having been excepted to, the court of appeals directed a new trial. Actions betvreen companies and their shareholders. Sec. 880. With respect to ordinary actions between companies and their shareholders, little remains to be added to what has been said in the previous chapters.' The following subjects have, in fact, been already considered, viz. : 1. Actions between the promoters of companies and by and against persons who subscribed for shares. 2. Actions by shareholders for being improperly on or off a com- pany's register, and for having had his shares illegally forfeited. 3. Actions between the buyers and sellers of shares, and between them and the brokers employed by them. It has also been seen that, as regards unincorporated companies, not represented by public officers, there are great difficulties, as well in the way of their suing, as of their being sued by their own share- holders. The proper and improper methods to which recourse is had in order to obviate these difficulties have been referred to, and it has been shown that the difficulties alluded to have no existence in actions between incorporated companies and their shareholders, nor in actions between public officers and the members of the companies they repre- sent, if such actions are maintainable at all, which, speaking gen- erally, they now are. There only remains for consideration in the present place a few rules relating to actions for calls and dividends, and the remedy by mandamus in the case of the non-performance by companies of their duties toward their shareholders. Actions for calls. Sec. 881. An action for calls must be brought in the name of the company, if it is incorporated, and in the name of the public officer if the company is empowered to sue its shareholders in that manner." ' If a company is merely a large part- dard v. Hodges, 3 Tyr. 309, and 1 Cr. & nership, one shareholder cannot sue M. 83. another at law for a debt owing to him ' Chapman v. Milvain, 5 Ex. 61 ; by the company; nor is such an action Wills v. Sutherland, 4 id. 211 ; Skin- sustainable by a person who is substan- ner v. Lambert, 4 Man. & Gr. 477 ; tially, though not actually a share- Lawrence v. Wynn, 5 M. «& W. 355 ; bolder, e. g., a cestui que trust of an Smith v. Qoldsworthy, 4 Q. B. 430. ostensible owner of a share. See God- Join-t-Stock CoMPAsriEs. 1385 Several of "the modern acts of Parliament relating to companies contain provisions having for their object the simplification of the pleadings and proofs in actions for calls. These provisions v^ill be found in the appendix. Their general effect is to render it necessary for a declaration in an action for calls, is to state merely that the defendant, as a shareholder, is indebted to the company in so much money for calls, omitting all statements respecting the making of the calls in question. As regards proof, the general effect of the pro- visions referred to is to render it necessary to show merely three things, viz. : .first, that the calls sued for were made in point of fact ; secondly, that the defendant is, or was, a shareholder when the call was made, and, thirdly, that he had proper notice of the making of the call. In an action, or cross-action ' for calls, the statutory form of dec- laration should be adopted in every case to which it is applicable." But a declaration is not demurrable for containing averments which maybe rejected as surplusage, and, therefore, a declaration by a com- pany, governed by the Companies Clause ConsolidationAct, averring not only that the defendant was a shareholder when the call was made, but that he still is a shareholder, has been held not to be bad, even on a special demurrer." The form of declaration given by the Companies Clauses Act is not applicable to an action against an exec- utor for calls made in the life- time of his testator." Calls made payable by statute, or by deed, are specialty debts, and an action for recovery is not, therefore, barred by the lapse of less than twenty years. ° The usual grounds of defense to an action for calls may be reduced to: A denial that the defendant is a person liable to pay the call. A denial of the making of the call in point of fact. A denial that the call, admitted to have been made in point of fact, was authorized, was made by competent persons, or in the proper manner, or for proper purposes. ' By a plea of set-ofF, Moore v. Metro- Howbeach Coal Co. v. Teague, 8 W. R. politan Sewage Co., 3 Ex. 333. 264. ' Wolverhampton, etc., Waterw. Co. ^Midland, etc., Rail. Co. v. Evans, 4 V. Hawesford, 5 Jur. (N. S.) 1104; Ex.649; East Lane. Rail. Co. v. Crox- Dundalk, etc., Kail. Co, v. Tapster, 1 Q.B. ton, 5 id. 387. 667; Newport, etc.. Rail. Co. v. Hawes, ■'Birkenhead, etc., Rail. Co. v. Cotes- 3 Ex. 476 ; Wilson v. Bilkerhead, etc., worth, 5 Eq. 336. Rail. Co., 6 id. 636. The laat case = Cork and Brandon Rail. Co. v. shows that a declaration in the statu- Goode, 18 C. B. 836. Compare Robin- toij form is unobjectionable. See son's case, 4 De Gt. Mc. & Q. 573. in 1386 Particular Partnekships. A denial of any notice of the call. A denial of such notice as the defendant was entitled to receive. Infancy. Fraud. It must be borne in mind that if a shareholder does not avail him- self of such defense as he may have at the proper time he will be pre- cluded from afterward disputing either the validity or the call, or his liability to pay it.' Nil debet is a bad plea to an action for calls due on a specialty, and a bad replication to a plea of set-ofE of such calls.' Under a plea of never indebted, a defendant in an action for calls may show that he is not a shareholder,' and that the calls sued for have not been duly made.'' Nevertheless, the court will allow a defendant both to plead never indebted and also to deny that he is a shareholder;'' but it has refused to allow a defendant to plead with the general issue that the calls wei"e made by persons not properly quali- fied ; that no notice of the call was given; that no time or place' for receiving payments was appointed; that the calls were made for unau- thorized purposes; that they were not made on all the subscribers and proj)rietors; that the shares in respect of which the call was demanded had been improperly created. « Evidence of the making of a call is usually given by proving the resolution by which it was made, and this may be done either by tes- timony of the company's secretary or some other person having actual knowledge of the fact, or by the company's minute books, which, as in many cases, are made admissible as evidence of the facts stated in them. Evidence that the defendant, is or was a shareholder is given by the production of the company's register. Evidence that the defendant received due notice of the making ' See Thames Haven, etc., Co. v. Hall, 673 ; London and Brighton Rail. Co. v. 5 Man. & Gr. 274; Thames Haven, etc., Fairclough, 6 Bing. N. C. 270. In Co. V. Rose, 4 id. 552. Aylesbury Rail. Co. v. Mount, 7 Man. '' Mil vain v. Mather, 5 Ex. 55. & Qr. 898, a plea showing that the de- ' Birkenhead, etc., Rail. Co. v. Brown- fendant was not a shareholder was held rigg, 4 Ex. 436. bad on special demurrer, as amounting * London and Brighton Rail. Co . v. to an argumentative denial of the debt ; Wilson. 6 Bing. N. C. 135 ; South East- and, in Willis v. Bobinson, 5 Ex. 303, a ern Bail. Co. v. Hebblewhite, 13 A. & E. plea that the persons stated to form a 497; Shropshire Union Rail. Co. v. board of directors did not constitute Anderson, 3 Ex. 401. such board, was held not warranted by * Id. leave to plead that the persons who ' Id. , and see further as to what pleas made the call did not constitute a board will and what will not be allowed, Wa- of directors, terford, etc., Rail. Co. v. Logan, 14 Q. B. Joint-Stock Companies. 1387 of the call must be giTen by showing that the requisite advertise- ments (if auy) were published, and that such notice as he was enti- tled to i-eceive either actually reached him or was so sent to him as to have probably reached him. This will be sufl&cient in default of evi- dence that what was so sent to him did not reach him. Actions for dividends. Sec. 882. Dividends, which are actually declared and payable by an incorporated company, are recoverable by action at law brought by the person legally entitled to receive them, against the company. The plaintiff must prove that the dividend sought to be recovered has been declared and has become payable, and that he is entitled at law to the dividend payable in respect of the shares by virtue of which he claims it. The circumstance that he is not a registered shareholder will not i^rejudice him if he has been wrongfully removed by the company from the register;' nor will the circumstance that the plain- tiff is a married woman be fatal to her clairp if she might have sued with her husband, and his non-joinder has not been pleaded in abate- ment. » As was seen in the chapter on dividends, the non-payment of calls is, in most companies, an answer to an action for dividends, and even where it is not so, calls and dividends may, it is conceived, be set off against each other. Whether a dividend declared by an unincorporated company can be recovered at law is a question of some difficulty. If those cases are excepted in which, on principles before explained, an action will lie by one partner against another for money in the hands of the lat- ter jJayable to the former, it will perhaps not be going too far to say that the above question must be answered in the negative.'' Even if the company is empowered to sue and be sued by a public officer, and an action by a shareholder against him for a dividend declared and payable might possibly lie, there would be very great, not to say insuperable difficulties in executing a judgment obtained by the plain- tiff in such an action. It must be executed, if at all, against indi- vidual shareholders; but they clearly are not as such debtors to the plaintiff for the dividends he seeks to recover. No instance of an ordin- ary action by a shareholder against a public officer for dividends is known to the writer. ' Eastern Union Rail. Co. v. Symonds, ^ Id. 5 Ex. 237. * See Lyon v. Haynes, 5 Man. & Gr. '' Dalton v. Midland Rail. Co. , 13 C. B. 504. The foregoing is from Lindley on 458, and 13 id. 474. Part. pp. 745-748. 1388 Particular Partnerships. Of 8et-o0 by and against companies. Sec. 883. In actions and suits between companies on the one hand and non-members on the other, there is little to be said upon the subject of set-off, except that the ordinary rules are applicable. It is only when a company sues or is sued by one of its own mem- bers, or when one member of a company, having obtained judgment against it, seeks to enforce such judgment against a co-member, or when a company is being wound up, that questions of set-oflE present peculiar difficulties. These are matters, however, which this is not the place to discuss, and the only observation which requires to be made here is, that in actions and suits between a company on the one hand and one of its own members on the other, the latter is so far treated as a stranger to the company, that cross demands between him and other members, as distinguished from cross demands be- tween him and the company, cannot be gone into. As regards incorporated companies, this follows from the circumstance that they are distinct from the menfbei'S composing them ; that a debt due from or to several persons jointly cannot be set ofE against a debt due to or from some or one of them only. Moreover, if a member of an unincorporated joint-stock company is a creditor of the company, and is in a position to sue the other members or any of them at law, a court of equity will not interfere to stay the action, on the ground that, if the company were wound up, and its accounts taken, the plaintifE at law would be found indebted to the company as a shareholder thereof. In such a case as that now supposed, the plaintifE at law sues as a non-member ; and if his de- mand is one capable of being enforced at law, a court of equity will not interfere upon the ground that, in his character of memRer, he is indebted to_ his co-shareholders. This is well illustrated by a recent case before Lord Cottenham, which may be conveniently noticed here, although it will have to be referred to again in connection with another subject. In the case in question, Rheam v. Smith,' the plaintifE and one of the defendants were members of an unincor- porated joint-stock company ; the defendants were the bankers of the company, and had sued the plaintifE for a debt due by the com- pany to the defendants as bankers. The plaintifE thereupon filed a bill against the bankers and the company, upon the ground that he ought not, as between himself and the bankers (one of whom was a ' 3 Ph. 726. See, too, Hammond v. Ward, 3 Drew. 103 ; Hardinge v Web- ster, 1 Jur. (N. S.) 88. Joint-Stock Companies. 1389 shareholder) to pay more than what, on taking the pccounts of the company, would be found to be due from the plaintiff in respect of the debt in question. The bill accordingly prayed that the accounts of the company might be taken, and its affairs wound up, and that proyision might be made for due payment of the debts of the com- pany, and that in the meantime the action, and all proceedings therein, might be stayed. A demurrer to the bill was overruled by the Vice-Chancellor, who, it is said, treated the case as one in which a partnership of A and B was siting the partnership of A, 0, and D, in which case it would be contrary to equity to allow the debt to be recovered without first ascertaining for what proportion of it A was himself liable.' But on appeal to the Lord Chancellor, the decision below was reversed, and the demurrer was allowed, the Lord Chancellor observing, " It really seems to me that, if the principle on which this demurrer is said to have been overruled by the Vice- Chan- cellor were admitted, it would lead to the most frightful consequences; for it comes to this, that if a railway company, or any company carrying on great works, and who may have become indebted to some contractor in half-a-million of money for work done, upon that con- tractor applying for payment of his debt, can find out that he, or any one connected with him in business, holds a single share in the company, they may say. No, we cannot pay our debt ; you must first break up the company, and ascertain whether its assets are sufficient for payment of its debts, for if not, you or the persons connected with you will be liable to contribute to the very sum which yon seek to recover. It is impossible to stop short of that if the principle be once admitted. After some difficulty a rule has been established at law, enabling creditors of these great companies to enforce their claims against individual shareholders, leaving them, of course, to their right to contribution against their copartners. The rule, no doubt, leads sometimes to hardship upon the party sued, but the balance of con- venience is in its favor, and for that reason it has been adopted ; because it would be a still greater hardship upon parties dealing with such companies, if the enforcement of their claims were to be em- barrassed by the necessity of treating all the members of the company as jointly responsible. This suit, however, is an attempt to induce a court of equity to interfere with that rule, for the plaintiff, by his bill, asserts in effect nothing short of this proposition : If I can find ' The fact that such an action could although one partner may under certain not be maintained at law is not noticed circumstances sue another at law, A. in the report. But it is clear that and B cannot possibly sue A. and C. 1390 Pakticulak Partsebships. out that you -who are suing me at law have a single share in the com- pany against whom the claim is made, then there is an end to your legal right ; equity will interfere, and though your money may have contributed to the establishment of the company, you shall not be permitted to recover a single farthing against any member of the company until the concern is altogether wound up." Execution against companies and their shareholders. Sec. 884. By the law of this country a judgment can only be obtained against a company in an action against the company sued, in its corporate name if it is incorporated, or in the name of its pub- lic ofiBcer if it is not incorporated, but is empowered to be sued in the name of such officer as its representative. A judgment against an incorporated company cannot by common law be executed except against the property of the company, and a judgment against an individual cannot, by common law, be executed against any person or property except the person or property of the individual named in the judgment. In order, however, to give creditors a more extensive remedy than they would have at common law upon a judgment obtained against companies, either in their corporate names or the names of their public officers, the legislature has rendered such judg- ments enforceable against the individual members of the companies. For this purpose three schemes have been had recourse to. The first in point of time was applicable to companies empowered to sue and be sued, and was as follows : A creditor, having obtained judgment against the public officer, was allowed to proceed upon that judgment by scire facias against any of the shareholders in the com- pany at the time the judgment was obtained, and, if necessary, also against such of the late shareholders as were members of the company when the debt was contracted. The next device was a mere modification of the last, and consisted in the application of it to judgments against companies by their cor- porate names, which judgments were made enforceable against share- holders and former shareholders in substan,tially the same manner as that above explained; a qualification, however, was added, to the efEect that recourse should not be had against individual shareholders until efEorts had been made in vain to obtain payment from the com- pany, and as to some companies, that recourse should not be had against any shareholder except to the extent of his shares. The third and last device was altogether diiferent, and was the result of the course adopted by creditors, who, when they could not Joint-Stock Companies. 1391 obtain satisfaction from companies, singled out some unfortunate shareholder and compelled him to pay the whole amount for which judgment had been recovered. This course, thought by some to be quite proper, was deemed by others to be in the highest degree cruel, and the opinion of the latter had sufficient support to induce Parlia- ment when legislating on joint-stock companies, in 1856, to leave out all those clauses found in the preceding acts enabling creditors to execute judgments against individual shareholders, and to provide, instead, that creditors should have the power, upon non-payment of the debts due to them from the company, to cause it to be wound up. Conse- quently, a creditor of a company governed by the Joint-Stock Com- panies Act of 1856, can only execute a judgment obtained against the company by proceeding against the corporate proj)erty, and, if neces- sary, by having recourse to a petition for winding up the company. Such is a general outline of the manner -in which a creditor of a company has been enabled to obtain satisfaction of a judgment recov- ered against it. To fill up this outline so far as is possible without alluding to the winding up of companies, is the object of the remain- der of the present section. As to execution against the company or person named in the judgment. Sec. 885. A judgment against a corporation is executed against the corporate property in the same way as a judgment against an individual is executed against his property; and a judgment against a public officer may, it is conceived, be executed against him and his property as if he were an ordinary individual, where the right of the judgment creditor is not in this respect modified by statute.' The Banking Act of Geo. IV requires the public officers of a com- pany governed by that act, to be members of the company,' and enacts that execution upon any judgment obtained against a public officer may be issued against any meniber of the company. From this it follows that a public officer of a company governed by the act in ques- tion is personally liable upon every judgment obtained against him, and that writs can issue against him grounded on such judgment, and that no set. fa. or other intermediate proceeding is necessary.* If, indeed, the public officer named in the judgment has ceased to be a member of the company, then, by the act, he is only liable like other ' See Harrison v. Timmins, 4 M. & where he was held not liable to an at- W. 510 ; Wormwell v. Hailstone, 6 tachment. Bing. 068, where the nominal defend- ' 7 Geo. 4, c. 46, s. 4. ant was held not liable to execution ; ' Id. , s. 13. and Corpe v. Glyu, 3 B. & Ad. 801, ■'Harwood v. Law, 7 M. & W. 303. 1393 Particular Partnerships. former shareholders; and upon an affidavit by him, the court will stay execution against him until after he has been proceeded against by scire facias. ' The Letters Patent Act ' does not require the public officers of a company governed by it to be members of the company, and even if they are members their liabilities are restricted to the extent specified in the letters patent of their respective companies. These circum- stances alone, it is conceived, render it improper for a creditor to issue execution against a public officer of a company governed by the Let- ters Patent Act without a sci. fa.; for it is clear from the act that he cannot be made personally liable unless he is or has been a member, and in neither case is he liable to the extent to which he would be liable at common law. Acts of Parliament are sometimes met with which empower a com- pany to sue and be sued by a public officer, but which, instead of giv- ing any remedy against him or the other shareholders individually, render the funds of the company alone liable to its creditor. In such a case no execution against the piiblic officer of the company, or against any of its shareholders, can be issued f but an action against the public officer will nevertheless lie, even although there may be no funds, and the plaintiff may consequently have no means of enforcing his judgment after he has obtained it.* Indeed, if there are funds, the only mode in which a creditor can get at them has been said to be by mandamus, or by a bill in equity.' Even before the Common Law Procedure Act of 1854, the 68th section of which considerably extends the power of courts of law to grant a mandamus," it had been held that a creditor of . a company, who, by virtue of its act of Parliament, had no remedy against its shareholders, but only against the funds of the company, was entitled to a mandamus to its treasurer and directors, after, establishing his debt in an action.' If there are no funds, and the company is not under an obligation to provide any, no mandamus can be granted ; « but if the company is under an obligation to provide funds, and it • See Harwood v. Law, 7 M. & W, cases, as in Cane v. Chapman, 5 A. & E. 203. 647 ; but see Addison v. The Mayor of ^ 7 Wm. IV, & 1 Vict., c. 73. Preston, 13 C. B. 108. ^See Harrison v. Timmins, 4 M. & ^SeeNorris v. The Irish Land Co., 8 Vf. 510; Wormwell v. Hailstone, 6 E. & B. 512, correcting Benson v. Paull, Bing. 668; Corpe v. Glvn, 3 B. & Ad. 6 E. & B. 373. 801. ' 'SeeCorpe V. Glyn, 3 B. & Ad. 801 ; ^ See Kendall v. King, 17 C. B. 483. -R. v. St. Katharine Doclt Co., 4 id. 360. ' See tlie cases in the last two notes. *R. v. The Victoria Park Co., 1 Q. B. Actions have been brought in such 288. Joint-Stock Companies. 1393 will take no measures to raise them, it seems that a mandamus will go.' It is, however, to be observed that a writ of mandamus will not be granted if the only reason why payment cannot be obtained by execution in the ordinary way, is that there if nothing to seize.' As to proceedings against shareholders upon a judgment obtained against a company or its public officer. Sec. 886. By the common law, a Judgment against A cannot be executed against B without a scire facias, which, though a judicial writ, is in the nature of an action, and may be pleaded to in abate- ment or in bar. The object of the sci. fa. is technically to make the execution conformable to the judgment, but substantially its object is to give the person against whom the judgment is sought to be enforced an opportunity of defending himself, for, ex hypoihesi, he has not had that opportunity before.^ Unless there is some statutory enactment to the contrary, a judg- ment obtained in this country * against a company in its own name, or in the name of its public officer, cannot be executed against a share- holder in the company without a sci. fa. In Bartlett v. Pen'tland,' judgment was obtained against the public officer of a company, and a shareholder was taken in execution on a ca. sa. sued out upon the judgment without any intermediate proceed- ing, but the court set aside the execution and discharged the share- holder who had been arrested. In this case it was urged in argument, and apparently thought by the court, that the execution creditor should have obtained leave to enter a suggestion upon the record, that the person proposed to be proceeded against was a member of the company; but it is now settled that the proper mode of proceeding is by scire facias, unless some other mode is expressly authorized by statute.' See as to shares. Sec. 887. Shares in public companies are rendered available for the payment of the separate debts of their holders by a very difEerent method from that to which recourse must be had in the case of part- nerships. There is no interference with the company or its property 1 Id. may be sued upon in an action in the ' See R. V. The Victoria Park Co., 1 ordinary form. Bank of Australia v. Q. B. 388. Nias, 16 Q. B. 717. ^See, generally, as to sci. fa. Com. * 1 B. & Ad. 704. Dig. Pleader,3 L.; Bac. Ab. &i. /as., « Clowes v. Brettell, lOM. & W. 506; and the note to Underbill v. Devereux, Wingfield v. Barton, 3 Dowl. (N. S.) 3 Wms. Saund. 71. 355, and 7 Jur. 258 ; Wingfield v. Peel, was similar to the foregoing. There, A and two others being partners, A retired, and due notice was given of the dissolution of the partnership. Upon his retirement, A, by deed, assigned his share of the stock, etc., to the remaining partners, in consideration of a certain sum, and the remaining part- ners covenanted to indemnify him against the partnership debts. The remaining partners became bankrupt. A, having been arrested by the creditors of the old partnership, petitioned that the specific stock and debts of. the old partnership might be applied in satisfac- tion of the creditors of that j)artnership in preference to the credi- tors of the new firm. But Lord Eldon dismissed the petition, being of opinion that the case fell precisely within the same rule as Ex parte Ruffin. How joint estate may be converted into separate. Sec. 912. 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 that deliv- ery of the goods, coupled with due notice that the partnership is dis- solved, and the remaining partner will pay the debts of the firm, is sufficient evidence of an agreement to change the ownership. In Ex parte Williams,'' Shepherd and Smith, who were in partnership as linen-drapers, dissolved their partnership on the 5th of September, 1803, inserting a notice in the London Gazette on the 35th of Novem- ber, in that year, stating that the partnership was dissolved by mutual » 10 Ves. 347. = 11 Ves. 3. 181 1442 Bankruptcy of Pabtneks. consent on the oth of September 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 the effects, to a considerable amount, belonging to the partners at the dissolution of the partnership, were remaining in specie, and that several outstanding debts to the partnership were still remaining due. The commissioners, having refused to include any part of such spe- cific effects, as forming part of the joint estate, a petition was pre- sented to the Lord Chancellor, praying an account, and that such effects might be declared to form part of the joint estate. But Lord Eldon dismissed the petition. "The creditors," he said, "are not injured by the agreement of partners to dissolve the partnership, and that from that time what was joint property shall become the separ- ate property of one, notice of the dissolution being given ; as either a consideration is paid, or, which for this purpose is equal to a consid- eration, a covenant is entered into to pay the debts and indemnify the retiring partner, so conceived as not to leave any lien upon the property. The question then, here, is whether the contract for disso- lution has left the equities of the partners attaching upon the pos- session. If it is competent for partners to say those equ.ities shall no longer exist, inquiry is necessary to ascertain whether, by the bar- gain for the dissolution, that which was the property of all has become the property of one. In Ex parte Kuffin 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 the case, there is distinct evidence to an agreement that the joint effects should be considered separate effects, and that fact calls upon me to declare the conclusion of law that these are separate effects." What is essential to make conversion complete. Sec. 913. 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. There- fore, 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. ADMINISTEATIOSr. 1443 for, until notice be given to the debtor, the debt remains in the order and disposition of the creditor, and is still payable to him whether or not he has parted with his security.' The case of Ex parte Monroe^ may be mentioned in connection with this subject, althougli 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 arrangement with B, sued the obligor on the bond and recovered the amount due. B then petitioned to have the money so recovered paid in liquidation of his debt, as far as it would extend, and 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 delivery of the bond by the bankrupt take away the power to receive the debt? and if the obligor had lona fide paid the debt to the bankrupt, conld the petitioner have called upon him to repay it? Certainly not; and if an action had been brought ou 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 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. In two subsequent cases,* where it appeared tliat upon the retirement of some of the members of a firm, they assigned the debts due to a 'See the judgment of Lord Chief par la signification qu'il fait au debiteur Baron Parker, Ryall v. Rowles, 1 Vea. de son titre de cession ; on par I'accep- 367; also Jones v. Gibbons, 9 id. 410, tatlon voluntaire que le debiteur fait du and the opinion of the commissioners in transport; et par consequent le paie- Ex parte Williams, 11 Ves. 3 ; see, also, ment qui lui est fait est valable. Au Ex parte Gibson, 3 Mont. & A. 10; 3 Sim. contraire, I'ancien creancier cesse de 257 ; Ex parte Leaf, 1 Dea. 176. I'etre par cette signification que le ces- • '^Buck, 300. sionaire fait au debiteur, ou parl'accep- 'But. of course, where a creditor has tation du transport ; et le paiement qui assigned a debt due to him to a third seroit fait depuis a I'ancien creancier ue person, and notice of the assignment seroit pas valable." Pothier, Tr. des has been given to the debtor, payment Oblig. part 8, c. 3, art. 3, s. 1. And see must be made to the assignee, for quod more on this subject, in Cod. lib. 48, tit. jussu alterius solmtur pro eo est quasi 3, s. 4 ; also Dig. lib. 46, tit. 3, ss. 13, 34, ipsi solutum esset. Pothier, treating of 56, 91, etc. ; Code Civil, par Hogron, art. tliis subject, says ; " Celui S, qui le ere- 1319, ei seq. Du paiement avec subro- ancier a cede sa creance, si quelque titre gation. que ce soit, soit de vente, soit de dona- *Ex parte Burton, 1 Gl^. & Jam. 307 ; tion, soit de legs, en devient le creancier Ex parte Usborne, id. 358. 1444 Bankruptcy of Partners. liartnership consisting of simple contract debts, to the remaining jiartner -who covenanted to discharge all the debts owing by the part- nership, and, accordingly-, notice was given in the London Gazette of the dissolution of the partnership, and that debts due to the partner- ship would be received by the remaining partner, it was held that such notice in the Gazette was not sufficient notice to the debtors of the assignment of their debts, that the assignment was therefore incom- plete, and that, consequently, upon the subsequent issuing of a joint commission against the members of the original firm, the debts so defectively assigned were still to be considered the property of the original partnership, and distributable accordingly. All the terms of the contract must be complied nrith. Sec. 914. 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, assigned all the stock, debts, etc., 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 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, etc., 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 partner against the other alleging fraud in the non-performance of the articles of disso- lution, 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 to its original character as joint property, unless the plaintiff in equity had, by his conduct between the time of his obtain- ing 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, ' Ex parte Wheeler, Buck, 25. But conversion as complete. The point, see Young v. Keighly, 15 Ves. 558, though noticed by the Master, was not where the agreement to convert sepa- made the subject of argument, rate into joint property was only in part * Ex parte Rowlandson, 1 Rose, 416. performed, yet the court treated the Administration. 1445 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 belonged to them, and the transfer and assignment of it by the one to the other, were mat- ters stilldependent 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, ii dormant partner.' In the case just cited. A, the father, after the dissolution of the partnership with his son, entered into partnership with another per- son, C, carrying into that new partnership the remaining stock of the old concern and blending it with the stock of A and 0; they, in the course of their dealings and transactions, introducing new stock, and intermixing it with the old, as the visible property of A and C. A and B afterward having become bankrupts, and the assignees under their commission having possessed themselves of all the joint effects of A and C to an amount more than sufficient to satisfy the joint creditors of that firm, and having relinquished his claim to the surplus. Lord Bldon held that the surplus was the separate property of A and not the joint property of A and B. In Ex parte Gibson,' it was made a question, whether an agree- ment, on the dissolution of a partnership, to assign the partnership pi'operty in consideration of 50?. paid, and five bills for 100/. each, was executed or executory, the bills not amounting to payment, but merely to security; but the Court of Review held that though the giving the bills was security and not payment, yet the agreement was not, therefore, executory, because it was clear that the parties con- sidered the payment of the 50Z. and the delivery of the bills as being all that was required to be done to fulfill 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 dissolution. 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 ' Ex parte Barrow, 3 Koae, 252. ' 3 Mont. & A. 4 ; Ex parte Clarkson, 4 D. & C. 56.- 1446 Bankruptcy of Partners. could have made any difference. Unquestionably, however, in simi- lar cases iu which real estate has been involved, the vendor has been held entitled to such a lien.' When conversion may be defeated. Sec. 915. In some cases the conversion, though absolute, may be. liable to bo 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 will 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 what otherwise might be ■the bankrupt's right by reputed ownership; 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 apparent, but not the true owner of the prop- erty of which he has the disposition. These obseiwations 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 49,600Z., 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 49,600Z. by installments of 3,000?., at the times therein mentioned, and it was provided that if any installmeut^were unpaid for thirty days, the exec- utors might enter and distrain on the partnership premises; and that if any installment were unpaid during sixty days, then that the executors might re-enter on the whole late partnership estates and property, and on such re-entry the deed was to become void. And George Stokes and Thomas Stokes covenanted that on such re-entry, they would, on demand, resign 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 ' Ex parte Peake, 1 Madd. 346 ; Grant « 3 Mont. & A. 548 ; 1 Deac. 44. V. Mins,3 Ves. &B. 306. ADiri2sristRA.TiON-. 1447 the debtors of the partnership. Thomas Stokes afterward retired, and George Stokes became bankrupt. Default being made in pay- ment of the installments, the question was whether a debt due to the firm of Pembertou & Stokes belonged to Pemberton or the assignees of George Stokes. At the first hearing of t'he petition, it was assumed that the default occurred after the bankruptcy, but it turned out otherwise, and accordingly the Court of Eeview granted a second hearing. The court, however, 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 re-assign, and that on non-perform- ance of the condition his assignees became subject to his liabilities ; the rule as to reputed ownership not applying to a case where the bankrupt is the 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 doctrine of reputed ownership would not apply." Conversion not affected by knoxrledge of the firm that it vras insolvent. Sec. 916. The effect of conversion of joint into separare estate will 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 necessarily a fraud upon creditors. A and B being partners, B, who was aware of, or sus- pected the insolvency of the firm, was permitted to retire. Upon his retirement he conveyed all his interest in the real estate of the part- nership to A, who gave his drafts for the amount of the purchase- money. The drafts were afterward 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, conse- quently, that B had a lien upon it for the amount of the purchase- money due to him." In all cases, the validity of the contract between the partners, for the conversion of the property must depend on the hona fide of the transaction. Thus, though in Ex parte Ruflfin the remaining part- ner 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 ' The case of Horn v. Baker, ante, ownership ; but there, it will be per- was cited in argument in the prin- ceived, the assignment was not absolute, cipal case in support of the reputed ^ Ex parte Peake, 1 Madd. 346. 1448 Bastkkuptcy of Partners. judgment was given, although the dissolution took place only a week before the bankruptcy, the conversion having been made bona fide} Creditofs oannot prevent conversion. Sec. 917. From what has preceded, it appears that the creditor of a partnership has no control over the partnership property, so as to prevent the conversion of joint into separate estate, or vice versa. But when a partnership is dissolved, and the partuership effects are assigned absolutely to the remaining partner, who covenants to pay partnership debts, the partnership creditor may accept the remaining partner as his separate debtor ; '' and, in that case, upon the subse- quent bankruptcy of the I'emaining partner, such creditor will enjoy all the rights of a separate creditor of the remaining partner. 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 con- tract 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 specially given credit, should, by the dealing 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 joint 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 sepa- rate estate, unless he has paid the joint debts. But the case of Ex parte Ruffin, and the other cases of that class which followed it, have established 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. " 1 Semble, Ex parte Snow, 1 Co. Bl. ' Ex parte Freeman, Buck, 471. 511. Compare D. Lord Eldon, Ex parte Williams, 11 Ves. 3 ; D. arg. Romilly, etc.. Ex parte Fell, 10 id. 347. Administkatiou-. 1449 CHAPTi^R XL I. OF JOINT AND SEPARATE DEBTS. Sec. 918. Separate debts, what are. Sbc. 919. How separate debt is converted into joint. Sec. 920. What amounts to conversion, and how proved. Sbc. 921. Of proof in general. Priority of joint creditors as to joint estate of separate creditors. Sec. 932. Exceptions to rule as to dividends with separate creditors. Sec. 923. When a joint creditor is a petitioner under a separate fiat. Sec. 924. Where there is no joint estate and no solvent partner. Sec. 925. Where there are no separate debts. Sec. 926. As to interest. Sec. 927. When partners may be creditors upon each other. Sec. 928. Enforcement of joint debts, against whole of deceased partner. Sec. 929. Of election of remedy. Sbc. 930. Confined to same debt. Sec. 931. Confined to bonds, bills and personal securities. Sec. 933. Of election of proof. Sec. 933. Rule when debt has been converted with or without extinguishment. Sec. 934. When debt has been collusively converted. Sec. 935. Rule when dormant and ostensible partners become bankrupts. Sec. 936. When a demand may be split. Sec. 937. Of the time of elections and waiver of proof. Sec. 938. Of double remedy. Sec. 939. Of double proof. Sec. 940. Limitations as to double proof. Sec. 941. Of proof between partners. Sec. 943. Qualification of the rule. Sec. 943. Exceptions of a special nature. Skc. 944. What debts one partner may prove against separate estate. Sec. 945. When one partner may prove against separate estate, although not sufficient to pay separate debts. Sec. 946. Rule as to distinct fines. Sec. 947. When there are no joint debts. Sec. 948. Of proof between estates. 182 1450 Bankruptcy of Pabtn^ers. Sec. 949. Exceptions to rule. Sec. 950. Rule when one partner is appointed manager of firm business. Sec. 951. Rule when some of the partners form a distinct firm. Sec. 952. Of set-off. Sec. 953. Equitable set-off. Separate debts, what are. Sec. 918. Separate debts are those for which the creditor can have his remedy at law, not against the whole firm, but against that part- ner only who contracted them ; joint debts are those for which an action, if brought, must be brought against all the partners consti- tuting the firm.' In all cases, therefore, when a partner becomes liable for a debt contracted by his copartner, a joint debt is created, and the creditor is a joint creditor of the firm. 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 bankrupccy 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 verm ; 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 ob- vious. 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 according to its new quality, and consequently is entitled to only one mode of proof. But where a debt is converted without extinguishment, 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 election of proof. It is evident from these considerations, that the conversion of a debt without extinguishment is upon the whole beneficial to the cred- itor. Where, therefore, a debt has been converted, and the creditor seeks the benefit of his old security, he must prove that such security ' Archb. B. rj.,Book 1, chap. 2 ; and see the judgment of Lord Eldon, in Ex parte Williams, Buck, 13. Administration. 1451 has not been extinguished. On the other hand, ivhere the creditor conceives liis debt to have been converted, and seeks the benefit of his new security, he must prove a sufficient conversion. Here, there- fore, are two points for our consideration — 1. What amounts to an extinguishment of tlie original obligation. 2. What is a sufficient conversion. Ho^r separate debt ia converted into joint. Sec. 919. If the separate creditor of a partnership take a partner- ship bill in full discharge of his claim, the separate debt is thus con- verted into a joint debt, and the original remedy extinguished. But if the evidence goes to show that the bill is given, not in discharge of, but by way of collateral security for the original debt, in such case the original remedy is not lost.' 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 expressing the pay- ment 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 receipt, if it had remained unexplained, it would have been evidence of the debt being paid; but, when it appears how the receipt happened to be given, it is not conclusive.' I think this may be proved as a separate debt." Again, in Ex parte Lobb,'' where separate creditors had taken a joint security, it was held that the original debt 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 partners. The petitioners sold goods to them separately. The goods were delivered to each sepa- rately; debited in the books so; and the transactions were entirely separate. There were some joint debts,- but to a small amount, due 1 See D. Rose, J., 3 Mont. & A. 643. Jackson, 5 Dowl. & Eyl. 37 ; 3 Barn. & ^ 3 Cox, 49. Ores. 431; ante, p. 485. 2 Upon this subject, see Scaife v. * 7 Ves. 593. 1452 Bankruptcy of Pahtnehs. 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 under- took to settle with his partner; and the petitioners with each other; and by the desire 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 applied to prove their original debts against the separate estates. Lord Eldon said, clearly 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 Meinhertzhagen ' may be i-eferred to the same principle. There A deposited Virginian bonds with his agent B, who pledged them for a debt of his own. Afterward B, at the request of A, agreed to give him credit on the security of the bonds to the amount of 10,000Z., for which sum A drew bills of exchange on B. On the day the bills were drawn, B took into partnership, and the bills were accepted by B & 0. A had subsequent dealings with B & 0. Upon the bankruptcy of B & it was held, notwithstanding the joint acceptance and the subsequent dealings, that A might prove the amount of the bonds against the separate estate of B. Again, in Ex parte Eoxby,' 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 be ascertained that the original debt had not been extin- guished. His Lordship said that the question was, whether the bill was given as a collateral security, or in discharge of the debt; as to which fact an afiSdavit must be made. Again, in Ex parte Hodgkinson,' 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 Eldon was of opinion that the bill had been taken as a mode of satisfying the ' 3 Dea. 101 » Coop. 101. » 1 Mont. Part. 303. ADMINISTEATIOiq-. 1453 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 several security by subse- quently taking a bill indorsed to him by the firm in part satisfaction of his debt. What amounts to conversion, and how proved. Sec. 930. To proceed to the other point which we proposed to con- sider, namely : what amounts to a sufficient conversion. The best evidence of conversion is an instrument in writing in the hands of the creditor, giving him a separate security for his joint 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 com- plied with those terms, if he seeks the benefit of the conversion given him by the instrument. In Ex parte Eairlee,^ three persons in part- nership covenanted jointly and severally with Fairlee & Co., their bankers and joint creditors, that they, the debtors, or some or one of them, should and would, on demand, well and truly pay to the cred- itors or the survivor or survivors, etc., every sum or sums of money, loss, cost, 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 cove- nant had been entered into for payment thereof, such covenant being intended only as additional or collateral security." The deed con- taining this covenant was a conveyance to the creditors of the real estate of one of the partners, upon trust to sell and repay themselves out of the produce. The estates were sold, and the produce applied toward satisfaction of the debt, but no demand was ever made in pur- suance of the covenant. Upon the bankruptcy of the covenantors, the creditors petitioned to prove against the separate estates of the bankrupts. Sir Lancelot Shad well, however, dismissed the petition with costs, observing that it was intended by the parties that an actual demand should be made. Some distinct acts are necessary to create a separate debt, and the parties had stipulated that it should be on demand. In this case, the transaction between the parties was not equivalent to a demand. Upon appeal to Lord Lyndhurst, this decision was afiBrmed, though ' 15 Ves. 4. ^ Mont. 17. 1454 Bankruptcy of Partners. without 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 payment 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 continued a joint debt, as in its original form, until an actual demand was made, and then, upon that actual demand being made, it became a debt under the cov- enant. 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 obtain the benefit of such conversion, it will be sufiBcient 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. Slight evidence of accept- ance is sufBcient, but some evidence of this kind is certainly required. In Ex parte Slater,' the execution by joint creditors of the compo- sition deed of a remaining partner, together with a 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 partner. In Ex parte Clowes," 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 partnership. 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 con- sent 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 part- ' 6 Ves. 146. But it must be said ' 3 Bro. 495 ; 1 Co. B. L. 360. that the decision turned on the deed being in the nature of a release. Administration. 1455 nership, one term implied was that their creditors should consent to be creditors of the general partnership only.' In a late case on this subject the Court of Keview had no hesita- tion in holding that 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 partnership of which the obligor was a member. In this case the debt consisted of trust money under the marriage settlement of H which had been advanced to H on the security of his bond. The money was afterward, with notice to the trustees, applied to the purposes of the partnership in which lie 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 bank- ruptcy of the partners the Court of Keview, under these circum- stances, 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.'' 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 scarcely necessary to advert to the question of assent by the creditor to the consolidating of the debts, as it was a disputed point whether the partners them- selves 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 Eldon required evidence of assent by the creditor to such arrangement before such proof could be allowed. In this case, A, a trader, being indebted to several persons, entered into part- nership 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 a schedule. A and B entered into partner- ship 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 having 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 petitioner that a joint action might have been main- tained by the creditors named in the schedule against the partners^ ' Ex parte Bonbonus, 8 Ves. 546. ' Buck, 13. 2 Ex parte Kedie, 2 D. & C. 331, and Bee Ex parte Hill, 1 Deac.123. 1456 BANKflTTPTCT OF PARTNERS. immediately upon the execution of the deed, and by force of that deed only, independent of any accession to the agreement on the part of the creditors named in the schedule, I cannot assent to the doc- trine. 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) where A, by deed, covenanted with B, a party to it, that he, A, would pay a sum of money to 0, a stranger to the deed; 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." The case of Bx parte Williams seems to establish not only the gen- eral 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 conversion before the bank- ruptcy. The same point was decided by Sir John Leach in Bx parte Freeman." There the stock and effects of the partnership of Hender- son & Morley were, upon a dissolution, assigned by deed to the con- tinuing partner, Henderson, who covenanted to pay the joint debts. The partners having become bankrupts, the court held that the joint creditors not having previous to the bankruptcy accepted the continu- ing 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 cove- nant of Henderson with Morley to pay the joint debts, without any concurrence on the part of the joint creditors, before the bankruptcy, does ipso facto, in the case of bankruptcy, convert these joint creditors into separate creditors of Henderson, either absolutely, 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 Hender- son alone, upon the same naked effect of the covenant. My first diffi- culty is, to apprehend the distinction in this respect between bank- ruptcy 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 1 Buck, 471. ADMINTSTEATIOiq-. 1457 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 incapable of contract. For these reasons I am of opinion that the petitioners cannot be considered as separate creditors of Henderson." This case of Ex parte Freeman seems to be consistent with most of those on the same subject that preceded it. It was, however, over- ruled by Lord Eldon. Nevertheless, as the grounds of Lord Eldon's decision do not appear, and as Sir John Leech decided, the subsequent case of Ex parte Fry ' in the same manner, there seems just reason to suppose, notwithstanding the observations of a learned writei',' that the case of Ex parte Freeman was rightly decided. In the last two cases, the agreement between the partners for con- version of their debts was contained in a deed inter partes. 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 cred- itors 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 insufiicient at law ; and that, where there is no deed, assent will be necessary,'' although perhaps it might be unnecessary at law.* The latter proposition is borne out by the case of Ex parte Hitch- cock.' There, A gave his guarantee for the payment of certain bills accepted by B. Afterward A and B became partners. They paid part of the bills, and solicited the creditor's indulgence as to the remain- der. Their solicitations, which were by writing, received no answer from the creditor, but he took no hostile proceedings against them. Upon the bankruptcy of A & B, it was held that there was not suffi- cient 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. 1 1 Glyn & Jam. 96. ■• Ex parte Hunter, 1 Atk. 233. ' 1 Mont. Partn. 117 . ' See the observations of Bayley, J., 3 " Barford v. Stuckey, 5Moore,23 ; and Dow. & Ryl. 537. see the cases cited, Buck, 15, note a. * 8 Deac. 507. 183 1458 Bankruptcy of Partners. 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 copartner." Judgment of outlawry against two or 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.' Of proof in generaL — Priority of joint creditors as to joint estate of separate creditors as to separate estate. Sec. 921. In the words of Lord Hardwicke, "Joint creditors, as they gave credit to the joint estate, have first their demand on the joint estaiie, and separate creditors, as they gave credit to the separate estate, have _^rs^ their demand on the separate estate. " ■* Again, in the words of Lord King,^ "It is settled, and is a resolution of con- venience, that the joint creditors shall be first paid out of the part- nership or joint estate, and the separate creditors out of the separate estate of each partner, and if there be a surplus of the joint estate, besides what will pay the joint creditors, the same shall be applied to pay the separate creditors; and if there be, on the other hand, a sur- plus of the separate estate beyond what will satisfy the separate cred- itors, it shall go to supply any deficiency that may remain as to the joint creditors." This rule was afterward deviated from by Lord Thurlow,' but restored 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 the payment of the other class of creditors, the joint creditors can only prove and receive dividends as against the joint estate, and the separate creditors as against the separate estate.' The rule has been occasionally productive of hardship. Thus, in Ex parte Jackson,'" W, a trader, died indebted to J, leaving all his personal property to his widow. After his death the widow carried ' See post, 8. 929. Pinkerton, and Ex parte Nuttal, there ' Ex parte Dunlop, Buck, 353. cited ; and see Datton v. Morrison, 17 = Ex parte Stanborough, 5 Madd. 80. Ves. 306. * Twiss V. Massey, 1 Atk. 67. ° Ord. Loughborough, Mar. 1794, and ' Ex parte Cooke, 2 P. Wms. 500. 6 Geo. 4, c. 16, s. 63. Where a credi- " Ex parte Hodgson, 2 Bro. 5 ; Ex tor has proved against the wrong estate parte Page, id. 119 ; Ex parte Flintum, by naistake, he will be permitted to id. 120 ; Ex parte Copland. Co. B. L. 348. transfer his proof to the other. Ex ' Ex parte Elton, 3 Ves. 340 ; Ex parte Vining, 1 Dea. 555. parte Abell, 4 id. 837. '" 1 Ves. Jr. 131. 8 Ex parte Clay, 6 Ves. 833 ; Ex parte AOMIU'ISTEATIOIir. 1459 on the trade, and, having borrowed another sum from J., gave him a bond for the whole. Afterward she took into the trade her son, being a minor, and her nephew, wlio before was her servant. The new part- ners did not bring any property into the trade, nor were they to liavo any of the profits, nor bear any loss, but the nephew received wages as before. The partnership lasted nearly two years, till a commissioa 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 joint commission. Lord Thur- low, though with great reluctance, felt himself bound to refuse the prayer of the petition, there being no fraud in the widow. The rule is the same, whether the fiat be joint or separate. When the fiat is joint, the separate creditors may, under Lord Loughbor- ough's general order,' prove their debts and receive 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 assignees get possession of the joint property, the court, upon the petition of the joint creditors, will order tlie 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.'' , i Sxceptions to rule as to dividends vrith separate creditors. Sec. 923. There are, however, three exceptions to the rule that a joint creditor shall not receive dividends with the separate creditors: 1. Where a joint creditor is the petitioning creditor under a separate fiat.^ 2. Where there is no joint estate and no solvent partner. 3. Where there are no separate debts.^ In the first case, the petition- ing creditor, and, in the second, all the joint creditors, may prove against the separate astsite pari passti with the separate creditors. In the last case, as there are no separate creditors, the joint creditors will be admitted ^art ^assM with each other, upon the separate estate. Where a joint creditor is a petitioning creditor under a separate fiat. Sec. 923. It was decided in Ex parte Orispe " that a commission or 1 Ord. Mar. 1794. See Ex parte Voguel, 1 Atk. 135 ; Hankey v. Garratt, Crowder, 2 Vern. 708 ; Twiss v. Massey, 3 Bro. 457. 3 Atk. 67; where the relief, afterward ^ Ex parte Hall, 9 Ves. 349 ; Ex parte provided for by Lord Loughborough's Ackerman, 14 id. 604; Ex parte De general order, was granted on petition. Tastet, 1 Rose, 10; Ex parte Buckle, 1 ^ Ex parte Tate, Co. B. L. 253 ; Ex Glyn. & Jam. 34. parte Aspinwall, id. 256; Ex parte * Ex parte Kensington, 14 Ves. 447. Marvey, Ex parte Hill, id. Formerly, ' Ex parte Chandler, 9 Ves. 35. the application must have been made * 1 Atk. 133; Crispe v. Perritt, Willes, by bill, unless by consent. Ex parte 467. 1460 Bankruptcy of Paetners. fiat may issue against one partner for a joint debt, though an action cannot be maintained against one, without joining the other parties, a commission 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 1,364Z., 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 4207., it was held that M was entitled to prove for the whole amount; that, for all that was received above 4307., M was a trustee for L ; and that the commissioners could not interfere with the trust." This exception in favor of the petitioning creditor under a fiat against one partner is expressly reserved by the 6 Geo. 4, c. 16, s. 63, which enacts that a joint creditor shall not receive a dividend out of the separate estate, until all the separate creditors have been paid in full, " unless such creditor shall be a petitioning creditor in a com- mission [fiat] 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 commission against several members, part of the whole firm. 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 purpose 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.^ Where there is no joint estate and no solvent partner. Sec. 934. The general 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, in ■ Ex parte De Taatet, 1 Rose, 10. Geo. 4, c. 16, s. 63, which enacts that, ^ Ex parte Bolton, 3 Rose, 389. under a separate commission, a joint ' Ex parte Barn ed, 1 Gly n & Jam. creditor, unless he be ftte petitioning 309. creditor, shall not receive flividends out ■* Ex parte Smith, 1 Gly n & Jam. 256; of the separate estate, until all the Ex parte Brown, 1 Rose, 433. separate creditors have been paid. But ' The practice referred to in the text see section 135 of the same act. might seem to be repealed by the 6 * Ex parte Leaf, 1 Uea. 176. Admikistration. 1461 another case, that it was worth only bl, 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 partner- ship, 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 out-going partner assigned to the remaining trader his moiety of the partnership effects.'-' On the other hand. Lord Bldon 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 desperate, 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 mean- ing such as are under the administration of assignees to distribute." To bring a case within exceptions of this second class, not only must there be no joint estate, but there must be no solvent partner, that is, no partner possessed of any available fund; ^ 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 bo solvent, the creditor, if there be no joint estate, may prove against the separate estate of thp bankrupt.' And so he may, where his debtors are not partners in trade, but merely joint contractors, on joint promissory notes, etc.* 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 ordei', they may select any one of the separate estates of the bankrupts, against which to prove.' And even where the general partnership 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 burdened is entitled to re-imbursement from the others.'" 1 In re Lee & Armstrong, 3 Rose, 54. ' Ex parte Bauerman, 3 Deac. 476. 2 Ex parte Appleby, 3 Dea. 483. Sed ] Id. qu. Id. 8 Ex parte Peaks, 3 Rose, 54. » Ex parte Willock, 3 Rose, 393. 4 Ex parte Hill, 3 N. R 191, (1); 1 '» Ex parte Wylie, Sid. 393; Ex parte Mont. Part. 113 App. Nolte, 3 Glyn & Jam. 395 ; Ex parte 5 Ex parte Janson, 3 Madd. 339, Buck, Machell, 1 Rose, 447. 337 ; Ex parte Sadler, 15 Ves. 53 ; Ex parte Crosfield, 3 Mont. & A. 543; 1 Dea. 405 ; overruling Ex parte Pinker- ton, 6 Ves. 843, n. 1463 Bakkruptcy of Partners. Where there are no separate debts. Seo. 925. The last exception to the general rule, namely, where there are no sej)arate debts, occurs when the separate debts are so inconsiderable that the joint creditors undertake to pay them. In such case, the joint creditors may prove against the separate estate.' But a mere offer to pay the separate debts will not be suflBcient with- out 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 insisting 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 separate fiat issues against 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 the difference against the separate estate of the bankrupt.* As to interest. Sec. 926. Generally, in the event of a surplus, creditors are entitled to interest for their debts, from the date of the fiat.' But where sep- arate creditors are paid 20s. in the pound, and there is a surplus of the separate estate, that surplus shall not go immediately to pay inter- est to the separate creditors, but shall go to make the joint creditors equal with them as to the principal." But all creditors shall receive interest before any partner, or assignee of a partner, shall be permitted to prove.'' The surplus of the joint estate must be apportioned between the respective estates of the partners, according to their equitable rights. Therefore, where a joint commission issued against a firm consisting 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 sep- ' Ex parte Chandler, 9 Ves. 35. fiat, can be charged upon the estate di- ^ Ex parte Taitt, 16 id. 193 ; and see rectly or indirectly, except in case of a Ex parte Hubbard, 13 id. 434. surplus. Ex parte Paton, 1 id. 833. ' Ex parte Basarro, 1 Rose, 366. * Ex parte Reeve, 9 Ves. 590 ; Ex parte ^ Ex parte Loyd, 3 Mont. & A. 601 ; 3 Clarke, 4 id. 677 ; Ex parte Boardman, Deac. 305. Co. B. L. 198. The rule is not altered ' 6 Geo. 4, c. 16, s. 138 ; Ex parte Mills, by the present Bankrupt Act. Ex parte 3 Ves. 195. As to the mode of calculat- Minchin, 3 Glyn & Jam. 287. ing the interest in case of a surplus, see 'Ex parte Reeve, SMjiray Ex parte In re Higginbottom, 2 Glyn & Jam. 123. Ogle, Mont. 850. No interest, however, subsequent to the Administkatiok. 1463 arate debt, and might come in with the separate creditors of such other, for the deficiency.' The appointment is regulated on the same principle, where some of the partners are solvent. For if, upon the bankruptcy of one of sevQjiial partners, all the joint creditors aie satisfied, and, upon a bal- ance 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 Bldon, in reference to the case of two partners, said, " If the surplus of the joint estate is not sufiicient to pay all that is due from one partner to the other, he ought to come in with the separate creditors of the other." ' 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 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 separate 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 respectively.' When partners may be creditors upon each other. Sec. 927. After their demands are finally liquidated, partners may be creditors upon each other, but not before.' This subject will be treated of hereafter. Enforcement of joint debts against estate of deceased partner. Sec. 928. "We have seen that, when one partner dies, and the sur- vivors become bankrupt, the joint creditors of the deceased and surviv- ing partners have a right to enforce payment of their debt against the deceased partner's estate. Theae creditors, therefore, have two funds to resort to, namely, that which is to be administered under the bankruptcy of the survivors, and that of the deceased 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 exclusively, that, by those means of ' Ex- parte King, 17 Ves. 115. See 'Ex parte Kin^, supra. Ex parte Reid, post. ^Kx parte Lanfear, 1 Rose, 443. ••'Goss V. Dufresnoy, Davies, 371; '^ Ex parte Franklyn, Buck, 333. Richardson v. Goodwin, 3 Vern. 393. ' Per Lord Eldon, 9 Ves. 589. 1464 Bankruptcy of Partners. 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 partner, and the bank- ruptcy of liis survivors, it is clear that the joint creditors of the deceased and surviving partners cannot be compelled to resort t^ 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 commis- sion of bankrupt issued against the survivoi-s, 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 admit them to the benefit of his assets, after his separate debts should be paid; and then a petition was presented in the bank- ruptcy of the new firm, by the creditors of the new firm, with a view of having D's assets marshaled for tkeir benefit, and, for that pur- pose, praying that the dividend under the commission might be ordered to be postponed, Lord Eldon held clearly that siicha jietition could not be supported. ' Of election of remedy. Sec. 939. 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 bankrupt, shall prove a debt under such commission, or have any claim entered upon the proceedings under such commission, without relinquishing 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 ' Ex parte Kendall, 17 Ves. 514. % the action. Ex parte Fritli, 1 Glyn & ^ It is not necessary that there should Jam. 165, be a formal discontinuance of the ac- ^ And where a creditor, who is pro- tion or suit before the plaintiff proves ceeding at law, presents a petition to his debt, for the proof itself operates the Chancellor to stay the bankrupt's as a discontinuance of the action or suit; certificate, and also impeaching the Ex parte Wooley, 1 Rose, 394, 2 Ves. & bankruptcy, and praying that if it Bea. 353 ; Ex parte Glover, 1 Glyn & should be found valid, he might be per- Jam. 371 ; and, therefore, it has been mitted to prove, by so doing he brings holden that a creditor may tender -a. himself within the jurisdiction of the proof or claim, and is entitled to have Great Seal, and will be enjoined from the judgment of the commissioners up- continuing his proceedings at law. Ex on his right to prove, before he dls- parte Bozannet, 1 Eose, 181 ; Ex parte charges the bankrupt, or discontinues Hardenberg, id. 204. Administration. 1465 but one satisfaction, so lie may prove the debt against each of them severally, under every fiat which may be issued against them.' Or, if some remain solvent, he may prove against the bankrupts, and bring his action against each of the solvent debtors.^ Lo;-d Hardvvicke illustrates 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. It seems clear, that if a creditor take a joint and several security from a firm for a partnership debt, and part of the firm become bank- rupt, 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 separate action against each of the others. But he cannot treat them as both joint and several debtors. There- fore, where A and B, partners, gave a joint and several bond to C, and B became a bankrupt, and proved the bond under the commis- sion 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.* Confined to the same debt. Sec. 930. The observations which have just been made regarding election of remedy have been confined to the case of one and the self- same debt. Where there are two debts arising from distinct contracts, it has been held that the creditor, having proved one under the bank- ruptcy, 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 ben- ' And he may prove under every fiat '' Bradley v. Miller, 1 Rose, 373. If, to the full amount, provided he receive under these circumstances, an action be dividends only to the amount due to brought against the bankrupt coEJoint- him. Ex parte Bloxam, 6 Ves. 600. See ly with the solvent partners, the bank- Ex parte King, Co. B. L. 168 ; Ex parte rupt may obtain an order to have his Lee, 1 P. W. 783 ; Ex parte Crossley, 3 name struck out, or to be indemnified Bro. 337 ; Ex parte Martin, 3 Rose, 87. against the costs and consequences of * Gregory v. Hurrill, 1 Bing. 824. its remaining. Ex parte Read, 1 Rose, ' Ex parte Wildman, 1 Atk. 109. 460. 184 1466 Bankkuptct of Partiters. efit of sucli commission with respect to the debt so proved or claimed. " ' But although th^re be distinct debts, the creditor cannot bring his action for the one so as to proceed to execution after the bankruptcy, and afterward 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 creditor for a debt operates as a relinquishment of an action pre- viously brought for any demand, even though it be distinct from the debt proved.' 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 by such creditor, he shall not prove or claim as aforesaid, without giving a sufficient authority in writing for the discharge of such bankrupt."^ By the same section, also, " where any such creditor shall have brought any action or suit against such bankrupt, jointly with any other person or persons, his relinquishing such an action or suit against the bank- rupt shall not affect such action or suit against such other person or persons." Confined to debts arising from bonds, bills and personal securities. Sec. 931. The foregoing remarks are principally, perhaps solely, ap- plicable to those cases where the debt is secured by bonds, bills oi other personal securities. But, if a creditor obtain a mortgage or pledge 'jB Geo. 4, 1. 16, s. 59 ; Watson v. Me- lie had been the holder of that bill at deif, 1 Barn. & Aid. 121; Harley v. the time of hia proof for the amount of Greenwood, 5 Barn. & Aid. 95 ; Bridgett the first. V. Mills. 4 Bing. 18 ; Ex parte Glover, '■' Ex parte Glover, 1 Glyn & Jam. 370; 1 Glyn & Jam. 270'; Ex parte Sly, 2 Ex parte Dickson, 1 Rose, 98; Ex parte id. 163 ; Ex pcjte Edwards, 1 Mont. Hardenberg, id. 804. & M'A. 116, overruling Ex parte ' 6 Geo. 4, c. 16, a. 59. If the credi- Schlesinger, 2 Glyn & Jam. 393. In the tor take the bankrupt in execution after latter case the Vice-Chancellor thought the issuing of the fiat, he will not be that a creditor by two bills, who, at the allowed to prove his debt, even upon time of proving for one had notice of the terms of delivering the bankrupt the dishonor of the other, could not af. out of custody. For charging in exe- terward bring his action on the latter, cution, under such circumstances, is a But Lord Lyudhurst, in his able judg- conclusive election to proceed against ment in Ex parte Edwards, said, that in the person. Ex parte Caton, Co. B. L. the case before him, there were two dis- 149 ; Ex parte Warder, Ex parte Bis- tinet debts for two distinct parcels of son, id. But, although a creditor should goods, in respect of which two distinct commence an action after the issuing of bills were given, and he thought the the fiat, and should even proceed to party might have proved the amount of judgment, if he do not proceed to exe- one of the bills under the commission, cution, he will not be barred of his and have afterward proceeded at law right of proof. Ex parte Arundel, 18 for the amount of the other bill, even if Ves. 331 ; Ex parte Gundall, 6 id. 446. ADMlNISTRATIOif, 1467 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 tlie whole debt,^ or have the security sold by the commission- ers and prove for the difference.^ Of election of proof. Sec. 933-. 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 sep- arate estate. This was decided by Lord Talbot," by analogy to the rule of law, that when A and B are bound jointly and severally to J ' See Ex parte Jackson, 5 Ves. 357 ; Ex parte Geller, 2 Madd. 262. ^ Ex parte Grove, 2 Atk. 105. ' By Lord I^oughborough's order, 8tli March 1794, it is ordered that, upon application to the major part of the commissioners named in any commis- sion of bankkrnptcy, by 9,ny person or persons claiming to be a mortgagee or mortgagees of any part of the bank- rupt's estate or effects, the said commis- sioners shall proceed to inquire whether such person or persons is or are a mort- gagee or mortgagees of any part of the bankrupt's estate or effects, and for what consideration and under what circum- stances, and if the commissioners shall find such person or persons is or are a mortgagee or mortgagees of any part of the bankrupt's estate or effects, and no sufficient objection shall appear to the title of sucli 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 mort- gages, 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, 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 Ga- zette, 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 pub- lic 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 convey- ances to the purchaser or purchasers, as the said commissioners shall direct. And it is further ordered that the mon- eys to arise from the sale be applied, in the first place, in payment of the expenses attending such sale, and then in payment and satisfaction of what shall be found due to such mortgagee or mortgagees, for principal, interest and costs ; and that the surplus of the said moneys, if any, be paid to the as- signees of the estate and effects of the said bankrupt ; but, in case the moneys to arise from such sale shall be insuffi- cient to pay or satisfy what shall be found due to such mortgagee or mort- gagees, it is ordered that such mortga- gee or mortgagees be admitted a credi- tor or creditors under such commission for such deficiency, and to receive a div- idend or dividends thereon out of the bankrupt's estate or effects, ratably, and in proportion to the rest of the creditors seeking relief under the said commission, but so as not to disturb |py dividend or dividends thereby already made. See Ex parte Holwell, 7 Vin. Abr. 103; Ex parte Coming, Co. B. L. 133; Ex parte Smith, 2 Rose, 64, etc. As to pledges which are within the order, see Ex parte Hillier, Co. Bl. 146 ; Bx parte Geller, 3 Madd. 262 ; Ex parte Troughton, 1 Co. Bl. 147. Equitable mortgagees, although not within the meaning of the above order, may, upon petition, obtain similar relief. Ex parte Payler, 16 Ves. 434 ; Ex parte Garbutt, 2 Rose, 78 ; Ex parte Hodgson, 1 Glyu & Jam. 13 ; Ex parte Alexander, id. 409 ; Ex parte Jennings, 3 Swanst. 360, etc. * Ex parte Rowlandson, 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. 1468 Bankruptcy of Partners. S, if J S sue A and B severally he cannot sue them jointly, and on the contrary, if he sue them jointly he cannot 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 war- rant of attorney upon vt^hich judgment is signed. In such case, the security of the bond is merged in the higher security of the judgment.' The rule of election as propounded by Lord Talbot is reprobated by Lord Eldon, who, in reference to Ex parte Eowlandson, observed that he was not perfectly satisfied with that authority. " The reason- ing," he said, " goes upon this, that a joint and separate action could not 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 two actions might be brought, the rule in bank- ruptcy 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 joint and several security should not go against both estates.' The rule, however, as laid down by Lord Talbot is completely established. It makes no diilerence 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, thi creditor obtain from the remaining partners an acceptance in the name of the original firm, and both the original and remaining part- ners 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 remain- ing partners.' 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 the time of taking it, of the connection between the drawers and acceptors, must ' Ex parte Cliristre, Mont. & Bl. 352. ^ 10 Ves. 109. = Ex parte Bevan, 9 Vps. 223 ; see Ex ■• 9 Ves. 225. parte Vaughan, cited 3 P. W. 206. = Ex parte Liddiard, 2 Mont. & A. 87; 4Dea. & C. 603. ADMIlflSTEATIOK. 1469 elect whether he will prove against the joint estate or against the estate of the individual partner. In Ex parte Bigg, ■ C drew a bill of exchange upon H & Co., which they accepted. 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 acceptance, sought to establish an additional proof against the separate estate of the drawer. The objection to the appli- cation was, that at the time of taking the bill, the holders were not ignorant that C was included in H & Co. Lord Eldo refused the application, considering that, under the circumstances, the petition- ers 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 arrangement shall not avail themselves of it, against their knowledge of the method in which the obligation of the firm ought regularly to be created." From this cause 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 be entitled to double proof, although the holders and acceptors are not in distinct partner- ships, as well as in an aggregate partnership. Lord Eldon also in another case' appears to establish 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 connection of the parties is not a question to be weighed in favor of the holder, in cases whei-e the general partnership is not subdivided into distinct firms.' And this opinion seems to rest on a fair founda- tion ; for, in another report of Ex parte Bigg,^ it does not appear that Lord Eldon laid any stress upon the circumstance of the holder's being ignorant of the connection between the parties to the bill. On the contrary, he is there reported to have said, that " whatever might be the right of the holder of such bill without 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 • 3 Rose, 37. » Eden, B. L. 183, 184. 2 Ex parte Bank of England, Rose, 82. * 1 Mont. Partn. 130. 1470 Bakkbuptct of Paetnbes. acceptors 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 indor- sers of a bill together form a partnership, and likewise form distinct firms respectively. Rule when debt has been converted with or without extinguishment. Sec. 933. When a debt has been converted with extinguishment, it is obvious that the creditor can only prove it according to its new quality. But where it has been converted without extinguishment, the creditor may elect' whether he will prove it according to its old or new quality. Therefore, where the creditor of a partnership took a joint and several bond from a firm, and afterward took a bill indorsed 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 pro- ceed against either the joint or sepai'ate estate.' Upon the same principle, where a joint creditor took, as collateral security, a draft from a solvent partner," and again, where a joint creditor took a sep- arate 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, Similarly, 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. "Where debts have been adopted or converted without the creditor's taking a new security, but only giving his assent to the arrangement, that is, a fortiori, a conversion without extinguishinent. And there- fore, where a partnership agreed to consolidate 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.' ' Ex parte Hay, 15 Ves. 4. • Ex parte Clowes, ante ; Ex parte » Ex parte Roxby. Apsey, 3 Bro. 265. 2 Ex parte Hodgkinson, ante. ' Ex parte Freeman, ante; Ex parte ••Ex parte Seddon, ante. Fry, ante. * Ex parte Lobb, ante; Ex parte Mein- hertzhagen, ante. Administratiok. 1471 When debt has been collusively converted. Sec. 934. We have already observed that where a debt has been converted by a debtor, by means of collusion with his (the debtor's) copartners, the debt may be treated as joint or several. Therefore, where a partner held property as a trustee, aud, with the knowledge of the firm, applied it to the use of the firm, it was hold that the cestui que trust might prove against the joint estate, or against the separate estate of the trustee.' So, where a partner had money intrusted to him as assignee of a bankrupt, which, with the knowl- edge 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 trust was not entitled to elect.' Where A employed B & as his stock-brokers, and, for the pur- pose of more convenient transfer, allowed certain stock belonging 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 part- nership 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 & C Rule ivhen dormant and ostensible partners become bankrupt. Sec. 935. Where a firm, consisting of a dormant and an ostensible partner, become bankrupts, it has been invariably held that a cred- itor who dealt with the ostensible partner, not knowing that he had a dormant partner, may prove either against the joint estate or against the separate estate of the ostensible partner. ° And where there is a joint commission against A & B, as partners, but the ' Ex parte Watson, 2 Ves. & Bea. 414; cestui que trusts, who, upon coming of Ex parte Heaton, Buck, 386. In such case age, indemnified B, but did not ratify the copartners who have notice of tlie the loan, was allowed to prove her appropriation of the trust-money to the share of the trust-money against the use of the firm, become, constructively, separate estate of A. Ex parte Beilby, trustees consenting to a breach of trust, 1 Glyn & .lam. 167. and trustees comniiting breach of trust 'Smith v. Jameson, 5 T. R. 601. are jointly and severally liable. Keble * Ex parte Apsey, 3 Bro. 265. V. Thompson, 3 Bro. 112. Where A and '' Ex parte Turner, Mont. & M'A. 355. B, trustees, lent trust-money to a firm ' Ex parte Norfolk, 19 Ves. 458 ; Ex of which A had been a member, B re- parte Watson, id. 459 ; and see Biuford ceiving indemnity for the loan from the v. Dommett, 4 id. 434; Ex parte cestui que trusts — upon the bankruptcy Hamper, 17 id. 413 ; Ex parte Mat- of the firm, and also of A, B was allowed thews, 3 Ves. & Bea. 125; Ex parte to prove the whole sum lent against Hodgkinson, Coop. 101. the estate of the firm; and one of the 1472 Bankkuptct of Partners. latter is a dormant partner, and the joint creditors have re- sorted to the separate estate of A, thereby diminishing A's sepa- rate estate, and exonerating the joint estate, so as to produce a sur- plus of it, the separate creditors of A have a lien iipon that surplus to the extent that their funds have been diminished by the election of the joint creditors.* When a demand may be split. Sbc. 936. 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 partnership 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, 27,620Z. was 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 mort- gage of some property belonging to A, with joint and several cove- nants 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 18,0001. J and that, with regard to the residue, after deducting the mortgage security, which fetched only 1300, they were entitled to prove the ultimate remainder of $9,320 against the separate estate of A, by virtue of his several covenant. Again, A, B, C, and D, partners, gave to their bankers a joint and several promissory note for 2,000?., to secure future advances. When the advances had amounted to 1,950?., A executed a sepa- rate 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 after- ward 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 security given by A, might prove the balance of the debt on the promissory note, against tlie separate estate ' Ex parte Reid, 3 Rose, 84. ^Glyn & Jam. 81. 2 Ex parte Matthews, 3 Atk. 816 ; Ex parte Crinsoz, 1 Bro. 270. Administration. 1473 of one of the other partners. In this case it may be remarked that on the execution of the mortgage the promissory note was not given up to be canceled, and further, that the bankers, on petitioning for liberty to prove, swore that the mortgage was intended to be an addi- tional security to the promissory note." Conversely, where the separate debt of one parbner is secured as to part of it by the joint security of the firm as sureties, the creditor may prove so much of the debt as is joint against the joint estate, and the residue against the separate estate of the debtor. As where A, on his marriage, covenanted to pay 4,000Z. to the trustees of the settlement, of which 3,0001. 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 prove for 3,000Z. against the joint estate, and 1,000Z. 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.' Of the time of election, and vraiver of proof. Sec. 937. In Ex parte Bond,* Lord Hardwieke 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 bankrupts' joint and separate estates, and see which would be most beneficial for them to come upon in the first place. And it has been determined that the party is entitled to defer his election until a dividend has been declared; ° or at least until the assignees are possessed of a fund to make a dividend.^ Lord Thurlow observed — " It is said to be the constant course for a joint and separate creditor to prove against both estates, and to elect at the dividend." ' In two early cases a creditor, who had received a dividend 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, how- ever, 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 ' Ex parte Bate, 3 Dea. 358. Diasen- ' Ex parte Clowes, Co. B. L. 261 ; Ex tiente, Erskine. C. J. parte Husband, 3 Glyn & Jam. 4. ' Ex parte Hill, 3 Mont. & A. 175 ; 3 " Ex parte Butlin, Co. B. L. 259. Dea. 349. See Kx parte Smith, 1 Dea. ' Ex parte Bentlev, 3 Cox, 818. 385. 8 Ex parte Rowlandson, 3 P. W. 405 ; ' Ex parte Bevan, 10 Ves. 107. Ex parte Bond, 1 Atk. 98. * 1 Atk. 98. ' Ex parte Masaon, 1 Kose, 159 1474 Bankruptcy of Partners. knowing the state of the funds 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 sometimes upon refunding be permitted to prove against the other. No person, said Lord Alvanley, can be put to elect without a clear knowledge of both funds.' In Ex parte Bolton,' joint creditors of A and B, partners, sued out a separate commission against each. Under the commission against A, they proved against the joint estate, and received a dividend. Afterward, under the commission against B, they proved their debt, and cjlaimed to receive dividends, against 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 like 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 com- mission; 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 i-ecently followed in Ex parte Law,' in which it was held that the receipt of a dividend fi"om the separate estate of one of the bankrupts did not exclude 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. But waiver of proof is not to be allowed where it will disarrange the ' Whistler v. Webster, 3 Ves. 371. ' 2 Rose, 389 ; Ex parte Swanzy, See Wake v. Wake, 1 id. 385. Buck, 7. 8 3 Dea. 541. Administkation-. 1475 proceedings which have already taken place in the bankruptcy. On a petition for this purpose, by persons who had proved as joint cred- itors, and wished to prove against the separate estates of the bank- rupts. 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 declines, if the waiver would affect the certificate by reason of the great amount of the cred- itor'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 & 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 continued by B & C, who took possession of all the eft'ects and paid most of the debts of the old partnership, and the peti- tioners 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 Joint estate of A, B & 0, but they were not at that time aware that they could elect between the estate of A, B & 0, and the estate of B & 0. They signed the certificate of A, B & C. The petitioners applied to withdraw their proof of 6,9271. made against the joinst estate of- A, B & C, and that they might prove the same against the estate of B & 0. But Lord Eldon dismissed the petition with costs. On the other hand, where the creditor had signed the certificate of the bankrupt from whose estate he wished to withdraw 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 sufiicient in value without his signature, under these cir- cumstances 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 signature on the certificate, after that of the peti- tioner, was by the Bank of England for 16,000Z., 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 regarded this objection. ' Ex parte Beilby, 13 Ves. 70. ^ Ex parte Atkinson, 1 Mont. Part. 2 1 Mont. Part. 139, App. 207. 1476 BANKKUPTcr of Pautnees. Nevertheless, the signature of a bankrupt's certificate by an influ- ential person must of necessity have considerable weight with other creditors. If, therefore, such person, after having signed the certifi- cate, and having, by his example, induced others to sign, be permit- ted to waive his proof, it seems difficult to say that such a permission might not, in many cases, materially affect the interest of third per- sons. Now it has been laid down by Sir John Leach that where a creditor has done acts by virtue of his proof which may afEect the interest of others, he cannot retract his proof. In the same case his Honor held that the petitioner having signed the certificate, might, under the circumstances, have influenced others to sign, and was therefore an act aflHecting 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 presumption is tliat his signature has influenced that of others, he will not be per- mitted 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 contrary," Of double remedy. Sec. 938. 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 will consider them his joint or his separate debtors, and proceed accord- ingly; yet this rule is not without exceptions. For, where a creditor 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 and D are in a dis- tinct 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 afterward 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 estate, it has been ruled that he may bring an action against the other partner for the residue.'' We have seen, also, that the mortgagee of a partnership, if he elects ' Ex parte Solomon, 1 Glyn & Jam. ^ Ex parte Parr. 1 Rose, 76. 25. " Heath v. Hall, 4 Taunt. 336 ; Young ■•i Ex parte Husband, 5 Madd. 421 ; 2 v. Hunter, 16 Bast, 258. Glyn & Jam. 4. Adminisxratiojs-. 1477 to prove under the bankruptcy, must give up his security, 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 consequence 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 Demerara, under the firm of A, B & Co., and accepted by C and D, who were in the firm of A, B & Co., but likewise 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 the interest. A joint commission of bankrupt having issued against C and D, the petitioners applied to j^rove 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 peti- tioners was allowed. Lord Bldon : " The deduction of a security is never to be made in bankruptcy but when it is the property of the bankrupt; it is said that it must be so considered in this case, as the house in Demerara and that in Liverpool were partners; but it is quite familiar that the same firm rnay be in one character drawers, and in another acceptors; and the question whether the mortgage is the prop- erty of the firm must be met in another way. The commissioners must call another meeting; the petitioners to prove without deducting their security." Again, in Ex parte Peacock,' A and B, partners, being largely indebted to C, executed to him a joint bond to secure the amount of the sums due. As a farther security to C, A alone executed a mort- gage to him of certain freehold and copyhold premises. A died, and a commission of bankrupt issued against B, as surviving partner of A. Lord Eldon held that C might prove the whole debt against the joint 1 1 Rose, 76. Generally speaking, in A may be reputed owner of property of tlie administration of "the bankrupt A and B are the real owners ; see, how- laws, A, a trader, and A and B, joint ever, an exception to this rule in the traders, are considered as much distinct ensuing section. as A and X. This appears not only ' Ex parte Peacock, 2 Qlyn & Jam. 37; from the cases mentioned in the present Ex parte Bowden, 1 D. & C. 13.5 ; Ex section, but from Ex parte Chuck, ante, parte Smyth, 3 Dea. 597. from which it seems clear that which 1478 Bankruptcy of Partners. estate of A and B, without giving 'up his security on the separate estate of A. The sepai'ate 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 in 10,OOOZ.. on bills, A alone assigned to a trustee for C certain debts and other securities belonging to A. Under these securities the sum of 8,414Z. was received by C's trustee. On the bankruptcy of A & B, it was held tjiat C might prove for 10,000?., without deducting the 8,414Z. from the proof.' The case of Ex parte Connell,' lately decided by the Court of Eeview, 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 was provided that all debts due to the com- pany from any proprietor on any account should be the iirst lien and charge on the shares of such proprietor ; and it was declared unlaw- ful 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 after- ward became bankrupts. The bank then petitioned to prove the debt against the joint estate, without giving up or selling the shares, or having the value deducted from the joint proof of debt; but the Court of Eeview dismissed the petition. It appears, however, that Cross, J., dissented from the opinions of the other judges, and it cannot be denied that his judgment is founded on very satisfactory reasoning.' But notwithstanding 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 partnership does diminish the creditor's right of proof to the extent of the value of the security. 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 applied to prove, it was held that he must deduct the amount so ' Ex parte Adams, 3 Mont. & A. 157 ; ' The other judges seemed to rely on Ex parte Uroom, 3 Deac. 265. the rule in Ex parte Rowlandson, ante, ^3 Dea. 301 ; 3 Mont. & A. 581. See which, however, was not a case of lien. Ex parte Bowden, 1 D. & C. 135. Administration. 1479 received before he could prove on the acceptance.' And, of course, a security for a separate demand does not extend to secure a Joint demand. Where, therefore, a partner deposited title deeds in his own name, as a security for any payments or guaranties which the creditor should make for that partner, and, upon the faith of the deposit, the creditor negotiated and guaranteed 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. -^ Of double proof. Sec. 939. Where the parties to an instrument are partners, and a creditor is permitted to prove against them, according to, and to the full extent of their respective liabilities, as apparent on the face of the instrument, without regard to the connection subsisting between them, such mode of proof may be designated as double proof.* The leading case on this subject is Ex parte La Forest.^ There, Corson and Gordon, partners and turpentine manufacturers, entered into partnership with Whincup and Griffin, soap manufacturers. The latter business was carried on under the firm of Whincup & Griffin. A joint commission issued against the four, under which they were found bankrupts, and the assignees 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 part- nership firm, drew bills of exchange upon the firm of Whincup & Griffin, who accepted such bills. The petitioners discounted many of these bills. The petitioners alleged that, at the time of such discount, they were ignorant of any partnership existing between the foui-, but that they considered Corson and Gordon, the drawers, and Whincup 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 admitted to prove against the respective joint estates of Corson and Gordon, and of Whincup and Griffin ; but the Commissioners refused, conceiving that the bills ought to be proved only against the joint estate of Whincup, Griffin, Corson and Gordon. Lord Loughborough held ' Ex parte Prescott, 4 D. & C. 23. names of the respective firms stand as ' Ex parte Freen, 3 Qlyn & Jam. 346. drawers, indorsers, or acceptors, a party 3 It Is laid down by Mr. Cooke, in re- taking such bills, conceiving them to lation to double proof, that where the be distinct houses of trade, may prove same persons are concerned }n severfil against each other. Co. B. L. 361. firms, and issue bills on which the ^ Co. B. L. 361. 1480 Bankbuptcy of Baktneks. that admitting the allegation of ignorance on the part of the petition- ers to be true, they were entitled to the proof which they required. ' Again, A, B and C were partners in a cotton manufactory, and B and C carried on a distinct trade in partnership as grocers. The petitioner sold goods to B and as grocers, for which they remitted to him a bill drawn by A in their favor upon one Z, and indorsed by B and 0. Z accepted the bill, but it was protested for non-payment. The drawer, indorsers, and acceptor, all became banlcrupts. The petitioner did not know that A had any connection in trade with B and 0. Lord Loughborough ordered that the petitioner should be at liberty to prove the amount of the bill against the joint estate of B and C, and also against the separate estate of A, and be paid divi- dends 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 car- ried on a distinct trade as H aud G. The bill was accepted, negoti- ated, 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 & Co., thepetitioner 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.* In all these cases, the partners, who appeared as distinct parties to the bills, were also in distinct partnerships; and yet, the holders of the bills, in order to obtain double proof, were x-equired 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 ' His Lordsliip accordingly ordered for further directions; but if the peti- the Commissioners to inquire, by exam- tioners did not know of such partner- ination of the respective parties upon ship at the time of their receiving the oatk, and otherwise, whether the peti- said bills of exchange and promissory tioners, or either of them, at the time notes, of which they were respectively of their respectively taking the respect- possessed, then such of the petitioners ive bills of exchainge and promissory aa did not know of such partnership, notes in the petition mentioned, knew were to be admitted to prove against that Alexander Corson and James Gor- the respective joint estates of Corson don, and Whincup and Griffin, were and Gordon, and of Whincup and Qrif- • concerned and engaged in one partner- fin, and to receive dividends therefrom ship, carried on under the firm of Whin- with the other creditors, cup and Griffin, or not. And if the peti- "^ Ex parte Benson, Co. B. L. 263. tioners knew of such partnership, then ' Ex parte Adam, 3 Bose, 36. they were to be at liberty to apply to * Eden, B. L. 183. the court, as they should be advised, ADMIinSTRATIOMr. 1481 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 ahnowledge of their joint interest, received in payment a bill drawn by A on, and accepted by B and 0. Lord Eldon held that on the bankruptcy of A, and of B and 0, the ven- dor was entitled to prove the bill against both their estates. On other occasions, 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. On the other hand, there is a recent case in which Sir George Eose is reported to have said that the holder of a bill is not entitled to double proof if he knew the different 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 by some of the partners upon the others, or upon the whole firm, or vice versa, and the bill purports and the fact is that the drawers 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 appearing on the face of the bill, and to prove against both the estate of the drawers and that of the acceptors. Iiimitations as to double proof. Sec. 940. But a creditor cannot be permitted to avail himself of double proof to the extent of proving against the joint and separate estate of the same individual. Thus, A carrying on business on his separate account, and also in partnership with B, gave a bill of exchange drawn by himself payable to the order of A & 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 afterward learned that distinct accounts were to be kept of the estates of A & B, applied to be at liberty to prove against the joint estate of A & B, in addition to his proof against the sepa- rate estate of A. But Lord Eldon only gave him the election either > 1 Eose, 441. ' 3 Deac. 261. ' Ex parte Bonbonus, 8 Vea. 546 ; Ex parte Bank of England, 3 Jtose, S3. 186 1483 Bankruptcy of Partn-ees. to retain his present proof, or to withdraw it and prove against the joint estate.' So, in Ex parte Liddel," A, B & C carried on business in partner- ship 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 & C. Under each of these commis- sions K proved as a joint creditor, and received a dividend out of the joint effects. He was then 'permitted by the commissioners to prove against C's separate estate in respect of the acceptance. But upon a petition by the assignees of C, praying that this proof might be expunged, Lord Bldon ordered 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 resort- ing to them individually. Again, in a case ^ where A, B & C, partners, indorsed 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 circumstance 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 petitioners, therefore, must elect. The more modern case of Ex parte Husband * appears to have been decided on the same principles. There, A & B being partners, the latter a dormant partner, A, on the partnership account, drew bills in his own name on B, who accepted them. A & 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 & B, and the separate estate of B, but that he might elect to prove them against the joint estate of A & B, or the separate estates of A & B. "It is clear," said Lord Eldon, "that where a party tak'es a bill, drawn by some members of a firm, carry- ing on a distinct trade, on the firm, in ignorance that the drawers constitute part of the firm of the acceptors, proof is admitted against both the drawers and acceptors, and it is equally clear that a person ' Ex parte Masson, 1 Rose, 159. mode of proof was allowed by the com- ' 3 Rose, 34. missioners and disallowed by the Chau- 2 Ex parte Bank of England, 3 Rose, cellor, but apparently on other grounds. 83 ; in Ex parte Kirby, Buck, 511, this * 3 Glyn & Jam. 4. Administeatiok. 1483 holding a joint and separate security for the same debt, is in banlr- ruptcy bound to elect. In this case, however, the bills are accepted by the dormant partner of the partnership of A & B, carrying on busi- ness 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." ' The preceding observations were written before the case of Ex parte Moult ' was argued before the Court of Eeview. There, Wil- liams, 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 Eadcliffe & Co. Barrow & Co. were commission agents at Manchester, and that business was carried on by Barrow and Geddes. The firm of Johnston & Co. car- ried on business as warehousemen in London, and that business was conducted by Johnston and Geddes. The firm of Geddes & Co. carried on business as cotton manufacturers at Stockport, and that business was conducted by Geddes alone. The firm of Radclifle & Co. cai'ried on business as cotton-spinners at Chester, and that business was car- ried on by Geddes and Eadcliffe. Williams & Co., at the time of taking the bills, were ignoran t that Geddes was a partner with Bar- row & Co. In September, 1828, a joint commission of bankrupt issued against Barrow & Geddes, and in October following, a commission was sued out against Johnston & Co. In November of the same year, Williams & Co., being the holders of the two bills, proved them under ' Johnston & Co.'s commission, under which dividends had been de- clared to the amount of 2s. 8^. in the pound. In 1830, Williams & Co. proved the same bills under the commission against Barrow & Geddes ; first, against the joint estate of Barrow & Geddes for the ' It is to be observed, however, that a settled the law on this subject, divi- case of this nature could scarcely arise dends had sometimes been received again. For, in pursuance of the doc- upon principles at variance with that trine laid down in Smith v. Watson, the decision. In a case where seven years estate of A would comprehend the joint had elapsed since a dividend, inconsist- chattels of A & B, B being a dormant ent witli Ex parte Moult, had been re- partner, ceived, the Court of Review refused to *Mont. 337; 1 D. & C. 44. On appeal, order the party to refund, but made a Mont. & Bl. 28 ; 2 Dea. & C. 419. Be- prospective order. Ex parte Soper, 1 fore the decision in Bx parte Moult had Moat. & A. 55 ; 4 D. & C. 569. 1484 Bankeuftct op Partners. whole amount ; and, secondly, against the separate estate of Geddes for the amount minus the dividends declared under Johnston's com- mission. This proof being allowed by the Commissioaers, the as- signees of Barrow & Geddes appealed from that decision, and prayed that Messrs. Williams & Co. might be ordered to elect before the Commissioners whether they would remain creditors of the joint estate of Barrow & Geddes, or of the separate estate of the latter. The Judges of the Court of Keview were divided in opinion upon this important question, Erskine, 0. J., and Eose, 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 au- thority 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 concluded, if not by many dicta and some few decisions, at least by the leading principle which guides the admin- istration of the bankrupt laws. But, however that may be, the case of Ex parte Moult may now be considered as a decisive authority on this subject. The principles of that case and Ex parte Husband have been car- ried still further, if possible, in a case Ex parte Chevalier.' There V & Co., who carried on business in partnership, as merchants in the Brazils, drew a bill upon V, one of the partners, who traded on his own account in England. The bills were made payable to the agent of the government of the Brazils, and were accepted by V. They were not paid. Process of insolvency afterward issued against the foreign firm, and a commission issued against the English partner. 'It was held, that the agent, though he might prove under the com- mission, yet must be restrained from receiving dividends, unless he elected not to prove under the insolvency abroad. Of proof between partners. Sec. 941. A debt due from one partner to another on the partnership account is provable under a commission against the debtor partner, for, in this case, the creditor stands in the situation of " a surety, or person liable for the debt of the bankrupt, and who has paid the debt." ^ The debt so provable will bar the bankrupt partner's certifi- ' I Mont. & A. 345. Mau. & Selw. 195 ; Afflalo v. Fourdrin- 5 6 Geo. 4, c. 16, s. 53 ; Ex parte Wat. ier, 6 Bing. 309. son, 4 Madd. 477 ; Wood v. Dodgson, 3 Admikisteatiost. 1485 cate, but the solvent partner can only prove under certain restric- tions. Thus, first, it is a settled rule that a solvent partner cannot prove under a commission against his copartner, so as to come in competi- tion with the creditors of the partnership, that is, he has no right to receive any portion of his debt, until all the creditors of the partner- ship 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, viz., that a partner who is himself liable 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.' Again, a solvent partner cannot prove against his copartner in com- petition with the separate creditors, unless the Joint creditors are first paid. For, if the dividend were reserved to him on such proof, the joint creditors miglit be injured by the partner stopping in transitiC the surplus of the separate estate, which Avould 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 afterward able to pay the joint debts. In order to admit the proof of one partner against another, it is likewise necessary that the partnership debts should have been 'bona fide satisfied, either by payment of the whole or of part in discharge of the whole.' Therefore, although there have been cases to the con- trary,^ it is not sufficient, in oi'der to enable the solvent partner to prove against the bankrupt partner, that the former should indemnify 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, then A, B and 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 ' Deac. B. L. 664 ; Ex parte Reeve, partner for the bankrupt's share of the 9 Ves. 558 ; Ex parte Ogle, Mont. 351 ; goods, until they first satisfy all that is Ex parte Burrell, Co. B. L. 505 ; Ex due from him to the partnership. 8 parte Broome, 1 Rose, 69 ; Ex parte Barn & Cres. 618. Rawson, Jac. 277 ; Ex parte Robinson, 4 ' Stat. 6 Geo. 4, c. 16, s. 52. D. & C. 499 ; M'Owen v. Hunter, Drury * Ex parte Ogilvy, 2 Rose, 177 ; Ex & Wash, 347 (Irish). parte Taylor, id. 175 ; Ex parte Stoveld, ' But, where the solvent partner has 1 Glyn & Jam. 303. possession of the goods, he cannot be '3 Qlyn & Jam. 166. sued by the aasignees of the bankrupt 1486 Bankeuptct of Paetitees. the Spilsby firm to the amount of 39, 841 Z. 3s. 2d. Of this deficiency, C, by his petition, alleged that he had already paid or secured to be paid 16,668Z. 17s. 3rf., and had the further sum of 2,450?. applicable to the same purpose. He, therefore, petitioned, B being insolyent, 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 diCBculty which the act of Parliament has interposed. That proof may be made by 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 persons shall not stand upon the proceedings in respect of the same debt, and, if the indemnity have not expunged from the proceedings, to all substantial purposes, the name of the original creditor, then the person giving indemnity does not come within the meaning of the act, as a surety or person liable to paying the debt, or paying part in discharge, or making an engagement which is accepted in discharge of the debt. I say, that till 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 considered as a person liable, paying the debt, or part in discharge of the debt, within the meaning of the act, and till he fills the character there designated he cannot prove." It appears that in this case of Ex parte Moore, the very fact of admitting the solvent partner's proof against the separate estate would have enabled him instanter to pay all that remained 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 part- ners 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 estate the money secured by the bonds, and also a large sum upon an account current. The executors filed a bill against the surviving partners for an account and a receiver ; but, ' See 2 Glyn & Jam. 337. , '■'Id. 333. Admikisteatioij-. 1487 pending the suit, the surviving partners became bankrupts. The exec - utors 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 separate estate of one of the partners, there being no joint estate. Sir John Leech 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. ISTor do I see, in principle, how the entering a claim differs from the establishing a proof, since it operates just as effectually in interrupting the payment of the credit- ors, and if it interrupts the payment of the creditors, it is equally an interference with their rights, whether the dividends be received by the surety in the first instance, or paid into the bank in trust for him. To this conclusion I have been compelled to come, nor can I conceive how the commencement of a suit in equity before the bank- ruptcy can make any difference as regards the" rights of the creditors." The preceding cases were followed by that of Ex parte Ellis.' 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, how- ever, 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 retirement. Prom 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 applied 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 bank- rupts, 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 bankrupt'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 part- ner, since he had authorized the use of his name as such. And, therefore, that until he should produce a discharge from the joint creditors, he could receive no relief. Upon the whole, therefore, the general rule is very strict, that no solvent partner can prove against the estate of his bankrupt copartner '2 Glyn&Jam. 313. 1488 Bakkruptcy of Partners. without having first hona fide discharged all the joint debts. More- over, as between such solvent partner and the joint creditors, 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.' Qualification of the role. Sec. 943. But the general rule in question, like all other general rules, is qualified in cases of necessity. Therefore, when the solvent partner, without his own default, is unable to procure a discharge, from every joint creditor, as for instance, where one of the joint cred- itors is a lunatic, in such case, it seems, he will be permitted to prove against the sepai'ate estate upon giving security for the debt which cannot be discharged, and paying the residue of the joint debts."' There are some cases, also, where, notwithstanding that the retiring partner has not paid all the demands of the partnership, he has been permitted to prove against the joint estate, on the ground of the joint creditors having assented to the arrangements made between the retir- ing and remaining partners, or being barred by length of time from objecting to the rctii-ing partner's proof. Thus, where a partnership had 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 afterward became bankrupt, it was held that the retir- ing partner might prove his debt against the separate estate of the bankrujpt, although some of the partnership debts were unpaid.' In this case it may be remarked that the retiring partner had been a dormant partner. 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 occasion the two con- tinuing partners gave the executors a bond, to secure the balance due to them, and more than six years afterward the two became bank- rupt, 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.* 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 ' See Ex parte Ogle, Mont. 350. ' Ex parte Grazebrook, 2 D. & C. 188. ^ Ex parte Young, 3 Ves. & Bea. 33. ■* Ex parte Hall, 8 Dea. 125. Administeatiok. 1489 be allowed to prove the amount of the capital so advanced, pari passu, with the separate creditors of the bankrupt. However, such proof will 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 premium, took B into partnership with him, and guaranteed to him a profit of 400Z. per annum. Shortly after the partnership began, B ascertained that A was insolvent, and that he had formed the partnership mei'ely to retrieve his affairs, which were desperate. B then filed a bill for the purpose of having the partnership declared void on the ground of fraud. A receiver was ordered upon a motion in this suit. Afterward A became a bank- rupt. B petitioned to prove the premium and receive a dividend with .the other creditors of A. Lord Eldon expressed himself at first inclined to grant the prayer of the petition, provided the petitioner would abandon the suit in equity and the receiver, but took time to consider. Afterward (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 creditors. Exceptions of a special nature. Sec. 943. 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 solvent part- ners, 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 debts so owing to the partnership.' In Ex parte Young,' A, B, and 0, being in partnership, fraudu- lently borrowed money and drew bills in the partnership name for his private use. afterward 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 com- mission against C, in competition with his separate creditors. "It has been objected," said his Lordship, " that the proof cannot be admitted, ' 1 Rose, 71. "3 Rose, 40 ; 3 Ves. & Bea. 31. 2 Ex parte King, 17 Ves. 115. 187 1490 Bankruptct of Partners. because thereby the solvent partners are admitted to prove in compe- tition 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 effect is the same; the proof will not be in competition with them. The bank- rupt's estate, it has been insisted, must, by the rules in bankruptcy, go exclusively to his separate creditors; but in every fair and equita- ble 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 equita- ble. 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 maintained an action against the bankrupt, yet, undoubtedly, upon equitable principles, the bankrupt was a trustee 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. The solvent partners paying the partnership debts may, if the sep- arate creditors have been paid, be reimbursed the principal moneys due to them before the separate creditors receive interest out of the sur- plus 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 circumstances, 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. 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 bal- ance of accounts is in favor of the solvent partners, the latter may be reimbursed out of the bankrupt's share of the partnership estate, and may prove the deficiency against his separate estate, so as not to dis- turb dividends already made. Where, therefore. A, B, and C were • Ex parte Rix, Mont. 337. In some parte Stoveld, 1 Glyn & Jam. 303. But cases the solvent partner may be ap- see Ex parte Tapper, 1 Rose, 179. pointed receiver of tlie partnership ef- ' Ex parte Robinson, 4 D. & C. 499. fects, and that on petition only. Ex Administration. 1491 partners, and became bankrupt, and 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 respectively due from the partnership of A, B, and 0, to the petition- ers respectively, and that the surplus, if any, of the funds of the joint estate, after' paying 2Qs. in the pound to the joint creditors, or after retaining enough for that purpose, might be paid over to the petition- ers, in or toward 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. What debts one partner may prove. Sec. 944. When a partner retires from a firm and the remaining partner covenants to indemnify him against all outstanding demands, 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 affected by the circumstance that the partner, at the time of his retirement, knew that the house was insolvent. Thus, in Ex parte Carpenter,' it appeared that in December, 1818, A, B, 0, and D dissolved partnership as bankers, by deed, by which it was agreed that A and B should retire, and the busi- ness be carried on in future by and D. and D covenanted to indemnify A and B against all outstanding demands. In October, 1825, died, and a commission issued against D. A having been obliged to pay certain partnership debts which C and D had under- taken 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 bank- rupt was to let the retiring partner escape ; that they looked to a ' Ex parte Terrell, Buck, 345 ; Goss cate will be a bar to an action after- V. Dufresnoy, Davies' B. L. 371. ward brought by the solvent partner on ^ Parker v. Eamsbottom, 3 Barn. & the covenant of indemnity. Wood v. Ores. 257 ; 5 Dowl. & Ryl. 138. And if Dodgson, 2 Rose, 47 ; 6 Geo. 4, c. 16, s. he neglect to prove, and the bankrupt 52. partner obtain his certificate, the certifi- ^ Mont. & M'A. 1. 1492 Bankruptcy of Paktneks. bankruptcy, and were, therefore, indifferent as to what mighi happen to themselves; or that tlie whole scope of the deed was to allow the retiring partner to get clear of the transaction. When one partner may prove against estate of one, vrhen there is a deficiency to pay private debts. Sec. 945. 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 insufiBcient to pay his share of the debts, the solvent partner can come against the other bankrupt's estate for his proportion of the deficiency, besides the original contributory proportion already proved against his estate. It was held by Sir John Leach, when Vice-Chaneellor, that this could not be done ; but that the solvent partner could only prove for such sum as at the time of the bankruptcy 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, his 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 payment. Now, with great defer- ence, 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 d§bt, 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 ' Ex parte Watson, Buck, 449 ; Ex that case the defendant, though part- parte Smith, id. 493. ner with the plaintiflF in the ship, was ^ Ex parte Hunter, Buck, 552 ; Ex also in a distinct partnership with other parte Moore, 3 Glyn & Jam. 173. In persons as ship's purser. The action Peter v. Rich, Rep. in Cliauc. 19, two was brought to recover moneys which out of three sureties were compelled to the plaintiff had been compelled to pay pay in moieties, the third being insol- on the purser's account. Therefore, vent. But it is otherwise at law; see gz«) Mont. 238. 1'504 Bankruptcy of PaetnIeks. where the debt has arisen from goods furnished by one firm to the other, in a manner as if they had been utterly unconnected in trade, but that, except in the case of bankers, this rule will not be applica- ble where the debt has arisen only from money advanced by one firm to the other. 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 carry- ing 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 pi-ove a personal debt against the joint firm, because the cred- itors of the joint firm are his creditors, and he would be taking from his own creditors what ought first to be applied 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 but 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 the way of their distinct trade, or in, respect of any other dealing with the larger firm. " ' If the opinion of Sir John Leach had been adopted, it should seem that in cases of distinct firms, and all becoming bankrupt, proof would have been admissible between each estate in respect of every species of money transaction, except in one particular 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 gene- ral rule of proof which has been allowed 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 prin- ciple is the same as that which suggested the doctrine of reputed owership.* On the occasion on which Sir John Leach made these observations, his Honor decided in favor of the proof in three different cases; but ' 2 G. & J. 137. It should seem that ' The same principle would have war the Court of Review adheres to the ranted the double proof in Ex parte opinion of Sir John Leach. See Ex Moult, ante, had not a positive rule in parte Dawson, 3 Dea. & C. 12; but that bankruptcy intervened, is not an express decision on the point. ADMINISTKATlOlf. 1505 it was unnecessary to depart from any principle laid down in Ex pa,rte Sillitoe. In the first of these cases. Ex parte Brenchley,' the banking firm, consisting of three, claimed to prove against the distilling firm con- sisting of two, for advances of money made by the bankers to the dis- tillers; one of the two distillers was not a partner in the banking firm' but Sir John Leach said, that if he had been, the advance of money by the bankers was a sufficient dealing in the way 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 employ- ment of such surplus moneys, and the debt was to be considered as due to them in respect of a deal ing in their trade. Lastly, the case of Ex parte Castell' was referred to the same prin- ciple. His Honor considered 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. In some cases contribution will be permitted between the joint and separate estate. As where joint creditors have been permitted under an order to go against the sej)arate estate, or joint creditors of a dor- mant and visible partner have pi-oved against the visible partner alone. So in a case where both the joint and separate estates were liable to a debt to the Crown, and, by process, more had been levied upon the joint estate than its proportion, contribution was decreed between the two estates, and it was referred to the Master to settle the propor- tion.'' Of set-off. Sec. 952. Formerly if a creditor of the bankrupt were also indebted to the bankrupt, the assignees might sue him for and recover the amount of the latter debt, and the , creditor might prove upon the bankrupt's estate for the amount of the debt to him. This was extremely disadvantageous to creditors where there happened 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. 3, c. 30, s. 28, and 46 Geo. 3, c. 135, s. 3, which made the ' 3 Glyn & Jam. 137. 'H. 2 Id. * Rogers v. Mackenzie, 4 Ves. 753. 189 1506 Bakkruptcy of Partners. balance of the accounts between the parties, the debt in law to be proved by the creditor or recovered by the assignees.' Although those statutes are now repealed, their provisions are con- tained in the stat. 6 G-eo. 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 bank- rupt 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 bankruptcy committed by such bankrupt before the credit given to or the debt contracted by him, and what shall appear due on cither 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-ofiE had not, when such credit was given, notice of an act of bank- ruptcy" by such bankrupt committed." The term mutual credits imports something more than that of "mutual debtft." 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 money on the other; but where there is a mere deposit of property, without any authority to turn it into money, unless the deposit 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.' ' Arclib. B. L. Book 1, ch. 1, s. 7. pearls were not sold nor the produce ' Notice of the bankrupt's insolvency received before the bankruptcy. French does not prevent the creditor's right of v. Feun, Co. B. L. 536. But mutual set-off. Hawkins v. Whitten, 10 Barn, credit may be constituted, although the & Cres. 3) 7. parties do not mean particularly to trust '^ Rose V. Hart, 3 Moore, 547 ; Eose v. each other; thus, where a bill of ex- Sims, 1 Barn. & Ad. 531 ; Groom v. change, accepted by A, got into the West, 8 Ad. & Ell. 758. Where there is hands of B, and B bought goods of A, a trust between tlie parties, that is a it was holden that there was a mutual mutual credit within the statutes, credit between A and B, although A did Therefore, where three persona joined not know that the bill was in B's hands, in an adventure to buy and to sell pearls, Hankey v. Smith, 3 T. R. 507, ra. In these one to advance the money and to sell the cases, what was allowed as a mutual pearls, and the profit and loss to be divi- credit was of such a nature as must ter- ded between the three, upon the bank- minate in a cross debt. In cases of the , ruptcy of one, the holder of the pearls deposit of goods, where the creditor, as was allowed to set off a debt due by for instance a factor, broker, banker, him to the bankrupt against the bank- etc. , has a general lien, he may, inde- rupt's share of the pearls, although the pendently of any statute as to set off or Administeation. 1507 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 ofE which are made prov- able by the Bankrupt Act.'' '\jVith respect to the debt due by the creditor to the bankrupt's estate, formerly it must have been due before the act of bankruptcy on which the commission was founded. But, by the present statute, the accounts of mutual debts and cred- its, as far as regards paper and money transactions, may be brought down to the date of the fiat, and set-ofE will be allowed under such accounts, unless the creditor, at the time of his dealing with the bankrupt, had notice of an act of bankruptcy. The statute enacts "that all payments really and bona fide made, or which shall hereafter be made by any bankrupt, 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 l^reference of such creditor), shall be deemed valid, notwithstanding any prior act of bankruptcy by such bankrupt committed, and all payments really and bona 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 bankriipt committed, and such creditor 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, notice 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.* mutaal credit, retain the goods in his ' 6 Geo. 4, c. 16, s. 83, overruling possession until he has been satisfied Tamplin v. Diggins, 1 Camp. 313, and his whole debt. But such general lien. Kinder v. Butterworth, 6 Barn. & Ores, either by express contract or usage of 43 ; 9 Dowl. & Ryl. 47. In the former trade, must be well established. Ex of these cases, bankers having accepted parte Ockendon, 1 Atk. 334 ; Rose v. bills for the accommodation of a trader, Hart, supra. Where a bailee is in- and he, after an act of bankruptcy but trusted with property of a bankrupt before the commission, having lodged for a special and limited purpose, such money with them to take up the bill, it a transaction does not form a case of was holden that they were bound to re- mutual credit within the statute. Key fund this money to the assignees, and V. Flint, 1 Moore, 451 ; 8 Taunt. 21 ; could not set it oflf. Buchanan v. Findlay, 9 Barn. & Cres. * Lanesborough v. Jones, 1 P. W. 335; 738 ; 4 Man. & Ryl. 593. Bishop v. Church, 3 Atk. 691 ;Ex parte ' Archb. B. L. Book 1, ch. 1, s. 7. Whitehead, 1 Glyn & Jam. 69. * 6 Geo. 4, c. 16, s. 50, mipta. 1508 Bankruptcy of Partners. Generally, therefore, in bankruptcy, as well as at law, there can be no set-oil between joint and separate debts, unless otherwise provided for by special agreement." And where a debt has been converted from a joint into a separate debt, it cannot be set off 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 separately liable to C on account of the joint demand against himself and B; Lord Eldon held that A was not entitled to set off against C's demand, though origi- nally joint, the joint debt due from C to A and B.* Equitable set-off. Sec. 953. 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 kind occurred before 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 partner- ship. The bond was not given np, but A took a separate note from 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 appear to have been, not that A was liablefor the bond debt as surviv- ing 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 separate debtor; that the bond had not been given up, and that the debt had been paid out of the assets of the old partner- ship ; that, therefore, the joint debt secured by the bond might be ' Ex parte Riley, W. Kelynge, 34 ; Ex '3 Geo. 2, c, 23 ; 8 Geo. 2, c. 34 ; Ex parte Christie, 10 Ves. 105 ; Ex parte parte Blagden, 19 Ves. 467 ; Whyte v. Twogood, 11 Id. 517 ; Kinnersley v. O'Brien, 1 Sim. & Stu. 551. Hossack, 3 Taunt. 170; Ex parte Soames, ■* 11 Ves. 37. 3 Dea. & C. 330. ' Jalnes v. Kynnier, 5 Ves. 108 ^ Ex parte Eoss, Buck, 135. ADMINISTRATIOlfr. 1509 set off against a debt which was equitably joint, though represented by a separate security. "Where stock, the separate property of A, is transferred to bankers, as a security for advances made by them to A, who likewise gives 'them his note for the amount, payable on a re-transfer of the stock, and A afterward pays ofE the note, and substitutes the joint note of himself and son, without calling for 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.' 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 their assignees having brought an action against A, the latter presented a petition praying that he might be allowed to set off and to prove the balance, and Lord Erskine 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. Sup- pose the bankruptcy had not occurred. A plea of set-off could not have been put into 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 bi'ought. Without the aid, therefore, of the extraordinary principles of fraud which governed the case of Ex parte Stephens,' there is a clear principle that 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." 1 Vulliamy v. Noble, 3 Mer. 618. ' See infra. ' Ex parte Hanson, 12 Ves. 346 ; 18 d. 233. 1510 Bankruptcy of Partkees. In cases where the bankrupt has committed a gross fraud against his creditor, the latter will be allowed a set-off of joint and separate debts. Thus, where A had instructed her banker to purchase certain stock in her name, which they, contrary to the fact, represented to have done, by making false entries 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 res- idue." Again, V, a customer of the banking-house of D. & Co., transferred 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, paya- ble on the stock being transfeiTed to him. V paid off these notes, and afterward borrowed a further sum on the joint note of himself and his son, without calling for a retransfer. P fraudulently sold the stock, together with other stock, and applied the produce to the use of the partnership. It was held, on the authority of Ex parte Ste- j)hens, 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.' On a subsequenb 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 and B, of the firm of S & Co., did, for certain considerations, jointly and severally cov- enant to pay C the sum of 4,000Z., with interest. In April, 1803, S & Co. stopped payment, and a separate commission issued against B. At the time of the bankruptcy, C was indebted to the house in a sum much greater than tlie debt due to him from A and B ; he, however, proved his debt and interest, amounting to 4,200?., under the commis- sion against B, and, in July, 1803, assigned it to a stranger for 5,5001. A petition was then presented on the part of the creditors of the house, praying a set-off of the two debts, and suggesting that the assignment of C's debt was made without consideration, 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 suggest- ing that there would be a surplus of B's separate estate, in which ' Ex parte Stephens, 11 Ves. 24. * 11 Ves. 517, overruling Ex parte = Vulliamy V. Noble, 3 Mer. 50. Quinten, 3 id. 248, and Ex parte Ed- ' Ex parte Blagden, 19 Ves. 46. wards, 1 Atk. 100. Administration. 1511 the creditors of the house were interested. But Lord Eldon dis- missed the petition, saying that he did not deny that there was a good deal of natural equity in the proposition upon whicli it stood ; but, pursuing it through all its consequences, it would so disturb all the habitual arrangement in bankruptcy that he dared not permit the set-off. It appears, therefore, that, even on equitable grounds, except under special circumstances, there cannot be a set-off as between the Joint and separate debts. Thus, in Addis v. Knight,' a debtor by bond to a 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 lia- ble to the partnership estate, and which were proved by him under a joint commission of bankrupt. It will be observed that, under the 50th section of the statute, set- off is allowed between the creditor and his bankrupt 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 bank- ruptcy by such bankrupt committed." Therefore, in an action brought by the assignees of certain bankers, it was held that, under this section, the defendant had no right to set off notes of such bank- ers, taken by him after he knew that three of the four partners con- stituting the banking-house had committed acts of bankruptcy.' '2 Mer. 117. 343. See Craven v. Edmonson, 6 Bing. = Dickson v. Cass, 1 Barn. & Adol. 734. t<, wbil'J Si; 1 i ■ ' . J 1 •i-iiiUi! ,1'..'! -ifftil ill;.'-. • i» J ^KO.il APPENDIX OF FORMS. PEBCEDENTS.' Ko. I. Deed of Partnership hetween hoo Traders. {General Form.) This indenture, made the day of , 1832, between A, of, etc., of the one part, and B, of, etc., of the other part; Whereas, the said A hath for many j'ears carried on the trade or business of , at , and the said A and B are desirous to become partners in said trade, for the term and under the stipulations hereinafter mentioned: Now this indenture witnesseth, that each of them, the said A and B, for himself, his heirs, executors, and administrators, doth hereby covenant with the other of them, his executors and administrators, in manner following that is to say 1. That they the said A and B shall be partners in the trade or business of 2. That the said partnership shall commence on the day of next, and shall continue for the term of foui'teen years thence next ensuing, if the said A and B shall so long live. Provided, that if either of the said partners shall be desirous to determine and dis- solve the said partnership at any time before the expiration of the said term of fourteen years, and shall give six calendar months' notice in writing of such his desire to the other of the said partners, then, and in such case, the said partnership shall cease and determine upon the expiration of the said six calendar months, or at such future day or time as shall be named in the said notice. ' For two valuable precedents in the debted to W. C. Macdougall and J. P. following collection, the author is in- Wilmot, Esquires, of Lincoln's Tnn. 190 loli Appendix. 3. That the firm and style of the said partnership or house of trade shall be ; and that the said trade or business shall be carried on under the said firm in the messuage belonging to the said A, in aforesaid, or in such other place of business as the said partners shall from time to time mutually agree upon. 4. That the capital of the said partnership shall consist of the sum of £ , which shall be brought in by the said partners m the fol- lowing proportions, namely, the sum of £ , being two-thirds thereof, by the said A, and the sum of £ , being the remaining one-third, by the said B ; and the said sums so to be advanced by the said partners respectively shall be paid by them into the bank of Messrs. , at aforesaid, to the credit of the said partnership, on or before the day of now next ensuing: " Provided that out of the said sum of £ (the whole capital), the sum of £ shall, within one calendar month after the commencement of the said part- nership, be paid to the said A as and for the price or purchase-money of the stock in trade now in his possession (and also the implements heretofore used by him in his trade or business of a , carried on in the said messuage in aforesaid), and which stock in trade it is hereby agreed shall be purchased by the said partnership at the price aforesaid; and the said partners shall be entitled to and interested in the capital stock and effects of the partnership in the following pro- portions, that is to say, A in two-third parts thereof, and B in the remaining one-third part. 5. That the said partners shall be entitled to the profits of the aid business, in the proportions following, namely, the said A to two- third parts, and the said B to the remaining one-third part thereof. And that all losses happening in the course of the said business shall be borne by them in the same proportions (unless the same shall be occasioned by the willful neglect or default of either of the said part- ners, in which case the same shall be made good by the partner through whose neglect the same shall arise). 6. That the said A shall be at liberty, from time to time, to draw out of the said business any sum or sums not exceeding the sum of £ per month for his own use. And the said B shall also be at liberty to draw out of the said business any sum or sums not exceed- ing the sum of £ per month for his own use, such sums to be duly accounted for by them respectively on every settlement of accounts and division of the profits of the said business. Precedents. 1515 7. That the said A shall be allowed by the said partnership the clear yearly sum of £ , by way of rent for the said messuage in 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, subject only to be used for the purposes of the said partnership business. 8. That, as well the said rent as all taxes and other outgoings which shall become payable in respect of the messuage wherein the said busi- ness shall be carried on; the costs of insuring the stock in trade and fixtures belonging to the said partnership from loss or damage by fire, and of keeping the said messuage and premises of A, so long as they shall be used in the said partnership business, in good and substantial repair; the expense of providing coals, and candles, and of paying clerks, porters and servants, to be employed in the said business, and of traveling, and all other disbursements and expenses which may be incurred by the said partners respectively in the course of the said business, shall be paid and borne out of the profits of the said busi- ness. 9. That proper books of accounts shall be kept by the said partners, and that true, plain, and perfect entries shall be made by each of them therein, of all the moneys, goods, wares, merchandises, effects, debts, and things relating to the trade or business of the said partnership, or which shall be receive^, paid, sold, or contracted for, in the course of such trade or business, and of all such other matters and trausactions as are usually entered in books of accounts by , or as may be necessary or useful for the better manifestation of the state and pro- ceedings of the trade or business of the said partnership ; and that the said books of account, together with all bonds, bills, specialties, assurances, notes, letters, and other writings, which shall from time to time concern the said partnership, shall be kept at the shop of the said partnership, in the house of A, at aforesaid, or in such other place where such trade or business of the said partnership shall from time to time be carried on : And that each of the said parties shall and may have free and equal access to the same without the interruption of the other. 10. That each of them, the said A and B, shall and will, at all times during the continuance of the said partnership, diligently and faith- fully employ themselves in and about the affairs of the said partner- ship, and carry on the said business for the greatest benefit and advantage of the said partnership. And that each of the said partners 1516 Appendix. shall be just and faithful to the other in all dealings and transactions in and about the premises ; and shall and will, on request, give, make and render to the other a just and faithful account of the same, when and so often as the same shall be reasonably I'equired. And that each of them shall at all times, upon the reasonable request of the other of them, deliver up or communicate to the other of them all such letters, accounts, writings, and other things, as shall or may come into his hands or knowledge, in anywise touching the trade or busi- ness of the said partnership. 11. That no apprentice, clerk, or servant, shall be taken or en- gaged, or employed in the said business by either of the said partners, without the consent of the other of them, and that all premiums and apprentice fees to be paid with any apprentice shall be considered as part of the profits of the said busiuess, and be divided accordingly. 12. That neither of them, the said A and B, shall, without the consent in writing of the other of them, employ any of the moneys, goods, or effects belonging to the said partnership, or engage the credit thereof, in any matter or thing, except on the account or for the use and benefit of the said partnership. 13. That neither of them, the said A and B, shall or will, either by himself or any other person or persons whomsoever, during the continuance of the said partnership, directly or indirectly engage in any trade, manufacture, or business, except upon the account and for the benefit and advantage of the partnership. 14. That neither of them, the said A and B, shall buy or engage in any contract for any goods, or any other article whatsoever, eX- ceeding the value of without the consent in writing of the other first had and obtained. 15. That neither of them, the said A and B, shall transact any business, or enter into any contract or agreement with, or give credit to, any person or persons ; or lend or advance any sum or sums of money out of the said partnership funds to any person or persons, after he shall be requested by the other not to do the same: And that neither of them, without the consent of the other of them, shall compound, release, or discharge, any debt or duty which shall be due or owing to the said partnership, without receiving the full amount thereof ; nor sign any bankrupt's certificate, letter of license, or other instrument, whereby any debt or security shall be in anywise dis- charged, vacated, or diminished : And also, that neither of them, the said A and B, without the consent of the other of them, shall Precedents. 1517 draw or accept any bill of exchange or promissory note, or contract any debt on account of the said partnership, except in the usual and regular course of the business of the partnership, and for the benefit thereof : And that neither of them shall become bail or surety for any person or persons : And that neither of them, the said A and B, shall assign over his share or interest in the said partnership, or with- draw his share of the capital therein, or carry on, either separately or in partnership with any other person or persons, the business of , or knowingly or willingly do, commit, or permit, any act, matter, or thing whatsoever, by which, or by means of which, the said partner- ship moneys or effects shall be seized, attached, extended, or taken in execution. 16. That on the day of now next ensuing, and every suc- ceeding day of , in every year during the continuance of the said partnership, a general account and rest, in writing, shall be made and taken by the said partners, of all such goods, wares, and mer-' chandises, as shall have been sold in the said trade or business, and of all stock, moneys, debts, and other things belonging, due, or owing to the said partnership ; and of all such debts as shall be due or owing from or by the said partnership to any pei-son or persons, by reason of the said trade or business ; and of all such other matters and things as are usually comprehended in annual accounts of the same nature taken by ; and a just value and appraisement shall be made by the said parties of all the particulars included in such account, which may be appraised. And the said general account or rest, valuation or appraisement, shall from time to time be written in two books, and be signed and subscribed in each of such books by each of the said partners, within one month after the time appointed for the taking thereof respectively, and after such signing and sub- scribing, 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 found therein, and signified by either of the said partners to the other of them within one year fi-om the date of such account : in which case, but not otherwise, such error shall be rectified. And that, on the making up of every such yearly account, all interest which shall be- come due to the said A or B, for any sum or sums of money which they may respectively advance and bring into the said partnership, and the yearly allowance to the said A for rent, shall in the first place be deducted, and the clear profits of the said trade, after all 1518 Appendix. necessai'y deductions and allowances made thereout, shall be divided between them, the said A and B, according to their respective propor- tions of the capital of the said partnership. 17. That within the space of six calendar months after the expira- tion of the said term of fourteen years, or next after the determination of the said partnership, pursuant to any notice to be given by virtue of these presents,, a general account, in writing, shall be taken of all the stock, moneys, and effects, and other things remaining and being in the said joint trade or business, or owing or belonging to the said partners on account thereof ; and also of all debts due or owing by the said partners to any person or persons for any matter or thing concerning the said joint trade or business, or relating thereto; and upon finishing the last-mentioned account, the partner who shall have advanced or lent any sum of money more than the other to the said copartnership, shall be paid and satisfied such sum of money as he shall have so advanced or lent more than the other, and which shall be then due, and all interest which may be due and owing to him from the copartnership or joint business, in respect thereof; and all other debts which shall be due or owing- from or by the said copart- nership and joint trade, shall also be satisfied and discharged ; and then the residue of the effects, together with the debts and moneys due and owing to the said partnership, shall be parted and divided between the said partners, in proportion to their respective shares and interests therein. And each of the said partners shall give unto the other of them a bond in a sufficient penalty for the payment of his proportion of the debts owing by the said partnership; and well and effectually assign to and empower ihe other of them, his executors and administrators, to recover and receive all such credits and sums of money as shall be due and owing to him after such partition and division, and do and execute all such other acts and things as shall be necessary in order to vest the sole right and property therein in the partner to whom the same shall then belong. 18. That after such partition oi division shall be made between the said partners, neither of them, his executors or administrators, shall discharge any debt or debts which shall upon the partition or divi- sion be allotted or assigned to the other of them, or in any respect interfere in the receipt or recovery thereof. 19. That, in case either of the said partners shall die before the expiration of the term of the said partnership, then the surviving partner shall, within the space of six calendar months next after the Precedents. 1519 decease of the partner so dying, settle and adjust with the representa- tive or representatives of the deceased partner, all accounts, matters and things relating to the said partnership : And if the surviving partner shall be desirous of purchasing the share of the deceased part- ner of and in the property, credits, and effects of the said partner- ship, then the value thereof shall be ascertained by two indifferent jiersons, one to be chosen by the surviving partner, and the other by the representa;tive or representatives of the deceased partner; and the surviving partner shall thereupon become the purchaser of the said share at such valuation, and shall enter into a bond, in a sufficient penalty, for securing to the representative or representatives of the deceased partner the amount of such valuation by three equal install- ments, at the respective periods of six, twelve and eighteen calendar months next after the decease of the partner who shall so die as afore- said, with interest at the rate of bl. per centum, per annum, from the time of such decease; and also, a bond for indemnifying the estates and effects of the deceased partner against the debts and demands due or owing by or from the said partnership, on having a proper assignment or assurance executed for vesting in the sui'viving partner the share of the deceased partner, and enabling such surviving part- ner to collect and get in all the credits and effects due, owing and belonging to the said partnership. But in case, at the decease of either of the said partners as aforesaid, the surviving partner shall decline to purchase the share of the deceased partner in manner afore- said, then the credits and effects of the said partnership shall be col- lected in or converted into money, and out of the money arising there- from, all the debts due from the said partnership shall be discharged, and the surplus or residue shall be divided between the said surviving partner and the representative or representatives of the deceased part- ner, in the same proportions in which the surplus or residue would have been divided between the said partners if living, at the expira- tion of the said partnership by efliuxion of time. 20. That, in case the said A shall die before the expiration of the term of the said partnership, then the said B shall have the option of purchasing from his representative or representatives, the messuage in aforesaid, where the said business is so carried on, at the price or sum of £ , provided that the said B signify his intention of becom- ing the purchaser of the said messuage, to the representative or rep- resentatives of the said A, within three calendar months next after the decease of the said A; and the'said B shall accept an assignment 1520 Appendix. (to be prepared at his expense), of the term of the said A in the said leasehold premises, whereof years are now expired, subject to the yearly rent of £ , without requiring 'the production of the lessor's title. 21. Provided, always, that if (contrary to the several agreements hereinbefore contained), either of the said parties shall neglect or refuse to attend to the business of the said partnership, or if either of the said parties shall willfully neglect or refuse to keep proper and just accounts, or, without the consent of the other, engage apprentices or servants; or employ the partnership money except on account of the partnership ; or engage in any other trade; or buy or contract for any goods exceeding the value of £ ; or shall transact business, or enter into contracts with, or make advances or give credit to any per- son or persons after he shall be requested not to do the same; or, if (contrary to the said agreements) either of the said parties shall com- pound or release any debt, or sign any bankrupt's certificate, letter of license, or such other instrument as aforesaid; or draw or accept any bill or note, or contract any debt on account of the said partnership, except in the usual and regular course of the business of the said partnership, and for the benefit thereof ; or shall become bail or surety for any person or persons; or shall assign his or their share or interest in the said partnership, or withdraw his share of the capital therein, or if either of the said partners shall carry on, either separately or in partnership with any other person or persons, the trade or business of a ; or shall become insolvent, or shall suffer his body to remain in execution for more than one calendar month; or shall do, commit, or permit to be done, any act, matter, or thing whatsoever, by which, or by means of which, the said partnership moneys or efEects may be seized, attached, extended, or taken in execution: Then, and in any of the said cases, the other of the said partners, if he shall think fit, shall be at liberty to dissolve the said partnership, by giving to the partner who shall' offend in any of the particulars aforesaid, a notice in writing, declaring the said partnership to be dissolved and deter- mined; and the said partnership shall, from the time of giving such notice, or from any other time to be therein specified for the purpose, absolutely cease and determine accordingly; without prejudice, nev- ertheless, to any remedies belonging to either of the said partners for the breach or non-performance of all or any of the covenants and conditions contained in these presents, at any time or times before the determination of the said partnership. And the partner so giving Peecedents. 1531 such noticJe of dissolution shall be at full liberty, and is hereby authorized to advertise the same in the London Gazette, without the consent of the other. 22. That in case any difference shall arise between the parties to these presents, their executors or administrators, touching the said joint trade or business, or the management of the same, or the settle- ment of the books and accounts thereof, or the settling, applying, or dividing any of the profits, debts, or property belonging to the said partnership or joint trade, or any other matter, cause, or thing, rela- tive to or concerning the same, or any thing contained in these presents, and they cannot agree and determine the same between themselves, then, and in any such case or cases, the said parties, or their executors or administrators, shall forthwith nominate .and appoint two disinterested persons, one of them to be chosen by each of the said parties, his executors or administrators; which two per- sons shall determine all such matters aforesaid, by their award in writing under their hands ; and in case such persons cannot agree to determine the matters to them referred within thirty days next after such reference, then the same shall be referred to and determined by such one other disinterested person as the two first referees shall for that purpose nominate and appoint umpire in the premises, who shall determine the same by writing under his hand, within ten days next after he shall be so appointed umpire ; and the said parties, their executors and administrators respectively, shall and will stand to and perform the award, arbitrament, and determination, which shall be made by the arbitrators or referees, or their said umpire, so to be elected and appointed as aforesaid, concerning the premises, without any further suit or trouble whatsoever. And it is hereby further agreed, that this submission to reference shall be made a rule of the Court of King's Bench, upon the application of either of the said parties: And also that no suit at law or in equity shall be commenced or prosecuted against the referees or their umpire, concerning any of the matters or things so to be referred to them or him as aforesaid, or cohcerning their or his award or determination. In witness, etc. No. II. Deed of Partnership between two Brewers. This indenture made the day of , 1832, between A, of, etc., of the one part, and B, of, etc., of the other part: Whereas, by an 191 1523 Appendix. indenture bearing date the day of , 1830, and made dr expressed to be made between L therein described of the one part, and the said A of the other part, it is witnessed that for the considei'ations therein mentioned, the said L did demise and lease unto the said A, his executors, administrators and assigns (all that messuage, etc.). To hold the same unto the said A, his executors, administrators, and assigns, for the term of years thence next ensuing, at the clear yearly rent of £ , payable as therein mentioned. And, whereas, the said A hath, ever since the commencement of the said lease, car- ried on the trade of a brewer on the said premises, and hath from time to time expended divers large sums of money amounting to £ , or thereabouts, in making new erections and buildings, alter- ations and improvements thereon. And, whereas, in pursuance of a power for that purpose contained in the said indenture of demise, the said A hath, with the consent in writing of the said L, agreed to admit the said B into partnership with him the said A in his said trade of brewer, in equal shares, for the whole of the residue now to come and unexpired of the said term of years; and, accordingly, by a certain instrument in writing, bearing even date with these pres- ents, the said A and B, their heirs, executors and administrators, have become jointly and severally bound and liable for the payment unto the said L, his executors, administrators and assigns, of the said yearly rent of £ , and for the performance of all and singular the covenants contained in the said indenture of demise, as fully as if the said B were a party thereto. And, whereas, in pursuance of the said agreement for a partnership, as well the residue of the said lease now to come and unexpired, as all the said several erections, buildings, alterations and improvements so made by the said A as aforesaid, together with the good-will of the said trade, and all the engines, machinery, implements, utensils, goods, wares, malt, hops, beers, ales, horses, drays, commodities, efEects, and stock of every kind, in and upon the said premises employed and used in carrying on the said trade, have been valued to the satisfaction of the said A and B at the sum of £ . And, whereas, it has been agreed that the siid intended partnership shall be adjusted on the tei'ms and in manner hereinafter mentioned. Now this indenture witnesseth, that each of them, the said A and B, for himself, his heirs, executors and admin- istrators, doth hereby covenant with the other of them, his execu- tors and administrators, in manner following (that is to say): Precedents. 1523 1. That the said A and B shall henceforth be and continue part- ners together in the trade or business of brewer. 2. That the said partnership shall commence from the day of the date of these presents, and shall endure for the residue now to come and unexpired of the said term of years, that is to say, for the full term of years, to be computed from the day of the date of these presents, if the said partners shall so long live, subject to the provisions hereinafter contained for determining the said partnership. 3. That the firm and style of the said partnership or house of trade shall be , and that the said trade or business shall be carried on under the said firm in the said brew-house, and on tlie several premi- ses comprised in the said indenture of demise, and wherein the said A hath hitherto carried on the trade of brewer as aforesaid, or in sucli other place as the said partners shall from time to time mutually agree upon. 4. That the capital of the said partnership shall consist of the sum of £ , to be brought in by the said partners in equal shares. Pro- vided that the said A shall be permitted to retain out of the moiety so to be brought in by him as aforesaid, the said sum of £ , as and for the purchase-money of the said lease, buildings, and other effects which have been valued as aforesaid, and which it is hereby agreed and declared shall be purchased by the said partnership. And the said part- ners shall stand possessed of and interested in all the capital stock and effects of the said partnership in equal shares, and shall be deemed creditors of the partnership in respect of their respective moieties of the capital, and shall be allowed thereon interest at il. per cent. 5. 6, 7. See General Precedent,' Clauses 5, 6, 8. 8. That all mortgages, leases, bonds, specialties and securities, and all other writings whatsoever, which shall at any time or times during the continuance of the said partnership be had, made, or taken for any houses, warehouses, vaults, cellars, or other premises, money, debts, or other matter or thing whatsoever, in anywise concerning the joint trade, shall be made and taken in the names of both the said partners. 9 to 15. See General Precedent, Clauses 9 to 15 inclusive. 16. That the cash account of the said joint trade shall be settled and balanced once in every week during the continuance of the said partnership, and the balance of the cash on hand on every such weekly settlement shall be paid in the name of the said partnership firm into ' Some verbal alterations are necessary. 1524 Appendix such bankers as may be mutually agreed on as the partnership bank- ers, the same, nevertheless, to be drawn out for the purposes of the said partnership only by drafts or checks, to be signed by the said in the name of the said partnership. 17. That, if at any time during the continuance of the said part- nership, any loss or damage shall happen to the said joint stock by the fraud or negligence of either of the said parties, then the party, by or through whom such damage or loss shall happen, shall make good the same within next after the discovery thereof. 18. That each of the said parties shall bring and pay into the joint stock or cash of the said partnership, all moneys as he shall receive on account thereof, and that the sums of money so to be received shall from time to time be applied in discharge of the debts that shall be due from the said joint trade. 19. That each of them, the said A and B, shall be allowed out of the said joint stock, all sums of money which he may expend in treating any of the customers of the said partnership, provided the same shall be claimed and brought to account, and entered in the expense or other proper book of the said partnership within seven days next after the expenditure thereof, but not otherwise. 20. That the said A shall be at liberty, during the continuance of the said partnership, to reside as heretofore in the said messuage, and that the rent for the same shall be payable out of the funds of the said partnership; but that the said A shall be alone liable to pay all government and parochial taxes payable in respect of the same, and shall at his own expense keep the same during such occupation in good and tenantable repair. 21. That each of the said partners shall be provided, at the expense of the said joint trade, with all such strong beer as he and his family may use and consume, and that the same shall be delivered at their respective dwelling-houses at the expense of the said partner- ship. 22. (Annual Account. — See Gen. Prec. 16). 23. That within the space of after the determination of the said partnership by effluxion of time, a general account in writing shall be taken of all joint stock, money, goods, effects, and things of the said j)artnership, and of all debts due to and from the same, and, thereupon, all and every the goods, wares, engines, machinery, imple- ments, utensils, stock, -and effects, of what kind or nature soever, belonging to and used in the said joint trade, shall be sold and dis- Precedents. 1525 posed of, and out of the moneys arising from such sale or sales, and the credits of the said partnership which have from time to time been col- lected and got in, all the debts due and owing by the said partnership shall be discharged, and the partner who shall have advanced or lent any sum of money more than the other to the said partnership, shall be paid and satisfied such sum of money as he shall have so advanced or lent more than the other, and which shall be then due, and all interest thereon, and the residue of the said moneys, credits, and effects shall be divided between the said parties, their executors and administrators, in equal moieties. And each of the said parties shall give unto the other of them a bond, in a sufficient penalty, for the payment of his proportion of the debts owing by the said partner- ship, and shall effectually assign to the other of them, his executors and administratorsjall such ccedits and sums of money as shall be due to him on such division of the moneys and credits of the said partnership, and all other things which it shall be necessary to assign in order to vest the sole right and property therein in the partner who shall be entitled thereto, such bond and deed of assignment to be at the expense of the party requiring the same; and that, after such division shall be made between the said parties, neither of thepi, his executors or administrators, shall release any of the credits which shall have been assigned to the other of them. 24. That if either of the said parties shall be desirous to determine and dissolve the said partnership at any time before the expiration of the said term of years, and, of stich his desire, shall give or leave six calendar months' previous notice in writing to or for the other of the said parties, at the counting-house of the said partnership, then, and in such case, the said partnership and Joint trade shall cease and determine upon the expiration of the said six calendar months, or at such future day or time as shall be named in the said notice. 25. That immediately after such notice shall be given as aforesaid, a general account in writing shall be taken of all the joint stock, money, goods, effects,.and things of the said partnership, and of all debts due to and 'from the same, and so soon as such account shall have been made, the erections, buildings, repairs, and improvements comprised in the inventory and valuation made previously to the commencement of the said partnership, and hereinbefore mentioned, and all other erections, buildings, repairs, and improvements to be hereafter made and t^uilt in and upon the said premises, comprised in the said instrument of demise, or in or upon any other premises, of 1526 Appendix. which the said partnership may, at any time hereafter during the continuance thereof, become possessed, and the good-will of the said joint trade, and the engines, machinery, implements, utensils, goods, wares, horses, drays, commodities, effects, or stock, of what nature or kind soever, then employed and used in carrying on the said joint trade, shall be valued by two proper persons to be named by the said A and B respectively, and the party to whom such notice shall have been given shall be at liberty, if he desires so to do, to take on him- self the whole of the said joint trade, and, in case he shall determine so to do, then he shall pay to the party retiring and giving such notice, his executors or administrators, one moiety of the amount of the valuation so to be made as aforesaid, by equal installments, at three, five, etc., calendar months, and shall give his bond, in a suffi- cient penalty, for securing the payment thereof, ^ith interest on each installment respectively, at and after the rate of 4:1. per cent per annum. And upon the execution and delivery of such bond, the said retiring party shall and will, upon the request and at the costs of the remaining party, his executors or administrators, execute to him or them such deeds or assurance as shall be requisite, for the purpose of vesting in the said remaining party, his executors or administrators, the said retiring party's share of, and in the said joint stock, and the produce thereof. 26. That at the dissolution of the said partnership, in manner last aforesaid, the valuation of the good-will of the said ti-ade, and of the beers, ales, malt, hops, and coals then belonging to the said copart- nership, shall be made in manner following — that is to say, the good- will of the said trade shall be estimated after the rate of £ for every thousand barrels of strong beer which shall yearly, on an aver- age of the three years then last past, have been brewed on account of the said joint trade ; the stock of beer and ales then belonging to the said partnership shall be estimated at the then net selling price thereof, making and allowing an abatement or deduction at the rate of for every lOOZ., on the whole amount of. the valuation of the said beer and ales ; the stock of malt, hops, and coals then belonging to the said joint trade shall be estimated at the price or prices at which the same respectively were purchased, as such price or prices shall appear by the books of the said partnership ; and the valuation of all other the buildings, improvements, engines, machinery, imple- ments, utensils, and stock, of what nature or kind soever, then be- longing to the said partnership, in regard to the principle or manner PllECEDENtS. 3527 of making the same, shall be in the discretion of the persons to be chosen for the purpose of valuing the same, as aforesaid. 27. That on the dissolution of the said partnership, by the means last aforesaid, the credits then owing to the said copartnershi]i shall be collected by the party remaining, and applied by him in discharge of the debts thereof ; and such party shall, if required, give his bond, in a reasonable penalty, conditioned for applying the moneys so to be received by him, in the first place in discharge of sncli debts, and then in payment to the said retiring party, his executors or adminis- trators of the share and proportion of him, the said retiring party, of and in the said credits. 28. That at the end of one year from the dissolution of the said partnership trade, by the means last aforesaid, the credits thereof then remaining unreceived by the said remaining party as aforesaid, shall be valued by two indifferent persons, to be claosen by the said 2)arties respectively ; and the said remaining party shall pay to the said retiring party, his executors or administrators, one moiety of the amount of such valuation ; on which payment being made, he, the said retiring party, his heirs, executors, or administrators, shall re- linquish all right and claim to any part or share in the said credits or the produce thereof, and shall and will, upon the request and at the costs of the said remaining party, his executors or administrators, by sufficient deeds or assurances, effectually assign or release all right, title, interest, claim, .and demand whatsoever, therein or thereto, to the said remaining party, his executors and administrators, and shall and will give him and them full power and authority to sue for, re- cover, and receive all and every, or any of the said credits, in the name of the said retiring party, or by any other lawful means whatsoever, as by the said remaining party, his executors or administrators, shall be reasonably required ; and, after such assignment being made, and such power being given, each of the said parties, his executors and administrators, shall, if required so to do by the other of them, his executors or administrators, give and execute to the other of them, his executors and administrators, a general release of all claims and demands whatsoever, relating to or in any ways concerning the said joint trade and partnership. And the said remaining party shall, at his own costs, give to the said retiring party his bond, conditioned to indemnify him, liis executors and administrators, against all costs, charges, and expenses which may happen or be occasioned to the said retiring party, his executors or administrators, by reason of any 1528 Appendix. action or suit which may bo brought by tlie said remaining party in the name of the said retiring party, by virtue of the power or author- ity to be given to liim, as aforesaid. 29. That in case the said B shall die at any time before tlie expira- tion of the said term of years, leaving the said A him suiTiving, an estimate and valuation shall, within thirty days next after such death, be made of all the erections, buildings, improvements, engines, machinery, implements, utensils, goods, wares, stock, and effects be- longing to the said joint trade, in like manner as is hereinbefore directed in pursuance of a notice to be given for the determination thereof, and that the credits due and owing to the said partnership shall be collected and received by the said A, without the interfer- ence of the executors or administrators of the said B. And that the said A shall and will pay, or cause to be paid, to the executors or administrators of the said B, his, the said B's full share of the amount of such estimate and valuation, by four equal installments, at three, six, etc., calendar months from the time of such his decease ; and also his, the said B's, share of the produce of all and every the credits then due and owing to the said partnership, after full payment and discharge of all the debts owing from the said partnership, as and when the same credits shall be received, in like manner as is herein- before provided in case of the determination of the said partnership in pursuance of such notice as aforesaid, together with interest for such share of him, the said B, of and in the said joint stock, at and after the rate of 61. per cent per annum, from the time of his decease as aforesaid ; and also that he, the said A, shall and will, within the space of one calendar month next after the decease of him the said B, at the costs of the said A, execute and deliver to the executors or administrators of the said B a bond, in a reasonable penalty, with a condition for keeping indemnified the executors or administrators of the said B fi-om all costs, damages, and expenses arising or to arise from, or on account, or by reason of the said joint trade and partner- ship ; and also shall and will, within one calendar month next after the decease of the said B as aforesaid, duly execute and deliver, to such executors or administrators, a bond in a proper penalty, condi- tioned for the payment of the amount of the net part or share of him, the said B, of and in the said joint stock, according to the valuation thereof to be made in manner aforesaid, together with such interest as aforesaid and also for the payment of his, the said B's share of the produce of the credits of the said copartnership, after payment of the Precedents. 1539 • debts owing therefrom, ia such manner, and ^t such times, as is and are hereinbefore appointed for the payment thereof respectively. 30. That from and after the execution of the said bond to be given by the said A, as aforesaid, tlie executors or administrators of the said B shall and will, on the request and at the costs of the said A, assign, release, and discharge all right, title, interest, claim, and demand whatsoever therein, or thereto, to the said A, his executors, adminis- trators, and assigns; and shall and will give him and them full power and authority, and assistance, for and toward the saing for, recovering, and receiving of all or any of the said credits, by permitting their names to be made use of, if necessary, or by such other lawful means as by the said A, his executors, administrators, or assigns, or his or their counsel in the law, shall be reasonably required; and the said A shall, at his own costs, execute and deliver to the said executors or administrators of the said B a bond in a sufBcient penalty, conditioned to indemnify them against all costs, damages, and expenses which they may sustain or be put unto, by reason of any action or suit which may be brought by the said A in their names, by virtue of the power so to be given to him as aforesaid. 31. That if, in any case where the same shall have been given him by virtue of these presents, either of the said parties shall decline to exercise the option of taking upon himself the whole of the said trade, and of purchasing the share of the other therein, then within after any notice as aforesaid shall have been given, by virtue of these presents, a general acnount, valuation, sale and division of the effects, moneys, and things of the said partnership, shall take place in the same manner and to the same extent, or as near thereto as the differ- ence of circumstances will allow, as has been hereinbefore provided , for upon the determination of the said partnership by effluxion of time; and that, upon taking such account, and making such divi- sion as last aforesaid, the interest of the said parties in the residue which shall be then unexpired of the said lease, shall be accounted for and disposed of, together with and in like manner as the other effects of the said partnership, if the said L shall consent thereto by writing under his hand; but if the said L shall not give such consent, then it is hereby agreed that the said A shall continue to occupy the said premises for the residue then to come and unexpired of the said term of years, and shall alone be responsible for the payment of the rent for the residue (Tf the said term; and shall, at his own costs, execute and deliver to the said B, his executors or administrators, a 192- 1530 Appendix. • bond, conditioned to jndemnify him, the said B, his executors or administrators, against all claims, demands, damages, costs and expen- ses, in respect of the rent for the said messuage during the residue of the said term of years. 32. That in case the said A shall die before the expiration of the said term of years, leaving the said B him surviving, it shall be lawful for the said B, during the then residue of the said term, if he shall so long live, to carry on the said joint concern, jointly with the executors or administrators of the said A, or such one or more of the children of the said A, as he by his last will and testament in writing shall nominate and appoint, who thereupon shall, from and after the decease of the said A, be and become jointly concerned with the said B as partners in the said trade in the room of the said A: Provided that the joint trade so to be carried on by the said B jointly with the executors, administrators, child or children of A, as the case may hap- pen, shall in every respect be under and subject to the like terms and agreements as are hereinbefore expressed and declared concerning the said i)artnership to be carried on by and between the said A and B, or as near thereto as the difference of circumstances will permit. 33. (Arbitration clause. — Gen. Prec, Clause 22). No. III. Deed of Partner sMp letioeen four Bankers This indenture, made the - day of , 1832, between A, of, etc., of the first part; B, of, etc., of the second part; C, of, etc., of the third part; and D, of, etc., of the fourth part: Whereas, the said A and B have for some years past carried on the business of bankers in partnership, at : And, wherea,s, the said A and B are possessed of the lease of a certain messuage and premises situate at aforesaid, for the term of years, which said premises the said A and B have heretofore used for the purposes of their business as bankers afore- said: And whereas it hath been agreed by and between the parties to these presents, that the said business which hath been so carried oij as aforesaid by the said A and B, shall henceforth be continued by the said A, B, C, and D, as partners, for the residue of the said^term of years, in manner hereinafter mentioned : Now this indenture witnesseth, that, in pursuance of the said agreement, each of them, the said A, B, C, and D, for himself, his heirs, executors, and admin- Pbecedekts. 1531 istrators, doth hereby covenant, promise, and declare, with and to the others, and each and every of the others of them, their respective executors and administrators, in manner following: that is to say : 1. 2. (Gen. Pi-ec, clauses 1, 2.) 3. That the capital of the said partnership shall consist of £ , which shall be bi'ought in by the said parties in the following propor- tions: that is to say, £ , being two-thirds thereof, by the said A and B, in equal proportions, and £ , the residue thereof, by the said C and D, in equal proportions; provided that out of the said sum of £ , so to be advanced by the said A and B, the sum of £ shall be retained and accepted by them the said A and B, as and for the consideration to be paid by the said partnership for the said house and fixtures, all which effects it is hereby agreed and declared shall belong to the said partnership. 4. That each of the said parties shall at all times during the contin- uance of the said partnership, and at the end or sooner determination thereof, have a several right, title, and interest in and to the said capital or joint stock, including the said lease and fixtures, and all the pi'ofits thereof, and in and to all and singular the money, credits, and effects whatsoever, which from time to time shall belong to the said partnership, according to the shares and proportions in which the said sum of £ is to be advanced and made up by them respectively. 5. That the capital of the said partnership shall at all times, and from time to time during the said partnership, bfe continued in and employed solely for the purposes of the said partnership, and no part thereof shall be diminished or taken out of the said joint trade, or employed by any of the said partners in or for any other trade or business, or use or purpose whatsoever. 6. That the gains and profits to arise from the said partnership business shall, from time to time, except as hereinafter is mentioned, be used and employed in carrying on the said business for the benefit and advantage of the said partnership, according to the respective shares of the said partners therein, and that the said partners shall be entitled to the profits of the said business in the proportion fol- lowing, namely, the said A and B to two-third parts, and the said and D to the remaining one-third part thereof, and that all losses happening in the course of the said business shall be borne by them in the same proportions, unless, etc. (Gen. Prec, clause 5.) t. That it shall be lawful for any of the said partners to draw out of the stock of the said partnership any sum or sums of money for 1533 Appendix. his or their own private current expenses, not exceeding the interest on his or their share of the capital of the said stock, to be advanced by him or them as aforesaid, at the rate of 51. per cent per annum, and so as the capital of the said partnership, amounting to £ as afore- said, shall not in any manner or at any time be diminished, and so as credit for all and every the sum and sums of money to be taken out of the said capital stock by each of the said partnei's respectively, shall be given by the said partners respectively to the general account of the said partnership in the meantime and until the next annual account of the said partnership shall be adjusted and settled when the sums so taken or received shall be charged against the party so taking or receiving the same in manner hereinafter mentioned. ^ 8. That the rent, taxes, and repairs of the said messuage with the appurtenances, where the said partnership shall be carried on, and of any other premises where the said partnership shall or may hereafter be carried on, and also the salary or wages of such person or persons as shall from time to time be employed in managing and carrying on the said partnership business, and all postage, and also all losses by bad debts, and all other losses, charges, damages, and expenses which shall or may happen to; or be paid, laid out, or expended by the said par- ties, or any of them, in and concerning the said partnership business, shall be borne and paid by and out of the said partnership efEects, and the gains and profits thereof. And in case such profits shall not at the end of any one year, during the continuance of this copartnership, be sufficient to answer such payments, losses, damages, and expenses, then and in every such case the said partners shall immediately advance and pay each, according to his share of the capital, such sum or sums of money as may be required to make up such deficiency, to the intent that the stock, capital, or sum of money to be employed in the said partnership business during the term aforesaid, may not be diminished by such losses, charges, damages, and expenses. 9. That all bills, drafts, promissory notes, and all acceptances of any bills, drafts, or notes, and all indorsements thereon, and all receipts, payments, letters, or other matters and things relative to the said banking business, shall be signed only by the said C and D, or by Mr. M, one of the clerks in the said banking-house, and in case of the death or removal of any of them, then by such other person or persons as shall be appointed or substituted in their or any of their places or place by a majority of the partners for the time being. Peecedents. 1533 10. That the said A and B shall not, nor shall either of them, sign nny such bills, drafts, notes, or any acceptance thereof, or any indorse- ments thereon, negotiated from and to or in the firm of the said bank, except in the case of the said C, D, or M, being prevented by sickness or other cause from attending to the said banking business, and it being necessary for the conducting of the said banking business for the said A and B or one of them so to do, such necessity, and the length oi the continuance thereof, to be judged of by a majority of the partners. 11. That the said parties shall make use of the banking-house or shop of , in London, or such other London banking-house as a majority of the partners shall think proper, for the purpose of making remittances, drawing of bills, and negotiating all other banking busi- ness necessary to be transacted there. 13. That the said A and B shall not be required to take an active part in the management of the said partnership business, but that the said C and D, as the acting partners, shall give such constant and diligent attendance as shall be necessary for the negotiating the said banking business at the said shop at , and for the more regular and orderly carrying on the same, and that the hours for transacting business at the said bank shall be fixed from nine o'clock in the morn- ing until five o'clock in the afternoon every day (Sundays, Christmas, and Good Fridays excepted), during the continuance of the said part- nership. 13. That the joint stock or capital, and all the debts, gains, and credits which shall be made, transacted, done, or given during the continuance of the said partnership, shall be regularly and fairly written in one or more book or books, to be for that purpose provided by the said partnership and kept in some convenient place where the said partnership shall be carried on, which book or books so to be kept the said partners, or such person or pei-sons as a majority of them shall authorize to appoint, shall freely and at all seasonable and proper times, as well during the continuance of the said partnership as within after the expiration thereof, have recourse to and have liberty to peruse and inspect, and to transcribe or copy all or any part thereof, without any let, suit, hindrance, or denial of or by the other or others of them the said partners, his or their executors or admin- istrators; provided that the said books or any of them shall not, on any such occasion, be taken or removed from the place where the said business shall be carried on during the said copartnership, and at the 1534 Appenbix. expiration thereof the same book or books shall be deposited in such place for their inspection as aforesaid, as a majority of the said part- ners shall think proper. 14. That all bonds, bills, notes, and securities whatsoever, which shall at any time or times during this partnership be made or taken for any matter or thing concerning the said partnership business, shall be made and taken in the name of the said partnership firm. 15. That no money shall be lent or advanced to any of the said partners without the consent in writing of all the other partners being first had and obtained, and that none of the said partners shall at any time during his continuance in the said partnership, borrow, receive, or take up any money on account of the said partnership, without bringing the same into the stock of the said partnership. 16. That none of the said partners shall at any time during the said partnership, in opposition to the will or direction of the major part in number of the said partners for the time being, lend any money or effects belonging to the said partnership, or give credit on account of the said partnership to any person or persons whomsoever; or take, hire, or dismiss any clerk or servant to be employed in and about the business and concerns of the said partnership; or at any time during the said partnership, or after the determination thereof, compound or release any debt or debts, or deliver up any security, which, from time to time, during the said partnership, shall be due, owing or belonging to the said partnership, without receiving the full amount of the same debt, or an equivalent for the same, and bringing the money so received, or the amount or value thereof, into the stock and cash of the said partnership. And that each partner shall account for and pay into the stock and cash of the said partnership, the full amount of every debt which he respectively shall receive, or for which he shall, without such consent as aforesaid, give a release or discharge. And that none of the said partners shall, contrary to the will of any one or more of the others of them, after notice for that purpose, at any time speculate in the public funds or in any government security, by buying or selling, or making bargains for time, or in any other man- ner whatsoever, except for ready money, or subscribe any policy of insurance. And that none of the said partners shall enter into any bond, judgment, statute or recognizance; or do any act, matter, or thing whatsoever (other than and except in the fair, regular, and ordi- nary course of the business of a banker), by means whereof the said capital or joint stock of the said partnership, or any part thereof, or Precedents. 1535 any money, credits, or effects, belonging, due, or owing to the said partnership, may be seized, attached, or taken in execution. 17. That, in all questions, differences, or disputes which may hap- pen to arise between the said partners for the time being, touching or concerning the said joint concern, or the management or regulation thereof, or any act, transaction, matter, or thing relating thereto, the voice and determination of the major part in number of the said part- ners for the time being, shall be final and conclusive on the other of the said partners for the time being, unless the other of them shall be desirous of submitting the determination of the matters in difference to arbitration, pursuant to the provision hereinafter contained in that behalf, and within three days after such determination of the major part of the partners for the time being shall be commimicated to him, shall require a reference to arbitration upon the same; in which case the determination which shall be made upon such reference to arbi- tration, shall be final and conclusive between the parties). 18. (Annual account. — Gen. Prec, cl. 16, with slight variations.) 19. That, upon the expiration of the said partnership by effluxion of time, a general account or rest in writing shall be made and taken by and between the present or any surviving or continuing partners of all and singular the money, credits, estate, and effects whatsoever, which shall be due, owing, or belonging to the said partnership, and also of all debts due and owing by or from the said partnership to any person or persons whomsoever. And that upon the closing and set- tling accounts, such the said partners shall forthwith pay, or make provision for the speedy payment and satisfaction of their respective shares of all sucli debts then owing by the said partnership, as can or may be immediately discharged, and shall lay out and invest in the purchase of the capital stock in the 31. per cent Consolidated Annui- ties, in the joint names of some trustee or trustees to be appointed by them, so much money as shall be sufficient to answer, pay and sat- isfy all outstanding notes, and other debts given, issued, and owing by or from the said partnership, as cannot be immediately discharged as aforesaid; and shall from time to time sell and dispose of a suffi- cient part of the said stocks or funds for the discharge of all the said outstanding notes, and such other debts as last mentioned, when and as the payment of the same notes and debts respectively shall be demanded or required; and upon the expiration of the said partner- ship, shall cause the lease of the said house in to be forthwith sold by public auction, for all the estate and interest of the said partners 1536 Appen-dix. therein; and also sell and dispose of all other articles and utensils belonging to the said partnership, and divide between them, according to their respective shares therein, on the expiration of the said part- nership, all the money arising from the sale of the said lease, and other articles, and also all other the moneys, credits, estates, and effects whatsoever, belonging or owing to the said partnership, after the dis- charge of all the outstanding notes and debts of the said partnership, or making provision and setting apart a fund for answering and pay- ing the same as aforesaid; and that immediately after such partition and division shall be made, the said surviving and continuing part- ners shall reciprocally assign unto each other the respective shares which shall be allotted to them respectively in and out of the said credits, sums of money, and other effects of the said partnership, with full power and authority to recover and receive the same, such assignments to be prepared by, and at the expense of the partners respectively taking the same; and that after such partition or divi- sion shall be made, neither of the said surviving partners, his execu- tors or administrators, shall or will release or discharge the credits which shall be allotted to the other or others of them, without the consent of the person or persons respectively to whom the same respectively shall be allotted, his, her, or their executors or adminis- trators. 30. That, if any of the said partners shall die before the expiration of the said partnership, the executors, administrators, or assigns of such deceased partner, shall have and receive from the surviving partners or partner, interest after the rate of 51. per cent per annum, for the capital sum or stock which such deceased partner had in the concern, the interest to be computed from the day of (the day of settling the annual account), preceding his decease, in lieu of any p rofits that may have accrued since such day of ; and that such capital and interest shall be paid at the times and in the proportions follow- ing (that is to say), one-third part thereof, with lawful interest as aforesaid, at the end of six calendar months from the time of the death of such partner or partners; one other third part thereof, with the like interest, at the end of nine calendar months from the time of the death of such partner or partners ; and the remaining third part thereof, with the like interest, at the end of twelve calendar months fi'om the time of the death of such partner, and in full of such deceased partner's right and property in the said joint stock or capi- tal, gains, profits and effects, and that the executors or administrators Precedehtts. 1537 of such deceased partner shall have no right or power to scrutinize or look into the books of the said concern. Provided, always, that if such deceased ^^artner shall have kept a private account with the said bank, in the same manner as any customer thereof, then the surviv- ing partners or partner shall furnish the executors or administrators of such deceased partner with a copy of such private account, for the year in which such partner shall have died. 21. That ail debts owing by any jjartner dying, on account of the said partnership, shall be paid in full to the death of such partner, when and as the same shall become due, or as soon after as the pay- ment of the same shall be demanded; and the surviving partners or partner shall, by a bond or obligation in a sufficient penalty, become jointly and severally bound to the personal representative of the deceased partner, for the payment of the said outstanding debts within the period of from the time of the decease of such part- ner, and also for the indemnity of the personal representative, and the estate and effects of the said deceased partner of, from, and against the said debts and all actions and suits at law and in equity, on account of the same. 22. That in case any one or more of the said partners shall neglect or refuse to bring into the said partnership stock his or their share or respective shares of and in the said capital of £ , on or before the day of next, or if, etc. (Pursue the several preceding cove- nants, or such of them as may be thought necessary, as in Gen. Prec, cl. 21, and then proceed), then and in every such case, the partner or partners so offending shall, upon notice in writing being given to him or them to that effect, be discontinued and expelled from the said part- nership in as full a manner as if he or they had not been named a joint partner or partners. 23. That upon the expulsion of any partner or partners as afore- said, a general account shall be taken of the credits and effects of the said partnership, and the debts of the said partnership shall be dis- charged np to the period of such expulsion, and the continuing part- ners or partner shall pay to such expelled partner or partners, his or their share or respective shares of the said capital, with interest, at such times and in such manner as are hereinbefore respectively men- tioned, in the case of payment to the personal representatives of a deceased partner or partners; and also shall execute to such expelled partner or partners, a bond of indemnity of like nature, and for like purposes as are hereinbefore mentioned in regard to the bond to 193 1538 Appendix. be given to the personal representatives of a deceased partner or part- ners. 34. That when any one or more of the said partners shall die or be dismissed from the said partnership, the lease of the house and other premises in which the banking business shall be carried on shall remain and become the property of the surviving or continuing part- ners in the same proportions in which they shall be entitled to the future profits of the said partnership as aforesaid. 25. That when and so soon as the said partnership shall be deter- mined as to anyone or more of the said partners, by his' or their death, or by his or their being dismissed from the said partnership before the expiration of the said term of years, then the original and also the derivative and additional share or shares of and in the said partnership concern, of such partner or partners respectively, shall belong to the surviving or continuing partners in proportion to their original shares in the capital of the same partnership; and the surviving or continuing partners shall, in the same rate or proportion, replace and supply the part or share, or several parts or shares, of and in the capital stock of the said partnership amounting to £ as aforesaid, which shall be drawn from the said partnership by or on the account of the partner or partners so dying or dismissed respectively, his or their respective executors or administrators. 26. (Arbitration clause.) No. IV. Deed of Partnership between ttvo Attorneys. This indenture made the day of , etc., between A, of, etc., atto]-ney at law and solicitor, of the one part, and B, of, etc., attorney at law and solicitor, of the other part: Whereas the said A and B have mutually agreed to enter into partnership as attorneys and solic- itors, for the term and under the stipulations hereinafter mentioned: Now this indenture witnesseth, that, in pursuance of -the said agree- ment and in consideration of the sum of £ of lawful English money, by the said B to the said A in hand well and truly paid (as and by way of premium for the said intended partnership) immedi- ately and before the sealing and delivery of these presents, the receipt of which said sum of £ he, the said A, doth hereby acknowledge, Precedents. 1539 and of and from the same, and every part thereof, doth acquit, release, and discharge the • said B, his heirs, executors and administrators, forever by these presents, each of them the said A and B dotli liereby for himself, his heirs, executors and administrators, covenant and declare with and to the other of them, his executors and administra- tors, in manner following (that is to say) : 1. That they the said A and B shall be and continue partners in the profession or business of attorneys at law, solicitors and conveyancers, for the term of fourteen yeai's fi'om the date hereof, if they the said A and B shall so long live. 2. That the said partnership business shall be carried on under the firm or style of Messrs. A & B, at the dwelling-house and office of the said A at aforesaid, until otherwise agreed upon by the said par- ties. 3. That the capital of the said partnership shall consist of the sum of £ , and of such other sum and sums of money as shall from time to time be wanted for carrying on the said business with facility and advantage, and the same shall be brought in by the said partners in the following proportions, namely, the sum of £ , being two-thirds thereof by the said A, and the sum of £ , being the remaining one- third part by the said B, and the said sums so to be advanced by the said partners, respectively, shall be paid by them into the bank of Messrs. , at, etc., to the credit of the said partnership, on or before the day of 4. That if either of the said partners shall at any time or times ad- vance or pay to or for the use or benefit of the said partnership, any sum or sums of money beyond the proportion which he ought to con- tribute, then the partner so advancing such sum or sums of money shall be paid and allowed interest thei'eon after the rate of £5 per cent per annum, before any division of profits shall be made. 5. That the said partners shall be entitled to the profits of the said business in the proportions following : namely, the said A to two- third parts, and the said B to the remaining one-third i^art thereof ; and that all and every sum and sums of money which shall, at any time during the continuance of the said partnership, be received as a fee or fees with any articled clerk or clerks to be taken by either of the said parties, shall be sliared between the said parties in like pro- portions. 6. That all losses happening in the course of said business, etc., (Gen. Prec, Clause 5.) 1540 Appendix. 7, 8. (Gen. Prec. Clauses, 7, 8 ; including, in the latter, stipulations as to expenses of stationery, copying clerks, counsels' fees, etc.) 9. That, in case the profits arising from the business of the said partnership, including fees with any articled clerk to be taken, or other extra fees or gratuities paid to the said partners on the joint account of the said partnership (after deducting thereout the rent so payable to A as aforesaid, and all the expenses of the said partner- ship), shall not at the end of the first tliree years of the said term, if both the said partners shall then be living, amount to tlie sum of £ , being the calculated average value of three years' profits of the said partnership : then the said A shall repay to the said B so much of the said sum of £ , advanced by way of premium as aforesaid, as shall make the profits of the said B equal to one-third of the said sum of £ (the average value). 10. That if both, or either of them, the said A and B, shall die be- fore the expiration of the said first three years of the said partnership term, then the said A, his executors or administrators, shall and may retain the whole of the said premium or sum of £ 11. 12. (Gen. Prec, Glauses 9, 10.) 13. That neither of them, the said A and B, shall or will at any time during the said partnership carry on, prosecute, or defend any action or suit at law or in equity, or ti-ansact any agency or other business incident to the profession of an attorney, solicitor, or con- veyancer, for any profit or advantage on his own separate account, or in any other manner than for the joint benefit of the said A and B, and that neither of the said parties shall undertake the prosecution of any cause or suit, after he shall be required by the other of the said parties not to do the same. 14. (Gen Prec, Clause 15.) 15. (Gen. Prec, Clause 16, with slight variations.) 16. That immediately upon the dissolution of the said partnership by effluxion of time, during the lives of both the said partners, a general account in writing shall be stated and settled between the said parties of all the debts due from and to the said partnership, and of all the affairs and transactions thereof ; and upon the com- pletion of such account, the said parties shall forthwith pay or pro- vide for the payment of their respective shares of the debts owing by them in respect of the said partnership, and, after payment of such debts, shall make a distribution, division, and allotment of the part- nership property, credits, and efiects between them according to their Plt'ECEDENXS. 1541 several proportions and interests therein ; and the deeds, papers, writings, vouchers, and documents belonging or which shall relate to the affairs of the clients of the said partnership, shall be retained by or delivered to each of the said parties, in manner following ; that is to say, such of them as shall belong or relate to the affairs of any clients who shall have been obtained through the interest of A, shall be retained by the said A, unless the said clients shall object thereto; and such of them as shall belong to or relate to. the affairs of any clients who shall have been obtained through the interest of B, shall be retained by the said B, unless the said clients shall object thereto; and in case any dispute shall arise as to the custody of the papers in any particular business, it shall be referred to the client to whose business tliey relate, to determine to which of the said partners the said j)apers shall be delivered. 17. That in case either of the said partners shall die during the said partnership, the survivor shall be at liberty to take at a fair valuation, 'to be made by some indifferent person to be appointed by such survivor and the executors or administrators of the deceased partner, the furniture, books, and all' such other things as shall have been used in the said partnership, and are not included in the said lease to A as aforesaid, provided that payment be made for the same within calendar months after the decease of the said partner : And on such i^ayment being made, the executors or administrators of the said deceased j^artner shall assign or otherwise make over the said furniture, books, and things unto the said survivor at the expense of the latter. 18. That immediately upon the dissolution of the said partner- ship, by the death of either of the said partners as aforesaid, an account in writing shall be taken by the surviving partner, and the executors or administrators of the deceased jDartner, of all the credits and effects of the said i^artnership, and of the debts due from the said partnership, according as the same shall stand at the day of such partner's decease ; and the surviving partner shall proceed with all convenient speed to collect and get in the credits of the said partner- ship ; and after ]3aying thereout all and every sum and sums of money owing by the said partnership, shall, from time to time, as often as the moneys in his hands shall amount to the sum of £ , pay over and account witli the executors or administrators of the deceased partner, for their share or proportion thereof ; and so soon as the whole of tlie share of such deceased partner shall have been paid to 1542 Appendix. his executors and administrators as aforesaid, they, the said executors and administrators, shall duly assign and release unto such survivor, all the right, title, and interest of them, the said executors and ad- ministrators, in and to the premises. 19. That the expense of winding up and adjusting the said accounts and the collection and receipt of the said credits, upon the decease of any partner as aforesaid, shall be paid out of the funds of the said partnership ; and that in case there shall be any deficiency in the said moneys, credits, and effects of the said partnership, to pay and satisfy the debts which shall be due and owing from the same, such deficiency shall be paid by the surviving partner and the representa- tives of the deceased partner in the same proportions, in which such surviving and deceased partner (if living) would have been bound by virtue of these presents to contribute to the losses of the said part- nership. 20. That in case the said B shall at any time after the expiration of four years from the commencement of the said partnership be desirous to retii-e from the same, and of such his desire shall give twelve calendar months' notice in writing to the said A, then and in such case the said partnership shall cease and determine upon the expiration of the said twelve calendar months, or at such day subse- quent thereto as shall be named in the said notice: And so soon as the said B shall have retired from the said partnership in pursuance of such notice, an account shall be taken of the debts, credits, and efEects of the said partnership, in like manner as is hereinbefore directed in the event of either of the said parties dying during the continuation of the said partnership ; and the said A shall take upon himself to collect and get in the credits of the said partnership, and shall pay and discharge the debts thereof, and, after payment thereof, shall pay over and assign one-third of the surplus of the moneys and effects of the said partnership which shall remain after payment of such debts, from time to time, as and when the moneys and effects so received shall amount to £ , unto the said B, his executors or administrators ; and so soon as the whole of the share of the said B shall have been paid to him as aforesaid, he, the said B, shall duly assign and release unto the said A all the right, title and interest of him the said B in the premises: And in case there shall be any deficiency in the said moneys, credits, and effects of the said partner- ship to pay and satisfy the debts which shall be due and owing from the same, such deficiency shall be paid by the said A & B according Precedents. 1543 to their seyeral proportions of and in the profits and losses of the said p.irtnership, as settled by these presents. 21. That in case of such dissolution by the retirement of the said B as aforesaid, all and every the papers, books, and writings -which shall relate to the general business of the said partnership, shall be retained by the said A, he, the said A, indemnifying the said B, his executors and administrators, from and against all damages, costs, and charges which he, the said B, his executors or administrators, may sustain or be put to by reason of his, the said B's, delivering up and permitting the said A to retain the said papers, books, and writings as aforesaid. 23. That in case of such dissolution by the retirement of the said B as aforesaid, he, the said B, shall not nor will at any time or times hereafter, during the life of the said A, set up business as an attorney or solicitor, either by himself or in partnership with any person, within fifty miles of aforesaid (the place of A's residence), whether the said A shall continue to reside and practice at , or shall remove to and practice at any other place within the said county of , and that in case he, the said B, shall willfully or negligently break or fail to perform this present covenant, then he, the said B, his heirs, executoi'S, or administrators, shall and will immediately thereupon pay unto the said A, his executors or administrators, the sum of £ , as liquidated damages, to be deemed and taken in full satisfaction and discharge of such covenant, and not in the nature of a penalty. 23. Provided, always, that if, contrary to the several agreements hereinbefore contained, either of the said partners, etc. (See Gen. Prec, clause 21.) 24. (Arbitration Clause.) No. V. Deed of Partnership letween hoo Farmers. This indenture, made the day of , etc., between A, of, etc., of the one part, and B, of, etc., of the other part: Whereas, by an indenture bearing date, etc., and made or expressed to be made between the [lessor], of the one part, and the said A of the other partj the said [lessor] did, for the considerations therein mentioned. 1544 Appendix. demise unto the said A, all that, etc. (describe parcels); To hold the same unto the said A, his executors, administrators and assigns, from tlie day of then last, for the term of sixteen years, under the yearly rent of £ , payable lialf-yearly as therein mentioned, and under such further contingent yearly sums, and subject to such provisos, cove- nants, conditions, and agreements as are therein contained: And, whereas, the said A is possessed of or entitled to a considerable stock upon the said farms, consisting of horses, carts, wagons, cows, oxen, crops upon the land, implements, utensils of husbandry, and other articles and things : And, whereas, it hath been agreed between the said A and B, that the said farm shall from the day of now next ensuing, during the then residue of the said term of sixteen years, by the said indenture of lease granted as aforesaid, be man- aged and cultivated by the said A and B for their mutual benefit and advantage, and that they shall be equally entitled to the clear gains and profits to ai-ise from and be produced by the said farms, under and subject to the conditions, stipulations, and agreements herein- after contained: Now this indenture witnesseth, that in pursuance of the said agreement, each of them, the said A and B, doth hereby, for himself, his heirs, executors, and administrators, covenant and declare with and to the other of them, his executors and administra- tors, in manner following (that is to say): 1. That the said A and B shall and will (if they shall both be living on the 29th day of September next ensuing) become and be beneficially interested in the gains and profits to arise from and to be produced by the said farms and premises hereinbefore mentioned and comprised in the said recited indenture of lease in equal shares and proportions from the 29th day of September next ensuing the date hereof, for and during the residue which shall be then to come and unexpired of the said term of sixteen years, by the said indenture of lease granted as aforesaid; subject to the proviso hereinafter con- tained for determining the said joint concern, either upon the death of both of them, the said A and B, during the said term, or in con- sequence of the death of the said A during the life-time of the said B, and of such notice being given or left by the said B as hereinafter mentioned; and that the said farms, lands, and premises shall, during that period, be managed, cultivated, and superintended for their mutual benefit and advantage. 2. That the said B shall, upon the 29th September next ensuing, pay or cause to be paid to the said A the sum of 500?., of, etc., as or Pkecedents. 1545 by way of premium or consideration for the admittance of the said B into the said joint concern, and that, over and above the sum of money liereinaf ter stipulated to be advanced by the said B, as his share of the capital of the said Joint concern. 3. That the stock, both live and dead, of and belonging to the said A, •which shall be upon the said farm and premises upon the 29th of September next ensuing, shall, upon that day, or as soon as may be then after, be valued and appraised either by the said parties, or, in case they differ, by two indifferent persons, one of whom shall be chosen by the said A and the other by the said B, within next after the said 29th September next ; and, in case such two referees shall also differ, then by such one person as they, the said referees, shall, for that purpose, appoint. 4. That the crops growing upon the said farms on the 29th Sep- tember next, and also the improvements made by the said A upon or in respect of the said lands, farms and premises since the day of , in the particulars following, viz. : in laying manure upon the said lands, in hedging and ditching, fallows, etc., shall be con- sidered as part of the said stock so to be valued as aforesaid, and shall be included in such valuation as aforesaid. 5. That immediately after such valuation shall be made as afore- said, the said B shall pay or cause to be paid unto the said A so much good and lawful money of Great Britain as shall be equal in value to one moiety or half part of such stock, according to the valuation or appraisement to be made thereof as aforesaid ; but, in case the value of such moiety shall exceed the sum of 1,5001. of like money, then the said B shall not be compelled or compellable to pay unto the said A more than the sum of 1,500/., immediately upon such valuation being made as aforesaid, and, in case the said B shall not then pay more than the said sum of 1,500Z., the remainder of the amount of the value of the said tnoiety or half part of such stock shall be con- sidered as a debt due from the said B to the said A, bearing interest from the said 29th September next, after the rate of 51. for every 1001. by. the year, which interest shall be paid to the said A, by equal half- yearly payments, and shall be a chai'ge upon the share of the said B, of and in the gains and profits of the said farms and premises, and the principal of the said debt shall be paid by the said B to the said A, upon the said A going to the said B, or leaving at his place of residence or abode for the time being, six calendar months' notice in writing, requiring the said B to pay the said debt, and specifying the 194 1546 Appendix. day on which it is or ought to be paid. And, in case no such notice shall be given or left during the said joint concern, then such debt and all arrears of interest thereof shall be paid by the said B, his executors or administrators, to the said A, his executoi's or adminis- trators, as soon as may be after the end or determination of the said joint concern. 6. That each of the said parties shall have a several right in a moiety of the said stock, and that the same stock shall, from time to time, during the said joint concern, be continued or employed in or upon the said premises, and for the cultivation and improvement thereof, and no part thereof shall be used for any other purpose. 7. That the stock of, or belonging to the said A shall, at the time of the valuation thereof, amount in value to the sum of 3,000Z. at the least. 8. That the clear gains or profits of, or to arise from the said farms and premises shall be divided between the said parties in equal shares and proportions, Nevertheless, during the first year of the said joint concern, neither of the said parties shall draw or receive from the said clear gains or profits, or his share or proportion thereof, more than the sum of 150Z., and, if the clear gains and profits of, or to ai«ise from the said farms and premises during the first year of the said joint concern shall exceed the sum of 300Z., then the surplus thereof shall be added to the capital stock of, or belonging to the said joint concern, and shall be considered as part thereof. 9. That each of them, the said parties, shall contribute toward the payment of the rents reserved upon the lease under which the said premises are holden, and also toward keeping up the live and dead stock upon the said farm, and also toward payment of all expenses and losses which shall or may be incurred or sustained for or by rea- son or on account of the said farms and premises, and the manage- ment and cultivation thereof, in equal shares aijd proportions. 10. That the said A shall reside at, and live in and have the sole use and occupation of the messuage, tenement and farm house called , in exclusion of the said B, and the said A shall pay to the said joint concern the annual sum of £ by way of rent for the same, for the payment of which said yearly sum of £ , the share of the said A of, and in the gains and profits of the said joint concern, shall be considered as primarily liable. 11. That the said A shall be paid and allowed out of the gains and profits of the said joint concern the yearly sum of £ for each PEECEDEITTSi 1547 workman, husbandman or laborer to be employed with the consent of the said B for the purposes of the said joint concern, whom he shall board or lodge in the said messuage, tenement or farm-house, called 12. That the crops now being in or upon, and which shall, on or before the 39th September next, be got in, to, or produced from the said farm and premises, shall be considered as the whole and exclu- sive property of the said A. 13. That, in the cultivation, management and improvement of the said farm, each of the said parties shall, during the continuance of the said joint concern, iise his best and utmost endeavors, and shall not, nor will, willingly or knowingly, make, do or suffer any act or thing which may amount to or be construed as a breach of any of the said covenants and agreements contained in the said recited indent- ure on the part of A to be kept, done and performed. 14. That neither of the said parties shall, without the consent of the other of them, take or receive any apprentice, nor hire, employ or engage any servant, husbandman, workman or laborer, in or about the said joint concern. 15. That in case either of the said parties shall, at any time or times during the said joint concern, enter into any bond, or become bail or surety with or for any person or persons whomsoever, or confess any judgment, or authorize the signing or entering up of the same without the consent of the other of them first Jiad or obtained in writing; or sell, or contract to sell or deliver, by way of trust or credit, any of the joint stock, produce or articles to the amount of £ , or upwards, of or belonging to the said joint concern, to any person or persons whom the other of the said parties shall forewarn not to be trusted, or do or suffer any other act, matter or thing, whereby or by reason or means whereof the said farms and premises, or any pai-t thereof, or the said joint concern, or the share or interest of either of the said parties therein shall be seized or attached, arrested, taken in execution, charged, assessed, or otherwise prejudiced ; then, and in any of the said cases, it shall be lawful for the other of the said parties, if he shall think fit, within three calendar months after the discovering thereof shall be made to him, to dissolve and determine the said joint concern, by giving notice in writing for that purpose to the offending party within the said three calendar months, and immediately after such notice shall be given, the said joint concern shall cease and deter- mine, and in that case the final account shall be had and taken, and 1548 AppEKnix. all other matters and things shall be done as are hereinafter directed to be made and done at the end of this copartnership. 16. That neither of the said parties shall or will at any time or times during the continuance of the said joint concern, without the consent of the other of them in writing for that purpose first had and obtained, be directly or indirectly concerned in, or use, exercise, or follow any trade, business, or concern whatsoever, other than and except the said joint concern. (17. Annual account. Gen. Prec, Clause 16.) 18. That in case both of them, the said A and B, shall die before the expiration of the said term of , granted by the said recited indenture of lease, then immediately after the decease of the survivor of them the said joint concern shall cease. 19. That in case the said B shall depart this life before the expira- tion of the said term, leaving the said A him surviving, then, and in such case, the said A shall and will, during the then residue of the said term, if he shall so long live, carry on the said joint concern jointly with the executors or administrators of the said B, or such other per- son or persons as he, by his last will and testament, or any writing by him duly executed in the presence of, and attested by, two or more credible witnesses, shall nominate and appoint in that behalf, who shall thereupon accordingly, from and after the decease of the said B, be and become jointly concerned with the said A in the said farms and premises in the joom and stead of the said B, under and subject ,to the like terms, conditions, provisos, and agreements as are herein expressed and agreed upon between the said parties hereto, in case they were both living, or as near thereto as circumstances will permit ; save only, that in case the share or proportion of the executors or administrators, or other person or persons appointed by the said B as aforesaid, of, or in the said stock of the said joint concern, shall become less than the share or proportion of the said A therein, then such executors or administrators, or other person or persons as aforesaid, shall only have and be entitled to receive a part or share of the said gains and profits of the said joint concern, in proportion to his, her, or their share of the capital thereof, as aforesaid. And save only, that such executors or administrators, or such other person or persons as aforesaid, shall not personally attend in or to the management or cul- tivation of the said farms or premises, and save and except that the said A, in consideration and in recompense of, and for the extraordin- ary care and trouble in the management and cultivation of the said Peecedents. 1549 farms and premises, with the executors or administrators of the said B, or with sucli other person or persons as he shall appoint in that behalf as aforesaid, shall fi-om and after the decease of the said B, during the then residue of the said term, if the said A shall so long live, have and receive the yearly sum of £ , by and out of the share of the said B, his executors, administrators, or appointees, of and in the clear gains and profits of the said farms, premises, and joint con- cern. 30. That in case the said A shall depart this life during the said term, leaving the said B him surviving, it shall be lawful for the said B, at any time within six calendar months next after the decease of the said A, to dissolve and determine the said joint concern, by giving or leaving notice in writing within that time, to or for the executors or administrators of the said A, at the said messuage or dwelling- house called , signifying the wish or desire of the said B to dis- solve and determine the said joint concern ; but, in case the said B shall not give or leave such notice within the time aforesaid, then and in such case the said B shall and will during the then residue of the said term, if he shall so long live, carry on the said joint concern with the executors and administrators of the said A, who shall thereupon accordingly, fi'om and after the decease of the said A, be and become jointly concerned with the said B in the said farm and premises, in the room and stead of the said A, under and subject to the same terms, conditions, provisos, and agreements as are herein expressed and agreed upon between the said parties hereto, in case they were both living, or as near thereto as circumstances will then permit. 21. Provided always, that in case the said B shall survive the said A, and the said A shall die without having .or leaving an executor or administrator that shall be capable of holding and occupying the said demised premises and every part thereof, or who shall not continue to hold and enjoy the same, and every part thereof, pursuant to the terms of the said recited indenture of lease, then, either upon the decease of the said A in the life-time of the said B, without having or leaving an executor or administrator capable of holding or occupying the said demised premises, or upon such executors or administrators not continuing to hold or enjoy the same, as the event may be, the said joint concern shall cease and determine. 32. That at the end of the said term granted by the said recited indenture of lease, or at the sooner determination of the said joint concern in any of the events hereinbefore mentioned, the said parties 1550 Appendix. respectively, or their respective executors and administrators, shall and will, within then next following, meet and account together, and make, cast up, state, and adjust the final account and reckoning in writing of, and concerning the said joint concern, and of all stock, moneys, debts, goods, gains, profits, and advantages which shall be then in, or due, owing, or belonging to the said joint concern, or to the said parties or their respective representatives for, or by reason, or on account thereof, and of, for, or concerning all debts or sums of money, which, by reason or means of the said joint concern, shall be due or owing to any person or persons, or which they, the said parties, or their respective representatives, shall have sustained, for, or by reason or means, or on account thereof, so and in such sort that it shall thereby appear what the then state and condition of the said joint concern shall be ; and immediately thereupon, or as soon after- ward as conveniently may be, true payment and satisfaction shall be made, or good order taken for the frue and speedy payment and satis- faction of all such debts and sums of money as at the determination of the said joint concern shall be by the said parties due and owing to any person or persons for or on account of the said joint concern. And then, also, true payment, division, and delivery shall be made between the said A and B, in equal shares and proportions, of all and every the stock, moneys, debts, goods, and other things which, after such payments as aforesaid, shall be then due, owing, or belonging to the said joint concern, or to the said parties, or their respective representatives, on account thereof. And thereupon each of the said parties, his executors or administrators, shall make and give unto the other of them, his executors or administratora, such assignment of his part or share of the debts which shall be then due to the said joint concern, together with full power to sue for and recover such debts as the party who is to have the same shall upon such division as aforesaid reasonably require, and after such partition, division, and assignment shall be made, neither of the said parties, his executors or administrators, shall or will receive, release, compound for, or dis- charge any debt or debts which shall be allotted to the other of them, his executors or administrators, without the consent of the party to whom the same shall be allotted. 23. Provided always, that in case the said A, his executors or administrators, shall upon the determination of the said joint con- cern be desirous of purchasing all or any part of the share or pro- portion of the said B, his executors or administrators, of or in the Pkecedents. 1551 said joint stock, goods, and effects, it shall be lawful for him, the said A, his executors or administrators, so to do, U]Don giving unto the said B, his executors or administrators, notice in writing of such his wish or desire within one calendar month next after the determination of the said joint concern, and in case the said parties shall differ as to the value or price to be given for the share or part of the share of the said B, his executors and administrators, of and in the said joint stock and effects so to be purchased, then the said share or part of the share of which such notice shall be given for the purchase thereof as aforesaid, shall be valued and appraised by two indifferent persons, one of whom shall be chosen by the said A, his executors or adminis- trators, and the other by the said B, his executors or administrators, and in case such two persons shall differ in their valuation, then the same shall be valued by such one person as the said two referees shall for that purpose appoint, and the said A, his executors or administra- tors, shall thereupon pay to the said B, his executors or administra- tors, such sum of money for the purchase thereof as the said two referees or their umpire shall determine to be the value thereof. 34. (Arbitration Clause.) No. VI. Deed of Partnership betioeen ttvo Haberdashers. This Indenture, etc. Whereas, M S hath for many years carried on the business of haberdasher and milliner in a house or shop at D, and hath lately retired from the said business. And whereas the said E S and M K have purchased all the stock in trade, effects, and good- will of the said business, and, in payment for the same, have given to the said M 8 six joint and several promissory notes, signed by each of them, the said E S and M K, and payable at, etc., respectively. And whereas the said E S and M K have agreed to become partners in the, trade or trades, and upon the terms and agreement hereinafter men- tioned : Now this indenture witnesseth, that each of them, the said E S and M K, for herself, her heirs, executors and administrators, doth hereby covenant, promise, and agree, to and with the other of them, her executors and administrators, mutually and reciprocally, by these presents, in manner following (that is to say) : 1. That they, the said E S and M K, shall and will become and be copartners in the trade or business of silk-mercers, haberdashers, 1552 Appendix. linen-drapers, and milliners, and in all matters and things incident thereto, from the day of the date of these presents, for the full term of twenty-one years thence next ensuing, determinable, nevertheless, as hereinafter mentioned. 2. That the said trade or business shall be carried on under the firm of " S & K," at the house and shop of D, where the same has heretofore been carried on by the said M S, or at such other place or places as the parties hereto shall for the time being mutually agree ui^on. 3. That the stock in trade, articles, and effects belonging to the said business, and now in and about the said shop and premises, shall be and remain the joint property of the said parties hereto in equal undivided shares, and that the six several before-mentioned promis- sory notes given to the said M S for the said stock shall, as the same respectively become due, be paid by the said E S and M K, in equal proportions, and be accounted as part of the disbursements of the said partnership business. 4. That all sums of money which shall be necessarily disbursed and expended for the payment of rent, taxes, and rates, and for the purchase of stock in trade, and for the providing all coals and can- dles, and for the wages and maintenance of all apprentices, servants, assistants, workwomen, and others used and employed, retained, hired, or taken for the carrying on of the said business, and for the joint use and service of the said E S and M K and all other necessary and proper expenses connected with the said partnership business, shall be advanced and paid by the said parties hereto in equal pro- portions, and that if either of the said parties shall advance any sum or sums beyond the other of them for the purchase of any stock in trade or effects, or for the general purposes of the said business, the stock in trade and effects which shall be so purchased shall immedi- ately become and remain the joint property of the said parties hereto, but interest at the rate of 51. per cent per annum sliall be paid and allowed to either of the said partners, who shall so advance any sum beyond the other of them. 5. That the said E S and M K shall be entitled to the net gains and profits of the said partnership business, and to the premiums of all apprentices taken by them, or either of them, in equal shares and proportions. 6. That proper books of accounts shall be kept by the said parties hereto, and true and perfect entries made therein of all receipts and Pkeceden-ts. 1553 disbursements, and of all goods bought and sold, and other business transacted by them respectively, or by any agent, apprentice, or ser- vant in their employment, and of all moneys, debts, and other things relating to the business; and that all such books of accounts shall be kept at the shop or place where the said business shall be carried on, and, that each of the said parties shall at all times have free access thereto, to inspect, examine, cast up, and make entries therein, or extracts or copies therefrom. ^ 7. That each o;E the said parties shall be just and true to the other of them, and shall devote her whole time and attention to the said partnership business, and use her best endeavors at all times to pro- mote the interest thereof; and that neither of them shall, during the continuance of this partnership, exercise or carry on, or be concerned, directly or indirectly, in carrying on the business of a silk mercer, hosier, linen-draj)er, haberdasher, and milliner, or any or either of such trades, either wholesale or retail, except for the benefit of the said partnership; nor shall either of them give away, lend, or employ any of the goods or moneys belonging to the said partnership, nor engage the credit thereof in any manner howsoever, except upon account and for the sole use and benefit of the said partnership, in the usual way of business. 9. That neither of the said parties shall become bail in any court whatever, nor become bail to the sheriff, nor give any undertaking for that purpose, without the consent in writing of the other of them ; and shall not hire or engage in, or discharge from their joint employ- nient any apprentice or servant, without their mutual consent. 10. That if either of the said parties hereto shall give credit to any particular person or persons, contrary to the wish of the other of them in writing declared, the party so giving credit shall alone bear the loss and hazard thereof; and the share of such party in the profits of the said partnership business shall stand charged thete- ■with, but all profits which shall arise from such credits shall, never- theless, be deemed part of the partnership profits, and accounted for accordingly. 11. That on the 29th day of September next ensuing the date hereof, and on every succeeding 29th day of September, during the continu- ance of the partnership hereby established, and also as soon as con- veniently may be after the expiration thereof, or after the determina- tion thereof by the death of either of the said parties, a full and gen- eral account in writing shall be made and taken by the said B S and 195 1554 Appendix. M K, or between the survivor of them and the executors and admin- istrators of the deceased partner, of all the business which shall have been transacted by the said partnership, and of all moneys, debts, arid other things due and owing to and from the said partnership business ; and the heads of such accounts, when settled and digested, shall from time to time, during the continuance of the said copartner- ship, be entered in two books, to be signed by both of the said part- ners; and that, after such signing, each of the said partners shall retain one of such books in her custody; and after .completing such accounts, the net gains and profits which shall appear to be due to each party shall be paid to her, or her executors or administrators accordingly. 12. That if either of the said parties hereto shall, during the con- tinuance of this partnership, draw, accept, or indorse any note or bill of exchange in the Joint names of the said copartnership. Or other- wise pledge the credit of the said copartnership for her own private or separate debts or engagements, or for any purpose unconnected with the ordinary business of the said copartnership, without the consent in writing of the other of such parties, or shall do, or knowingly suf- fer to be done, any act, matter, or thing whereby the said partnership effects, or any part thereof, shall be seized, attached, extended, or taken in execution, or shall in any other respect be guilty of a willful or notorious breach of any of the covenants, stipulations, and agree- ments herein contained; then, and in every such case, it shall be law- ful for the other of them, at any time within three calendar months next after such ofEense or default, to dissolve and determine the copartnership hereby established, by giving notice in wi-iting of her determination to that efEect to the party so offending, or by leaving the same at her last known place of residence. And immediately after such notice being so given or left as aforesaid, the said partner- ship shall be dissolved and determined to all intents and purposes; and the party so dissolving the said copartnership shall be exclusively entitled to wind up and settle the aflairs and accounts of the said copartnership, accounting for the remaining share and interest of the other parties in the partnership effects, after deducting a full compen- sation for all loss and inconvenience which shall have been sustained in consequence of any such offense, default, or breach as aforesaid. And the party giving such notice shall alone be entitled to retain possession of the said shop and premises, and carry on business therein, paying the Peecedents. 1555 rent, and performing the covenants to which the same premises shall be liable. 13. That if, at any time during the copartnership, it shall be found expedient or advisable to take or rent the said messuage or tenement, shop and premises, or any part thereof, or any other messuage, shop, and premises, for any term of years, for the purposes of the said busi- ness, the same shall be taken and rented in the joint names, and for the mutual benefit of the said parties hereto as joint tenants, during their joint lives, and to the survivor of them; and if it should happen that the said partnership, by means of the notice hereinbefore and hereinafter mentioned, should be determined or dissolved, the party receiving such notice shall, upon the request, and at the cost and charges of the other party, assign all her right, term, and interest in the said messuage or tenement, shop and premises, so as to vest the same in "the party giving such notice and dissolving the partnership as aforesaid, for her sole use and benefit, subject to the rents and covenants to which the same premises shall have been theretofore liable. 13. That if either of the said parties hereto shall marry during the said partnership, and the husband of the party so marrying shall med- dle or interfere with the said partnership business, or any money or effects of the said copartnership, or any matter relating thereto, or do or commit any act whereby, or in consequence whereof, the business of the said copartnership may be prejudiced, or any property or effects of the said copartnership may be taken in execution, or either of the said parties may be prevented from observing or performing any of the covenants or agreements contained in these presents, then it shall be lawful for the other of the said parties to put an end to this partnership, by giving notice in writing of her intention so to do, and to wind up and settle the partnership accounts and affairs in the same manner as is hereinbefore declared in case of a willful or noto- rious breach of any of the covenants, stipulations, and agreements herein contained. 14. That if either of the said parties hereto shall be desirous of withdrawing from the said copartnership at any time after the first seven years thereof, it shall be lawful for her so to do, upon giving to the other of the said parties three calendar months' notice, in writ- ing, of such her desire; and thereupon the accounts and affairs of the said partnership shall, within the said three months from the date of such notice, be made up and settled, and the party so withdrawing 1556 Appendix. shall, if required so to do, and without any fine, premium, or increased rent, assign all her right and interest to aud in the same premises to the remaining or continuing partner; and after such settlement of accounts, and the expiration of the said three months' notice, the part- nership hereby established shall cease and determine. 15. (Arbitration clause.) • No. VII. Apjiointment of a Clergyman as Editor of certain Periodical Publica- tions, with a salary and a share of the profits. This indenture made the day of , 1839, between A, of, etc., and B, of, etc., being the joint publishers of certain periodicals and other publications, under the style and firm of A & B, of'the one part, and the Eeverend S I of, etc., of the other part: Whereas a part- nership lately subsisted between H, of, etc., and the said A under the style and firm of H & A, for the purpose of publishing certain peri- odical publications entitled respectively, " H's Portraits of Eminent Statesmen," and " Beechy's Cabinet of Gems," and the said partner- ship hath lately been dissolved. And whereas, by an indenture bear- ing even date herewith, but executed immediately before the execu- tion of these presents, and made between the said H of the first part, the said B of the second part, the said A of the third part, and the said Eeverend S I of the fourth part (being the indenture declaring the dissolution of the said partnership of H & A), the share and interest of the said H of and in the goods, chattels, moneys, credits rights and advantages of the said partnership, was duly assigned by the said H to the said B, in consideration, among other valuable con- siderations therein mentioned, of the sum of 2,000Z. therein expressed to be secured by several bills of exchange drawn by the said S I, upon and accepted by the said A and B, and indorsed by the said S I, delivered by the said B to the said H, and bearing even date with the said indenture, such bills of exchange being for the sum of £ each, and payable to the said H, or his order, at months after date respectively. And whereas the said bills were drawn and indorsed by the said S I for the accommodation of the said B in order to enable him to purchase the share of the said H in the said partnership, which he hath accordingly done by the means of the said bills. And whereas the said A and B have agreed to become partners under the Precedents. 1557 firm of A & B, in the business or trade of printers and publishers in general, and likewise as printers and publishers of certain periodical works which bear or are intended to bear the following titles respect- ively, namely, "H's Portraits of Eminent Statesmen, "Beechy's Gems," " Portraits and Memoirs of Archbishops," etc. And whereas, in pursuance of the said agreement between the said A and B, an indenture of partnership bearing even date with these presents, hath been duly executed between them whereby the said partnership of A & B is constituted for the term of twenty-one years, determinable at the expiration of the first seven or fourteen years of the said term upon six calendar months' notice, and likewise determinable upon the death of either party, and whereby, among other things, it is declared and agreed that the capital of the said partnership shall consist of the copyright of and in the works and publications hereinbefore men- tioned, stock in trade, goods, chattels, credits and effects of the said late firm of H & A, including the lease of certain apartments, being the ground floor in the house No. Eegent street, wherein the busi- ness of the said last-mentioned firm was carried on, together with tjie furniture and fixtures therein. And whereas, in consideration of the purchase by the said B of the said share of the said H, as aforesaid, by means of the said bills of exchange so drawn by him, the said S I, and likewise in consideration of the joint use and employment of the said share by the said firm of A & B, for the purposes of the said part- nership, and likewise in consideration of the assignment hereinafter contained on the part of the said S I, of five-sixth parts of the copy- right of the several works hereinafter mentioned or referred to, the said A & B have agreed to employ the said S I, as the editor of cer- tain of the said publications already published, and also of other publications to be published by the said firm, at the salary and under the stipulations and conditions hereinafter mentioned, and have like- wise agreed to indemnify the said S I by the means hereinafter men- tioned against the non-payment by the said B of the said bills of exchange, or any of them, when the same shall become due and paya- ble. Now this indenture witnesseth, that, in consideration of the premises, they, the said A & B, do hereby jointly and severally for themselves, their heirs, executors and administrators, covenant, prom- ise and agree with and to the said S I, his executors, administrators and assigns, in manner following (that is to say),. that they, the said A & B, shall and will during the continuance of the said partnership, and in case of the dissolxition of the said partnership as aforesaid. 1558 Appendix. then that the party or parties who shall contiauo the business thereof shall and will employ the said S I, and no other person or persons, unless with his consent as the editor of the following works, namely, "H's Portraits of Eminent Statesmen," "Portraits and Memoirs of Archbishops," etc., and likewise as editor of all periodical and other works to be published by the said firm of A & B, which do or shall or may consist of or relate to religious, ecclesiastical, classical, or academi- cal subjects, or shall consist of illustrations of plates or engravings upon such subjects, the duties of such editor being to write and compose certain observations by way of illustrations of the said plates and engravings. And also, that they, the said A and B, or the party or parties so continuing the said business as aforesaid, shall and will so long as the said S I shall continue in his situation of editor as aforesaid, and well and truly perform the duties thereof, allow and pay to the said S I a fixed salary at the rate of 200^. per annum, to be paid and payable by quarterly payments as hereinafter men- tioned, and likewise an additional salary to be equal in amount to one-sixth part of the profits of the said partnership of A & B, as the same profits shall be ascertained on the day of in every year during the continuance of the said partnership, such last-mentioned salary to be paid and payable to the said S I from time to time within one calendar month after every successive day of ; and, also, that they, the said A & B, or the party or parties so continuing the said business as aforesaid, shall and will, so long as the said salary of 2001. per annum shall be payable to the said S I by virtue of these presents, well and truly pay the same from time to time without any deduction or abatement whatsoever, by equal quarterly payments, on the first day of every third calendar month succeeding the day of the date hereof in the year (the first of such quarterly payments to be made on the day of now next ensuing), at the said messuage. No. Eegent street, or at any other house where the business of the said partnership shall be carried on; and, also, shall and will, so long as the said additional salary shall be payable to the said S I by virtue of these presents, well and truly pay the same from time to time, without any deduction or abatement whatsoever, on the 31st day of every December in each succeeding year, at the place afore- said, the first of such last-mentioned payments to be made on the 31st day of December now next ensuing; and in case it shall happen that any quarterly portion of the said annual salary of 300Z., or any part of the said additional salary, shall respectively be m arrear and Precedents. 1559 unpaid by the space of fourteen days next after any of the aforesaid days wherein the same ought to be paid as herein provided, it shall be lawful for the said S I, his executors or administrators, to enter the said apartments and premises, 'No. Eegent street aforesaid, or any other premises where the said partnership shall or may for the time being be carried on, and distrain for such arrears, and the distress and distresses then and there found, to take and carry away and keep or otherwise to sell and dispose thereof, as landlords may in the case of arrears of rent; and by means of such distress and sale as aforesaid, to satisfy himself or themselves the amouiit of such arrears of salary and all expenses occasioned by the non-payment thereof: And, also, that they, the said A & B, or the party or parties so continuing the said business as aforesaid, shall and will, from time to time and at all times during the continuance of the said partnership, permit the said S I at all seasonable hours to inspect as well the books of account of the said partnership, as all letters, accounts, vouchers, receipts, memo- randums, and other documents relating to the said partnership, which from time to time shall be in the possession of the said partners, party or parties, or any or either of them: Provided that nothing herein- before contained shall be deemed or construed to give to the said S I a specific share of or speciiic lien upon the profits of the said partner- ship, so as to make him a partner thei'ein; or any specific lien or claim upon the said profits whatsoever, further than he may be entitled to under the said power of distress for recovering the arrears of the said annual and additional salary: And the said S I, for himself, his heirs, executors, and administrators, doth hereby covenant, promise, and agree with and to the said A & B, and the survivor of them, and the executors and administrators of such survivor, that he, the said S I, shall and will, so long as he shall continue in the situation of editor as aforesaid, well, diligently, and truly perform the duties thereof according to the true intent and meaning of these presents, and in particular shall and will complete the editorial illustration of six parts of the "Portraits of Eminent Statesmen," and also six parts of the said works entitled "Portraits and Memoirs of Archbishops," etc., in every year at such periods as the said A & B shall fix for that purpose, so that a part of each of the said works may be published every alternate month, and in default thereof shall forfeit all quarterly payments which shall be due in respect of the said annual salary of 2001. during the time of such default, and in lieu thereof shall be paid only according to the quantity of work actually performed by him 1560 Appendix. (that is to say), iu the proportion of lOOZ. for six parts of eacli work ■which shall have been completed by him, such 1001. being the full estimated payment for the editorial portion of such six complete parts: And, also, that he, the said S I, shall and will, during the time he shall be editor as aforesaid, complete the editorial illustration of all works requiring the same quantity of letter-press (reckoning by pages) as the said " Portraits of Eminent Statesmen," within the period and according to the stipulations hereinbefore contained rela- tive to the said work: Provided, always, that the said S I shall not be called upon by the said A & B, or by the party or parties continuing the said business as aforesaid, to prepare for publication in any one year, either in the way of illustration of plates or otherwise, more manuscript than shall be sufficient when printed to complete eighteen sheets of a quarto volume, printed in large pica, and twenty-four sheets of an octavo volume printed in small pica: Provided, also, that in case the said S I shall fall into ill health, and shall produce the certificate of a physician of the College of Physicians in London that he is not in a proper state to pursue the duties of his said editor- ship, it shall be lawful for the said S I to cease from his duties, and thereupon to appoint some fit and proper substitute for him as such editor as aforesaid, to be approved of by the said A & B, and to be paid and remunerated by the said S I, without being required to forfeit any quarterly portions of the said salary of 2001. which may become due during that interval, or any portion of the said additional salary; provided that if the said illness shall exceed three calendar months, the said S I shall be paid thereafter until he shall be able to resume his duties only for the work he shall actually perforin, the same being estimated according to the mode hereinbefore presci'ibed in regard to his default of editing the said six parts of the said H's "Portraits of Eminent Statesmen," etc. And this indenture further witnesseth, that, in further pursuance of the said agreement, and in consideration of the covenants hereinbefore and hereinafter contained on the part of the said A & B, he, the said S I, hath bargained, sold, assigned, transferred, and set over, and by these presents doth bargain, sell, assign, transfer, and set over tmto the said A & B, their executors, administrators, and assigns, five-sixth parts or shares (he, the said S I, retaining possession and enjoying the remaining one-sixth part or share) of and in the copyright of the literary portion of the several works hereinbefore mentioned or referred to respectively, entitled " H's Portraits of Eminent Statesmen," " Por- Pkecedents. 1561 traits and Memoirs of Archbishops," etc., and all and singular the works which shall or may hereafter be published by the said A & B, or any other party or parties who for the time being shall or may carry on the business of the said partnership, to hold the said five- sixths parts or shares of the said copyright, and all the profits, ben- efits and advantages thereof, unto the said A & B, their executors, administrators and assigns, for and during and unto the full end of the term of twenty-one years, to commence from the day of the date hereof ; and the said A & B do hereby jointly and severally, for themselves, their heirs, executors and administrators, covenant, prom- ise and declare, with and to the said S I, his executors, administra- tors and assigns, that they, the said A & B, or one of them, shall and will take up and fully pay, satisfy and discharge the said bills of exchange and every of them, when and as they respectively shall kecome due and payable ; aud also that each of them, the said A & B, shall and will execute a joint and several warrant of attorney, bearing even date with these presents, authorizing certain attorneys therein respectively named, to enter upon i*ecord, judgment against them jointly as copartners in trade, and eacli of them individually, in Her Majesty's Court of Queen's Bench, at the suit of the said S I, for the sum of 4,000Z., and costs of suit, on which said warrant of attorney it is hereby agreed and declared that judgment shall be forthwith entered up, and that execution shall be issued on such judg- ment in case default shall be made in payment of any of the said bills of exchange in manner aforesaid, according to the true intent and meaning of these presents. In Witness, etc. No. VIII. Deed of Pao-tnersliip in a Colliery. This indenture, made the day of , between John Cole, of , in the county of , Esq., of the one part, and John Church, of , in the county of , Gentleman, of the other part : Whereas, by an indenture of demise, bearing date the day next before the day of the date of these pi-esents, and made or expressed to be made between Sir Henry Hartley, therein described, of the one part, and the said John Cole and John Church, of the other part, the said Sir Henry Hartley hath, for the considerations therein 196 15G2 Appendix. mentioned, demised, leased, and to farm let, unto the said John Cule and John Church, their executors, administrators and assigns, all those mines, beds or delphs of coal, already opened or hereafter to be opened, lying and being within and under the lands of the said Sir Henry Hartley, situate in the manors, towns, parishes, fields, pre- cincts or territories of Singleton, Windgrave, etc., and any parishes, townships and places adjacent thereto, in the said county of , and in a plan to the said indenture annexed more particularly described or referred to, with all and singular the appurtenances, togetlier with full power, license and authority, to and for the said John Cole and John Church, their executors, administrators and assigns, to enter upon the said lands and premises, and to open, sink, dig, drive, work, and make any pits, shafts, adits and drains under the said lands (except as therein is excepted), for the purpose of searching and working the said mines, delphs and beds of coal, together with other power% authorities and privileges incidental to the working of collieries, but with certain reservations tlierein particularly mentioned ; to hold the said mines, beds or delphs of coal, with the liberties, powers and privileges thereinbefore demised, except the mines, beds or delphs of coal under the lands respectively called the manor of Winthrop and lands in Wilton, north of the road from to , and col- ored yellow, and the powers and privileges applicable to the said excepted lands, unto' the said John Cole and John Church, their exec- utors, administrators and assigns, as tenants in commouj from the day of the date of the said indenture and demise, for and during the term of forty-two years, determinable as therein mentioned; and to hold the said mines, beds and delphs of coal under tha lands respectively called the manor of Winthrop and lands in Wilton, col- ored yellow, together with all and singular the powers, liberties and privileges thereinbefore mentioned and contained, applicable to the said last-mentioned mines, unto the said John Cole and John Church, their executors, administrators and assigns, as tenants in common, from the day of the date of the said indenture, for and during the term of twenty years, determinable as therein mentioned, and also upon cer- tain events mentioned in the said indenture ; to hold the said last-men- tioned beds or delphs of coal, collieries, powers and privileges for and during the term of twenty-two years, to commence from the expira- tion of the said term of twenty years ; and the said John Cole and John Church have, by the said now reciting indenture, jointly and severally, for themselves, their heirs, executors and administrators. Pbecedents. 1563 covenauted, promised and declared with and to the said Sir Henry Hartley, his heirs and assigns, that they, the said John Cole and John Church, their executors, administrators and assigns, shall and will, within two calendar months after the execution of these presents, upon a site to be jointly fixed by the mineral agent of the said Sir Henry Hartley, his heirs or assigns, and the said John Cole and John Church, their executors, administrators and assigns, sink one pit or shaft in or upon the said land and premises described in the said plan, for working and getting the Blackgang bed of coal, with other necessary pumping and engine or other shafts, and con- tinue to work and pursue the said pits or shafts in an efficient and workmanlike manner until a colliery shall be established upon the said site, and shall and will, in an efficient and wormanlike manner as aforesaid, continue to work the said colliery, and shall and will, in the course of working the said shaft and colliery, proceed as speedily as possible to the said Blackgang bed of coal, and shall and will, by the ways and means aforesaid, raise and get such a supply of coal as shall, within five years after the execution of the said now reciting indenture, be sufficient to produce in and for each and every year up to that period, at least the fixed rent of 600Z. per annum ; and, fur- ther, that, in case the said pit or shafts and colliery, having been fairly and truly, and in a proper and workmanlike manner, carried to the said Blackgang bed of coal, it shall, thereupon, appear that the mines, beds or delphs of coal, which shall be found in the said pits or shafts, are incapable of being worked to the advantage of the said John Cole and John Church, their executors, administrators or assigns, they, the said John Cole and John Church, their executors, administrators or assigns, shall and will, immediately after such fail- ure shall hare been ascertained (the truth and reality of such fail- ure being, if necessary, the subject of arbitration as in the said indent- ure mentioned), sink one other working pit or shaft, and other simi- lar shafts as aforesaid within said premises, upon another site to be jointly fixed as aforesaid, and work a colliery therein ; and thereupon, all the stipulations and agreements thereinbefore contained, relative to the time and manner of woi-king the said first-mentioned pits or shafts and colliery, shall be in all respects applicable to the said second- mentioned pits or shafts and colliery. And whereas, by a certain other indenture, bearing even date with the said last-recited indenture of lease, and made between the said Sir Henry Hartley of the one part, and the said John Cole and John Church of the other part, the said 1564 Appendix. Sir Henry Hartley hath covenanted to grant to the said John Cole and John Church a lease or leases of the ironstone in and under the lands where the said beds of coal are leased, or certain parts thereof, if the same leases shall be required by the said John Cole and John Church, at such rents, for such terms, and under such conditions as in the said indenture contained and provided. And whereas the said John Cole and John Church have agreed to carry on the working of the said mines and collieries, or such of them as shall be found advan- tageous, in copartnership ; and also the said mines of ironstone, if at any time hereafter any lease shall be made to them pursuant to the said lastly recited indenture, in equal shares, for the term of forty-two years, to commence as from the day of the date of the said indenture of demise, upon the terms and conditions hereinafter mentioned and declared . Now this indenture witnesseth, that each of them, the said John Cole and John Church, for himself, his heirs, executors, and administrators, doth hereby covenant with the other of them, his executors and administrators, in manner following (that is to say) : 1. That all and singular the said mines, beds, or delphs of coal, col- lieries, hereditaments, and premises, hereinbefore respectively men- tioned or referred to, and to which the said John Cole and John Church, their executors, administrators, and assigns, are entitled as tenants in common under and by virtue of the said indenture of demise, for the said terms of forty-two years, twenty years, and twen- ty-two years, from the day of the date of the said indenture of demise; and the said mines of ironstone, if any such lease or leases shall be granted as aforesaid, shall thenceforth, dui-ing such, of the said respect- ive terms in which they are respectively comprised, but subject to the covenants, provisos, and agreements hereinafter contained, be worked, carried on, used, and enjoyed, by and under the direction and for the mutual benefit of the said John Cole and John Church, their executors, administrators, and assigns, as copartners in working the said mines and collieries, and in selling the coals, coke, and iron- stone to be gotten and made from the same, in equal shares, the exec- utors, administrators, or legatees of a deceased partner, or the assigns of a living partner, having power to become partners with the surviv- ing or continuing partner or partners, in manner and under the restrictions and conditions hereinafter mentioned. 2. That in case, during the first five years of the said, respective terms of forty-two years and twenty years, or during a shorter period, if a shorter period shall be found sufficient for that purpose, the said Pbecedents. 1565 Sir Henry Hartley shall bear, pay, and contribute one-third part of all the expenses which shall be incurred in carrying into execution the covenant hereinbefore mentioned to be contained in the said indent- ure of demise, so far as relates to opening, setting on foot, and estab- lishing the colliery on the Blackgang bed, comprised in or referred to and contemplated by the said covenant ; then, after the expiration of the said five years, or sooner if the said covenant shall be sooner car- ried into execution to the extent aforesaid, it shall be lawful for the said Sir Henry Hartley, provided he shall make his claim within one year after the expiration of the said five years at the latest, to claim to be admitted as a jpartner with the said John Oole and John Church in the said copartnership, and he shall accordingly be admitted as such partner, and shall thenceforth be interested in a one-third part or share of, and in the said partnership, the said John Cole and John Church, their executors, administrators, or assigns, being respectively interested each in one other third part or share thereof ; but in case the said Sir Henry Hartley shall not be minded, or claim to become such partner as aforesaid, then, upon his request in writing made to the said John Cole and John Church, their executors, administrators, or assigns, within one year after the expiration of the said five years, or sooner if the said covenant shall have been sooner, to the extent aforesaid, carried into execution (or without his request in case he shall not make such request within the first year after the said five years as aforesaid), a just and true account and valuation shall be taken and made (and, if necessary, by the arbitrators hereinafter appointed) of all and singular the moneys which shall have been expended by the said Sir Henry Hartley during the said five years, or such shorter period, in carrying the said covenant into execution as aforesaid, and the person or persons making such valuation shall have full power and discretion to take into their consideration the profit and loss which shall have accrued during the said five years, or such shorter period as aforesaid, in carrying the said covenant into execution, and to what extent the sums which they shall find to have been advanced by the said Sir Henry Hartley as aforesaid, shall be deenjed to have been increased or diminished with reference to such profit and loss ; and the amount which the person or persons making the said valua- tion shall find to be due to the said Sir Henry Hartley, shall be forth- with paid to him by the said John Cole and John Church, their exec- utors, administrators, and assigns. And it is hereby further agreed and declared, that in case the said Sir Henry Hartley shall die within 1566 Appendix. the said five years, or such shorter period as aforesaid, and his execu- tors or administrators shall, within six calendar months after his decease, give notice in writing to the said John Cole and John Church, their executors, administrators, or assigns, of their intention to con- tinue to share in the said expenses, then, all and singular the clauses, provisos, covenants, matters, and things in this article contained, shall, as far as circumstances permit, be applicable to, be made avail- able by, and obligatory upon the executors or administrators for the time being of the said Sir Henry Hartley. Provided that nothing herein contained shall be deemed to entitle the said Sir Henry Hart- ley to receive more than the sums actually advanced, with interest, at the rate of bl. per cent, from the time they shall respectively have been advanced. 3. That the said copartnership business shall be carried on under the style or firm of " The Singleton Coal Company." 4. That on the 1st day of December now next ensuing, the sum of 1,050L shall be paid into the bank of Messrs. , of , as and for the first installment of such capital as is requisite for the good and efficient working the said mines and collieries, and carrying on the said partnership business ; out of which, the sum of 500Z. shall beset apart, and left in the hands of the said Messrs. , as and for the standing cash capital, to be employed for the purposes aforesaid ; and such further installments of capital as shall be required for working the said collieries and mines, and partnership concerns, shall be con- tributed by the said John Cole and John Church in equal moieties ; or in case the said Sir Henry Hartley shall be minded to share in the expenses aforesaid, then by the said John Cole, John Church, and Sir Henry Hartley, in equal third parts or shares ; and in case after the expiration of the said five years the said Sir Henry Hartley shall elect to become a partner with the said John Cole and John Church, in manner hereinbefore mentioned, the capital which shall then have been contributed shall continue to be the capital of the said copart- nership, until the same or any part thereof shall by agreement in writing between or among the copartners for the time being, or a majority of them in value, be withdrawn from the said partnership concern ; but in case the said Sir Henry Hartley shall decline to enter into the said copartnership as hereinbefore mentioned, and shall elect to receive back the moneys which shall have been advanced by him for his share of the capital, upon an account and at a valuation to be taken and made in manner hereinbefore provided for, then the Precedents. 1567 amount of moneys which shall be received by him on the footing of such account and valuation as aforesaid, shall be replaced by the said John Cole and John Church, or other the partners for the time being, according to their respective shares in the said partnership concern ; and the moneys so replaced, together with the moneys which shall have been advanced by the said John Cole and John Church, their executors, administrators, or assigns, shall be the capital of the said copartnership, until the same or any part thereof shall by agreement, as hereinbefore mentioned, be withdrawn from the said partnership concern. 5. That the capital of the said copartnership shall at all times be continued in and employed solely for the purposes of the said coi)art- nership, and that, unless by special agreement in writing under the signatures of the said John Cole and John Church, or other the part- ners for the time being, or the majority of them, in value, no part of such capital shall be diminished or withdrawn from the said partner- ship concern, or employed by the said partners in or for any other trade or business, or use or purpose whatsoever. 6. That during the first five years of the said terms of forty-two years and twenty years, the standing cash capital to be employed -for the purpose aforesaid shall amount at least to the said sum of 500/., and in case the said cash capital shall at any time be reduced, by , means of payments on account of the said undertaking, below the said sum of 500/., such deficiency shall, within the space of one calen- dar month after the same shall have taken place, be supplied by the said John Cole and John Church, their executors, administrators, or assigns, in equal moieties ; or in case the said Sir Henry Hartley shall have agreed to share in the expenses aforesaid, then by the said John Cole and John Church, or their respective executors, adminis- tratoi's, or assigns, and the said Sir Henry Hartley, in equal third parts or shares. 7. That in case, after the expiration of the said, five years, any further sum or sums of money over and beyond the capital already con- tributed, shall in the judgment of the said John Cole and John Church, or other the partners for the time being, or the majority in value of them, be required for the purposes of the said copartnership, the same shall be advanced by all the copartners for the time being of the said copartnership, according to the shares and proportions in which they shall respectively be entitled to, or interested in, the said copartner- ship. 1568 Appendix. 8. That during the five years of the said terms of forty-two years and twenty years, all the gains and profits which shall arise from or be produced by the said collieries and premises, or joint concern, shall, as they arise and are received, be paid into the said banking- house of Messrs. , or into such other banking-house as shall from time to time be for that purpose appointed by the said John Cole and John Church, their executors or administrators, or by them and the said Sir Henry Hartley, as the case may be, to the intent that the same may go in the first place to keep up the standing cash capital of the said copartnership, and, subject thereto, be applied and dis- posed of as any gains and profits are hereafter disposable, which accrue after the said five years. 9. That after the expiration of the said five years, the gains and profits to arise from the said copartnership business shall, from time to time, except as any portions of the same shall be agreed to be drawn out as in the next article is mentioned, be used and employed in carrying on the said business for the benefit and advantage of the said copartnership, according to the respective shares of the said partners therein ; and that subject to any alterations which may be occasioned by the admission of the said Sir Henry Hartley into the said partnership, as hereinbefore mentioned, or by the assignment by him, or the said John Cole or John Church, of their respective shares in the said copartnership as hereinafter mentioned, the said John Cole and John Church shall be entitled to' the profits of the said copartnership, in equal moieties, and shall bear all losses happening in the course of the said copartnership business, in the same pro- portions. 10. That it shall be lawful for either of them, the said John Cole and John Church, or any other person, who shall be a partner under and by virtue of these presents, after the expiration of the said five years, to draw out of the stock of the said partnership, any such sum or sums of money for his own use, as from time to time shall be mu- tually agreed upon, by writing under their respective signatures ; so as the standing cash capital for the time being of the said partner- ship shall not in any manner or at any time be reduced below the said sum of oOOL, and so as credit for all and every the sum and sums of money to be taken out of the said capital stock by each of the said partners, respectively, shall be given by the said partners to the genei'al account of the said partnership in the meantime, and until the next annual account of the said partnership shall be adjusted and settled; Precedents. 1569 when tlie sums so taken or received, together with interest thereon, shall be charged against the party so taking or receiving the same, in manner hereinafter mentioned. (See ;jo,9;f, Article 18.) 11. That the rent and taxes payahle for and in respect of the said mines and collieries, and also all repairs which shall from time to time be done, or be necessary or required to be done for good man- agement, to the machinery, buildings, engines, roads, and other part- nership property, matters, and things used in and about the said mines, collieries, or other premises where the said partnership shall be carried on, and all outlay in works or other matters, the con- structing, carrying on, and executing whereof is made obligatory on the lessees of the said mines and collieries by virtue of the said indenture of demise, or which is necessaiy for the prosperous and effectual carrying on of the said partnership, or made obligatory on the partners for the time being of the said mines and collieries by virtue of any clause or proviso herein contained, and all expenses whatsoever incurred in carrying on the said partnership, including the expense of cultivating any farm which shall be used for the purpose of the said partnership, and also all losses by bad debts and all other losses, charges, damages, and other expenses which shall or may happen to or be paid, laid out, or expended by the said parties, or any of them, in and concerning the said partnership business, shall be borne and paid by and out of the said partnership effects, and the gains and profits thereof, and in case such profits shall not at the end of any one year during the continuance of this copartnership be sufficient to answer such payments, losses, damages, and expenses, then and in every such case the partners for the time being shall immediately advance and, pay each according to his share of the cap- ital, such sum or sums of money as may be required to make up such deficiency to the intent that the capital for the time being of the said partnership business may not be diminished by such losses, charges, damages, and expenses. 12. That all bonds, bills, notes, and securities whatsoever which shall, at any time or times during the said partnership, be made or taken for any mattei' or thing concerning the said partnership busi- ness, shall be made and taken in the name of the said partnership firm, and that all checks drawn upon the bankers of the said firm shall be signed by them or their duly authorized agent; provided that so long as the said agent shall be authorized to sign the said checks, it shall not be competent for either or any of the said partners for 197 1570 Appendix. the time being to sign the same, but the said agent shall alone have authority for that purpose. 13. Tliat no person who shall be a partner under and by virtue of these presents, shall or may lend or advance any sum or sums of money to any person or persons whomsoever, for or on account of the said Joint concern without the consent in writing of his copartner or a majority in value of the copartners. 14. That no jjerson who shall be a partner as a'foresaid, shall or will at any time, without the consent in writing of his copartner or a majority in value of the copartners first had and obtained, draw, accept, indorse, or negotiate any bill or bills of exchange, or any promissory note or notes of hand, or any other security or securities in the name or names, or on behalf of his copartner or copartners, or so as to make his copartner or copartners subject or liable* to the pay- ment of any sum or sums of money not in' the ordinary course of the said partnership business, nor do or willingly suffer to be done any act or thing whatsoever, whereby or by reason or means whereof the said joint concern, or the capital or joint stock, debt, and effects thereof, or any part thereof respectively, shall or may be incumbered, prejudiced, or affected. 15. That no person who shall be a partner as aforesaid shall, except with the consent of their copartners and the said Sir Henry Hartley, his heirs and assigns, embark in any other coal partnerships which shall use the Railway for the conveyance of their coals. 16. That all necessary books of account shall be provided at the expense of the said joint concern in which shall be written or entered a just, true, and particular account of all sums of money received and paid, and of all debts which shall be contracted, and of all other matters and things in anywise conducive to the manifesting the state and condition of the said copartnership, and the collieries, mines, and premises, and that the same books, together with all vouchers and writings relating to and concerning the said joint concern,- and also the lease and all other deeds relating to the said coj)artnership, shall be lodged and deposited for safe custody in the principal count- ing-house of the. said copartnership firm, or in such other place or places as shall be hereafter for that purpose agreed upon- by the said partners respectively, or a majority of them, for the time being, and shall at all times remain and be open and extant for the inspection of the said partners respectively, their executors and administrators. Precedekts. 1571 with full liberty for them, or any of them, to take extracts or copies therefrom. 17. That all clerks, book-keepers, managers, and superintendents to be employed in and about the said joint concern shall, from time to time, be appointed and removed by both or all the said partners, or the majority in value of them. 18. That on the 31st day of December now next ensuing, and every succeeding 31st day of December in every year, during the con- tinuance of the said partnership, a general 'account and rest in writ- ing shall be made and taken by the said partners of all such coals, coke, ironstone, and other matters as shall have been sold in the said trade or business, and of all stock, moneys, debts, and other things belonging, due, or owing to the said partnership, and of all such debts as shall be due or owing from or by the said partnership to any person or persons by reason of the said trade or business, and of all such other matters and things as are usually comprehended in annual accounts of the same nature, taken by coal-dealers and coal-miners, and ironstone workers, or necessary and proper in relation to the business and copartnership carried on by virtue of these presents, and a just value and appraisement shall be made by the said parties of all the particulars included in such account which are capable of being appraised, and the said general account or rest, valuation or appraise- ment shall, from time to time, be written in a book, which shall be kept at the counting-house where the said trade or business shall from time to time be carried on, and if the said Sir Henry Hartley shall be a partner in the said business, then a copy of the said book shall be made and kept at Singleton Hall, for the use of the said Sir Henry Hartley and his said copartners, and each of the said partners shall, within two calendar months after the yearly taking of the said accounts, respectively sign the accounts contained in the said books, and shall be bound and concluded by every such account respectively, unless; some manifest error shall be found therein, and signified by either or any of the said partners to the other or others of them, within one year from the date of such account, in which case, but not otherwise, such error shall be rectified. And on the making up of every such yearly account, all sums of money which the said partners, or any of them, may respectively have taken or received from the profits of the said concern, by virtue of the clause hereinbefore for that purpose contained (see ante, Article 10), together with interest on the said si^ms respectively, at 4Z. per cent, shall be charged against each partner 1572 Appendix. or partners; and the clear profits of the said trade, after such and all necessary deductions and allowances made thereout, shall be divided between the said partners according to their respective proportions of the capital of the said partnershipj and any partner who shall have received on account any more than such his ascertained share shall forthwith, within one calendar month after such yearly settlement of accounts, repay to the said banking account of the said partnership such excess of his receipts, with interest on the same in the meantime at the rate of 51. per cent? 19. That within the space of sis calendar months after the expira- tion or sooner determination of the said term of forty-two years, a just and true valuation shall be made and taken by the arbitrators herein- after appointed, of all and singular the coals, coke, ironstone, bricks, brick-earth, machinery, horses, cattle, goods, stock in trade, chattels, and efEects, then belonging to the said copartnership; and upon such valuation being taken, the said Sir Henry Hartley, his heirs or assigns, shall, according to the provision contained in the said indenture of demise, have the option of purchasing all or any such of the articles so valued, as shall consist of machinery or other articles and stock in trade, materials and effects used in and upon the said collieries or iron- works, or in carrying on the said trade, so as he or they shall give such notice in writing as is mentioned in the said indenture of demise of his or their desire to purchase the same ; and immediately after such valuation shall be made or taken as aforesaid, all and singular the said coals, machinery, and other efEects hereinbefore enumerated, shall be sold and delivered to the said Sir Henry Hartley, his executors and administrators, if he or they have elected to be the purchasers thereof; and if not, then the same shall be either by private sale or public auction, as the partners may determine, sold, and at the same time a general account in writing shall be taken of all the stock in trade, moneys, credits, and efEects of the said copartnership, including a particular account of the moneys to arise from the articles so sold as aforesaid; and also of all debts due or owing by the said partners to any person or persons for any matter or thing concerning the said joint trade or business, or relating thereto; and upon finishing the last-mentioned account, the partner who shall have advanced or lent any sum of money more than the other or others to the said copart- nership, shall be paid and satisfied such sum of money (if the same shall be then due), and all interest which may be due and owing to him from the copartnership or joint business in respect thereof, and Precedents. 1573 all other debts which shall be due or owing from or by the said copartnership and joint trade, shall also be satisfied and discharged; and then the residue of the effects, together with the debts and moneys due to the said partnership, shall be parted and divided between the said partners in proportion to their respective shares and interests therein. And eacli of the said partners shall give unto the other or others of them a bond, in a sufficient penalty, for the payment of his proportion of any debts owing by the said part- nership; and well and effectually assign to ilid empower the other of them, his executors and administrators, to recover and receive all such credits and sums of money as shall be due and owing to him after such partition and division; and do and execute all such other acts and things as shall be necessary, in order to vest the sole right and property therein in the partner to whom the same shall then belong. 20. That in case either of the said partners, or any other person who, by virtue of these presents, shall be a partner in the said joint concern, shall during the said terms be desirous of selling his share of and in the said collieries and premises, then the continuing part- ner or partners shall have the option of purchasing such share in preference to any other person, at or for such price as shall be mutually agreed upon, or in case the said parties shall not agree as to such price, then, at a valuation to be made as hereinafter provided ; and if such option is not accepted, then a sale of the said share shall take place to any other person in manner hereinafter in that behalf pro- vided. 21. That in case either of the said partners, or any other person who shall be a partner by virtue of these presents, shall die during the continuance of this partnership, then tlie executor or administra- tor, or executors or administrators of the partner so dying, or one of his legatees, under the circumstances provided for by the next article, shall have the option of succeeding to the share or shares of such deceased partner in the said partnership business, estate and effects, if he or they shall think proper, and shall give notice of such his, her, or their intention, within twelve calendar months after the decease of such partner, to the surviving partner or partners; and thereupon, immediately after such notice, the executor or administra- tor, or executors or administrators, or legatee, under such circum- stances as aforesaid, of such deceased partner, shall execute all such acts and deeds as shall be requisite to subject him, her, or them respectively to the same debts and demands, and to the same condi- 1574 Appendix. tions and agreements as the party so dying was subject or liable to in respect or by reason of the said partnership; and thereupon shall have full power and authority to share as a partner or partners in the conduct, management, profits, and privileges, and shall be liable to share the losses of the said partnership concern, in proportion to the value of the share or shares so accruing to him, her, or them respect- ively. 22. That if any i^artner shall die, having by his will devised or bequeathed all his share^d interest in the said partnership to any person or persons, whether in trust or beneficially, other than his exec- utors and administrators, and such executors and administrators shall not have within the time limited by the last article elected to become partners and duly accepted the partnership, but shall within such period, having duly taken administration of the said will, execixte a proper transfer, assignment and release to any one, but not more, of such legatees of all such partnership share and interest of such testator, and signify the same to the surviving partner or partners, and such legatee shall, in proof thereof, produce the said assignment to the said surviving partners duly perfected, and request within such period to be admitted as partner, then such legatee shall, within such period, but not afterward, be entitled to be admitted in the same manner and sub- ject to the same terms and conditions as if he were claiming to be admitted as the executor or administrator of such testator. 23. That in case either of the said partners, or any other person who shall be a partner by virtue of these presents, shall be desirous to sell his entire share (but not any part thereof), as aforesaid, and shall not agree with the continuing partner or partners, as to the price thereof, within six months after giving them notice of his intention to sell, or in case either of the said partners, or any other person, as aforesaid, shall die during the continuance of the said partnership, and his executors, or administrators, or legatee as aforesaid, shall decline or neglect to avail themselves of the option given to them by the articles hereinbefore contained, then the continuing or surviving part- ner or partners shall, within the space of six calendar months next thereafter, settle and adjust with the retiring partner, or the repre- sentatives of the deceased partners, all accounts, matters, and things relating to the said partnership, and the amount of the share of the retiring or deceased partner in the credits and effects of the said part- nership, shall, in case the parties disagree respecting the same, be ascertained by an estimate and valuation to be made by arbitrators to Precedents. 1575 be chosen as hereinafter mentioned; and thereupon the continuing or surviving partner or partners, if he or they shall think proper, and shall declare their intention in writing to that effect within three calendar months after the award shall have been made by the said arbitrators in that behalf, and if no such intention be declared within such period, then any other person (but not more than one) may become the purchaser of the said share at the price or value to be ascertained as aforesaid, or at any price or value that can be gotten for the same; and such person shall enter into a bond in a sufficient penalty for indemnifying the estate" and effects of the retiring or deceased partner against all debts and demands due or owing by or from the* said partnership on having a proper assignment or assurance, or assignments or assurances, executed for vesting in the continuing or surviving partner or partners, together with the new partner, if any such there be, and enabling such continuing or surviving partner or partners, and new partner (if any), to collect and get in all credits and effects due, owing, and belonging to the said partnership. 34. That upon the admission of the said Sir Henry Hartley or any other person or persons, whether by assignment or succession into the said copartnership in manner hereinbefore mentioned, all and every the clauses, covenants, matters and things hereinbefore contained, shall be applicable as far as circumstances will permit, to the party or parties who shall so be admitted into partnership, and he or they shall, immediately on entering into the said partnership, sign and execute any such deed or deeds of conformity to these presents, as by the legal advisers of the continuing or surviving partner or partners shall be reasonably required. 25. That in all matters and things relating to the said copartner- ship, except otherwise provided for by these presents, the voice and determination of the major part in value of the partners for the time being, shall be conclusively binding on the other or others of the said pai-tners unless the other or others of them shall be desirous of sub- mitting the matters and things in question to the determination of arbitrators, to be chosen as hereinafter mentioned. 26. That in case the said Sir Henry Hartley shall be interested in having an account and valuation taken and made of moneys to be repaid to him at the expiration of five years as hereinbefore mentioned and provided for, and shall demand an arbitration in respect of such account or valuation, he shall be entitled to such arbitration; and thereupon one arbitrator shall be chosen by the said Sir Henry Hart- 1576 Appendix. ley, and the other by the said John Cole and John Church, or the majority in value of the partners for the time being, and such arbi-. trators shall choose a tliird arbitrator, and the tliree arbitrators so chosen shall have the same powers and authorities (allowing for differ- ence of circumstances) as are next hereinafter provided for, in regard to arbitration between persons who shall be partners by virtue of these presents. 37. That as well for settling and adjusting the several matters and things hereinbefore made the subject of arbitration, as for .settling and adjusting any differences of controversies which may arise either during the continuance of the said partnership, or after the expira- tion thereof, between the said John Cole, John Church,* and Sir Henry Hartley, or any of them, their or any of their executors, administrators or assigns, or any persons who, by virtue of these pres- ents, shall become jjartners in the said mines and collieries, touching the dealings and transactions, profits or losses of the said partnership, or the taking the accounts thereof, or touching any valuation to be made, or any sum or sums of money to be paid by virtue of these presents, or the admission of any person or persons into the said pai't- nership, or touching the construction of any covenant, article, pro- viso, or clause hereinbefore contained, or any other matter or thing relating to the said partnership, then such difEerences and controver- sies (in case the said pai'ties cannot determine the same by agreement between or among themselves), and also all other matters and things hereinbefore made the subject of arbitration, shall, from" time to time, and as often as occasion shall require, be referred to the arbitration of three indifEerent persons to be appointed as arbitrators in manner fol- lowing (that is to say), in case there shall be two parties only who shall be partners in the said partnership, then one arbitrator shall be appointed by one of such parties, and the other arbitrator by the other of such parties, and the arbitrators so appointed shall forthwith, before they proceed to the business of the said arbitration, choose a third person to act with them as arbitrator, .and in case they shall differ as to ihe choice of such third person, then such third person shall be chosen by lot out of two other persons to be named by the said partners; and in case there shall be three parties who shall be parties in the said partnership, then one arbitrator shall be appointed by each of such parties; and for the purposes of such arbitration, the executors, administrators and assigns of a deceased partner shall be considered as one party only, and in case any or either of the said partners, or PfiECEDENTS. * 1577 their executors, administrators or assigns shall, upon being requested, refuse or neglect forthwith to appoint an arbitrator, then the other partners or partner, or their executors or administrators, shall appoint another arbitrator, and the arbitrators so appointed (if only two in number) shall choose a thii-d person to act with them as arbitrator; and in case any partner shall die after any matter shall have been agreed to be referred to arbitration, but before any arbitrator shall have been chosen by him as aforesaid, then the executors or administrators of the partner so dying shall hare the same power of choosing an arbi- trator as the partner represented by him would have had by virtue of these presents. And it is hereby agreed that the arbitrators so appointed as aforesaid, or any two of them, shall award, adjudge, and determine concerning such differences and controversies ; and each of the said partners shall and will stand to, obey, fulfill, perform, and keep the award and determination of such arbitrators or any two of them, and pay such costs as they shall award and direct, so as such award of and concerning the premises be made in writing under the hands and seals of such arbitrators, or any two of them, ready to be delivered to the said parties hereto, their executors, administrators, or assigns, within thirty days next after the time fixed by the said arbitrators for ma,king their award therein; and for the better enforc- ing the performance and observance of every such award, the same shall from time to time be made a rule of the Court of Queen's Bench, according to the direction of the statute, in that case made and pi'ovided. 28. Provided, always, and these presents are upon this express con- dition, that if any person who, by virtue of these presents, shall be a partner in the said joint concern, shall refuse to keep proper accounts, or shall give cheques not authorized as hereinbefore mentioned, or shall employ the moneys of the said partnership for other than part- nership purposes without such consent as aforesaid, or shall, without the like consent, draw, accept, indorse, or negotiate any bill of ex- change or promissory note, or any other security in the name or names of his copartners, so as to make him or them liable for pay- ment of any sum or sums of money not in the ordinary course of the said partnership business, or shall do or suffer any act or thing whereby the said joint concern shall be incumbered, prejudiced, or affected, or shall, except with such consent as aforesaid, embark in any other coal partnership which shall use the railway for the conveyance of their coals, or shall sell, or in any manner attempt to 198 1578 • Appendix. sell, his share or shares in the said joint concern without giving the continuing partner or partners an option to purchase the same as aforesaid, or shall become bankrupt, insolvent, or outlawed, or suffer his body to be taken in execution for more than one calendar month, or shall do, permit, or suffer any act, deed, matter, or thing whatso- ever, whereby the said partnership moneys or effects may be seized, attached, or taken in execution, then and in every of such cases the other partner or j)artners shall be at liberty to dissolve the said part- nership as to the partner so offending, by serving the said offending partner personally with, or leaving at his usual place of abode, or, if that is unknown, then his last place of abode, or with any person acting as his attorney or agent, a writing signed by such other part- ner or partners, or the majority of them in value, declaring the partnership to be dissolved, in manner and to the extent aforesaid; and thereupon the share or shares of the said offending partner shall be valued and sold, and the said other partner or partners shall have the option of purchasing the same, in the same manner as herein- before is provided for in the case of a partner desiring to sell his share or shares of and in the said copartnership collieries and prem- ises. And it is hereby agreed that this article shall be without preju- dice to any other remedies which may be had against the said offending jDartner by the said other partner or partners for breach of any of the covenants hereinbefore contained. In witness, etc. No IX. Assignment of a Deceased Partner's Stock, iy his Executors, to the surviving Partners. This indenture, made the day of , 1832, between M, of, etc., and N", of, etc., of the one part ; and A & B, of, etc., of the other part: Whereas, by an indenture bearing date, etc., and made between the said A of the first part, the said B of the second part, and (J, therein described, of the third part, the said several parties thereto agreed to become partners in the trade of , for the term of years: And whereas, in pursuance of the said indenture, the said A, B and for some years carried on the business of , in partner- ship, at : And whereas the said C duly made and published his last will and testament in writing, bearing date, etc., and he thereby Precedents. 1579 appointed the said M and N executors thereof: And whereas the said C died on the day of, etc., and soon after his decease tlie said M and N duly proved his said will in the Court of : And whereas, in pursuance of a power or direction for that purpose contained in the said recited indenture, the accounts of the said partnership have been duly settled and stated up to the day of the death of the said 0, and after a just valuation taken of all the stock in trade and fixtures of the said partnership, and also of the credits and ready money thereof, and after payment of the debts of,the said partnership, the share of the said C in the clear surplus of the capital stock of the said partnershij) hath been found to amount in value to the sum of £ : And whereas the said M & N", as executors of the said C, have agreed to accept the said sum of £ , in full of all further claims or demands of them, the said executors, upon or out of the said partnership stock : Now, this indenture witnesseth, that in pur- suance of the said agreement, and in consideration of the sum of £ of lawful English money to them, the said M & N, or one of them, in hand well and truly paid by them, the said A & B, immedi- ately before the sealing and delivery of these presents, the receipt of which said sum of £ they, the said M & N, do, and each of them doth, hereby acknowledge, and of and from the same and every part thereof do, and each of them doth, acquit, release, and discharge, as well them, the said A & B, their executors and administrators respectively, as also the said joint stock of the said late copartner- ship, forever by these presents ; they, the said M & N, have, and each of them hath, bargained, sold, assigned, transferred, and set over, and by these presents do, and each of them doth, bargain, sell, assign, transfer, and set over unto the said A & B, their executors, administrators, and assigns, all and every the part and parts, share or shares whatsoever, late of him, the said 0, of and in all and every the stock, goods, moneys, credits, effects, and things of the said partnership, and all other the right, title, and interest what- soever belonging or accruing to the estate late of him the said 0, by virtue of his being a copartner with them the said A and B as afore- said ; and all the right, interest, property, benefit, advantage, claim, and demand whatsoever, both at law and in equity, of them the said M and N, or either of^them, of, in, to, or out of the said stock and primises hereby assigned or intended so to be, and every part and parcel thereof ; to have, hold, receive, take, and enjoy the said prem- ises unto the said A and B, their executors, administrators, and 1580 AppEifDiX. assigns. And for the better and more effectually enabling them the said A and B to have and receive all and singular the said hereby assigned premises to and for their own use and benefit, they, the said M and N, have, and each of them hath, and by these presents do, and each of them doth, make, constitute, and appoint them, the said A and B, their executors, administrators, and assigns, the true and lawful attorney or attorneys, jointly and separately, irrevocable, of them the said M and N, to ask, demand, sue for, recover and re- ceive to and for their owji proper use and benefit, all and singular the said hereby assigned goods, moneys, stock, credits, effects, and premises, of and from all and every person and i^ersons whomsoever, who are or shall be liable to answer and pay the same ; and, in case of non-payment thereof, or of any part thereof, then at the charge of them, the said A andB, and in their own names, and in the names of them, the said M and N, or either of them, to bring any action or suit, either at law or equity, for the recovery thereof, and the same to prosecute to effect, and, upon receipt thereof, or of any part thereof, to give proper and sufficient discharges for the same, and finally to make, do, and execute all and every such further and other lawful acts, deeds, and things in the premises, as fully and effectually as the said M and N might or could do if personally present ; provided al- ways, that they, the said A and B, their executors, administrators, and assigns, shall and do at all times hereafter save harmless and keep indemnified them the said M and N", their executors and administra- tors, of, from, and against all costs, charges and damages, which they, or either or any of them, shall or may pay or sustain by reason of their, either or any of their names being made use of in any action or suit to be brought or commenced by virtue of the power hereby given. And they, the said M and N, for themselves, their executors and administrators, do hereby covenant, promise, and agree with and to the said A and B, their executors, administrators, and assigns, that they, the said M and N, have not nor hath either of them made, done, committed, or suffered any act, matter, or thing whatsoever, whereby or by means whereof the said hereby assigned premises, or any parb thereof, are, is, shall, or may be in anywise prejudiced, re- leased, discharged, or incumbered; nor shall or will at any time hereafter do any act or thing whatsoever whereby to release or dis- charge all or any the said hereby assigned premises, or any part thereof, or the power or authority hereby given for recovering the same, or any action or suit to be thereon brought for recovering Pbeoedents. 1581 thereof, without the consent of them the said A and B, their execu- tors, administrators, or assigns, first had in writing for that purpose ; and also that they, the said M and 'N, and all other persons lawfnlly claiming any right or interest of, in, or to the said hereby assigned premises, or any part thereof, by, from, or under them, or either of them, or by, from, or under the said 0, shall and will at any time, at the request and at the proper costs of the said A and B, or either of them, their or either of their executors or administrators, make, do, and execute all such further or other lawful and reasonable acts, for the further, better, and more perfectly assigning all and singular the said hereby assigned premises, unto them, the said A and B, their executors, administrators, and assigns, as by them or any of them, or their or any of their counsel in the law, shall be reasonably advised or required ; And further, that in case, within the space of months now next ensuing, it shall be proved, or made plainly appear, that he, the said C, hath contracted any debt or debts on account of his said late copartnership with them, the said A and B, with any person or persons whomsoever, and that such debt or debts is or are now justly due and owing from the said C to such person or persons on account of the late joint trade, and the same shall become charged therewith ; then and in such case, they, the said M and N, their executors and administrators, shall and will, out of the estate of the said C, pay and satisfy all and every such debt or debts so now due as aforesaid, or shall and will save harmless and keep indemnified them, the said A and B, their executors and administrators, of and from payment thereof. And this indenture further witnesseth, that, for the con- siderations and in pursuance of the agreement aforesaid, they, the said M and N", do hereby for themselves, and for their respective execntors and administrators, and for all other the representatives of the said C, remise, release, and forever quitclaim unto them, the said A and B, their executors and administrators, all and every sums and sum of money now due to the said late joint trade, and all and all man- ner of actions, suits, claims, and demands whatsoever, both at law and in equity, which they, either, or any of them, can or may from hence- forth claim, challenge, or demand against them, the said A and B, or either of them, theii* or either of their executors or administrators, for or on account of any breach or non -performance, of any covenant or agreement, or any other act, matter, or thing whatsoever done or committed, or which on their part, by virtue of the said indenture of copartnership, or otherwise, are or were by them covenanted or 1582 Appendix. agreed to be paid, done, and performed ; and they, the said A and B, in consideration of the release hereinbefore made and given to them as aforesaid, and also in pursuance of the said agreement, do hereby for themselves, and for their respective executors and administrators, remise, release, and. forever quitclaim, unto them, the said M and N, and all and every other the representatives of the said C, all and every sum and sums of money, and all and all manner of actions, suits, claims, and demands whatsoever, both at law and in equity, which they, either or any of them can or may have, claim, challenge, or demand against the estate late of the said C, or them, the said M and "N, as executors thereof, for or on account of any breach or cove- nant, or non-performance of any agreement, or any other act, matter, or thing whatsoever by him or them done or committed touching or relating to the before-mentioned copartnership, or which, by the said indentures of copartnership, or otherwise, are or were by him, the said C, thereby covenanted or agreed to be paid, done, and performed, save and except such particular debt or debts hereinbefore specially referred to, as may under certain contingencies, and within the space of months, become payable by the said M and N, on the condi- tions and in manner aforesaid. In witness, etc. No. X. Deed of Partnership between two Persons. {General form.) This indenture, made the day of , between A B, of, etc. , of the one part, and D, of, etc., of the other part, Witnesseth, that in consideration of the mutual trust and confidence 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: 1. That they, the said A B and D, will be partners in the busi- ness of from the day of ,' for the term of fourteen years thence ensuing. 2. That if, nevertheless, either of the said partners shall be desirous to determine and dissolve the said partnership at the end of seven ' Or if so intended, " from the day of the date of these presents." Pbeoedents. 1583 years from the said day of ,' 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 upon the expira- tion of the said seven years. 3. That if either of the said partners shall be gviilty 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 part- nership 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 remedies of the respective partners, for the breach or non-ob- servance of all or any of the covenants and agreements contained in these presents at any time or times before the determination of the said partnership. 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. 4. That the firm and style of the said partnership shall be . 0. That the business of the said partnership shall be carried on ' If it is intended that there should As lunacy does not per se work a dis- be power of dissolution upon notice at solution, this clause would in a certain the will of either party for the clause degree provide for the case of a partner in the text substitute the following: turning lunatic by enabling the other " That if nevertheless either of the partner to dissolve, but as six months' said partners shall be desirous to deter- notice would be necessary under this mine and dissolve the said partnership clause, a special clause for this purpose at any time before the expiration of the may be inserted, at least where there said term of fourteen years, and of such are several partners. A doubt may have his desire shall give not less than six formerly existed whether a notice to calendar months' previous notice in dissolve being served on a lunatic was writing to the other of them, or shall valid, but this doubt has been set at leave such notice at the place where the rest by the very recent- case of Robert- said business shall for the time be car- son v. Lockie, 10 Jur. 533, in which the ried on, then and in such case the said Vice-Chancellor of England, Sir L. partnership shall cease and determine Shadwell, held tliat, where partners immediately upon the expiration of the agreed that their partnership should be said six calendar months, or at such dissolved on notice, the notice was future day or time as shall be named in good, though the partner on whom it the said notice." wtis served was lunatic at the time. 1584 Appendix. at , or at such other place or places as the said partners shall hereafter determine. 6. 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 therefrom (including the premiums to be paid for any apprentice to be taken by either of the said partners) shall (subject as is hereinafter mentioned) be employed in the said business, and the said A B and 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. 7. 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 cap- ital 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.' ' When tlie capital is not advanced in the said business by the said A B and C equal proportions, but, for example, in D in the following proportions, namely, the proportion of two-thirds by A, and two-thirds by the said A B, and the re- one-third by B, for the clause in the maining one-third part thereof by the text substitute the following : said C D, out of which sum of £ , " That the capital of the said partner- the sum of £ shall be forthwith ship shall consist of the sum of £ paid to the said A B, as and for the price to be brought into the said business by or purchase-money of the stock in trade the said A B and C D in the following pro- and fixtures heretofore used by him in portions, namely, two-thirds by the said his said trade or business of a , and A B and the remaining one-third part which stock in trade and fixtures have thereof by the said C D, and the said been purchased by the said partnership partners shall be entitled to and inter- at the price aforesaid, and the said part- ested in the said capital and so much of ners shall be entitled to and interested the profits or produce thereof as shall in the said capital and the profits remain after all payments hereinafter thereof, stock in trade and fixtures, in directed to be made thereout shall have the proportions aforesaid." been made in the following proportions, ' Sometimes the house in which the namely, the said A B in two-third parts, business is carried on is the private and the said C D in the remaining one- property of one of the partners, and third part thereof." It frequently hap- rent is then paid to such partner for his pens that the stoc'i in trade, etc., is house. In this case, insert the follow- purchased of one of the partners. In ing clause : — " That the said A B, (or C such case substitute the following D as the' case may be), shall be allowed clause: "That the capital of the said by the said partnership, the clear year- partnership shall consist of the sum of ly sum of £ by way of rent for the £ to be advanced and brought into said messuage in street aforesaid. PfiECBDEN'TS. 1585 8. That the said A B shall be at liberty from time to tiriie to draw out of the moneys of the said partnership any sum or sums not exceeding the sum of £ per month for his own separate use. And the said 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 sha,ll not have amounted to the sum of £ (the total amount drawn out by 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 T), shall pay 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. 9. 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. 10. That neither of them, the said A B and 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 partnei-ship and upon account thereof,'' and that neither of them will, without the consent in writing. of the other, employ any of the moneys or eilects of the said partnership, or engage the credit thereof except upon the account and for the benefit of the said partnership. so long as the said business shall be proportionally for any less period dur- carried on therein, but that the said ing the time of such occupation, but the messuage shall continue the sole prop- said A B (or C D) shall not be required erty of the said A B (or C D) subject to pay any proportion of the taxes in only to be used for the purpose of the respect of his said occupation, and shall said partnership business." And if so be at liberty to quit and leave the said intended, " That the said A B (or C premises if he shall think proper, with- D) shall be at liberty if he shall think out any previous notice." proper to use and occupy all such part ' With respect to this and some of the of the said messuage as is not used in subsequent clauses, the remark of Mr. or wanted for the purposes of the said Jarman, already cited, may be repeated, partnership business for the residence that " provisions wliicli are almost of of himself and his family without pay- course cannot be too short." ing any rent or taxes for the same." Or '■'This covenant is frequently made to if so intended, " At the yearly rent of prohibit only the business of the part- £ to be paid by him the said part- nersbip. nership in equal half-yearly portions or 199 1586 Appbkdix. 11. That neither of them, the said A B and C D, will take any apprentice, or hire or dismiss any clerk, traveler, workman, or servant in the business of the said partnership, without the consent of the other of them.' 12. 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 D, and that if either of them shall give any such security (except in the cases before mentioned) which shall not be executed and signed by the other of them, the same shall be deemed to be given on the separate account of the partner so ginng 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. 13. 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 partnership the whole of the money so borrowed ; and the part- ner so compounding 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 authority, shall give any receipt for. 14. 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 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 ' If so intended add : — " And that which case it might be convenient-to any premium or sum of money received place thia clause after the clauses re- in respect of any apprentice shall be specting the capital or profits of the considered part of the profits of the business. See Precedent 3. business of the said partnership," in Precedents. 1587 remain the separate property of the partner who shall have so bought, ordered, or contracted for the same. 15. That neither of them, the said A B and D, will without the previous consent in writing of the other enter into any bond or become 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, mat- ter, or thing whereby the capital or property of the said partnership may be seized, attached, extended, or taken in execution. 16. 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. 17. That boolfs of accountshall be kept by the said partners and pro- per 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, specialties, assurances, securities, letters and other writings belonging to the said partnership, shall be kept at the count- ing-house in , aforesaid, or in such other place where the bus- iness 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. 18. 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, mon- eys, credits and things belonging, due or owing to the said partner- ship, 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 an^ valuation or appraisement, or a sufficient abstract thereof, referring to the particulars in the ordinary books of this partnership, shall be entered in two books and be signed in each such book by each of them, the said A B and D, within three calendar months after the time appointed for taking thereof respectively, and that, after ' " This prohibition is often found refusing to become bail or surety." 7 useful in affording partners a reason for Jarm. Conv. 137, n. d, 3d ed. 1588 Appendix. such signature, each of tlie 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 discovered 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. 19. That, within the space of six calendar months after the expira- tion or determination of the said partnership, a full, true and partic- iilar account, in writing, shall be made and taken by the said A B and C D of all the stock in trade, moneys, credits, efl'ects 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 partnership shall be divided between the said A B and C D in equal shares,' and such instruments in writing shall be executed by the said A B and C D respectively for getting in the outstanding credits and effects of the said partnership, and for indemnifying each other concerning 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 partner- ship, as are usual in cases of the like nature, such instruments respect- ively 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 practicing in the court of chancery who will consent to give an opinion therein. 30. 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 by such deceased 'If the shares are not equal, substitute "in the proportions hereinbefore mentioned. " Precedents, 1589 partner, or, if the same shall happen after the day hereinbefore appointed 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 of 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 [ of, etc., of the other part, witnesseth, that each of them, the said A B and D, doth for himself, his heirs, executors, and administra- 1600 Appendix. tors, covenant with the other of them, his executors and administra- tors, by these presents in manner following (that is to say) : 1. That the said A B and C D will be partners in the business of attorneys and solicitors for the term of seven years, to be computed from the day of 2. That the firm of the said partnership shall be 3. That the business of the said partnership shall be carried on at the offices in where the same is now carried on, or in such other place as the said partners may agree upon. 4. That the capital of the said partiiership shall consist of the sum of $ to be brought in by the said A B and C D in the shares fol- lowing, namely, two-thirds thereof by the said A B, and the remain- ing one-third thereof by the said D. And on the day of when the said C D will become entitled to an increased share of the busi- ness, he shall pay the sum of £ to the said A B, and thereupon be considered to have brought in shares in this capital. 5. That the rent of the offices in which the business of the said partnership shall be carried on, and all repairs and taxes, the salaries of all clerks, and all necessary expenses which shall be incurred in the business of the said partnership, and all debts due and to become due upon or on account of the same, and all losses which may happen in the business thereof and interest of all moneys (if any) to be bor- rowed by the said partnership, and on the shares of the said partners respectively in the said capital, after the rate of 5?. per cent per annum (which is hereby agreed to be allowed to them respectively,) shall be paid out of the gains, and profits, and capital of the said partnership, or in case the same shall be deficient, then by the said partners, their executors or administrators, according to their re- spective shares in the capital and profits of the said partnership. 6. That the said capital and the gains and profits arising from the same shall be employed in the business of the said partnership, and the said partners shall be entitled thereto in the shares following (that is to say), during the first years of the said partnership the said A B to shares thereof, and the said C D to the remaining shares thereof, and during the last years of the said partnership, the said A B to shares thereof, and the said C D to the remain- ing shares thereof. 7. That when and so often as either of the said partners shall hold any official situation, either of them will assist in the performance of the business thereof, and the salary and other j^rofits to be received in Precedents. 1601 respect thereof shall be considered part of the profits arising from the business of the said partnership. 8. That neither of the said partners will take any articled clerk, or hire or keep any clerk or servant in the business of the said partner- ship against the consent of the other of them, and that any premium or sum of money received in respect of any articled clerk shall be considered part of the profits of the business of the said partnership. 9. That in every calendar month during the said partnership on the day of in every such month, by, way of subsistence money, the said partners may take out and receive the sums of money here- inafter mentioned (that is to say), the said A B the sum of £ and the said C D during the first three years of the said partnership the sum of £ , and during the last four years thereof the sum of £ , and the said sums respectively at the time of taking out the same shall be entered in the cash-book belonging to the said partnership, and carried to the debits of the respective accounts of the said partners in part of their shares of the profits of the said business ; 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 £ (the total amount drawn out by both partners dur- ing the year), then and in such case immediately after such general annual account shal'l 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. 10. That if either of the said partners shall bring into the business any sum or sums of money beyond his share of the capital -with the consent of the other partner, the same shall be entered in the cash book of the said partnership as a debt due from the said partnership to the partner lending the same, and shall be a charge upon the part- nership estate and carry interest after the rate of bl. per cent per annum, which shall be paid by half-yearly payments before any di- vision of profits shall be made. And if the party lending any such money shall neglect to take back the same upon receiving six calendar months' previous notice in writing for that purpose from the other partner, interest thereon shall cease from the expiration of such notice. 11. That when any sum or sums of money shall be received from any client or clients in respect of any debt or debts, part of which 201 1603 Appendix. shall be owing to the said A B for business done by him prior to the commencement of the said partnership, the same shall be applied in payment of the part thereof due to the said A B in preference to any part of the debt due to the said partnership. [Insert here Article 9, from precedent 1.] 13. That neither of the said partners will directly or indirectly engage in any business except upon the account of the said partner- ship without the consent in writing of the other. 14. That neither of the said partners 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, or act as an attorney at law for or on behalf of any person whatsoever, or undertake any profes- sional business whatsoevei', except upon the account and for the ben- efit of the said partnership. 15. That neither of the said partners will lend any moneys or do any business on account of the said partnership to or for any person or persons whom the other shall have previously forbidden him (by notice in writing) to trust, or borrow any money on account of the said partnership, or compound any debt or debts due to the said partnership. [Insert here Articles 15, 16, from Precedent I.] 18. That all proper books of account shall be kept by the said part- ners, which, with all bills, deeds, letters, and other writings which shall from time to time concern the said partnership, shall be kept at the offices of the said partnership, and the said partners shall have free access at all times to examine and copy out or take extracts from the same. 19. That on the day of next and every succeeding day of during the said partnership, a general account in writing shall be made of all such business as shall have been transacted by the said partners, and of all the moneys, debts, and effects belonging to, and all the debts due irom the said partnership, and of all such other things as are usually comprehended in annual accounts of the like nature, and that a just valuation shall be made of the particulars included in such account which are susceptible of valuation, and that a fair copy of such general account and valuation shall be entered in two books and signed in each such book by both of them, the said A B and C D, within three calendar months of the approval of each such account, and after such signatures each of the said partners shall take one of the said books. And the said partners shall be bound by such Precedents. 1603 account and yaluation signed as aforesaid, unless some manifest error shall be found therein and signified by either of the said part- ner to the other within twelve calendar months then next, in which case such error shall be rectified. And as soon after the finishing of every such account respectively as the same can be conveniently paid, the gains and profits which shall have arisen by the business of the said partnei;ship, during the time to which such accounts respectively shall extend, shall be divided between the said partners in the propor- tions hereinbefore mentioned. 20. That within six calendar months after the expiration of the said term of seven years a full account in writing shall be made and settled of all the moneys, debts and effects belonging to, and all the debts due from the said partnership, and that a joint valuation shall be made of the particulars included in such amount which require and are susceptible of valuation, and tliereupon the said partners shall forthwith pay the debts owing by the said partnership, and the balance of the said partnership capital and effects, and the profits thereof, or other the matters to be included in such general account, shall be divided between the said partners, their respective executors, administrators or assigns, in the proportions hereinbefore mentioned. And after making such division, such instruments in writing shall be executed by the said partners respectively for getting in the debts out- standing, and for indemnifying each other concerning the premises, and for vesting the whole property in the said respectiye shares of, and in the debts and effects in the parties to whom the same respect- ively 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. 21. That in case either of the said partners shall depart this life during the said partnership,' the surviving partner shall be entitled to the share of him so dying of and in the said business, and the gains and profits thereof accruing, after the yearly account or rest, as here- inafter mentioned; and the executors or administrators of the deceased partner shall be entitled, if such death shall happen before the day hereinbefore appointed for the first yearly general account, or rest and valuation, to the share of the capital belonging to such deceased part- ner as aforesaid, or if the same shall happen after the day appointed ' A person paying a premium on his consequence of the absence of stipula- introduction as a partner in a profes- tion respecting the good-will in the aional business should keep in view the event of his death. 1604 Appendix. for the first yearly account or rest, to such sum of money as the share of the deceased partner in the capital, debts, and effects of the said partnership shall, upon the balance of the last yearly general account, rest and valuation as aforesaid, amount to, or such share would have amounted to, if such yearly account had been taken on the day of immediately preceding such death; and also to an allowance after the rate of 5Z. per cent per annum upon the capital or balance in favor of such deceased partner, as the case may happen, in lieu of the profits from the commencement of the said partnership, or from the last general account or rest and valuation (as the case may happen), to the time of such death; such allowance in lieu of profits to be paid by the surviving partner, his heirs, executors, or administrators on demand; and such other sum of money as the executors or adminis- trators shall become entitled to as aforesaid, with interest for the same in the meantime after the rate of 51. per cent per annum from the decease of the partner so dying, to be paid in manner following (that is to say), one-third part thereof with interest for the whole at the expiration of six calendar months next after such decease, one other third part with interest for two-third parts thereof from the end of such six calendar months at the expiration of twelve calendar months next after such decease, and the remaining one-third thereof with interest for the same from the end of such twelve calendar months at the expiration of eighteen calendar months next after such decease. 22. That the surviving partner shall also pay to the executors, admin- istrators, or assigns of the deceased partner during the remainder of the said term of seven years, if such surviving partner shall so long live, the annuity hereinafter mentioned (that is to say), if the said A B shall be the deceased partner, the annuity of £ , and if tha said D shall be the deceased partner, the annuity of £ ; the said annuity to be paid by two half-yearly paymen-ts on the day of and the day of in every year, without any deduction whatsoever, the first half-yearly payment thereof to be made on such of the said days as shall first and next happen after the decease of the partner first dying. 23. That, for security to the executors, administrators or assigns of the deceased partner such sum of money in and by the installments aforesaid and the said annuity, the surviving partner, his executors or administrators, shall, within one calendar month next after such decease, give two bonds unto the executors, administrators or assigns Precedents. 1605 of the deceased partner, one of them iu a penalty double the amount of the principal moneys to be thereby secured, and the other for secur- ing the payment of said annuity in a penalty of £ 24. That the surviving partner, his executors or administrators, shall also give to such executors or administrators another bond in a sufficient penalty for indemnifying them and the estate of the deceased partner from the debts owing by the said partnership, and all actions, suits, damages and expenses thereof, and the said execu- tors or administrators of the deceased partner shall release and assign unto the surviving partner, his executor or administrator, all their share and interest in the said capital, effects and debts belonging and owing to the said partnership. . 25. That, in case, at any time during the said partnership, the said A B shall, by any writing under his hand, desire that his son A B may, for the remainder of the said term of seven years, be admitted into the said partnership, and shall also give or transfer to his son any part of his share in the said partnership and the capital thereof, then the said A B,'the son, shall be entitled to the part of the share of the said father's estate which shall be so transferred to him, in the same manner, subject to the same conditions to all intents and pur- poses whatever as his said father would himself have been entitled to the same if he had continued possessed thereof. And, there- upon, the said A B, the father, and the said C D, and the said A B, the son, shall execute all such acts and deeds as shall become neces- sary or requisite to confirm and substitute the said A B, the son, in the said part of the share of the said A B, the father, and to subject him, the said A B, the son, to the same debts, demands and other conditions and agreements as the said A B, the father, would have been subject to in respect thereof by reason of the business of the said partnership. 26. That, if any difference shall, at any time or times hereafter, arise between the said partners or between either of them and the executors or administrators of the other of them, or between their respective executors and administrators, in- anywise relating to these presents, on any account or valuation to be made as aforesaid or other- wise concerning the said partnership, which shall not be decided within one calendar month, then and as often as the same shall hap- pen, such difference shall, upon the request of either of the said partners or the executors or administrators of either of them, be reduced into writing and referred to the award of three indifferent 1606 Appendix. persona, one to be chosen by each of the persons differing, and a third by the two persons first chosen, within two calendar months next after sucla request. And the award of such three persons or any two of them in the matter referred to them shall be conclusive upon the said parties if made in writing within twenty-eight days after the said three persons shall have been elected as aforesaid, or in such fur- ther reasonable time as the said arbitrators shall appoint for making the award. 27. That, if either of the said partners, his executors or adminis- trators, shall neglect or refuse to choose an arbitrator on his or their behalf, or shall name a person who shall neglect or refuse to act as such arbitrator for the space of two calendar months after either of them, his executors or administrators, shall have requested him or them to refer any difference to arbitration, it shall be lawful for the person chosen arbitrator by the party making su6h request to choose an arbitrator on the part of the party who or the arbitrator named by whom shall so refuse or neglect, whereof notice shall be immedi- ately sent to the party who or the arbitrator named by whom shall so ■ refuse or neglect, and that the two persons chosen arbitrators as last aforesaid shall choose an umpire, and the award or umpirage of the per- sons sochosenas lastly hereinbefore is mentioned, or any two of them, shall be as effectual and conclusive as if the person chosen arbitrator by the arbitrator of the party requesting, on behalf of the party refusing or neglecting, had been chosen by him. That, for the better enforc- ing the award to be made as aforesaid, the reference or submission in respect of the same shall be made a rule of His Majesty's Courts of King's Bench, Common Pleas, and Plea side of the Exchequer, according to the statutes in that case made and provided.' In wit- ness, etc. ' It might probably be found more he shall think fit, at the amount of such useful to substitute for the arbitration valuation, and the sum so to be paid by clauses the following clauses. See 7 him shall form part of the paftnership Jarm. Con v. 143, n. (/.) effects; but that all deeds, drafts of " That in the event of the determin- deeds, and other papers belonging to ation of the said partnership, by the clients or otherwise, which shall be decease of either of the said partners, in custody of the said partners or during the said term of seven years, the either of thera, on account of the said printed books, office fixtures and furni- partnership, at the time of the decease ture, and other property of the said of either of them as aforesaid, shall partnership (except as hereinafter men- (subject to the claims of the persons, if tioned) shall be valued by two indiffer- any, to whom they may happen to be- ent persons, one to be chosen by the long) remain in the hands of or be de- surviving partner, and the other by the livered to the surviving partner, executors or administrators of the de- " That, in case of the dissolution of ceased partner, and the same shall be the said partnership, by effluxion of purchased by the surviving partner, if time or otherwise, during the lives of Pkecedents. 1607 No. XIII. Deed of Partnership between Coal Merchants, with Provision for substituting a Minor, ivhen of age. This indenture, made, etc., between A B, of, etc., coal merchant, of the first part, C D, of the same place, coal merchant, of the second part, E F, of, etc., gentleman, of the third part, and G H, of, etc., nephew of the said E F, and an infant of the age of 19 years and a half, or thereabouts, of the fourth part. "Whereas the said A B and C D have for some years last past carried on the trade or business of coal merchants, at aforesaid, at and for their joint and equal risk and benefit. And whereas the said A B and D are possessed of and entitled unto a stock in trade, consisting of barges, lighters wagons, carts-, horses, and other effects and things necessary for carry- ing on the said trade or business. And whereas the said A B, with the privity and approbation of the said C JD, did lately agree to sell or dispose of a moiety of his share or interest of and in the said trade or business unto the said E F, at or for the price or sum of £ . And whereas, upon the treaty for the said sale it was agreed that a valuation should be made of the said stock in trade of the said A B and D, and that the said E P should pay to the said A B one- fourth part of the sum of money at which the same should be valued, and that the said E P should be thenceforth entitled to one-fourth part of the said stock in trade, and of the gains and profits of the both the said partners, they, the said the business of persons who were cli- partners, shall, as soon as conveniently enta of either of the said partners be- may be after such dissolution, make fore the formation of the said partner- out a general statement of the partner- ship, shall (unless the contrary be ex- ship affairs and transactions and pecun- pressly directed by such clients) be iary accounts ; and, after making an ef- committed to the custody of the part- fectual provision for the liquidation of ner whose clients such persons for- the debts owing from the said partner- merly were, and, with respect to the ship, shall make a distribution, divis- papers relating to the business of cli- JOQ and allotment of the partnership ents not included in this class, the same credits, property and effects between shall be equally divided between the them, according to their several proper- said partners, and, in case any dispute tions and interests therein, or, in case shall arise as to the custody of the pa- it shall be deemed more expedient so pers in any particular business, it shall to do, the same credits, property and be referred to the client to whose busi- effects shall be collected, got in and ness they relate, to determine to whiqh converted into money on the joint ac- of the partners the said papers shall be count of the said partners, and the delivered. Provided, nevertheless, that deeds, drafts of deeds, and other docu- nothing herein contained shall preju- ments and papers in the custody of the dice or affect any lien which the said said parties respectively, as such part- parties may have, either on the partner- nera as aforesaid, shall be divided be- ship account or otherwise, or any deeds tween them in the manner following or writings in their respective hands or (that is to say) : The papers relating to custody. In witness, etc. 1608 Appendix. said business, and that the said A B, C D, and E F should become copartners in the said trade or business for the term or time, and in manner, and under and subject to the provisions, conditions, cove- nants, and agreements hereinafter expressed and contained. And whereas, the said E P hatli this day paid the said sum of £ , and, also, the sum of £ , being one-fourth part of the said sum of £ unto the said A B, as he, the said A B, doth hereby admit and acknowledge. And whereas the said E F entered into the aforesaid agreements for the benefit of the said G H, from the time of his attaining the age of 21 years, and it was agreed between the said parties that the said B F should assign his share or interest of and in the said trade or business, and the said stock in trade, unto the said G H, in case he should live to attain the age of 31 years, on payment by the said G H to the said E P of the sum of £ , and of such further sum of money as the share or interest of the said B P, of and in the then stock in trade should be valued at, and that the said G H should in the meantime, until he should attain the age of 21 years, manage and conduct the said trade or business on behalf of the said E F: Now this indenture witnesseth, that for effectuating the aforesaid agreements, and in consideration of the premises and of the mutual trust and confidence which the said A B, C D, and B P have in each other, each and every of them the said A B, C D, and E P, for himself, his heirs, executors, and administrators, doth covenant and agree with and to the said others and every other of them, their and his executors and administrators, by these presents in the manner following (that is to say) : 1. That they, the said A B, C D, and E F, will be copartners in the trade or business of a coal merchant, for the term of 14 years, com- mencing from the day of the date of these presents. 2. That the firm or style of the said copartnership shall be 3. That the trade or business of the said copartnership shall be carried on at aforesaid, or in or at such other place or places as the said partners shall from time to time fix and agree upon. 4. That the capital of the said copartnership shall consist of the aforesaid stock in trade now used in carrying on the said joint trade; and the said capital, and the increase thereof, and the profits arising therefrom, shall (subject as hereinafter is mentioned) be employed in the said business; that the said A B, C D, and E F, shall be entitled to the said capital, and so much of the gains, profits, and produce thereof as shall remain after all payments hereinafter directed to be Pbecedents. 1609 made thereout shall have been made in the following proportions, namely, the said A B to one-fourth part thereof, the said D to two other fourth parts thereof, and the said E P to the remaining one- fourth part thereof. 5. That the rent of the house and buildings in aforesaid, or of any other house or buildings, where the said trade or business of the said copartnership shall be carried on, and all repairs, additions, and alterations of, to, and in the same, and all taxes, rates, assessments, payments for insurance and other payments whatsoever in respect of the same; and the wages or maintenance of clerks, apprentices, or servants, respectively, who shall be employed in the business of the said copartnership, and all necessary and proper charges and expenses which shall be occasioned or incurred in or about the trade or busi- ness of the said copartnership, or in anywise relating thereto; and all debts and duties which shall be owing for or upon account of the said trade or business, and all losses and damages which may happen in the same shall be sustained, paid, and borne by and out of the capital of the said copartnership and the gains and profits arising from the same, or in case the same shall become deficient, then by all of them, the said A B, C D, and E P, out of their respective separate estates, in the shares and proportions following (that is to say), one-fourth share thereof by the said A B, two other fourth shares thereof by the said C D, and the remaining fourth share thereof by the said E P. 6. That in each year during the said copartnership it shall be law- ful for the said A B to have and take out of the clear net gains and profits of the business of the said copartnership by four even and equal quarterly payments on the day of , the day of , the day of , and the day of , in every year the sum of £ for his separate use, the first quarterly payment thereof to be made on the day of now next ensuing. And that in each year during the said copartnership it shall be lawful for each of them, the said P and B P, to have and take out of the net gains or profits of the trade or business of the said copartnership, by four even or quarterly payments on or at the days or times hereinbefore men- tioned, the sum of £ for his respective separate use ; the first payment thereof respectively to be made on the day of now next ensuing. [Insert here the provision for refunding in case' of excess, from Precedent I, article 8.] 202 1610 Appendix. 7. That they, the said A B, C D, and E F, will, at all times during the continuance of the said copartnership, diligently and faithfully employ themselves in and about the business of the said copartner- ship, and carry on and conduct the same for the greatest benefit and advantage of the said copartnership; but, nevertheless, the said E P shall not be compelled to attend to, carry on and conduct the same during such time as the said G H shall attend to, carry on and con- duct the same as aforesaid, for and on the behalf of him, the said E P, and he, the said E P, will use his utmost endeavors to cause and procure the said Gr H to attend to and conduct the same accordingly. And that each and every of them, the said A B, C D, and E P, will be just and faithful to the others and other of them in all bu)rings, sellings, accounts, reckonings, receipts, payments, dealings, and transactions, in and about the premises, and will give and render to the others and other of them a just and faithful account of the same when and so often as the same shall be required; and upon every reasonable request of the others, or any other of them, inform the others or other of them of all such letters, accounts, writings, and other things which shall or may come to his or their hands or knowl- edge in anywise concerning the trade or business of the said copart- nership. 8. That none of them, the said A B, D, and E P, will, without the consent in writing of the others or other of them, employ any of the moneys, goods, or effects belonging to the said copartnership, or engage the credit thereof in any matter or thing except upon the account or for the use and benefit of the said copartnership. And that neither of them, the said A B, C D, and B P, will, either by him- self or with any other person or persons whomsoever, directly or indi- rectly engage in any trade, manufacture, of business except upon the account and for the benefit and advantage of the said copartnership. 9. Insert here article 11, from Precedent I. 10. That in all cases where there shall be occasion to give any bond, note, or other secui'ity for any sum or sums of money on account of the said copartnership (other than and except where the contrary shall in the common course of business be unavoidable), the same shall be respectively signed and executed by all of them, the said A B, D, and E P ; and that if any of them, the said A B, C D, and E P, shall give any such bond, note, or other security (except in the cases before mentioned) which shall not be executed and signed by the others or other of them, every such bond, note, or other security Peecedents. 1611 shall be deemed to be giveu on the separate account of the person or persons giving the same, and he and they shall accordingly pay, satisfy, and discharge the same out of his or their own separate estate, and shall indemnify and save harmless the others or other of them and their and his heirs, executors, and administrators, and their and every of theiv estate and estates of, and from the payment |;hereof, and of and from all actions, suits, costs, damages, and expenses which may be incurred on account thereof. 11. That none of them, the said A B, D, and E F, will, at any time during the continuance of the said copartnership, lend any of the moneys or deliver upon credit any of the goods or stock in trade of, or belonging to the said copartnership, to any person or persons whom the others or other of them shall, before the lending or deliv- ering of such moneys, goods, or stock in trade, have forbidden him or them by notice in writing to trust ; and that if any of them, the said A B, C D, and B F, shall lend any money or deliver upon credit any of the goods or stock in trade of or belonging to the said copartner- ship after such notice given as aforesaid, then and in such case the party so lending or delivering upon credit any such money, goods, or stock in trade as aforesaid shall pay to the said copartnership so much ready money as the full amount or value of the money, goods, or stock in trade which he shall so lend or deliver upon credit as afore- said shall amount unto or be valued at. 12. That none of them, the said A B, C D, and E P, will, without the consent of the others or other of them in writing first had and obtained, enter into any bond or become bound as bail, surety, or security with or for any person or persons whomsoever, or underwrite any policy of insurance, or do or willirfgly sufEer to be done any act, matter, or thing whatsoever whereby the stock in trade of the said copartnership may be seized, attached, extended, or taken in execu- tion. 13. That each of them, the said A B, C D, and E P, will from time to time duly and punctually pay and discharge the debts now due and owing, or hereafter, during the continuance of the said copartnership, to be due and owing from him to any person or persons whomsoever ; and will at all times hereafter, during the continuance of the said copartnership, save, defend, and keep harmless and indemnified the others and other of them, their and his heirs, executors, and admin- istrators, and the stock of the said copartnership, and the increase thereof, of and from all their respective private and separate debts 1612 Appendix. and engagement.s already contracted or entered into, or hereafter dar- ing the continuance of the said copartnership to be contracted and entered into, and of and from all actions, suits, costs, charges, dam- ages, and expenses on account thereof. 14. Insert here article 17, from Precedent I. 15. Insert here article 18. from Precedent I. 16. That within the space of six calendar months next after the expiration or determination of the said copartnership, a true, full, and particular account, in writing, shall be made, settled, and stated between the said copartners of all the stock in trade, moneys, debts, and effects then belonging or owing to, and of all debts due from the said copartnership, and thereupon the sai-d A B, CD, and E F shall forthwith pay or take good order for the safe and speedy payment of the debts owing by the said copartnership. And the said A B, D, and E P and their respective executors, administrators, and assigns shall be entitled to the balance of the said stock in trade of the said copart- nership, and the increase thereof in manner hereinbefore mentioned, and the same shall be divided amongst them accordingly. 17. That each of them, the said A B, C D, and E P, will give unto the 'others and other of them a bond in a sufficient penalty for tlie payment of their respective shares, and proportions of the debts owing by them in respect of the said copartnership, and for the saving harm- less and indemnifying each other of them, his heirs, executors, and administrators, of and from each other's share, or proportion of such debts, and all costs, damages and expenses on account thereof. 18. That each of them, the said A B, C D, and E P, will immedi- ately> upon such division as aforesaid, well and sufliciently assign unto each other entitled thereto, under or by virtue of these presents, his executors, administrators, and assigns, his share of all such debts and sums of money as shall then be due and owing to the said parties on account of the said copartnership, and authorize and empower him or them to recover and receive the same, and to do and execute all such other acts, deeds, matters, things, assignments, and assurances in the law whatever as shall be necessary or expedient for vesting the sole right and property therein in the partner to whom the same shall upon such division belong. 19. That after such division shall be made between the said parties, none of the said parties, his executors or administrators, will discharge any debt or debts which shall on the division be allotted and assigned to the others or other of them, or in any respect interfere in the receipt Precedents. 1613 or recovery thereof or otherwise, except upon the express request of the person or persons to whom the same shall be allotted or assigned. 20. That if the said A B shall be minded or desirous to quit the said copartnership before the expiration of the said term of fourteen years, it shall be lawful for him to do so upon giving three months' previous notice in writing to the said C D and E P, or their respect- ive executors or administrators, and thereupon, at the expiration of the said three calendar months, a true, full, and particular account in writing shall be made, stated, and settled between the said partners of all the stock, moneys, debts, and other things belonging to or owing from the said copartnership, and a just valuation and appraise- ment shall be made of all particulars included in such account by two persons, one to be chosen by the said A B, his heirs, executors, or administrators, and the other to be chosen by the said D and E P, or their respective executors or administrators, and in case the said two persons so to be chosen as aforesaid shall not agree in the premises, then by some indifferent person to l)e chosen as umpire by such two persons. That if the said A B shall die during the continuance of the said copartnership, such account and valuation shall immediately after his death be taken and made as hereinbefore is directed to be taken and made in case the said A B shall quit the said copartner- ship. That in either of the cases or events lastly hereinbefore men- tioned, the said D and E F, their respective executors and admin- istrators, shall thenceforth be entitled to the whole of the said stock in trade, and the increase thereof, and the net gains and profits of the same in the shares following (that is to say) the said D, his execu- tors and administrators, to two-third shares thereof, and the said E P, his executors or administrators, to the remaining third part thereof, and the said A B, his executors or administrators, shall be entitled to one-fourth part of the sum of money to which such valua- tion as aforesaid shall amount, the same to be secured to be paid with interest for the same after the rate of 51. per cent per annum by the installments and in the manner hereinafter mentioned (that is to say) the said C D and E F, or their respective executors or adminis- trators, will, immediately on such valuation being so made as afore- said, duly execute and deliver unto the said A B, his executors or administrators, a joint and several bond in double the principal, con- ditioned for the payment of the same sum with interest after the rate aforesaid from the expiration of the said three calendar months, for which such notice shall be given as aforesaid, or from the death of the 1614 Appendix. said A B, as the case may be, in the manner following (that is to say), one-fourth part with interest for the whole immediately after tlie expiration of six calendar months next after the expiration of the said three calendar months, or the death of the said A B, as the case may be, one other fourth part thereof with interest for three-fourth parts thereof to be computed from the end of such six calendar months, immediately after the expiration of twelve calendar months, next after the expiration of the said three calendar months, or the death of the said A B (as the case may be) one other fourth part thereof with interest for two-fourth parts to be computed from the end of such twelve calendar months immediately after the expiration of eighteen calendar months next after the expiration of the said three calendar months, or the death of the said A B (as the case may be) and the remaining fourth part thereof with interest for the same to be computed from the end of such eighteen calendar months immediately after the expiration of twenty-four calendar months next after the expiration of such three calendar months, or the death of the said A B (as the case may be). 22. That as between them, the said C D and E F, and their respect- ive executors and administrators, the said D, his executors or administrators, will pay two-third parts of the sum of money and interest, to be secured by the aforesaid bond, and the said E F, his executors or administrators, will pay the remaining third part of the said sum of money and interest. And in either of the cases or events hereinbefore mentioned, the said D and E F, or their respective executors or administrators, will also execute and give one other bond in a sufficient and reasonable penalty unto the said A B, his execu- tors and administrators (as the case may be) for indemnifying him and them, and his and their estate and effects, of and from all the debts which shall be owing by the said parties on account of the said copartnership at the time the said A B shall quit the same, or at the time of his decease as aforesaid (as the case may be) and of and from all actions, penalties, judgments, executions, extents, charges, dam- ages, and demands whatsoever, which may arise, happen, or become payable for or concerning the said debts, or any of them, or otherwise, howsoever, on account of the said copartnership and the trade thereof. 23. That the said A B, his executors or administrators (as the case may be), will at the request, costs, and charges of the said C D and E F, their executors or administrators, such costs and charges to be Pbecedents. 1615 paid out of the stock of the said copartnership, release and assign nnto them, the said D and E F, their executors or administrators, all his or their share, right, title, and interest of, in, and to the joint stock and estate, debts, and effects belonging, due, or owing to the said copartnership, and all matters and things thereunto belonging, and, as far as he or they can, empower and enable the said C D and E F, their executors or administrators, to recover and receive the same. 34. That if the said C D or E F shall die during the continuance of the said copartnership, no benefit of survivorship shall accrue therefrom to the other of them, but in any such case the executors or administrators of the party so dying shall stand in his place with respect to his share in the said stock and effects and the profits thereof, until the determination of the said copartnership, save and except with respect to the management of the said trade or business, which shall exclusively belong to the surviving partners or partner for the time being. 35. Provided always, that if either of them, the said C D or E F, shall die during the continuance of the said copartnership, then and in such case the surviving partner shall during the remainder of the said copartnership, if he shall so long live, be entitled, as and for a compensation for the additional trouble which he will have in the management of the business, by reason of the decease of the partner so dying, to have and take out of the net gains and profits of the said copartnership, such an annual sum of money as shall be fixed upon for that purpose by two persons, one to be chosen by the surviving partners or partner, and the other to be chosen by the executors or administrators of the party so dying within the space of one calendar moi\];h next after the decease of such party, and in case the said two persons shall not agree in the premises, then such an annual sum of money as shall be fixed upon for that purpose by some indifferent person, to be chosen as umpire by the two persons first chosen, the said annual sum to be over and above the share of such surviving part- ner of and in the gains and profits of the said copartnership. But nevertheless, at the expiration of the said copartnership, the joint stock thereof shall be divided in such and the same manner in all respects as the same would have been divided in case-both of them, the said D and E F, had been then living. (The arbitration clause may be here inserted. But see Ch. VIII, pi. 17). 1616 APPEIfDIX. 26. And lastly, the said E P, with the pi'ivity and approbation of the said A B and C D, testified by their severally being parties to and sealing and delivering these presents, doth hereby for himself, his heirs, executors and administrators, covenant and agree with the said G H, his executors and administrators, that in case he, the said Gr H, shall live to attain the age of twenty- one years he, the said E F, his executors or administi'ators, will, within the space of one calendar month next after he shall attain that age, well and effectually assign unto the said G H, his executors, administrators, and assigns, the share or interest of him, the said E F, his executors or administra- tors, of and in the said trade or business, and of and in the stock in trade then used in or belonging to the same, on payment by the said G H to him, the said B F, his executors or administrators, of the sum of £ , so paid by him as aforesaid, and of such a sum of money as the share of the said E F, his executors or administra- tors, of and in the stock in trade then used in or belonging to the said trade or business, shall be valued at by two persons, one of thorn to be chosen by the said E F, his executors or administrators, and the other of them to be chosen by the said G H, and in case the said two persons so first chosen cannot agree in such valuation, then on payment of such a sum of money as the same share shall be valued at by some indifferent person to be chosen by the two persons first named. And it is hereby agreed and declared by and between the said parties to these presents, that immediately after such assignment being so made by the said E F, his executors or administrators, he, the said E F, his heirs, executors or administrators, shall be absolutely free and discharged of and from the covenants and agreements herein contained, and all costs, charges and expenses which he or they might otherwise be liable or subject to for and on account of the same ; and tliereupon all such acts, deeds, matters, and things shall be made, done, and executed, as shall and may be necessary to indemnify the said E F, his heirs, executors and administrators, from all such costs, charges, and expenses as aforesaid, and to bind the said G H to the due observance and performance of the covenants and agreements hereinbefore contained, and to substitute him as a partner with the said A B and C D in the place of the said E F in the same manner, to all intents and purposes, as if his name had been inserted as a jjartner in these presents instead of the name of the said E F. 27. Provided always, that in case the said G H shall depart this life under the age of twenty-one years, then and in such case if the Phecedents. 1617 said E P, his executors and administrators, shall be desirous to quit the said copartnership before the expiration of the said term of four- teen years, it shall be lawful for him or tlaem so to do upon giving thi-ee calendar months' previous notice in writing to the said A B and G D, or their respective executors or administrators, and thereupon, at the expiration of the said three calendar months, a true, full, and particular account in writing shall be made, stated, and settled be- tween the said partners of all the stock, moneys, debts, and other things belonging, due, or owing to or from or by the said copartner- ship, or any person or persons by reason of the said business, and a just valuation and appraisement shall be made of all the particulars included in such account by two persons, one to be chosen by the said B P, his executors or administrators, and the other to be chosen by the said A B and C D, or their respective executors or administrators, and in case the said two persons so chosen, as afoi'esaid, shall not agree in the premises, then by some indifferent person to be chosen as umpire by such two persons. 28. That in the case hereinbefore mentioned, the said A B and T), their respective executors or administrators, shall thenceforth be entitled to the whole of the share of the said B P, his executors or administrators, of and in the said stock in trade, and the increase thereof, and the net gains and profits of the same in equal shares and proportions, and the said B P, his executors or administrators, shall be entitled to one-fourth part of the sum of money to which such valuation as aforesaid shall amount, the same to be secured to be paid with interest for the same after the rate of 61. per cent per annum, by the installments and in the manner hereinafter mentioned (that is to say) : the said A B and D, their respective executors or admin- istrators, will, immediately upon such valuation being so made as aforesaid, duly execute and deliver unto the said B P, his executors or administrators, a Joint and several bond in double the principal conditioned for the payment of the same money, with interest after the rate aforesaid, from the expiration of the said three calendar months, for which such notice shall be given as aforesaid, in the man- ner following (that is to say) : one-fourth part thereof with interest for the whole immediately after the expiration of six calendar months next after the expiration of the said three calendar months ; one- fourth part thereof with interest for three-fourth parts thereof, to be computed from the end of such six calendar months, immediately after the expiration of twelve calendar months after the expiration of 203 1G18 Appendix. the said three calendar months ; one other fourth part thereof with interest for two-fourth parts thereof, to be computed from the end of such twelve calendar months, immediately after the expiration of eighteen calendar months next after the expiration of the said three calendar months ; and the remaining one-fourtn part thereof with interest for the same, to be computed from the end of such eighteen calendar months, immediately after the expiration of twenty-four calendar months next after the expiration of the said three calendar months. 29. That the said A B and C D for their respective executors or administrators will also execute and give one other bond in a suflB- cient and reasonable penalty unto the said E F, his executors or ad- ministrators, for the indemnifying him and them, and his and their estate and effects, of and from all the debts and sums of money which shall be due or owing by the said parties on account of the said copartnership at the time the said E F, his executors or administra- tors, shall quit the same, and of and from all actions, penalties, judgments, executions, extents, charges, damages, and demands, whatsoever, which shall or may arise, happen or become payable for or concerning the said debts or any of them, or otherwise howsoever on account of the said copartnership and the trade thereof. 30. That the said E F, his executors or administrators, will, at the request, costs, and charges of the said A B and C D, their respective executors or administrators, release and assign unto the said A B and C D, their respective executors and administrators, all his or their share, right, title, and interest of, in, and to the joint stock and estate, debts and effects belonging, due, or owing to the said copart- nership, and all matters and things thereunto belonging, and as far as he and they can empower and enable the said A B and D, their executors and administrators, to recover and receive the same. 31. And lastly, it is hereby declared and agreed between and by the said parties to these presents, that the said E F, his executors or ad- ministrators, shall not be considered as a trustee for the said G H, of the profits of the said trade or business before the said G H shall attain the age of twenty-one years, but the said E F, his executors or ■ administrators, shall in the meantime be considered in the said busi- ness at and for his and their own proper risk and benefit. In wit- ness, etc. Precedents. 1619 No. XIV. Deed^ where one of the pai'ties is to receive ten per cent on the capital to he advanced iy him for a specified time, without leing liable to losses, and at the end of the time the sum advanced ly him is to he repaid by him. . This indenture made the day of between A B, of, etc,, of the first part, C D, of, etc., of the second part, and E P, of, etc., of the third part. Whereas the said A B and C D have for several years passed carried on the trade or business of in street, in the city of as partners, and have proposed and agreed to admit the said B F into the said business upon the conditions and subject to the covenants hereinafter contained: Now this indenture witness- eth that in pursuance of the said agreement each of them, the said A B, D, and E F, doth for himself, his heirs, executors, and admin- istrators, hereby covenant with the other and others of them, and the executors or administrators of the other and others of them in man- ner following, that is to say : 1. That they, the said A B, C D, and B F, will carry on together the said business of from the day of for the term of seven years thence next ensuing. 3. That in case at any time, during the said term of seven years, the said B F shall be desirous of retiring from the said business, and shall give to the said A B and C D, or leave for them at the counting- house of the said business, calendar months' notice in writing of such his desire; then at the expiration of sucii notice the said E P shall be at liberty to retire from the said business accordingly. 3. That the said business shall be carried on in the same warehouse and premises and under the same style or firm as it has been hereto- fore carried on by the said A B and C D. 4. That the capital requisite for carrying on the said business shall be advanced by the said parties respectively in the proportions follow- ing: The said B P shall advance and bring in the sum of £ , and the said A B and C D shall advance and bring in such further sum and sums of money as shall be requisite for carrying on the said busi- ness in equal proportions. And the said E F shall be entitled to the 1 It would not be strictly correct to F and the other two, though there is as call this a deed of partnership, for there between A B and C D. Grace v. Smith, is clearly no partnership aa between E 3 W. Bl. 998. 1630 Appendix. said sum of £ , part of the said capital, without any deduction whatsoever, and shall in every year during the continuance of this present agreement receive out of the produce of the said business, and if such produce shall be insufficient, then out of the capital of the said business the sum of £ in full satisfaction of his share of the produce thereof, to be paid in equal half-yearly payments on the day of , and the day of , and that the residue of such cap- ital and of such produce (if any) shall belong to the said A B and»C D in equal proportions. 5. That the rents of all houses or buildings where the said busi- ness shall be carried on, and the costs of all repairs and alterations? and all taxes, rates, assessments, payments for insurance, 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 busi- ness, and all losses and damages which shall happen in the same, shall be paid, defrayed, and borne exclusively by and out of the respective shares of the said A B and C D in the capital of the said business, 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. 6. That the said B F shall not be required to give his attention to the said business, nor shall interfere in the concerns thereof, but the same shall be under the exclusive direction and control of the said A B and C D, who shall devote their whole time and attention to the management thereof. [This being an ordinary partnership as regards A B and D, insert here the usual clauses, being Articles 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, from Precedent I.] 18. That the said A B and D will not only furnish to the said B ¥ a copy or transcript of such annual account as aforesaid, but will at all times during the continuance of the said E F's connection with the said business freely and unreservedly communicate and disclose to the said B P such information respecting the said business as shall ena- ble him to form a correct opinion of the actual condition thereof. 19. That upon the determination in any manner of the connection of the said E F with the said business, the said E F, or his executors or administrators, shall in the first instance receive out of the pro- duce of the said business, and if that shall be insufficient, then out of the capital thereof, a proportional part of the said annual allowance Pkbcedekts. 1621 or sum of £, up to the period of such determination, to be paid immediately on such determination, and the said B P, or his execu- tors or administrators, shall also be entitled out of the capital of the said business to the full sum of £ in satisfaction of his share in the said capital and without any deduction on account of the expenses or losses which may have been incurred or shall have accrued therein ; which sum of £ shall be secured to be paid to the said E F, his executors or administrators, by the joint and several bond of the said A B and C D, or the bond of such one of them as shall be then living (as the case may be), by four equal installments of three, six, nine and twelve calendar months, to be computed from the time of such determination, with interest thereon at the rate of 51. per cent per annum from the time of such determination, and that if the capital of the said business shall be insuflScient to pay to the said E P, his executors or administrators, the said sum of £ , then the same shall be made good by the said A B and C D, or their respective execu- tors or administrators, in equal proportions out of their respective separate estates. [This clause only provides for the share of B P, In regard to the mode in which the final account is to be taken and the affairs wound up as between A B and D, the ordinary clauses apply, and may be inserted, viz.: Articles 19, 30, 21, from Precedent I.] No. XV. Deed of dissolution of copartnership in the trade or business of stock trohers. This indenture made, etc., between A B, of, etc., of the one part, and C D, of, etc., and E F, of etc., of the other part. Whereas, by indenture bearing date, etc., and made between the said C D of the first part, the said A B of the second part, and the said E F of the third part, the said C D, A B, and B F covenanted with each other to be copartners in the business of stock brokers and bill or discount brokers at the Bank of England, Stock Exchange, and elsewhere, within the city of London, for the term of three years from the 2oth day of March then instant, if all of them should so long live, and for such further contingent term as therein mentioned, and subject to the agreements therein mentioned, under the style of , and that the 1622 Appendix. said parties should bring into the business the sum of £ as their capital in the proportions following (that is to say), the said C D should bring in £ , the said A B £ , and the said E F £ ; and that the said capital and all the profits of the said business, and all expenses and losses attending the same, should be divided into thirty-two equal parts, of which the said C D should be entitled to have and should bear and pay nine parts, the said A B fifteen parts thereof, and the said E P the remaining eight parts ; and after vari- ous stipulations with respect to the management of the said business and the divisions and funding of the clear profits of the said trade in augmentation of the capital, it is provided that the said sum of £ capital, brought in by the said parties, should be a charge upon the said copartnership estate, and the profits thereof, until the whole of the said sum of £ and all increase thereof as aforesaid, should bo repaid to the parties in proportion to their respective advances; and that in the meantime it should be lawful for the said parties respect- ively to take out of the profits of the concern interest upon the capital brought in by each, at the rate of five per cent per annum. And whei'eas, by indenture of lease bearing date, etc. [recite lease of business premises to A B]. And whereas, by an agreement in writing, bearing date, etc., and made, or expressed to be made, between the said A B of the one part, and the said C D and E F of the other part, the said A B agreed to retire from the said copartnership on the 31st day of October then next, on receiving the sum of £ as a premium for his share of the good will of the concern, such sum to be secured to him by the said E F and D, as thereinafter mentioned, and the said D and E F agreed to pay and secure to the said A B the said sum of £ , in manner following (that is to say) the sum of £ part thereof to be paid on the said 31st day of October next, and the remainder of the said sum of £ to be paid by two equal install- ments of £ each, on the day of , and the day of ; such two last-mentioned installments to be secured , by the Joint and several bond of the said D and E P in the penalty of £ , but such installments not to bear interest, and the said A B did thereby agree with the said D and E F, that he, the said A B, would on the said day of , upon receiving payment of the sum of £ , and on receiving the said joint and several bond of the said C D and E F for securing the said sum of £ , payable by installments as aforesaid, assign unto the said D and E F all the good-will, future benefit, and advantage of him the said A B, of and Precedents. 1633 in the said copartnership business, and all profits thenceforth to arise therefrom, and all his estate and interest in the house in which the said copartnership business was then carried on, and in the lease then held by him thereof, and the said parties did thereby agree, that upon such payment of the said sum of £ being made and security given for the said sum of £ , the said copartnership should be finally dissolved as on and from the said day of , by notice in the Gazette as to the said A B and a proper deed of dissolution signed and executed between the parties, and it was also agreed that the free use and exercise of a right to carry on the business of a stock broker and exchequer bill broker and jobber, as theretofore carried on by the said parties, should be reserved to the said A B. And whereas the said parties hereto have made up, adjusted, and settled the accounts of the said copartnership up to and inclusive of the day of the date of these presents, and there having appeared upon the final balance of such accounts to be due and owing to the said A B, in respect of cajpital advanced by him pursuant to the said articles of partnership and interest thereon, and for his share of the profits of the said copartnership, the sum of £ the said sum of £ hath accordingly been drawn out of the funds of the said copartnership by the said A B, on the day of the date hereof, as he, the said A B, doth hereby admit and acknowledge. And whereas the said C D and E F have in further pursuance of the said recited agreement executed and given to the said A B, their joint and several bond bearing even date herewith in the penal sum of £ , conditioned for securing the payment to the said A B, his executors, administrators, and assigns of the sum of £ , by two equal installments on the day of and the day of , without interest. And whereas the said par- ties hereto, in further jDursuance of the said agreement, have this day signed an advertisement or notice of the dissolution of the said copart- nership as to the said A B, and an authority for inserting the same in the London Gazette: Now this indenture witnesseth, that in fur- ther pursuance and performance of the said agreement, they, the said C D, A B, and E F, with the mutual assent of each other, do by these presents, as from the day of instant, determine and dissolve the said copartnership carried on by them as aforesaid, so far as relates to or concerns the said A B. And this indenture also wit- nesseth, that in further pursuance and jDerfbrmance of the said recited agreement on the part of the said A B, and in consideration of the sum of £ , of lawful money of Great Britain, to the said A B, 1624 Appendix. paid by the said C D and E F upou or immediately before the execu- tion hereof, the receipt of which said sum of he, the said A B, doth hereby acknowledge, and of and from the same doth hereby release the said C D and E F, and each of them, their and each of their heirs, executors, and administrators, and in consideration of the said bond given by the said D and E F to the said A B as afore- said (the receipt of which said bond the said A B doth hereby acknowledge), he, the said A B, doth by these presents grant, assign and transfer unto the said D and E F, their executors, administra- tors, and assigns, all, etc. (the household premises), and also all these fifteen full and equal thirty-two parts, and all other part, share, right, and interest of him, the said A B, of, in, and to all the cap- ital, stock, debts, moneys, books of account, vouchers, securities, effects, matters and things due, owing, or belonging to the said copartnership, or to the said parties hereto respectively on account thereof, and all future gains and profits thereof, and of, in, and to the good-will, benefit, and advantage of the said business of a bill broker, and discount broker, and stock broker, and all other business connected therewith carried on by the said copartnership (save and except the right hereinafter reserved to the said A B to caiTy on the business of a stock broker and exchequer bill broker and jobber, on his own account), and all the estate, right, title, and interest, claim and demand whatsoever, at law and in equity of him, the said A B, of, in, to, or out of the said several premises; to have and to hold the said leasehold premises hereinbefore expressed and intended to be hereby assigned, with the appurtenances, unto the said C D and E F^ their executors, administrators and assigns, henceforth, for and dur- ing the unexpired residue and remainder of the said term of years thereof granted as aforesaid, and for and during all other the estate, term, and interest of the said A B in or to the same* subject, nevertheless, to the payment of the rent and perform- ance of the covenants and agreements in the said indenture of lease reserved and contained, and henceforth on the lessees, or assignees, part to be paid and performed; an.d to have, hold, and take the said parts of capital, debts, effects, good-will, and all and singular other the premises hereby assigned, except the said leasehold prem- ises, unto the said D and E F, their executors, administrators, or assigns, for their absolute exclusive use and benefit. And for better enabling them, the said C D and E F, their executors, administrators, or assigns, to have, receive,. get in,, and recover all and singular the Pbecedekts. 1635 said copartnership debts, effects, and premises, to and for their own use and benefit, he, the said A B, doth hereby irrevocably appoint and in his place and stead put the said C D and E P and the survivor of them, his executors, administrators, and assigns, as his true and lawful attorneys and attorney, to ask, demand, sue for, recover, and receive to and for tlieir own resiiective use and benefit all and every the debts, estate, and effects due, owing, or belonging to the said hereby dissolved copartnership, and all other the premises, the shares, rights, and interests therein of the said A B so hereby assigned as aforesaid, of and from all and every person or persons whomsoever liable to answer and pay the same, and in case of non-payment or non-delivery thereof, or of any part thereof, then at the proper costs and charges of the said C D and E F, their executors, administrators, and assigns, and in the joint names of the said A B, CD, and E F, or in the name or names of any of them, or otherwise, to commence, bring, and prosecute any actions, suits, or proceedings at law or in equity for the recovery thereof, and the same from time to time to dis- continue at pleasure, or ujjon the receipt or delivery thereof, or of any part thereof, to give and sign acquittances or other dis- charges for the same, and finally to make, do, or execute all and every such further or other lawful acts, matters, and things as may be thought necessary for the recovering, receiving, or compounding, acquitting, and discharging the premises. And for all or any of the purposes aforesaid from time to time to appoint one or more attorney or attorneys, agent or agents, and at pleasure to revoke or alter such appointment. And for all or any of the purposes aforesaid to use the name or names of the said A B, his executors or administrators, he, the said A B, hereby agreeing to allow, ratify, and confirm all what- soever they or either or any of them shall lawfully do or cause to be done in or about the premises. And the said A B, for himself, his heirs, executors, and administrators, doth covenant with the said D and E F, their executors, administrators, and assigns, that he, the said A B, hath not at any time heretofore made, done, executed, com- mitted, permitted, or suffered to be made or done any act, deed, mat- ter, or thing whatsoever, whereby or by reason or means whereof the said leasehold premises, or the term of years thereof, granted as afore- said, are or is, can, shall, or may be assigned, charged, affected,. or incumbered in any wise howsoever or whereby the debts appearing in the books of the copartnership, or any of them, are released or ex- tinguished, or the said capital stock, debts, effects, and premises of 204- 1636 Appendix. or belonging, due, or owing to the said joint trade, or any of them, or any part thereof, or the said partners ai-e, or is, or can, shall, or may be charged, affected, or incumbered except as appears by the books of the said partnership, or as is now made known to the said par- ties. And also that he, the said A B, his executors or administrators, shall not, nor will at any time hereafter apply for, obtain, receive, or take any of the stock, debts, books of account, vouchers, effects and premises belonging to the said partnership, nor release, compound, give up or discharge any debts or effects of the partnership, or any suit, action or proceeding to be brought, commenced or instituted for the recovery thereof, without the consent and direction in writing of the said C D and E F, their executors, or administrators, or as- signs, or do, or authorize to be done, any act, deed, matter or thing whatsoever, whereby, or by reason or means whereof, they, the said C D and E F, their executors, administrators, or assigns, or any of them, can, shall, or may be prevented or obstructed from receiving, recovering, and getting all or any of the said stock, debts, effects, and premises whereof the share and interest of the said A B is hereby assigned, nor revoke or make void the power hereby to them granted for that purpose. But that on the contrary, he, the said A B, shall and will from time to time, during the space of two calendar months now next ensuing, upon the request of the said D and E F, their executors or administrators, afford his advice or assistance in pro- curing the liquidation of the accounts and concerns of the said late copartnership. And also that he, the said A B, his executors or ad- ministrators, shall and will at any time or times hereafter, at the re- quest, costs, and charges of the said C D and E P, their executors, administrators, and assigns, make, do, perform, and execute all such acts, deeds, assignments, matters, and things whatsoever, for further and more effectually assigning and assuring the said several premises hereinbefore expressed to be assigned unto the said C D and E F, their executors, administrators and assigns, in manner aforesaid, and for facilitating the receipt and recovery of the said debts and effects, as by the said C D and E F, their executors, administrators, and as- signs, or their said counsel in the law, shall be reasonably advised and required. And the said C D and B F do hereby for themselves, their heirs, executors, and administrators, and each of them doth hereby for himself, his heirs, executors, and administrators, covenant with the said A B, his executors and administrators, that they, the said C D and E F, or one of them, their or one of their heirs, executors, or Peecedents. 1637 administrators, will with all convenient speed well and truly pay, or cause to be paid, all the debts owing from or by the said late copart- nership, or all or any of them the said parties hereto in respect thereof, and which appear in the books or accounts of the said late copartnership, and fulfill and perform all other the engagements whatsoever of the said late copartnership, or to which the said par- ties or their respective heirs, executors, or administratoi-s, or any of them are, is or shall be liable on account of the said copartnership ; and shall and will save, defend, keep harmless, and indemnify the said A IJ, his heirs, executors, and administrators, and his and their estates and effects of, from, and against all losses, damages, costs, charges and expenses whatsoever, which shall or may or otherwise might be sustained or incurred or become payable for, or by reason or meaus of the non-payment or non-performance of any of the said debts or en- gagements, or in anywise relating thereto, or for or by reason of any action or suit, or actions or suits, or other proceeding or proceedings, which shall or may be brought or prosecuted or used by virtue of or under any power or authority hereby given or in pursuance hereof to be given to the said D and E F, or either of them, their executors, administrators, or assigns, or their or any of their substitute or sub- stitutes. And this indenture also witnesseth, that in pursuance of the said agreement, they, the said C D and E P, do and each of them doth by these presents acquit, release, and discharge the said A B, his heirs, executors, and administrators, and the said A B doth by these presents acquit, release, and discharge the said C D and E F, and each of them, their and each of their heirs, executors, ad- ministrators, and assigns, of and from all actions, suits, accounts, reckonings, claims, and demands whatsoever, either at law or in equity, for or by reason or on account of the said articles jjf copartnership of the day of , or any clause, covenant, matter, or thing therein contained, or for or by reason of any act, deed, matter, or thing what- soever, in anywise relating to the said copartnership or to the prem- ises ; saving always out of this release the said bond of even date herewith, and all claims and demands of the said A B in respect thereof. . In witness, etc. 1628 Appendix. No. XVI. Deed of Dissolution. This indenture, etc., between A, of, etc., of the one part, and B, of, etc., of the other part. (Eecite 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 following deed for more eflfectually dissolving the partnership, for assigning A's share to B, and for indemnifying A from the debts of the concern, etc. Then proceed.) Now this in- denture witnesseth, that, in pursuance of the said agreement, and in consideration of the sum of £ of lawful English money to the said B in hand, etc., 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, execittors, 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 covenant, 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 anywise notwithstanding. And the said A, in pur- suance of the said agi-eement, and for the considerations aforesaid, hath bargained, sold, and assigned, and by these presents doth bargain, sell, and assign unto the said B, his executors, administra- tors, 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 belonging, 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, receive, and enjoy 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, and all and singulat other the premises hereby assigned, or intended so to be, and every part and parcel thereof, unto the said B, his executors, administrators. PllECEDENTS. 1629 and assigns, to and for his and their own proper use and benefit: And the better to enable the said B, his executors and administrators, to receive all the said partnership debts and effects to and for his and their own use aifd benefit, he, the said A, hath made, constituted, and appointed, and by these presents doth make, constitute, and appoint the said B, liis executors and administrators, his true and lawful attorney and attorneys, to ask, demand, sue for, recover, and receive of and from all and every person and persons whatsoever, all and every the debts, sum and sums of money, goods, chattels, and effects whatsoever, now due and owing, or belonging to the said copartner- ship, and, upon receipt of the same, or any and every of them, to give, sign, and execute proper and sufficient releases, 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 compound and release all and every or any part of the said debts and demands, as he and they shall think fit and necessary; 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 effectually 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, execu- tors, and administrators, covenant, promise, and agree to and with the said B, liis execntoi-s, administrators, and assigns, that he, the said A, his executors, administrators, or assigns, shall not, nor will at any time or times hereafter, receive, release, acquit, or discharge any of the debts or demands due to the said copartnership, or any actions or suits that shall be brought, sued, or commenced for or on account of the same, without the consent of the said B, for that pur- pose in writing first had and obtained : Nor shall nor will do, or suffer or cause to be done, any act, matter, or thing whatsoever, whereby the said B, 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 copartnership, 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 matters and things, for the better enabling him, the said B, his executors, admin- istrators, 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 administra- 1G30 Appendix. tors, remise, release, and forever quit claim unto the other of them, his heirs, 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, e::ftcutors, adminis- trators, 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 admin- istrators, covenant, promise, and agree with and to the said A, his executors and administrators, in manner following (that 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 execu- tors 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, Avell and sufficiently save, keep harmless, and indem- nify the said A, his heirs, executors, and administrators, and his and their, and every of their estate, goods, chattels, and effects, of, fi'om, and against all costs, payments, charges, demands, and expenses whatsoever, which he, the said A, his heirs, executors, or administra- tors, 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 copartner- ship, or by reason of the said B, his executors or administrators, 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 reason or means of his being made defendant in any suits, or any other matter or thing whatsoever, relating to the said copartnership. In witness, etc. No. XVII. Deed of Settlement ly the " London Ale Brewing Company." This indenture, made the day of , in the year of our Lord, etc., between John Styles, of, etc., of the first part ; the several persons whose names are subscribed hereunto, and whose seals are Precedekts. 1631 hereunto affixed, of the second part ; L, M, and N (three of the pro- posed trustees), of the third part ; and (the other of the proposed trustees), of the fourth part. Whereas at divers meetings heretofore had and holden hy and between the several persons parties hereto, and others, proposals w^ere mutually made and adopted by the parties hereto, for establishing a company for supplying the city of London, and the community at large, with pure and unadulterated ale and table beer, to be procured upon or by the application and adoption of the principles of the system of brewing, and it has been agreed among the said parties that they, together with such others as might Join therein, in manner hereinafter mentioned, should form and asso- ciate themselves into a cojjartnership society or company under the title or denomination of the London Ale Brewing Company: And whereas, in contemplation of the proposed establishment, and with a view to promote its objects, certain expenses have been incurred by the persons hereinafter appointed directors of the said compiany, and particularly in the purchase of the lease, and in the fitting up of a house and premises convenient for carrying on the concerns of the said company, and it was agreed that such expenses should be paid out of the funds of the said company when established, and that the said house and premises should form and be considered part of the property of the said company, and be held in trust for the company in manner as hereinafter mentioned. And whereas the same house and premises were, by a certain indenture", bearing date on or about the day of last, and made or expressed to be made between L, of, etc., of the one part, and the said John Styles of the other part, m consideration of £ , and of the rent and covenants therein men- tioned and contained, demised for a term of years, commencing from the date thereof, unto the said John Styles, his executors, administra- tors, and assigns, but in trust only for the benefit of the said com- pany; and it was, previous to the execution of such indenture, agreed that the said John Styles should enter into the declaration of trust thereof hereinafter contained; and whereas it has been agreed, for giving effect to the said proposals and agreements, and for the estab- lishment of the said company, that the present deed shall be executed, and that the concerns of the said company shall be carried on and conducted under the superintendence and control of such officers and agents, and subject to such declarations, rules, regulations, restric- tions, conditions, and provisions as in and by these presents are declared and contained : Now this indenture witnesseth, that, in pur- 1632 Appendix. suance of the said recited agreements, he, the said John Styles, doth hereby acknowledge and declare that his name was made use of in the said indenture of trust only for the benefit of the said company when established, and, for himself, his executors, and administrators, doth hereby renounce and disclaim all manner of beneficial estate, title^ or interest in the house and premises so assigned or assured to him by the said indenture of the day of , or in the term of years thereby created otherwise than and in trust only for the said company and the respective members thereof, their executors, administrators, and assigns, subject to these presents, and the true intent and mean- ing thereof ; and he, the said John Styles, for himself, his heirs, executors, and administrators, doth hereby covenant, agree, and declare with and to the said , and the trustees for the said com- pany for the time being, that he the said John Styles, his executors, administrators, and assigns, shall and will stand and be possessed of and interested in all and singular the said house and premises, and the issues, proceeds, and profits thereof, in trust only for the said company, and shall and will, whenever required in manner hereinaf- ter mentioned, and on being properly indemnified therefor, and at the costs of the said company, assign or otherwise assure the same house and premises, and the issues, proceeds, and profits thereof, upon Such trusts and for such ends, intents, and purposes, as the said com- pany or its authorized officers or agents for the time being shall direct or appoint; and that free and clear of all charges and incumbrances, made, created, or knowingly suffered by him the said John Styles, his executors or administrators, or any person claiming or having title to claim under him, them, or any or either of them. And this indent- ure further witnesseth, that, in pursuance and performance of the said recited agreements and proposals, and for the purposes hereinbe- fore mentioned, and other the ends, intents, and purposes hereinafter expressed, they and each of them the parties whose names and seals are hereunto respectively set and affixed (save only the parties hereto of the third part) for themselves and himself severally and respect- ively, and their and his several and respective heirs, executors, and administrators, and as to and for their -and his own proper and respective acts and deeds, but not a.11 or any of them jointly, nor any one or more of them for the other or others of them, or for their heirs, executors, or administrators, or the acts or deeds of the other or others of them, do and doth covenant, promise, declare, and agree with and to the said parties hereto of the third part, their executors and admin- Precedents. 1633 isbrators; and they the said parties hereto of the third part, for them- selves and himself severally, etc., do and doth covenant, prom- ise, declare, and agree with and to him the said party hereto of tlie fourth part, and his executors and administrators, in manner follow- ing (that is to say), that they the several persons and parties herein- before mentioned, and the several other pe-rsons who shall hereafter be and become parties hereto, or members or partners in the said company, shall and will be, remain, and continue connected and asso- ciated together and firmly bound unto each other in copartnership, for supplying London and the community at large with pure and una- dulterated ale and table beer to be brewed or procured upon and by the application and adoption of the principles of the system of brewing, under the firm, title, or denomination of " The London Ale Brewing Company," for or during the term or period, and sub- ject to and under the rules, regulations, restrictions, conditions, cov- enants, provisions, clauses, and agreements, hereinafter, or to be hereafter agreed upon and established in manner hereinafter provided in that behalf. 1. That the business and concerns of the said company shall, for the present, be carried on and conducted at street aforesaid, and shall continue to be there carried on and conducted until some other place or places shall hereafter have been selected and agreed upon, in man- ner and by virtue of the powers and authority hereinafter contained, for the space of ten years, unless the company shall be dissolved, in manner hereinafter mentioned. 2. That the capital stock or fund of the company shall, for the present, consist of the sum of 500?.; which may, nevertheless, be increased in manner hereinafter mentioned. 3. That the said capital of 500?. shall be divided in fifty shares of 10?. each share, and that no person shall subscribe for less than one share, nor more than five shares ; the several shares, as subscribed for, to be numbered progressively, and thereafter identically distin- guished by such number, in manner hereinafter more particularly mentioned. 4. That the sum of 3?. per share shall be paid by way of advance or deposit on each of the said shares, at or before signing these presents; and the directors hereinafter named, or the directors for the time being of the company, shall have the power and absolute discretion to call in or require payment of the remaining 7?. on each share, or such parts thereof from time to time, and at such times, until the whole 205 1634 Appendix. lO;. shall have been called in and paid, as they may deem expedient, by giving such notice of any such call as hereinafter mentioned. 5. That every of the parties hereto respectively shall and will pay or cause to be paid mto the hands of the bankers of the company, to be chosen as hereinafter mentioned, all such sums, by way of install- ment on his or her shares, as he or she shall or may be, from time to time, called upon or required to pay by virtue of these presents, at the time and times they may respectively be called on or required to pay the same. 6. That the capital stock of the said company may at any time or times, and from time to time, be increased beyond and above the amount of 5001., if the major part of the proprietors, at any general meeting, to be held as hereinafter mentioned, shall think fit, and be raised by the issues of fresh shares of 101. each, and the admission of new subscribers, who shall thenceforth be considered and be proprie- tors or shareholders, and entitled to exercise and enjoy the same rights, pi'ivileges, and advantages, and be subject to the same liabilities, as if such additional capital had formed the original capital of the said concern, and such new proprietors had been originally parties to these presents. 7. That no member of the company shall hold or possess more than five shares in the capital stock thereof, unless the same, or the addi- tional number thereof, shall have come or accrued to him, her, or them by marriage, or as legatee, executor, administrator, next of kin, or other lawful representative of a deceased proprietor; and if his or her number of shares shall exceed the number of five by any other means than last aforesaid, the excess of shares shall be forfeited and sink into the capital stock of the company, for the general benefit of the proprietors. 8. That the general management of the concerns of the company shall (subject to the clauses, conditions, provisions, and restrictions hereafter expressed) be intrusted to persons who shall constitute a board of directors; and the following persons shall be the first and present board of directors — that is to say, A, B, C, etc., of whom the said shall be chairman, and the said deputy chairman, for the rime being of the said board; and that the following persons shall be the first and present officers of the company, tiiat is to say, the said shall be the trustees, the said shall be the manager, the said shall be the auditors, Messrs. the bankers. Pkecedents. 1635 9. That the affairs and concerns of the company shall be conducted and managed under and subject to the several rules, regulations, clauses, and agreements hereinafter contained, that is to say — 10. That the proprietors of the company shall assemble together at the offices of the company at , or in some other convenient place in London, twice in every 11. That every such assembly of the proprietors shall be styled a general meeting; and such general meeting shall have full power to superintend, regulate, and control all the affairs of the company, the sense of such meeting being first taken in manner hereinafter men- tioned. 13. That the half-yearly general meeting shall be held on the first Wednesday in the months of , and held on the day of in every year, and shall be convened by the board of directors in the manner hereinafter mentioned. 13. That an extraordinary general meeting may be called at any time by any six proprietors or more, each of whom shall be a holder, in his own I'ight, of not less than three share^ in the capital of the company, and each of whom (the present proprietors excepted) shall have been a proprietor of the company for at least six months, send- ing a written requisition under their hands to that effect to the board of directors, who shall thereupon call such extraordinary meeting: Provided that the requisition of such proprietors be left at the office of the company at least fifteen days before the time named in the requisition for holding the same: And provided that in every such requisition the object for which the extraordinary general meeting is required to be called, shall be fully expressed, and the day and hour specified for holding the same, otherwise it shall not be incum- bent on the board of directors to take notice of the same. 14. That if, after any such requisition to the board of directors shall have been left at the office of the company, the said directors shall refuse or neglect to call such extraordinary meeting, then the proprietors signing the requisition may advertise an extraordinary general meeting in any two London newspapers, not less than four- teen, nor more than twenty-one days before the time fixed for holding the same, specifying the time and place of meeting, and the nature of the business transacted. 15. That both a half-yearly and an extraordinary general meeting may, in the cases hereinafter mentioned, adjouni to a future day; but no adjourned genei-al meeting shall, except in the cases hereinafter 1636 Appendix. specified, be held until the same be duly called in the manner herein- after mentioned. 16. That no other business shall be transacted at an extraordinary general meeting besides the business for which it shall have been called; and no other business shall be transacted at an adjourned general meeting besides the business left unfinished at the general meeting, for which such adjournment took place. 17. That, upon any difEerence of opinion at any general meeting, concerning any matter or thing that may be lawfully transacted or agitated at the , any ten proprietors or more who shall be present at the meeting, and qualified to vote as hereinafter mentioned, and each of whom shall be a holder, in his own right, of not less than three shares in the capital of the company, may demand a ballot if they think proper; and the same, if demanded at the meeting by writing under their hands, but not otherwise, shall be granted, and such a day for taking the same shall be fixed by the chairman as will allow sufiicient time for giving notice thereof in the manner herein- after mentioned; and every ballot shall commence at twelve o'clock at noon, and shall be kept open six hours, and no longer. 18. That only those proprietors present at any general meeting or ballot shall be considered qualified proprietors, and entitled to vote at that meeting or ballot, who (the present proprietors excepted) shall have been proprietors of the company for three calendar months next preceding the time at which such general meeting or ballot shall be held. 19. That at every general meeting and ballot every qualified pro- prietor shall have and be entitled to one vote for every share or shares, not exceeding five shares, which he, she, or they shall or may possess; but no member shall be entitled to more than five votes in respect of any shares he may so hold in the said company. 20. That every proprietor qualified to vote at the general meetings a.nd at ballots shall be entitled to appoint a person to vote and act for him or her by proxy, either at a given or an indefinite number of general meetings or ballots; but no vote or act by proxy, at any gen- eral meeting or ballot, shall be admitted, unless the person appointed to vote and act by proxy shall be a qualified proprietor, and shall be nominated in writing under the hand of the qualified proprietor availing himself or herself of his or her right so to vote and act by proxy, and unless such appointment shall have been entered in the books of the company; and no such qualified proprietor shall carry Precedestts. 1637 more than five proxies; and every proxy shall continue in iorce for the period to which the same was originally intended to extend, unless or until revoked by writing under the hand of the proprietor giving the same, and until notice of such revocation shall be given at the office of the company. 21. That every proprietor who shall have appointed such proxy as aforesaid shall, for all the purposes of the general meeting or meet- ings, or of the ballot or ballots for which the proxy shall have been ,aj)pointed, but not for the purpose of composing the number of pro- prietors whose personal presence is requisite to prevent adjournment, be considered present by such proxy; and all the votes and acts of the proxy in that capacity shall be as valid and effectual as the votes and acts of the proprietor appointing him would have been if such pro- prietor had been present and personally voted and acted at any such general meeting or ballot. 23. That two-thirds of the qualified proprietors present at two suc- cessive extraordinary general meetings specially called for the purpose, at the ballot or ballots which may be taken in consequence of being demanded at such meetings, or either of them, shall be requisite to make new laws, regulations, and provisions for the company, to amend, alter, or repeal all or any of the existing laws, regulations, and provisions of the company, or to dissolve the company. 23. That, as to all questions relating to any other business or matter to be transacted or agitated at any general meeting, a majority of the votes of all the qualified proprietors present and not declining to vote at the meeting, or at any ballot which may be taken in consequence of being demanded after such meeting, shall be sufficient to decide the same. 24. That the person to be in the chair at every general meeting shall be the chairman of the company; and, in case he should be absent, the deputy chairman of the company; and, in case both the chairman and deputy chairman should be absent, then some one of the directors present, to be elected by ballot, if need be, at the meet- ing; but, in the absence of all those, no business, except the adjourn- ment of the meeting, shall be proceeded in. 25. That the minutes of the proceedings of every meeting, general or special, ordinary or extraordinary, shall be entered and kept in proper books kept for such purpose, and signed by the person in the chair for the time. 1638 Appendix. 26. That an extraordinary general meeting, specially called for the purpose, may remove from his office any director, auditor, manager, or trustee, for negligence or misconduct in office, or any other reason- able cause, the sense of the meeting being taken by ballot, as herein- after mentioned. 27. That two successive extraordinary general meetings, specially called for the purpose, shall have full power to make any new laws, regulations, and provisions for the company, or to amend, alter, or repeal, either wholly or in part, all or any of the existing laws, pro- visions, and regulations of the company, provided such new, amended, or altered laws, regulations, and provisions do not extend to amend, alter, or repeal all or any part of the laws, regulations, and provisions established and settled by these presents, for confining the individual responsibility of each proprietor of the company to the amount of his or her share or shares in the capital thereof. 28. That any general meeting shall adjourn to a future day, if five of the proprietors and one or more of the directors shall not be present at the time appointed for such meeting, and proceed to business, within one hour from the time fixed for the meeting, and may adjourn to a future day, if the number of proprietors aforesaid and a director shall not be personally present when the whole or any part of the business to be transacted shall be decided upon; and may also adjourn to a future day if the meeting shall, by ballot, determine to break up before the whole of the business shall be completed; but, if any general meeting shall be adjourned, from any other cause than those aforesaid, the adjourned meeting may be held either from time to time, or from day to day, or at such other time or tifnes, and in sach manner as the proprietors present at the original meeting, or at any adjournment thereof, shall think proper. 29. That, whenever a general meeting shall, in consequence of a deficiency in the number of proprietors and a director, or from their or his absence during the time of transacting the business of the meeting, have adjourned to a future day, the board of directors shall call the adjourned general meeting, by advertising the same in any two or more London daily newspapers at least seven days and not more than twenty-one days before the time for Iiolding the same, and in the advertisement the object of the adjourned general meeting and the hour and place of meeting shall be specified. 30. That the directors shall meet together at the house or office of the company in aforesaid, once in every month at least, and at Peecedents. 1639 such other times as they shall be convened in the manner hereinafter mentioned. 31. That every such meeting shall be styled a board of directors. 33. That any one director may require the manager of the com- pany to call an extraordinary board of directors ; and such manager shall call the same, by sending to each of the directors, at least six days before the day appointed for the meeting, a circular letter signed by him, mentioning the day and hour of the meeting, and the pur- pose for which the same is required to be held. 33. That no business shall be transacted at a board of directors, unless the directors be present at the commencement of the business, and when a decision takes place upon the whole or any part of the business. 34. That no business shall be transacted at an extraordinary board, unless five directors be present at the commencement of the business, and when a decision takes place upon the whole or any part of the business. 35. That neither the directors nor any other officers of the conir pauy shall monopolize, forestall, regrate, or engross, or cause to be monopolized, forestalled, regrated, or engrossed, any malt, hops, beer, or any other articles or commodities used in carrying into effect the object of the company, but purchase and procure the same from time to time in market overt, or otherwise in the usual way of trade and dealing, as and when the ordinary consumption of the company shall require, without occasioning any grievance, prejudice, or inconven- ience to his Majesty's subjects, in their trade, commerce, or calling, contrary to the common law or statutes of this realm. 36. That no director, trustee, manager, auditor, or other officer or agent of the company shall directly or indirectly have or be in any- wise beneficially interested in any contract, agreement, bargain, or transaction, by supplying any malt, hops, beer, or any other article, commodity, matter, or thing for the use of the said company ; and if any such director, trustee, manager, auditor, or other officer or agent, enter into or be concerned in any such contract, agreement, bargain, or transaction, he shall thenceforth cease to act officially for the company, and shall pay such pecuniary fine, in increase of the capital of the company, as any general meeting may declare and direct, and, in default, forfeit all his shares or share and interest in the said company and capital, and be no longer a proprietor or shareholder thereof or therein. 1640 Appendix. 37. Tliat the board of directors shall cause all sales of ale and beer, and other the goods of the company, to be made for ready money, ex- cept where the same may be likely to prove injurious to the interests of the company, or shall not be practicable ; but, when it shall be necessary or advisable to sell upon credit, the board of directors shall, in all practicable cases, take or receive in payment bills or promissory notes, or other good and sufficient securities. 38. That the board of directors shall cause all purchases for or on behalf of the company to be made for ready money only, and not on credit, upon any pretense or under any circumstance whatsoever. 39. That, in order as far as possible to limit the liability of individ- ual proprietors in respect of transactions between the company and the public, beyond the amount of the share or shares of each proprie- tor, the board of dii'ectors shall, so far as is practicable, cause all con- tracts and engagements on behalf of the company to be made and en- tered into with an express stipulation, that each proprietor shall be liable, in respect of any contract or engagement, to the extent only of his share or shares in the concerns of the said company. 40. That, when and so often as there shall be a vacancy in the ofiSce of chairman or deputy chairman of the board of directors, the board of directors shall cause such vacancy to be filled up with all conven- ient speed, by the election at an extraordinary board of directors of a new chairman, or deputy chairman, from amongst the directors for the time being of the company. 41. That, when and so often as there shall be a vacancy in the office of director, manager, or trustee, the board of directors shall cause the same to be filled up with all convenient speed, by the election, at an extraordinary board of directors, of a new director, manager, or trustee. 42. That it shall be lawful for an extraordinary board of directors, specially called for the purpose, to remove from his office any director, manager, or trustee, for negligence or misconduct in office, or any other reasonable cause. 43. That the board of directors shall appoint the future bankers and solicitors of the company, and may change the present or future bankers or solicitor at their discretion. 44. That the board of directors shall make such compensation as they shall think fit and reasonable to the manager and auditors of the company, for his and their trouble in managing the affairs of the company, and auditing the reports, which, in pursuance of the direc- Precedents. 1641 tions hereinafter contained, are to be prepared by the board of direct- ors for the half-yearly meetings. 45. That all questions relating to any business or matter to be transacted or agitated at the board of directors shall be decided by a majority of the votes of the directors present. 46. That, at the board of directors, no director shall have more than one vote, except the person in the chair, who, in addition to the privilege of voting with the other directors, shall have a casting vote on air questions where the votes shall happen to be equal. 47. That the minutes of all the proceedings at every board of di- rectors shall be entered and kept in a book, and signed by the person in the chair. 48. That the person to be in the chair at every board of directors shall be the chairman of the board of directors ; and, in case he should be absent, then the deputy chairman of the board of directors ; and, in case he should be absent, then some one of the directors present, to be elected at the board. 49. That, in all other respects, the board of directors shall be regu- lated, and the business thereof conducted and decided upon as the directors present shall think proper, and according to the rules and orders of any preceding board of directors. 50. That the board of directors shall, so far as the same may be practicable, and except where the same is otherwise directed by these presents, cause all the funds or property of the company to be at all times vested in the trustees of the company, and for that purpose shall cause all sums which may be invested in any Parliamentary stocks or public funds of Great Britain to be.in vested in the names of the trus- tees for the time being of the company. 51. That the said board of directors shall, as soon as conveniently may be, procure, or cause to be procured, a proper license or licenses for the sale of ale and beer of the company by wholesale and retail ; and that such license or licenses shall be taken and made out in the name of the said John Styles, and be held and employed by him as manager of the company, in trust for the general benefit of the com- pany, and for the purpose of enabling the objects of the company to be carried into effect. 52. That the said John Styles, as manager, shall continue to have vested in him, in trust, for the benefit of the company, the legal pos- session and ownership of the aforesaid house and premises, and the said license or licenses, and that he will do no act to forfeit any 206 1G42 Appendix. license or licenses, or to assign or otherwise incumber the said house and premises, except under a request in writing, under the hands of the board of directors; and that, on his retirement or dismissal as manager of the company, all future license or licenses shall be taken and be made out in the name of the manager for the time being, and the said house and premises shall be assigned to such new manager, at and in such time and manner as the said board of directors shall in writing under their hands direct. 53. That the said John Styles, or other the manager of the com- pany for the time being, shall act to the best of his ability in forward- ing the object of the company, and shall, at all times during the con- tinuance of his management, devote his whole time and attention in the usual hours of business, and use his utmost endeavors in carrying on the company's trade according to the true intent and meaning of these presents. 54. That the said John Styles, or other the manager for the time being (subject to the control of the board of directors, and other pro- visions herein contained), make purchases for and on behalf of the company, of malt, hops, beer, and such other commodities, matters, and things, as may be necessary for carrying into effect the objects of the company, and shall make sales of the ale and beer made by or on behalf of the said company ; and, for the purpose of carrying on the trade for the benefit of the company, shall have placed at his disposal, in the hands of the bankers of the company, the fund called the man- agement fund, hereinafter mentioned. Provided always, that no purchase to be made by virtue of the power hereby given to any one person, or any one firm, shall exceed in value or amount the sum of £ , unless such goods shall be fully paid for on delivery, or unless such sales shall be allowed to be effected by express permission of a board of directors specially convened for that purpose, and given in writing under their hands. 55. That all purchases to be made by the said John Styles, or other the manager for the time being, on behalf of the company, shall be for ready money only, and no credit taken by him so as to bind the said company on any pretense whatever ; and all payments exceeding ol. in amount shall be discharged by drafts or checks drawn by the said manager on the bankers of the company, to be signed by the said John Styles, or manager for the time being, upon, and payable out of the said management fund. Provided always, that no draft or check, or number of drafts or checks, in aggregate amount shall exceed the Pkecedents. 1643 sum hereinbefoi-e directed to be placed under the control of the said manager in the management fund. oG. That the receipts of the said John Styles, or other the manager for the time being, shall be good and effectual discharges for all sums of money in such receipts purporting to be received by him for or on account of the company. i 57. That, in the event of credit being given to any person or per- sons for goods and effects of the said company sold and delivered to them by tlie said John Styles, or other the manager for the time being, the said manager shall not, on any account ■whatsoever, during the continuance of the said company, release any debt or demand due or belonging to the said company, or accept for the same less than shall be really due, the usual abatement and allowance according to the custom of trade only excepted ; nor shall or will release or discontinue any action or suit to be brought for any such debt or demand, with- out the consent in either case of the other of them, on pain of being compelled to make good, out of his share of and in the said joint stock, and the profits thereof, the amount or value of the loss occa- sioned thereby. 58. That the said John Styles shall not, during the continuance of the said company, directly or indirectly be concerned in or follow the business of a brewer, or any other trade, art, business, or employment whatsoever, either alone, or in company with, or as agent to, or in the name or names of any other person or persons. 59. That the said John Styles, and other the manager for the time being, shall submit to the general board of directors, full, true, and particular accounts of all purchases and sales, and payments made, and credits given, for or on account of the said company. 60. That, except the said house and premises, and license or licenses, and moneys, from time to time placed under the control of the said manager, all property to which the company may be or become enti- tled, shall be and be deemed the property at law of the trustees for the time being of the company, and be treated and considered as such in all criminal and civil proceedings at law, and not as the property of the proprietors for the time being of the company ; and all such personal estate to which the company may be entitled shall, so far as the same may be practicable, pass either by assignment by deed from or by delivery by the trustees for the time being. 61. That, upon the removal, resignation, or death of any manager or any trustee of the company, the board of directors shall, at the 1644 Appendix. expense of tlie company, cause all such deeds and acts to be done and executed as shall be necessary for the purpose of getting out of such manager or such trustee, his heirs, executors, or administrators, all such trust property belonging to the company as may happen to be vested in the manager or trustee for the time being removed or resign- ing, or in the heirs, executors, or administrators of the manager or trustee so for the time being departing this life. 62. That the board of directors shall, when and so often as they shall think fit and at the expense of the company, cause declarations of trust to be executed by the manager and trustees of .the company, in regard to the said house and premises, or other houses, offices, or premises, in which the business of the company may be carried on, and in regard to the funds or other property of the company which shall from time to time be vested in such manager or trustee. 63. That the board of directors shall always have in the hands of the bankers of the company, such a balance as shall be sufficient to answer the current payments and expenses of the company, and shall, when and so often as a sufficient balance cannot be obtained by any other means, sell and convert into money a competent part of the funds or property hereinafter directed to be accumulated, and of the stocks and securities in which the same shall for the time being be invested. 64. That all the various payments to which , the funds or property of the company shall from time to time be subject or liable shall be made by order or resolution of the board of directors, and no pay- ment shall be valid without such order or resolution, save and except that if in the interval between the meetings of the board of directors there shall be any sudden or unexpected demand for the payment of any money by the company, such payment may be made by the said John Styles, or other the manager of the company for the time being, for which payments the funds or property of the company shall be answerable, and that exclusive of the management fund hereinbefore mentioned, provided one or more of the directors, who shall from time to time be specially appointed by the board of directors for that pur- pose, shall certify in writing under his or their hand or hands the jn'opriety of the immediate payment of such money. 65. That the board of directors shall cause at every monthly meet- ing of the board a certain sum not exceeding £ in the whole, to be placed in the hands of the bankers of the company, which shall be at the disposal and control of the said John Styles, or other the man- Pbeceden'ts. 1045 ager for the time being, to be called the management fund, out of which the current expenses of the said concern shall be defrayed, and all goods and orders purchased or to be paid for on behalf of the com- pany at a cost exceeding 51., shall be paid by checks drawn on the said bankers, such checks, if for answering the current and immedi- ate expenses of the company, to be signed by the manager for the time being, and drawn upon or out of the management futid, but, if for sums ordered to be paid by the said board of directors, such checks must be signed by any three of the directors whom the board of directors may appoint to sign drafts for the company. 6G. That as to so much of the funds or property of the company as shall not be required to supply the management fund and satisfy the current and immediate claims upon and expenses or other purposes of the company, the board of directors shall accumulate the same at compound interest, and shall for that purpose lay out and invest the same and all the resulting income and produce thereof in the Parlia- mentary stocks or public funds of Gi'eat Britain, or in Navy or Exchequer bills, or India bonds, and may either permit the said funds and property to remain in its then state of investment, or cause the same to be disposed of, called in, or otherwise converted into money, and the money arising thereby to be laid out and invested either in the Parliamentary stocks or public funds, or iu Navy or Exchequer bills, or India bonds, and so from time to time as occasion shall require. Provided, nevertheless, that in every such laying out and investment, due care shall be taken so to dispose of the funds or property, that sufficient money may at all times be immediately raised whenever the same shall be required, to satisfy the current claims upon and expenses of the company. 67. That the board of directors shall cause all the ready money at the bankers to be placed to an account to be called " The London Ale Brewing Company Account," and shall cause all Navy and Exchequer bills, or India bonds, and other securities, to be kept either at the bankers of the company, or in the Bank of England, to be there placed to a similar account. 68. That an extraordinary board of directors specially called for the purpose shall, when and so often as the profits of the company will safely allow the same, declare a dividend out of such profits. 69. That the board of directors shall cause every dividend which ■shall be so declared to be divided amongst the proprietors for the time 1646 Appendix. being of the company, ratably and proportionably, according to the number of the shares in the capital of the company. 70. That within three days after a dividend shall have been declared out of the profits of the company, the board of directors shall cause a circular letter to be sent to each proprietor informing him or her of the amount of the dividend, and when the same will be payable at the office of the company. 71. That the board of directors shall cause every dividend to be declared out of the profits of the company, to be payable at the office of the company at the end of fourteen days at the most from the time when the same shall have been declared. 72. That it shall be lawful for an extraordinary board of directors, specially called for the purpose, to come to a resolution that all the proprietors and holders for the time being of shares in the capital of the company shall pay a further installment upon their respective shares in the said concern. Provided that the said board shall, by a circular letter to each of the proprietors, inform him or her of the resolution stating the amount of such further installment, and the day and place fixed by the board for the payment of such further installment, and also stating that if the same is not paid within fifteen days after the day fixed for the payment thereof, interest after the rate of oZ. per cent for every 1001. by the year, will be payable on such installment, from the day fixed for the payment thereof up to the time when the same shall be actually paid; and that if the installment is not paid within one calendar month after the day fixed for the payment thereof, the share or shares in the capital of the company of the proprietor or other holder who shall so make default, and all the benefits and advantages whatsoever attending the same, shall be liable to be forfeited to the com- pany, and, within two days after the day fixed for the payment of such further installment, the board of directors shall cause to be sent to such proprietors or other holder for the time being of shares in the capital of the company, who shall not then have paid his or her installment, a circular letter containing a second application for the payment of the same, and setting forth the statement required in the first circular letter in regard to the payment of interest and the lia- bility to forfeiture. 73. That, upon the neglect or refusal of any proprietor, or of the husband of any female proprietor, or of the executors or administra- tors of any deceased proprietor, to pay any installment within one' calendar month after the day to be mentioned in the circular letter Peecedents. 1647 for payment thereof, or upon the neglect or refusal of any person after his or her being approved of as a proprietor by the board of directors to execute within the time hereinafter prescribed, such deed of covenant as hereinafter is mentioned, then, and in either of the said cases, it shall be lawful for an extraordinary board of directors, spec- ially called for the purpose, to declare that the share or shares in the capital of the company of the person or persons who shall so neglect or refuse as aforesaid, and the installment or installments paid thereon, and all the benefits and advantages whatsoever attending the same, shall thenceforth be forfeited to the company for the benefit of the other proprietors, and thenceforth to expel from the company the person (.if living, and a proprietor) whose share or shares shall be so forfeited. 74. That, notwithstanding any thing hereinafter contained, it shall be lawful for the board of directors, if they should think fit, to enforce the payment of any further installment from those propri- etors or other holders, who shall make default in payment of the same, instead of declaring their share forfeited pursuant to the last- mentioned clause. 75. That it shall be lawful for the board of directors, if they shall think fit, within three calendar months after any share or shares shall, under the provisions hereinafter in that behalf contained, have been forfeited to the company by reason of the person holding the same having neglected or refused to execute these presents or such deed of covenant as hereinafter is mentioned, within the sixty days hereinafter prescribed, to discharge such share or shares from the forfeiture, and restore such share or shares to the person who held the same, on his or her becoming a proprietor and executing these presents or such deed of covenant as hereinafter is mentioned, and paying to the company such a sum by way of fine, in respect of such share or shares, as the board of directors shall think fit. 76. That it shall be lawful for the board of directors, if they shall think proper, but not otherwise, at any time or times hereafter, with and out of the fund or property of the company, to purchase for the benefit of the proprietors, at such price as the board shall deem fair and reasonable, any share or shares which any proprietor may be desirous of selling. 77. That it shall be lawful for the board of directors, if they shall think proper, but not otherwise, to sell for the benefit of the propri- etors for the time being, at such price or prices, and upon such terms 1648 Appendix. as the board of directors shall think projier, all or any of the shares which shall be so from time to time purchased as aforesaid, and also all or any of the shares which, under the provision contained in these presents, shall from time to time be forfeited to the company, from any cause whatsoever, to any person or persons who shall be approved of by the board as fit to become a proprietor or proprietors in respect thereof, and either with or without the dividend or other profits which may have been declared or appropriated on the said share or shares in the interval between the purchase thereof and the sale thereof by the board. 78. That, whenever any such notice as hereinafter is mentioned shall be given by any husband, executor, or administrator, .desirous of becoming a proprietor, or having procured some person to become a proprietor in any respect, of all or any of the shaj-es held by him or her in that capacity or by the assignees of a bankrupt or insolvent proprietor having procured some person to become a proprietor in respect of all or any of the shares held by him in that capacity, or by any proprietor having procured some person to become a propri- etor in respect of all or any of the shares held by him or her in the capital of the company, or by any person desirous of taking or pur- chasing any share or shares from them, the board of directors shall proceed without delay to take such notice into consideration, and shall, under the hands of three of the directors, certify in writing to the person or persons giving the notice, their approbation or disap- probation of the person proposed in such notice to be the proprietor of such share or shares. 79. That in no case shall the board of directors permit more than one person to become a proprietor of the company in respect of any share or shares of the capital thereof, it being hereby intended that two or more persons jointly entitled, either as trustees or beneficially, to any share or shares, shall not be allowed to be joint proprietors in respect thereof. 80. That the board of directors shall cause the name and place of residence of any and every present and future proprietor, and the shares belonging to every proprietor, and the proper number of each share, to be entered in a book to be kept for that purpose, to be called the "Share Register Book," and shall, on receiving at the o£&ce of the company notice in writing of a proprietor having changed his or her name or place of residence, cause the new name of Precedents. 1649 place of residence to be entered in such book as aforesaid, and substi- tuted for the former name or place of residence. 81. That the board of directors, on receiving at the office of the company notice in writing of any proprietor having married (being a female), or died, or become a bankrupt, or petitioned to take the benefit of any act for the relief of insolvent debtors, shall, if the proprietor respecting whom such notice shall for the time being have been received shall be a female, and shall then be married, cause the name and place of residence of her husband to be entered in the share register book, and, if the proprietor respecting whom such notice shall for the time being have been received shall have died, become bankrupt, or petitioned to take the benefit of any act for the relief of insolvent debtors, cause the name and place of residence of his or her executors, administrators, or assigns, as the case may be, to be entered in the same book. 82. That the board of directors shall also, on receiving at the office of the company notice in writing of any such husband, executor, administrator or assign, having changed his or her name or place of residence, cause the new name or place of residence to be entered in the share register book, and substituted for the former name or place of residence. 83. That, when and so often as a certificate of the marriage of any female proprietor, or the probate of the will or letters of administra- tion of a deceased proprietor, or an official extract or copy thereof, or the deed of assignment of the estate and effects of a bankrupt or insolvent proprietor, or an attested copy thereof, or any deed or instru- ment by which any share in the capital of the company shall be trans- ferred, or an attested copy of any such deed- or instrument, shall, in pursuance of the directions hereinafter contained, be left at the office of the company, the board of directors shall cause a sufficient minute or extract thereof to be made in the share register book, 84. That, on any person ceasing to be a proprietor of the com- pany, in respect of all or any of the shares held by him or her, and on any person becoming a proprietor of any share or shares in the capi- tal of the company, the board of directors shall cause all such entries to be made in the share register book as shall be necessary, in order that the same book may at all times show who are the proprietors for the time being of the company, and the number of shares held by each proprietor, and the proper number of each share beld by each of the proprietors for the time being. 207 1650 Appendix. 85. That the board of directors shall cause every share in the capi- tal of the company always to be distinguished by a number. 86. That the board of directors shall cause every share which shall be purchased by the board of directors, or forfeited to the company, and which shall be afterward sold, to be distinguished by the same number by which it was distinguished at the time when the same was purchased by the board of directors, or forfeited to the company. 87. That the board of directors shall cause to be delivered to every present proprietor of the company, for each share held by him in the capital of the company, a certificate under the hands of three of the directors, specifying the number of each share, and the name and resi- dence of the person entitled thereto, and declaring that he or she is the proprietor thereof. 88. That, -when and so often as any person, not a purchaser from the board of directors, shall, in the manner hereinafter required, have become a proprietor of any share or shares in the capital of the company, and any further installment or installments which may then nave oeen previously called for on such share or shares shall have been duly paid, the board of directors shall, at any time there- after, when required so to do by the last proprietor of such share or shares, his or her executors or administrators, and at his, her, or their expense, cause to be delivered to him, ber, or them, a certificate signed by three directors, certifying that such last proprietor is no longer the proprietor of such share or shares, and mentioning the time when he or she ceased to be a proprietor of the same shares or share. 89. That, upon the bankruptcy or insolvency of any person or per- sons who may happen at the time of such bankruptcy or insolvency to be indebted to the company, the board of directors shall nominate and appoint such one or more of the proprietors, as they shall think proper, to prove the debt due to the company from the effects and estate of such bankrupt or insolvent, and generally to act for and on behalf of the company; and in case of such bankruptcy or insolvency, the board of directors shall also nominate and appoint the person who shall receive for and on behalf of the company the dividends or divi- dend which shall from time to time become due and payable in respect of such debt; and the receipts or receipt of the persons or person who shall be so nominated and appointed to receive such dividend or divi- dends shall effectually discharge the person or persons paying the same from being answerable or accountable for the misapplication or Pkecedents. 1651 non-application thereof, or from being obliged to see to the applica- tion thereof. 90. That the board of directors shall cause proper books of account to be kept, and entries to be made therein of all such matters, trans- actions, and things as are usually written or entered in books of account kept by persons engaged in concerns of a nature similar to the concerns of the company hereby established, and shall cause the said books of account, and all minute and other books belonging to the company, and all the reports which, in pursuance of the directions hereinafter contained, are to be produced by the board of directors at the half-yearly general meeting, and shall cause the afore- said indenture of lease, or agreement for any lease, and all and every licenses or license for the sale of ale and beer, and also these pres- ents, and all other deeds, documents and writings, concerning the company, except the bills, notes, and money securities hereinbefore mentioned, to remain and be kept at the office of the company; and shall at all times admit any one or more of the proprietors, upon the requisition in that behalf of any three or more of the proprietors, to have free access to these presents, and the said other documents and writings, and to examine and cast up any of the accounts to be con- tained in any of the said books, reports, and other documents and writings, without any hindrance or denial whatsoever. 91. That, at every general meeting, the board of directors shall cause to be produced, if called for by any three of the proprietors present, all or any of the account, minute, or other books belonging to the company, and these presents, or any deeds or other documents and writings concerning the company, which shall be in the possession of the board of directors. 93. That the board of directors shall, so far as the same may be practicable, cause to be prepared previously to and to be produced at the half-yearly general meeting, to be held in the month of March next, a report, signed by the auditors of the company, of the receipts and disbursements of the company, from the commencement thereof up to that time, and of the particulars and amount of the funds or property of the company, and of the state and condition of the com- pany; and shall, so far as the same may be practicable, cause to be prepared previously, and to be produced at every half-yearly general meeting to be held after the half-yearly general meeting in next, a report signed by the auditors of the company, of such of the receipts and disbursements of the company, up to that time, as shall not have 1652 Appendix. been incljided in any preceding report, and of the particulars and amount of the funds or property of the company, and of the state and condition of the company. 93. That, whenever two such successive extraordinary general meet- ings, as hereinbefore mentioned, shall have come to a resolution to dissolve the company, the board of directors shall cause so much of the funds or property of the company, as shall not then consist of money, to be forthwith sold or otherwise converted into money; and, as soon as conveniently may.be after such resolution, so much of the funds or property of the company as shall remain after answering or providing for the claims and demands thereupon, shall be jDaid to and distributed by the board of directors amongst the proprietors, or their respective executors, or administrators, or assigns, in the proportions in which they shall be respectively entitled thereto; and, immediately after such payment and distribution, the company shall be dissolved, and these presents, and every clause, article, matter, and thing herein contained, shall thenceforth cease, determine, and he void. 94. That, when and so often as any person or persons shall break, or refuse or neglect to perform or comply with any of the covenants, agreements, and provisions contained in these presents, and which, on his, her, or their part, ought to be performed and complied with; or when and so often as the default or misconduct of any person or per- sons shall render any action, suit, or other proceeding necessary, it shall be lawful for the board of directors, when and so often as they, in their discretion, shall think fit, to order or direct an action, suit, or other proceeding to be brought, commenced, carried on, and prose- cuted or defended, for or on account of any such refusal, neglect, or default, and also for or on account of any of the funds or property •of the company, of any contract or engagement for or on behalf of the company, or of any other cause, matter, or thing concerning the rights and interests of the company. And it shall be lawful for the board of directors to cause any action, suit, or other proceeding which shall be so brought, commenced, carried on, prosecuted, or defended by their order or direction as aforesaid, to be stayed, com- pounded, or compromised; and also to cause all disputes and differ- . ences, upon which there may be cause for any such action, suit, or other proceeding, to be referred to arbitration, either before or after the commencement of such action, suit, or other proceeding; and also to order or direct the necessary party or parties for or on behalf of the company to bring, commence, carry on, prosecute, or defend Pkecedekts. 1653 any such action, suit, or other proceeding; and also to order or direct such necessary party or parties afterward to stay, compromise, or com- pound such action, suit, or other proceeding ; and also to order or direct such necessary party or parties to refer any such dispute or differ- ence to arbitration, either before or after the commencement of any such action, suit, or other proceeding ; and such necessary party or parties to any such action, suit, or other proceeding, shall not release or voluntarily discoutinue or become nonsuit in such action, su.it, or other proceeding, 'without the consent of the board of directors, and shall be indemnified out of the fund or property of the company, and the board of directors shall dispose of the same accordingly. 95. That, subject and without prejudice to the powers hereinbefore given to the general meetings, the board of directors shall have the entire management of and superintendence over the affairs and con- cerns of the company, and shall, in all cases provided for by these presents, or hereafter to be provided for by the general meetings, act in strict conformity to the laws and regulations hereby established, or hereafter to be established by the general meetiiigs; but, in all cases for the time being iinprovided for by these presents, or by the general meetings, it shall be lawful for the board of directors to act in such manner as shall appear to them best calculated to promote the welfare of the company; and for the better guidance of the board of directors in the management of and superintendence over the afEairs and con- cerns of the company, it shall be lawful for an extraordinary board of directors, specially called for the purpose, to make whatever by-laws and rules they shall think proper, provided the same be not incon- sistent with or repugnant to the fundamental princij)les of the com- pany, as established and settled by these presents, or as altered and changed by virtue of the powers hereinbefore given to the general ■ meetings for that purpose, and at any time to alter or repeal all or any of the by-laws or rules which may be so made. 96. That the report to be prepared in pursuance of the directions hereinbefore contained by the board of directors, previously to the holding of every half-yearly general meeting, shall be examined, and the accounts from which such report shall or ought to have been drawn shall be audited by the auditors of the company; and, in order thereto, the auditors shall, with the assistance of the clerks of the company, inspect and examine all the books and vouchers of the company which they shall think necessary; and, after a careful exam- ination of such reports with such books, papers, and vouchers, and 1654 Appendix. correcting and altering the same, if necessary, the auditors shall, previously to the day on which the half-yearly general meeting is to he held, at which such report must be produced, sign their names at the foot thereof, in testimony of their I'cspective approbation of the same. 97. That the trustees of the company shall never consist of more or less than three. 98. That the trustees of the company, in whom any of the funds or property of the company shall for the time being be vested, shall stand possessed of the same in trust for the company, and shall apply and dispose of the same in such manner, for the benefit of the com- pany, as the board of directors shall, conformably to the duties imposed on them by these presents, from time to time order or direct. 99. That the chairman and deputy chairman of the board of directors, or any director, auditor, or trustee of the company, may at any time vacate his office by sending in his resignation in writing to the board of directors of his intention so to do. 100. That the receipt or receipts in writing of any three of the directors for the time being, and the receipt or receipts in writing of the manager, or the trustees, or bankers for the time being, for any of the moneys of the company, which may be paid to such directors, managers, trustees, or bankers, shall effectually discharge the person or persons paying the same from being obliged to see to the applica- tion thereof, or from being answerable or accountable for the misap- plication or non-application thereof. 101. That the directors, auditors, manager, trustees, and other officers for the time being of the company, and each and every of them, and their and each and every of their executors and adminis- trators, shall be indemnified and saved harmless out of the funds or property of the company from and against all costs, charges, losses, damages, and expenses which they or any of them, or their or any of their executors or administrators, shall or may incur or sustain by reason or in consequence of or on account of any contract or engage- ment into which they may enter on behalf of the company, or any action, suit, or other proceeding, either at law or in equity, relating to or in consequence of, or on account of any contract or engagement into which they may enter on behalf of the company, or any action, suit, or other proceeding, either at law or in equity (relating to or in consequence of the acts or property of the company, or the acts, neg- lects, or defaults of any one or more of the directors or other per- Precedents. 1655 sons in the employ of the company), which the' board of directors, at any general meeting, may order to be commenced, prosecuted, or de- fended, or otherwise in or about the execution of their respective offices or trusts; except such costs, charges, losses, damages, or expenses as shall happen or occur through their or any of their own willful neglects or defaults ; and that none of them shall be answer- ble for any act or default of any one or more of the others of them, or for joining in receipts for the sake of conformity, or for any person or persons who shall collect or receive the debts or moneys of the company, or for any banker or other person with whom any moneys or effects belonging to the company shall or may be lodged or de- posited for safe custody or otherwise, or for the insufficiency or deficiency of any security upon which any moneys of or belonging to the company shall be placed out or invested, or for any other loss, misfortune, or damage which may happen in the execution of their respective offices or trusts, or in relation thereto, except the same shall happen by or through their or his own willful neglect or default respectively, 102. That every proprietor or other holder for the time being of shares in the capital of the company shall pay every installment that may hereafter be called for by an extraordinary board of directors in the manner hereinbefore required, on his or her share, or on each of hfs or her shares in the capital of the company, on or before the day and at the place mentioned in the circular letter calling for the sanie. 103. That in no case shall any proprietor or other holder be liable to pay at any one time, in respect of any one share, a larger install- ment than another proprietor or other holder, or to pay at any one time as an installment on any one share more than the sum of £ , or to pay in respect of any one share more than the sum of 101. in the whole, including the said deposit or installment already paid. 104. That the legatees and next of kin of deceased proprietors shall not be entitled to hold, in either of those capacities, any share or shares in the capital of the company. But, in all cases where legatees or next of kin of deceased proprietors shall become entitled to any share or shares in the capital of the company, the executors or administrators of such deceased proprietor shall, as between themselves and the company, be considered as the holders of such share or shares, and shall be the only persons who shall be entitled either to become proprietors or to procure any other person to become proprietor in respect of such share or shares. 1656 Appendix. 105. That the husband of any female proprietor, or the executor or administrator of any deceased proprietor, shall not be a proprietor in respect of any share held by him or her in the capital of the company in that capacity, but may, in the manner and upon the terms herein- after mentioned, either become a proprietor or procure some other person so become a proprietor in respect of any share so held by him or her. 106. That, before any husband, executor, or administrator can" be- come a proprietor, or can procure any other person to become a pro- prietor in respect of any share held by him or her in that capacity, he or she shall leave or cause to be left at the office of the company, for the space of one week, the certificate of the marriage, or (as the case may be) the probate of the will, or letters of administration under which he or she may claim or be entitled to such share or shares, or otherwise an official extract or copy of such will or letters of administration, in order that a minute or extract of such certificate, will, or administration, respectively, may be entered in the share register book. 107. That the assignees of any bankrupt or insolvent proprietor shall not be proprietors in respect of any share held by them in the capital of the company in that capacity, but may, in the manner and upon the terms hereinafter mentioned, procure some person to be- come a proprietor in respect of any share so held by them. 108. That, before the assignees of any bankrupt or insolvent pro- prietor can procure any person to become a proprietor in- respect of any share held by them in that capacity, 'they shall leave or cause to be left at the office of the company, for the space of one week, the deed by which the effects of the bankrupt or insolvent proprietor were assigned to them, or an attested copy of such deed, in order that a minute or extract thereof may be entered in the share register book. 109. That any proprietor of the company may procure some other person to become a proprietor in respect of all or any of the shares held by him or her in the capital of the company. 110. That the husband of any female proprietoi', and any executor or administrator of a deceased proprietor, who shall be desirous of becoming a proprietor in respect of all or any of the shares held by him or her in that capacity, and also any person who shall be desirous of taking or purchasing any share or shares from the board of di- rectors, shall give notice in writing at the office of the company, of Precedents. 1657 such his or her desire, and shall describe in such notice his or her name or place of abode, and the number of the share, or of each of the shares in respect of which he or she is desirous of becoming a proprietor. 111. That the holder or holders of any share or shares in the capital of the company, whether such holder or holders shall be a proprietor, or the husband of a female proprietor, or the executors or adminis- trators, or any one or more of the executors or administrators of a deceased proprietor, or the assignees of a bankrupt or insolvent pro- prietor or proprietors, who shall have procured some person or per- sons to become a proprietor or proprietors of all or any of his, her, or their shares in the capital of the company, shall give notice in writing at the office of the company of his, her, or their having procured such person or persons to become a proprietor or proprietors, and shall describe in such notice the name and place of abode of such proposed proprietor, and the number of the share, or of each of the shares in respect of which he, she, or they shall have procured such person or persons to become a j)roprietor or proprietors. 113. That, whenever the board of directors shall, in the manner hereinbefore I'equired, have certified that any executor or adminis- trator who may be desirous of becoming a proprietor, or any person who may have been procured to become a proprietor of any share or shares in the capital of the company, is fit to be a proprietor of such share or shares, the proprietor, or the assignees of the bankrupt or insolvent proprietor, or the executor or administrator of the last proprietor, shall be at liberty to transfer the same without delay. 113. That every transfer of any share or shares in the capital of the company shall be made either at the office of the company or at such other place as the board shall require, and in such manner as the board shall prescribe, for vesting the share or shares in the pro- posed new proprietor. 114. That every deed of transfer shall be prepared by the solicitor for the time being of the company, who shall be paid by every person to whom a transfer may be made the sum of , exclusively of stamp duty, for each deed of transfer. 115. That the deed or instrument by which any share shall be transferred, or an attested copy of such deed or instrument, shall, within six days after the execution thereof, be left at the office of the company for the space of three days by the person to whom the assignment shall be made in order that an extract or minute thereof may be entered in the share register book. 208 1658 Appendix. 116. That every husband who may be desirous of becoming a pro- prietor in respect of all or any of the shares held by him in that capacity, and every person who may take or purchase any share or shares in the capital of the company from the board of directors, and who shall be approved of by the board in the manner hereinbefore required, as fit to be a proprietor in respect of such share or shares, and who shall not at the time of such approval be a proprietor of the company, shall within one calendar month after such approval shall have been certified to him or her by the board of directors, execute at the office of the company, or at such other place as the board shall require, either in person or by attorney, a deed of covenant by which he or she shall covenant to abide by the rules and regulation's of the company. 117. That every person who may have been aiDproved of by the board of directors as fit to become a proprietor in respect of any share or shares in the capital of the company, and to whom a transfer of such share or shares shall have been made, and who shall not, at the time of such transfer being made, be a proprietor of the company, shall, within one calendar month after such transfer shall have been made, execute at the office of the company, or at such other place as the board shall require, either in person or by attorney, a deed of covenant to abide by the rules and regulations of the company. 118. That every deed of covenant to be executed in the cases here- inbefore mentioned, by any person or persons becoming a proprietor or proprietors of the company, shall at all times be prepared by the solicitor for the time being of the company, who shall be paid the sum of , exclusively of stamp duty, for every such deed of coven- ant by the person or persons executing the same and entering into the covenants therein contained. 119. That all dividends and other profits which may be declared or appropriated on any share of any female, or deceased bankrupt, or insolvent proprietor, in the interval between the time of her or his marriage, death, bankruptcy, or petitioning to take the benefit of any act for the relief of insolvent debtors, and of some person becoming a proprietor of such share, shall not be received, neither, during such interval, shall the rights and privileges attending such share be exercised by any person or persons whomsoever, but the same respect- ively shall remain in suspense, and as soon as any person shall become a proprietor of such share, the husband of such female proprietor, or the executors or administrators of such deceased proprietor, or the Pbecedents. 1659 assignees of such banl^upt or insolvent proprietor, shall, on payment of all installments which may have been previously called for and may then remain unpaid on such share, may be entitled to receive the dividends and other profits which may have been so suspended as aforesaid. 120. That every husband who may have been approved of by the board of directors in manner hereinbefore mentioned, as a fit person to become a proprietor of any share in the capital of the company, held by him in that capacity, and every person who may be approved of in like manner as a fit person to become a proprietor of any share which he or she may take or purchase from the board of directors, and who, at the time of such approval, shall be a proprietor of the company in respect of any other share or shares, sh-all, as to the share in respect of which he or she may have been so as aforesaid approved of as fit to become a proprietor, be, from tb time of such his or her approval, considered a proprietor of the company, and sub- ject to all the installments which may thereafter be called for on such share, and to all other duties, claims, and demands in respect of the same, and (in the case of husband) shall then be entitled to receive the dividends and other profits (if any) which may have remained in suspense in respect of such share. 121. That every person who may have been approved of as fit to become a proprietor of any share in the capital of the company held by him in the capacity of husband of a female proprietor, or may have been approved of as fit to become a proprietor of any share which he or she may be desirous of taking or purchasing from the board of directors, and who, at the time of such apjiroval, shall not be a proprietor of the company, shall, from the time of his or her executing the deed of covenant hereinbefore requii-ed, be considered a proprietor of the company, and (in the case of a husband) shall then be entitled to receive the dividends and other profits (if any) which have remained in suspense in respect of such share. 122. That every person who may have been approved of by the board of directors as fit to become a proprietor in respect of any share in the capital of the company, and to whom a transfer shall have been made of such share, and who on the day of the date of such deed of transfer shall be a proprietor of the company m respect of any other share or shai-es shall as to such share which may have been so transferred to him or her, b6 considered a proprietor of the com- pany from the day of the date of the deed by which the same share 1660 APPEKDIX. Avas transferred to him or her, and shall thenceforth be subject to all the installments which may thereafter be called for on such share, and to all other duties, claims, and demands in respect of the same. 123. That every person who may be approved of by the board of directors as fit to become a proprietor in respect of any share in the capital of the company, and to whom a transfer shall have been made of such share, and who on the day of the date of such deed of transfer shall be a proprietor of the company in respect of any other share or shares, shall, as to such share which may have been so transferred to him or her, be considered a proprietor of the comjiany from the day of the date of the deed by which the same share was transferred to him or her, and shall thenceforth be subject to all the installments which may bo thereafter called for on such share, and to all other duties, claims, and demands in respect of the same. 12-i. That every person who may have been approved of by the board of directors, as fit to become a jiroprietor in respect of any share in the capital of the company, and to whom a transfer shall have been made of such share, and who, on the day of the date of such deed of transfer, shall not be a proprietor of the company, shall, from the time of his orher.executingthe deed of covenant hereinbefore required, be considered a propi-ietor of the company. 125. That when and so often as any person, not a purchaser from the board of directors, shall in the manner hereinbefore required, have become a proprietor of any share or shares in the capital of the company, the last proprietor of such share or shares, and all persons claiming by, from, or under him or her (except the new in'oprietor), shall, from the time of such new proprietor becoming a proprietor in respect of such share or shares, and on payment of any further install- ment or installments which may then have been previously called for on such share or shares, be forever acquitted and discharged from all other liabilities and obligations in respeat of such share or shares, and from all other or further claims and demands on account of the same, and the certificate to be given by the board of directors as hereinbe- fore required, of such person having ceased to be a proprietor in respect of such share or shares, shall at all times be evidence of such acquit- tance and discharge as aforesaid, in respect of such share or shares. 126. That when and so often as any person, not a purchaser from the board of directors, shall, in the manner hereinbefore i-equired, have become a proprietor of any share or shares in the capital of the company, the last proprietor of such share or shares, and all persons Peeckdents. 1661 claiming by, from, or under him or her (except the new proprietor), shall, from the time of such new proprietor becoming a proprietor, have no claim or demand whatsoever, either at law or in equity, either upon or against the company, or any one or more of the proprietors thereof for the time being, other than such new proprietor, his or her executors or administrators, for or on account or in anywise relating to such share or shares, except in respect of the dividends and other profits which may have been declared or appropriated previously to the time of such new proiwietor being a proprietor. 127. That any person entitled to a certificate of any share newly acquired by him or her in the capital of the company, and who, at the time of acquiring such share, shall be a proprietor of the company in respect of any other share or shares, and on that account shall not be required to execute such deed of covenant as aforesaid, in respect of the share or shares specified in such certificate, shall, at his or her expense, or at the expense of the company, at the option of the board of directors, on receiving the said certificate, give to the board a receipt under his or her hand for the same, in such form as the board shall prescribe, and such receipt shall be evidence of the person who gave the receipt being the proprietor of the share or shares specified in the certificate for which such receipt shall have been given. 128. That the report, which in pursuance of the directions herein- before contained is to be produced by the board of directors at every half-yearly general meeting, shall, after the same shall have been approved of either at the general meeting at which it is to be pro- duced, or at any subsequent general meeting, and signed by the chair- man of the meeting in testimony of such approval, bo binding and conclusive on all the proprietors of the company, unless some mani- fest error to the amount of 201., or upward, be discovered therein by any one or more of the proprietors of the company within twelve cal- endar months after such approval ; and such report, when the error therein shall be rectified by the board of directors in pursuance of the directions hereinbefore contained, shall be binding and conclusive on all the proprietors. 129. That each and every of the proprietors, by whom the business of the company shall for the time being be managed and conducted, shall and will be just and faithful to the others, a*nd each and every of the others of them, and also to all the other proprietors, and to each and every other proprietor, in all buyings, sellings, reckonings, receipts, payments, dealings, and transactions in or about the said 1662 Appendix. business, or in anywise relating thereto, and shall and will give and render a just and faithful account of the same to the board of direct- ors, if required so to do by a previous board of directors, or to an extra- ordinary general meeting specially called for the purpose, if required so to do, either by the board of directors, or by seven or more proprie- tors, each of whom, other than present proprietors, shall have been a proprietor of the company for at least three calendar months. 130. That none of the directors (except the manager by these pres- ents authorized so to do, and except any proprietor or proprietors act- ing under the order or direction of the board of directors) shall buy, order, sell, or contract for any goods, wares, merchandise, articles, or any thing whatsoever, for or on account of the company, and if any of the proprietors (except as aforesaid) shall so buy, order, or contract as aforesaid, then and in such case the goods, wares, merchandise, articles or things which shall have been so bought, ordered, or con- tracted for, shall be paid or accounted for by the proprietor or pro- prietors who shall buy, order, or contract for the same, out of his, her, or their separate estate, and shall remain and be for his, her, or their separate use and benefit. 131. That each and every of the proprietors shall and will at all times duly and effectually pay and discharge all the private and sepa- rate debts now or hereafter to be due and owing from him or her to any person or persons whomsoever, and shall and will at all times here- after save, defend, and keep harmless and indemnified all the other proprietors, and each and every of them, and their and his heirs, exec- utors, administrators, and assigns, and the funds and property of the company, from and against such private and separate debts, and all actions, suits, executions, costs, charges, damages and expenses for or on account of the same, or in anywise relating thereto. 132. That none of the proprietors shall do, or knowingly suffer to be done, or be party or privy to any act, deed, matter, or thing whatsoever, whereby or by reason whereof the funds or property of the company may be seized, attached, extended, or taken in execution or in anywise charged, affected, or incumbered, to the damage, loss, or injury of the other proprietors, or their executors or administra- tors. 133. That every proprietor of the company, his or her executors or administrators, as between him, her, and them, and all or any of the other proprietors of the company, and their respective heirs, executors, and administrators, shall be answerable and accountable, and liable Pkecedents. 1663 for or in i-espect of the calls, debts, losses, and damages of or upon the company in j^roportion to his or her share and interest for the time being in the funds or property of the company, but not further or otherwise, and no person, his or her heirs, executors or administrators, shall, in respect of any share or shares which shall have been held by him or her as proprietor, be answerable or accountable or liable for or in respect of such calls, debts, losses, or damages, or any of them, in any manner or to any extent or upon any account, or from any cause whatsoever, after some other person or persons shall have become a proprietor or proprietors of the company in respect of such share or shares. 134. That when and so often as any dispiite or difference shall arise among or between the proprietors, or any of them, or among or between any one or more of the proprietors, or the husband, executors, admin- istrators, or assignees of any female, or deceased, or bankrupt, or insolvent proprietor, in anywise relating to any of the affairs or con- cerns of the company, the same shall be submitted or referred to arbi- tration in manner hereinafter mentioned (that is to say), in case the dispute or difference shall be between two parties, then one of the par- ties, whether consisting of one or more person or persons, shall name an arbitrator, and the other of the said parties, whether consisting of one or more person or persons, shall also name an arbitrator, and the two arbitrators shall, within ten days after their nomination, appoint a third arbitrator, and the award of any two such three arbitrators shall be final and conclusive; and in case the two arbitrators named shall refuse or decline, or cannot agree within such ten days to name a third arbitrator, then any one of the directors for the time being, not a party to the dispute or difference, shall be at liberty to name a third arbitrator, and shall, in the event of the two arbitrators still refusing or declining to act, be the sole arbitrator, and the award of such arbitrator shall be final and conclusive; and in case the subject of dispute or difference shall be between three or more parties, then each of the said parties, whether of one or more persons, shall name an arbitrator, and the arbitrators shall within ten days after their nomination appoint another arbitrator, and the award of such last- mentioned arbitrator, with or without the arbitrators or any one or more of them, shall be final and conclusive; and in case the arbitra- tors so to be named by the said three or more parties, cannot agree in the nomination of the other arbitrator within such ten days as afore- said, then a third arbitrator may be chosen in manner aforesaid. 1664 Appendix. whose award shall in like manner be final and conclusive; and the arbitrators or arbitrator, to whom for the time being any dispute or difEerence shall stand referred as aforesaid, sliall be at full liberty, if they or he shall think fit, to make one or more award or awards touching all or any part of the subject of dispute or difference. And that every such award shall be binding on all the said parties, although the same may not be final and conclnsive as to the whole subject of dispute or difference; and that no suit or action shall be commenced or brought by any of the j)roprietors against any other or others of them, or against the said arbitrators or arbitrator touching the matter aforesaid; and that all necessary books, papers, and writings shall be produced before the said arbitrators or arbitrator; and that all par- ties to the said reference shall be examined before. the said arbitrators or arbitrator, if they or he shall think fit; and that the submission shall be made a rule of His Majesty's Court of King's Bench at West- minster. In witness, etc. No. XVIII. 1 Vict. Cap. lxxiii. An Act for letter endblijig Her Majesty to confer certain, Powers and Immunities on Trading and other Companies, 17th July, 1837. Whereas divers associations are and may be formed for trading or other purposes, some of which associations it would be inexpedient to incorporate by royal charters, although it would be inexpedient to confer on them some of the privileges of and incident to corporations created by royal charters, and also to invest such associations or some of them with certain other powers and privileges: And whereas it would also be expedient to extend the powers of Her Majesty in ref- erence to the creation of corporations, and to the conferring of privi- leges upon corporations, and upon other bodies or companies enabled to sue and be sued: And whereas, by an act passed in the sixth year of the reign of His Majesty King George the Fourth, entitled "An Act to repeal so much of an act passed in the sixth year of His late Majesty King George the First, as relates to the restraining of several extrava- gant and unwarrantable practices in the said act mentioned; and for conferring additional powers upon His Majesty with respect to the Precedents. 1665 granting of Charters of Incorporation to trading and other companies; " it was among other things enacted, that in any charter thereafter to be granted by His Majesty, his heirs or successors, for incorporation of any company or body of persons, it should and might be lawful in and by such charter to declare and provide that the members of such cor- poration should be individually liable in their persons and property for the debts, contracts and engagements of such corporation, to such extent and subject to such regulations and restrictions as His Majesty, his heirs or successors might deem fit and proper, and as should be declared and limited in and by such charter, and the members of such corporation should thei-ebybe rendered so liable accordingly: And whereas, by an act passed in the session of Parliament held in the fourth and fifth years of the reign of His late Majesty entitled " An Act to enable His Majesty to invest trading and other companies with the powers necessary for the due conduct of their affairs, and for the security of the rights and interests of their creditors; " His Majesty, his heirs and successors were empowered to grant to unincorporated companies and associations certain privileges in such last-mentioned act ' set forth: And whereas the aforesaid provisions of the said recited acts have not been found effectual for the purposes thereby intended, and it is therefore expedient to repeal the. same, and to make such provisions in reference to the several matters aforesaid as are hereinafter con- tained: Now, therefore, be it enacted by the Queen's Most Excellent Majesty, by and with the advice and consent of the lords spiritual and temporal, and commons, in this present Parliament assembled, and by the authority of the same, that so much of the said act of the sixth year of the reign of His Majesty King George the Fourth as is herein- before set forth, and also the said recited act of the session of Parlia- ment held in the fourth and fifth years of the reign of His late Majesty King William the Fourth, shall be and they are hereby respectively repealed. 2. And be it enacted, that it shall and may be lawful for Her Majesty, her heirs and successors, by letters patent to be from trine to time for that purpose issued under the great seal of the United Kingdom of Great Britain and Ireland, or in Scotland under the seal appointed by the Articles of Union to be used instead of the great seal thereof, to grant to any company or body of persons associated together for any trading or other purposes whatsoever, and to the heirs, executors, administrators, and assigns of any such persons, although not incorporated by such letters patent, any privilege or 209 1066 Appendix. privileges which, according to the rules of the common law, it would be competent to Her Majesty, her heirs and successors, to grant to any such company or body of persons in and by any charter of incor- poration. 3. And be it enacted, that in any such letters patent so to be granted as aforesaid by Her Majesty, her heirs or successors, to any such com- pany or body of persons so associated together as aforesaid, but not incorporated, it shall and may be lawful, in and by such letters pat- ent, either expressly or by a general or special reference to this act, to provide and declare that all suits and proceedings, whether at law, in equity, or in bankruptcy or sequestration, or otherwise howsoever, as well in Great Britain and Ireland as in the colonies and dependencies thereof, by or on behalf of such company or body, or any person or persons as trustee or trustees for such company or body, against any person or persons whether bodies politic or others, and whether mem- bers or not of such company or body, shall be commenced and prose- cuted in the name of one of the two officers for the time being to be " appointed to sue and be sued on behalf of such company or body, and registered in pursuance of the directions of such appointment and registration respectively hereinafter contained; and that all suits and proceedings, whether at law or in equity, by or on behalf of any per- son or persons, whether bodies politic or others, and whether or not members of such company or body, against such company or body, shall be commenced and prosecuted against one of such officers, or if there shall be no such officer for the time being, then against any member of such company or body: Provided nevertheless, that noth- ing in this act or in such letters patent contained or to be contained shall prevent the plaintiff from joining any member of such company or body with such officer as a defendant in equity, for the purpose of discovery, or in case of fraud. 4. And be it enacted, that it shall and may be lawful, in and by such letters patent so to be granted to any such body or company as afoi-esaid, to declare and provide that the members of such company or body so associated as aforesaid shall be individually liable in their per- sons and property for the debts, contracts, engagements, and liabilities of such company or body to such extent only per share as shall be declared and limited in and by such letters patent; and the members of such company or body shall accordingly be individually liable for such debts, contracts, engagements, and liabilities respectively to such extent only per share as in such letters patent shall be declared and Peecedents. ' 1667 limited ; such liability nevertheless to be enforced in such manner and subject to such provisions as are hereinafter contained. 5. And be it enacted, that every such company or body to which any such privileges or powers as -hereinbefore mentioned shall be granted under the authority of this act shall be entered into or formed by a deed of partnership or association, or an agreement in writing of that nature; and the undertaking shall by such deed or agreement be divided into a certain number of shares to be there specified; and in such deed or agreement, or in some schedule thereto, there shall be set foi'th the name or style of the said company or body, the names or styles of the members of the said company or body, the date of the commencement thereof, the business or purpose for which the said company or body is formed, and the principal or only place for carry- ing on such business; and in such deed or agreement there shall also be contained the appointment of two or more officers to sue or be sued on behalf of such company or body in manner hereinafter men- tioned. 6. And be it enacted, that such company or body as aforesaid shall, within three calendar months after the grant of such letters patent as afoi-esaid, make or cause to be made a return to such one of the offices for enrollment hereinafter mentioned as shall be required under the provisions of this act, containing the date of the grant of such letters patent as aforesaid, the name or style of the said company or body, the business or purpose for which the said company or body is formed, the principal or only place for carrying on such business, the total number of shares in the said company or body (and each of which shares is to be distinguished by a separate number in regular succes- sion), the amount to which each share shall render the holder thereof liable, the names and (except as to bodies politic) the places of abode of all the members thereof, and the distinctive number or numbers of the share or respective shares which each member holds; and such company or body shall also at tlie same time make a return of the names and descriptions of the officers appointed by such company or body to sue and be sued on behalf thereof in manner aforesaid; such return to be made in the form in the schedule (A) to this act annexed. 7. And be it enacted, that during the continuance of any such company or body after it shall have been so registered no change shall be made in the name or style thereof; and if the principal or only place for carrying on the business of the said company or body shall 1608 Appendix. be changed, the said company or body shall, within three calendar montlis after such change, make or cause to be made a return to the said office as aforesaid of such change in the form in schedule (B) to this act annexed. 8. And be it enacted, that in case any person shall cease to be a member of such company or body (except by means of the transfer by deed or writing of any share therein), or in case of the addition of any person thereto (except by means of the transfer of any share as afore- said), or of the change of the name of any member thereof by mar- I'iage or otherwise, the said company or body shall, within three calen- dar months after information shall be received by the said company or body of any person so ceasing as aforesaid, or of such change or addi- tion as aforesaid, make or cause to be made a return to the said office as aforesaid, containing the names and places of abode of all persons having ceased to be members thereof (except as aforesaid), and the names and places of abode of all persons having become members thereof (except as aforesaid), and specifying any change in the name of any member thereof by marriage or otherwise, such return to be made in one of the forms in the schedule (0) to this act annexed, as the case may be. 9. And be it enacted that on the transfer by deed or writing of any share in any such company or body as aforesaid, a notice in writing specifying the date of such transfer, the distinguishing number of the share transferred, the name and (except in the case of a body politic) the place of abode of the person by whom or on whose behalf and of the name and (except as aforesaid) the place of abode of the persons to whom such transfer is made, shall be given to the said company or body, by leaving the transfer when executed by both parties, or some note or memorandum thereof signed by them, at the principal or only office of the said company or body. 10. And be it enacted that in case of the transfer of any share in such company or body, the said company or body shall, within three calendar months after receiving such notice as aforesaid of such trans- fer, make or cause to be made a return to the said office as aforesaid, containing the date of such transfer, the distinguishing number of the share transferred, the name and (except in the case of a body politic) the place of abode of the person by whom or on whose behalf, such transfer is made, and of the person to whom such transfer is made, in the form in schedule (D) to this act annexed; and such Pkecedekts. 1669 company or body are hereby required, on the request in -writing of either of the parbies, forthwith to make such return accordingly. 11. And be it enacted that where the extent per share of the lia- bility of the individual members of any such company or body shall have been limited by letters patent as aforesaid, it shall be lawful for any person who shall or may from time to time have advanced or paid any sum in consequence or by virtue of any execution or diligence issued against him in respect of any share in such company or body, under any judgment, decree, interlocutor, or order to be obtained against any officer of the said company or body, or any member thereof, in manner hereinafter mentioned, to make a return thereof to such office as aforesaid in the form in schedule (E) to this act annexed; and every such return shall be accompanied with a proper voucher or vouchers of the fact of such payment, without which the same shall not be registered as hereinafter mentioned. 13. And be it enacted that if any sum or sums shall at any time be repaid by any such company or body as last aforesaid in respect of any such sum which may have been so advanced or paid by virtue of such execution or diligence, the said company or body shall forthwith make or cause to be made a return to such office as aforesaid, specify- ing the amount of such repayment in the form iA schedule (F) to this act annexed. 13. And be it enacted that in case of the death or resignation or removal of any officer appointed to sue and be sued on behalf of any company or body to be formed in pursuance of any of the provisions qf this act, the said company or body shall forthwith appoint in his stead another officer to sue and be sued on behalf of such company or body, and shall, within three calendar months after the death, resig- nation or removal of such officer as aforesaid, make or cause to be made a return to the said office as aforesaid, containing as well the name and description of the person who has ceased to be such officer in manner aforesaid as the name and description of the officer who has been appointed to sue and be sued on behalf of such company or body, such return to be made in the form in schedule (G) to this act annexed. 14. And be it enacted that all returns to be made in manner afore- said by such company or body shall be signed by one of such officers and shall be verified by a declaration of such officer made pursuant to the provisions of the statute of the fifth year of His late Majesty's reign, entitled "An Act to repeal an act of the present session of 1670 ApPEIfDIX. Parliament, entitled ' An Act for the more eflfectual abolition of oaths and affirmations taken and made in yarious departments of the State, and to substitute declarations in lieu thei'eof, and for the more entire suppression of voluntary and extra-judicial oaths and affida- vits; and to make other provisions for the abolition of unnecessary oaths," except that if there shall be no such officer, or such officer shall refuse to act, then such return shall be signed and verified as aforesaid by some member of the said company or body. 15. And be it enacted that any return to be made in manner afore- said, of the name or place of abode of any original member of such comiDany or body, or of any person to or in whom any share in such company or body shall be transferred or become vested, shall not be rendered invalid for the purposes of this act by any error or omission in the same, if the said company or body shall, within one calendar month after information of such error or omission shall be received by such company or body, cause a correct return to be made to the said office as aforesaid in the form in schedule (F) to this act annexed: Provided always, that this clause shall not invalidate or prejudice any intermediate transaction or matter whatsoever which shall have iona fide taken place or proceeded upon the faith of such erroneous or defective return, nor shall the benefit of this clause extend to any error or omission which shall be fraudulent. 16. And be it enacted that where the principal or only place for carrying on the business of any such company or body as aforesaid shall be situated in any part of England or Wales, the' returns herein- before directed shall be made to the enrollment office of the Court of Chancery in England, and where such principal or only place for carrying on such business shall be situate in any part of Scotland, such returns shall be made to His Majesty's General Registry Office at Edinburgh, and where such principal or only place for carrying on such business shall be situated in any part of Ireland, such returns shall be made to the enrollment office of the Court of Chancery in Ireland. 17. And be it enacted that all such returns as are hereinbefore directed to be made to the enrollment office of the Court of Chancery in England shall be registered by the clerks of enrollments in Chancery, or their deputy, and that all such returns as are hereinbefore directed to be made to the general registry office at Edinburgh shall be regis- tered by the lord clerk register or his deputy, and all such returns as are hereinbefore directed to be made to the Enrollment Office of the Precedents. 1671 Court of Chancery in Ireland, shall be registered by the clerks of enrollments in Chancery in Ireland, or their deputy, in books to be by them respectively kept for that purpose, and that an alphabetical index shall be kept of the names of such companies or bodies, with references to such returns, and that there shall be paid for the regis- tering of each return a fee of sixpence per folio, and no more; and that any person shall be at liberty to inspect such books and index, and that there shall be paid for such inspection a fee of one shilling, and no more; and that any person shall be at liberty to require a copy of any such return to be certified by the said clerks or their deputy, and that there shall be paid for such certificate a fee of one shilling and sixpence for each folio of such copy, and no more; and the day of the registration of every return to be made in pursuance of this act shall be written on such return by the said clerks or their deputy. 18. And be it enacted, that a copy, so certified as aforesaid, of such return, including the date to be marked on such return, shall be received in evidence in all proceedings, whether civil or criminal, and shall also be received as evidence of the day of the registering thereof. 19. And be it enacted, that such orders and directions as to the forms of the returns to be made in pursuance of this act, and the mode of keeping the register, and of making the index thereof, and of any other matters incidental thereto, as may be deemed expedient, may from time to time be made, altered, or varied as follows: that is to say, as regards the registration to be made in the Enrollment Office in the Court of Chancery in England, by the Lord Chancellor, Lord Keeper, or First Lord Commissioner of the Great Seal, and the Master of the Eolls, jointly; as regards the- registration to be made in the General Eegistry Office in Edinburgh, by the lord clerk register and lords of council and session jointly; and as regards the registra- tion to be made in the Court of Chancery in Ireland, by the Lord Chancellor of Ireland and the Master of the Eolls in Ireland jointly. 20. And be it enacted, that no person becoming a member of any such. company or body by the transfer of any share therein, or other- wise, shall be entitled to sue for or recover any share of the profits thereof, unless and until a return of the transfer or other fact whereby he shall so become a member shall be registered pursuant to the pro- visions hereinbefore contained. 21. And be it enacted, that any person ceasing to be a member of any such company or body, whether by the transfer of any share 1673 Appexdix. therein, or by death or otherwise, shall be considered for all purposes of liability as continuing a member of such company or body until a return of the transfer or other fact whereby he shall have so ceased to be a member shall be registered pursuant to the provisions hereinbe- fore contained. 23. And be it enacted, that no action, suit, or proceeding, whether civil or criminal, commenced either by or against any such company or body (whether in the name of one of the officers appointed to sue and be sued as aforesaid, or of some member of such company or body, in the case and in manner aforesaid), shall be abated or preju- diced by the death or by any act of such officer or person, or by the resignation or removal of such officer, either before or after the commencement of such action, suit, or proceeding, or by any change in the members of such company or body by the transfer of shares or otherwise, but that the same shall be continued in the name of such officer or member (as the case may be) notwithstanding such death or act, or such resignation or removal, and notwithstanding such change in the members of such company or body. 23. And be it enacted, that in all such actions, suits, and other proceedings, whether civil or criminal, the evidence of any such officer as aforesaid, or of any member of such company or body, shall be admissible in the like manner as if such officer or member were not an offiq^ r or member of such company or body. 34. And be it enacted, that all judgments, decrees, interlocutors, and orders obtained in any such actions, suits, or other proceedings as aforesaid against such officer or member in manner aforesaid, whether such member or officer respectively be party to such actions, suits, or proceedings, as plaintiff, pursuer, petitioner, or defendant or defender, shall have the same effect against the property and effects of such company or body, and also (to the extent hereinafter men- tioned) against the persons, property, and effects of the individual existing or former members thereof respectively, as if such judgments, decrees, interlocutors, or orders had been obtained against such com- pany or body in suits or proceedings to which all the persons liable as existing or former members of such company or body had been parties, and that execution or diligence, or executions or diligences, shall be issued thereon accordingly: Provided, nevertheless, that where the extent per share of the liability of the individual members shall have been limited by any letters patent as aforesaid, no such execution or diligence shall be issued against any such individual Precedents. 1673 existing and former member of such company or body as aforesaid for a greater sum than the residue, if any, of the amount for which, by virtue of such letters patent as. aforesaid, such individual member shall be liable in respect of the share or shares then or theretofore held by him in the said company or body, after deducting therefrom the amount, if any, which shall appear by such register as aforesaid to have been advanced and paid in respect of such shares or any of them by himself or herself, or any previous or subsequent holder of the same shares or any of them, or the representatives of any such holder, under or by virtue of any former execution or diligence, and not repaid at the time of issuing such subsequent execution or diligence. 25. And be it enacted, that the bankruptcy, insolvency, or stop- ping payment of any officer or member of such company or body in his individual capacity, shall not be construed to be the bankruptcy, insolvency, or stopping payment of such company or body; and that the property and effects of such company or body, and the persons, property, and effects of the individual members or other individual members thereof (as the case may be), shall, notwithstanding such bankruptcy, insolvency, or stopping payment, be liable to execution or diligence in the same manner as if such bankruptcy, insolvency, or stopping payment had not taken place. 26. And be it enacted, that in all cases wherein it may be necessary for any person to serve any summons, demand, or notice, or any writ or other proceeding at law or in equity, or otlierwise, upon the said company or body, service thereof respectively on the clerk of the said company or body, or by leaving the same at the head office for the time being of the said company or body, or in case such clerk of the said office shall not be found or known, then service thereof on any agent or officer employed by the said company or body, or by leaving the same at the usual place of abode of such agent or officer, shall be deemed good and sufficient service of the same respectively on the said company or body. 27. And be it enacted, that in all cases wherein it msiy be necessary for the said company or body to give any summons, demand, or notice of any kind whatsoever to any person or corporation, under the pro- visions or directions contained in this act, such summons, demand, or notice may be given in writing, signed by the clerk, attorney, or solicitor for the time being of the said company or body, without being required to be under the common seal of the said company or body. 210 1G74 Appendix. 28. And be it enacted, that in case of the determination of such company or body, such company or body shall nevertheless be con- sidered as subsisting, and to be in all respects subject to the provis- ions of this act, so long and so far as any matters relating to such company or body shall remain unsettled, to the end- and intent that such company or body may do all things necessary to the winding up of the concerns thereof, and that it may be sued and sue under the provisions of this act in respect of all matters relating to such com- pany or body. 29. And be it also enacted, that it shall be lawful for Her Majesty, her heirs and successors, in any charter of incorporation to be here- after granted, to limit the duration thereof for any term or number of years, or for any other period whatsoever ; and also in any charter of incorporation (whether in perpetuity or for any term or period), either by reference to this act or otherwise, to make the corporation thereby formed, and the officers and members thereof, subject to all of the provisions, liabilities, and directions hereinbefore authorized to be imposed on or required from any unincorporated company or body, or its officers or members, and also to confer on such corporation or its members and officers all the powers or privileges hereinbefore authorized to be conferred on any unincorporated company or body, or its officers or members ; and all the powers, provisions, clauses, matters, and things hereinbefore contained in reference to unincor- porated companies or bodies shall accordingly in such case, and so far as the same may be applicable, be considered to belong and apply to such corporation. 30. Provided always, and be it enacted, that nothing in this act contained shall authorize or be construed to authorize Her Majesty, her heirs and successors, by any such letters patent, to exempt any company or body of persons associated as aforesaid from the necessity of entering into a deed of partnership, from making the return of the patent to the enrollment office of the Court of Chancery, from the necessity of carrying into execution the provisions of this act in respect to cliange of name or style of the company or body associ- ated in respect to the cessation, or to the addition or to the change of names of any of the individuals of the company, or to the transfer of shares and to the notices to be given thereof, or to the payment of any sum by any shareholder on account of any preferment against such company or body, or to the returns to be made to the enrollment office of such payment, or of the repayment thereof, or from making Pkecedents. 1675 a return to the said office of the name of the officer appointed by said company to sue and be sued on its behalf, in case of the death, resig- nation, or removal of the one registered, or to exempt any company or body so associated from the provisions of this act in relation to the period at which its several members shall become entitled or shall cease to share in the profits thereof, the whole as required by the pro- visions of this act. 31. Provided always, and be it enacted, that nothing in this act contained shall authorize or be construed to authorize the grant to any company or body of persons of any privilege in derogation of any exclusive privileges now enjoyed by any comjjany or corporation under any act or acts of Parliament. 32. And be it enacted, that whenever an application shall be made to Her Majesty to grant letters patent or a charter of incorporation to any company or body of persons -associated together for any pui"- pose of trade, and such application shall have been referred by Her Majesty to the Committee of Privy Council for Trade and Plantations, then, before any report shall be made to Her Majesty, and before any such letters patent or charter shall be granted, notice of such appli- cation shall be inserted by the parties applying three several times in the London Gazette, and in one or more of the newspapers circulating within the county in which it is proposed that the principal place of business of such company shall be established, at intervals of not less than one week. No. XIX. Kinder v. Taylor. Lord Eldon said, that, though attention was due to what was the construction of the 6 Geo. 1, it ought never to be forgotten that there was a common law as well as a statute. He was very ready to admit that the statute 6 Geo. 1 was an ill-drawn act of Parliament. The recital clause jumbled together things in such a manner, that it was not certain what was, or what was not intended to be settled. When- ever that act came to be considered, he should wish it to be argued upon the effect of the recital, which took it for granted that there were some companies so prejudicial to the country, as to be mani- festly objectionable ; and the question was, whether cases of that 1676 Appendix. kind were to be left entirely to the decision of a jury, or whether the judges were not to pronounce their opinion of the law upon them, as in other cases. It was also to be considered, from the recital clause, whether the assuming to act as a corporation, independently of open- ing books and subscriptions, was not an offense under the act. Look- ing at the exceptive clauses of the act, it was impossible not to observe that chartered and acknowledged companies were contem- plated, and that the Legislature excepted them from penalties, if they called for money by opening books. In 1720, the practice was to open books one day, and to shut them the next. He hoped that such practice was not followed in 1835. He hoped, in the present day, the public were not so deluded. His opinion might be of use to nobody, but it' was as well that the world should know it. If no value were put upon his notion of the law, it perhaps might not be the worse for knowing it. ThaJ; opinion was, and he had taken some trouble to consider the question, that if it could satisfactorily be made out to a jury, that a party was opening books, raising a premium upon the shares, and then took care to get himself out of the scrape, that was an indictable offense. The next question was, and it was one of very deep importance, whether such companies as these to which he had alluded, were or were not tending to the grievance of his Majesty's subjects, and injurious to the public credit? He would first consider the first point, whether they were tending to the griev- ance of his Majesty's subjects, and injurious to the laudable endeavors of individuals, working for the benefit of themselves and families ; whether it was consistent with public policy thas such combinations were suffered to exist, taking away from individuals the power of exercising themselves in trade and commerce. It was the duty of the Legislature to consider that the public ought to be protected. Perhaps it might be of little consequence that our ancestors struggled so strenuously against the powers of the Crown to grant monopolies ; for, in the present day, it was in the power of individuals to monopo- lize when and where they pleased — to monopolize not only in the gold mines of Mexico, which, for anything he knew, might be useful enough, but in every article of consumption ; and the time seemed to be approaching when people would neither be allowed to eat, drink, or wear clean linen except upon the terms these companies saw fit to impose. He would then ask, whether it was consistent with public credit that matters should remain in this state ? It might be worth considering, in the event of pecuniary diflBculties in which this coun- Precedents. 1677 try might be involved, and in the event of a clashing of the interests of these companies and those of the country at large, how far this state of things would be allowed to continue. He would repeat, that, in the argument (if it ever took place) upon this act of Parliament, it should never be forgotten that there was a common law, and if the act was to be contended to destroy the common-law remedy, the ques- tion then would be, whether such a construction was not at variance with every sound and legal principle of justice ? IISTDEX. A. ABANDONMENT: * Page, advantage of evidence of, in certain cases 357 ABATEMENT : objection of non-joinder must be plead in, when 1030 plea in, for non-joinder only avails v?hen plaintiff ought to have joined others, not simply because he might have done so 1070 suit does not abate by death of partner 1068 plea in 1086, 1087 See Actions. ABSCONDING: of partner, ground for dissolution 149 et seq. ACCEPTANCE: of bill of exchange must be in firm name 693, n. 695 ACCOMMODATION NOTE: firm liable on for, given by one partner, to innocent holder n. 644 not liable for, to one who takes with notice n. 644 ACCORD AND SATISFACTION: as defense to bill for accounting 463 ACCOUNT: one partner cannot convert open, into interest bearing, after dissolu- tion n. 170 clause providing for annual 296 general, upon dissolution 297 ACCOUNTS : keeping proper books of 293 errors in, may be stipulated against 397 duty of partner to keep 266, 293 ACCOUNTING : one partner may file bill for 15 must Establish partnership as condition precedent to right to n. 51 when joint purchasers not entitled to .... 36, 37 between partners ngnt of partners to 443 1680 Index. ACCOUNTING— ContinMetf. Page. usually consequent on dissolution 430 accountingf without dissolution 431, 433, 442 contrary rule in Loscombe v. Russell 431 when an account will be decreed 443 executors of deceased partners entitled to an account 443 sub-partner has no right to an account from the firm 443 rights of creditors and legatees of deceased partner 444 limited account without dissolution 444 instances in which limited accounts may be had 445 who may seek an accounting 450 what must appear in bill for 450 what defendant partners must do 451 relative to production of books, etc 453 who is entitled to inspection of 454 of defense to bill for accounting 455 denial of partnership 455 statute of limitations 456 account stated 460 award 462 payment and accord and satisfaction 463 release 463 of the decree 464 just allowances, what are 465, 540 period over which account extends 465, 471 evidence on which accounts are to be taken 472 outlays and advances 473 liability for useless outlays 474 outlays not chargeable if particulars refused 475 of debts, liabilities and losses 476 partners not always bound to contribute to losses 476 must contribute to loss from iona fide act 477 guilty of fraud or bad faith loss must be borne by partner guilty of . . . 478 firm responsible for losses from wrongful acts of servants, though em- ployed by one partner 478 unauthorized act, neglect or fraud of partner ratified by firm 479 when all are in pari delicto 482 firm liable for illegal acts of partners ^ 480 doctrine denying contributions as to wrong-doers does not apply to part- ners 480 of interest 482 of division of profits and dividends 483, 486 foundation of right to contribution 486 of right of agent to indemnity from principal 487 agent who executes orders. '. 488 acting without instructions 488, 489 of right of partners to indemnity 491 , 495 when an accounting will be decreed 495 ei seq. n. 495 of the payment of partnership money into court , 497 stated, need not be signed to support, plea of , , , , , 461 Index. 1681 ACCOni^TmQ — Continued. Page. long possession of, effect of 461 action of 431 ei seq. under decree, may be for profits made contrary to articles n. 3, 259 is generally consequent on dissolution 430 et seq. generally will not be decree unless there has been, or dissolution Is asked for 431 et seq. partner seeking, must pay money borrowed as private loan, into court. 497 need not pay partnership money into 497 et seq. unless he admits himself indebted to that extent 497 et seq. or has received it contrary to good faith 497 et seq. but admission must be by answer unless affidavits are filed 497 et seq. ■when defendant must pay money into court 498 when money in hands of partner is debt to the firm 499 interest on profits, in hands of partner , 543 of sale under a decree 501 when firm is dissolved by bankruptcy or death 501 rule in Crawshay v. Collins 502 rule in Featherstonhaugh v. Fenwick 502 rule in Wilson v. Greenwood 503 rule in Cook v. CoUingridge 503 rule upon dissolution of partnership at will 505 practice, wheu an account is decreed 505 under decree for, parties examined 505 how examination of parties conducted.*. 505 parties must generally produce books. 505 must be taken according to the method prescribed by the article. 506 et seq. from what time will be reckoned 506 must be taken according to Clayton's case, where 506 what necessary to be considered in taking 520 what may be considered subject of sale and 520 real and movable property 520 good- will , 521 outstanding contracts, etc 526 by remaining partners continuing to trade with the partnership efEects. 528 by surviving partners 532 by solvent partners 532 between solvent partners and assignees, must be settled on the footing of the respective shares, though at the bankruptcy the proportion of the shares was altered by advances 529 on death of a partner, may be taken in a suit for the administration of the effects of one 533, 539 must be rendered by executor partner of his debt 540 must include allowances fixed by agreement 540 whether may include an allowance for treating customers, qucere 540 may, after inquiry directed, include allowance for specific loss 540 how far may include interest 542 how the accounts must be taken when provision is made therefor in the contract 506, 509 ; also, n. 3, p. 506 et seq. when no provision therefor is made in the contract 508 how the account is to be taken generally 510, n. 506, n. 518 211 1683 IXDEX. ACCOU'STl'NQ— Continued. Page. matters to be considered in taking 516, 521 how the value of the joint property is to be arrived at 521 good-will, value of, how ascertained 581 what is treated as firm property 523, n. et seq. rule when remaining partners continue the trade 522, n. 528 right of assignee of bankrupt partner to share of profits 529 allowances for skill and services of surviving partners 532 survivors' rights and powers 533 dissolution by bankruptcy, accounts how taken 538 rights of executors of deceased partners 535 dissolution by- death of partner 539 when copartner is made executor 540 interest on profits in the hands of a partner 542 costs 544 partners entitled to allowance for expenses in business n. 507 for debts paid by each partner n. 508 principles upon which accounting is based n. 506 n. 518 for debts due him from firm n. 509 et seq. when action for, will be sustained n. 506, n. 518 distribution of capital on dissolution u. 518 bill for, lies when 614 may be plead or relied on in the answer 462 must be in writing * 461 need not be signed 461 rendition of account does not prevent necessity of taking under direc- tion of court 461 to have such effect, must have been acquiesced in 461 accounts of companies rendered and approved can only be impeached, when 461 stated account may be impeached in part or in toto for fraud 461 will be opened when is fraud or mistake 461 will be opened in toto for fraud 461 but not for mistake 461 leave to surcharge and falsify will be given, when 461 effect of lapse of time 461 impeached for errors, particular errors must be stated and proved 462 in surcharging and falsifying any errors of law, as well as of fact, may be rectified 462 leave to one to falsify, is leave to all 462 in cases where releases have been executed, accounts will not be opened until releases are set asside 462 ACCOUNT STATED : as defense to bill for accounting 460 ACT OF BANKRUPTCY. See Bankrdptcy. ACTIONS : in, brought by partners, must prove the partnership n. 15 at least if denied n. 15 Index. 1683 ACTIONS — Continued. Page. defendants in, may, under general issue, disprove partnership n. 15 all must join n. 15 death of partner after suit brought does not abate n. 15 surviving partner may bring in his own name n. 15 by partners, should be by individual names n. 15 may be in name of firm in some States n. 171 cause of, cannot be created by partner, after dissolution n. 171 except as to those not having notice or knowledge of dissolution. . . . n. 171 by firms must be in names of the several partners n. 289 instances in which one partner may sue firm n. 332, n. 339 ■when he may not n. 839 et seq. right of, survives to covenantees 350 rule as to parties to 362, 363, 366-368, 370-872 at law, between partners, will be restrained when 560 by partners. .' 1004-1046 as to, firms having common member n. 1005 actions between partners at law n. 1006 in equity n. 1006 on specialties n. 1010 on bills and notes n. 1010, 1017 on contracts generally n. lOll on implied contracts n. 1012 on written contracts n. 1012 when one may sue alone n. 1013 - when one should sue alone n. 1013 when all must join n. 1013 dormant, need not join n. 1012, 1020 who should sue in actions «a; delicto n. 1014, 1028 in case of joint damage n. 1014 in case damage is not joint n. 1014 actions for libel n. 1014, 1038 actions for goods, or loss of, or inj ury to n. 1015 judgment may be given when one sues alone for damages to his inter- est, unless the misjoinder is plead in abatement n. 1015 after such judgment, each of the others may sue, and misjoinder can- not be plead n. 1015 who may sue third person colluding with one partner n. 1015 all should join in action of ejectment n. 1015 one making lease in his own name, may sue thereon in his name. . . n, 1015 nominal partner need not join, except 1023 infant partners must be joined 1034 rule wlien one partner is bankrupt 1035 rule when one partner is dead, also n. 3. 1026 in what cases the power of bringing, not co-extensive with that of individuals 983 where there are two firms and a common member 983 where the injury arises from fraud committed by the defendant jointly with one of the plaintiffs 1005 where the contract made by one partner only, without the knowledge of his copartners, is illegal 1008 1684 Index. ACTIONS — Continued. Page. may be brought here, though they could not abroad 1008 must be brought generally, by all who were partners at the time of contract 1009 covenantees ^ 1009 joint-owners of a fund n. 4, 1009 payees 1009 but by such only as were partners at time of contract therefore not incoming partner, unless the old contract be extin- guished 1015 and where contract in writing, by such only as were parties to the contract 1015 always in deeds 1016, 1019 generally in unsealed contracts as bills of exchange 1017 with exceptions — guaranty 1017 policy of insurance 1017 bill indorsed in bank 1018 where partner admitted as from a previous day 1019 where contract is severed 1019 where one possesses an oflBce 1020 by dormant partner 1020 nominal partner 1023 infant partner 1024 solvent partner , . . . . 471 surviving partner 1025 does not abate by death pending the action 1026 how defect of parties is remedied 1026 how misjoinder of parties remedied 1026 actions ex delicto, ought to be brought by all jointly on joint damage. . 1027 or by part jointly, where part are jointly damaged 1027 on death of one must be brought by surviving partner 1029 no nonsuit in, for defect of plaintiifs 1029 except where the action is substantially founded in contract. . . 1039 where may be brought severally, by each partner 1029 declaration in, iiow should describe plaintiffs 1031 joint interest in, should appear in the declaration 1031 declaration in, to recover the amount of goods, should state the goods as of the partnership 1031 on policies of insurance, declaration in 1032 et seq. for libel, declaration in 1034 defendant may plead in bar all matters in confession and avoidance. . . 1035 illegality of .partnership 1035 that the premises were made jointly by plaintiff and defendant . . . 1035 bankruptcy of a co-plaintiff 1035 release by one partner 1035 tender to one partner 1036 Statute of Limitations 1036 See Etidencb, also M36, etiseg. indictments by partners 1043 Ikdex. 1685 ACTI01