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PARTNERSHIP, in English law. The law on this the following heads:-1. The nature and formaimportant subject we purpose to arrange under tion of a partnership. 2. The rights and powers of partners amongst themselves. 3. Their liabilities to third persons. 4. The exceptions to such liability. 5. The means of dissolution. SECT. I.-OF THE NATURE OF A PARTNERSHIP AND ITS FORMATION.

In order to constitute a partnership it is essential that there should be a communion of profit and loss. This is the criterion by which to determine the question whether persons are partners or not. An agent who is paid by a proportion of the profits of an adventure does not thereby become a partner in the property, though it may render him liable as a partner to third persons. 5 Taunt. 74. 2 Barn. 401.

If a person make himself responsible to the vendor for a purchase, upon an agreement with the purchaser, that if any profit arise from the sale he shall have one-half for his trouble; this does not constitute a partnership between the parties. 4 East 141. A partnership may be limited to a particular concern, without extendof the firm is engaged, 4 Esp. 182. ing to all the concerns in which another member It was

ruled by lord Ellenborough that, if there be a partnership as to third persons, the presumption of law is that there is a partnership between the parties. 2 Camp 45.

The cases in which the courts have determined

what particular circumstances constitute a partnership will best explain the legal definition of its nature. We proceed therefore to state some of the principal decisions on this point. A, having neither money nor credit, offers to B, that, if he will order with him certain goods to be shipped upon an adventure, if any profit should arise from them B should have half for his trouble. B having lent his credit on this contract and ordered the goods on their joint account, which were furnished accordingly, and

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entitled to recover back such payment in assumpsit against A, who had not accounted to him for the profits, such contract not constituting a partnership as between themselves, but only an agreement for a compensation for trouble and credit, though B were liable as a partner to third persons, creditors. 4 East 144.

A and B, general partners in trade, being indebted to C for advances paid by him on the joint account of the three in the purchase of tobacco which had been sent out on a special joint adventure to Spain, with a view to liquidate that balance, C agreed with A and B to join with them in another adventure to Lisbon, of which he was to have one moiety; and it was

agreed that A and B should purchase goods for the adventure, to be shipped on board a certain vessel, and pay for them, and the returns of such adventure were to be made to C to go in liquidation of his demand on them; but C was to bear his proportion of the loss if any; and also to receive his share of the profits if any after reimbursing himself out of the returns the amount of his advances previously made to A and B. The court of king's bench held that this agreement constituted a partnership between the three in the adventure, at and from the time of the purchase of the goods for the adventure by A and B, although C did not go with them to make the purchase nor authorize them' to purchase on the joint account, but A and B alone, in fact, made the purchase; and although C also purchased in his own name, and paid for goods to be sent out at the same time in which B was to share the profit or loss, and these goods were consigned for sales and returns to the same persons who went out as supercargo on the joint account of the three. 12 East 421.

SECT. II-OF THE RIGHTS AND POWER OF PARTNERS AMONG THEMSELVES.

If there is no express stipulation as to the management of partnership property, the majority must decide as to the disposition and management of the partnership concerns. One partner cannot bind the other partners by deed, except in bankruptcy. 7. Term Rep. 207. But he may by drawing or accepting bills of exchange. 7 Term Rep. 210. And, it is said that, if the partners agree that one member of the firm may bind it by deed, such agreement is valid. 7 T. R. 207. So if one partner in the presence of the other, and by his authority, execute a deed for both of them in a transaction in which they are both interested, it is a valid execution by both, although there is but one seal. 4 T. R. 313. And it is undoubted that the execution of a deed is valid, as the separate act of the person by whom it is actually executed. 2 B and B 338. So if a partnership, indebted on simple contract, intend that a bond shall be given, and by mistake it is executed by the senior partner only in the partnership firm, the creditor is entitled to rank as a special creditor against the estate of any of the partners. 3 Vesey, 73.

If the partners' life effects are taken and sold under an execution against one partner only, the sheriff is to pay over to the other partners a share of the produce proportioned to their shares in the partnership effects. As a general rule one partner cannot sue another in a court of law; but must seek relief in equity. Thus a number of persons agreeing to subscribe sums of money for the purpose of obtaining a hill in parliament to make a railway are partners in the undertaking; and, therefore, a subscriber who acted as their surveyor cannot maintain an action for work done by him in that character, on account of his partnership, against all or any of the other subscribers. 1 Barn. and Cress. 74. So also, the partners in one house of trade cannot maintain an action against the partners in another house of trade, of which one of the partners in the

plaintiff's house is also a member, for transactions which took place while he was partner in both houses; and that whether the action be brought in the life time of the common partner or after his decease: but after his decease the surviving partners of the one house may sue the surviving partners of the other house upon transactions subsequent to the decease of the common partner. 6 W, P. Taunt. 597.

To this general rule, that one partner cannot maintain an action at law against his co-partner, there are however several exceptions. For instance, if partners covenant to account, and a balance is struck, and the indebted partner promises to pay, an action of assumpsit may be maintained. 2 T. Rep. 483. And, if two persons agree to share in profit or loss upon goods bought by one of them on joint account, an action will lie against the other for the payment of his share. 13 East 7. So one partner may maintain an action against the other for money received to the separate use of the former and wrongfully carried to the partnership account. 2 Term. Rep. 476.

The following cases are also explanatory of the principle which regulates this exception to the general rule. The defendant agreed in writing to take one half share of certain goods bought by the plaintiff on their joint account, half in the profit or loss, and to furnish the plaintiff with half the amount in time for the payment thereof, the goods being to be paid for by bills. The court of king's bench held, that the plaintiff having paid the whole price of the goods which were to constitute the partnership stock to which both parties were to contribute equally, an action lay against the defendant for his moiety of the price which was to be furnished by him in the first instance, although there might be an account to be taken between them as partners upon the subsequent disposal of the joint stock. 13 East 7. Where money is owing to two partners, and after the death of one it is paid to a third person, the surviving partner may maintain an action for money had and received in his own right and not as survivor. 2 Term Rep. 140.

On the subject of the expenses of conducting a partnership concern, the following case may be material:-If, after two partners have lived in the same house where the business is carried on, one of them take and live in a separate house for his dwelling, and the remaining partner manage the whole business, and is at considerable, expense in treating the customers, and such treating is necessary and usual, but not universal in the trade; and a balance of profits and expenses is struck every year without any demand for the expenses of such treating; and it is usual for articles of partnership to contain a covenant for such expenses, the remaining partner is not entitled to an allowance for such expenses. 1 Ans. 94. In some respects an individual partner, or a particular partnership consisting of two or more such persons as are partners in some larger partnership, may be considered as third persons in transactions in which the general partnership may happen to be engaged with a correspondent. Per Eyre C. J. 1 Bos. and Pull. 546, 547. If partners by deed assign all

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their partnership effects, &c., to trustees for the benefit of their creditors, and some of the separate creditors of one partner do not assent to it, the assignment is fraudulent and void. 8 Term Rep. 140. An admission by one of the two partners, after the dissolution of the partnership, is competent evidence to charge the other part1 W. P. Taunt. 104. If the names of two partners in trade appear (among others) on the certificate of registry as owners of a ship, the registry acts do not prevent the showing how and in what proportions the several owners are respectively entitled, and the partners may derive title under different conveyances; yet if their shares were purchased with the partnership funds and treated by them as partnership property, and the partners become bankrupt, these shares will be considered as the joint property. Term Rep. Hil. 56 Geo. III. To prevent the ends of justice from being defeated in criminal prosecutions by the difficulty of ascertaining the names of every owner of property, the 7th George IV. cap. 64, sec. 14, enacts that, in any indictment or information for felony or misdemeanor, when it shall be necessary to state the ownership of property, it shall be sufficient to name one owner;' and this extends to all partners in trade, joint tenants, parceners, or tenants in common as well as to trustees and joint stock companies.

SECT. III.-OF THE LIABILITIES OF PARTNERS TO THIRD PERSONS.

Where there is a share of profits there shall also be a share of losses; for whoever takes a part of the capital, or of the profits of it, takes a part of that fund to which the public have given credit, and to which they look for payment. Dormant partners are liable when discovered, because they would otherwise receive usurious interest and without a risk. Another, and perhaps a better, reason is, that the act of the partner binds all his co-partners, on account of the communion of profit and loss. The following cases will explain the nature of the liabilities incurred by the several persons who compose a partnership.

Where the consignee of goods (to whom the bill of lading was indorsed in blank) assigned it over as a security for acceptance given by the assignee not amounting to the value of the goods, and afterwards they became partners in the goods by an agreement between them that the profits and loss should be equally divided, but the first was to stand guarantee to the other for the solidity of the factors by whom the goods were to be sold; and it appeared by the agreement that the consignor had not been paid for the goods; the assignee of the bill of lading cannot maintain trover against the consignor if he stop the goods in transitu on the insolvency of the consignee; for one partner cannot recover those goods which the other could not. 2 Term. Rep. 674. An action cannot be maintained by several partners for goods sold by one of them living in Guernsey, and packed by him in a particular manner for the purpose of smuggling, though the other partners who resided in England knew nothing of the sale; for the act of one is, in this respect, the act of all; and as it is a contract by VOL. XVI.

subjects of this country, made in contravention of the laws, this case must be considered in the same light as if all the partners resided in England. 3. Term. Rep. 454. 5 Term Rep. 599. 4 Term Rep. 466. If one partner draw or indorse a bill in the partnership firm, it will prima facie bind the firm, although passed by the one partner to a separate creditor in discharge of his own debt, unless there be evidence of covin between such separate debtor and creditor, or at least of the want of authority either express or implied in the debtor partner to give the joint security of the firm for his separate debt. But the court of king's bench held that no sufficient circumstance appeared in this case to raise any presumption adverse to the separate creditor taking such joint security in a case where the bill appeared to have been drawn in the name of the firm to their own order, eighteen days before the delivery of it to the separate creditor, and to have been accepted and indorsed before such delivery, and to have been drawn for a larger amount than the particular debt, and where, though the indorsement was in fact made by the hand of the debtor partner, yet it did not appear that that fact was known to the separate creditor at the time, and this too in a case where direct evidence might have been given of the covin or want of authority if it existed. 13 East 175.

A and B, ship agents at different ports, enter into an agreement to share in certain proportions the profits of their respective commissions, and the discount on tradesmen's bills employed by them in repairing the ships consigned to them, &c. By this agreement they were held to become liable as agent: though the agreement provided that neither should be answerable for the acts or losses of the other, but each for his own. 2 H. Blacks. 235. Where A, B, and C, were engaged in a cotton trade under the firm of A and B (C not being known to the world as a partner), and A and B traded under the same firm as grocers, and a bill given to them in the cotton business was indorsed in the firm common to partnerships, and given in payment by A and C for goods received in their grocery business; the court of king's bench held that С was liable to pay the bill to the holders, although the indorsement was unknown to C, of whom the indorsee had no knowledge at the time of the indorsement. 7 East 209. One of two partners applied trust money in the trade with the privity of the other partners; afterward they separated, and the partnership effects were assigned over to the first who took on him. the debts; this was held to be no payment in discharge of the other partner, but both were liable to make good the trust money. 5. Term Rep. 601. A contract made by two partners to pay a certain sum of money to a third. person equally out of their own private cash is a joint contract, and they must be jointly sued upon it. 1 H. Blacks. 236.

If three partners (two of whom reside abroad and one in England) be sued for a partnership debt, and the partner resident in England appear to the action, but refuses to appear for the partners resident abroad, the sheriff under a distringas against the two partners may take partnership

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effects, though paid for by the partner resident in England alone, to whom the partnership was legally indebted; and the court will not relieve him against such distress. 3 Bos. and Pull. 254. In assumpsit against one of several partners for not delivering goods, with account for money had and received, to which defendant pleaded that the promises were jointly made with A and B, made the contract individually though in the name of the partnership, and for the sale of parnership property; and that in fraud of his partners he received the money to his own use: though the bill drawn by him for the money was in the partnership name. Held that plaintiff might recover the money so received under the common court. Term Rep. Hil. 56. Geo. III. Where one of three partners, after a dissolution of partnership, undertook by deed to pay a particular partnership debt on two bills of exchange, and that was communicated to the holder, who consented to take the separate notes of the one partner for the amount, strictly reserving his right against all three, and retained possession of the original bills. Held that the separate notes having proved unproductive he might still resort to his remedy against the other partners, and that the taking under these circumstances the separate notes, and even afterwards renewing them several times successively, did not amount to satisfaction of the joint debt Term Rep. Mich. 53, Geo. III.

It has been said (but it does not appear conclusively settled) that if one partner sign a letter of credit or guarantee in the name of all the partners, it binds the firm. But that there is a material difference between one partner pledging the guarantee of the firm for his separate debt, and his negociating bills in the partnership firm. 1 East 48. After a general partnership between two conveyancers in the country; if money be received partly by one of the firm, and partly by the other, to be laid out upon a mortgage, which is forged by one of the partners without the knowledge of the other, the innocent partner is liable to repay the money. 2 Cowp. 814.

It is sometimes the case that although no contract of partnership has been actually entered nto between persons acting or dealing together, so as to bind each other among themselves, yet a partnership is held to be subsisting, and a consequent liability to be incurred to third persons. So also a previous partnership, which has ceased as between the partners, may be held to continue as regards the world. Thus if a person suffer his name to be used as a partner he is liable to third persons.

If an outgoing partner is to receive an annuity and a per centage upon all sales to his old customers, and to new customers by him recommended, it seems that the partnership as to third persons continues. 2 H. Blackst. 242. It has been said that the liability of the outgoing partner is to be determined by considering whether the payment is certain and defined, or depending upon the casualties of trade. So, also, the liability is said to depend upon his agreeing to share the profits, or only relying upon the profits as a fund for payment. 2 Blackst. 998.

In partnerships not incorporated, the indivi

dual partners are liable for the debts of the joint trade without limitation. The members of incorporated societies are liable for their respective shares, or, according to 6 Geo. IV. cap. 91, in such other degree as the charter of incorporation may prescribe.

SECT. IV. -OF THE EXCEPTIONS TO THE LIABILITY OF PARTNERS.

A joint purchase without any communion of profit does not constitute a liability to third persons. Thus, if a purchase be made upon an agreement that one of the parties shall be ostensible buyer, and each party have a distinct share of the whole; and the ostensible purchaser is the only party known to the vender, the other parties are not liable for payment. 1. H. Blackst. 37. A communion of subsequent profits, without any joint interest at the time of the purchase, does not constitute a joint liability. 4 T. R. 724. As a general rule, it may be observed, that the liability of one partner for the acts of another extends only, to debts contracted in the course of the partnership concern.

A dormant partner is not responsible for a bill of exchange, accepted by the acting partners in their names, unless such bill relate to the business of the partnership-the sleeping partner having no privity of interest in the bill. 2 Car. and Pay. 138. A member of a firm who retires from the partnership, is not liable on account of the remaining members continuing his name without his consent. And if the remaining partners continue the trade in the style of the old firm, after due notice of the dissolution, it seems that there is not any necessity for the protection of the outgoing partner that he should apply to a court of equity to restrain the remaining partners from the use of the style of the old firm. 2 Camp. 617. This, however, supposes that all the measures of precaution by advertisement, notice, &c., have been adopted."

An agreement by the remaining members of a firm to pay to an outgoing partner an annuity for his interest at the time of the dissolution in the profits and good will does not constitute a lability as partners to third persons. A share in a ship or other specific object does not constitute a general partnership; and therefore the responsibility is limited to that particular object.

If the proprietor of cattle agree with the owner of land that the cattle shall be pastured upon the land, and that the profit after they are fatted above a certain sum at which the cattle are estimated, shall be equally divided between the prietor of the cattle and the owner of the land; this is merely a mode of paying for the pasture, and does not constitute a joint liability. 1 Camp. 331, in notes.

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If the contract is for an antecedent debt, due from the partner to the contracting party, the presumption seems to be that the firm is not liable. 1 East. 48.

If there be any speculation of which one of the partners should disapprove, he may avoid responsibility by giving notice, to those with whom the other partners are about to contract, that be will not be concerned in it. Two (of three) partners who had contracted a debt prior to the

admission of the third partner into the firm cannot bind him, without he assent by accepting a bill drawn by the creditor in their joint names; but such security is fraudulent and void as against the third partner, and cannot be recovered in an action against the three, wherein one only of the original partners plead to the action. 1 East. 48, 49. Where A and C had entered into an agreement to purchase goods in the name of A only, and to take aliquot shares of the purchase, but it did not appear that they were jointly to resell the goods, the court of common pleas (Wilson J. Diss.) held that on failure of A, the ostensible buyer, B and C were not answerable as partners with him. 1 H. Blackst. 37.

Acts subsequent to the time of delivering goods on a contract may be admitted as evidence to show that the goods were delivered on a partnership account, if it were doubtful at the time of the contract; but, if it clearly appear that no partnership existed at the time of the contract, no subsequent act, by any person who may afterwards become a partner (not even an acknowledgment that he is liable on his accepting a bill of exchange drawn on them as partners for the very goods), will make him liable in an action for goods sold and delivered, though he will be liable in an action on the bill of exchange. 4 Term Rep. 720. On the dissolution of a partnership between A, B, and C, a power given to A, to receive all debts owing to, and to pay all those owing from the late partnership, does not authorise him to indorse a bill of exchange in the name of the partnership, though drawn by him in that name and accepted by a debtor to the partnership after the dissolution. The person therefore to whom he so indorses it cannot maintain an action on it against A, B, and C, as partners. 1 H. Blackst. 155. Neither can such indorsee maintain an action against A, B, and C, for money paid to the use of the partnership, though in fact the money advanced by him in discounting the bill be applied by A to the payment of a debt due from the partnership. i II. Blackst. 155.

The authority of one partner to bind another, by signing bills of exchange and promissory notes in their joint names, is only an implied authority, and may be rebutted by express previous notice to the party taking such security from one of them, that the other would not be liable for it; and this though it were represented to the holder, by the partner signing such se'curity, that the money advanced on it was raised for the purpose of being applied to the payment of partnership debts and though the greater part of it were in fact so applied. Nor can he recover against the other partner to the amount of the sums so applied to the payment of the partnership debts against such notice. 10 East. 264. If several persons horse, with horses their several property, the several stages of a coach in the general profits of which they are partners, they are not jointly liable for goods furnished to one partner for the use of the horses drawing the coach along his part of the road. 2 W. P. Taunt. 49. In an action on the case, upon a delivery of goods to several joint owners of a ship to be carried to A for freight alleging a

deviation if the plaintiff fail in proving all the defendants to be owners he cannot recover, even against those whom he proves o be owners. New Rep. C. P. 454.

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A bond was given to the several persons constituting the firm of a banking house, conditioned for the repayment of the balance of an account, and of such further sums as the bankers might advance to the obligor; one of the partners dies, and a new partner is taken into the firm at that time a considerable balance is due from the obligor to the firm, advances are afterwards made by the bankers, and payments made to them on account by the obligor; the latter is credited by the new firm with the several payments, and charged with the original debt and subsequent advances, as constituting items in one entire account, and the balance due at the time of the partner's death is considerably reduced; and that reduced balance, by order of the obligor, is transferred by the bankers to the account of another customer, who, with his assent, is charged with the then debt of the obligor. The person so charged having become insolvent, the surviving partners of the original firm brought their action upon the bond. Held that as they had not originally treated it as a distinct account, but had blended it in the general account with other transactions, they were not at liberty so to treat it at a subsequent period, and, having received in different payments a sum more than sufficient to discharge the debt due upon the bond, was to be considered as paid. Term. Rep. Mich. 59 Geo. III.

SECT. V. OF THE DISSOLUTION OF PARTNERSHIPS.

A general partnership, entered into for an unlimited time, may be put an end to, at any time, by either of the parties, so that he does not break off with some sinister view. It may be dissolved also by the award of arbitrators, by the insanity of one of the firm, or by the gross misconduct of a partner; on which a court of equity may annul the contract.

The death of one partner dissolves the partnership, unless there be an express agreement to transmit the interest in the business to the family of the deceased partner, or his executor, or administrator. It is dissolved also by the bankruptcy, outlawry, or attaint for treason or felony of either partner.

If a partnership for a limited time, with a right to dissolve upon giving a year's notice, be continued, without any new agreement after the expiration of the limited time, such new partnernership is dissoluble at the will of either party. 17 Vesey 298. The taking, by a partnership, of a lease which is unexpired, or their entering into contracts which are unexecuted, does not deprive either party of his right to dissolve at will. Ibid. If a partnership be formed for carrying into effect a new invention, which, after repeated trials, is found impracticable, it seems that the partnership is dissoluble. Baring, v. Dix, at the Rolls, 1786.

A firin may be bound, after the dissolution of the partnership, by a contract, made by one partner in the name of the firm, with a person who con